WillScot Reports Second Quarter 2024 Results
Delivered 44% Adjusted EBITDA Margin and 20% Free Cash
Flow Margin and On Track for Record Financial Year
PHOENIX, Aug. 01, 2024 (GLOBE NEWSWIRE) --
WillScot Holdings Corporation (“WillScot” or the “Company”)
(Nasdaq: WSC), a leader in innovative temporary flexible space
solutions, today announced second quarter 2024 results and provided
an update on operations and the current market environment,
including the following highlights:
- Generated revenue of $605 million,
up 4%. Loss from continuing operations was $47 million, including a
one-time non-cash impairment of $133 million associated with brand
consolidation, and diluted loss per share was $0.25.
- Adjusted income from continuing
operations excluding the impairment, restructuring, and
transaction-related charges was $75 million and Adjusted Diluted
Earnings Per Share was $0.39.
- Adjusted EBITDA was $264 million,
up 1%, with Adjusted EBITDA Margin expanding sequentially to
44%.
- Generated Net cash provided by
operating activities of $176 million and Free Cash Flow of
$121 million, with Free Cash Flow Margin of 20%.
- Maintained leverage sequentially at
3.3x Net Debt to Adjusted EBITDA as of June 30, 2024.
- Generated 17% Return on Invested
Capital2 ("ROIC") over the last 12 months.
- Returned $435 million to
shareholders by repurchasing 10.6 million shares of Common Stock,
reducing our share count by 4.9% over the twelve months ended June
30, 20241.
- Updated FY 2024 Adjusted EBITDA
outlook range to $1,085 million to $1,125 million, representing 2%
to 6% growth in our continuing operations versus 2023.
- On January 29, 2024, WSC announced
a definitive agreement to acquire McGrath RentCorp ("McGrath")
(Nasdaq: MGRC). On July 11th, McGrath's shareholders voted in favor
of the transaction. The Company expects the transaction to close in
Q4 2024 after the receipt of remaining regulatory
approvals.
Brad Soultz, Chief Executive Officer of WillScot, commented,
"The operating environment was mixed during Q2 2024. We saw
continued demand from larger-scale projects related to industrial,
manufacturing, energy, onshoring, and infrastructure, offset by
less demand from smaller, more transactional commercial
construction and interest rate sensitive sectors. Despite this
backdrop, modular activations were up year-over-year, so we
continue to be pleased with the resilience of our modular portfolio
and our differentiated value proposition. Storage orders and
activations also improved throughout the second quarter, with units
on rent stabilizing sequentially heading into July. While we
continued to see strong momentum across our pricing and Value-Added
Products KPIs, sequential unit on rent growth was slower than we
expected."
Soultz continued, "We continue to pursue other initiatives that
are within our control to drive efficiencies and capture demand.
The final systems and field harmonization, which we completed
earlier this year, allowed us to achieve cost savings across our
portfolio that will continue to build into the second half of 2024.
These savings support our continued expectation for strong margin
expansion in the second half of the year. Commercially, we
announced earlier this week that we consolidated our space
solutions offerings under the WillScot brand. This is an important
step to ensure that our customers have a singular, streamlined, and
best-in-class experience, and is the logical culmination of our
efforts to harmonize our legacy modular and storage organizations.
This experience will include contemporary digital capabilities,
such as the new www.WillScot.com website and an enhanced customer
portal. The branding reflects the commitment by our team to deliver
space solutions that are right for the project, right for the
timeline, and Right From The Start."
Soultz concluded, "Regarding the McGrath transaction, we were
pleased with the resounding approval that McGrath's shareholders
expressed for our pending acquisition during McGrath's shareholder
meeting on July 11, 2024. We continue to work collaboratively with
the Federal Trade Commission, and as such, extended the review
window to September 27, 2024. We expect to close the transaction in
Q4 2024. WillScot has a strong track record of leadership, growth,
and innovation in our industry, and we look forward to creating
significant benefits for the communities in which we operate and
our customers, employees, and shareholders after the transaction
closes."
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(in thousands, except share data) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
| Revenue |
$ |
604,590 |
|
|
$ |
582,089 |
|
|
$ |
1,191,771 |
|
|
$ |
1,147,557 |
|
| (Loss) income from continuing
operations |
$ |
(46,851 |
) |
|
$ |
87,729 |
|
|
$ |
9,389 |
|
|
$ |
164,000 |
|
| Adjusted income from
continuing operations2 |
$ |
75,043 |
|
|
$ |
90,231 |
|
|
$ |
143,057 |
|
|
$ |
168,889 |
|
| Adjusted EBITDA from
continuing operations2 |
$ |
263,576 |
|
|
$ |
261,341 |
|
|
$ |
511,585 |
|
|
$ |
508,183 |
|
| Gross profit margin from
continuing operations |
|
54.1 |
% |
|
|
56.3 |
% |
|
|
54.0 |
% |
|
|
56.7 |
% |
| Adjusted EBITDA Margin from
continuing operations (%)2 |
|
43.6 |
% |
|
|
44.9 |
% |
|
|
42.9 |
% |
|
|
44.3 |
% |
| Net cash provided by operating
activities |
$ |
175,611 |
|
|
$ |
202,155 |
|
|
$ |
384,287 |
|
|
$ |
350,920 |
|
| Free Cash
Flow2,5 |
$ |
120,878 |
|
|
$ |
159,601 |
|
|
$ |
264,778 |
|
|
$ |
262,541 |
|
| Diluted (loss) earnings per
share from continuing operations |
$ |
(0.25 |
) |
|
$ |
0.43 |
|
|
$ |
0.05 |
|
|
$ |
0.78 |
|
| Adjusted diluted earnings per
share from continuing operations2 |
$ |
0.39 |
|
|
$ |
0.44 |
|
|
$ |
0.74 |
|
|
$ |
0.81 |
|
| Weighted average diluted
shares outstanding |
|
189,680,091 |
|
|
|
204,326,162 |
|
|
|
192,409,616 |
|
|
|
208,233,141 |
|
| Adjusted weighted average
diluted shares outstanding2 |
|
191,753,841 |
|
|
|
204,326,162 |
|
|
|
192,409,616 |
|
|
|
208,233,141 |
|
| Net cash provided by operating
activities margin |
|
29.0 |
% |
|
|
34.7 |
% |
|
|
32.2 |
% |
|
|
30.3 |
% |
| Free Cash Flow Margin
(%)2,5 |
|
20.0 |
% |
|
|
27.4 |
% |
|
|
22.2 |
% |
|
|
22.7 |
% |
| Return on Invested
Capital2 |
|
16.4 |
% |
|
|
18.1 |
% |
|
|
15.7 |
% |
|
|
17.5 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
2024
Results2
Tim Boswell, President and Chief Financial Officer, commented,
"Revenue of $605 million increased 4% and Adjusted EBITDA of $264
million increased 1% year-over year. Pricing and Value-Added
Products penetration increased across our portfolio and continued
to offset volume, where sequential growth from Q1 has been slower
than we expected. During the quarter, we reallocated resources and
began realizing internal efficiencies following the completion of
our latest system implementation. Adjusted EBITDA margin of 43.6%
increased 136 basis points sequentially from the first quarter in
part due to these changes, and was better than we expected. We
expect that these efficiencies are durable and that other cost
savings from some meaningful headcount net reductions made at the
end of the second quarter will continue to support margin expansion
in the second half of 2024 and beyond."
