WillScot Mobile Mini Reports First Quarter 2023 Results
WillScot Mobile Mini Holdings Corp. (“WillScot Mobile Mini” or the
“Company”) (Nasdaq: WSC), the North American leader in innovative
flexible space and storage solutions, today announced first quarter
2023 results and provided an update on operations and the current
market environment, including the following highlights:
- First quarter revenue increased 25%
to $565 million, income from continuing operations increased 96% to
$76 million, and Adjusted EBITDA from continuing operations
increased 47% to $247 million year-over-year.
- Adjusted EBITDA Margin from
continuing operations of 43.7% expanded 650 basis points
year-over-year.
- Generated Cash From Operations of
$149 million and Free Cash Flow of $103 million, up 2%
and 88% year-over-year, respectively, and Free Cash Flow Margin of
18%. Contributions from organic growth and acquisitions fully
offset divestitures of non-core segments.
- Divested our former UK Storage
Solutions segment on January 31, 2023, generating $418 million of
cash proceeds.
- De-levered to 3.0x Net Debt to
Adjusted EBITDA at the end of Q1, at the bottom of our 3.0-3.5x
target range.
- Invested $80 million of capital in
two acquisitions of regional and local storage and modular
companies in the quarter with a robust pipeline continuing in
2023.
- Returned $216 million to
shareholders by repurchasing 4.6 million shares of Common Stock
during the quarter, reducing economic share count by 9.5% over the
last twelve months as of March 31, 20231.
- Generated company-record 17% Return
on Invested Capital ("ROIC") over the last 12 months, which
increased approximately 450 basis points year-over-year.
Brad Soultz, Chief Executive Officer of WillScot
Mobile Mini, commented, “The continued execution of our portfolio
of $1 billion idiosyncratic growth levers, combined with
outstanding capital discipline and operating efficiency, drove Q1
2023 results ahead of my expectations and the increase in our 2023
outlook. Our turnkey value proposition continues to resonate with
our customers, with ongoing Value-Added Products (“VAPS”)
penetration and rate optimization driving revenue up 25%, and with
excellent flow-through resulting in Adjusted EBITDA up 47% and a
company-record 17% ROIC over the last 12 months. Robust revenue
growth, exceptional operating efficiency, and laser-focused organic
capex deployment resulted in 18% Free Cash Flow Margin and leverage
of 3.0x at the bottom of our target range, which altogether
afforded continued aggressive capital deployment towards M&A
and shareholder returns consistent with our framework."
Soultz continued, “We remain disciplined and
focused on growth levers that are within our control, underpinned
by our zero-based capital budgeting process and discretionary
capital expenditure profile. We are pleased to announce that we
went live with our harmonized customer relationship management
(“CRM”) system in early February, which gives our approximately 500
sales representatives and all of our customer service professionals
visibility into activity across our over 85,000 unique customers.
As we committed at our 2021 Investor Day, this state-of-the-art
platform will serve as a catalyst for enhanced sales productivity,
cross-selling, digital marketing, and predictive analytics. This is
a significant milestone in our strategy to improve organic market
penetration, add new revenue streams at scale, and provide a
seamless and efficient customer experience.”
Soultz concluded, “Thank you to our team for
delivering yet another outstanding quarter and progressing each of
our growth levers while successfully navigating our CRM system
harmonization. With our Storage and Modular Solutions segments now
operating on world-class ERP and CRM platforms, we are extremely
well-positioned and confident in our ability to continue to drive
growth, improve operating efficiencies, and accelerate Free Cash
Flow generation for years of shareholder value creation. Given our
long lease durations, differentiated value proposition, and $1
billion of idiosyncratic growth levers that are largely under our
control and independent of end market conditions, we will easily
eclipse our $1 billion Adjusted EBITDA milestone in 2023 and are on
track to achieve all of the long-term financial targets that we
established less than 18 months ago."
|
Three Months Ended March 31, |
(in thousands, except share data) |
|
2023 |
|
|
|
2022 |
|
Revenue |
$ |
565,468 |
|
|
$ |
451,171 |
|
Income from continuing operations |
$ |
76,271 |
|
|
$ |
39,048 |
|
Adjusted EBITDA from continuing operations2 |
$ |
246,842 |
|
|
$ |
167,773 |
|
Adjusted EBITDA Margin (%)2 |
|
43.7 |
% |
|
|
37.2 |
% |
Net cash provided by operating activities |
$ |
148,765 |
|
|
$ |
145,527 |
|
Free Cash Flow2,5 |
$ |
102,940 |
|
|
$ |
54,624 |
|
Fully Diluted Shares Outstanding |
|
209,663,985 |
|
|
|
228,955,504 |
|
Free Cash Flow Margin (%)2,5 |
|
17.9 |
% |
|
|
10.7 |
% |
Return on Invested Capital2 |
|
16.8 |
% |
|
|
11.3 |
% |
|
Three Months Ended March 31, |
Adjusted EBITDA by Segment (in
thousands)2,6 |
|
2023 |
|
|
2022 |
Modular |
$ |
136,964 |
|
$ |
99,586 |
Storage |
|
109,878 |
|
|
68,187 |
Consolidated Adjusted EBITDA |
$ |
246,842 |
|
$ |
167,773 |
First Quarter
2023
Results2
Tim Boswell, President and Chief Financial Officer,
commented, “Our commercial KPIs were resilient in Q1 2023 with
particularly strong contributions from pricing and Value-Added
Products. Modular space unit average monthly rate increased 20%,
with continued growth in both unit pricing and VAPS penetration.
