Willscot Holdings Corporation · NASDAQ:WSC
Willscot — WillScot Mobile Mini Holdings — Q2 2020 Earnings Presentation
50 slides from Willscot's earnings presentation, Aug 10, 2020
Slide 1: Quarterly Investor Presentation Second Quarter 2020
Quarterly Investor Presentation Second Quarter 2020 8/10/2020
Slide 2: Safe Harbor
Safe Harbor Forward Looking Statements This presentation contains forward-looking statements (including the earnings 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.
Slide 3: Turnkey modular space and storage solutions are our business
Turnkey modular space and storage solutions are our business. Everything about our company, from our expert staff to our turnkey solutions to our network of locations, is designed to make it easier for customers to make one call and get a complete, immediately functional temporary space and storage
Slide 4: We completed a transformational merger and are positioned to drive growth and returns
We completed a transformational merger and are positioned to drive growth and returns Combination Created Industry-Leading Specialty Leasing Platform Two Iconic Industry Leaders with Distinct but Complementary A Leading Modular Space Portfolios and Enhanced Ability A Leading Portable Solutions Provi
Slide 5: We are stronger together as one company
We are stronger together as one company A North American leading provider of modular space A North American leading provider of portable storage solutions solutions ~153k modular space and portable storage fleet units; Rental fleet of ~200k storage solutions containers and representing over
Slide 6: Compelling strategic and financial rationale
Compelling strategic and financial rationale Strategic Financial Combination of a leading provider of Modular Space Pro forma LTM 06/30/20 Revenue of ~$1.65B and LTM Solutions and a leading provider of Portable Storage 06/30/20 Adj. EBITDA of ~$688M (1) Solutions Combined market cap of ~$3.5B
Slide 7: Highly complementary fleet portfolios and expanded national footprint
Highly complementary fleet portfolios and expanded national footprint Combined 2019 Fleet Count (1) : 366k Tank & Pump Solutions Ground Level 3% Offices & Other Modular Space 10% 33% Portable Storage 54% Combined 2019 NBV (2) : $2.8B 275 locations Tank & Pump Ground Level Solutions, 5% Offices & Oth
Slide 8: Our Q2 results and 2020 outlook reinforce the resilience of our business model
Our Q2 results and 2020 outlook reinforce the resilience of our business model Q2 Standalone Q2 Standalone Q2 Proforma4 1 Q2 revenue of $256.9M declined 2.6% Q2 revenue of $132.1M declined 12% Q2 revenue of $389.1M declined • Modular leasing revenue increased • NA Storage rental revenue down 5.6% $2
Slide 9: Highly attractive unit level economics
Highly attractive unit level economics Illustrative unit level economics Rapid Maintenance Proceeds Capital investment Realized residual values • Portable Storage Containers Average acquisition cost of less payback of Low annual average >50% of original IRR ~30% over 30 than $4k ~30 months maintenan
Slide 10: Flexibility to manage free cash flow through cycles
Flexibility to manage free cash flow through cycles Maximizing FCF and Redeploying Transforming Executing Growth Investing in Growth Globally for Growth Strategy WSC WSC MINI WSC MINI WSC MINI WSC MINI • Long-lived assets provide Avg. Annual Op. ~89 ~158 ~126 ~91 ~130 ~46 ~114 ~130 ~146 significant
Slide 11: Diverse end markets provide optionality to navigate periods of economic uncertainty
Diverse end markets provide optionality to navigate periods of economic uncertainty Pro Forma % Revenue By End Market(1) End Market Outlook Engineering & Architecture, 2% Highway & Heavy Construction, 6% • Construction: Strong start to the year w/ deliveries up 4-5% y.o.y. Experienced 20-30% reducti
Slide 12: We have powerful levers to drive shareholder value creation
We have powerful levers to drive shareholder value creation for years to come and in any operating environment Strong pricing momentum heading into 2021 with a roadmap to improve pricing practices as well as contractual terms and conditions in key areas Modular VAPS represent >$150M of organic reven
Slide 13: Current Operating Environment
