Willscot Mobile Mini Reports First Quarter 2024 Results
WillScot Mobile Mini Holdings Corp. reported solid first quarter 2024 results, with a 4% revenue increase to $587 million and $56 million income from continuing operations. Adjusted EBITDA remained flat at $248 million, with a 40% rise in net cash provided by operating activities and free cash flow. The company maintained its FY 2024 Adjusted EBITDA outlook of $1,125 million to $1,200 million, representing 6% to 13% growth. WillScot Mobile Mini returned $595 million to shareholders through share repurchases and expects to close the McGrath RentCorp acquisition in 2024.
Q1 2024 revenue increased by 4% to $587 million, with income from continuing operations at $56 million.
Adjusted EBITDA remained steady at $248 million, with a 40% rise in both net cash provided by operating activities and free cash flow.
The company maintained its FY 2024 Adjusted EBITDA outlook range of $1,125 million to $1,200 million, showing solid growth potential.
Return on Invested Capital (
Margins contracted sequentially and year-over-year, impacting profitability.
Approximately $15 million of integration and transaction-related expenses were reported.
Leverage was maintained at 3.3x Net Debt to Adjusted EBITDA, potentially impacting financial flexibility.
Insights
WillScot Mobile Mini's reported revenue increase of 4% to
The aggressive share repurchase program, reducing share count by 6.4% and returning
The modular space industry is often regarded as a cyclical business, influenced by trends in non-residential construction. WillScot Mobile Mini's growth in leasing revenue by 5% despite a contraction in construction starts is a noteworthy outperformance, hinting at a potential gain in market share or successful penetration into less cyclical markets. The update on operational improvements, such as the integration of sales and operations teams and the enhancement of service systems, is expected to streamline processes and improve customer relations, which could be beneficial for long-term customer retention and operational scaling.
The pending acquisition of McGrath RentCorp could serve as a catalyst for future growth, provided the integration is smooth and synergies are effectively realized. As the industry continues to evolve with a focus on turnkey solutions and digital enhancements, WillScot Mobile Mini seems positioned to capitalize on these trends, potentially offering a competitive edge over its peers.
For investors with a keen interest in capital allocation, WillScot Mobile Mini's approach towards a balanced use of cash flow is promising. The company's Free Cash Flow Margin improvement to
However, it is essential for investors to remain mindful of the risks associated with acquisitions, such as integration challenges and potential dilution of focus on core operations. The company's debt maturities and interest rate swaps also warrant attention, as interest rate fluctuations could impact the cost of capital and debt servicing capabilities.
Solid Modular and Value-Added Products Demand Support Full Year 2024 Outlook
PHOENIX, May 02, 2024 (GLOBE NEWSWIRE) -- WillScot Mobile Mini Holdings Corp. (“WillScot Mobile Mini” or the “Company”) (Nasdaq: WSC), a leader in innovative temporary flexible space solutions, today announced first quarter 2024 results and provided an update on operations and the current market environment, including the following highlights:
Q1 2024
- Revenue increased
4% to$587 million and Income from continuing operations was$56 million . Income from operations included approximately$15 million of integration and transaction-related expenses. Adjusted EBITDA was flat year-over-year at$248 million . - Generated Net cash provided by operating activities of
$209 million and Free Cash Flow of$144 million , both up40% year-over-year, with Free Cash Flow Margin of24.5% , which increased by 660 basis points. - Maintained leverage sequentially at 3.3x Net Debt to Adjusted EBITDA as of March 31, 2024, inside our target range of 3.0x to 3.5x.
- Generated
17% Return on Invested Capital2 ("ROIC") over the last 12 months. - Returned
$595 million to shareholders by repurchasing 13.9 million shares of Common Stock, reducing our share count by6.4% over the last twelve months as of March 31, 20241. - Maintained our FY 2024 Adjusted EBITDA outlook range of
$1,125 million to$1,200 million , representing6% to13% growth in our continuing operations versus 2023. - On January 29, 2024, WSC announced a definitive agreement to acquire McGrath RentCorp (NASDAQ: MGRC). The Company expects the transaction to close in 2024.