Portable storage average monthly rate was up 30% year-over-year,
driven by value-based selling and our price management tools and
processes. Importantly, revenue from Value-Added Products in our
Storage Solutions segment of nearly $22 million was up 66% versus
Q1 2022. This relatively new revenue stream for this segment is
still in its infancy and is just one example of the powerful
organic growth strategies that we are executing with tangible
results. Similarly, we built upon the value-based pricing
strategies that we initiated in 2022 to drive our logistics
services revenue up 25% to $107 million, with margins expanding
approximately 1,200 basis points. And we progressed initiatives
focused on work order efficiency to improve vendor administration
and material consumption, which contribute to our reduced Net Capex
and increased Free Cash Flow expectations for 2023. These are just
a few examples of the internal initiatives that we are executing to
drive sustainable growth and returns irrespective of market
conditions.”
Boswell continued, “In Q1 2023, our lease revenue
increased by 25% to $440 million, Adjusted EBITDA of $247 million
was up 47%, Adjusted EBITDA Margin of 43.7% was up 650 basis
points, and Free Cash Flow of $103 million was up 88%. These
extraordinary results illustrate the power of our predictably
compounding reoccurring revenue and flexible cost structure, which
together give us increased confidence in our 2023 outlook and
run-rate entering 2024. We are increasing our existing guidance
range for Adjusted EBITDA to $1,025 - $1,075 million and reducing
our range for Net Capex to $250 - $300 million, which implies an
outstanding year for growth, margin expansion, and Free Cash Flow.
And given the forward visibility in our business model and our
largely idiosyncratic growth drivers, we expect that our leasing
revenue run-rate will be up approximately 10 to 15% year-over-year
as we head into 2024.”
Boswell concluded, “Top-line revenue is compounding
as expected and Adjusted EBITDA margins, Free Cash Flow margins,
and ROIC have expanded, all of which allow us to allocate capital
with confidence. Following the divestiture of the UK Storage
segment, we are at the bottom of our target leverage range with
3.0x Net Debt to Adjusted EBITDA. We closed two tuck-in
acquisitions for $80 million in the quarter, and we expect to
maintain or exceed that rate of inorganic reinvestment through the
remainder of the year. And we returned $216 million to our
shareholders during the quarter, repurchasing 9.5% of our economic
share count in the last twelve months, which represents a powerful
economic return. Overall, it was an outstanding start to the year
by our team. We are executing and delivering results across all
five pillars of our growth strategy, and we remain committed to
increasing shareholder value by driving growth, expanding returns
on capital, and allocating shareholder capital to these compelling
opportunities.”
Consolidated Q1
2023 Results From Continuing
Operations
- Revenue of
$565.5 million increased by 25.3% year-over-year due to our organic
revenue growth initiatives and due to the impact of acquisitions.
We estimate that recent acquisitions completed over the past four
quarters contributed approximately $17 million to total revenues in
the quarter.
- Adjusted EBITDA
of $246.8 million increased by 47.1% year-over-year and Adjusted
EBITDA margin of 43.7% increased by 650 basis points year-over-year
due to strong pricing and Value-Added Products trends, a 1,200
basis point expansion of delivery and installation margins, cost
efficiency initiatives, and moderation of inflationary
pressures.
- Effective Q1
2023, we transferred approximately 6,000 Ground Level Office (GLO)
modular products from the Modular Solutions segment to our Storage
Solutions segment. We transferred these legacy WillScot GLOs to the
Storage Solutions segment because they are modified container
products that can be operated more efficiently within the legacy
Mobile Mini branch and logistics infrastructure. The adjustment
transferred approximately $50 million of revenue and $21 million of
Adjusted EBITDA on an annualized basis from the Modular Solutions
segment to the Storage Solutions segment. We have recasted
historical segment financial results and operating KPIs to reflect
this transfer.
Modular Solutions Segment
- Revenue of
$349.7 million increased by 21.2% year-over-year.
- Average modular
space monthly rental rate increased $152 year-over-year, or 17.0%,
to $1,046.
- Average modular
space units on rent increased 1,219 units year-over-year, or 1.5%,
to 81,902.
- VAPS average
monthly rate, a component of average modular space monthly rental
rate above, increased $38 year-over-year, or 15%, to $295. For
delivered units over the last 12 months, VAPS average monthly rate
increased $22 year-over-year, or 5%, to $479.
- Adjusted EBITDA
of $136.9 million increased by 37.4% year-over-year and Adjusted
EBITDA Margin of 39.1% expanded by 460 basis points.
Storage Solutions Segment
- Revenue of
$215.8 million increased by 32.7% year-over-year.
- Average portable
storage monthly rental rate increased $50 year-over-year, or 30.1%,
to $216.
- Average portable
storage units on rent increased by 12,265 units year-over-year, or
8.1%, to 164,591.
- Modular space,
representing 20,235 Ground Level Office modular products, average
monthly rental of $760 increased 29.7% year-over-year as a result
of price optimization and increased VAPS penetration. Average
modular space units on rent decreased 2,649, or 11.6%,
year-over-year.
- Adjusted EBITDA
of $109.9 million increased by 61.1% year-over-year and Adjusted
EBITDA Margin of 50.9% expanded by 900 basis points.
UK Storage Segment (Discontinued
Operations)
- Completed divestiture of UK Storage
segment effective January 31, 2023. Earnings from the UK Storage
segment are reported as discontinued operations in the first
quarter of 2023 and all prior periods. Proceeds from the sale of
$418 million were used in Q1 2023 initially to reduce the
outstanding balance on our asset backed revolving credit facility,
creating additional capacity to support our other capital
allocation initiatives.
Capitalization and Liquidity
Update2
As of March 31, 2023:
- Generated $103
million of Free Cash Flow, up 88% year-over-year.
- Maintained over
$1.1 billion of excess availability under the asset backed
revolving credit facility.
