WSC - Earnings call transcript Q1 2019 | WillScot Holdings Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the WillScot First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] I would now like to turn the conference over to your host, Matt Jacobsen, Vice President of Finance.

You may begin, sir.

Matthew Jacobsen

morning. good and you, Thank

differ result Before we will Private and including you those of we later results to filed the Litigation our forward-looking release Form I'd our discussed our in forward-looking statements today. like factors, factors SEC may Actual discuss XXXX. the Act remind from risk as those XX-Q the identified various Reform XXXX statements a that of begin, materially defined in press Securities as and under Form XX-K with

While we we do the may update forward-looking statements so. disclaim in future, to any obligation

You your should of all today. reliance in may call questions statements that statements. these as of to like forward-looking the remind you this conference not statements, place forward-looking undue We'd some include only to which responses speak of on and

X-K As assumes to such, uncertainties these forward-looking release cause our events materially obligation results to The to last the is the website. we presentation that on press any call no posted statements. intend and of are could section and in Relations from submit Investor they to copy not update differ and issued included an been of will subject actual the A WillScot statements. future night also the for release are SEC. such does today's we that our

on via We this will of make the Company website. webcast replay call available conference a

reconciliations have earnings the information on the that tables we today's presentation non-GAAP included GAAP to slide release. accompanying financial information. For has expressed refer and been comparable basis, Please to a

first quarter website. section will the The filing our SEC Investor our XX-Q Relations Lastly, the be or this for the XX-Q with are XXXX. morning, the on SEC of of available through we

our quarter with have brief Tim overview strategy, our me Brad provide CEO; call Brad first CFO. of I'll an results financial provide results President with and for Now, summarize a will will kick-off and on the the today's update detail I and before we today, our our open to turn quarter Boswell, call key up additional initiatives. Brad. on for over progress our With the Tim the our call that, then first on questions. Soultz,

Bradley Soultz

and as $XXX the first to first growing revenue EBITDA XXXX continue extremely million quarter focus adjusted to results "Ready-to-Work" our our and prior of quarter year. million up were pleased and our I’m through over welcome, Matt, and with we core continued Thanks, on XXX% conference optimization everyone, platform. price expansion respectively of of $XX.X WillScot's Revenues XX.X% leasing call.

XXXX. quarter when the net quarter and adjusted we remain growth rate to extraordinary achieve an strategy our second of optimization "Ready-to-Work" realization revenue control, management's first Our quarter margin EBITDA EBITDA debt-to-adjusted XXX in confident outstanding as with combined This these value XXXX largely million annualized are and the growth These organically our scale lease ability deleverage of first of drive of margin to business expansion guidance XXXX. XX.X% highlights to solutions. XXXX in on commercial points by levers over the run results, of the synergy both with of basis and coupled $XXX increased rate and below when penetration our EBITDA exit through Xx adjusted our and

investors overview before a three, company highlights and provide we new again into of further we I'll get have joining Slide that analysts to turning QX brief given today. Now the us

locations meeting an about unparalleled spanning a over proposition the leader, million solutions and temporary solution, over provide XXX unique their now on modular XX representing of square and functional the is immediately we providing This space provide space innovative, on our units We portable productive, network is industry. with can customer market is space space forget all foot our best customers so of "Ready-to-Work" goals. service our solutions. these Canada fleet storage and the productivity rental deliver specialty XX,XXX We focus sees. that U.S. being XXX,XXX mission customers to value these and they project, a Mexico. through do working what As When than of focus more an over to the solutions branch in and

including customers, to are to us recent it and Our acquisitions new is growth. embracing driving our those it,

Turning underpinning a I'd five compelling the a our to growing service slide as unique highlight within rental sector. four, and platform attributes to WillScot growth represents like leader fast specialty platform.

first is given growth average growth. At revenue U.S. modular we up lease segment, quarter our we of the rates by increase million rate a average double the a XXXX pro were XX.X% And XX% basis, which VAPS. primarily in $XXX delivered and core durations in rental visibility exited same in quarter monthly from its looking year-over-year embedded we significant driven at level, noted, the of which first XXXX, XX.X% forma of consolidated trajectory forward the consecutive over our up a quarter digit in as XXXX. First QX, on have period sixth XX-month revenue modular pricing representing our

by growth continue our addition look ahead. we the momentum is to as optimization, price "Ready-to-work" continued expect value to of In this proposition expansion driven rate and we

the quarter The for adjusted basis strong start points and is result year. second the up of respective The attribute we and adjusted the EBITDA delivered margins XXX million EBITDA a margin XX.X% $XX.X first to of providing are XXX% year-over-year. in up EBITDA adjusted very

along XXXX. addition in $X.X action the cost of the approximately ramped cost impressive cost of quarter quarter of our realization line acquisitions that quarter. results the mod In with as such related are synergy first contributed included been exited to those savings million top had throughout of in flow we XX% and These prior through space synergies growth, the

second exit half control. the is in of With and are straightforward, rate Fourth, achieve an XXXX. million strong accelerating improvement EBITDA as and margin the of to year, within a run growth generation headed $XXX recipe The achieving have adjusted we continued expansion. approximately to flow cash Third, in we adjusted into XXXX XXXX. EBITDA start we accelerates largely free this our the confident

accelerating cash with free them. earnings Xx. to and leverage we the that entire confidence XXXX, second in characteristics net the of of discretionary QX platform annualized net our cash at cost range to Xx biased and be our the half head Given or below $XXX we of provide deleveraging the generation of million target the achieving results in free and cost with our first income that inherent Xx cash and XXXX. the EBITDA fifth, of are net we're flow into In generation flow quarter line These rate into accelerates half delivered cash And our expect flow debt-to-adjusted summary, the proud synergies, associated second expenditures to team as XXXX, approach to we by WillScott expect XXXX.

aligned believe goal objective our rate well achieve delever to fully is year. achieving the of Our is continuing adjusted EBITDA million the our safely frugally within control, team a this exit and $XXX We as to towards while run all business. we the

to in company the capability as Slide turnkey to Turning sector scale, other and deliver commitment our no five, we service scope, has do.