Boswell continued, "Net cash provided by operating activities
was $176 million, offset by $55 million of Net Capex, which
resulted in Free Cash Flow of $121 million and Free Cash Flow
Margin of 20%. Adjusted Diluted Earnings Per Share was $0.39, which
excluded nearly $30 million of expenses related to the ongoing
regulatory review and restructuring, as well as a $133 million
non-cash impairment of the Mobile Mini tradename from consolidating
our portfolio under the WillScot brand."
Boswell concluded, "Overall, our financial results in the second
quarter were in line with our expectations, with stronger margins
offsetting slower sequential revenue growth. Free Cash Flow
remained robust despite transaction costs, and we have significant
balance sheet and capital allocation flexibility. At the midpoints
of our revised guidance, we expect revenue of $2.45 billion and
Adjusted EBITDA of $1.11 billion, which will each be up
approximately 4% versus full year 2023, with approximately 20 basis
points of margin expansion for the year. The combination of
continued top-line growth, coupled with structural improvements to
profitability, demonstrates our model's resilience in a challenging
demand environment. And WillScot continues to be on track to
achieve its best financial performance in company history in 2024,
with a strong trajectory heading into 2025."
Capitalization and Liquidity
Update2
As of and for the three months ended June 30,
2024, except where noted:
- Generated Net
cash provided by operating activities of $176 million and $121
million of Free Cash Flow.
- Invested $30
million of capital in two acquisitions during the quarter, with
$483 million invested in the last 12 months.
- Completed
private offering of $500 million of senior secured notes at 6.625%
due 2029. Proceeds were used to repay approximately $495 million of
outstanding indebtedness under the ABL Facility and certain fees
and expenses.
- Increased
availability under our asset backed revolving credit facility to
approximately $1.8 billion.
- Weighted average
pre-tax interest rate, inclusive of our recent debt issuance and
$1.25 billion of fixed-to-floating swaps at 3.55%, was
approximately 5.8%. Annual cash interest expense based on the
current debt structure and benchmark rates is approximately $205
million, or approximately $220 million inclusive of non-cash
deferred financing fees. Our debt structure is approximately 93% /
7% fixed-to-floating after giving effect to all interest rate
swaps.
- No debt
maturities prior to June 15, 2025. We have ample liquidity
available to redeem or refinance our $527 million 2025 notes,
using either our asset backed revolver or other sources of capital,
and intend to do so opportunistically prior to maturity in a manner
that optimizes our interest costs.
- Leverage is at
3.3x based on our last 12 months Adjusted EBITDA from continuing
operations of $1,065 million, which is inside our target range of
3.0x to 3.5x.
- Repurchased 2.0
million shares of Common Stock for $79 million in the second
quarter 2024, contributing to a 4.9% reduction in our share count
over the 12 months ending June 30, 2024.
2024 Outlook 2, 3,
4
This guidance is subject to risks and uncertainties, including
those described in "Forward-Looking Statements" below.
|
$M |
2023 Results |
2024 Outlook
(excludes McGrath) |
|
Revenue |
$2,365 |
$2,400 - $2,500 |
| Adjusted
EBITDA2,3 |
$1,061 |
$1,085 - $1,125 |
| Net CAPEX3,4 |
$185 |
$260 - $290 |
| |
|
|
1 - Assumes common shares outstanding
as of June 30, 2024 versus common shares
outstanding as of June 30, 2023.
2 - Adjusted EBITDA from continuing operations, Adjusted
EBITDA Margin from continuing operations, Adjusted income from
continuing operations, Adjusted Diluted Earnings Per Share, 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, Net CAPEX, and Free Cash Flow to GAAP financial measures is
unavailable to the Company without unreasonable effort and
therefore neither the most comparable GAAP measures nor
reconciliations to the most comparable GAAP measures are
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, we add back discontinued operations
to reported revenue to calculate Free Cash Flow
Margin.