- Executed a $750
million floating-to-fixed interest rate swap in January 2023,
resulting in approximately 60% fixed-rate and 40% floating rate
debt in our debt structure, which is consistent with our targeted
mix.
- Weighted average
interest rate, inclusive of the swap, is approximately 5.7%, and
annual cash interest expense based on the current debt structure
and benchmark rates is approximately $168 million.
- No debt
maturities prior to 2025.
- Reduced leverage
to 3.0x last twelve months Adjusted EBITDA from continuing
operations of $963 million. This leverage ratio is at the low end
of our target range of 3.0x to 3.5x, which combined with
accelerating Free Cash Flow, a flexible covenant structure, and
excess capacity in our ABL gives us ample flexibility to fund
multiple capital allocation initiatives.
- Repurchased 4.6
million shares of Common Stock for $216 million in the first
quarter 2023, contributing to a 9.5% reduction in our economic
share count over the last twelve months.
2023 Outlook 2, 3,
4This guidance is subject to risks and uncertainties,
including those described in "Forward-Looking Statements"
below.
$M |
2022 ResultsExcluding T&P and
UK |
Prior 2023 Outlook |
Current 2023 Outlook |
Revenue |
$2,143 |
$2,325 - $2,475 |
$2,350 - $2,450 |
Adjusted EBITDA2,3 |
$884 |
$1,000 - $1,050 |
$1,025 - $1,075 |
Net CAPEX3,4 |
$367 |
$300 - $380 |
$250 - $300 |
1 - Assumes common shares outstanding as of
March 31, 2023 versus common shares outstanding plus treasury stock
method from warrants outstanding as of March 31, 2022 and the
closing stock price of $39.13 on March 31, 2022.2 - Adjusted
EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Free Cash Flow
Margin, Net Debt to Adjusted EBITDA, and Return on Invested Capital
are non-GAAP financial measures. Further information and
reconciliations for these non-GAAP measures to the most directly
comparable financial measure under generally accepted accounting
principles in the US ("GAAP") are included at the end of this press
release.3 - Information reconciling forward-looking Adjusted EBITDA
and Net CAPEX to GAAP financial measures is unavailable to the
Company without unreasonable effort and therefore no reconciliation
to the most comparable GAAP measures is provided.4 - Net CAPEX is a
non-GAAP financial measure. Please see the non-GAAP reconciliation
tables included at the end of this press release.5 - Free Cash Flow
incorporates results from discontinued operations. For
comparability, reported revenue is adjusted to include results from
discontinued operations to calculate Free Cash Flow Margin.6 -
During the first quarter of 2023, the ground level office business
within the Modular segment was transferred to the Storage segment,
and associated revenues, expenses, and operating metrics were
transferred to the Storage segment. All periods presented have been
retrospectively revised to reflect this change within the Modular
and Storage segments. See further discussion within the Unaudited
Segment Operating Data tables included at the end of this press
release.
Non-GAAP Financial Measures
This press release includes non-GAAP financial
measures, including Adjusted EBITDA, Adjusted EBITDA Margin, Free
Cash Flow, Free Cash Flow Margin, Return on Invested Capital and
Net CAPEX. Adjusted EBITDA is defined as net income (loss) plus net
interest (income) expense, income tax expense (benefit),
depreciation and amortization adjusted to exclude certain non-cash
items and the effect of what we consider transactions or events not
related to our core business operations, including net currency
gains and losses, goodwill and other impairment charges,
restructuring costs, costs to integrate acquired companies, costs
incurred related to transactions, non-cash charges for stock
compensation plans, gains and losses resulting from changes in fair
value and extinguishment of common stock warrant liabilities, and
other discrete expenses. Adjusted EBITDA Margin is defined as
Adjusted EBITDA divided by revenue. 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 from investing activities.
Free Cash Flow Margin is defined as Free Cash Flow divided by
revenue. 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 (income) expense,
amortization adjusted for non-cash items considered non-core to
business operations including net currency (gains) losses, goodwill
and other impairment charges, restructuring costs, costs to
integrate acquired companies, non-cash charges for stock
compensation plans, gains and losses resulting from changes in fair
value and extinguishment of common stock warrant liabilities, and
other discrete expenses, reduced by our estimated statutory tax
rate. Given we are not a significant US taxpayer due to our current
tax attributes, we include estimated taxes at our current statutory
tax rate of approximately 26%. Net assets is total assets less
goodwill and intangible assets, net and all non-interest bearing
liabilities and is calculated as a five quarter average. 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 the sale of rental
equipment and proceeds from the sale of property, plant and
equipment (collectively, "Total Proceeds"), which are all included
in cash flows from investing activities. Net Debt to Adjusted
EBITDA ratio is defined as Net Debt divided by Adjusted EBITDA. The
Company believes that Adjusted EBITDA and Adjusted EBITDA margin
are useful to investors because they (i) allow investors to compare
performance over various reporting periods on a consistent basis by
removing from operating results the impact of items that do not
reflect core operating performance; (ii) are used by our board of
directors and management to assess our performance; (iii) may,
subject to the limitations described below, enable investors to
compare the performance of the Company to its competitors; (iv)
provide additional tools for investors to use in evaluating ongoing
operating results and trends; and (v) align with definitions in our
credit agreement. The Company believes that Free Cash Flow and Free
Cash Flow Margin are useful to investors because they allow
investors to compare cash generation performance over various
reporting periods and against peers. The Company believes that
Return on Invested Capital provides information about the long-term
health and profitability of the business relative to the Company's
cost of capital. The Company believes that the presentation of Net
CAPEX provides useful information to investors regarding the net
capital invested into our rental fleet and plant, property and
equipment each year to assist in analyzing the performance of our
business. Adjusted EBITDA is not a measure of financial performance
or liquidity under GAAP and, accordingly, should not be considered
as an alternative to net income or cash flow from operating
activities as an indicator of operating performance or liquidity.