CURRENT OPERATING ENVIRONMENT
Slide 14: Demand story improving monthly since April 2020
Demand story improving monthly since April 2020 Modular SpaceSpace US Modular Monthly North America StorageSolutions NA Storage Solutions Order Rates Monthly Order Rates Monthly Core Orders Monthly Orders Excluding Seasonal Units 6,000 YOY YOY -20% -24% -14% -5% 20000 5,000 -25% -38% -5% -4% 4,000 1
Slide 15: Our units on rent installed base is stable and predictable
Our units on rent installed base is stable and predictable US Modular Space The two core segments are: Average Units on Rent (in thousands) • US Modular Space which is a segment of WillScot Corporation • NA Storage Solutions which is a segment of Mobile Mini In both segments, the installed base, or
Slide 16: Strong pricing power demonstrated across the core segments
Strong pricing power demonstrated across the core segments US Modular Space Year over Year AMR Change (%) • US Modular average monthly rental rate (AMR) increased 11.3% year over year to $681 for Q2 2020. • Q2 2020 marked the 11th consecutive quarter of double-digit rate growth for this segment. NA
Slide 17: Protecting Employees and Supporting Our Customers Amid COVID-19
Protecting Employees and Supporting Our Customers Amid COVID-19 Keeping our employees safe • Maintaining safe operations at all of our branches, including mandatory temperature screening and masks at all locations • Maintaining remote and flexible work arrangements in all shared service centers • En
Slide 18: Actions taken in Q2 2020
Actions taken in Q2 2020 Proactive Cost Reductions • Executed reduction of variable labor headcount to current production capacity through significant reductions in temps, subcontractors and overtime • Significant reductions to all other discretionary spend ◦ Marketing unless lead generation-related
Slide 19: Financial Review
FINANCIAL REVIEW WILLSCOT = MOBILE MINI
Slide 20: WillScot Q2 2020 results
WillScot Q2 2020 results Delivered Adjusted EBITDA(1) of $97.5 million, up $10.0 million, or 11.4% and Free Cash Flow(1) up $37.4 million over prior year 1 Q2 Revenue of $256.9 million decreased 11.3% YOY U.S. Modular space AMR growth 2.6% over 2019 3.9% YOY U.S. Modular leasing revenue growth 2 Q2
Slide 21: WillScot delivered Adj. EBITDA growth of 11% in Q2 2020
WillScot delivered Adj. EBITDA(1) growth of 11% in Q2 2020 Revenue (1) (US$m) Adj. EBITDA (1) (US$m) Free Cash Flow (3) (US$m) 1.6 Modular - US Modular - Other North America Adj EBITDA(1) Q2 2020 Margin % ▪ Revenue of $256.9 million decreased 2.6% year Consolidated Pro Forma Quarterly Revenue (2) (U
Slide 22: WillScot cash generation is accelerating
WillScot cash generation is accelerating Net Cash Provided By Operating Activities US$m Net cash provided by operating activities was up $30.6 million in Q2 Operating cash flow increased meaningfully over prior year due to: ▪ Steady top-line growth to core modular leasing revenues ▪ Margin expansion
Slide 23: Mobile Mini Q2 2020 Results
Mobile Mini Q2 2020 Results Delivered Adjusted EBITDA(1) of $56.3 million, down $0.6 million, or 1.1% and Free Cash Flow(1) of $31.1 million 1 Q2 Revenue of $132.1 million decreased YOY North America Storage Solutions rental 12.0% over 2019 3.2% rate growth 2 Q2 Adjusted EBITDA(1) of $56.3 million 4
Slide 24: Mobile Mini expanded Adj. EBITDA margin despite decline in revenues
Mobile Mini expanded Adj. EBITDA margin despite decline in revenues Revenue (1) (US$m) Adj. EBITDA (1) (US$m) Free Cash Flow (2) (US$m) Adj EBITDA(1) Margin % Q2 2020 Consolidated Quarterly Revenue (1) (US$m) ▪ Revenue of $132.1 million decreased 12.0% year over year – Sustained year over year rate
Slide 25: Mobile Mini's 50th consecutive quarter of positive free cash flow generation
Mobile Mini’s 50th consecutive quarter of positive free cash flow generation Net Cash Provided By Operating Activities Net cash provided by operating activities was US$m down $22.6 million in Q2 • Year over year decrease due to the sharp improvement in days sales outstanding experienced in 2019, whi
Slide 26: We are de-levering rapidly with over $915M of liquidity in our new ABL
