WSC - Earnings call transcript Q3 2019 | WillScot Holdings Corporation

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Operator

Good morning ladies and gentlemen and welcome to the WillScot Third Quarter 2019 Conference Call. [Operator Instructions] I would now like to turn the conference over to your host Mr. Matt Jacobsen, Vice President of Finance.

Please go ahead, sir.

Matt Jacobsen

Thank you and good morning.

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

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

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

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

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

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

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

President I've and got CEO; CFO. Boswell, Now with Tim and today Soultz our Brad our me

the some call our for the to of for the I'll that a provide our before kick detail for today's then additional outlook up turn results the quarter of an third questions. on and key call off the year update company financial we summarize the of So, with brief indicators. rest open performance will With on results and provide Tim quarter I'll overview third call over the discuss our Brad.

Brad Soultz

to our first I'd Thank call. of strong aspects which as to you third I investor six Please undertaken welcome performance quarter to conference we've entering XXXX. presentation to of the turn WillScot's highlight X with slide and indicative would Matt. the XXXX financial like our of momentum we'll be key transformation like everyone

we is XXXX. First period $XXX over in up generated the which revenue million same of XX%

down our on leasing in prior and While ready-to-work we and was X% as forma up portfolios acquired revenue pro aspects expanding the business. expected emphasizing X% turn leasing U.S. transition our versus modular a continue sales was revenue the the deemphasizing consolidated basis as the of to higher-value year

in we of marked sale leasing final which turn in to and of the change quarter revenue. QX see one-year ModSpace expect acquisition Importantly mix meaningful of and year-over-year our anniversary the in

and for continue by services strategic pro and The growth, year-over-year is of acquired average XX% increased expect and driven double-digit consecutive eighth to momentum the value-added we penetration new which this forma or evidence pricing space the quarter in modular XX.X% VAPS in basis XX% rate are as contracts to is and This to portfolios redeployed. on continue come. return U.S. products the our up were success of rates on apparent this rental by a shift years

reduction This aspects in generated XX% over a we revenue. of on On prior portfolios is aforementioned business. was X% higher-quality on up which in year. the focus adjusted forma the basis, adjusted up impressive EBITDA, XX% flow the million the through Second, $XX pro inherent EBITDA highlights leasing of to platform well acquired more strategic as as our further our decision leverage the validates exclusively the

complete. The ModSpace substantially is integration

our results acquisitions, exited on contributed savings on cost ModSpace-related and the cumulative synergies, the with the of These a of cost quarter. XX% of such, as in have million along basis. prior As we $XX included actioned quarter synergies those been

I other potential otherwise of sourcing the A optimization. which also in not very included incremental right would further note the scale and logistics synergies, that targeting million. execution and opportunities plans, we're initial $XX were scoping procurement good optimization, include few making progress examples and potential efficiencies, developing fleet

the forma clearly year-over-year of Finally, and continued a points in realization organic adjusted organic proven established on revenue track swift in along revenue effective EBITDA acquisitions. resulted pro the integration lease of with margin XXX of and basis. combination shift We've cost-synergy basis growth, expansion record growth, with mix a

and accelerating, to transition with income cash our million up planned year-over-year quarter, positive free the generation. net income free in and is second Third, million $XX inflected cash were consistent flow net cash $XX profitability XXXX with and up and basis. a on flow net half Both

our and confidence and results quarter to debt we're growth XXXX as us Fourth, million driving summary, pleased to exit we're results in cash and trajectory the business entering year-to-date Xx EBITDA by of to run the but control, in $XXX XXXX. rate achieve of we largely EBITDA, very accelerating are the third discretionary deleverage our million to $XXX annualized levers free XXXX. our the flow net of second provide an platform quarter adjusted the which We believe with upon

Now turn Slide to if you'll X.

on a a incremental revenues realizing forma XXX% than greater noted, through basis. As of we're pro flow

contributions Tyson you'll ModSpace adjusted $XX note the acquisitions EBITDA as X.X was total left, as This acquisition $XX forma of that given months ModSpace brings included the have at well million. our to Starting that XX. the third in August quarter XXXX and EBITDA million. closed Acton on actuals, pro the would far pre-acquisition adjusted Adding

reductions synergies results. of of X the points associated $XX.X of build which on pro of million by noted, million $X.X XXX quarter $XX.X these approximately which sales third All in $XX cumulative adjusted VAPS margins cost quarter realized primarily a million organic EBITDA in quarter our in driven the that forma and Next, on a year-over-year basis. quarter increased EBITDA the $XX million, improvement rate third cost basis, of majority as which million. million non-recurring our offsetting contributed of We ModSpace the in $X.X savings was, realized basis acquisition-related in then were the optimization growth million contributed penetration, margins, export for in a $X was result project concentrated of XXXX hurricane

which turning for the fourth Finally, foundation pro KPIs they snapshot enter I'll provide quarter. run in U.S. to quarter Slide the rate provide of a realized since the the X. forma primary leasing in we the third

we in to look continue This further consecutive growth, point eighth bit ahead. a expand is left upon As this as average XX.X% monthly top this year-over-year. was Modular quarter expect Space I'll up momentum reflected a moment. we rate the double-digit rate the and $XXX chart, of in lease important of

stabilize the rents and with strong quarter, prior particularly As sequential in expected, deliveries the the we up improvements in quarter. delivery X% we total pleased with unit-owned were QX, versus volumes saw in

was validating of productivity providing as year our sales as and, commercial our we over sales the exited force, rep Our head XX% quarter, in the again, we into approximately prior strategy positioning us confidence XXXX.