These non-GAAP measures should not be considered in isolation from,
or as an alternative to, financial measures determined in
accordance with GAAP. Other companies may calculate Adjusted EBITDA
and other non-GAAP financial measures differently, and therefore
the Company's non-GAAP financial measures may not be directly
comparable to similarly-titled measures of other companies. For
reconciliation of the non-GAAP measures used in this press release
(except as explained below), see "Reconciliation of Non-GAAP
Financial Measures" included in this press release.
Information reconciling forward-looking Adjusted
EBITDA to GAAP financial measures is unavailable to the Company
without unreasonable effort. We cannot provide reconciliations of
forward-looking Adjusted EBITDA to GAAP financial measures because
certain items required for such reconciliations are outside of our
control and/or cannot be reasonably predicted, such as the
provision for income taxes. Preparation of such reconciliations
would require a forward-looking balance sheet, statement of income
and statement of cash flow, prepared in accordance with GAAP, and
such forward-looking financial statements are unavailable to the
Company without unreasonable effort. Although we provide a range of
Adjusted EBITDA that we believe will be achieved, we cannot
accurately predict all the components of the Adjusted EBITDA
calculation. The Company provides Adjusted EBITDA guidance because
we believe that Adjusted EBITDA, when viewed with our results under
GAAP, provides useful information for the reasons noted above.
Conference Call Information
WillScot Mobile Mini Holdings will host a
conference call and webcast to discuss its first quarter 2023
results and 2023 outlook at 10 a.m. Eastern Time on Thursday,
April 27, 2023. To access the live call by phone, use the
following link:
https://register.vevent.com/register/BI56e4d98e310b4be89b31141f151e7d4e.
You will be provided with dial-in details after
registering. To avoid delays, we recommend that participants dial
into the conference call 15 minutes ahead of the scheduled start
time. A live webcast will also be accessible via the "Events &
Presentations" section of the Company's investor relations website
www.willscotmobilemini.com. Choose "Events" and select the
information pertaining to the WillScot Mobile Mini Holdings First
Quarter 2023 Conference Call. Additionally, there will be slides
accompanying the webcast. Please allow at least 15 minutes prior to
the call to register, download and install any necessary software.
For those unable to listen to the live broadcast, an audio webcast
of the call will be available for 12 months on the Company’s
investor relations website.
About WillScot Mobile Mini
WillScot Mobile Mini trades on the Nasdaq stock
exchange under the ticker symbol “WSC.” Headquartered in Phoenix,
Arizona, the Company is a leading business services provider
specializing in innovative flexible space and storage solutions.
WillScot Mobile Mini services diverse end markets across all
sectors of the economy from a network of approximately 240 branch
locations and additional drop lots throughout the United States,
Canada, and Mexico.
Forward-Looking Statements
This press release 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 "estimates," "expects," "anticipates,"
"believes," "forecasts," "plans," "intends," "may," "will,"
"should," "shall," "outlook," "guidance" and variations of these
words and similar expressions identify forward-looking statements,
which are generally not historical in nature. Certain of these
forward-looking statements include statements relating to: our
mergers and acquisitions pipeline, acceleration of our run rate,
acceleration toward and the timing of our achievement of our three
to five year milestones, growth and acceleration of cash flow,
driving higher returns on invested capital, and Adjusted EBITDA
margin expansion. Forward-looking statements are subject to a
number of risks, uncertainties, assumptions and other important
factors, many of which are outside our control, which could cause
actual results or outcomes to differ materially from those
discussed in the forward-looking statements. Although the Company
believes that these forward-looking statements are based on
reasonable assumptions, they are predictions and we can give no
assurance that any such forward-looking statement will materialize.
Important factors that may affect actual results or outcomes
include, among others, our ability to acquire and integrate new
assets and operations; our ability to judge the demand outlook; our
ability to achieve planned synergies related to acquisitions; our
ability to successfully execute our growth strategy, manage growth
and execute our business plan; our estimates of the size of the
markets for our products; the rate and degree of market acceptance
of our products; the success of other competing modular space and
portable storage solutions that exist or may become available;
rising costs and inflationary pressures adversely affecting our
profitability; potential litigation involving our Company; general
economic and market conditions impacting demand for our products
and services and our ability to benefit from an inflationary
environment; our ability to maintain an effective system of
internal controls; and such other risks and uncertainties described
in the periodic reports we file with the SEC from time to time
(including our Form 10-K for the year ended December 31, 2022),
which are available through the SEC’s EDGAR system at www.sec.gov
and on our website. Any forward-looking statement speaks only at
the date on which it is made, and the Company disclaims any
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
Additional Information and Where to Find
It
Additional information can be found on the
company's website at www.willscotmobilemini.com.