Non-GAAP Financial Measures
This press release includes non-GAAP financial
measures, including Adjusted EBITDA, Adjusted EBITDA Margin from
continuing operations, Adjusted income from continuing operations,
Adjusted diluted earnings per share, Free Cash Flow, Free Cash Flow
Margin, Return on Invested Capital, Net CAPEX and Net Debt to
Adjusted EBITDA ratio. 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, and
other discrete expenses. Adjusted EBITDA Margin from continuing
operations is defined as Adjusted EBITDA divided by revenue.
Adjusted income from continuing operations is defined as income
(loss) from continuing operations plus certain non-cash items and
the effect of what we consider transactions or events not related
to our core business operations, including goodwill and other
impairment charges, restructuring costs, costs to integrate
acquired companies, costs incurred related to transactions, and
other discrete expenses. Adjusted diluted earnings per share is
defined as adjusted income from continuing operations divided by
adjusted diluted weighted average common shares outstanding. Free
Cash Flow is defined as net cash provided by operating activities,
less purchases of, and proceeds from the sale of, 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 average invested capital. Adjusted earnings before
interest and amortization is defined as Adjusted EBITDA (see
definition above) reduced by depreciation and estimated statutory
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%. Average invested capital
is calculated as an average of net assets. Net assets is defined as
total assets less goodwill, intangible assets, net and all
non-interest bearing liabilities. 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. The Company
believes that the presentation of Net Debt to Adjusted EBITDA,
Adjusted income from continuing operations and Adjusted Diluted
Earnings Per Share provide useful information to investors
regarding 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 reconciliations
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 regarding the most comparable GAAP
financial measures and reconciling forward-looking Adjusted EBITDA,
Net CAPEX, and Free Cash Flow to those GAAP financial measures is
unavailable to the Company without unreasonable effort. We cannot
provide the most comparable GAAP financial measures nor
reconciliations of forward-looking Adjusted EBITDA, Net CAPEX, and
Free Cash Flow 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 ranges of Adjusted
EBITDA and Net CAPEX that we believe will be achieved, we cannot
accurately predict all the components of the Adjusted EBITDA and
Net CAPEX calculations. The Company provides Adjusted EBITDA and
Net CAPEX guidance because we believe that Adjusted EBITDA and Net
CAPEX, when viewed with our results under GAAP, provides useful
information for the reasons noted above.
Conference Call Information
WillScot will host a conference call and webcast
to discuss its second quarter 2024 results and 2024 outlook at 5:30
p.m. Eastern Time on Thursday, August 1, 2024. To access the
live call by phone, use the following link:
https://register.vevent.com/register/BI50723f93b9934af398eee697e542a655
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.investors.willscot.com. Choose "Events" and select the
information pertaining to the WillScot Second Quarter 2024
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
Listed on the Nasdaq stock exchange under the
ticker symbol “WSC,” WillScot is the premier provider of highly
innovative and turnkey space solutions in North America. The
Company’s comprehensive range of products includes modular office
complexes, mobile offices, classrooms, temporary restrooms,
portable storage containers, protective buildings and
climate-controlled units, and clearspan structures, as well as a
curated selection of furnishings, appliances, and other
supplementary services, ensuring turnkey solutions for its
customers. Headquartered in Phoenix, Arizona, and operating from a
network of approximately 260 branch locations and additional drop
lots across the United States, Canada, and Mexico, WillScot’s
business services are essential for diverse customer segments
spanning all sectors of the economy.
Forward-Looking Statements
This news 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," "see," "have confidence"
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, as well as
statements involving the proposed acquisition of McGrath (the
“Proposed Transaction”), including anticipated time of closing, the
expected scale, operating efficiency and synergies, stockholder,
employee and customer benefits, the amount and timing of revenue
and expense synergies, future financial benefits and operating
results, expectations relating to the combined customer base and
rental fleet, and tax treatment for the acquisition.
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; regulatory
approvals; 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,
2023), 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.
Recent Developments
Entry into an Agreement to Acquire
McGrath RentCorp
On January 28, 2024, the Company, along with its
newly formed subsidiaries, Brunello Merger Sub I, Inc. (“Merger Sub
I”) and Brunello Merger Sub II, LLC (“Merger Sub II”), entered into
an Agreement and Plan of Merger (the “Merger Agreement”) with
McGrath RentCorp ("McGrath"). Merger Sub I will merge with and into
McGrath (the “First-Step Merger”), with McGrath surviving the
First-Step Merger and, immediately thereafter, McGrath will merge
with and into Merger Sub II (the “Second-Step Merger” and together
with the First-Step Merger, the “McGrath Acquisition”), with Merger
Sub II surviving the Second-Step Merger as a wholly owned
subsidiary of the Company. At the effective time of the First-Step
Merger, and subject to the terms and subject to the conditions set
forth in the Merger Agreement, each outstanding share of the common
stock of McGrath shall be converted into the right to receive
either (i) $123.00 in cash or (ii) 2.8211 shares of validly issued,
fully paid and nonassessable shares of the Company’s common stock.
McGrath shareholders will receive for each of their shares either
$123.00 in cash or 2.8211 shares of WillScot common stock, as
determined pursuant to the election and allocation procedures in
the merger agreement under which 60% of McGrath’s outstanding
shares will be converted into the cash consideration and 40% of
McGrath’s outstanding shares will be converted into the stock
consideration. Under the terms of the Merger Agreement, we expect
McGrath’s shareholders would own approximately 12.6% of the Company
following the McGrath Acquisition.
The McGrath Acquisition has been approved by the
respective boards of directors of the Company and McGrath and
McGrath's shareholders. In July 2024, both WillScot and McGrath
agreed to extend the Federal Trade Commission's review period
through September 27, 2024. The McGrath Acquisition is subject to
customary closing conditions, including receipt of regulatory
approval, and is expected to close in 2024.