the growth with our rate was revenues, expanding we're leasing Given modular in selectively the solutions, a original heading into XX%. team line particularly in net confidence about is sales which outlook a X% very ready-to-work result run expansion of the year-over-year our robust in XXXX. continued pro our The by U.S. expectations demand forma and of

X. Slide to Turning

has rate our of based on the growth units been As previously we VAPS than have of upon months, growth delivered last million consistently new expect revenue another penetration growth. VAPS driving annualized over greater XX overall mentioned, achieved XX% we $XXX

months of particularly increased of VAPS rate average units the rate the over the all XX year. levels value incorporated quarter, up achieved X $XXX. In is to the prior last second given This months the of month the across outperformance pleasing in is continued acquired XX XX% portfolios. integration the per This LTM delivered

many who this and been very combining We the increase This certainly unique prop performance behind our is productivity in teams key aforementioned a have introducing customers. driver sales original rep have been to value in above XX% is themselves successful sales the new expectations. successful

are in units mentioned, once on of rent growth and level years their current as associated our will The as next revenue redeployed current the end at VAPS over previously are occur, projects returned X penetration.

the our expands duration. extends goal, VAPS and in towards continue revenue As stated penetration to growth we increase long-term associated

was I were and deployed the the offering portfolios XX% would management our was as portfolio acquisition by benefit our well to tools. by rental acquired on-rent ModSpace. other the rate third primarily our prior modular note increase, yield and driven respective WillScot's And sophisticated of contracts. as of on office approximately Tyson, without new drove rate XX% comprehensive deployed These overall that of Acton VAPS and VAPS while XX.X% pricing of

the those deliveries rate months years our on-rent the on-rent rate XX% the One of last least again. potential delivered extend page, the that three double-digit Although amount Stated associated is the two and between growth achieved the rates specific years over to at to is and this and rates very average we optimization demonstrate the rate VAPS-related office idiosyncratic higher drivers much return next achieved are growth and obviously over expected X across redeployed. driving the disclosing than visualize $XXX XX to the can they're we've the yield similar the is confidence with than greater growth could the convergence offices, XX% on continue as of simply, average benefit new million not convergence is other be revenue growth portfolio. come. to foundational these of acquired for to depicting on provide which charts Combined achieved years modular if portfolios the over last driving

it expand end your XX demand over to order turning to to attention ask markets. you across to our diverse outlook our slide in Before Tim I'd on turn

chart you at down which the bottom direct to our of to like slide end I'd breaks markets. the pie left First the

the more an customers X% very individual and end seen highly of revenue no diverse the XX customer material with top customer activity. less shift the is than market aggregate representing At our addition level XX%. end In any of fragmented representing to base markets not group in we've than

or for indicator drives to book remained for our the generated deliveries activity best is order demand targets Our and projects. which by new has quote field at above

So and remains our in clearly in have overall while the demand and the externally quarter outlook there's of our internally volumes disruption third stabilized both some been positive. half the year first

forward. expectation As well the going business in continued reflects outlook an our capex reinvestment of

already and coupled strengths monitor which is to demand model geographies short over and of various with allocate spending our through disciplined flexibility capital. and One across our we have control term markets end and our in reallocate support not a inherent the do the on continue discretion we idiosyncratic and have growth. This We process together to that drivers business cash capital top key lease terms the average bottom long-term free particularly reduce extent business. long-lived I'm us capital drive with markets our the spending line flow allows and assets. and to growth pleased

market Our synergies optimization scale unparalleled growth through hand it continued portfolios to I'll cycles are M&A-related drive several unfold and growth will next solutions years of embedded commercial will over ready-to-work additional strategy penetration to will rate predictably over the lease return provide provide redeployed. context. as and and independent the our who that of largely organically acquired revenue With and our Tim

Tim Boswell

QX XX. Thank continuation slide pricing line saw value-added the quarters as to cost activity you Brad our The for synergy X% execution notable only sequential of and year. being in results. of in to the good our prior with similar well products delivery good change another are an operational with quarter morning. turn expectations Please increase strong and QX quarterly as impacting all trends nearly execution

straight which show pro charts revenue to and adjusted the a year-over-year EBITDA bottom basis. on drop Let's forma

previously, of we've million and large executed revenue ModSpace hurricane a last related relief to of year. sale adjusted As generated very and million EBITDA QX in $X $XX export highlighted

On best sales the the which current the we've left-hand of how indicator performing operations side quarter of impact isolated to performance our the the of of each the portfolio in is leasing chart show nonrecurring organically. is

on mix Similar that a where the This pro minute. modular through realization derived and million from and to we leasing basis operations. $XX and basis. on segment. $XX revenue. increase $XX organic leasing pricing approximately impact in on products year-over-year quarters forma expect Adjusting X.X% implies generated expansion million to in in up by margin basis the year-over-year is I'll a XXX EBITDA shift the leasing from approximately revenue value-added driven prior last was quarter synergy have this million and elaborate we year-over-year contribution flow growth for $XX points XXX% of revenue modular the our over million year U.S. This last activity, a meaningful revenue sales growth a cost This in of noncore of of pro forma EBITDA drove

leasing Sequentially contraction EBITDA sequential increase variable and expected. points, million basis the costs well we $X from that margins of driven had margins XX QX, in a delivery installation as was contracted as which by

later activity into result we period. of and of first delivery deliveries relative talked ramp-up variable the to in the lower mix of from the seasonal to As last costs about QX, quarter, effectively the leasing the half pushed margin year returns a in the tends higher

the Sequentially, levels. should delivery Variable And towards margins continue to synergy area. top heading to we costs the line into build and QX XX% QX, expect push with execution, margins should back modestly. revert continued to

plan Stepping that puts excited run we in QX in about back, XXXX. expectation the on this laid path January, that same and rate is essentially the for us out we're