Contact Information |
|
|
|
|
|
Investor Inquiries: |
|
Media Inquiries: |
Nick Girardi |
|
Jake Saylor |
investors@willscotmobilemini.com |
|
jake.saylor@willscot.com |
|
|
|
WillScot Mobile Mini Holdings
Corp.Consolidated Statements of
Operations(Unaudited)
|
Three Months Ended March 31, |
(in thousands, except share and per share
data) |
|
2023 |
|
|
|
2022 |
|
Revenues: |
|
|
|
Leasing and services revenue: |
|
|
|
Leasing |
$ |
439,951 |
|
|
$ |
351,559 |
|
Delivery and installation |
|
106,630 |
|
|
|
85,539 |
|
Sales revenue: |
|
|
|
New units |
|
10,657 |
|
|
|
5,787 |
|
Rental units |
|
8,230 |
|
|
|
8,286 |
|
Total revenues |
|
565,468 |
|
|
|
451,171 |
|
Costs: |
|
|
|
Costs of leasing and services: |
|
|
|
Leasing |
|
97,515 |
|
|
|
80,334 |
|
Delivery and installation |
|
75,007 |
|
|
|
70,580 |
|
Costs of sales: |
|
|
|
New units |
|
6,208 |
|
|
|
3,756 |
|
Rental units |
|
4,454 |
|
|
|
4,892 |
|
Depreciation of rental equipment |
|
59,156 |
|
|
|
57,548 |
|
Gross profit |
|
323,128 |
|
|
|
234,061 |
|
Expenses: |
|
|
|
Selling, general and administrative |
|
150,892 |
|
|
|
138,144 |
|
Other depreciation and amortization |
|
17,173 |
|
|
|
15,362 |
|
Currency losses, net |
|
6,775 |
|
|
|
137 |
|
Other income, net |
|
(3,359 |
) |
|
|
(1,283 |
) |
Operating income |
|
151,647 |
|
|
|
81,701 |
|
Interest expense |
|
44,866 |
|
|
|
30,570 |
|
Income from continuing operations before income tax |
|
106,781 |
|
|
|
51,131 |
|
Income tax expense from continuing operations |
|
30,510 |
|
|
|
12,083 |
|
Income from continuing operations |
|
76,271 |
|
|
|
39,048 |
|
|
|
|
|
Discontinued operations: |
|
|
|
Income from discontinued operations before income tax |
|
4,003 |
|
|
|
15,787 |
|
Gain on sale of discontinued operations |
|
176,078 |
|
|
|
— |
|
Income tax expense from discontinued operations |
|
45,468 |
|
|
|
3,664 |
|
Income from discontinued operations |
|
134,613 |
|
|
|
12,123 |
|
|
|
|
|
Net income |
$ |
210,884 |
|
|
$ |
51,171 |
|
|
|
|
|
Earnings per share from continuing operations attributable to
WillScot Mobile Mini common shareholders: |
Basic |
$ |
0.37 |
|
|
$ |
0.17 |
|
Diluted |
$ |
0.36 |
|
|
$ |
0.17 |
|
Earnings per share from discontinued operations attributable to
WillScot Mobile Mini common shareholders: |
Basic |
$ |
0.65 |
|
|
$ |
0.06 |
|
Diluted |
$ |
0.64 |
|
|
$ |
0.05 |
|
Earnings per share attributable to WillScot Mobile Mini common
shareholders: |
Basic |
$ |
1.02 |
|
|
$ |
0.23 |
|
Diluted |
$ |
1.00 |
|
|
$ |
0.22 |
|
Weighted average shares: |
|
|
|
Basic |
|
206,092,169 |
|
|
|
223,490,912 |
|
Diluted |
|
209,663,985 |
|
|
|
228,955,504 |
|
Unaudited Segment Operating
Data
The Company operates in two reportable segments
as follows: Modular and Storage. Modular represents the activities
of the North American modular business, excluding ground level
offices, which were transferred to the Storage segment during the
first quarter of 2023. Storage represents the activities of the
North American portable storage and ground level office business.
All periods presented have been retrospectively revised to reflect
this change within the Modular and Storage segments. For the three
months ended March 31, 2022, this resulted in approximately
$11.1 million of revenue, $6.3 million of gross profit,
and $4.4 million of Adjusted EBITDA being transferred from the
Modular segment to the Storage segment. As part of the transfer, we
adjusted average monthly rental rate for modular units (Ground
Level Offices) in the Storage segment to only include Value-Added
Products specifically applicable to Ground Level Offices.
Comparison of Three Months Ended March
31, 2023 and 2022
|
Three Months Ended March 31, 2023 |
(in thousands, except for units on rent and
rates) |
Modular |
|
Storage |
|
Total |
Revenue |
$ |
349,670 |
|
|
$ |
215,798 |
|
|
$ |
565,468 |
|
Gross profit |
$ |
165,335 |
|
|
$ |
157,793 |
|
|
$ |
323,128 |
|
Adjusted EBITDA |
$ |
136,964 |
|
|
$ |
109,878 |
|
|
$ |
246,842 |
|
Capex for rental equipment |
$ |
39,412 |
|
|
$ |
7,345 |
|
|
$ |
46,757 |
|
Average modular space units on rent |
|
81,902 |
|
|
|
20,235 |
|
|
|
102,137 |
|
Average modular space utilization rate |
|
66.2 |
% |
|
|
65.3 |
% |
|
|
66.0 |
% |
Average modular space monthly rental rate |
$ |
1,046 |
|
|
$ |
760 |
|
|
$ |
989 |
|
Average portable storage units on rent |
|
502 |
|
|
|
164,591 |
|
|
|
165,093 |
|
Average portable storage utilization rate |
|
62.0 |
% |
|
|
78.7 |
% |
|
|
78.7 |
% |
Average portable storage monthly rental rate |
$ |
217 |
|
|
$ |
216 |
|
|
$ |
216 |
|
|
Three Months Ended March 31, 2022 |
(in thousands, except for units on rent and
rates) |
Modular |
|
Storage |
|
Total |
Revenue |
$ |
288,547 |
|
|
$ |
162,624 |
|
|
$ |
451,171 |
|
Gross profit |
$ |
122,598 |
|
|
$ |
111,463 |
|
|
$ |
234,061 |
|
Adjusted EBITDA |
$ |
99,586 |
|
|
$ |
68,187 |
|
|
$ |
167,773 |
|
Capex for rental equipment |
$ |
57,577 |
|
|
$ |
20,171 |
|
|
$ |
77,748 |
|
Average modular space units on rent |
|
80,683 |
|
|
|
22,884 |
|
|
|
103,567 |
|
Average modular space utilization rate |
|
66.9 |
% |
|
|
74.9 |
% |
|
|
68.5 |
% |
Average modular space monthly rental rate |
$ |
894 |
|
|
$ |
586 |
|
|
$ |
826 |
|
Average portable storage units on rent |
|
463 |
|
|
|
152,326 |
|
|
|
152,789 |
|
Average portable storage utilization rate |
|
52.6 |
% |
|
|
83.2 |
% |
|
|
83.1 |
% |
Average portable storage monthly rental rate |
$ |
160 |
|
|
$ |
166 |
|
|
$ |
166 |
|
WillScot Mobile Mini Holdings
Corp.
