WillScot Reports First Quarter 2025 Results and Reaffirms 2025 Full
Year Outlook
PHOENIX, May 01, 2025 (GLOBE NEWSWIRE) --
WillScot Holdings Corporation (“WillScot” or the “Company”)
(Nasdaq: WSC), a leader in innovative temporary space solutions,
today announced first quarter 2025 results including key
performance highlights and market updates.
Q1
20251,
2
- Generated
revenue of $560 million, gross profit margin percentage of 53.7%,
net income of $43 million and diluted earnings per share of
$0.23.
- Increased
average monthly rates, inclusive of Value-Added Products ("VAPS"),
for modular space and portable storage units 5.2% and 1.9%,
respectively, offsetting much of the year-over-year impact from
decreased units on rent.
- Delivered
Adjusted EBITDA of $229 million at a 40.9% margin.
- Generated net
cash provided by operating activities of $207 million at a 36.9%
margin. Adjusted Free Cash Flow was $145 million at a 25.9%
margin.
- Returned $45
million to shareholders through a combination of repurchasing
approximately 1.1 million shares of Common Stock for $32 million
and paying first Common Stock quarterly cash dividend totaling $13
million.
- Reaffirmed previous FY 2025
Revenue, Adjusted EBITDA, and Net CAPEX outlook ranges given both
the resiliency of our recurring lease revenues and recent
improvements in our pending order book.
Brad Soultz, Chief Executive Officer of
WillScot, commented, “Our first quarter financial results were
consistent with our expectations and support reaffirming our
previously issued full year 2025 outlook. We delivered $145 million
of Adjusted Free Cash Flow at a 26% margin, returned $45 million to
shareholders, and progressed our acquisition pipeline. In addition
to our focus on day-to-day execution, we continued investing in the
business to support our medium-to-longer term margin expansion and
organic revenue growth plans discussed at our Investor Day on March
7, 2025."
Soultz continued, "Despite macro-related
end-market uncertainty, our pending order book is up 7%
year-over-year, which we believe would support our expected
new lease activation levels in the second quarter. Importantly, we
have multiple performance levers that allow us to achieve our
growth goals through different paths and end-market backdrops. As
always, we will remain nimble and make adjustments as needed along
the way. I have tremendous confidence in our team's ability to
achieve our three-to-five year financial milestones of $3 billion
in revenue, $1.5 billion in Adjusted EBITDA, and $700 million in
Adjusted Free Cash Flow."
First Quarter
2025
Results1
|
|
Three Months Ended
March 31, |
|
(in thousands, except share data) |
|
2025 |
|
|
|
2024 |
|
| Revenue |
$ |
559,551 |
|
|
$ |
587,181 |
|
| Net income |
$ |
43,055 |
|
|
$ |
56,240 |
|
| Adjusted Net
Income1 |
$ |
43,777 |
|
|
$ |
68,013 |
|
| Adjusted
EBITDA1 |
$ |
228,785 |
|
|
$ |
248,009 |
|
| Gross profit margin |
|
53.7 |
% |
|
|
54.0 |
% |
| Adjusted EBITDA Margin
(%)1 |
|
40.9 |
% |
|
|
42.2 |
% |
| Net cash provided by operating
activities |
$ |
206,627 |
|
|
$ |
208,676 |
|
| Adjusted Free Cash
Flow1 |
$ |
144,795 |
|
|
$ |
145,015 |
|
| Diluted earnings per
share |
$ |
0.23 |
|
|
$ |
0.29 |
|
| Adjusted Diluted Earnings Per
Share1 |
$ |
0.24 |
|
|
$ |
0.35 |
|
| Weighted average diluted
shares outstanding |
|
185,301,787 |
|
|
|
193,065,392 |
|
| Net cash provided by operating
activities margin |
|
36.9 |
% |
|
|
35.5 |
% |
| Adjusted Free Cash Flow Margin
(%)1 |
|
25.9 |
% |
|
|
24.7 |
% |
| Return on Invested
Capital1 |
|
13.4 |
% |
|
|
15.0 |
% |
| |
|
|
|
|
|
|
|
Matt Jacobsen, Chief Financial Officer of
WillScot, commented, “First quarter 2025 revenues of $560 million
and Adjusted EBITDA of $229 million were both in line with our
expectations and support our full year outlook, which remains
unchanged. We continue to invest in our fleet to support our
customers and invested $62 million of Net CAPEX in the first
quarter. Given our first quarter results and the build of our
pending order book since the beginning of the year, we remain
confident in our full year 2025 outlook range. And our consistent
Adjusted Free Cash Flow generation across various market
environments continues to be a strength of our business model."