U.S. the Approximately This was $X as period. end diverse XXXX three a and and are Acton, For EBITDA our the on of our combined adjusted our over generated ModSpace our of forma a serving revenues billion group XX% million. Tyson acquisitions; revenues for markets. owned inclusive very entire of is were just if we'd in them business the $XXX pro basis,

WillScott. to three advantage, Beyond our substantial are scale attributes there differentiate

First, We've business this the as of proposition I added and with our strategically "Ready-to-Work" unique VAPS. mentioned our to value proposition. the or products expansion value offering, repositioned services

accretive driving it, and growth it's customers returns. highly our Our with value

and differentiated our scalable is Second, operating platform.

created Over allocation swiftly management the we've in characteristics. years, our differentiated We've capital leveraged highly of and platform platform operating efficiently and asserting sophisticated price past includes successfully have market platform this people, our our several operating a technology companies. invested integrate leadership. capable acquired and and to The scalable processes,

performance. Third, typically into average of with degree a which months. assets which lived profit XX% by our XX is economics, lease visibility leasing XX gross from durations unit years adjusted future is high a underpinned derived Over of of coupled recurring long of business, provide attractive our

the accelerate growth doubled highly M&A. Slide the by platform order already the six, size and organic turning of the operating Now six last with WillScott quarters, in over accretive augment to leveraging the further we've strong company to unique

adjusted to arrow, depicted recapitalize in has As and above markets company the the since continued public we returned accelerate the EBITDA to our in late boxes XXXX.

EBITDA The first adjusted quarter of the growth. of consecutive eighth quarter XXXX represents

Now during the and all joined making we XXXX, XXXX, integrating Russell while three acquisitions.

the the and has into begin I'm safely proud As system these of efficiently evident in the embedded effort of to us substantial QX costs team gone to execution associated ModSpace XXXX has their our extremely synergies. companies and and our Tremendous and results, realize now operational accomplishments. integrating commercial, enabled commercial and integration

are revenue This the have acquisition will our evident our adjusted its integration. from contributions Starting the seven, QX, with Slide to results. turn was significant that would realization the growth, to left, lease combined we million. $XX.X subsequent prior synergy QX EBITDA at organic note you XXXX included So in

the our delivered million pro period, forma QX XXXX a million. them adjusted acquisition of EBITDA EBITDA same to total adjusted prior subsequent During $XX.X ModSpace combined for with $XX.X

the of $X.X other estate savings previously personnel consolidation consolidation, period. real through As the million cost and plant synergies in noted, realized to acquisitions corporate SG&A we've sales related branch,

building and quarter flow extraordinary represented remind realization commercial points VAPS. deferred $XX.X the business which costs, in rate margin of as In through impressive as addition adjusted I growth, synergies, to our XX.X% to drive with also result forma optimization, highlights is adjusted organically with This in rate through of basis the million improvements penetration of and million our margin as VAPS XXX% increase QX XXXX, top revenue first the result contributions some is line strategy basis which we a you period realized and increase optimization basis same versus XXX and the of XX% by as scale basis. points $XX.X The which EBITDA primarily value of $X.X cost when variable coupled driven a to over up organic all on of the a an bottom well seasonal on pro million XXX growth line synergy up first EBITDA on reported combined least pro expansion our resulted forma quarter of XXXX.

EBITDA Given We've and adjusted of to continue $XXX to generating do start and track we're XX% on discretionary same. to delivered we to the to flow XXXX. have substantial year, commitments our well an to the expansion to cash we expect be the margin run EBITDA free on strong million, as achieve rate

expanding we first executed WillScott quarter VAPS provide as the the expansion leasing points capital I'd in the provide KPIs first by on left realized chart, quarter. the continue Turning U.S. U.S. a to rate the network. rebalance presenting vast representing up for best space given monthly middle fleet left snapshot the Slide chart, the focus they In as across was the consecutive driven of rate top units XXX fleet. primary of tools. acquired XX.X% to run and business. X% the ramp And left current we increases. forma as which were in XX.X% is optimization, reflects the optimization price foundation the utilization pro and entered as the previously average quarter as on space noted, underlying $XXX increase a company on lower integration ModSpace XXXX continued basis U.S. of in the idle these In Modular our rate basis sixth results was major I'm penetration this the modular the This of down trajectory key and rental eight, quarter rebalancing to activities like branch allocation double-digit to hand, the solid in up year-over-year

starts. While than later new deliveries weather broad bit to activities are in quarter, impacts, expectations remained expected the ramping and projects a more season has generally integration normal spread some at have throughout projects delayed our above activity Code given the both [ph] our which the or up related

and Our safety integration subsequent of colleagues, second the remains third our and fourth, VAPS project, penetration our primary optimization focus periods throughout and of optimization, rate harmonization the utilization. asset

I'm years. Slide term levels delivered that average given XXX of annualized goals. our achievable this of successful successful XX over continue pleasing rate of million introducing have term achieved the to growth VAPS the months prior next and XX long XX% both our over our months synergies, year. of scenes office facilitate prior equipping This quarter, particularly who towards is there nine, million chain units cost is increase -- of incorporated In XX Acton in business. the the This is ModSpace revenue VAPS value many to increased unique the in to our up study portfolios. to the long addition delighted our LTM the to per acquired levels continued and been to key focus an first customers. confirm vast penetration sales month Turning the the new We've all expanding three rate Increasing remain $XXX. across past combining team growth. integration themselves to proposition been job a done operations outstanding logistics Behind penetration will team supply have this opportunity and