Brad Soultz, Chief Executive Officer of WillScot Mobile Mini, commented, "Our Company delivered results in Q1 that were in line with our overall expectations for the year. Leasing revenue was up
Soultz continued, "The team also completed the final systems and field harmonization that we contemplated in the original WillScot and Mobile Mini integration plan. In January, we combined our legacy WillScot and Mobile Mini sales and operations teams under a single leadership structure, organized by geography. This allows us to go-to-market locally with a single team that can service our customers across our full offering of turnkey space solutions. To support this field integration, in March we upgraded our field service and dispatch system, which allows us to better utilize our operational resources across all product lines while improving execution and customer communication. And we are advancing our digital roadmap using customer feedback to enhance nearly every aspect of the customer experience.”
Soultz concluded, "These initiatives allow us to even more seamlessly deliver our ever-expanding portfolio of space solutions to our entire customer base and will ensure that we continue to offer the most compelling value proposition in the industry. And the McGrath acquisition, which we expect to close in 2024, will further accelerate our growth and proportionally increase the
| Three Months Ended March 31, | |||||||
| (in thousands, except share data) | 2024 | 2023 | |||||
| Revenue | $ | 587,181 | $ | 565,468 | |||
| Income from continuing operations | $ | 56,240 | $ | 76,271 | |||
| Adjusted EBITDA from continuing operations2 | $ | 248,009 | $ | 246,842 | |||
| Adjusted EBITDA Margin from continuing operations (%)2 | 42.2 | % | 43.7 | % | |||
| Net cash provided by operating activities | $ | 208,676 | $ | 148,765 | |||
| Free Cash Flow2,5 | $ | 143,900 | $ | 102,940 | |||
| Weighted Average Dilutive Shares Outstanding | 193,065,392 | 209,663,985 | |||||
| Free Cash Flow Margin (%)2,5 | 24.5 | % | 17.9 | % | |||
| Return on Invested Capital2 | 15.0 | % | 17.0 | % | |||
First Quarter 2024 Results2
Tim Boswell, President and Chief Financial Officer, commented, "Q1 2024 results were in line with our overall plans for the year, so we are maintaining our 2024 outlook. Margins contracted sequentially and year-over-year as expected to support increases in modular activation volumes and related maintenance activity in Q1 and heading into Q2, and we expect margins to reflate through the course of the year as lease revenues build sequentially. So, we are maintaining our 2024 outlook of
Boswell concluded, "Cash flow and returns continue to be highlights, despite approximately
Capitalization and Liquidity Update2
As of and for the three months ended March 31, 2024, except where noted:
- Generated
$144 million of Free Cash Flow in the first quarter, up40% year-over-year. - Invested
$43 million of capital in one acquisition during the quarter, with$526 million invested in the last 12 months. - Increased excess availability to approximately
$1.3 billion under our asset backed revolving credit facility. - Weighted average pre-tax interest rate, after giving effect to both the
3.44% floating-to-fixed interest rate swap that we executed in January 2023 and the3.70% floating-to-fixed interest rate swap that we executed in January 2024 is approximately5.9% . Annual cash interest expense based on the current debt structure and benchmark rates is approximately$207 million , or approximately$220 million inclusive of non-cash deferred financing fees. Our debt structure is approximately79% /21% fixed-to-floating after giving effect to all interest rate swaps. - No debt maturities prior to 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 last 12 months Adjusted EBITDA from continuing operations of
$1,063 million , which is inside our target range of 3.0x to 3.5x.
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 MGRC) | |
| Revenue | |||
| Adjusted EBITDA2,3 | |||
| Net CAPEX3,4 | |||
1 - Assumes common shares outstanding as of March 31, 2024 versus common shares outstanding as of March 31, 2023.
2 - Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Free Cash Flow Margin, Net Debt to Adjusted EBITDA and Return on Invested Capital are non-GAAP financial measures. Further information and reconciliations for these non-GAAP measures to the most directly comparable financial measure under generally accepted accounting principles in the US ("GAAP") are included at the end of this press release.