We are de-levering rapidly with over $915M of liquidity in our new ABL post-merger Face Amount Face Amount Outstanding at Outstanding at (in thousands, except rates) Interest rate Year of maturity June 30, 2020 July 1, 2020 2022 Secured Notes 7.875% 2022 $ 270,000 $ — 2023 Secured Notes 6.875% 2023
Slide 27: We moved to a single class of common stock with the merger
We moved to a single class of common stock with the merger Outstanding as of Outstanding as of July 31, 2020 (post June 30, 2020 Merger) Total Common Shares 121,233,232 227,721,220 Single Class of Common Stock Shares Underlying Warrants with $11.50 exercise price 8,780,850 8,780,850 Outstanding warr
Slide 28: Revised 2020 outlook demonstrates resilience of the combined portfolio
Revised 2020 outlook demonstrates resilience of the combined portfolio and expanding profitability in a challenging macro environment Adj. EBITDA(1) of the combined business increases from $600M to ~$630M at midpoint on a Pro Forma Basis (2) Pro Forma 2020E(2) Revenue Adj. EBITDA(1) ▪ Revenues of $1
Slide 29: Growth, cash generation, and capital allocation will drive future shareholder returns
We believe that growth, cash generation, and capital allocation will drive future shareholder returns 1. We have a high degree of confidence regarding free cash generation into 2021 and beyond, based on the forward visibility in our business model and the idiosyncratic earnings growth levers stemmin
Slide 30: We are aligned as to how we will operate as a team
We are aligned as to how we will operate as a team 30
Slide 31: Appendix
APPENDIX WILLSCOT = MOBILE MINI
Slide 32: WillScot Modular - US segment fundamentals
WillScot Modular - US segment fundamentals As Reported Pro Forma(2) Modular Space(1) Average Units on Rent (in thousands) Modular Space(1) Average Units on Rent (in thousands) Utilization (%) Utilization (%) Modular Space (1) Average Monthly Rate / UOR (US$) Modular Space (1) Average Monthly Rate /
Slide 33: WillScot Modular – US segment performance
WillScot Modular – US segment performance Revenue (1)(3) (US$m) Q2 2020 ▪ Modular - US segment revenue decreased 0.2% to $236.0 million as compared to $236.5 million in the prior year quarter ▪ Modular space monthly rental rates increased 11.3% year over year ▪ Modular space units on rent decreased
Slide 34: WillScot Modular – Other North America quarterly performance
WillScot Modular – Other North America quarterly performance Revenue (1)(3) (US$m) Modular Space AMR / UOR (1) (US$) 571 Reported Pro forma Pre-acquisition Revenues(2) Reported Pro forma(2) Adj. EBITDA (1)(3) (US$m) Modular Space Average UOR / Utilization Reported Pro forma(2) Utilization Reported (
Slide 35: WillScot reconciliation of non-GAAP measures – Adj. EBITDA
WillScot reconciliation of non-GAAP measures – Adj. EBITDA Three Months Three Months Ended June 30, Ended June 30, Consolidated Adjusted EBITDA(1) Reconciliation 2020 2019 Explanation of Reconciling Adjustments (US$ in thousands) Net Income (loss) 12,833 (11,438) Income tax expense (285) (1,180) Los
Slide 36: WillScot summary P&L, balance sheet & cash flow items
WillScot summary P&L, balance sheet & cash flow items Key Profit & Loss Items Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Modular - Other Modular - Other (in thousands, except rates) Modular - US North America Total Modular - US North America Total Leasing and Services Modular
Slide 37: WillScot reconciliation of non-GAAP measures – Adj. EBITDA
WillScot reconciliation of non-GAAP measures – Adj. EBITDA Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before income tax expense, net interest expense, depreciation and amortization adjusted for non-cash items considered non-core to business operations including net currency (
Slide 38: WillScot reconciliation of non-GAAP measures – Adj. EBITDA margin %
WillScot reconciliation of non-GAAP measures – Adj. EBITDA margin % Adjusted EBITDA Margin is a non-GAAP measure defined as Adjusted EBITDA divided by Revenue. Management believes that the presentation of Adjusted EBITDA Margin % provides useful information to investors regarding the performance of
Slide 39: WillScot reconciliation of non-GAAP measures – Adj. gross profit