Jacobsen continued, "Our strong balance sheet,
further bolstered by the successful refinancing of our 2025 senior
secured notes during March, provides us continued financial
flexibility to strategically allocate capital towards accretive
investments and support our future growth priorities. In turn, we
believe these moves will deliver sustained value to our
shareholders, in addition to our quarterly cash dividends and
opportunistic share repurchases, which together totaled $45 million
during the first quarter."
Capitalization and Liquidity
Update1, 2, 3
As of and for the three months ended March 31, 2025, except where
noted:
- Net cash
provided by operating activities was $207 million, resulting
in $145 million of Adjusted Free Cash Flow after Net CAPEX
investments.
- Invested $62
million of Net CAPEX in the quarter, primarily supporting growth in
new product lines.
- Completed an
offering of $500 million of its 6.625% senior secured notes due
2030 on March 26, 2025 and subsequently redeemed the outstanding
$527 million senior secured notes due June 2025. Our next debt
maturity is in 2027.
- Maintained
availability under our asset backed revolving credit facility of
approximately $1.6 billion.
- Total debt was
$3,622 million and net debt, or total debt net of cash and cash
equivalents, was $3,612 million.
- Weighted average
pre-tax interest rate, inclusive of $1.25 billion of
fixed-to-floating swaps at 3.55%, was approximately 5.9%. Annual
cash interest expense based on the current debt structure and
benchmark rates is approximately $214 million, or approximately
$230 million inclusive of non-cash deferred financing fees. Our
debt structure is approximately 89% / 11% fixed-to-floating after
giving effect to all interest rate swaps.
- Net Debt to
Adjusted EBITDA was at 3.5x based on our last 12 months Adjusted
EBITDA of $1,044 million.
- Repurchased
1,094,932 shares of Common Stock for $32 million in the first
quarter of 2025, contributing to a 3.9% reduction in our
outstanding share count over the 12 months ending March 31,
2025.
- Paid first
Common Stock quarterly cash dividend of $0.07 per share on March
19, 2025 to shareholders of record as of March 5, 2025.
2025 Full Year
Outlook1, 2
Willscot reaffirmed its FY 2025 Revenue, Adjusted EBITDA, and Net
CAPEX outlook ranges provided in February of 2025. This outlook is
subject to risks and uncertainties, including those described in
"Forward-Looking Statements" below.
|
$M |
2025 Outlook |
| Revenue |
$2,275 - $2,475 |
| Adjusted
EBITDA1,2 |
$1,000 - $1,090 |
| Net CAPEX1,2 |
$225 - $305 |
____________________
1 - Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net
Income, Adjusted Diluted Earnings Per Share, Adjusted Weighted
Average Diluted Shares Outstanding, Adjusted Free Cash Flow,
Adjusted Free Cash Flow Margin, Net Debt to Adjusted EBITDA, Net
CAPEX 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.
2 - Information reconciling forward-looking Adjusted EBITDA and
Net CAPEX 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.
3 - Net Debt to Adjusted EBITDA is defined as total debt, net
of total cash and cash equivalents, divided by Adjusted EBITDA from
the last twelve months.
Non-GAAP Financial Measures
This press release includes non-GAAP financial
measures, including Adjusted EBITDA, Adjusted EBITDA Margin,
Adjusted net income, Adjusted diluted earnings per share, Adjusted
Weighted Average Diluted Shares Outstanding, Adjusted Free Cash
Flow, Adjusted Free Cash Flow Margin, Return on Invested Capital,
Net CAPEX, and Net Debt to Adjusted EBITDA ratio. Adjusted EBITDA
is defined as net income 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 and other discrete
expenses. Adjusted EBITDA Margin is defined as Adjusted EBITDA
divided by revenue. Adjusted net income is defined as net income
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 net income
divided by Adjusted diluted weighted average common shares
outstanding. The calculation of Adjusted Weighted Average Diluted
Shares Outstanding includes shares related to stock awards that are
dilutive for Adjusted diluted earnings per share. Adjusted Free
Cash Flow is defined as net cash provided by operating activities;
less purchases of rental equipment and property, plant and
equipment and plus proceeds from sale of rental equipment and
property, plant and equipment, which are all included in cash flows
from investing activities; excluding one-time, nonrecurring
payments for transaction costs from terminated acquisitions.