sales XX% given leasing of results, it pricing in illustrate dark no green and chart and noncore There accounts year-over-year total this average duration. we and modular given here revenue Slide year-to-date. to products shift the XX of acquired good gives particularly portion opportunity very due our revenue leasing bottom the QX is of in portfolios. is our variability value-added multiyear for essentially The XXXX. into XX-month operations to our visibility our And penetration revenue is long-term forward the our had improve impact lease added our favoring us mix the the new, to

customer our consistent levels, movement by year-to-date. longer revenue customer clearly over our installation, and, representing the is of but to from thus, on activity margin Next, gray leasing is based This our equipment and of it driven is leased the linked revenue sites. and and delivery predictable This quite movement to has section revenue seasonality modular dark periods. XX% revenue

been the of WillScot you time sale carries in-housemanufacturing to X and relative maintains facilities, execution Lastly, our have to acquisition top closed. the has of we of at the the double see mix ModSpace than historically predict chart, harder different revenue, had sale risks. which which at revenue and more

the of increased QX. Strategically, into heading revenue, obviously XX% believe, lease since low-volatility unique we've as rental rate the compound XXXX long-duration, sits repositioned our truly has run record the portfolio rate this growth to view at makes and, annual a focus over which and a platform. on XXXX levels This of we at supports

into please. ABL generation year In and a $X.X I'm going transition $XXX,XXX and modest indicated of the restructuring moderated. to of was to half as we the outset QX integration, skip the XX, profit of operations. and have as QX. interest ahead from year. Overall, to We second up $XX.X in we the X% transition acquisition-related continuing costs consistent we our our a incurred Slide sequentially that refinancing QX million note declined we of that result also cash At would beginning these year, profits million expense that net net from head with income in the I'll as floating from total, prior of portion balance. transaction items saw of

coming down, XXXX. and synergies generation ramp substantially top interest heading and costs to acquisition we into restructuring income and building cash the QX expect line and With and net

synergy where on Slide costs actions. and stand restructuring shows we integration realization, XX estate and real overall

June On now acquisition been the million of of since QX We synergy the originally $XX remain cost results identified. has announcing on total annual of which XX% track left, in to year, XX% that synergies QX in our deliver include our of the this of value total target the we XXXX.

costs year-to-date of real to in our of middle In original the proceeds shared to $XX although that winding estimate, QX, an $X in chart, the right-hand than net monetize. intend May. generated the million bringing additional we estate total million down, $XX integration total we are And sales as we chart, from the in higher million

We proceeds remainder monetize approximately expect additional $X to in expect of to QX XXXX. net the majority and of million the generate in

$XX we've As to value QX, value will, with I that acquired in real over estate the which the In balance third-party benefit value the million, real and brings estate ModSpace indicated the acquisition. by shareholders valuations we as the all pleased last increased market real estate at sheet. quarter, of a finalized market transaction, review ModSpace we've fair WillScot the estate time we optimize That of seeing. $XX acquired ModSpace that million of been real from to the of we time, the we're total reflect

XX. Slide to Moving

flow is As previously, XXXX. in we significantly executed plan explained we've operating have our WillScot's profile inflecting cash as

We expectations. chart, top are In in pleased operations flow and flow from prior to be positive free and prior see cash and year-to-date cash significantly with our both this QX million ramping QX consistent versus QX year. is XXXX, up $XX.X the into

costs XXXX. burden of integration the well and QX of as see last in transaction as and can year You QX was significant most of QX

and As we on down executed our cash to flows, and into year-over-year working schedule top costs include: down levers fundamental five improvement to winding growth; is down; lease expect have into come in revenue and costs we synergies heading cost interest XXXX; XXXX, growing drive and head integration sequential capital into QX further; come line QX. which operating stabilizing have and continued room

we Together, into that can head free cash CapEx we've which In of million the We've these spoke chart, our investing the aligns to point and per bottom to integration-related seasonal that as significant the into trends see as net seen normal incurred well activities QX, year. you $XX averaged towards range both about guidance for generation CapEx some and QX XXXX. the factors high and in due as heading CapEx cash QX. has sustained end moderating used quarter, net in of

XX. Moving to Slide

structure costs from is due and X% June debt Our QX declined to refinancing. the sequentially XX, unchanged relative interest to

lastly in expect closing we'll since free our QX the Xx to approximately reduced improve We pace profile every ModSpace be cash target XXXX into in revolver. acquisition, our And our for availability $XXX XXXX. ways financing looking million ABL to maturity of we positively. toward continue opportunistic by deleveraging costs we and flow to quarter as of head and have as inflects this sequentially has accelerate Leverage

QX On adjusted slide $X.XXX CapEx. consistent EBITDA we and carry adjusted Based XXXX XX updated we see in of August. of EBITDA of and run ranges $XXX we're million January. what on our rate revenue in had billion net million maintaining expect the we EBITDA into which the XX% At $XXX annual is communicated expectations the adjusted with roughly a million guidance we midpoint margin that to of $XXX for

to take understand you encourage I'd QX. changes XX Lastly look reporting up in coming compliance to and slide some a at

WillScot for accelerated will of adopting standards, is accounting As of a the our existing a our mentioned year of large Thurston precise pull are this than first which we've in large growth. adopt be so become asca deadline XX-K date standard the one due will this weeks earlier to QX you'll and standard. controls we of a for X. accelerated up purposes, implications performing filing and audit changes. filer The purposes effective prior of notable youngest filers March several The with XX-K we'll most practical January notice years retroactively our it will was our XX accounting couple

that expense estate both properties First be exiting. roughly that related balance has real will to the of to restructuring sheet. $XX added debt. $XXX we our of WillScot include of and finance currently liabilities And that our then to second we liabilities and leased $X year-to-date long-term million assets including are incurred million we've all million increase will as leases as roughly the on a lease assets operating leases be This