In connection with the Merger Agreement, the
Company entered into a commitment letter dated January 28, 2024,
which was amended and restated on June 13, 2024 and modified by a
Notice of Reduction of Bridge Commitments on June 28, 2024 (the
"Commitment Letter"), pursuant to which certain financial
institutions have committed to make available, in accordance with
the terms of the Commitment Letter, (i) a $500 million
eight-year senior secured bridge credit facility and (ii) an upsize
to the existing $3.7 billion ABL Facility of Williams
Scotsman, Inc., a subsidiary of the Company ("WSI"), by
$750 million to $4.5 billion to repay McGrath's existing
unsecured revolving lines of credit and notes, fund the cash
portion of the consideration, and pay the fees, costs and expenses
incurred in connection with the McGrath acquisition and the related
transactions.
Important Information About the Proposed
Transaction
In connection with the Proposed Transaction, the
Company filed a registration statement on Form S-4 (No. 333-
278544), which includes a preliminary prospectus of the Company and
a preliminary proxy statement of McGrath (the “proxy
statement/prospectus”), and each party will file other documents
regarding the Proposed Transaction with the SEC. No offering of
securities shall be made, except by means of a prospectus meeting
the requirements of Section 10 of the U.S. Securities Act of 1933,
as amended. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC CAREFULLY AND IN THEIR ENTIRETY, IF AND WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT
STOCKHOLDERS SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING
THE PROPOSED TRANSACTION. A definitive proxy statement/prospectus
will be sent to McGrath’s stockholders. Investors and security
holders will be able to obtain these documents (if and when
available) free of charge from the SEC’s website at www.sec.gov.
The documents filed by the Company with the SEC may also be
obtained free of charge from the Company by requesting them by mail
at WillScot Holdings Corporation, 4646 E. Van Buren Street, Suite
400, Phoenix, Arizona 85008. The documents filed by McGrath may
also be obtained free of charge from McGrath by requesting them by
mail at McGrath RentCorp, 5700 Las Positas Road, Livermore,
California 94551 Attn: Investor Relations.
Participants in the
Solicitation
The Company, McGrath, their respective directors
and executive officers and other members of management and
employees and certain of their respective significant stockholders
may be deemed to be participants in the solicitation of proxies in
respect of the Proposed Transaction. Information about the
Company’s directors and executive officers is available in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2023, which was filed with the SEC on February 20,
2024. Information about McGrath’s directors and executive officers
is available in McGrath’s Amendment No. 1 to Annual Report on Form
10-K/A for the fiscal year ended December 31, 2023, which was filed
with the SEC on April 16, 2024. Information regarding the persons
who may, under the rules of the SEC, be deemed participants in the
proxy solicitation and a description of their direct and indirect
interests, by security holding or otherwise, will be contained in
the proxy statement/prospectus and other relevant materials to be
filed with the SEC regarding the Proposed Transaction when they
become available. Investors should read the proxy
statement/prospectus carefully when it becomes available before
making any voting or investment decisions. You may obtain free
copies of these documents from the SEC, the Company or McGrath as
indicated above.
No Offer or Solicitation
This release shall not constitute an offer to
sell or the solicitation of an offer to buy any securities, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Additional Information and Where to Find It
Additional information can be found on the
company's website at www.willscot.com.
|
Contact Information |
|
| |
|
| Investor
Inquiries: |
Media
Inquiries: |
| Nick Girardi |
Jake Saylor |
| investors@willscot.com |
jake.saylor@willscot.com |
| |
|
WillScot Holdings Corporation
Consolidated Statements of Operations
(Unaudited) |
| |
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
(in thousands, except share and per share
data) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
2023 |
|
| Revenues: |
|
|
|
|
|
|
|
|
Leasing and services revenue: |
|
|
|
|
|
|
|
|
Leasing |
$ |
458,592 |
|
|
$ |
449,320 |
|
|
$ |
919,193 |
|
$ |
889,271 |
|
|
Delivery and installation |
|
108,147 |
|
|
|
112,754 |
|
|
|
208,509 |
|
|
219,384 |
|
|
Sales revenue: |
|
|
|
|
|
|
|
|
New units |
|
21,378 |
|
|
|
9,004 |
|
|
|
34,877 |
|
|
19,661 |
|
|
Rental units |
|
16,473 |
|
|
|
11,011 |
|
|
|
29,192 |
|
|
19,241 |
|
|
Total revenues |
|
604,590 |
|
|
|
582,089 |
|
|
|
1,191,771 |
|
|
1,147,557 |
|
| Costs: |
|
|
|
|
|
|
|
|
Costs of leasing and services: |
|
|
|
|
|
|
|
|
Leasing |
|
98,248 |
|
|
|
98,556 |
|
|
|
200,642 |
|
|
196,071 |
|
|
Delivery and installation |
|
81,170 |
|
|
|
81,349 |
|
|
|
159,012 |
|
|
156,356 |
|
|
Costs of sales: |
|
|
|
|
|
|
|
|
New units |
|
13,358 |
|
|
|
4,795 |
|
|
|
21,631 |
|
|
11,003 |
|
|
Rental units |
|
9,085 |
|
|
|
5,067 |
|
|
|
15,961 |
|
|
9,521 |
|
|
Depreciation of rental equipment |
|
75,611 |
|
|
|
64,450 |
|
|
|
150,519 |
|
|
123,606 |
|
|
Gross profit |
|
327,118 |
|
|
|
327,872 |
|
|
|
644,006 |
|
|
651,000 |
|
| Other operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
