Willscot Holdings Corporation · NASDAQ:WSC
Willscot — Q3 2023 Earnings Presentation
48 slides from Willscot's earnings presentation, Nov 2, 2023
Slide 1: Quarterly Investor Presentation Third Quarter 2023
November 2, 2023 Quarterly Investor Presentation Third Quarter 2023
Slide 2: Safe Harbor
Safe Harbor Forward Looking Statements This presentation contains forward-looking statements (including the guidance/outlook contained herein) within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. The words
Slide 3: Table of Contents
Table of Contents 3 WillScot Mobile Mini Business Overview 17 Q3 2023 Operating Results 20 Q3 2023 Financial Review 27 Value Drivers 31 Appendix 3
Slide 4: The Industry Leader in Turnkey Space Solutions
The Industry Leader in Turnkey Space Solutions Unmatched Logistics Turnkey Space Solutions Turnkey Storage Solutions Ability to deploy solutions when and Multiple options and configurations, combined with essentials Highly customized storage solutions to where our customers need them – such as furni
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 >$10B North American market for flexible space solutions Unlevered IRRs on portable storage and turnkey modular space >25% fleet investments 2 Compelling Unit Economics And Return on Invested Capit
Slide 6: We have the #1 position in modular space and portable storage leasing
We have the #1 position in modular space and portable storage leasing Combined Fleet Count: ~368K1 42% 58% Modular Space Portable Storage Combined 2023 NBV: $3.3B1 3% Long-lived assets with 20-30 year useful lives 25% Predictable revenue model with 30+ month average lease duration Rapid paybac
Slide 7: Our scale is a key competitive advantage and value driver
Our scale is a key competitive advantage and value driver for our customers We leverage our scale to win locally o 5X next largest alternative provider 130M+ square feet of turnkey space relocatable anywhere in North America Sophisticated commercial and operational technology platform ~4,500
Slide 8: Our business is inherently sustainable and a pioneer within the industrial circular economy
Our business is inherently sustainable and a pioneer within the industrial circular economy Alternatives Our circular economy solutions Our current solutions Future value proposition Ready to Work solution Temporary • We have implemented Incorporates VAPS to drive reuse modular and of more products
Slide 9: We offer the most flexible and cost-effective temporary space and storage solutions
We offer the most flexible and cost-effective temporary space and storage solutions In Wynne, AR, we delivered 180 flex modules for the Wynne School District within 90 days following a tornado. Orders accelerating for storage units, including We are uniquely positioned to rapidly deploy large comple
Slide 10: We serve diverse end markets and have the ability to reposition within them
We serve diverse end markets and have the ability to reposition within them Revenue By End Market1 End Market Outlook Engineering & Architecture – 2% Demand across end markets consistent with our prior assumptions Highway & Heavy Construction – 6% regarding macroeconomic conditions in North Americ
Slide 11: Long history of driving returns with VAPS penetration
We have a long and consistent history of driving compelling returns with Value-Added Products (“VAPS”) penetration • ~16% per unit per month rent CAGR over 10 years • Units on Rent up >2x • Quarterly VAPS revenue up >10x Historical Progression of Consolidated Modular Space VAPS Average Monthly Rate1
Slide 12: We have compelling unit economics
We have compelling unit economics Illustrative unit level cumulative cash flow1 Capital investment Rapid Maintenance Proceeds Realized residual values • IRR ~30% over Portable Storage Containers2 Average acquisition cost of payback of Low annual ~$6K ~35 months maintenance costs average >50% of orig
Slide 13: Modular Unit VAPS Convergence Opportunity
VAPS are our largest opportunity and a great example of how innovation drives predictable multi-year growth across our portfolio Modular Solutions Segment Modular Space VAPS Future Revenue Potential1 $142 $/unit 81.9k x x 12 = 700 + $333M 600 Units1 mo. 197 $197 500 -4% Y/Y Modular Unit VAPS Converg
Slide 14: Robust and growing Adjusted EBITDA and Free Cash Flow profile
We have a robust and growing Adjusted EBITDA and Free Cash Flow profile Maximizing Cash Flow Transforming Accelerating Growth • Capex is discretionary due to long-lived assets Post-Global Financial Crisis for Growth and can be adapted to market cycles Avg. EBITDA less • Cash flow remains resilient a