GAAP impacts change but impact income let our wanted Under to EPS guidance coming recognition None net recast cash the not will know the of of it's I business be also the and will adjusted economics but you this flows expense the our And these team. impairments. as of the restructuring XXXX timing EBITDA. expenses thank and asset new which or will

two but goes underappreciated The compliance into effort these activities past that essential it's our critical been in is over often the transformation years.

comments back Q&A. slide Brad So and hand it for I'll with closing that XX on to

Brad Soultz

Tim. Thank,

thank First, biscuit investors entire and our continued our in like for trust the customers performance. and I their to for would organization us the

right the along my sizes. view, certainly of third long of I have enter We of term continued the remain and right XXXX. in track growth the in of all strategy record the XXXX increase the all we expect the effective continue in team accomplished to proven convicted value. to quarter we organic swift momentum integration established and to we've a extremely shareholder companies which proud We're and have

into We to very EBITDA adjusted with with XXXX adjusted million very Xx many ability achieve the deleveraging of run in the today and the to net EBITDA time you the company. debt of in us as confident look to by XXXX. join our forward second million the flow discretionary $XXX for you taking of to appreciate to head generation rate $XXX free your of We're soon. platform speaking cash quarter and interest we We

That prepared our concludes remarks.

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

Operator

[Operator the Kevin first of comes question Instructions] McVeigh from Credit from Your line Suisse.

Excuse Mr. open. Your McVeigh. line is me,

is line Your open.

Kevin McVeigh

you Can Great. hear me?

Brad Soultz

Yes.

Now we can hear you.

Kevin McVeigh

about beyond talked could Sorry what you of way or to the incremental way with accelerating about be deleveraging decelerating -- about that? any any to ModSpace. that about think just what out to applied that framed be? the you've synergies would Is think Brad, that. And there some

just without assets how really, any to hiccups. context think within integrate huge able X one really the of the story really understated of seamlessly you've is And I been that, of parts the

about potential leg range year of a So bit of on synergies, you that. a just we little is think way as kudos that? get to we about just the can any you But into think on kind there the next further

Brad Soultz

Yes, about out investments quarter, I expect and we'll execution any required support have specific significant talking detailed very the we these we We think to close opportunities. be don't once as plans. fourth ranges

EBITDA and in of I further just So earnings. the think would be impact leverage growth

couple and our mention that's alone been $XXX focus. and a delivery installation about that cost certainly calls, million spend, Kevin, the is did the We of last primary annual

price we and on cost as that of side opportunities, as see well. -- on the and both the So commentary, Tim mentioned side his in

plans expect a have we quarter results. detailed focus. to as number about be I So not and doing We're we'll ready that's until execute, fourth we talk to that really provide our

Kevin McVeigh

any quick queue. a really organizations like one X then more I'll back continue a feels you get Got It the inorganic And we in and the time approach you position versus it. company? have would real you to organic as what to kind opportunities in fashion. in Operationally, given brought what thoughts Do seamless where and the the are evolution you're the together of scale. about of the are be around think in the

Brad Soultz

Yes.

don't While a specific any we comment would points. on couple of I make strategy,

acquisitive one, a we tremendous And swiftly the and growth, sizes. with been clearly past track along For integrating proven of have company. in the an well as created I We to record value effectively noted, future. as established expect companies and we've certainly strategy continued organic through all shareholder in this of

have could good our them small, we fit of a big, medium be make. and shareholders. can We confident We're for acquisitions each company

substantially free to we want of clear, beauty be year. next plan right? jeopardize next to we really anything with we're our flow accretive, to levered will I to value will use But, as our be The do Xx quarter, many options. well now, to positioned cash not platform QX cash accelerate be of And that shareholder flow below right in drive starts

Kevin McVeigh

Awesome. job. Really Thank great you.

Operator

Yakavonis comes line the of from Stanley. from Morgan question next Courtney Your

Your open. line is

Courtney Yakavonis

for Thanks question the Hi. guys.

a units bit to trend. about on little Just wanted talk rent your

stabilization. comments about you made a seeing think some I

that numbers we looking the decline -- just think I the rent units average still at units saw looks like quarter-over-quarter. on I'm

increase, understand how and it's thoughts year. just year-over-year quarter? X% the heading of down into us that given weighted of the towards the that the we about rate year-over-year especially deliveries then kind of should about more units help when Or thinking on just on you was kind be about next X.X% end rent So the talked

Brad Soultz

say with still it's declines out, line discussed we we've the I note think call. the unit of second rent, last first, what in stability in point quarter. experiencing would I on I So, quarter's on were but I'll -- largely when the

stable was pleasing. entered from where we that quarter was and exited, third The to on rent we where pretty very

the end down we on achieve I X% X% of we're to the So I still -- expect mean, year, said that. still I and range at think to

Tim Boswell

from say up Unit Yes, sequentially, is what our time. Courtney. rate X% Tim. run just what a of CAGR and in any on right? is is X% at the lease most revenue This rent the is XX% matter year-over-year revenue I'd that So lease since equation, was would point is a on XXXX. piece perspective

next will recipe to of the rate. always And of down be and comparison in So It are lease happy the deliver where confident is. pricing. the will but and very takes the we're which volumes is going kind go is in revenue it this some puts XXXX. that, for there budget what gives be do quarter QX more What now And and or two. sequentially volume see here us terms for from with in matters QX, we into just the we run at point pickup to the in delivery year-over-year confidence

Courtney Yakavonis

on you kind talking the down think America side, guys have other just rates. been rental Okay. you. I of Also North Got

a were X%, second contract those had roughly there quarter. in surprised in I the to that last think was big and But quarter. you obviously, with guys that line similar

and So kind thinking should just other there how we on be America impacts there growth of wanted understand if to were the rate about North onetime any side. just other

Tim Boswell

Tim. is This Yes.