Adjusted Free Cash Flow Margin is defined as Adjusted 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. We include
estimated taxes at our current statutory tax rate of approximately
25%. 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 Adjusted Free Cash Flow and Adjusted 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 net income 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
and Net CAPEX 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 and Net CAPEX 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 first quarter 2025 results and 2025 outlook at 5:30
p.m. Eastern Time on Thursday, May 1, 2025. To access the live
call by phone, use the following link:
https://register-conf.media-server.com/register/BI248b69f39f734935ac24d9830934f91e
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 First Quarter 2025
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. 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, 2024), 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.willscot.com.
| Contact
Information |
|
|
| |
|
|
| Investor
Inquiries: |
|
Media
Inquiries: |
| Charlie Wohlhuter |
|
Juliana Welling |
|
investors@willscot.com |
|
juliana.welling@willscot.com |
| |
|
|
WillScot Holdings Corporation
Condensed Consolidated Statements of
Operations
(Unaudited) |
| |
|
|
Three Months Ended
March 31, |
|
(in thousands, except share and per share
data) |
|
2025 |
|
|
2024 |
| Revenues: |
|
|
|
|
Leasing and services revenue: |
|
|
|
|
Leasing |
$ |
434,390 |
|
$ |
460,601 |
|
Delivery and installation |
|
88,661 |
|
|
100,362 |
|
Sales revenue: |
|
|
|
|
New units |
|
22,437 |
|
|
13,499 |
|
Rental units |
|
14,063 |
|
|
12,719 |
|
Total revenues |
|
559,551 |
|
|
587,181 |
| Costs: |
|
|
|
|
Costs of leasing and services: |
|
|
|
|
Leasing |
|
88,070 |
|
|
102,394 |
|
Delivery and installation |
|
73,796 |
|
|
77,842 |
|
Costs of sales: |
|
|
|
|
New units |
|
15,198 |
|
|
8,273 |
|
Rental units |
|
8,169 |
|
|
6,876 |
|
Depreciation of rental equipment |
|
73,952 |
|
|
74,908 |
|
Gross profit |
|
300,366 |
|
|
316,888 |
| Other operating expenses: |
|
|
|
|
Selling, general and administrative |
|
157,146 |
|
|
168,314 |
|
Other depreciation and amortization |
|
23,140 |
|
|
17,920 |
|
Currency losses, net |
|
223 |
|
|
77 |
|
Other expense, net |
|
423 |
|
|
631 |
|
Operating income |
|
119,434 |
|
|
129,946 |
|
Interest expense, net |
|
58,469 |
|
|
56,588 |
| Income before income tax |
|
60,965 |
|
|
73,358 |
|
Income tax expense |
|
17,910 |
|
|
17,118 |
| Net income |
$ |
43,055 |
|
$ |
56,240 |
| |
|
|
|
| Earnings per
share: |
|
Basic |
$ |
0.23 |
|
$ |
0.30 |
|
Diluted |
$ |
0.23 |
|
$ |
0.29 |
| Weighted average shares: |
|
|
|
|
Basic |
|
183,680,565 |
|
|
190,137,533 |
|
Diluted |
|
185,301,787 |
|
|
193,065,392 |
|
|
|
|
|
|
|
WillScot Holdings Corporation
Condensed Consolidated Balance Sheets |
| |
|
(in thousands, except share data) |
March 31, 2025 (unaudited) |
|
December 31, 2024 |
| Assets |
|
|
|
|
Cash and cash equivalents |
$ |
10,679 |
|
|
$ |
9,001 |
|
|
Trade receivables, net of allowances for credit losses at March 31,