Aside the of than growing of levered of expansion proposition returns greater from value aspect M&A, represents "Ready-to-Work" with XX% business fastest the IRR. the our on

demand the diverse upon turning We to for to will increase attention years offering businesses. over ask our as turn finally Slide markets outlook. those demand in well your and as to several And our penetration expect our XX value both expand and with the Tim, you customers expand continue legacy over acquired before to customers this new we would to I as proposition end Tim to order associated increase our our

of to left those like the which to for you in chart our a this direct story, depicts profile. slide you I'd of the pie First, to new bottom customer

remained to customers Our utilities less now customer Non-residential general highly represent of actually the and revenues. industrial black market one highlights revenue associated this end-markets for their several is of revenue. The the our quarters. the very is than than green of end major are discrete the itself projects customers comprised fragmented providing resource end stable contractors, slices an are XX XX% which energy, markets has level quite with represented over stable end top mix. and in segment are and our commercial as typically by And diverse No represents finally, continue the end discrete of end groups of mining and market A largest XX darker in one this is other the overall and more segment from end group of mid the revenues representing market more diverse are natural at X% serving which XX% other years. markets. as and downstream for last than and market majority or remain have customer with our few X% they construction representing no revenue the several of base energy

Our with across external forecasts like overall positive, geographies. few demand our prior outlook strength and calls, I'd diverse balanced, we continue highlight to and to remains indicators. Consistent our quite relevant a see end-markets or

XXXX. American the X% is revenue First, forecasting annual Association growth through Rental

ARA U.S. stable square charts value same Canadian forecast the and which are the remain growth the construction remain positive with current is activity above XX of construction months. for finally, with for contracts or as inquiries long of for good to generally last consensus in X% on XX.X X%. and GDP for And Second, indicator March growth term non-risk The new design reported a the new has page. and to has the levels positive. XX ABI projects X% forecast left Non-residential averages. at above above period the depicted in the a XX basis starts line continue been been foot ABI XXXX of for in leading top

in strengthen largely and that our while Now end and trillion infrastructure further included now diverse to outlook, be implemented substantial our markets. would up bills any we not most approved underpin U.S. to rumored spending once $X of would expect

remain term vigilant the ahead our as to and capital in supportive growth are markets at end We investing as our flexible time, balancing support currently strategy, we returns. same growth and remain expect affording, we our long markets look maintaining

to have with model over of our which As markets short drive long the reduce of key lease support XX growth. lived average spending together free we in assets, extent our to us the capital terms and coupled is the over flow our not and allow do one discretion term month spending strengths business a reminder, our capital to the cash

I'll allocation. hand have provide process Tim We continually With additional to we to quarterly a will context. that, disciplined our demand capital control and which through it who over reassess

Timothy Boswell

original from acquisitions Acton WillScot contribution the Thanks Slide build this an both was began our financial QX each reported our quarter they see results expect adjusted exciting ModSpace Please turn to and and growth to our as and synergy show charts synergy quarter adjusted are financial The EBITDA significant were expectations. in year-over-year as value Brad. XXXX we XX.X% EBITDA XXX% consistent revenue year. statements. to with XX. top to up was up prior contributing our and in Revenues we versus for

course EBITDA growth is half from both sequentially year organic $XX.X adjusted better year-over-year annualized by leverage was of synergy we away Total offset the adjusted a our The articulated and adjusted operations. and or our in through on identified million from organically. of XX% sequential annualized up which forma and roughly of represents previously. in operating came that show other flow million of sales This leasing about healthy and synergy cost million mix chart forma the consistent the Of and on leasing performed saw result the had of how revenue realization we'll that prior original also the million cost a and a $XX.X cost XX% combined EBITDA, portfolio The savings is of $XX year-over-year in of bottom EBITDA XXXX specifically contribution modular a million forma coming was and from dollars opportunity. basis, platform revenue charts pro growth of million half in operations indication pro through pro $XX is pro X.X% adjusted $X.X actioned. in the we decline with approximately combined from ModSpace quarter consecutive increase revenue This what eighth and QX EBITDA, $X.X intentional, shift marks QX. continue to adjusted revenue, partly favoring up mentioned, expect the XXXX from of take net growth is the leasing with growth coming the we Brad basis, in relative and through revenue. flow which to growth. tremendous EBITDA forma EBITDA The synergies we've the is a As is X.X%

line adjusted that to $XX growth That increase in which and seasonal adjusted Of lower our EBITDA sense excess delivery was And the from costs leasing than lease see given we by $XX.X $X direct forma referenced. the dynamic materials a dropping that were was come pro in over EBITDA, added variable adjusted flow million value to thrilled decline which installation as bottom as somewhat revenue commissions such partly to the is encouraging. growth labor, are leaves remaining in quite million it makes the just EBITDA million due $X XX% based We start volumes, approximately emphasis sales peculiar it improved products. our slower revenue. and that to suggests year in Brad pricing margins on million into delivery expected I'll on and to resulted to QX in million shifted to offset which appear have minute, through this on of enhanced back and but that $XX from increase revenue a by of services planned.

and QX points results puts points well XXX and XX.X% cost EBITDA as overall Again, us season. the QX the that adjusted deferred a $XXX our supports will cost cost pro be expansion margins basis the communicated synergies that full year-over-year said, Our D&I year. basis XX% basis, later outlook forma volumes for margin on in pro XXX on of margin gross in by adjusted margin this basis million year. variable and basis basis in this way to That was ramping of of points as seasonal delivery margin the flow $X expect and the through as to approximately million QX target organic to variable run which we've drove QX on three well pricing in a primarily items, reverse appear XXX rate These year due this deferred initiatives. XXX points I of forma XX% EBITDA added on up

