Willscot Holdings Corporation · NASDAQ:WSC
Willscot — Q3 2024 Earnings Presentation
48 slides from Willscot's earnings presentation, Oct 30, 2024
Slide 1: Quarterly Investor Presentation Third Quarter 2024
QUARTERLY INVESTOR PRESENTATION THIRD QUARTER 2024 10/30/2024
Slide 2: Safe Harbor
SAFE HARBOR Forward Looking Statements Non-GAAP Financial Measures This presentation contains forward-looking statements (including the guidance/outlook This presentation includes non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA Margin from continuing operations, Adjusted cont
Slide 3: Table of Contents
04 18 23 WillScot Business Q3 2024 Q3 2024 Overview Operating Results Financial Review TABLE OF CONTENTS 30 34 Value Drivers Appendix 3
Slide 4: The Continuous Evolution of Turnkey Spaces
THE CONTINUOUS EVOLUTION OF TURNKEY SPACES Leading Onsite Comfort & Facilities Turnkey Storage Solutions Clearspan Structures From restrooms to efficient climate-control, we aim to make Highly customized storage solutions to help Expansive, durable, and highly configurable your site as comfortable a
Slide 5: WSC Has an Established Formula to Drive Sustainable Growth and Returns
WSC HAS AN ESTABLISHED FORMULA TO DRIVE SUSTAINABLE GROWTH AND RETURNS 1 Clear Market Leadership #1 In ~$20B North American market for flexible space solutions >25% Unlevered IRRs on portable storage and turnkey modular space fleet investments 2 Compelling Unit Economics And Return on Invested Capit
Slide 6: We Offer the Most Flexible and Cost-Effective Temporary Space Solutions
WE OFFER THE MOST FLEXIBLE AND COST-EFFECTIVE TEMPORARY SPACE SOLUTIONS Multiple modular product types, including our new solar panel offering, at Crypto.com Arena. Supporting high-end events with Clearspan Structures Value-Added Products inside a modular unit. A fully furnished conference room in a
Slide 7: Our Scale Is a Key Competitive Advantage and Value Driver for Our Customers
OUR SCALE IS A KEY COMPETITIVE ADVANTAGE AND VALUE DRIVER FOR OUR CUSTOMERS ▪ We leverage our scale to win locally ▪ ~128M square feet of turnkey space relocatable anywhere in North America ▪ Sophisticated commercial and operational technology platform ▪ ~5,000 experts safely work ~10M hours annuall
Slide 8: We Are a Pioneer Within the Industrial Circular Economy
WE ARE A PIONEER WITHIN THE INDUSTRIAL CIRCULAR ECONOMY AND OUR BUSINESS IS INHERENTLY SUSTAINABLE Alternatives Our circular economy solutions Ready to Work solution Permanent new construction Incorporates VAPS to drive reuse ▪ We have implemented of more products and equipment, Requires extensive m
Slide 9: Our Lease Revenues Compound Predictably, with Stability Through Cycles
OUR LEASE REVENUES COMPOUND PREDICTABLY, WITH STABILITY THROUGH CYCLES $1.9B Leasing Revenue LTM GDP¹ Non-residential construction square foot starts¹ Lease Revenue2 Increase of ~85% $1.0B Lease Revenue2 2019 2020 2021 2022 2023 / 2024 “Normal” Demand COVID Shock Post-COVID Inflection “Exceptional”
Slide 10: We Continue to Invest to Optimize Our Platform
WE CONTINUE TO INVEST TO OPTIMZE OUR PLATFORM Investments in the Business Investments in Core Solutions Investments in Our Team Investments in New Offerings 2020 2021 2022 2023 2024 2025 + CRM Harmonization Digital Logistics Optimization ▪ Branding ▪ Project One ▪ Website ▪ VAPS quoting ▪ Customer P
Slide 11: We Serve Diverse Customer Segments and Can Reposition Within Them
WE SERVE DIVERSE CUSTOMER SEGMENTS AND CAN REPOSITION WITHIN THEM Revenue By Customer Segment1 Customer Segment Outlook Engineering & Architecture – 2% ▪ Continued multi-year demand from Highway & Heavy Construction – 4% strategic onshoring with infrastructure Construction & demand beginning in H2 2
Slide 12: We Have Compelling Unit Economics
WE HAVE COMPELLING UNIT ECONOMICS Illustrative unit level cumulative cash flow 1 Maintenance Proceeds Capital investment Rapid Low annual Realized residual Average acquisition payback of maintenance values average >50% ▪ IRR ~30% over Portable Storage cost of ~$5K ~35 months costs of original factor
