WSC - Earnings call transcript Q1 2020 | WillScot Holdings Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the WillScot Corporation First Quarter 2020 Conference Call. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Matt Jacobsen, Vice President of Finance. Thank you, and please go ahead, sir.

Matthew Jacobsen

Thank you, and good morning.

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

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

statements, all undue of place reliance forward-looking only on not which should as of these today. You speak

We'd and like forward-looking in call to the remind you that include responses this some of may statements. statements questions to your conference

As such, and intend to to events results differ uncertainties they materially forward-looking update from any does that not such WillScot future statements. obligation and could these cause no actual subject are our statements. to assumes

issued A call today's section The X-K SEC. to the morning press are of of Investor been we release submitted in copy our also the the posted we presentation and has included Relations the for website. that this on an release

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

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

next our section SEC available days, through Relations SEC our for Over the XXXX. Investor filing the XX-Q the several of be will we'll on the with of XX-Q be also The first quarter website. or the

bit provide perspective call we markets. of detail up business in more XXXX rest for questions. Tim of our key how a President before quarter on CFO. market CEO; will cycles call will an Brad our developments provide our and and outlook business with the our brief some with today's I Now recent Soultz, WillScot first on Tim give historical and kick me today, and for then operates our Boswell, across in open and Brad overview and results update on our have off our a the

With that, to over the turn I will call Brad.

Bradley Soultz

to to Please turn pandemic. Both compassion, grit modular by like and to of Thank of COVID-XX QX as Conference are the particularly you, everyone. each help financial to everyone Matt. First immediate outstanding taken steps pleasing metropolitan unexpected Good major outlook. Relations through solutions while XXXX results temporary presentation, continue and and in Quarter and every future. deploying other, in revised I'm communities into the team, North and our Investor our I'd to America as well pandemic welcome XXXX of customers impact order this WillScot in results WillScot's the the necessary perseverance our our our strong Slide area our actively X which to thrive highlights the QX humbled morning, given Call. who've unprecedented protect persevere Space our our outlook

double-digit our U.S. First, rate same over we leasing by in on X% continue was up QX our improvement expect segment, continued and consecutive service-related is Modular is to of and growth, This tenth in a revenue rate. the driven which XX% as revenue the year-over-year quarter we This ahead. up momentum this XXXX. in X% period outperformance look million was of $XXX in

and remind increased by remaining penetration While a by you this the our and XX% or delve minutes, the optimization driven of price processes. and tools is in few services, rate we'll into I'd our products XX% deeper improvement VAPS, that of value-added

flow. mix The improvement of in continued leasing, million revenue consecutive Next, XXX up our flow shift quarter the our $XX million our is reductions, a QX cash quarter. cost year-over-year is and for points XX% of in versus EBITDA QX $X margins, fourth prior adjusted And free a improvement, were represents EBITDA the ongoing finally, combined million year. with $XX our cash favoring free of result X% positive which basis

turn to revised we as outlook. XXXX our Finally,

forward our gross financial reacted impact We've and related dynamic COVID-XX high the of the Despite we visibility, any nearly profits with lease first and variable related assets the uncertainty, recurring outlook are duration market not of of our degree CapEx. it to severity our introduced did associated pandemic demand costs given leasing both X quarter of XX% significantly, results has certainly disruption. the in to the reducing years. long-lived of have average this conditions, While of uncertainty already adjusted durations a XXXX quickly

prior with by over we original activity midpoint EBITDA reduced these to $XXX issued prior with to the year. is is $XXX the improvement as is or of able driven any those XXXX our million $XX net reduction Mobile $XXX does of to of from revised Mini million a range pending XXXX ranging growth minus The midpoint versus capital Our market still quarter X% million EBITDA was to contemplates of year. cash original EBITDA contributions about and the represent through $XX XXXX, XXXX XX% offset the were guidance our CapEx This adjusted million represents EBITDA from through XX% levels, durations an prior lower, approximate XX% to be revised range to transaction balance The to revenues million guidance in million expected shock, guidance, of of second over demand lower-end revised flows. year. from outlook and guidance manage CapEx lower free $XXX $XXX respectively. million just levels, from and which to million our this between net of spending our yet XX% reductions $XXX Accordingly, to ranging the with COVID adjusted line