However, margins dynamic. due continuing this before should QX now the bit in target dip the to our a atypical seasonal to expansion

Slide to loss net reconciliation is adjusted Turning EBITDA. XX, this to of our usual

the income are our throughout integration sounds clarification improve minor adjusted we XXXX. in related of what sell our from net in tapering believe XX-Q the nearly are on operating down impairment $X.X million like after equipment line opening best that The to see related to by we and half bottom certain up indicator transition and last we impairment the a EBITDA $X that ModSpace and peaking we non-cash In will lease us value bad with our remain we intend of is million and to sequentially fair steadily estate which QX page, totaled growth to bottom you restructuring, the this consistent off contribution focused wrote charges While of costs also confidence a revenue balance incurred expect QX, One property line performance, generation thing. combined total second this real $XX.X sheet. synergy year. In plant million year. continued of in the and give that XX% on these realization charge organic

integration, annualized transactions. the real QX unproductive reflected seeing XX% this as we as surplus Remember maximize where results impact in owned QX our will opportunity on was of year. is actually simply expect We've as in reflected costs So total Slide of opportunity that encouraged well and our to restructuring at proceeds. realization, already the the our by in gives synergy our property Approximately we the results, are we million discussed $XX to proceeds update favorability the full XX be cost status valuations continue seeing estate and stand realization initial to of XX% quarter. annualized synergy redeploy summary real and goal net are overall us in capital. the are some estate we

lease contingency as point believe, opportunities, middle X a In in we As this synergy uncertainty do for result chart, potential not integration of do reminder, that certain managing that the optimize some at these our some and risk the three will related believe restructuring assume to that we to flag integration cost may planned the and from cash aggressively, potential to to it estimate. the totals we could which original We're contingencies want ModSpace be and facilities, risk potential quantify And there any proceeds terminations. any costs, XXX% perspective are identified half the risk offset future, right necessary, we we do be approximately operations. former the other from which real we shutdowns risk the but these while we include of prudent have that in would the manufacturing Phase is the entirely not reflects by estate a incremental remainder hand chart. did

exit owned positions estate real nicely. Our is very progressing of

begin be in while from which expectations. in original of estate the is million will the proceeds real sales of transactions And to potential $XX is our QX. would hard timing realize to property cash XXXX, We predict, realize cash there faster significantly overall from up these proceeds to than to

reminder, highlighted expectation the that disruptions proceeds of expect Brad retain $XX our As rent the modular and leasing to excludes were off basis to XX, total fleet integration In a was On ModSpace estimated Slide XX already value year. fleet, on quarter the forma last top year-over-year $XX chart, the XXX we basis seasonal year-over-year U.S. properties of the million. to we the reductions discussed fundamental owned on units already. a the And KPIs X% utilization carrying updated in due up discussed on with in that approximately segment. million due size pro of average primarily points left last

While added products. core the the offset volumes value entirely the in on is strong that remainder year, performance and of continued rent risk create by a of rates headwind

our goes guidance performance driving range segment that which is unchanged. U.S. the and revenue expected bit run I the discussed Slide already XX operations which on I our EBITDA at and the segment, rate consolidated more in very adjusted are segment So trends North QX a into level. includes brief Alaska, slide and significant change America add QX. America No our other segment And comments this rather, North in on Mexico. Canada, XX, in will regarding detail

looks it the in by a is provided flat on changing sales strength it not from that Overall to revenue sequential a Canada the because Alaska, QX how a in I we as increase so equipment we was impressive, Western spend opportunity flow units so but sequential Canada in Slide pricing, in it expansion view of sequentially $X.X margin time that of business continue Eastern We illustrates largely both XXXX. look are decline cash rent. and Mexico, with stable, QX the driven with in and offsetting as was And but and sales million extrapolating. beyond average and equipment perspective. result XX this from some on course is contribution, it will through year a more

business cash That $XX we and ultimately realization, to be we cash these flow EBITDA of XXXX. the This the using remaining at continued the second cash format throughout growth. net generation we the that the year the quarters generation January. million flow more in to driven we income also You in cash the how transition significantly free shows from run expect adjusted free midpoint from that year our adjusted of original for bridge top cash we ranges. adjusted begins to will lease implied illustrate cash head generative free And the well chart. for recall approximately same integration indicated is EBITDA culminating EBITDA we million in left synergy And half we and still is year. call, XXXX. revenue result as flow used We chart by quarter-to-quarter cash when of see the our what flow provided cash the that discussed free dynamics January, that we quarters, in losses as to remaining in that half flow the transition issued On consumption, QX first free our into with XXXX restructuring QX, consistent early guidance rate in million accelerating tapering to the the the guidance costs, left the would a That being to of present of in of as than in our bottom adjusted $XXX free bridge year how cash $XXX EBITDA bridge for our ranges. and expect discretionary

year expenditures driven $XXX headwind million largely by bottom offsetting change consolidation The a as that products. expectation and reassessed that our no of left. real million can was behind thesis and as $XX the KPIs, installation million as our to the organic debt. And will profile, see fundamentals, added will margins, EBITDA remaining remaining as from The for we or us, suggests strategy. such profound million well $XXX fluctuations are underlying chart estate fundamental delivery on cash well by to generate of transition in remaining and as pace cost Focusing operating the original a proceeds synergy cash demand realization. adjusted business expect of of the the $XX capital this to $XXX our beginning which driven starting The average realize. our Altogether, of we in flow on refurbished given debt that million interest our assumes weighted be in to leasing cash this you primarily structure sales, and remaining is value left quarterly equipment integration be costs

perceived and million XX, integration comfortable of fund upfront to planned Slide our expenditures. have debt the we very structure to other which $XX structure interest to cash debt well manage with inclusive the capital debt our changes dramatically to passing with flexibility risk Moving there is of flow results, than quarter. I with draw as just no as outstanding the reduced costs is the light activity or of We change illustrate XX% any overall in the each associated leverage structure Approximately fixed consolidation the material ABL dynamics discussed, remain the swap. rate, execution that in been rate QX our have

is rate which see to approximately average we of exposure clear some debt cost weighted opportunities reduce currently our with So limited interest X.X%.