Slide 13: Our Growth Algorithm Is Simple with Multiple Paths to Compound Returns
OUR GROWTH ALGORITHM IS SIMPLE AND WE HAVE MULTIPLE PATHS TO DRIVE PREDICTABLE COMPOUND RETURNS TO SHAREHOLDERS OVER TIME ▪ Moves directionally with GDP overweight to non-residential construction ▪ Governed by 3-year lease duration Value-Added Predictable Adj. Volume Rate Lease Revenue Margin Produc
Slide 14: We Have a Robust and Growing Free Cash Flow Profile
WE HAVE A ROBUST AND GROWING FREE CASH FLOW PROFILE Carve-Out and Minimal North American Investment under Transforming Accelerating Growth Global Ownership Structure for Growth ▪ Capex is discretionary due to long-lived assets and can be adapted Avg. EBITDA 265 173 795 to market cycles less Net Cape
Slide 15: We Are Executing Initiatives Representing Over $1B of Growth Opportunity
WE ARE EXECUTING INITIATIVES REPRESENTING OVER $1B OF GROWTH OPPORTUNITY POTENTIAL ($M) Value Added Products ~$500 and Services (VAPS) Lease Rate ~$200 Optimization Market ~$200 Penetration Logistics ~$50 Recent M&A and ~$100 Scale Efficiencies Modular Storage 15
Slide 16: Eclipsing 3-5 Year Milestones Established at 2021 Investor Day
ECLIPSING 3 – 5 YEAR MILESTONES ESTABLISHED AT 2021 INVESTOR DAY THROUGH GROWTH MINDSET AND CONSISTENT EXECUTION Performance 3 – 5 Year Updated Metric1 Operating Range Q3 2024 LTM 2024E – 2026E % | $M (‘21 Investor Day) Operating Ranges ▪ Portfolio of growth initiatives gives us optionality and mult
Slide 17: Table of Contents
04 18 23 WillScot Business Q3 2024 Q3 2024 Overview Operating Results Financial Review TABLE OF CONTENTS 30 34 Value Drivers Appendix 17
Slide 18: Long History of Compounding Unit Returns with Value-Added Products
WE HAVE A LONG AND CONSISTENT HISTORY OF COMPOUNDING UNIT RETURNS WITH VALUE-ADDED PRODUCTS Historical Progression of Modular Space VAPS1 ▪ ~14% per unit per month rent CAGR over 10 years Average Monthly Rate2,3 ▪ Units on Rent up >2x $/unit ▪ Quarterly VAPS revenue up ~10x 2019-2024 Average UOR: ~1
Slide 19: VAPS Are Our Largest Opportunity
VAPS ARE OUR LARGEST OPPORTUNITY AND AN EXAMPLE OF INNOVATION DRIVING PREDICTABLE MULTI-YEAR GROWTH Modular Units VAPS Future Revenue Potential1,2 94.9k Units1,2 x $84 + $206 x 12 mo. = $330M $/unit VAPS Average 206 Monthly Rate / UOR ▪ ~$330M revenue growth opportunity in modular units +3% Y/Y Lift
Slide 20: Consistent Rental Rate Performance Reflects Differentiated Value Proposition
OUR CONSISTENT RENTAL RATE PERFORMANCE REFLECTS OUR DIFFERENTIATED VALUE PROPOSITION Modular Space Unit Average Monthly Rental Rate1 $/unit per month ▪ Modular space unit average monthly rental rate increased 1,149 6% Y/Y to $1,199 in Q3 2024 1,010 1,145 1,031 1,091 1,176 1,130 1,199 914 977 ▪ ~15%
Slide 21: Stable Portfolio of Units on Rent Underpinned by 3-Year Lease Duration
OUR STABLE PORTFOLIO OF UNITS ON RENT IS UNDERPINNED BY 3-YEAR LEASE DURATION Average Modular Space Units on Rent1 in thousands 103.1 97.7 100.7 99.8 95.8 102.0 98.9 95.7 102.9 98.2 94.9 ▪ 3% decline in average modular units on rent, with strength in industrial and manufacturing offset by headwinds
Slide 22: Table of Contents
04 18 23 WillScot Business Q3 2024 Q3 2024 Overview Operating Results Financial Review TABLE OF CONTENTS 30 34 Value Drivers Appendix 22
Slide 23: Our 2024 Results Reflect Resiliency in a Challenging Operating Environment
OUR 2024 RESULTS REFLECT RESILIENCY IN A CHALLENGING OPERATING ENVIRONMENT Metric Commentary Driven by unit on rent decline, primarily from a reduction in portable storage units on rent, offset by Y/Y Change in Leasing Revenue -2% rate optimization, Value-Added Products penetration and contributions
Slide 24: Revenue and Adjusted EBITDA in Q3 2024