Alaska, to that see that'd referring rental I'd to you're the kind Western QX. did There and You monthly average would quarter, our -- the down back the QX of a moderate up said last as from probably to bit, expect bit that, rate a $XXX we've did in duration. project year. last end in Canada activity you and has of towards be levels shorter unique been some seen have that tick

segment, the sequential quarters of but a I though, you maybe growth. got moderate would I'd expect at period you we're since other about there, bit. a you off Overall, side, look rates So those if by couple volume mean, say I volume, the still asked that North a to just America volume

utilization, But the are part tightening albeit say below America other a still all far go the I positive, the segment to. in on You've in where business. North got indicators it can smaller some of would leading

as particular, well good a it's border, in signs as So Mexico. north the in of

Courtney Yakavonis

comments efforts just think Can Great. sales you during any understand, sales were will you expanding teams there the increase be us some I this kind team. consolidation of And made help just and then the where acquisitions the lastly, about dedicated towards? on

Brad Soultz

that the been the So some team the various of Scotsman. They we sales to maintain what we were combined reductions. -- endeavor pretty that brought would and did to sales And certainly ModSpace modest reps relationships right make team. in have the

lease the I each right simply expected. get then realizing it you the customer than That more with We're as the success more would time. into with VAPS. acquire consultatory-type you with think we sale associated of you price more engagement box and takes the

we're simply fund continued of in adding a capacity VAPS. growth that So largely bit to

Courtney Yakavonis

Okay. portable I more the side. one could if on Great. And squeeze storage in just just

Just thoughts utilization and seems pretty that it's consistent on it business. like rental curious rates rate. the your Obviously

are your business So just there if the thoughts and right curious for now. your what's scale that's right

Brad Soultz

Yes, but about to a we great VAP economics past I I have fully think similar great of very offices. mean the this times unit in number talked a it's business

offices rent customers of over got majority XXXXX XXXXX than less storage our on actually are the and We've storage. think utilizing I offices containers.

will. you those a scale if to more there's So in potential bring balance obviously

over it's we're excited So about. one time really

organically to a have including of up time. over number scale We options that

Operator

comes question the next from Scott line Oppenheimer. Schneeberger of Your from

Your line open. is

Scott Schneeberger

Scott. the guidance for in Daniel high achieve Morning, of end discuss quarter factors the This on the potentially? is the please XXXX you Could to swing fourth

Tim Boswell

have activity. was can That unforeseen business Daniel. Tim to that pointing data be in think favorably. probably the could of any my the that case this one biggest I one piece sale from don't saw particular is I surprise the incur any volumes that is factors but in The This variable X QX move you unfavorably delivery cost if the then or expectation you in to interesting have And know relative moves. business which the area. that in we thing you either direct unit this favorably our as as perspective in period in

the actually So would expectations. than way QX pressure delivery more ahead are perversely that if the on expectations moderated true be of if side. in delivery volumes cost our reverse put And volumes would

largely is the point baked. potential So have EBITDA revenue to lease theory onetime to that most at this it's in probably result. of move the this kind result Obviously the us

Scott Schneeberger

it. you you far do across How demand out core visibility have feel the conditions markets? Got into

Brad Soultz

Yes.

a next would support have least month quarter. we X% look if that still at in quarter-over-quarter. orders think more. obviously growth year us macro I take this The strong perhaps quotes indicators We hand at think you out and would X%, will plus represent that I a

our from see perspective, strong. order what the quote see in we in quite book, So activity, quite What strong. we

seeing the if pull Beyond any and level markets total we'll We're in we we on to that, indicators flex if And and consolidated that. back just right eye just capital macro now needed do at we between an regions areas to. need need that not to. a our keep

Tim Boswell

that say terms applies commentary new leasing the I'd to Daniel, portfolio. product in of deliveries overall

the base. As duration, know, in which contractual as of The typically stream in we're revenue years you as well terms beyond duration. several obviously the contracted extends expected installed out the place that's looking well

Scott Schneeberger

of type long-term potential Got sustaining for growth? it. you VAPS me. at the growing I terms in revenue? Thank you. for of opportunity Final that the mean a incremental would the mean is How categorize that what clip VAPS rate one XX% here. And would for

Brad Soultz

that we -- deck, About months, We've next the years, Well, we'll articulated rates of million revenue last million it delivered growth. the through the hold $XXX that in just demonstrated we've XX% the realize of if X XX over was the $XXX falls right? over over slide EBITDA.

line current perform we assumes say, in of our of level the simply let's And clearly, sights. at it that's delivery. VAPS So

we're value to at million now. compares Our is long-term goal $XXX $XXX per delivery. to of achieve per VAPS That the month, the

$XXX portfolio the can to same be that, revenue. and thereafter harvest potential mentioned And $XXX paced to kind then do million. will over So the math of you of $XXX quickly that get another how years it's by million X $XXX as million, we Tim churns, Again, can well you before. million get between as

So this platform. that's those levers one about that of is quite idiosyncratic exciting

Tim Boswell

just the accelerated would acquisitions, penetration we per some you XX%, driven on our see information, revenue legacy that's underpenetrated. for well Slide X, which years, value-added the any it's and which products unit WillScot I After now that at X are largely new to platform provided CAGR. Daniel, to acquired the by as is highlight, across continued in of prior as portfolios, growing XX% acquisitions,

base. quite the growth on acceleration excited larger a that revenue about So of we're

Scott Schneeberger

Good thank work, Got it, you. guys.