Consolidated Balance Sheets
(in thousands, except share data) |
March 31, 2023(unaudited) |
|
December 31, 2022 |
Assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
15,918 |
|
$ |
7,390 |
Trade receivables, net of allowances for credit losses at March 31,
2023 and December 31, 2022 of $61,402 and $57,048,
respectively |
415,344 |
|
409,766 |
Inventories |
42,007 |
|
41,030 |
Prepaid expenses and other current assets |
42,684 |
|
31,635 |
Assets held for sale - current |
8,924 |
|
31,220 |
Total current assets |
524,877 |
|
521,041 |
Rental equipment, net |
3,128,061 |
|
3,077,287 |
Property, plant and equipment, net |
305,608 |
|
304,659 |
Operating lease assets |
219,926 |
|
219,405 |
Goodwill |
1,011,513 |
|
1,011,429 |
Intangible assets, net |
413,188 |
|
419,125 |
Other non-current assets |
6,578 |
|
6,683 |
Assets held for sale - non-current |
— |
|
268,022 |
Total long-term assets |
5,084,874 |
|
5,306,610 |
Total assets |
$ |
5,609,751 |
|
$ |
5,827,651 |
Liabilities and equity |
|
|
|
Accounts payable |
$ |
92,057 |
|
$ |
108,071 |
Accrued expenses |
120,838 |
|
110,820 |
Accrued employee benefits |
28,803 |
|
56,340 |
Deferred revenue and customer deposits |
199,274 |
|
203,793 |
Operating lease liabilities - current |
51,076 |
|
50,499 |
Current portion of long-term debt |
13,514 |
|
13,324 |
Liabilities held for sale - current |
— |
|
19,095 |
Total current liabilities |
505,562 |
|
561,942 |
Long-term debt |
2,876,453 |
|
3,063,042 |
Deferred tax liabilities |
464,798 |
|
401,453 |
Operating lease liabilities - non-current |
169,914 |
|
169,618 |
Other non-current liabilities |
29,100 |
|
18,537 |
Liabilities held for sale - non-current |
— |
|
47,759 |
Long-term liabilities |
3,540,265 |
|
3,700,409 |
Total liabilities |
4,045,827 |
|
4,262,351 |
Preferred Stock: $0.0001 par, 1,000,000 shares authorized and zero
shares issued and outstanding at March 31, 2023 and December 31,
2022 |
— |
|
— |
Common Stock: $0.0001 par, 500,000,000 shares authorized and
203,723,099 and 207,951,682 shares issued and outstanding at March
31, 2023 and December 31, 2022, respectively |
21 |
|
21 |
Additional paid-in-capital |
2,667,424 |
|
2,886,951 |
Accumulated other comprehensive loss |
(62,855) |
|
(70,122) |
Accumulated deficit |
(1,040,666) |
|
(1,251,550) |
Total shareholders' equity |
1,563,924 |
|
1,565,300 |
Total liabilities and shareholders' equity |
$ |
5,609,751 |
|
$ |
5,827,651 |
Reconciliation of Non-GAAP Financial
Measures
In addition to using GAAP financial
measurements, we use certain non-GAAP financial information that we
believe is important for purposes of comparison to prior periods
and development of future projections and earnings growth
prospects. This information is also used by management to measure
the profitability of our ongoing operations and analyze our
business performance and trends.
We evaluate business segment performance on
Adjusted EBITDA, a non-GAAP measure that excludes certain items as
described below. We believe that evaluating segment performance
excluding such items is meaningful because it provides insight with
respect to intrinsic operating results of the Company.
We also regularly evaluate gross profit by
segment to assist in the assessment of the operational performance
of each operating segment. We consider Adjusted EBITDA to be the
more important metric because it more fully captures the business
performance of the segments, inclusive of indirect costs.
We also evaluate Free Cash Flow, a non-GAAP
measure that provides useful information concerning cash flow
available to fund our capital allocation alternatives.
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 not related to our core business operations,
including net currency (gains) losses, goodwill and other
impairment charges, restructuring costs, transaction costs, costs
to integrate acquired companies, non-cash charges for stock
compensation plans, gains and losses resulting from changes in fair
value and extinguishment of common stock warrant liabilities, and
other discrete expenses.
- Currency (gains)
losses, net: on monetary assets and liabilities denominated in
foreign currencies other than the subsidiaries’ functional
currency.
- Goodwill and
other impairment charges related to non-cash costs associated with
impairment charges to goodwill, other intangibles, rental fleet and
property, plant and equipment.
- Restructuring
costs, lease impairment expense, and other related charges
associated with restructuring plans designed to streamline
operations and reduce costs including employee termination
costs.
- Transaction
costs including legal and professional fees and other transaction
specific related costs.