REVENUE AND ADJUSTED EBITDA IN Q3 2024 ▪ Leasing revenue decreased 2% Y/Y ▪ Driven by volume declines, with modular units on rent down 3% and storage units on rent down 18% Revenue Adjusted EBITDA1 ▪ Offset by VAPS penetration and increased pricing as a result of our price $M $M management tools and
Slide 25: Free Cash Flow Driven by Predictable, Recurring Lease Revenues
FREE CASH FLOW DRIVEN BY PREDICTABLE, RECURRING LEASE REVENUES AND CAPITAL MANAGEMENT Net Cash Provided By Operating Activities1 $M ▪ Continued strong operating cash flow from predictable, recurring 219 209 210 lease revenues 200 188 202 176 191 202 146 149 ▪ $16M Y/Y Net Capex increase driven by lo
Slide 26: We Maintain Appropriate Leverage and a Flexible Long-Term Debt Structure
WE MAINTAIN APPROPRIATE LEVERAGE AND A FLEXIBLE LONG-TERM DEBT STRUCTURE Liquidity and Debt Maturity Profile1 $M ▪ Leverage at 3.4x last-twelve-months Adj. EBITDA of $1.07B ▪ ~$1.7B available liquidity in our revolving credit facility $1,678 $1,510 ▪ Weighted average pre-tax interest rate is approxi
Slide 27: Our LTM Capital Allocation Is Consistent with Our Long-Term Framework
OUR LTM CAPITAL ALLOCATION IS CONSISTENT WITH OUR LONG-TERM FRAMEWORK Capital Allocation Framework $893 LTM Capital Generated $893 LTM Capital Allocated $5 – $6B Over 5 Years $M | % $M | % % 28 51 3% 6% 212 231 25% 24% 26% 50% 164 25% 286 18% 814 32% 91% Cash From Increased Net Capex Net Capex Opera
Slide 28: Revised Outlook Reflects Challenging Operating Environment
REVISED OUTLOOK REFLECTS CHALLENGING OPERATING ENVIRONMENT 2023 Results $M 2024 Outlook From Continuing Operations Revenue $2,365 $2,380 - $2,420 Adjusted EBITDA1 $1,061 $1,050 - $1,070 Net CAPEX $185 $250 - $280 ▪ At its midpoint, revenue is expected to be up 1% relative to 2023, due to volume impa
Slide 29: Table of Contents
04 18 23 WillScot Business Q3 2024 Q3 2024 Overview Operating Results Financial Review TABLE OF CONTENTS 30 34 Value Drivers Appendix 29
Slide 30: We Are Executing Initiatives Representing Over $1B of Growth Opportunity
WE ARE EXECUTING INITIATIVES REPRESENTING OVER $1B OF GROWTH OPPORTUNITY POTENTIAL ($M) Value Added Products ~$500 and Services (VAPS) Lease Rate ~$200 Optimization Market ~$200 Penetration Logistics ~$50 Recent M&A and ~$100 Scale Efficiencies Modular Storage 30
Slide 31: Our Growth, Cash Generation, and Capital Allocation Drive Shareholder Returns
▪ Strong confidence in sustained growth given our forward visibility & availability of $1B organic growth levers. Our growth, ▪ Clear line of sight to $700M annual free cash flow as the portfolio rolls forward predictably. cash generation, ▪ Maintain 3.0x – 3.5x leverage while and capital allocation
Slide 32: Our Company Values
OUR COMPANY VALUES WE ARE Dedicated To Committed To Driven To Health & Safety Inclusion & Diversity Excellence We take responsibility for our own We are stronger together when we We measure success through our well-being and for those around us. celebrate our differences and strive results and the a
Slide 33: Table of Contents
04 18 23 WillScot Business Q3 2024 Q3 2024 Overview Operating Results Financial Review TABLE OF CONTENTS 30 34 Value Drivers Appendix 33
Slide 34: Appendix
APPENDIX WILLSCOT RIGHT FROM THESTART = zz
Slide 35: Strategy and Execution Driving Sustainable Growth and Returns
STRATEGY AND EXECUTION DRIVING SUSTAINABLE GROWTH AND RETURNS Return on Invested Capital1 $M 17.7% 16.6% 3,500 15.4% 15.0% 3,000 11.7% 9.6% 10.0% 2,500 5.0% 2,000 0.0% 1,500 1,000 -5.0% 500 -10.0% - -15.0% 2020 2021 2022 2023 Q3 2024 LTM Average Invested Capital Adjusted Earnings Before Interest and
Slide 36: Summary P&L, Balance Sheet and Cash Flow Items
SUMMARY P&L, BALANCE SHEET AND CASH FLOW ITEMS Key Profit & Loss Items Three Months Ended September 30 Nine Months Ended September 30 (in thousands) 2024 2023 2024 2023 Leasing and Services Leasing $455,578 $466,769 $1,374,771 $1,356,040 Delivery and Installation 114,765 115,598 323,274 334,982 Sale
Slide 37: Consolidated Quarterly Performance