the XXXX. maturities structure. that do debt to prior flexibility have We no in every at repay level We to debt have

market Slide as and monitor us And target be our capital meantime, the both generation. and the a capital maintain there expenditure as conditions expect lease cycle cash revenue sooner this many tremendous for flexibility With basis a cash closing average great full times that the and in two to planning current conditions of visibility of reasons will our on can rate we managing Brad on So we run when it basis, assuming is leverage on flow, measured lease structure. give comments why will XX-month then to of we combination discretionary plan. around have and a durations as Q&A. capital We be and the by a extent business. good QX always optionality free well hand XX-day trailing I'll four as market we opportunistic the transition how target improve XX our we deliver underpinning In to we a to XXXX, this

Bradley Soultz

provides we very that in forward of with quarter remarks. join appreciate Tim. our We XXXX. below the look continue you’ve of to articulated. our you generation on provide interest closing, deliver XXXX, concludes and into at in flow of approaching debt-to-adjusted free speaking These characteristics commitments. $XXX in to We're that we your inherent many the second confident working cash our proud $XXX Xx or an foundation the in be future. to outlook all run our accelerated soon. XXXX taken the of EBITDA annualized which Thanks us with our expect ability head cash million our discretionary to extremely as We're for rate flow Tim million EBITDA net We adjusted XXXX In That strategy prepared of our rate accomplished first a today achieve we for we earnings, of to company. that is very and platform great by as quarter and confidence time

questions. Now we'd to your please Operator, line. the be happy take open

Operator

from Thank Our comes question Manav Barclays. you [Operator from first Instructions] Patnaik

line open. is Your

Manav Patnaik

Thank morning you. Good gentlemen.

was at had guess picking the I just up the end question track, new of you you quarter you first and could some forward? order The was said provide if how going activity I that to color anticipate more on that the

Bradley Soultz

Yes.

mentioned at prepared the our quarter throughout or I quote comments, the my targets. activity As above first remained

then quote quite to Order forma kind and rates, so with you related of spread the we've pro I four than levels, the the quarter say are or friction. reasons obviously throughout and a involved those more order, the been seen conversions five would historic consider the integration pleased the If nicely in activity. mentioned, of ramped so for ramped broad certainly weather in I've bit close we're lower last least industry. the both impacts delivery at years orders the

Manav Patnaik

synergies Are coming quantified just you there with were overall, some synergies other wanted Just And haven't terms whether close to of you Got in think talked the that I getting about we up of see it. are you those? there? yet. then to guys

Timothy Boswell

able Yes, little year, talk this about more I or Tim. as little two, is specifically a deeper that. get the next And to bit into a we're quarter we expect

to our For the opportunities will just the results the up the thereafter. attention we're will encouraged show that original and to build now, very we are of very starting that throughout course expectations continue future turn in year to

Manav Patnaik

it. All Thanks right. Got guys.

Operator

Thank you.

Suisse. comes from from Credit Kevin McVeigh question next Our

Your line is now open.

Kevin McVeigh

I Hey, thanks. volumes I'm Great, wonder, aren't I'm the more. down surprised actually

relative you that? given towards driving kind you the or number key the if Brad. outperformance around integration sales or that? really towards about I force relative the the waiting Just what's it from just two, is of and to other one, thoughts just Number through, think clients, more think then one the Tim went on any

Bradley Soultz

some XX branch with activity, larger lease smaller in portfolio. of in we've What's office the network remain where unit the or the moves larger business on on well given some get going portfolio slowly the extremely well. can in clients positioned is We seen disruption transactional complex biggest in that our that and Well through I business. the back average transactional but The the of in month duration as either. the very rent think disrupted

it's picks seen with see it's products from it or gradually added what and volume and pricing gradual But to order see offsetting whether recovery. very value to as perspective. So that's date going do we up, a going activity we we've about up and down any weakness

Timothy Boswell

mean is, XXX. about what thing Kevin, go to from I the it's branches operating to XXX add task context. would I your a one significant appreciate was I

you after transaction. based November we recall shortly occurred Xst March the that If closed

of focus hadn't point, care those to we So but on really substantial the not made structural expansions of at the the team's drop customer, locations, No, at take that first. the customer mandate was any balls.

So various continued rebalancing more expansions well as you the continue to articulate, XXX we've we at structural idle now how as go I'm you've consolidation. And acquired navigated to some which will as initial with progress, branches, of all our quite remaining the efficiency and the we forward. pleased fleet effectively improve as got as

Kevin McVeigh

sense. long And makes been pricing great. double It digit you do that pricing? sustain can then -- has How you the sense just, think any obviously

Timothy Boswell

see did the doesn't and we overall $XXX number the change. the three mentioned suggest ended year. we and that QX But you March rates because But that opportunity our to course delivered which $XX added is QX still continued We to as up, That's and always that the for reassess is Brad product go period number would and say, by a Kevin. the months change, traction. get deeper have were that's certainly we same this opportunity great We tough into thing, one the not we'll results push through and grew goes value we very ago. had in love – value size another business we up in pick that by time saw LTM the added as a encouraging, million expectation year, on original of products great. to continuing

all So that's good. that's

Kevin McVeigh

you. thank Awesome,

Operator

Thank from you. question Ng comes next from Philip our Jefferies. And

Your line is now open.