playbook and strategic truly we to team respond specifically, maintaining combination growth, the in the future our right and with right Mini. the short have transformative while confident and commitment term, the the Mobile I'm to enthusiasm

provide with to order additional COVID-XX as you XX, pandemic we seeing in take ask and to I'd to context the shock. to Now some turn under the bit respect what a hood to Slide you are

the delivery new with across demand the indicators reflecting to diverse orders were into extended than they very with have our customers' also strong of into associated QX, end markets respect dates new when future throughout While further April. some projects typical, out have decelerated start. leading uncertainty The

left, the XXXX. green gray in Starting the graphic order our behind U.S. bars represent The the the rates at bars the same bottom represent shadow business. the monthly with for for green the bars period order rates Modular

rates reflects our rates reflects point the the year. portion which later. orders depicts You'll prior have in on book our and XX% accelerating year. pending prior those green above those note of and of to dates that are current the order monthly year. down dropped compared bottom the of chart XX% Since of the first order through sequentially March, delivery have The as those versus been end over have the orders, the right XX% next scheduled of were bar prior the portion the the gray X while of the same weeks, quarter, The

what next same book that year, orders You'll time versus over X up last dates note order XX% that next X are prior over overall have our pending XX% is weeks weeks, down pending while pending the delivery the was over year. scheduled the

less not an we essential fully continue pricing, returns, customers network. our reductions certain, is We've experienced for experienced service provider as or collections. important increases operational in penetration in to our that VAPS and it's service unusual demand not new While to from projects branch note we've early

next expect quarter, year, $XXX the Now upon up we current delivered above XX,XXX rent. has overall and last at of achieved the rate turning their units VAPS redeployed the been currently months, months on LTM to in Based of of another XX currently years the revenue the consistently VAPS growth. rent X Slide average driving returned on the revenue per the we our delivered across of as prior The units prior level will is XX. first XX% associated current VAPS which and value units projects all XX month rate of average units $XXX, annualized over penetration. million VAPS over are was occur over growth of In growth end are once penetration growth. the on new levels X% level $XXX the

the optimization. modular XX% driven XX% While of XX% was rate increase, growth rate by overall VAPS our drove office the other

the Although the rate we deliveries higher Combined, future. and of new X idiosyncratic these than achieved and portfolio, across confidence specific can levers over convergence X growth disclose approximately offices, on-rent extend XX% the the are growth average demonstrated foundational on they rates double-digit provide do into represent the opportunity. last not years a similar that achieved

I'll Now at markets end more outlook please and on granular than normal. across our to demand level our Slide expand a XX, turn diverse a bit

top with to and group those to left represent the relative nonresidential commercial stack grouped of green at construction, in the bars end black. the those the of and our corresponding industrial most markets, corresponding First, on dark diverse size

X% We markets. very started construction strong the X% with nonresidential out deliveries to year year-over-year. with Starting up

projects we active a been have some impacted, at will continue, slower While pace. albeit expect temporarily it

We new project through to quarter. down the least at to XX% starts expect XX% be second

additional more expect accommodate While infrastructure-related could we social which order and stimulus will term, immediate appropriate catalyst new in both site the opportunities. in active project a medium screening, space projects could density be provide require to and

which immediately recover markets, not to only to X%. X% materially commercial impacted deliveries X% our started are revenue, to events, up and strong year. Shifting Short-term were similarly year the of represent industrial expected with this

professional services accommodate expect we also will order remained offsets we additional distancing and construction as from in was space and warehousing more projects, some provide and require retail stable, and will appropriate immediate While social both and Manufacturing impacted, also opportunities. expect distribution. immediately new customers active with to

