Willscot Holdings Corporation · NASDAQ:WSC
Willscot — Q2 2023 Earnings Presentation
48 slides from Willscot's earnings presentation, Aug 3, 2023
Slide 1: Quarterly Investor Presentation Second Quarter 2023
August 3, 2023 Quarterly Investor Presentation Second 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 Q2 2023 Operating Results 20 Q2 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: ~366K1 42% 58% Modular Space Portable Storage Combined 2023 NBV: $3.2B1 4% 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 pure play modular and storage scale to win locally o 5X next largest alternative provider 128M+ square feet of turnkey space relocatable anywhere in North America Sophisticated commercial and operationa
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 Incorporates VAPS to drive reuse modular and of more products and equipment, • We ha
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 Littleton, CO, 5 mobile offices, Essentials furniture and In D.C., several modular units are being used for recent In Louisiana, LPL Solar LLC is using 6+ mobile offices, restrooms were delivered to clients buildi
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% ABI stabilizing in H1 2023 and has been a good indicator to modular Highway & Heavy Construction – 6% activations in 9-12 months. Construction Home
Slide 11: 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 30-year unit life Portable Storage Containers2 Average acquisition cost of payback of Low annual ~35 months maintenance costs average
Slide 12: Long history of compelling returns with Value-Added Products
We have a long and consistent history of driving compelling returns with Value-Added Products (“VAPS”) penetration • +17% per unit per month rent CAGR over 10 years • Units on Rent up >2x • Quarterly VAPS revenue up 12x Historical Progression of Consolidated Modular Space VAPS Average Monthly Rate1
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 = $163 $/unit 81.9k x x 12 700 + $336M Units1 mo. 179 $179 600 500 -1% 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 ~$70 Scale Efficiencies MODULAR STORAGE 15
Slide 16: Eclipsing 3-5 year milestones established at 2021 Investor Day
Eclipsing 3 – 5 year milestones established at 2021 Investor Day through growth mindset and consistent execution 3 – 5 Year Operating Performance Metric1 Q4 2021 LTM Q2 2023 LTM Range Est. at 2021 Investor Day Clear path to invest in M&A and/or our own Revenue CAGR2 6% 24% 5 - 10% stock to compoun
Slide 17: Table of Contents
Table of Contents 3 WillScot Mobile Mini Business Overview 17 Q2 2023 Operating Results 20 Q2 2023 Financial Review 27 Value Drivers 31 Appendix 17
Slide 18: We have multiple levers to increase rental rates
We have multiple levers to increase rental rates Modular Space Unit Average Monthly Rental Rate Consolidated ($/unit per month)1 19% 18% 20% 20% 989 1,051 1,100 940 972 826 882 • Consolidated modular space unit average monthly rental rate increased 19% 796 810 758 Y/Y to $1,051 in Q2 2023 900 698 70
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) 100.5 105.4 102.3 105.6 101.2 103.6 102.1 101.1 104.6 101.1 100.0 • 0.6% decline in Modular Segment, with strength in manufacturing and the southern U.S. offs
Slide 20: Table of Contents
Table of Contents 3 WillScot Mobile Mini Business Overview 17 Q2 2023 Operating Results 20 Q2 2023 Financial Review 27 Value Drivers 31 Appendix 20
Slide 21: We delivered outstanding financial performance in Q2 2023
We delivered outstanding financial performance in Q2 2023 Metric1 Commentary Results driven by pricing and Value-Added Products penetration, supported by Y/Y Change in Leasing Revenue +16% value-based selling and our price management tools and processes Q2 2023 Adjusted EBITDA and Y/Y Change $261M /
Slide 22: Total Revenue growth of 11% and Adjusted EBITDA growth of 25% in Q2 2023
Delivered Total Revenue growth of 11% and Adjusted EBITDA growth of 25% in Q2 20231,2 Revenue2 Adj. EBITDA1 $M $M • Continued commercial and financial momentum across pure play Modular 700 and Storage segments 582 • Adjusted EBITDA Margin expansion of 500 bps Y/Y 11% 600 523 • Increased pricing and