3 - Information reconciling forward-looking Adjusted EBITDA, 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, 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, non-cash charges for stock compensation plans, gains and losses resulting from changes in fair value and extinguishment of common stock warrant liabilities, and other discrete expenses. Adjusted EBITDA Margin from continuing operations is defined as Adjusted EBITDA divided by revenue. Free Cash Flow is defined as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and equipment, which are all included in cash flows from investing activities. Free Cash Flow Margin is defined as Free Cash Flow divided by revenue. Return on Invested Capital is defined as adjusted earnings before interest and amortization divided by average invested capital. Adjusted earnings before interest and amortization is the sum of income (loss) before income tax expense, net interest (income) expense, amortization adjusted for non-cash items considered non-core to business operations including net currency (gains) losses, goodwill and other impairment charges, restructuring costs, costs to integrate acquired companies, non-cash charges for stock compensation plans, gains and losses resulting from changes in fair value and extinguishment of common stock warrant liabilities, and other discrete expenses, reduced by our estimated statutory tax rate. Given we are not a significant US taxpayer due to our current tax attributes, we include estimated taxes at our current statutory tax rate of approximately
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 Mobile Mini will host a conference call and webcast to discuss its first quarter 2024 results and 2024 outlook at 5:30 p.m. Eastern Time on Tuesday, May 2, 2024. To access the live call by phone, use the following link:
https://register.vevent.com/register/BI67c0c32bbb4946b7b9932de4019917d0
You will be provided with dial-in details after registering. To avoid delays, we recommend that participants dial into the conference call 15 minutes ahead of the scheduled start time. A live webcast will also be accessible via the "Events & Presentations" section of the Company's investor relations website www.willscotmobilemini.com. Choose "Events" and select the information pertaining to the WillScot Mobile Mini Holdings First Quarter 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 Mobile Mini
WillScot Mobile Mini trades on the Nasdaq stock exchange under the ticker symbol “WSC.” Headquartered in Phoenix, Arizona, the Company is a leading business services provider specializing in innovative and flexible temporary space solutions. The Company’s diverse product offering includes modular office complexes, mobile offices, classrooms, temporary restrooms, portable storage containers, blast protective and climate-controlled structures, clearspan structures, and a thoughtfully curated selection of furnishings, appliances, and other services so its solutions are turnkey for customers. WillScot Mobile Mini services diverse customer segments across all sectors of the economy from a network of approximately 260 branch locations and additional drop lots throughout the United States, Canada, and Mexico.
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. Certain of these forward-looking statements relate to the proposed transaction, including: expected scale; operating efficiency; stockholder, employee and customer benefits; key assumptions; timing of closing; the amount and timing of revenue and expense synergies; future financial benefits and operating results; and integration spend. 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)
The McGrath Acquisition has been approved by the respective boards of directors of the Company and McGrath. The McGrath Acquisition is subject to customary closing conditions, including receipt of regulatory approval and approval by McGrath’s shareholders, and is expected to close in 2024.
In connection with the Merger Agreement, the Company entered into a commitment letter on January 28, 2024, which was further amended and restated on February 12, 2024 (the "Commitment Letter"), pursuant to which certain financial institutions have committed to make available to Williams Scotsman, Inc. (WSI), in accordance with the terms of the Commitment Letter, (i) a
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 Mobile Mini Holdings Corp., 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.willscotmobilemini.com.