Philip Ng

seasonality QX helped you think bit of can you your XQ. a call guys in kind on expense margins QX I basis timing more, in points flush to XXX out that's the little the margins a for variable Hey from by

dip in XQ, more so of that through synergies of of mindful kind anything to kind normalize and as expecting decline, does for year rest need the to out you're fully? we that So your flow be

Timothy Boswell

this Phil, Tim. Yes is

So little seasons cost margins than QX simply busier be the to you of as delivery in a a starting up tend and tell say normal year, in as lower that branch in you QX. you're to incur few more a the X, QX ramp that because for variable would I bit network,

Okay.

that what we So or related other seasonal ramp up heard basically lot a a it's the this year of whether some that integration we've saw was deferral disruptions due to about. of

are has way our generating view changes activity that XXXX. going the would but otherwise that the QX, just run really think direction going great. margin and then truly that occurred up, in the pressure QX, business. all That of activity. it and of as business you’re And the is in our that's cost that you no that's shifts get So fine. with orders normal picking nothing overall as are variable that This have get into that's about the means in in realization into we QX do associated rate the synergy to delivery we And with QX cost

chunk of the relatively course I a fashion that the saw clearly of building big think we through the we've and QX. synergies line as as in drop said linear of in the year before, the cost bottom So to

Philip Ng

drive set shape you And you thought? I bit more the seem of upside? have in fair question the upside based March realizing to synergies any is is opportunity than well? as in segway. Were next a faster kind would to guess good the of you a my surprised a quarter. Are larger That's little there the pockets amount the a that that

Timothy Boswell

And I'd are believe business are there much the do business, synergy operational call improvements are synergies just in or cost Now and we opportunity expectations. the of beginning that to say turn us a ago, that attention there's in Manav’s the you other looking line out coming available cost areas minute very with forward. our to whether to question we to

we WillScott legacy where knew, and surprise delivery and quarter, one installation that have That's an perspective area historically that the had at attention. pleasant and been margin highlighted time the dedicating Looking we a XX%. from pushing I was some opportunity

Philip Ng

lot. Thanks a it. Got

Operator

Sabadra And question Ashish our from you. Thank comes Bank. from next Deutsche

is line now open. Your

Ashish Sabadra

about improve the just wanted the talk but going well, Hi, How congrats, around talked do as you importantly, up solid Can to can for delivery logistics. improvement congrats a you -- results. the forward? is opportunity follow you can the such much installation and and on you earlier about comment to margins. there pricing optimizing there what I on margins outsourced just

Timothy Boswell

pricing really a from There a you more coming performance that can dynamic driven. wells margin the Yes, rather bit that is margins if Ashish revenue QX deliveries largely help well. of I’ll as was equal that, than returns is say on all that of in where have your

on So decline there sequentially. rent on of some there unit a was that given going certainly was that

into that. the As from to or cost do relates year. I it’s And premature standpoint, an in improvements get that it to revisit efficiency we'll later expect

Ashish Sabadra

good. a have highlighted current is VAPS, LTM monthly VAPS forward penetration question the on penetration up every What's sounds go in the steady quarter. to or you VAPS, middle? just think a the with the in you continue again $XXX rates do move can maybe how And the the there? That maybe the What penetration state going And where rate? Thanks.

Bradley Soultz

believe we that our increase This that to Yes. month, value as XX our of stated to penetrated to would objective is is Well, have kind furniture. Brad. per with XXX. about we've term We units long of XX% $XXX

the little right, -- calls, but and penetration, mentioned units as a steps ramps, about I capital almost primarily the we're prior have talking because furniture so on drivers. to all back As have

be about in if would which XX%. term XXX So, now, goal we’re progressing that XX% to XX% towards $XXX we're range our long of

Ashish Sabadra

That's congrats great, again solid on results. and once

Bradley Soultz

you. Thank

Operator

Thank Oppenheimer. you. from our question next Schneeberger Scott from comes And

line is Your now open.

Scott Schneeberger

going that not quantification huge any so good such to for don't morning. Good you that's want wise. be, But know that discussion. Yes, feel, and quarter quarterly just Tim, quarter a should guys. to you the quarter first on second to first any I follow-up be first XXX quarter could very us a everyone trend nice points? what a to want because give was to it's XQ obviously much. feel just guidance basis quarter second very has swing to give quarter-to-quarter Thanks Q, margin I for

Timothy Boswell

should in actually would million that take points that that cost about variable XXX intended QX. And $X Yes. pushing expect to QX. that represents margin and we're I if you in of remarks I convey is that dip Because that basis Scott. into my

QX original to higher consistent original relative in QX. in plan to us So due bit will QX by our with margin our that put relative and lower a XX% come in than our that slightly to expectations. this dynamic normalize will original Margins QX culminating original QX expectations. then in expectations came and in

the to take QX. you margin will that take points about out basis QX, if XX%; starting XX% in So be a point XXX for thinking

as is a pull there down moderation installation in QX big that delivery other could which was Any variable the you delivery margin The season. very and in into especially surprise a positive bit there that QX. active get delivery

terms from cost a takeout It's unique related everything cause in our not perspective. alarm any for initiatives start with just of to year the bit cost that's So variable a of to well track. our timing a on

Scott Schneeberger

Great. Thanks.

the to guidance. I think that that's segway helpful. as full year a at look I'll use

bit that And push above then low high that little the you're pretty a year. end how opportunities the three keep are you could the you or could tracking. could think as I three two of two things end? kind things phone push of Thanks. you guidance of top good phone ends But rank towards the far as are think of or order the both this on end things the concerned this that