are represents We'll and to end process schools of our adjustments quite very across allocate potentially health been catalysts have social communities capital. norms. have revenue. portion the some remained combat distancing overall, in continue immediately help and have revenues, of limited disciplined and order provide normally finally, reacted also and could to a markets Energy government largely contributing declines than impacted pandemic. care which were geographies with which through as monitor upstream demand And a our most Education small our COVID-XX requisite we X% markets make markets, in stable markets, as stable, we our the accommodate energy, to various to robust control less

the and Given cycles. control frequency planning markets, we've of of nature the these end dynamic increased our

the long that free capital which assets, do the spending allow short in model our of to capital is have the lease and we term, to flexibility or with of drive over spending markets long-lived coupled average growth. reallocate term, strengths cash discretion flow present us our extent reduce One the key and business not

growth, inherent Again, as to and largely optimization independent rate our penetration drive the such continued M&A-related noted, our will looking growth lease unfold our Ready unparalleled strategy ahead. idiosyncratic cycles commercial VAPS organically synergies market and of scale, business, through solution predictably expect embedded and of to in our levers growth I as will revenue Work provide to

Turning this liquidity Slide to our WillScot's of a In heightened position, liquidity. and value think, XX. all the have I overall sensitivity resilience environment, model. highlights business And around we

We business are free operations organically great free cash flow in flexibility a major manage cash XXXX. the lease growing fortunate while past flow. that gives We've discretionary generated integration all for completing our positive quarters, the to our us X have to and

QX. Our and QX business will be more cash-generative into heading

So in primary be of internally term, simply source the the near flow. cash generated liquidity our free will

million down have. such, like the on many QX we revolver than our $XX in drawing companies as about As rather balance repaid facility

to needed, no that do the In If and in delever both the March the to see ABL approximately EBITDA top in our $XXX growing continue reducing million scenarios. revolver illustrates continue even adjusted chart, we QX and ABL to regarding chart have concerns ability availability draw by covenant of of modeling XX. we course, which debt, in that most our of additional QX. on we we'll have bottom you'll severe had as compliance, on The

realistic have liquidity, to we all altogether, which So believe with ample execute we scenarios. demand

XX. Slide to turning Finally,

cash demand to maximize While uncertainty ready given To protracted liquidity reduce taken the preserve demand is margins in action elements cost faced to drive significant and our are to as of left-hand below of and the nevertheless to we or semi-fixed have our aggressive more position that of results. strong, chart action them environment cost the aggressively decremental and right-hand of there free we side There draconian the variable flex components and leasing into structure listed variable are variable also flow. can QX have in downturn, our in XX%. the illustrates we margins we on actioned how can the playbook and cost heading short-term with SG&A we've page, align that the the to overall The duration the around date, order the are down face scenarios. with downturn elements

capital on will on more are -- are later, but Tim will the are variable -- capital short touch this entirely Tim expenditures in this almost term. but touch later, expenditures more

net our Our given organic of volume in XXXX support CapEx guidance implied an increase plans growth. to

with net CapEx Now environment, volume we've cut XX% likely guidance QX to and down our net by faced approximately expect least year-over-year. $XX at reduced the CapEx million be

always, order delivery we field As real-time from data decision-making. we'll see our drive let that the

capital wide range and market of reflects relatively second biweekly allocation these unfold CapEx that could dynamic conditions, are reassessing the We demand guidance respond to the half net different scenarios in the year. to

helpful is of take the will think which we additional of from from some historical hitting to going few the investors, the through Tim? a With last you that, Tim be highlights data recession, QX. for before