Slide 15: 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 Optimization ~$200 Market Penetration ~$200 Logistics ~$50 Recent M&A and MODULAR ~$70 Scale Efficiencies STORAGE 15
Slide 16: Eclipsing 3-5 year milestones established at 2021 Investor Day
Eclipsing 3 – 5 year milestones established at 2021 Investor Day through growth mindset and consistent execution 3 – 5 Year Operating Performance Metric1 Q4 2021 LTM Q3 2023 LTM Range Est. at 2021 Investor Day Portfolio of growth initiatives gives us Revenue CAGR2 6% 16% 5 - 10% optionality and mu
Slide 17: Table of Contents
Table of Contents 3 WillScot Mobile Mini Business Overview 17 Q3 2023 Operating Results 20 Q3 2023 Financial Review 27 Value Drivers 31 Appendix 17
Slide 18: We have multiple levers to increase rental rates
We have multiple levers to increase rental rates Modular Space Unit Average Monthly Rental Rate Consolidated ($/unit per month)1 19% 16% 20% 20% 1,051 1,089 1,100 972 989 940 826 882 900 810 758 796 • Consolidated modular space unit average monthly rental rate increased 16% 698 700 Y/Y to $1,089 in
Slide 19: 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 Rent Consolidated (in thousands) • 1.7% decline in Modular Segment, with strength in manufacturing and the 102.3 105.6 101.2 103.6 102.1 101.1 104.6 101.1 100.5 105.4 100.3 southern U.S. offs
Slide 20: Table of Contents
Table of Contents 3 WillScot Mobile Mini Business Overview 17 Q3 2023 Operating Results 20 Q3 2023 Financial Review 27 Value Drivers 31 Appendix 20
Slide 21: We delivered outstanding financial performance in Q3 2023
We delivered outstanding financial performance in Q3 2023 Metric1 Commentary Results driven by pricing and Value-Added Products penetration, supported by Y/Y Change in Leasing Revenue +9% value-based selling and our price management tools and processes Q3 2023 Adjusted EBITDA and Y/Y Change $266M /
Slide 22: Total Revenue growth of 5% and Adjusted EBITDA growth of 11% in Q3 2023
Delivered Total Revenue growth of 5% and Adjusted EBITDA growth of 11% in Q3 20231,2 Revenue2 Adj. EBITDA1 $M $M 700 • Continued commercial and financial momentum across segments 5% 605 • Adjusted EBITDA Margin expansion of 250 bps Y/Y 600 578 • Increased pricing and VAPS penetration driving higher
Slide 23: Free Cash Flow is accelerating
Free Cash Flow is accelerating due to combination of top-line growth, margin expansion, and capital management Net Cash Provided By Operating Activities2 $M 7% (9)% 36% 200 2% 202 210 • Continued strong operating cash flow from predictable long duration lease 188 191 revenues 148 146 149 140 122 130
Slide 24: Appropriate leverage and flexible long-term debt structure
We maintain appropriate leverage and a flexible long-term debt structure Liquidity and Debt Maturity Profile1 $M • Leverage at 3.3x last-twelve-months Adj. EBITDA of $1.04B • Increased sequentially to fund M&A and comfortably inside 3.0-3.5x target range • ~$1.3B+ available liquidity in our revolvin
Slide 25: LTM capital allocation consistent with long-term framework
Our LTM capital allocation is consistent with our long-term framework Capital Allocation Framework $1,681 LTM Capital Generated $1,681 LTM Capital Allocated $5 – $6B Over 5 Years $M | % $M | % % 42 | 217 | 404 | 3% 13% 25% 24% 743 | 50% 25% 534 | 44% = 928 | 55% 494 | 29% 32% Net Capex Net Capex Cas
Slide 26: 2023 outlook implies Adj. EBITDA growth of 19%-20%
Our 2023 outlook implies Adj. EBITDA growth of 19% - 20% from continuing operations 2022 Results $M Prior 2023 Outlook Current 2023 Outlook From Continuing Operations Revenue $2,143 $2,350 – $2,450 $2,360 – $2,390 Adjusted EBITDA1,2 $884 $1,025 – $1,075 $1,050 – $1,065 Net CAPEX $367 $250 – $300 $22
Slide 27: Table of Contents
Table of Contents 3 WillScot Mobile Mini Business Overview 17 Q3 2023 Operating Results 20 Q3 2023 Financial Review 27 Value Drivers 31 Appendix 27
Slide 28: 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 Optimization ~$200 Market Penetration ~$200 Logistics ~$50 Recent M&A and MODULAR ~$70 Scale Efficiencies STORAGE 28
Slide 29: Growth, cash generation, and capital allocation drive shareholder returns
Our growth, cash generation, and capital allocation drive shareholder returns and value creation • Strong confidence in sustained growth given our forward visibility & availability of $1B organic growth levers. • Clear line of sight to $650M annual free cash flow as the portfolio rolls forward predi
Slide 30: Our values: health & safety, inclusion, community
Dedicated To Health Committed To Driven To Excellence Trustworthy & Devoted To Our Community & Safety Inclusion & Diversity Reliable Customers Focused We take responsibility for We are stronger together We measure success We hold ourselves We anticipate the We actively engage in our own well-being a