Operator

the of from line comes question next Manav Patnaik from Your Barclays.

Your open. line is

Greg Bardi

is calling Greg in. This actually

CapEx. that about ask to want Just

there? typically ahead that back the you're guess possibly given do quo on continue to you could status is year. CapEx. leases of the that high the number in? about think you'd talk investing timing And coming looking of spend too I expectation kind $XXX backdrop, million this with type of just million I more you without end what far there the in maintenance $XXX But growth, obviously, a is

Tim Boswell

Hi, is Greg, this Tim.

of so investment was at neutral. guidance maintenance rent, original year maintain CapEx. the units for constant our We the to million So on net CapEx required maintenance level define $XXX volume

given And been some inventory, fleets We has that numbers, outset at are products with about million ModSpace some some million about. in value-added that rent $XX had of committed VAPS $XX of year. includes I investing fleet the to acquisition-related expansions another along just that CapEx additional there refurbishment the of XXXX, and round new growth CapEx the talked

million. us end $XXX factors those of high take So the together the to

think Looking into next similar very year, I formula. be very much -- it'd

Our maintenance not CapEx changed. views have of

a we're and outlook quarter. demand -- we're this will planning And every We forward in I'll capital purchasing on incremental cycle. And basically capital invest dependent. it at branch investments commitments business. quarter, zero-based the and redoing our looking there value-added in no continue budget The a products you are long-term remind absolutely be every to market from then fleet will XX-day that network a program. doing

had to unfavorably. be guided of But XXXX. or will conditions nimble a So beginning similar here as sitting what right market we capital now, we towards the at I'd favorably change very outlook budget

Greg Bardi

but And seeing it's sense. business, your gas makes the shown. maybe upstream what wondering I smaller That some then part given know of part business a your oil quickly, from Yes. volatility has you're of and market of that the

Brad Soultz

to We Upstream than our no X% revenues. have less would of be upstream. total virtually exposure

that. bit be to and Mexico Alaska, really least in We at of little majority stable. in Canada, related that significant Southern any haven't And Western would seen been the a shift all of have which

a it's piece, little So yes.

Operator

question of Jefferies. the next Philip comes line from Ng from Your

Philip Ng

a nicely revenues? again And the moderate price you into AMR was the do on driven in strong rate is How this after year? rolling unit quarter. acquired increases lift very of the lease to expect versus optimization platform leases much by up price in growth XXXX

Tim Boswell

Tim. it's Phil,

pricing year-over-year growth core the of in rental that by way. What a from said value-added disaggregated question. products. remainder We with Brad haven't good the was was is about growth It the coming in rates XX% his remarks driven

manage is minimum ability units now change are levers being repriced acquired different that. segmentation core the disaggregated year-over-year units dynamic in contractual there when rates rate our you model. on delivered is the to rates the with on there beyond their base under you There within three If And rental There spot go rental the then term. installed contracts. movements, new is mentioned the

So drive of we're to levers business. is the managing when attributes actually we pricing, multiple talk that result, about one the nice which of

we As you're base. into larger a of look, moving go XXXX, off

of percentage So yes, of the magnitude course I through growth of the in surprised positively growth. terms been would moderate, expect the but year year-over-year the to we've this

Brad Soultz

portfolios. acceleration organically double-digit growth these right? organic XX% seen we running were as have acquired absorb We some certainly We

very I before So as it'll not feel I'm comfortable continue double XX%. years at that come. multiple with, digits I for saying to mentioned

Philip Ng

and appreciating do can quoting preference then and when about unit clear more think price think for WillScot you over progressing how And intra-quarter? November? that's XXXX on early how about great. rent mix little October in you you deliveries a provide tracked growth volume? color on And a And has That's how

Tim Boswell

Yes.

is Tim. So this

seasonal the this picking busier rent do where terms up unit year time in which kind April into delivery typically expect go with similar of here from is tapering Courtney's part frame. what in QX QX of In we sequentially season would you question the some March normal is May to a into expect first to on of normal of

think will in run about sitting the potential here rent in a view rate seasonality going kind in today unit about on business. just is second outcomes talk of let's really And frame. next into we QX. of it year range function no XXXX the of realistic way quarter or our talk in which changes for that a meaningful the natural March growth time So I expectation that's sequential And the of

Philip Ng

a relates been think as obviously Okay. better But in it about to helpful. expect you would noisy how would that color here because WillScot ModSpace? in it you just with XXXX of just provide of want the to terms did market. you this I some growth year integration understand has the be because But

Brad Soultz

the our I seen certainly before We've stable Yes. Clearly Stable. the up again part or I stabilize. of kind disruption things had first track X%. X% and we mean year. that's record said of in organically. as mean some we've And

feel So about quite good I that.

Philip Ng

Got me. for you. one And just one last

integrated nuances curious bandwidth and any of color larger portable Now pipeline appetite what on fully in storage to is versus leasing engage that thinking how your ModSpace And terms deal. in any you're about set? and between your module M&A opportunity

Brad Soultz

No.

growth before is ModSpace size. us a my and before. track both large companies mentioned interesting continued As think all in in and very are I modular I We've behind as of mentioned to organic comments of storage I us. demonstrated record portable both office acquiring solid and integrating

another. to the our inhibit there. capacity would again will is capability second corner. quite we to I Pipeline is would are ability the do get just EBITDA anything to leverage robust. There not the which around have quarter many out right do frankly to that debt and net We by of opportunities the Xx reinforce XXXX

Philip Ng

for Thanks calling really appreciate.