| Contact Information | ||
| Investor Inquiries: | Media Inquiries: | |
| Nick Girardi | Jake Saylor | |
| investors@willscotmobilemini.com | jake.saylor@willscot.com | |
| WillScot Mobile Mini Holdings Corp. Consolidated Statements of Operations (Unaudited) | ||||||
| Three Months Ended March 31, | ||||||
| (in thousands, except share and per share data) | 2024 | 2023 | ||||
| Revenues: | ||||||
| Leasing and services revenue: | ||||||
| Leasing | $ | 460,601 | $ | 439,951 | ||
| Delivery and installation | 100,362 | 106,630 | ||||
| Sales revenue: | ||||||
| New units | 13,499 | 10,657 | ||||
| Rental units | 12,719 | 8,230 | ||||
| Total revenues | 587,181 | 565,468 | ||||
| Costs: | ||||||
| Costs of leasing and services: | ||||||
| Leasing | 102,394 | 97,515 | ||||
| Delivery and installation | 77,842 | 75,007 | ||||
| Costs of sales: | ||||||
| New units | 8,273 | 6,208 | ||||
| Rental units | 6,876 | 4,454 | ||||
| Depreciation of rental equipment | 74,908 | 59,156 | ||||
| Gross profit | 316,888 | 323,128 | ||||
| Other operating expenses: | ||||||
| Selling, general and administrative | 167,568 | 150,870 | ||||
| Other depreciation and amortization | 17,920 | 17,173 | ||||
| Lease impairment expense and other related charges | 746 | 22 | ||||
| Currency losses, net | 77 | 6,775 | ||||
| Other expense (income), net | 631 | (3,359 | ) | |||
| Operating income | 129,946 | 151,647 | ||||
| Interest expense, net | 56,588 | 44,866 | ||||
| Income from continuing operations before income tax | 73,358 | 106,781 | ||||
| Income tax expense from continuing operations | 17,118 | 30,510 | ||||
| Income from continuing operations | 56,240 | 76,271 | ||||
| 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 income | $ | 56,240 | $ | 210,884 | ||
| Earnings per share from continuing operations: | ||||||
| Basic | $ | 0.30 | $ | 0.37 | ||
| Diluted | $ | 0.29 | $ | 0.36 | ||
| Earnings per share from discontinued operations: | ||||||
| Basic | $ | — | $ | 0.65 | ||
| Diluted | $ | — | $ | 0.64 | ||
| Earnings per share: | ||||||
| Basic | $ | 0.30 | $ | 1.02 | ||
| Diluted | $ | 0.29 | $ | 1.00 | ||
| Weighted average shares: | ||||||
| Basic | 190,137,533 | 206,092,169 | ||||
| Diluted | 193,065,392 | 209,663,985 | ||||
| WillScot Mobile Mini Holdings Corp. Consolidated Balance Sheets | |||||||
| (in thousands, except share data) | March 31, 2024 (unaudited) | December 31, 2023 | |||||
| Assets | |||||||
| Cash and cash equivalents | $ | 13,147 | $ | 10,958 | |||
| Trade receivables, net of allowances for credit losses at March 31, 2024 and December 31, 2023 of | 450,572 | 451,130 | |||||
| Inventories | 47,622 | 47,406 | |||||
| Prepaid expenses and other current assets | 61,912 | 57,492 | |||||
| Assets held for sale – current | 2,110 | 2,110 | |||||
| Total current assets | 575,363 | 569,096 | |||||
| Rental equipment, net | 3,399,628 | 3,381,315 | |||||
| Property, plant and equipment, net | 344,187 | 340,887 | |||||
| Operating lease assets | 259,965 | 245,647 | |||||
| Goodwill | 1,175,972 | 1,176,635 | |||||
| Intangible assets, net | 412,264 | 419,709 | |||||
| Other non-current assets | 12,955 | 4,626 | |||||
| Total long-term assets | 5,604,971 | 5,568,819 | |||||
| Total assets | $ | 6,180,334 | $ | 6,137,915 | |||
| Liabilities and equity | |||||||
| Accounts payable | $ | 100,490 | $ | 86,123 | |||
| Accrued expenses | 161,625 | 129,621 | |||||
| Accrued employee benefits | 25,889 | 45,564 | |||||
| Deferred revenue and customer deposits | 227,042 | 224,518 | |||||
| Operating lease liabilities – current | 61,569 | 57,408 | |||||
| Current portion of long-term debt | 19,178 | 18,786 | |||||
| Total current liabilities | 595,793 | 562,020 | |||||