Timothy Boswell

remaining guidance. variables. with then QX Obviously on this And biggest free based my original Yes. EBITDA Brad I yours. start the is was I'll the contribution QX, perspective on of referring cash touched and expectations to when you I one give that in QX, the

those percentage to of installation least on. KPIs there products now a act a one opportunity the you significant some and but certainly result. but is we right bit either and QX, we is some can value came -- balancing leasing any opportunity the play relative year, price in revenue we're margin the added way headwind change what we're is Delivery drive this seeing there If something and maybe other a about risk margins; every of the in KPIs, offset or where working and volume think by

of the our think expectation I year the balanced. for is remainder sales

the a energy very the nicely. one cost So, there I be And or tracking expectation other. don't way to have meaningful realization appears

permits. leasing is So, about fundamentals this the think I all of the

Bradley Soultz

Yes.

that's I think right.

and the the next more The Tim seeing upside right. markets costs the touched further be It add you'd what on us could to other in with expecting how invest we are period. some could to for thing helpful but and more very us have given would we're acceleration than on rate, depend run same capital, year's volume variable year, or the happened in incremental is, I require -- that would surprise

the one the of confident next we able consider And fees I is, these as for volume in. said cost we which kind where able now. the to Or it forward. for we its neutral Tim, too said to XX% realize any to and focus if leaving we than were of other before within targeted more that synergies start to we're only to if Tim call touched upside then We're above year. quite the synergies, move QX we probably additional were to just on on the were So helpful early but be realize of period, of as if cost we'll we proud are to surprises and all

Scott Schneeberger

Thanks. Okay.

optimal potential through call. takes the once conceptually multiple on of on it I volume the with interesting. and think process? and you drives. rate little on that about term? state and a through looking of in at there's get Thanks. on the balance integration quarters it’s How focus Just if flow rate do could lot But puts Obviously out I this in. everyone is margin sneak and longer incremental steady a it's volume one appreciates now the think that you the What the your Brad, right well there, been more integration commentary covered

Bradley Soultz

integration Yes, we'd to XX is like our to say the prior and XX. results I’ll are reference

were So significantly volume. and we without compromising that's improving rate

where or liquidity point I period were a there couldn't invest that Now, was growth. two perspective the in from always we in a out constrained we year will that and

the believe isn't of sacrifice we it will we if track other or compromise you two good all. record to volume have focus our So, volume for getting a

We and a of strategy Now capital us good not any based or intensive and that's you share for will if of having market volume growth said out pursue. our would become investors. that, in buy the we're game then not also to kind go

So I'd balanced say volume. we're on

advantageous We the fleet are we'll the territories. accordingly. very relative the to the rates or are interesting another those XXX selective our in as branches and we underlying deploy If amongst capital the VAPS capital redeploy in the in

art So that's science and a in optimization bit capital little the price and game. allocation of our

have think can one three. optimization to two if do and We are we volume So we a rate strategy we don't will. But VAPS. number compromise all

Scott Schneeberger

Great. Thanks. Thanks. Thanks for taking questions.

Operator

And from you. Courtney our Stanley. Thank next question from comes Yakavonis Morgan

Your line is now open.

Courtney Yakavonis

on for some of Thanks from to the quarter. the I guys. deliveries wanted go first to the the question comments delayed back just

I still $X second Or was revenue this the associated that million point you And to commented cost amount? delivered would some with in all has it But think been this actual that them. quantify you the quarter? alert? did is left be at

Bradley Soultz

Courtney. Hi,

eventually. is answer what unit do no. indicator The a I way rent about is obviously to there think of the short going think is leading to deliveries on

that's the increase in year-over-year X% down the slight and QX quarter from results. we're rent Our a volume

So, in value side expectations have see kind is original but a some with lower of of what other we to pricing products metric. equation is you would exciting And little relative planned, the that a and on the of which dropping services. than added traction originally

of said I but just third like a a through the picking we balancing are go through So earlier, QX. as way up QX, volumes it's Order we're act. still

Courtney Yakavonis

to has on now. the these [ph]? a offset that Got further you. it sure estate just the impairment until point I to can then or maybe explain contingencies produce Appreciating And what the baking are branch for? little by in just going just some this related restriction all just they cost you're really occurred of Okay. at the they're -- office contingency of back additional make consolidation are if that real it's you

Timothy Boswell

and of work Right. is being And market all we we've is location in are have et locations, single extent operating our here the locations. cetera this maintenance consolidated where the to done the consolidated a distinction meaning personnel a the

property that exited. You an to a real on position still leased needs may be idle have estate

could the course write managing specific last that's remaining locations question, out and on are a QX economics through a and So mentioned. that of in It and a consolidated operating of place the The answer the Does several you there -- could exit distinction that locations is what always physical surplus some This lease your situation part just of I that lease the properties be be contributor year were ModSpace through, the year. that's of we're plan. taking of this the of this been legacy breakage. of is manufacturing biggest Courtney? depending that

Courtney Yakavonis

lastly Yes. me forgive That's VAPS. missed very I think just the Did was versus that Thank from core rental I you But much helpful. provide you you. this rate then it. us quarter? if And how growth get

Bradley Soultz

did not. We

just we I last think to in quarter had XX/XX in reference rates. core rental QX favor of split

yes, So XX/XX. we've XX/XX characterized

going through [ph]. see and the to we'd forward range XXXX continue expect that We through that period

Courtney Yakavonis

Okay.

So quarter? no this dramatic change

Bradley Soultz

trends. No in change the

Courtney Yakavonis

Thanks. Got you. Okay.

Operator

Thank Deutsche from you. Bank. question next Sean And from comes Wondrack our

open. now is line Your

Sean Wondrack

complex setting Hey, a guys. integration Great expectations going of the meeting pretty and backdrop job, on. in them

Bradley Soultz

Thanks Sean.