2025 and December 31, 2024 of $100,291 and $101,693,
respectively |
|
400,501 |
|
|
|
430,381 |
|
|
Inventories |
|
47,736 |
|
|
|
47,473 |
|
|
Prepaid expenses and other current assets |
|
57,585 |
|
|
|
67,751 |
|
|
Assets held for sale |
|
1,953 |
|
|
|
2,904 |
|
|
Total current assets |
|
518,454 |
|
|
|
557,510 |
|
|
Rental equipment, net |
|
3,367,026 |
|
|
|
3,377,939 |
|
|
Property, plant and equipment, net |
|
365,497 |
|
|
|
363,073 |
|
|
Operating lease assets |
|
257,530 |
|
|
|
266,761 |
|
|
Goodwill |
|
1,201,710 |
|
|
|
1,201,353 |
|
|
Intangible assets, net |
|
239,816 |
|
|
|
251,164 |
|
|
Other non-current assets |
|
11,643 |
|
|
|
17,111 |
|
|
Total long-term assets |
|
5,443,222 |
|
|
|
5,477,401 |
|
| Total assets |
$ |
5,961,676 |
|
|
$ |
6,034,911 |
|
| Liabilities and equity |
|
|
|
|
Accounts payable |
$ |
93,976 |
|
|
$ |
96,597 |
|
|
Accrued expenses |
|
168,889 |
|
|
|
121,583 |
|
|
Accrued employee benefits |
|
25,689 |
|
|
|
25,062 |
|
|
Deferred revenue and customer deposits |
|
240,816 |
|
|
|
250,790 |
|
|
Operating lease liabilities – current |
|
66,559 |
|
|
|
66,378 |
|
|
Current portion of long-term debt |
|
25,439 |
|
|
|
24,598 |
|
|
Total current liabilities |
|
621,368 |
|
|
|
585,008 |
|
|
Long-term debt |
|
3,596,816 |
|
|
|
3,683,502 |
|
|
Deferred tax liabilities |
|
496,418 |
|
|
|
505,913 |
|
|
Operating lease liabilities – non-current |
|
191,736 |
|
|
|
200,875 |
|
|
Other non-current liabilities |
|
43,976 |
|
|
|
41,020 |
|
|
Long-term liabilities |
|
4,328,946 |
|
|
|
4,431,310 |
|
| Total liabilities |
|
4,950,314 |
|
|
|
5,016,318 |
|
|
Preferred Stock: $0.0001 par, 1,000,000 shares authorized and zero
shares issued and outstanding at March 31, 2025 and December 31,
2024 |
|
— |
|
|
|
— |
|
|
Common Stock: $0.0001 par, 500,000,000 shares authorized and
183,109,208 and 183,564,899 shares issued and outstanding at March
31, 2025 and December 31, 2024, respectively |
|
19 |
|
|
|
19 |
|
|
Additional paid-in-capital |
|
1,793,859 |
|
|
|
1,836,165 |
|
|
Accumulated other comprehensive loss |
|
(78,607 |
) |
|
|
(70,627 |
) |
|
Accumulated deficit |
|
(703,909 |
) |
|
|
(746,964 |
) |
| Total shareholders' equity |
|
1,011,362 |
|
|
|
1,018,593 |
|
| Total liabilities and
shareholders' equity |
$ |
5,961,676 |
|
|
$ |
6,034,911 |
|
| |
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial
Measures
In addition to using GAAP financial
measurements, we use certain non-GAAP financial measures that we
believe are 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.
Adjusted EBITDA
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, gains and
losses on disposals of property, plant, and equipment, and
unrealized gains and losses on investments.
We evaluate business performance utilizing
Adjusted EBITDA, as shown in the reconciliation of the Company's
net income to Adjusted EBITDA 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 and captures the business performance, inclusive of
indirect costs.
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 a measure of cash that
will be available to meet our obligations.