174,610 |
|
|
|
146,810 |
|
|
|
342,178 |
|
|
297,680 |
|
|
Other depreciation and amortization |
|
18,135 |
|
|
|
17,346 |
|
|
|
36,055 |
|
|
34,519 |
|
|
Impairment loss on intangible asset |
|
132,540 |
|
|
|
— |
|
|
|
132,540 |
|
|
— |
|
|
Lease impairment expense and other related charges, net |
|
(23 |
) |
|
|
— |
|
|
|
723 |
|
|
22 |
|
|
Restructuring costs |
|
6,206 |
|
|
|
— |
|
|
|
6,206 |
|
|
— |
|
|
Currency (gains) losses, net |
|
(42 |
) |
|
|
14 |
|
|
|
35 |
|
|
6,789 |
|
|
Other expense (income), net |
|
924 |
|
|
|
(2,838 |
) |
|
|
1,555 |
|
|
(6,197 |
) |
|
Operating (loss) income |
|
(5,232 |
) |
|
|
166,540 |
|
|
|
124,714 |
|
|
318,187 |
|
|
Interest expense, net |
|
55,548 |
|
|
|
47,246 |
|
|
|
112,136 |
|
|
92,112 |
|
| (Loss) income from continuing
operations before income tax |
|
(60,780 |
) |
|
|
119,294 |
|
|
|
12,578 |
|
|
226,075 |
|
|
Income tax (benefit) expense from continuing operations |
|
(13,929 |
) |
|
|
31,565 |
|
|
|
3,189 |
|
|
62,075 |
|
| (Loss) income from continuing
operations |
|
(46,851 |
) |
|
|
87,729 |
|
|
|
9,389 |
|
|
164,000 |
|
| |
|
|
|
|
|
|
|
| Discontinued operations: |
|
|
|
|
|
|
|
|
Income from discontinued operations before income tax |
|
— |
|
|
|
— |
|
|
|
— |
|
|
4,003 |
|
|
Gain on sale of discontinued operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
176,078 |
|
|
Income tax expense from discontinued operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
45,468 |
|
| Income from discontinued
operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
134,613 |
|
| |
|
|
|
|
|
|
|
| Net (loss) income |
$ |
(46,851 |
) |
|
$ |
87,729 |
|
|
$ |
9,389 |
|
$ |
298,613 |
|
| |
|
|
|
|
|
|
|
| (Loss) earnings
per share from continuing operations: |
|
|
| Basic |
$ |
(0.25 |
) |
|
$ |
0.44 |
|
|
$ |
0.05 |
|
$ |
0.80 |
|
| Diluted |
$ |
(0.25 |
) |
|
$ |
0.43 |
|
|
$ |
0.05 |
|
$ |
0.78 |
|
| Earnings per
share from discontinued operations: |
|
|
| Basic |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
$ |
0.66 |
|
| Diluted |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
$ |
0.65 |
|
| (Loss) earnings
per share: |
|
|
|
|
| Basic |
$ |
(0.25 |
) |
|
$ |
0.44 |
|
|
$ |
0.05 |
|
$ |
1.46 |
|
| Diluted |
$ |
(0.25 |
) |
|
$ |
0.43 |
|
|
$ |
0.05 |
|
$ |
1.43 |
|
| Weighted average shares: |
|
|
|
|
|
|
|
| Basic |
|
189,680,091 |
|
|
|
200,946,619 |
|
|
|
189,908,812 |
|
|
204,635,764 |
|
| Diluted |
|
189,680,091 |
|
|
|
204,326,162 |
|
|
|
192,409,616 |
|
|
208,233,141 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WillScot Holdings Corporation
Consolidated Balance Sheets |
|
(in thousands, except share data) |
June 30, 2024
(unaudited) |
|
December 31, 2023 |
|
Assets |
|
|
|
|
Cash and cash equivalents |
$ |
5,924 |
|
|
$ |
10,958 |
|
|
Trade receivables, net of allowances for credit losses at June 30,
2024 and December 31, 2023 of $89,070 and $81,656,
respectively |
|
442,205 |
|
|
|
451,130 |
|
|
Inventories |
|
49,727 |
|
|
|
47,406 |
|
|
Prepaid expenses and other current assets |
|
74,134 |
|
|
|
57,492 |
|
|
Assets held for sale – current |
|
4,387 |
|
|
|
2,110 |
|
|
Total current assets |
|
576,377 |
|
|
|
569,096 |
|
|
Rental equipment, net |
|
3,402,707 |
|
|
|
3,381,315 |
|
|
Property, plant and equipment, net |
|
351,513 |
|
|
|
340,887 |
|
|
Operating lease assets |
|
253,913 |
|
|
|
245,647 |
|
|
Goodwill |
|
1,175,701 |
|
|
|
1,176,635 |
|
|
Intangible assets, net |
|
272,444 |
|
|
|
419,709 |
|
|
Other non-current assets |
|
16,113 |
|
|
|
4,626 |
|
|
Total long-term assets |
|
5,472,391 |
|
|
|
5,568,819 |
|
| Total
assets |
$ |
6,048,768 |
|
|
$ |
6,137,915 |
|
|
Liabilities and equity |
|
|
|
|
Accounts payable |
$ |
118,890 |
|
|
$ |
86,123 |
|
|
Accrued expenses |
|
150,203 |
|
|
|
129,621 |
|
|
Accrued employee benefits |
|
44,122 |
|
|
|
45,564 |
|
|
Deferred revenue and customer deposits |
|
233,555 |
|
|
|
224,518 |
|
|
Operating lease liabilities – current |
|
63,884 |
|
|
|
57,408 |
|
|
Current portion of long-term debt |
|
21,140 |
|
|
|
18,786 |
|
|
Total current liabilities |
|
631,794 |
|
|
|
562,020 |
|
|
Long-term debt |
|
3,459,255 |
|
|
|
3,538,516 |
|
|
Deferred tax liabilities |
|
524,941 |
|
|
|
554,268 |
|
|
Operating lease liabilities – non-current |
|
190,746 |
|
|
|
187,837 |
|
|
Other non-current liabilities |
|
40,696 |
|
|
|
34,024 |
|
|
Long-term liabilities |
|
4,215,638 |
|
|
|
4,314,645 |
|
| Total
liabilities |
|
4,847,432 |
|
|
|
4,876,665 |
|
|
Preferred Stock: $0.0001 par, 1,000,000 shares authorized and zero
shares issued and outstanding at June 30, 2024 and December 31,
2023 |
|
— |
|
|
|
— |
|
|
Common Stock: $0.0001 par, 500,000,000 shares authorized and
188,591,960 and 189,967,135 shares issued and outstanding at June
30, 2024 and December 31, 2023, respectively |
|
19 |
|
|
|
20 |
|
|
Additional paid-in-capital |
|
2,014,327 |
|
|
|
2,089,091 |
|
|
Accumulated other comprehensive loss |
|
(47,306 |
) |
|
|
(52,768 |
) |
|
Accumulated deficit |
|
(765,704 |
) |
|
|
(775,093 |
) |
| Total
shareholders' equity |
|
1,201,336 |
|
|
|
1,261,250 |
|
| Total
liabilities and shareholders' equity |
$ |
6,048,768 |
|
|
$ |
6,137,915 |
|
| |
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 performance on Adjusted
EBITDA, a non-GAAP measure that excludes certain items as described
below. We believe that evaluating performance excluding such items
is meaningful because it provides insight with respect to intrinsic
and ongoing operating results of the Company.