| Long-term debt | 3,465,619 | 3,538,516 | |||||
| Deferred tax liabilities | 565,955 | 554,268 | |||||
| Operating lease liabilities – non-current | 198,265 | 187,837 | |||||
| Other non-current liabilities | 34,576 | 34,024 | |||||
| Long-term liabilities | 4,264,415 | 4,314,645 | |||||
| Total liabilities | 4,860,208 | 4,876,665 | |||||
| Preferred Stock: | — | — | |||||
| Common Stock: | 20 | 20 | |||||
| Additional paid-in-capital | 2,083,735 | 2,089,091 | |||||
| Accumulated other comprehensive loss | (44,776 | ) | (52,768 | ) | |||
| Accumulated deficit | (718,853 | ) | (775,093 | ) | |||
| Total shareholders' equity | 1,320,126 | 1,261,250 | |||||
| Total liabilities and shareholders' equity | $ | 6,180,334 | $ | 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 US GAAP. Some of these limitations are:
- Adjusted EBITDA does not reflect changes in, or cash requirements for our working capital needs;
- Adjusted EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;
- Adjusted EBITDA does not reflect our tax expense or the cash requirements to pay our taxes;
- Adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
- Adjusted EBITDA does not reflect the impact on earnings or changes resulting from matters that we consider not to be indicative of our future operations;
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
- Other companies in our industry may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.
Because of these limitations, Adjusted EBITDA should not be considered as discretionary cash available to reinvest in the growth of our business or as measures of cash that will be available to meet our obligations.
The following table provides unaudited reconciliations of Income from continuing operations to Adjusted EBITDA from continuing operations:
| Three Months Ended March 31, | |||||
| (in thousands) | 2024 | 2023 | |||
| Income from continuing operations | $ | 56,240 | $ | 76,271 | |
| Income tax expense from continuing operations | 17,118 | 30,510 | |||
| Interest expense | 56,588 | 44,866 | |||
| Depreciation and amortization | 92,828 | 76,329 | |||
| Currency losses, net | 77 | 6,775 | |||
| Restructuring costs, lease impairment expense and other related charges | 746 | 22 | |||
| Integration costs | 2,877 | 3,873 | |||
| Stock compensation expense | 9,099 | 8,150 | |||
| Other | 12,436 | 46 | |||
| Adjusted EBITDA from continuing operations | $ | 248,009 | $ | 246,842 | |
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 an unaudited comparison of Adjusted EBITDA Margin to Gross Profit Margin:
| Three Months Ended March 31, | |||||||
| (in thousands) | 2024 | 2023 | |||||
| Adjusted EBITDA from continuing operations (A) | $ | 248,009 | $ | 246,842 | |||
| Revenue (B) | $ | 587,181 | $ | 565,468 | |||
| Adjusted EBITDA Margin from Continuing Operations (A/B) | 42.2 | % | 43.7 | % | |||
| Gross profit (C) | $ | 316,888 | $ | 323,128 | |||
| Gross Profit Margin (C/B) | 54.0 | % | 57.1 | % | |||
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) | March 31, 2024 | |
| Long-term debt | $ | 3,465,619 |
| Current portion of long-term debt | 19,178 | |
| Total debt | 3,484,797 | |
| Cash and cash equivalents | 13,147 | |
| Net debt (A) | $ | 3,471,650 |
| Adjusted EBITDA from continuing operations from the three months ended June 30, 2023 | $ | 261,341 |
| 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 last twelve months (B) | $ | 1,062,632 |
| Net Debt to Adjusted EBITDA ratio (A/B) | 3.3 | |
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 March 31, | |||||||
| (in thousands) | 2024 | 2023 | |||||
| Net cash provided by operating activities | $ | 208,676 | $ | 148,765 | |||
| Purchase of rental equipment and refurbishments | (72,417 | ) | (47,128 | ) | |||