The following table provides reconciliations of
net income to Adjusted EBITDA:
|
|
Three Months Ended
March 31, |
|
(in thousands) |
|
2025 |
|
|
2024 |
| Net income |
$ |
43,055 |
|
$ |
56,240 |
|
Income tax expense |
|
17,910 |
|
|
17,118 |
|
Interest expense, net |
|
58,469 |
|
|
56,588 |
|
Depreciation and amortization |
|
97,092 |
|
|
92,828 |
|
Currency losses, net |
|
223 |
|
|
77 |
|
Restructuring costs, lease impairment expense and other related
charges |
|
702 |
|
|
746 |
|
Transaction costs |
|
34 |
|
|
— |
|
Integration costs |
|
227 |
|
|
2,877 |
|
Stock compensation expense |
|
8,341 |
|
|
9,099 |
|
Other |
|
2,732 |
|
|
12,436 |
| Adjusted EBITDA |
$ |
228,785 |
|
$ |
248,009 |
| |
|
|
|
|
|
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 comparisons of Adjusted EBITDA Margin to
Gross Profit Margin:
|
|
Three Months Ended
March 31, |
|
(in thousands) |
|
2025 |
|
|
|
2024 |
|
| Adjusted EBITDA (A) |
$ |
228,785 |
|
|
$ |
248,009 |
|
| Revenue (B) |
$ |
559,551 |
|
|
$ |
587,181 |
|
|
Adjusted EBITDA Margin (A/B) |
|
40.9 |
% |
|
|
42.2 |
% |
| Gross profit (C) |
$ |
300,366 |
|
|
$ |
316,888 |
|
|
Gross Profit Margin (C/B) |
|
53.7 |
% |
|
|
54.0 |
% |
|
|
|
|
|
|
|
|
|
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 net of total cash and cash
equivalents. 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 a reconciliation of Net Debt to Adjusted EBITDA ratio:
|
(in thousands) |
March 31, 2025 |
|
Long-term debt |
$ |
3,596,816 |
| Current portion of long-term
debt |
|
25,439 |
|
Total debt |
|
3,622,255 |
| Cash and cash equivalents |
|
10,679 |
|
Net debt (A) |
$ |
3,611,576 |
| |
|
| Adjusted EBITDA from the three
months ended June 30, 2024 |
$ |
263,576 |
| Adjusted EBITDA from the three
months ended September 30, 2024 |
|
266,863 |
| Adjusted EBITDA from the three
months ended December 31, 2024 |
|
284,712 |
| Adjusted EBITDA from the three
months ended March 31, 2025 |
|
228,785 |
| Adjusted EBITDA from the last
twelve months (B) |
$ |
1,043,936 |
| Net Debt to Adjusted EBITDA
ratio (A/B) |
|
3.5 |
| |
|
|
Adjusted Net Income and Adjusted Diluted Earnings Per
Share
We define adjusted net income as net income,
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.
- Transaction
costs, including legal and professional fees and other
transaction-specific costs, for terminated acquisitions.
We define adjusted diluted earnings per share as
adjusted net income divided by adjusted diluted weighted average
common shares outstanding. Management believes that the
presentation of adjusted net income and adjusted diluted earnings
per share provide useful information to investors regarding the
performance of our business.
The following table provides reconciliations of
net income to adjusted net income and comparisons of diluted
earnings per share to adjusted diluted earnings per share:
|
|
Three Months Ended
March 31, |
|
(in thousands, except share data) |
|
2025 |
|
|
|
2024 |
|
| Net income |
$ |
43,055 |
|
|
$ |
56,240 |
|
|
Restructuring costs, lease impairment expense and other related
charges, net |
|
702 |
|
|
|
746 |
|
|
Transaction costs |
|
34 |
|
|
|
— |
|
|
Integration costs |
|
227 |
|
|
|
2,877 |
|
|
Transaction costs from terminated acquisitions |
|
— |
|
|
|
12,287 |
|
|
Estimated tax impact1 |
|
(241 |
) |
|
|
(4,137 |
) |
| Adjusted Net Income |
$ |
43,777 |
|
|
$ |
68,013 |
|
| |
|
|
|
| Net income per adjusted
diluted share |
$ |
0.23 |
|
|
$ |
0.29 |
|
|
Restructuring costs, lease impairment expense and other related
charges, net |
|
0.01 |
|
|
|
0.01 |
|
|
Integration costs |
|
— |
|
|
|
0.01 |
|
|
Transaction costs from terminated acquisitions |
|
— |
|
|
|
0.06 |
|
|
Estimated tax impact1 |
|
— |
|
|
|
(0.02 |
) |
| Adjusted Diluted Earnings Per
Share |
$ |
0.24 |
|
|
$ |
0.35 |
|
| |
|
|
|
| Weighted average diluted
shares outstanding |
|
185,301,787 |
|
|
|
193,065,392 |
|
| Adjusted Weighted Average
Dilutive Shares Outstanding |
|
185,301,787 |
|
|
|
193,065,392 |
|
| |
|
|
|
|
|
|
|
1 We include estimated taxes at
our current statutory tax rate of approximately 25% and 26% for the
three months ended March 31, 2025 and 2024, respectively.
Adjusted Free Cash Flow and Adjusted Free Cash Flow
Margin
We define Adjusted Free Cash Flow as net cash
provided by operating activities; less purchases of rental
equipment and property, plant and equipment and plus proceeds from
sale of rental equipment and property, plant and equipment, which
are all included in cash flows from investing activities; excluding
one-time, nonrecurring payments for the transaction costs from
terminated acquisitions. Adjusted Free Cash Flow Margin is defined
as Adjusted Free Cash Flow divided by Revenue. Management believes
that the presentation of Adjusted Free Cash Flow and Adjusted Free
Cash Flow Margin provides useful additional information concerning
cash flow available to fund our capital allocation alternatives.