We also regularly evaluate gross profit to
assist in the assessment of the operational performance. We
consider Adjusted EBITDA to be the more important metric because it
more fully captures the business performance, 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 From Continuing
Operations
We define EBITDA as net income (loss) plus
interest (income) expense, income tax expense (benefit),
depreciation and amortization. Our adjusted EBITDA ("Adjusted
EBITDA") reflects the following further adjustments to EBITDA to
exclude certain non-cash items and the effect of what we consider
transactions or events not related to our core business
operations:
- 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.
- 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
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 (loss) from continuing operations to
Adjusted EBITDA from continuing operations:
| |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(in thousands) |
|
2024 |
|
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
| (Loss) income from continuing
operations |
$ |
(46,851 |
) |
|
$ |
87,729 |
|
$ |
9,389 |
|
$ |
164,000 |
|
|
Income tax (benefit) expense from continuing operations |
|
(13,929 |
) |
|
|
31,565 |
|
|
3,189 |
|
|
62,075 |
|
|
Interest expense |
|
55,548 |
|
|
|
47,246 |
|
|
112,136 |
|
|
92,112 |
|
|
Depreciation and amortization |
|
93,746 |
|
|
|
81,796 |
|
|
186,574 |
|
|
158,125 |
|
|
Currency (gains) losses, net |
|
(42 |
) |
|
|
14 |
|
|
35 |
|
|
6,789 |
|
|
Restructuring costs, lease impairment expense and other related
charges, net |
|
6,183 |
|
|
|
— |
|
|
6,929 |
|
|
22 |
|
|
Impairment loss on intangible asset |
|
132,540 |
|
|
|
— |
|
|
132,540 |
|
|
— |
|
|
Transaction costs |
|
40 |
|
|
|
— |
|
|
40 |
|
|
— |
|
|
Integration costs |
|
3,066 |
|
|
|
2,247 |
|
|
5,943 |
|
|
6,120 |
|
|
Stock compensation expense |
|
9,614 |
|
|
|
9,348 |
|
|
18,713 |
|
|
17,498 |
|
|
Other |
|
23,661 |
|
|
|
1,396 |
|
|
36,097 |
|
|
1,442 |
|
| Adjusted EBITDA from
continuing operations |
$ |
263,576 |
|
|
$ |
261,341 |
|
$ |
511,585 |
|
$ |
508,183 |
|
| |
Adjusted EBITDA Margin From Continuing
Operations
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 comparisons of Adjusted EBITDA
Margin to Gross Profit Margin:
| |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(in thousands) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
| Adjusted EBITDA from
continuing operations |
$ |
263,576 |
|
|
$ |
261,341 |
|
|
$ |
511,585 |
|
|
$ |
508,183 |
|
| Revenue (B) |
$ |
604,590 |
|
|
$ |
582,089 |
|
|
$ |
1,191,771 |
|
|
$ |
1,147,557 |
|
|
Adjusted EBITDA Margin from Continuing Operations (A/B) |
|
43.6 |
% |
|
|
44.9 |
% |
|
|
42.9 |
% |
|
|
44.3 |
% |
| Gross profit (C) |
$ |
327,118 |
|
|
$ |
327,872 |
|
|
$ |
644,006 |
|
|
$ |
651,000 |
|
|
Gross Profit Margin (C/B) |
|
54.1 |
% |
|
|
56.3 |
% |
|
|
54.0 |
% |
|
|
56.7 |
% |
|
|
Net Debt to Adjusted EBITDA From
Continuing Operations Ratio
Net Debt to Adjusted EBITDA ratio is defined as
Net Debt divided by Adjusted EBITDA from continuing operations from
the last twelve months. We define Net Debt as total debt from
continuing operations net of total cash and cash 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:
| (in
thousands) |
June 30, 2024 |
|
Long-term debt |
$ |
3,459,255 |
| Current portion of long-term
debt |
|
21,140 |
|
Total debt |
|
3,480,395 |
| Cash and cash equivalents |
|
5,924 |
|
Net debt (A) |
$ |
3,474,471 |
| |
|
| Adjusted EBITDA from
continuing operations from the three months ended September 30,
2023 |
$ |
265,480 |
| Adjusted EBITDA from
continuing operations from the three months ended December 31,
2023 |
|
287,802 |
| Adjusted EBITDA from
continuing operations from the three months ended March 31,
2024 |
|
248,009 |
| Adjusted EBITDA from
continuing operations from the three months ended June 30,
2024 |
|
263,576 |
| Adjusted EBITDA from
continuing operations from the last twelve months (B) |
$ |
1,064,867 |
| Net Debt to Adjusted EBITDA
ratio (A/B) |
|
3.3 |
| |
Adjusted Income from Continuing Operations and Adjusted
Diluted Earnings Per Share
We define adjusted income from continuing
operations as income (loss) from continuing operations, plus
certain non-cash items and the effect of what we consider
transactions not related to our core business operations
including:
- 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 and lease
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.