Sean Wondrack

housekeeping. more question First

forma XXXX a you of million. adjusted last as XQ $XXX.X pro about said think EBITDA I was quarter

growth you? the and that sounds right this X.XX With quarter Is range. to getting I'm to X.XX

Timothy Boswell

reporting course cost you the year, does will That for banker our And to example that sounds example for realization we're include additional not pro through synergy so when significantly the EBITDA a metric that about that build number. adjusted get higher forma right. obviously of this

Sean Wondrack

sense. makes That Right.

the more on business. is one just Second

and people your to there's opportunities sort change sort think you the is past something provide solution about? or for for But discrete a opportunities in could know is something or to Immigration there outlook I that that been highlighted any of some of You've your if housing business. been that there's Customs Enforcement. don't the full within

Bradley Soultz

some just former sister couple that with with ice the kind were parent There and of would around the present challenge assets not on company points. the or others divisions We of but coded of be that. of No, by they focused a I as inhabited the to day. people. are that watch generally they and our were more FEMA of Most do all characterize move and activity opportunities, event holding

not activity our top an there vast really a somewhere. needle situation level. one event typically the given portfolio where So moves always the at region some in now But are it's

of So it's we these just if from We small a large of you piece benefit now. typically kind close stay to right will but locally it. portfolio interactions a

Sean Wondrack

Right.

couple debt to assuming down are ones. at target And is you about Okay. That's that in you. When four you helpful. or going target more pay then quick done any talk a XQ basically Thank turns XXXX, all just through to be ratio the by leverage deleveraging?

Timothy Boswell

absolutely gross No. down. assuming pay We're debt

should of On cash that cash the flow trend get free all transitions to generation we slide. and XXXX, explained I half course continue else the substantial the of through equal. into the to XXXX fairly business how QX first as

So cash that free repay go to debt. would yes other those, to capital plan absent any allocation

Sean Wondrack

of know kind sort would capital reduction for And if you. then you three too or rank begin allocation buybacks about early going that there? think as you it's debt sort rank dividends allocation acquisitions versus to Got your of of versus sort comment don't given but where capital cash, on I top to of this, priorities you're when start generating share

Bradley Soultz

start in. I’ll then Tim jump and

between going with quite personally to to comfortable I Xx and range. clear the into the back it’s we're ourselves second now range. Xx think the get Xx quarter I'm

I platform expand think significant this we and M&A. opportunities offering course created not grown keep once we're with accretive VAPS of for to. pretty as our we always eye the investment that be into we further to We has maybe back everything level we're will that And interesting We our out and compelled is expand think adjacencies. further discussed and other board. here

Sean Wondrack

luck. Thank good for and All me. very you right. much it That's

Operator

America. of Ross question Gilardi [Operator you. Thank Bank our from comes And Instructions] next from

is line Your open. now

Ross Gilardi

Thanks me for squeezing guys. in

of the going I'm what but just day you've through really QX I margin between first quarter. in It's think second at gone number of the the a wonder in in a QX bit I to I get end little mean XX% EBITDA okay. did and dial times, interplay the you the quarter,

And to roll you're still you've at got your through. these XX% for midpoint that still synergies implies are by going XX% QX. guidance like aiming and the think I all

like the is raising I hear seems to of today? some environment? but give -- that you of I from QX a So, big you the all gain that back demand get aren't in the going really What's anything that QX, why guide on don't concern

Timothy Boswell

one quarter maintaining we're that's I keep our had a strong first this of bit start, to its fair side watch and through the XXX to a progress a that. think observation. you very is tracking the I to of And the four. we of quarter We'll as higher We're posted. year call guidance if XXX. today Maybe

Ross Gilardi

rate; quarter apples great for Got just forma in though. I'm the XX% little comparing I pro on if the module or like to for year Mod did is you for in guide bit your What I'm not rate then the it. or just overall But understand And It's is leasing sure. XX.X% business? more. trying sure was a U.S.? oranges that and

Timothy Boswell

We were we were referring for about we talked XX% to year. the Mod the U.S. when business

your apples-to-apples in expectations a relative good earlier that's in pricing to a So comment volume VAPS QX. and and original I had we to very headwind result think

the every balancing play we'll that's year. So act

Ross Gilardi

doing I to growth But your I it there you like in baking U.S. a I of guidance amount XX% the the have gate Mod out at rate of in it. Okay. of is at imagine XX%. Got seem fair cushion mean mean, least mid-point?

Timothy Boswell

how course did year. trends quarterly through that fair Yes. We terms of in observation. give That’s guidance of not the the a

you necessarily can static of the think that, a of added it's not component assumption original products value our model I in outlook. terms but

So, that's probably coming into play as well.

Ross Gilardi

And and those What are of what's the then office demand just is synergies ask I with mobile over candidates two, with you real any and smaller is and been less this it on code part clearly has focus, that there focus mean in you the assets is that the could business the a time? really of but just business. the I it's rest softer obviously happening storage want a to WillScot the divestiture portable business of of be

Bradley Soultz

focus similar and we more looking results our a appropriately of book last loaded of this It's, VAPS, a -- than something would that the I office now. It's move and is achieving. little interesting like characterize achieve addressable Brad. say, would unit along to aspect we’re been has It to offices market. I the net think our the with the quite year currently our very forward, leverage has X% duration. it's large like our It's very It's lease economics we'd to right offices. I over mean, less I just platform portfolio. similar treat a storage VAP with value a

the characteristics years, the continue of to as interested to really ahead think business a it's we So, like be we of portable over the expand. part I and I'd business, the storage look

Ross Gilardi

guys. Thanks it. Got Okay.

Operator

showing call to further time, back questions any Schultz you. any this remarks. at I the Thank And not further to want Brad turn for

Bradley Soultz

we've touched everything, on we're think I No on short running time. and

of end of proud at the forward So look with and to speaking our results, QX. Thank everyone you.

Operator

and gentlemen. your in for today's conference. program. This concludes you Ladies participation Thank today's

You may all have disconnect. Everyone day. a great

WillScot (WSC) 3 May 192019 Q1 Earnings call transcript