Operator

line question Bank from next America. the comes Ross Your from Gilardi of of

open. lines Your

Ross Gilardi

two level on I re-lever curious fund and guys. thanks, above you sheet that of time you the Yeah, the balance get and to once a I'm a note a second if to was your use year thought to in transaction? to equity about period I willingness to larger your for or in could that mean you temporary what's overall quarter back Just the get just Xx willingness that

Tim Boswell

pricing. business we ModSpace for market use and But the in any terms is an was really would the in time, ModSpace, a revenue well. Tim. example acquisition knew be. that dynamics whatever this may asset. situation-specific products I'll is understood of as what value-added be We lease decision Ross that financing it right? at and but That could it the point of it to question add context unique in this in the We the of

factors we We to seen. played into And confidence target that in had X degree take the of which think leverage our those so diligenced our you've of a thoroughly willingness very times. have X execution, of I all above to cost synergies, high stated

give to answer. hard it's you a So specific

done unique have were where business. before expected We the we of in circumstances future flows a the in it cash highly confident

Ross Gilardi

if Can improve. of side line I and help already in continue on apologize the understanding profit operating covered you Thanks. guys terms us in other you third to this. some of it. that, Got lot restructuring stuff the your you to noise quarter. and probably positive got that XXXX and the costs. one-off to below separate getting target number question, you've There's And the a costs the and puts just a all ModSpace line integration below been at to would of GAAP But other already that? And to suggested of you on getting clearly, covered EPS a takes into costs the lines in that

Tim Boswell

Ross. Not in detail,

happy to give So a shot. it

expense. start let's with First, interest

the come in You quarter. X% down sequentially saw that

over various alternatives. time with there's refinancing room to some think I there improve

there we see we'll XXXX. can what accomplish So in

of In close integration to zero quarterly restructuring seen an and into the and to is taper get further We're costs, it. kind down you've QX year very million level, of expectation. that $X as that will of our taper next terms to we

expectation which noise absolutely our moderate should and has been along all goal So that here. significantly,

our income bit as with net income tax a is pretax next federal a typical. year to I'd quirky. X-year mid-XXs NOLs. tax to which tax Taxes into X- profile thanks cash have toward be income, our rate, been attractive you But we would or Obviously, very go U.S. shield, with guide effective consistent a

feel there. pause if free. And question, you So a follow-up I'll have

Ross Gilardi

okay. That's

was million and $X versus that the sorry, that was a integration So quarter, that was one the Or other? -- restructuring?

Tim Boswell

includes That both.

Ross Gilardi

Okay.

you. Thank Okay, great.

Operator

from Davidson. D.A. from Thielman line of comes question Brent next Your the

open. is line Your

Brent Thielman

Great. Tim, you. line maybe for one more item

guideposts You've in down XQ? give Any done think could could you where a SG&A. great driving land on the job you that us

Tim Boswell

from kind nonrecurring when just reduction into the QX about, let's we'd Ross see, QX, so items asking out expect adjust was In here. of we that modest

of couple a million So dollars.

Brent Thielman

with units from Okay. a transactions. little you because Great. tell transitioning And have know to I then hard hard I guess these my seen older market or the any regional out that the rate, actually the on a offering I'm in they this push And It's question. years follow-up But guess customers you local improved even have you're because little curious, to broader ago? to level? share of sort fluctuations didn't portfolio I you're

Brad Soultz

for the just the get Yes. offering VAPS elasticity. changed strategy our project one not end. mean critical other, points. of to has couple started, do we're always It's the until price/volume been It's we I the game. this there a certainly service we are testing have. to believe the We're trade I nor a I believe and delivering

easier we So make the extract customers, in and the we that our for rate. can more more realize the value they

the looked look back ago year would think ago have a across year geographies, a in I said and the I I Central our last So Plains. if

looking The The line And states overall, we're as now. are other Northeast one ahead would the where and Coast of accordingly. bit Mid-Atlantic at little with Tim is lighter in year I right and ago. that's a color expectation. Gulf have Tim our expected really segment, looks mean, what quarter, as I just that as, is every adjusting I'm But sharing great. portfolio mentioned, mentioned,

Brent Thielman

follow-up. quick A Okay.

units in curious know I presented out. I and the out had disastrous your the the an incremental, pickup Coast areas impact just in but think, business? it's relatively West past, wildfires in of on sometimes, sort these -- if had a I'm

Brad Soultz

percentage. of the given a mean in those That X% typically a -- one on individually our been, benefit. I a unit one Harvey large past. It's X.X% less now of locally. Each such is just mean talked rent we've it's than now about of smaller do would total very like, the small -- scale larger or all portfolio was to now. amount those Hurricane portfolio, I have company. we the

And suffer uniquely were level, over fleet from it the in relief. the immediate a scale, shock our that market. When the communities provide right? we we to they're other supportive a over -- all rate period is one of given for react, unparalleled local and bring meaningful we local So America that at usually all we positioned our can like and North if we country, suffer respond that, effectively to need

Operator

line from Sabadra next Bank. Your from comes the Ashish of question Deutsche

Ashish Sabadra

quick follow-up So clarifying questions. just a of couple

compared the does normal back, the was to that the the how X% historic some improvement coming Just are that at on which delivery, pretty of compare strong, it the or has seasonality? to units compared also rate to how your expectations sequential And seasonality? --

Tim Boswell

only in expected the side of this is significant delivery so earlier the like we pickup The that sequential year Yes. year, equation, difference the have more QX, terms pickup. the would in of

in in delivery implications you're that So dynamic that when then the cost tried in QX, to it's variable getting sequential which where year, I say the materialized has I've highlight. later volumes timing, quarter-to-quarter than and QX increase that rather for the

any something on historical as the seen there. contracted our the as On how experience side equation, in with at surprises stay return portfolio long level of the out. that the we frankly, That's portfolio haven't duration we see units well we based model the typically