- Pre-closing
transaction costs including legal and professional fees and other
transaction-specific costs for pending acquisitions.
We define adjusted diluted earnings per share
from continuing operations as adjusted income from continuing
operations divided by adjusted diluted weighted average common
shares outstanding. Management believes that the presentation of
Adjusted Income and Adjusted Diluted Earnings Per Share provide
useful information to investors regarding the performance of our
business.
The following table provides unaudited
reconciliations of income (loss) from continuing operations to
adjusted income from continuing operations and unaudited
comparisons of diluted earnings (loss) per share to adjusted
diluted earnings per share:
| |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(in thousands) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
| (Loss) income from continuing
operations |
$ |
(46,851 |
) |
|
$ |
87,729 |
|
|
$ |
9,389 |
|
|
$ |
164,000 |
|
|
Restructuring costs, lease impairment expense and other related
charges, net |
|
6,183 |
|
|
|
— |
|
|
|
6,929 |
|
|
|
22 |
|
|
Impairment loss on intangible asset |
|
132,540 |
|
|
|
— |
|
|
|
132,540 |
|
|
|
— |
|
|
Transaction costs |
|
40 |
|
|
|
— |
|
|
|
40 |
|
|
|
— |
|
|
Integration costs |
|
3,066 |
|
|
|
2,247 |
|
|
|
5,943 |
|
|
|
6,120 |
|
|
Pre-closing transaction costs |
|
22,893 |
|
|
|
1,134 |
|
|
|
35,180 |
|
|
|
465 |
|
|
Estimated tax impact1 |
|
(42,828 |
) |
|
|
(879 |
) |
|
|
(46,964 |
) |
|
|
(1,718 |
) |
| Adjusted income from
continuing operations |
$ |
75,043 |
|
|
$ |
90,231 |
|
|
$ |
143,057 |
|
|
$ |
168,889 |
|
| |
|
|
|
|
|
|
|
| (Loss) income from continuing
operations per adjusted diluted share2 |
$ |
(0.24 |
) |
|
$ |
0.43 |
|
|
$ |
0.05 |
|
|
$ |
0.78 |
|
|
Restructuring costs, lease impairment expense and other related
charges, net |
|
0.03 |
|
|
|
— |
|
|
|
0.04 |
|
|
|
— |
|
|
Impairment loss on intangible asset |
|
0.69 |
|
|
|
— |
|
|
|
0.69 |
|
|
|
— |
|
|
Transaction costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Integration costs |
|
0.02 |
|
|
|
0.01 |
|
|
|
0.03 |
|
|
|
0.03 |
|
|
Pre-closing transaction costs |
|
0.12 |
|
|
|
— |
|
|
|
0.18 |
|
|
|
— |
|
|
Estimated tax impact1 |
|
(0.23 |
) |
|
|
— |
|
|
|
(0.25 |
) |
|
|
— |
|
| Adjusted Diluted Earnings Per
Share |
$ |
0.39 |
|
|
$ |
0.44 |
|
|
$ |
0.74 |
|
|
$ |
0.81 |
|
| |
|
|
|
|
|
|
|
| Weighted average diluted
shares outstanding |
|
189,680,091 |
|
|
|
204,326,162 |
|
|
|
192,409,616 |
|
|
|
208,233,141 |
|
| Adjusted weighted average
dilutive shares outstanding2 |
|
191,753,841 |
|
|
|
204,326,162 |
|
|
|
192,409,616 |
|
|
|
208,233,141 |
|
| 1 We include
estimated taxes at our current statutory tax rate of approximately
26%. |
| 2 For the
three months ended June 30, 2024, diluted loss per share is based
on weighted average diluted shares outstanding of 189,680,091,
which excluded shares related to stock awards, as the effect would
be anti-dilutive. The calculation of adjusted diluted earnings per
share is based on weighted average diluted shares outstanding of
191,753,841 as the shares related to stock awards are dilutive for
adjusted diluted earnings per share. |
| |
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 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 June 30, |
|
Six Months Ended June 30, |
|
(in thousands) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
| Net cash provided by operating
activities |
$ |
175,611 |
|
|
$ |
202,155 |
|
|
$ |
384,287 |
|
|
$ |
350,920 |
|
| Purchase of rental equipment
and refurbishments |
|
(65,174 |
) |
|
|
(55,581 |
) |
|
|
(137,591 |
) |
|
|
(102,709 |
) |
| Proceeds from sale of rental
equipment |
|
16,473 |
|
|
|
17,473 |
|
|
|
30,668 |
|
|
|
25,254 |
|
| Purchase of property, plant
and equipment |
|
(6,247 |
) |
|
|
(4,453 |
) |
|
|
(12,801 |
) |
|
|
(11,189 |
) |
| Proceeds from the sale of
property, plant and equipment |
|
215 |
|
|
|
7 |
|
|
|
215 |
|
|
|
265 |
|
|
Free Cash Flow (A) |
$ |
120,878 |
|
|
$ |
159,601 |
|
|
$ |
264,778 |
|
|
$ |
262,541 |
|
| |
|
|
|
|
|
|
|
| Revenue from continuing
operations (B) |
$ |
604,590 |
|
|
$ |
582,089 |
|
|
$ |
1,191,771 |
|
|
$ |
1,147,557 |
|
| Revenue from discontinued
operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,694 |
|
| Total Revenue including
discontinued operations (C) |
$ |
604,590 |
|
|
$ |
582,089 |
|
|
$ |
1,191,771 |
|
|
$ |
1,156,251 |
|
|
Free Cash Flow Margin (A/C) |
|
20.0 |
% |
|
|
27.4 |
% |
|
|
22.2 |
% |
|
|
22.7 |
% |
| |
|
|
|
|
|
|
|
| Net cash provided by operating
activities (D) |
$ |
175,611 |
|
|
$ |
202,155 |
|
|
$ |
384,287 |
|
|
$ |
350,920 |
|
|
Net cash provided by operating activities margin (D/C) |
|
29.0 |
% |
|
|
34.7 |
% |
|
|
32.2 |
% |
|
|
30.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 UK Storage
Solutions segment through January 31, 2023.