Slide 31: Table of Contents
Table of Contents 3 WillScot Mobile Mini Business Overview 17 Q3 2023 Operating Results 20 Q3 2023 Financial Review 27 Value Drivers 31 Appendix 31
Slide 32: Strategy and execution driving sustainable growth and returns
Strategy and execution driving sustainable growth and returns Historical Return on Invested Capital1 $M 17.9% 3,500 15.4% 15.0% 3,000 11.7% 9.6% 10.0% 2,500 6.8% 5.0% 2,000 0.0% 1,500 1,000 -5.0% 500 -10.0% - -15.0% 2019 2020 2021 2022 Q3 2023 LTM Average Invested Capital Adjusted Earnings Before In
Slide 33: Summary P&L, balance sheet and cash flow items
Summary P&L, balance sheet and cash flow items Three Months Ended September 30, Key Profit & Loss Items (in thousands) 2023 2022 Leasing and Services Leasing $466,769 $427,842 Delivery and Installation 115,598 127,016 Sales New Units 10,155 9,608 Rental Units 12,312 13,542 Total Revenues 604,834 578
Slide 34: Consolidated quarterly performance
Consolidated quarterly performance Modular Space AMR / UOR1 Portable Storage AMR / UOR1 $M $M 1,051 1,089 246 989 226 250 940 972 220 216 882 197 810 826 200 178 164 166 150 100 50 0 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Modular Space Average
Slide 35: Consolidated quarterly performance
Consolidated quarterly performance1 Quarterly Results for the nine months ended September 30, 2023: (in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Total Revenue $ 565,468 $ 582,089 $ 604,834 $ 1,752,391 Gross profit $ 323,128 $ 327,872 $ 339,694 $ 990,694 Adjusted EBITD
Slide 36: Modular Solutions Segment quarterly performance
Modular Solutions Segment quarterly performance Revenue1,2 Modular Space AMR / UOR1,2 $M $M 450 1,102 1,142 388 1,028 1,046 400 362 371 999 356 350 939 350 335 869 894 297 289 300 250 200 150 100 50 - Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Adj
Slide 37: Modular Solutions Segment quarterly performance
Modular Solutions Segment quarterly performance1,2 Quarterly Results for the nine months ended September 30, 2023: (in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Total Revenue $ 349,670 $ 370,675 $ 387,806 $ 1,108,151 Gross profit $ 165,335 $ 172,740 $ 181,179 $ 519,254
Slide 38: Storage Solutions Segment quarterly performance
Storage Solutions Segment quarterly performance Revenue1,2 Portable Storage AMR / UOR1 $M $M 234 216 216 211 217 246 188 220 216 226 164 163 197 178 163 166 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Adjusted EBITDA1,2 Portable Storage Average UOR
Slide 39: Storage Solutions Segment quarterly performance
Storage Solutions Segment quarterly performance1,2 Quarterly Results for the nine months ended September 30, 2023: (in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Total Revenue $ 215,798 $ 211,414 $ 217,028 $ 644,240 Gross profit $ 157,793 $ 155,132 $ 158,515 $ 471,440 A
Slide 40: 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 41: Reconciliation of non-GAAP measures – Adjusted EBITDA Margin %
Reconciliation of non-GAAP measures – Adjusted EBITDA Margin %1 We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. Income from Continuing Operations Margin is defined as Income from continuing operations divided by revenue. Management believes that the presentation of Adjusted E
Slide 42: 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 the last twelve months. We define Net Debt as total debt from continuing operations net of total cash and cash equivalents from continuing
Slide 43: 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 44: 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 is a non-GAAP measure. We define Free Cash Flow as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and equipment, which are all included
Slide 45: 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 net assets. Adjusted earnings before interest and amortization is the sum of income (loss) before income tax expense, net interest (
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 net assets. Adjusted earnings before interest and amortization is the sum of income (loss) before income tax expense, net interest (
Slide 47: Common Stock Outstanding
Common Stock Outstanding Outstanding as of September 30, 2023 Total Common Shares 193,460,704 Single Class of Common Stock Q3 2023 • 5.0M common shares repurchased for $220M under share repurchase authorization during the quarter • 20.3M common shares repurchased for $907M and 9.2% reduction in econ
Slide 48: WillScot = Mobile Mini
WILLSCOT = MOBILE MINI HOLDINGS CORP wiiscot] | gaohile mini