- Costs to
integrate acquired companies, including outside professional fees,
non-capitalized costs associated with system integrations,
non-lease branch and fleet relocation expenses, employee training
costs, and other costs required to realize cost or revenue
synergies.
- Non-cash charges
for stock compensation plans.
- Gains and losses
resulting from changes in fair value and extinguishment of common
stock warrant liabilities.
- Other expense,
including consulting expenses related to certain one-time projects,
financing costs not classified as interest expense, and gains and
losses on disposals of property, plant, and equipment.
Adjusted EBITDA has limitations as an analytical
tool, and you should not consider the measure in isolation or as a
substitute for net income (loss), cash flow from operations or
other methods of analyzing the Company’s results as reported under
US GAAP. Some of these limitations are:
- Adjusted EBITDA
does not reflect changes in, or cash requirements for our working
capital needs;
- Adjusted EBITDA
does not reflect our interest expense, or the cash requirements
necessary to service interest or principal payments, on our
indebtedness;
- Adjusted EBITDA
does not reflect our tax expense or the cash requirements to pay
our taxes;
- Adjusted EBITDA
does not reflect historical cash expenditures or future
requirements for capital expenditures or contractual
commitments;
- Adjusted EBITDA
does not reflect the impact on earnings or changes resulting from
matters that we consider not to be indicative of our future
operations;
- although
depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in
the future and Adjusted EBITDA does not reflect any cash
requirements for such replacements; and
- other companies
in our industry may calculate Adjusted EBITDA differently, limiting
its usefulness as a comparative measure.
Because of these limitations, Adjusted EBITDA
should not be considered as discretionary cash available to
reinvest in the growth of our business or as measures of cash that
will be available to meet our obligations.
The following table provides unaudited
reconciliations of Income from continuing operations to Adjusted
EBITDA from continuing operations:
|
Three Months Ended March 31, |
(in thousands) |
|
2023 |
|
|
2022 |
Income from continuing operations |
$ |
76,271 |
|
$ |
39,048 |
Income tax expense from continuing operations |
|
30,510 |
|
|
12,083 |
Interest expense |
|
44,866 |
|
|
30,570 |
Depreciation and amortization |
|
76,329 |
|
|
72,910 |
Currency losses, net |
|
6,775 |
|
|
137 |
Restructuring costs, lease impairment expense and other related
charges |
|
22 |
|
|
263 |
Transaction costs |
|
— |
|
|
13 |
Integration costs |
|
3,873 |
|
|
4,087 |
Stock compensation expense |
|
8,150 |
|
|
6,273 |
Other |
|
46 |
|
|
2,389 |
Adjusted EBITDA from continuing operations |
$ |
246,842 |
|
$ |
167,773 |
The following tables provide unaudited
reconciliations of Income before income tax to Adjusted EBITDA for
the ground level office segment adjustment:
|
Three Months Ended March 31, |
(in thousands) |
|
2022 |
Income before income tax |
$ |
3,453 |
Depreciation |
|
909 |
Adjusted EBITDA |
$ |
4,362 |
|
Twelve Months Ended December 31, |
(in thousands) |
|
2022 |
Income before income tax |
$ |
17,142 |
Depreciation |
|
3,624 |
Adjusted EBITDA |
$ |
20,766 |
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 table provides unaudited reconciliations of Adjusted
EBITDA Margin:
|
Three Months Ended March 31, |
(in thousands) |
|
2023 |
|
|
|
2022 |
|
Adjusted EBITDA from continuing operations (A) |
$ |
246,842 |
|
|
$ |
167,773 |
|
Revenue (B) |
$ |
565,468 |
|
|
$ |
451,171 |
|
Adjusted EBITDA Margin from Continuing Operations (A/B) |
|
43.7 |
% |
|
|
37.2 |
% |
Income from continuing operations (C) |
$ |
76,271 |
|
|
$ |
39,048 |
|
Income from Continuing Operations Margin (C/B) |
|
13.5 |
% |
|
|
8.7 |
% |
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 operations.
Management believes that the presentation of Net Debt to Adjusted
EBITDA ratio provides useful information to investors regarding the
performance of our business. The following table provides an
unaudited reconciliation of Net Debt to Adjusted EBITDA ratio:
|
March 31, |
(in thousands) |
2023 |
Long-term debt |
$ |
2,876,453 |
Current portion of long-term debt |
|
13,514 |
Total debt |
|
2,889,967 |
Cash and cash equivalents |
|
15,918 |
Net debt (A) |
$ |
2,874,049 |
|
|
Adjusted EBITDA from continuing operations from the three months
ended June 30, 2022 |
$ |
208,643 |
Adjusted EBITDA from continuing operations from the three months
ended September 30, 2022 |
|
239,368 |
Adjusted EBITDA from continuing operations from the three months
ended December 31, 2022 |
|
268,090 |
Adjusted EBITDA from continuing operations from the three months
ended March 31, 2023 |
|
246,842 |
Adjusted EBITDA from continuing operations from the last twelve
months (B) |
$ |
962,943 |
Net Debt to Adjusted EBITDA ratio (A/B) |
|
3.0 |
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 in cash flows from
investing activities. Free Cash Flow Margin is defined as Free Cash
Flow divided by Total Revenue including discontinued operations.
Management believes that the presentation of Free Cash Flow and
Free Cash Flow Margin provides useful additional information
concerning cash flow available to fund our capital allocation
alternatives. Free Cash Flow as presented includes amounts for the
former Tank and Pump segment through September 30, 2022 and the
former UK Storage Solutions segment through January 31, 2023.