The following table provides unaudited
reconciliations of Net CAPEX, which is calculated using metrics
from our Statements of Cash Flows:
| |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(in thousands) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Purchases of rental equipment and refurbishments |
$ |
(65,174 |
) |
|
$ |
(55,581 |
) |
|
$ |
(137,591 |
) |
|
$ |
(102,709 |
) |
| Proceeds
from sale of rental equipment |
|
16,473 |
|
|
|
17,473 |
|
|
|
30,668 |
|
|
|
25,254 |
|
|
Net CAPEX for Rental Equipment |
|
(48,701 |
) |
|
|
(38,108 |
) |
|
|
(106,923 |
) |
|
|
(77,455 |
) |
|
Purchases of property, plant and equipment |
|
(6,247 |
) |
|
|
(4,453 |
) |
|
|
(12,801 |
) |
|
|
(11,189 |
) |
| Proceeds
from sale of property, plant and equipment |
|
215 |
|
|
|
7 |
|
|
|
215 |
|
|
|
265 |
|
|
Net CAPEX |
$ |
(54,733 |
) |
|
$ |
(42,554 |
) |
|
$ |
(119,509 |
) |
|
$ |
(88,379 |
) |
|
|
Return on Invested Capital
Return on Invested Capital is defined as
Adjusted earnings before interest and amortization divided by
Average Invested Capital. Management believes that the presentation
of Return on Invested Capital provides useful information regarding
the long-term health and profitability of the business relative to
the Company's cost of capital. We define Adjusted earnings before
interest and amortization as Adjusted EBITDA (see reconciliation
above) reduced by depreciation and 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%.
The Average Invested Capital is calculated as an
average of Net Assets, a four quarter average for annual metrics
and two quarter average for quarterly metrics. Net assets is
defined for purposes of the calculation below as total assets less
goodwill, intangible assets, net, and all non-interest bearing
liabilities.
The following table provides unaudited
reconciliations of Return on Invested Capital and includes amounts
for the former UK Storage Solutions segment through January 31,
2023.
| |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
(in thousands) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
| Total Assets |
$ |
6,048,768 |
|
|
$ |
5,718,500 |
|
|
$ |
6,048,768 |
|
|
$ |
5,718,500 |
|
| Goodwill |
|
(1,175,701 |
) |
|
|
(1,012,135 |
) |
|
|
(1,175,701 |
) |
|
|
(1,012,135 |
) |
| Intangible assets, net |
|
(272,444 |
) |
|
|
(407,250 |
) |
|
|
(272,444 |
) |
|
|
(407,250 |
) |
| Total Liabilities |
|
(4,847,432 |
) |
|
|
(4,279,955 |
) |
|
|
(4,847,432 |
) |
|
|
(4,279,955 |
) |
| Long Term Debt |
|
3,459,255 |
|
|
|
3,035,521 |
|
|
|
3,459,255 |
|
|
|
3,035,521 |
|
| Net Assets, as defined
above |
$ |
3,212,446 |
|
|
$ |
3,054,681 |
|
|
$ |
3,212,446 |
|
|
$ |
3,054,681 |
|
| Average
Invested Capital (A) |
$ |
3,204,978 |
|
|
$ |
3,035,179 |
|
|
$ |
3,204,604 |
|
|
$ |
3,067,862 |
|
| |
|
|
|
|
|
|
|
| Adjusted EBITDA |
$ |
263,576 |
|
|
$ |
261,341 |
|
|
$ |
511,585 |
|
|
$ |
508,183 |
|
| Depreciation |
|
(86,466 |
) |
|
|
(75,858 |
) |
|
|
(171,849 |
) |
|
|
(146,250 |
) |
| Adjusted EBITA (B) |
$ |
177,110 |
|
|
$ |
185,483 |
|
|
$ |
339,736 |
|
|
$ |
361,933 |
|
| |
|
|
|
|
|
|
|
| Statutory Tax Rate (C) |
|
26 |
% |
|
|
26 |
% |
|
|
26 |
% |
|
|
26 |
% |
| Estimated Tax (B*C) |
$ |
46,049 |
|
|
$ |
48,226 |
|
|
$ |
88,331 |
|
|
$ |
94,103 |
|
| Adjusted earnings before
interest and amortization (D) |
$ |
131,061 |
|
|
$ |
137,257 |
|
|
$ |
251,405 |
|
|
$ |
267,830 |
|
| ROIC (D/A), annualized |
|
16.4 |
% |
|
|
18.1 |
% |
|
|
15.7 |
% |
|
|
17.5 |
% |
| |
Willscot (LSE:0A1N)
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Willscot (LSE:0A1N)
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