CONSOLIDATED QUARTERLY PERFORMANCE Modular Space Unit Average Monthly Rental Rate1 Portable Storage Unit Average Monthly Rental Rate1 $/unit per month $/unit per month 262 262 263 265 242 1,199 218 214 223 1,176 1,145 1,149 1,130 1,091 1,031 1,010 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 2
Slide 38: Consolidated Quarterly Performance
CONSOLIDATED QUARTERLY PERFORMANCE1,2 Quarterly Results for the nine months ended September 30, 2024: (in thousands, except for units on rent Q1 Q2 Q3 Q4 TOTAL and monthly rental rate) Revenue $587,181 $604,590 $601,432 $1,793,203 Gross profit $316,888 $327,118 $321,484 $965,490 Adjusted EBITDA $248
Slide 39: Reconciliation of Non-GAAP Measures – Adjusted EBITDA
RECONCILIATION OF NON-GAAP MEASURES – ADJUSTED EBITDA Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before income tax expense (benefit), net interest (income) expense, depreciation and amortization adjusted for certain items considered non-core to our business operations includi
Slide 40: Reconciliation of Non-GAAP Measures – Adjusted EBITDA Margin %
RECONCILIATION OF NON-GAAP MEASURES – ADJUSTED EBITDA MARGIN % We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. Management believes that the presentation of Adjusted EBITDA Margin provides useful information to investors regarding the performance of our business. The following
Slide 41: Reconciliation of Non-GAAP Measures – Net Debt to Adjusted EBITDA Ratio
RECONCILIATION OF NON-GAAP MEASURES – NET DEBT TO ADJUSTED EBITDA RATIO Net Debt to Adjusted EBITDA ratio is defined as Net Debt divided by Adjusted EBITDA from continuing operations from the last twelve months. We define Net Debt as total debt from continuing operations net of total cash and cash e
Slide 42: Reconciliation of Non-GAAP Measures – Net CAPEX
RECONCILIATION OF NON-GAAP MEASURES – NET CAPEX We define Net CAPEX as purchases of rental equipment and refurbishments and purchases of property, plant and equipment (collectively, "Total Capital Expenditures"), less proceeds from the sale of rental equipment and proceeds from the sale of property,
Slide 43: Reconciliation of Non-GAAP Measures – Adjusted Income from Continuing Operations
RECONCILIATION OF NON-GAAP MEASURES – ADJUSTED INCOME FROM CONTINUING OPERATIONS We define adjusted income from continuing operations as income (loss) from continuing operations, plus certain non-cash items and the effect of what we consider transactions or events not related to our core business op
Slide 44: Reconciliation of Non-GAAP Measures – Adjusted Diluted Earnings Per Share
RECONCILIATION OF NON-GAAP MEASURES – ADJUSTED DILUTED EARNINGS PER SHARE We define adjusted diluted earnings per share from continuing operations as adjusted income from continuing operations divided by adjusted diluted weighted average common shares outstanding. Management believes that the presen
Slide 45: Reconciliation of Non-GAAP Measures – Free Cash Flow and Free Cash Flow Margin
RECONCILIATION OF NON-GAAP MEASURES – FREE CASH FLOW AND FREE CASH FLOW MARGIN Free Cash Flow and Adjusted Free Cash Flow are non-GAAP measures. We define Free Cash Flow as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and equip
Slide 46: Reconciliation of Non-GAAP Measures – Return on Invested Capital
RECONCILIATION OF NON-GAAP MEASURES – RETURN ON INVESTED CAPITAL Return on Invested Capital is defined as Adjusted earnings before interest and amortization divided by Average Invested Capital. Management believes that the presentation of Return on Invested Capital provides useful information regard
Slide 47: Reconciliation of Non-GAAP Measures – Return on Invested Capital
RECONCILIATION OF NON-GAAP MEASURES – RETURN ON INVESTED CAPITAL Return on Invested Capital is defined as Adjusted earnings before interest and amortization divided by Average Invested Capital. Management believes that the presentation of Return on Invested Capital provides useful information regard
Slide 48: WillScot
WILLSCOT RIGHT FROM THESTART = 3.