Ashish Sabadra

the on I front? that price if to able wondering price on update month-to-month more optimization was Okay. on then sophisticated like that are out optimization roll any front planning you've And been you

Tim Boswell

yet Not the is answer.

pricing recalibration that opportunity. an that relates activity Applying is But there to of We an would to opportunity. installation as of rates call model one completed should from I what just the point a refinement over pricing that a got your delivering the have rental now annual across prices. rental we time. data combined D&I the map we've on rate margins months have that nine of Being support portfolio. recently And is it segmentation I'd upfront is an our as in pricing more out-of-term business. think tool mentioned the road delivery to as that Brad sophisticated lever

to interesting continues the lever pricing So be business. a in very

Ashish Sabadra

that then you're last plus things on one logistic in-sourcing great. the that it on optimization. planning That's of the that quantifying good. to whole I of maybe know on much That's maybe optimizing so of been were the terms some it around made you've was trend there do progress that. some not but implemented has just one And importantly logistics update on there more wondering piece? and that technology any in the you've I

Tim Boswell

and The working Brad this spoke resources is that the as annual outsourcing our for We've double and size We've internal QX. team bit in-sourcing Think got on base it's our it. structure. roughly about resources over we'll what will talk I about now that million we substitution this D&I in significant We logistics of earlier. got that mix it this specifically question support so external largely piece should a upfront be tackling. problem business don't that of expect a of cost more time any And right versus actively the once rather $XXX was. cost a capital to of cost that a tackle see

Ashish Sabadra

Thanks again.

Operator

Your next Wondrack Deutsche question of line Sean from comes from the Bank.

Your lines open.

Sean Wondrack

did we to expect to there. improvement earlier years? you expect XX% of noted on also this sort trend higher-volume of continue think comments which around of should also about Hey, made It as that and Should guys.So kind quarter pretty we I quarter. just line? over you've made good. your some to is you see the some hires was of couple next SG&A sales How the SG&A that

Brad Soultz

a head off inflationary across expect we are reasonable it QX leased XXXX the as to the a have into think costs properties continue also reduce sales. of largely you some percentage say a this to count in And cost that in There going further I so as a things SG&A-related taper occupancy normal certainly at will to to I'd getting dollars. of be foundation executed million pretty result point. Well couple would but we're some QX. reduce merit increases at it will by synergies continue

Tim Boswell

be no-brainer We're of kind certainly they're revenue it basis. minimis when And you at of look scheme salespeople on And So wouldn't these worried de I of the a about things. adding percentage incremental drive grand are right? to kind investments.

Brad Soultz

into And sounds it it. like already QX some that's of

way view or move don't I the head a commentary one the count other. meaningful SG&A sales as So

Sean Wondrack

there you a lag to little like add of typically, this, training the a realize And et head you're from the before revenue Okay. employees, bit cetera? is when count able

Brad Soultz

large actually team, so a that have in very we began a is July pretty sales year. mean right, I modest this this add

of up We've primary you our be small they're the tools a their lag certainly when quickly. bring is disposal quickly in at from someone as possible. team, to producing, as excellence there So to door focus to commercial but when great a folks those bring to speed that's productive got

a So smart it is add.

Sean Wondrack

about helpful. and your obviously then M&A, been to see numbers you've leverage the disciplined as pretty And gain could That's operating ability here. in you

stated for over certain turns opportunity, you'd that going threshold right of You've sort at the point. the X consider a

For the right opportunity, ceiling how short things do would as you Or of to currency? you on use think equity of a you to allow sort willing a about period for where go be time?

Brad Soultz

situational. equity next bit use is could X We'll we look would And second of at I also line jeopardize sight said at it. to is into above of XXXX going that in visibility. proven situational. And expect. go said anything that our go our us as said, the what X range once results that to in getting of transaction. high not into the side did just finance detail. I've a out. deal we It's And knew right with exactly Tim every think to looked by something we We What to certainly, clear we're year. deal leverage We've have quarter is

Sean Wondrack

sense. through. coming Right. That you And of debt as look capital now, lastly, callable structure have just your some makes you then lot a obviously, at

capital you there? also You bit over permanent as that your get out a decent on terming some debt structure Would of you more into a time have revolver. revolver drawn consider of

Tim Boswell

immediate in the the financing at revolvers liquidity term that cash is here positive, you inflecting no out. on need got today this a flow that kind there's another the range the on And and dependent mid-X% business would of decision. million cost $XXX quite our and significantly require Well, the market so actually again, in availability are you of moment. the and business is attractive revolver of Sitting opportunistic that to

I improve think to we've opportunities got on that.

So what a is public we're still say can company. relatively new I

performance, we've that I established the both every organically done. acquisitions a of and we've goes with think quarter track by, that record

to I And the we of our continue improve Every think time will that trading that's example. the continue able been capital. be track for par, this been in cost record, market, to bonds we as the expect, above overall reflected the to we've case. -- we've on

Sean Wondrack

Great. you Great job. And answering the question. thank for

Brad Soultz

Thanks.

Operator

the Brad questions to back Please to Mr. conference time. showing I'm now Soultz. I would at continue. turn further like this no

Brad Soultz

to customers, just not, our again, you when like very for All I'd all a fourth look with continued right. we performance, the investors our Well, team of day. announce thank and to great and Have WillScot Thanks. quarter if results. forward soon, all speaking

Operator

Ladies your conference for and Thank gentlemen, today's participation. call. this concludes you

You may now disconnect.

WillScot (WSC) 9 Nov 192019 Q3 Earnings call transcript