The following table provides unaudited
reconciliations of Free Cash Flow and Free Cash Flow Margin:
|
Three Months Ended March 31, |
(in thousands) |
|
2023 |
|
|
|
2022 |
|
Net cash provided by operating activities |
$ |
148,765 |
|
|
$ |
145,527 |
|
Purchase of rental equipment and refurbishments |
|
(47,128 |
) |
|
|
(95,236 |
) |
Proceeds from sale of rental equipment |
|
7,781 |
|
|
|
14,554 |
|
Purchase of property, plant and equipment |
|
(6,736 |
) |
|
|
(10,481 |
) |
Proceeds from the sale of property, plant and equipment |
|
258 |
|
|
|
260 |
|
Free Cash Flow (A) |
$ |
102,940 |
|
|
$ |
54,624 |
|
|
|
|
|
Revenue from continuing operations (B) |
$ |
565,468 |
|
|
$ |
451,171 |
|
Revenue from discontinued operations |
|
8,694 |
|
|
|
57,723 |
|
Total Revenue including discontinued operations (C) |
$ |
574,162 |
|
|
$ |
508,894 |
|
Free Cash Flow Margin (A/C) |
|
17.9 |
% |
|
|
10.7 |
% |
|
|
|
|
Net cash provided by operating activities (D) |
$ |
148,765 |
|
|
$ |
145,527 |
|
Net cash provided by operating activities margin (D/C) |
|
25.9 |
% |
|
|
28.6 |
% |
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, plant and equipment (collectively, "Total
Proceeds"), which are all included in cash flows from investing
activities. Management believes that the presentation of Net CAPEX
provides useful information regarding the net capital invested in
our rental fleet and property, plant and equipment each year to
assist in analyzing the performance of our business. As presented
below, Net CAPEX includes amounts for the former Tank and Pump
segment through September 30, 2022 and the former UK Storage
Solutions segment through January 31, 2023.
The following table provides unaudited
reconciliations of Net CAPEX:
|
Three Months Ended March 31, |
(in thousands) |
|
2023 |
|
|
|
2022 |
|
Total purchases of rental equipment and refurbishments |
$ |
(47,128 |
) |
|
$ |
(95,236 |
) |
Total proceeds from sale of rental equipment |
|
7,781 |
|
|
|
14,554 |
|
Net CAPEX for Rental Equipment |
|
(39,347 |
) |
|
|
(80,682 |
) |
Purchase of property, plant and equipment |
|
(6,736 |
) |
|
|
(10,481 |
) |
Proceeds from sale of property, plant and equipment |
|
258 |
|
|
|
260 |
|
Net CAPEX including discontinued operations |
|
(45,825 |
) |
|
|
(90,903 |
) |
UK Storage Solutions Net CAPEX |
|
87 |
|
|
|
(11,351 |
) |
Tank and Pump Net CAPEX |
|
— |
|
|
|
(7,741 |
) |
Net CAPEX from continuing operations |
$ |
(45,912 |
) |
|
$ |
(71,811 |
) |
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
(income) expense, amortization adjusted for non-cash items
considered non-core to business operations including net currency
(gains) losses, goodwill and other impairment charges,
restructuring costs, costs to integrate acquired companies,
non-cash charges for stock compensation plans, gains and losses
resulting from changes in fair value and extinguishment of common
stock warrant liabilities, and other discrete expenses, reduced by
estimated taxes. Given we are not a significant US taxpayer due to
our current tax attributes, we include estimated taxes at our
current statutory tax rate of approximately 26% effective in 2023.
Net assets is total assets less goodwill, and intangible assets,
net and all non-interest bearing liabilities. Denominator is
calculated as a four quarter average for annual metrics and two
quarter average for quarterly metrics.
The following table provides unaudited
reconciliations of Return on Invested Capital. Average Invested
Capital and Adjusted EBITDA related to our former Tank and Pump
segment and former UK Storage Solutions segment has been excluded
prospectively from July 1, 2022 and January 1, 2023, respectively,
and prior periods have not been adjusted.
|
Three Months Ended March 31, |
(in thousands) |
|
2023 |
|
|
|
2022 |
|
Total Assets |
$ |
5,609,751 |
|
|
$ |
5,857,773 |
|
Goodwill |
|
(1,011,513 |
) |
|
|
(1,177,288 |
) |
Intangible assets, net |
|
(413,188 |
) |
|
|
(453,785 |
) |
Total Liabilities |
|
(4,045,827 |
) |
|
|
(3,891,588 |
) |
Long Term Debt |
|
2,876,453 |
|
|
|
2,790,842 |
|
Net Assets excluding interest bearing debt and goodwill and
intangibles |
$ |
3,015,677 |
|
|
$ |
3,125,954 |
|
Average Invested Capital (A) |
$ |
3,106,732 |
|
|
$ |
3,088,776 |
|
|
|
|
|
Adjusted EBITDA |
$ |
246,842 |
|
|
$ |
191,823 |
|
Depreciation |
|
(70,392 |
) |
|
|
(75,178 |
) |
Adjusted EBITA (B) |
$ |
176,450 |
|
|
$ |
116,645 |
|
|
|
|
|
Statutory Tax Rate (C) |
|
26 |
% |
|
|
25 |
% |
Estimated Tax (B*C) |
$ |
45,877 |
|
|
$ |
29,161 |
|
Adjusted earnings before interest and amortization (D) |
$ |
130,573 |
|
|
$ |
87,484 |
|
ROIC (D/A), annualized |
|
16.8 |
% |
|
|
11.3 |
% |
|
|
|
|
Operating income (E) |
$ |
151,646 |
|
|
$ |
97,909 |
|
Total Assets (F) |
$ |
5,609,751 |
|
|
$ |
5,857,773 |
|
Operating income / Total Assets (E/F), annualized |
|
10.6 |
% |
|
|
6.7 |
% |
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