| Proceeds from sale of rental equipment | 14,195 | 7,781 | |||||
| Purchase of property, plant and equipment | (6,554 | ) | (6,736 | ) | |||
| Proceeds from the sale of property, plant and equipment | — | 258 | |||||
| Free Cash Flow (A) | $ | 143,900 | $ | 102,940 | |||
| Revenue from continuing operations (B) | $ | 587,181 | $ | 565,468 | |||
| Revenue from discontinued operations | — | 8,694 | |||||
| Total Revenue including discontinued operations (C) | $ | 587,181 | $ | 574,162 | |||
| Free Cash Flow Margin (A/C) | 24.5 | % | 17.9 | % | |||
| Net cash provided by operating activities (D) | $ | 208,676 | $ | 148,765 | |||
| Net cash provided by operating activities margin (D/C) | 35.5 | % | 25.9 | % | |||
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 March 31, | |||||||
| (in thousands) | 2024 | 2023 | |||||
| Purchases of rental equipment and refurbishments | $ | (72,417 | ) | $ | (47,128 | ) | |
| Proceeds from sale of rental equipment | 14,195 | 7,781 | |||||
| Net CAPEX for Rental Equipment | (58,222 | ) | (39,347 | ) | |||
| Purchases of property, plant and equipment | (6,554 | ) | (6,736 | ) | |||
| Proceeds from sale of property, plant and equipment | — | 258 | |||||
| Net CAPEX | $ | (64,776 | ) | $ | (45,825 | ) | |
Return on Invested Capital
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 the sum of income (loss) before income tax expense, net interest (income) expense, amortization adjusted for non-cash items considered non-core to business operations including net currency (gains) losses, goodwill and other impairment charges, restructuring costs, costs to integrate acquired companies, non-cash charges for stock compensation plans, gains and losses resulting from changes in fair value and extinguishment of common stock warrant liabilities, and other discrete expenses, reduced by estimated taxes. Given we are not a significant US taxpayer due to our current tax attributes, we include estimated taxes at our current statutory tax rate of approximately
The following table provides unaudited reconciliations of Return on Invested Capital, which is calculated using metrics from our Balance Sheets and Statements of Operations. Average Invested Capital and Adjusted EBITDA related to our former UK Storage Solutions segment have been excluded prospectively from January 1, 2023.
| Three Months Ended March 31, | |||||||
| (in thousands) | 2024 | 2023 | |||||
| Total Assets | $ | 6,180,334 | $ | 5,609,751 | |||
| Goodwill | (1,175,972 | ) | (1,011,513 | ) | |||
| Intangible assets, net | (412,264 | ) | (413,188 | ) | |||
| Total Liabilities | (4,860,208 | ) | (4,045,827 | ) | |||
| Long Term Debt | 3,465,619 | 2,876,453 | |||||
| Net Assets excluding interest bearing debt and goodwill and intangibles | $ | 3,197,509 | $ | 3,015,676 | |||
| Average Invested Capital (A) | $ | 3,200,466 | $ | 3,074,453 | |||
| Adjusted EBITDA | $ | 248,009 | $ | 246,842 | |||
| Depreciation | (85,383 | ) | (70,392 | ) | |||
| Adjusted EBITA (B) | $ | 162,626 | $ | 176,450 | |||
| Statutory Tax Rate (C) | 26 | % | 26 | % | |||
| Estimated Tax (B*C) | $ | 42,283 | $ | 45,877 | |||
| Adjusted earnings before interest and amortization (D) | $ | 120,343 | $ | 130,573 | |||
| ROIC (D/A), annualized | 15.0 | % | 17.0 | % | |||
FAQ
<p>What was WillScot Mobile Mini's Q1 2024 revenue?</p>
WillScot Mobile Mini reported a first quarter 2024 revenue of $587 million.
<p>What were the income from continuing operations for Q1 2024?</p>
The income from continuing operations for Q1 2024 was $56 million.
<p>What is WillScot Mobile Mini's FY 2024 Adjusted EBITDA outlook?</p>
WillScot Mobile Mini's FY 2024 Adjusted EBITDA outlook is $1,125 million to $1,200 million, representing 6% to 13% growth.