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 61% 36% 7% • Continued strong operating cash flow growth from predictable long duration 210 2% lease revenues 200 202 188 • Operating cash flow
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 $B • Leverage at 3.0x last-twelve-months Adj. EBITDA of $1.02B3 • Resulted in leverage at the bottom of target range of 3.0-3.5x • ~$1.0B+ available liquidity in our revolving credit facilit
Slide 25: LTM capital allocation consistent with long-term framework
Our LTM capital allocation is consistent with our long-term framework Capital Allocation Framework $1,614 LTM Capital Generated $1,614 LTM Capital Allocated $5 – $6B Over 5 Years $M | % $M | % % 156 | 301 | 10% 25% 19% = 762 | 50% 852 | 266 | 47% 53% 16% 891 | 25% 55% Net Capex Net Capex Cash From O
Slide 26: 2023 outlook implies Adj. EBITDA growth of 16%-22%
Our 2023 outlook implies Adj. EBITDA growth of 16% - 22% from continuing operations 2022 Results $M Prior 2023 Outlook Current 2023 Outlook From Continuing Operations Revenue $2,143 $2,350 – $2,450 $2,350 – $2,450 Adjusted EBITDA1,2 $884 $1,025 – $1,075 $1,025 – $1,075 Net CAPEX $367 $250 – $300 $25
Slide 27: Table of Contents
Table of Contents 3 WillScot Mobile Mini Business Overview 17 Q2 2023 Operating Results 20 Q2 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 ~$70 Scale Efficiencies MODULAR 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 Q2 2023 Operating Results 20 Q2 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 17.4% 3,500 15.4% 15.0% 3,000 11.7% 9.6% 10.0% 2,500 6.8% 5.0% 2,000 1,500 0.0% 1,000 -5.0% 500 -10.0% - -15.0% 2019 2020 2021 2022 Q2 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 June 30, Key Profit & Loss Items (in thousands) 2023 2022 Leasing and Services Leasing $449,320 $386,386 Delivery and Installation 112,754 110,841 Sales New Units 9,004 9,927 Rental Units 11,011 15,736 Total Revenues 582,089 522,890 G
Slide 34: Consolidated quarterly performance
Consolidated quarterly performance Modular Space AMR / UOR1 Portable Storage AMR / UOR1,2 $M $M 1,051 972 989 220 226 250 940 216 882 197 796 810 826 200 178 164 166 155 150 100 50 0 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Modular Space Average
Slide 35: Consolidated quarterly performance
Consolidated quarterly performance1 Quarterly Results for the six months ended June 30, 2023: (in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Total Revenue $ 565,468 $ 582,089 $ 1,147,557 Gross profit $ 323,128 $ 327,872 $ 651,000 Adjusted EBITDA $ 246,842 $ 261,341 $ 50
Slide 36: Modular Solutions Segment quarterly performance
Modular Solutions Segment quarterly performance Revenue1,2 Modular Space AMR / UOR1,2 $M $M 362 371 1,102 356 400 335 350 1,028 1,046 999 939 350 288 297 289 853 869 894 300 250 200 150 100 50 - Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Adjusted
Slide 37: Modular Solutions Segment quarterly performance
Modular Solutions Segment quarterly performance1 Quarterly Results for the six months ended June 30, 2023: (in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Total Revenue $ 349,670 $ 370,675 $ 720,345 Gross profit $ 165,335 $ 172,740 $ 338,075 Adjusted EBITDA $ 136,964 $ 1
Slide 38: Storage Solutions Segment quarterly performance
Storage Solutions Segment quarterly performance Revenue1,2 Portable Storage AMR / UOR1 $M $M 234 226 216 216 220 216 211 197 188 178 164 163 163 166 155 145 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 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 six months ended June 30, 2023: (in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Total Revenue $ 215,798 $ 211,414 $ 427,212 Gross profit $ 157,793 $ 155,132 $ 312,925 Adjusted EBITDA $ 109,878 $
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 June 30, 2023 Total Common Shares 198,375,893 Single Class of Common Stock Q2 2023 • 5.4M common shares repurchased for $239M under share repurchase authorization during the quarter • 20.5M common shares repurchased for $885M and 9.1% reduction in economic
Slide 48: WillScot = Mobile Mini
WILLSCOT = MOBILE MINI HOLDINGS CORP wiiscot] | gaohile mini