Yahoo Finance WillScot Mobile Mini Holdings Corp (WSC) (Q1 2024) Earnings Call Transcript Highlights: ...
Revenue: $587 million, in line with expectations.
Leasing Revenue: $461 million.
Adjusted EBITDA: $248 million, with a margin of 42%.
Free Cash Flow: $144 million, up 40% year-over-year.
Free Cash Flow per Share: $0.75, up over 80% year-over-year.
Net Debt to Adjusted EBITDA Ratio: 3.3x, within target range of 3.0 to 3.5x.
Return on Invested Capital: 17% over the last 12 months.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
WillScot Mobile Mini Holdings Corp (NASDAQ:WSC) reported Q1 results aligned with expectations, supporting the 2024 outlook.
The company successfully integrated legacy WillScot and Mobile Mini sales and operations under a single leadership structure, enhancing market reach and customer service.
Significant advancements in digital and operational tools, such as the launch of Project One, are expected to optimize sales processes and customer engagement.
The acquisition of McGrath is anticipated to bring synergies and growth opportunities, expanding WillScot Mobile Mini Holdings Corp (NASDAQ:WSC)'s product offerings and market presence.
Strong pricing across product lines continued, with modular and storage products seeing significant year-over-year growth in average monthly rates.
Negative Points
Storage volumes continue to lag behind modular volumes, posing a risk to overall performance.
The company faces macroeconomic uncertainties, particularly in nonresidential construction sectors which could impact future performance.
Integration and transaction-related costs associated with the McGrath acquisition impacted earnings by approximately $0.06 per share in Q1.
While modular activations are increasing, the company noted that storage unit activations are below the planned levels, indicating potential challenges in this segment.
The regulatory review process for the McGrath acquisition introduces uncertainty, with outcomes that could affect the anticipated benefits of the transaction.
Q & A Highlights
Q: Tim, could you elaborate kind of in closing your remarks, you mentioned 2024, unlike originally expected and some work to do anywhere within the range will be, again, another nice year of growth. But just reading between the lines, where are you with regard to the guidance range right now? And what are the puts and takes the changes this year, specifically, if you just with the top 3 or 4 that are different than expected as far as it trends? A: Timothy D. Boswell - WillScot Mobile Mini Holdings Corp. - President & CFO: Yes, Scott, really not much has changed. And hence, the guidance range is unchanged. If you just think about where we landed in Q1, it was right on top of our internal plans, which is good. I commented that a good place to center would be on mid-single-digit sequential revenue growth quarter-to-quarter for the rest of the year, which probably puts you right in the middle of our guidance range and right where we expected. So there's really no change to the revenue outlook based on where we finished Q1 and what we see heading into Q2.
Q: I'm going to go now to the mention of share repurchase in April. And it looks like we'll get a decision on the closing of McGrath later in the year. So it's given you a little bit more flexibility with how to apply cash in the interim. So are you open to sharing how much you've repurchased in April so far? And just whether you answer that one or not, just what are your thoughts on applying your capital here in the interim? A: Timothy D. Boswell - WillScot Mobile Mini Holdings Corp. - President & CFO: Look, we're not going to share the exact amounts, Scott. But if you think back to our capital allocation framework for the last couple of years, repurchases have been a consistent mechanism to return capital to shareholders and amplify and compound returns. And we are still very enthusiastic about that lever. We had paused repurchases back in Q4 and for the duration of Q1 as we were working on the McGrath transaction.
Q: This is Ronan Kennedy on for Manav. Can I just confirm the driver of the last 12 months delivered VAPS down 2%? And then what last 12 months VAPS modular units and modular segment was given the switch that was made last year? And then what you're quoting now? A: Timothy D. Boswell - WillScot Mobile Mini Holdings Corp. - President & CFO: Ronan. So on Page 14, you'll see that we had about $393 per unit per month of Value-Added Products all modular activations over the last 12 months. That number includes some third-party managed services from the legacy storage segment. So it's a little higher than the number that you would have seen last quarter. And we included that as a function of the segment consolidation this quarter. In Q1, if we just isolate the last 3 months, that metric is up year-over-year.
Q: Just a couple of quick questions here on demand. You highlighted the demand across customer segments supports a unit on rent inflection in the second half of 2024. So that was really interesting. Can you just dig into that a little bit more for us? Is that because you're expecting an improvement in nonresidential construction or retail remodel or some other facet of end market demand in the second half? Just curious what you're seeing that gives you confidence to make that statement. A: Timothy D. Boswell - WillScot Mobile Mini Holdings Corp. - President & CFO: Tim, this is Tim. So this was our -- we're talking about the modular product, specifically when we say that. And this was always the expectation for the year. It was predicated on mid-single-digit year-over-year activation growth sustained through the course of the year. And because we have 3-year lease duration underpinning the unit on rent portfolio, it takes several consecutive quarters of year-over-year activation growth to cause unit on rent to inflect positively on a year-over-year basis.
Q: I was wondering if you could talk a little bit about the conversion rates from your quotations to your orders and how that is informing, maybe your opinion on the customers' price sensitivity or their view of the health of their end markets? Maybe talk about how the timing is changing, if at all, between -- the time between quotation and order and delivery? I know maybe last year this time, you were saying that, that was extending a little bit. I was wondering if that's still extended or if it's extending further contracting? I guess just some detail around the consumer behavior as you're seeing it on your leading indicators. A: Bradley Lee Soultz - WillScot Mobile Mini Holdings Corp. - CEO & Director: Yes. Andy, this is Brad to start with. So you're right. We've talked about this phenomenon last year, but it was specific to the modular portfolio. And I think effectively, we're seeing something very similar, right? We said storage will lag modular. So our rolling 4-month quote activity in the storage business is up year-over-year. As Tim mentioned, we are seeing conversion rates slow, but that's not necessarily because we're losing business, right? I think this is maybe a timing phenomenon a bit like we saw in modular.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