The following table provides reconciliations of Adjusted Free Cash
Flow and Adjusted Free Cash Flow Margin:
|
|
Three Months Ended
March 31, |
|
(in thousands) |
|
2025 |
|
|
|
2024 |
|
| Net cash provided by operating
activities |
$ |
206,627 |
|
|
$ |
208,676 |
|
| Purchase of rental equipment
and refurbishments |
|
(72,552 |
) |
|
|
(72,417 |
) |
| Proceeds from sale of rental
equipment |
|
14,063 |
|
|
|
14,195 |
|
| Purchase of property, plant
and equipment |
|
(4,634 |
) |
|
|
(6,554 |
) |
| Proceeds from the sale of
property, plant and equipment |
|
1,291 |
|
|
|
— |
|
| Cash paid for transaction
costs from terminated acquisitions |
|
— |
|
|
|
1,115 |
|
|
Adjusted Free Cash Flow (A) |
$ |
144,795 |
|
|
$ |
145,015 |
|
| |
|
|
|
| Revenue (B) |
$ |
559,551 |
|
|
$ |
587,181 |
|
|
Adjusted Free Cash Flow Margin (A/B) |
|
25.9 |
% |
|
|
24.7 |
% |
| |
|
|
|
| Net cash provided by operating
activities (C) |
$ |
206,627 |
|
|
$ |
208,676 |
|
|
Net cash provided by operating activities margin (C/B) |
|
36.9 |
% |
|
|
35.5 |
% |
|
|
|
|
|
|
|
|
|
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.
The following table provides reconciliations of
Net CAPEX:
|
|
Three Months Ended
March 31, |
|
(in thousands) |
|
2025 |
|
|
|
2024 |
|
| Purchases of rental equipment and
refurbishments |
$ |
(72,552 |
) |
|
$ |
(72,417 |
) |
| Proceeds from sale of rental
equipment |
|
14,063 |
|
|
|
14,195 |
|
|
Net CAPEX for Rental Equipment |
|
(58,489 |
) |
|
|
(58,222 |
) |
| Purchases of property, plant and
equipment |
|
(4,634 |
) |
|
|
(6,554 |
) |
| Proceeds from sale of property,
plant and equipment |
|
1,291 |
|
|
|
— |
|
|
Net CAPEX |
$ |
(61,832 |
) |
|
$ |
(64,776 |
) |
|
|
|
|
|
|
|
|
|
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. We include
estimated taxes at our current statutory tax rate.
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 reconciliations of
Return on Invested Capital.
|
|
Three Months Ended
March 31, |
|
(in thousands) |
|
2025 |
|
|
|
2024 |
|
| Total Assets |
$ |
5,961,676 |
|
|
$ |
6,180,334 |
|
| Goodwill |
|
(1,201,710 |
) |
|
|
(1,175,972 |
) |
| Intangible Assets, net |
|
(239,816 |
) |
|
|
(412,264 |
) |
| Total Liabilities |
|
(4,950,314 |
) |
|
|
(4,860,208 |
) |
| Long Term Debt |
|
3,596,816 |
|
|
|
3,465,619 |
|
| Net Assets, as defined
above |
$ |
3,166,652 |
|
|
$ |
3,197,509 |
|
| Average Invested Capital (A) |
$ |
3,208,115 |
|
|
$ |
3,200,466 |
|
| |
|
|
|
| Adjusted EBITDA |
$ |
228,785 |
|
|
$ |
248,009 |
|
| Depreciation |
|
(85,745 |
) |
|
|
(85,383 |
) |
| Adjusted EBITA (B) |
$ |
143,040 |
|
|
$ |
162,626 |
|
| |
|
|
|
| Statutory Tax Rate (C) |
|
25 |
% |
|
|
26 |
% |
| Estimated Tax (B*C) |
$ |
35,760 |
|
|
$ |
42,283 |
|
| Adjusted earnings before
interest and amortization (D) |
$ |
107,280 |
|
|
$ |
120,343 |
|
| ROIC (D/A), annualized |
|
13.4 |
% |
|
|
15.0 |
% |
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