WillScot reconciliation of non-GAAP measures – Adj. gross profit Adjusted Gross Profit is a non-GAAP measure defined as gross profit plus depreciation of rental equipment. Management believes that the presentation of Adjusted Gross Profit provides useful information to investors regarding the perfor
Slide 40: WillScot reconciliation of non-GAAP measures – net CAPEX
WillScot reconciliation of non-GAAP measures – net CAPEX Net Capital Expenditures ("Net CAPEX") is defined as purchases of rental equipment and refurbishments and purchases of property, plant and equipment (collectively "Total Capital Expenditures"), less proceeds from sale of rental equipment and p
Slide 41: WillScot reconciliation of non-GAAP measures – free cash flow
WillScot reconciliation of non-GAAP measures – free cash flow Free Cash Flow is a non-GAAP measure. Free Cash Flow is defined as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and equipment, which are all included in cash flows f
Slide 42: Mobile Mini reconciliation of non-GAAP measures – Adj. EBITDA
Mobile Mini reconciliation of non-GAAP measures – Adj. EBITDA Adjusted net income information and adjusted diluted earnings per share. Adjusted net income and related earnings per share information exclude certain transactions that management believes are not indicative of our business. We believe t
Slide 43: Mobile Mini reconciliation of net cash provided by operating activities to EBITDA and free cash flow
Mobile Mini reconciliation of net cash provided by operating activities to EBITDA and of non-GAAP measure, free cash flow Free Cash Flow. Free cash flow is defined as net cash provided by operating activities, minus or plus, net cash used in or provided by investing activities, excluding acquisition
Slide 44: Mobile Mini reconciliation of net income to Adj. net income, three months ended June 30, 2020
Mobile Mini reconciliation of non-GAAP measures – net income to Adj. net income(1) for the three months ended June 30, 2020 (in millions, except per share data and includes effects of rounding) Statement of Statement of Operations Merger Related Operations As Reported Realignment (2) Expenses (2) Ad
Slide 45: Mobile Mini reconciliation of net income to Adj. net income, three months ended June 30, 2019
Mobile Mini reconciliation of net income to Adj. net income(1) for the three months ended June 30, 2019 (in millions, except per share data and includes effects of rounding) Statement of Statement of Operations Chief Executive Office Acquisition Related Operations As Reported Transition ( 2 ) Expens
Slide 46: Mobile Mini reconciliation of net income to adj. net income, six months ended June 30, 2020
Mobile Mini reconciliation of net income to adj. net income(1) for the six months ended June 30, 2020 (in millions, except per share data and includes effects of rounding) Statement of Statement of Operations Merger Related Operations As Reported Realignment (2) Expenses (2) Adjusted Revenues: Renta
Slide 47: Mobile Mini reconciliation of net income to adj. net income, six months ended June 30, 2019
Mobile Mini reconciliation of net income to adj. net income(1) for the six months ended June 30, 2019 (in millions, except per share data and includes effects of rounding) Statement of Statement of Operations Chief Executive Office Acquisition Related Deferred financing costs Operations As Reported
Slide 48: Mobile Mini reconciliation of non-GAAP measures – Adj. EBITDA by segment
Mobile Mini reconciliation of non-GAAP measures – Adj. EBITDA by segment (in millions and includes effects of rounding) Storage Solutions North America 2019 2020 LTM Q2 Q1 Q2 Q3 Q4 Q1 Q2 2020 Net income $ 14.0 $ 9.4 $ 18.0 $ 25.1 $ 5.4 $ 14.6 $ 63.1 Interest expense 7.9 7.8 7.6 6.8 6.5 4.9 25.8 Inco
Slide 49: Mobile Mini reconciliation of non-GAAP measures – Adj. EBITDA by segment (cont'd)
Mobile Mini reconciliation of non-GAAP measures – Adj. EBITDA by segment (cont’d) (in millions and includes effects of rounding) Storage Solutions United Kingdom 2019 2020 LTM Q2 Q1 Q2 Q3 Q4 Q1 Q2 2020 Net income $ 3.2 $ 3.5 $ 4.0 $ 3.7 $ 3.7 $ 4.1 $ 15.5 Interest expense 0.1 0.1 0.1 0.1 0.1 0.1 0.5
Slide 50: WillScot = Mobile Mini
WILLSCOT = MOBILE MINI HOLDINGS CORP witiscor | | mobile mini ,
WillScot Mobile Mini Holdings — Q2 2020 Earnings Presentation on 6ix