Timothy Boswell

Thank you, good morning. Brad, and

provided to give we some on some also WillScot how we we ahead. fundamental backdrop, macroeconomic back recession. the perspective the of think the our work we It to given when last highlights XX, Slide to performed our public, differences that looking pages wanted advantage went Turning revisit in

in chart the our years. last bar middle XX revenue of The sale the delivery the for and page leasing, shows

a So observations. of couple

First, volume the drop declined enough starting not naturally rent XXXX. slowly GFC. There base, on long churn of lease our projects pretty nonres We easily to prolonged durations, the weren't installed replace construction simply in forecast unit bottoming did that the to can in those due starts. to which following ended due change new our post-GFC,

increased almost rental the the no fleet X sales harvested until XXXX. Secondly, unit contracted fleet major we during business reinvestment size with period, as cash post-GFC Total we years. for from

due So to structure. recovery captive we nonres lagged our clearly the ownership

will public As we today, a the company leading in stand-alone be aggressive recovery.

bottom has the today XX% of the Over revenue from at leasing our see only dramatically. XXXX. changed versus revenue mix in of XX% Third, page, you operations our comes

volatile, strategically. and revenue more deemphasized it we've As discussed, is sales we've

roughly streams. have volume I'll greater the as out accounted revenue tightened. state market, point post-GFC, decline budgets visibility had we also half forward education a which So concentration we for the into high our that in local and of

in We portfolio exposures the today. have no such outsized market end

healthier demand. the Lastly, structure, in of heading more a we've and we remainder much results have scale a into balance rational believe which transformed of business and of XXXX and XXXX, the industry the supply

longevity of gives on show cash free to well Turning our illustrates to of are CapEx, years, unlevered free negative our our company to non-res cash sharp over chart The significant periods the assets, of flexibility went entirely operating former strategy, extended meaning net and parent almost drop our investments conditions. gray Modular given given discretionary, we This have reinvestment units shows to is Page as XX. reinvested, that which XXXX, even was leasing revenues fleet to X and mechanical the material than we of sold business and years cash no operating $XXX generated more maintain. source XX-year useful back that real which in today technological double have following services U.S. was were possible lives CapEx in million until what to fleet flow approximately free and company. cash in net XXXX. a they the unlevered The There how for capital line flow, time, us bars our the depending market actually manage or net you are and exclusive acquisitions. that CapEx the of the GFC, green the no our as roughly Both in X due XX- flow see elements

today. growth markets shows delever focused would generation would and familiar have value. capital with earlier our redeploy opportunism. extended proposition Instead, deal reinvest acquisitions environment of and in a a for further to the expanding us illustrates business the we Since which approach, our and return are capital consolidate strategic of and at flexibility History XXXX, Obviously, not the and value-added refurbishment, flexibility cycle, shareholders, to capital this how period, great to rapidly, with fleet extreme organic investors overall allow the allocating an our to in the is lower-demand shareholder market. we opportunity, to example market products, value how will on cash expense primarily operate while drive deleveraging,

XX. Slide to Turning

on here. churn instructive on portfolio we our in rate contracts as between The mechanics the rental recent of see shows rental of new dotted and rate for rental U.S., our in green. few is implications play average we've our Let's KPIs and where in go our the deliveries rate the average average XXXX, well growth Based gray, on the in versus seen spend irrespective minutes on market chart conditions, this spot rate, thinking historically. portfolio left-hand this from spread prices current into average current dark about a portfolio most the and out

GFC, delivered and before across the XXXX, trough of During declining the above about XX peaked XX% months levels approximately for XX% the the average in end were whole Spot portfolio. plateaued at rates rates spot to rate then rental XXXX.

long Importantly, due duration cycle, XX catch spot rental only the average of and Lease after trough. to average a which take XXXX, spot in rental rate roughly rates rates, also long our months to rate peak lease amplitude rate QX to time durations, peaked X% up the dropped the rental to from average the moderates peak.

And were rates manage We we've factors term them. of and to are pricing mechanics important, there contractual inflationary churn was some our tools more we adjustments a their algorithm-based improvements have manage ability whereas each So industry and pricing today, to We've XXXX. manual whereas the rational place rental put these our in of historically. rates units XXXX, relative and to beyond much spot portfolio managed only today strategically, centrally fundamentally in pricing decentralized structure made improve on previously. average

XX% in average. the between was changes rates is months XX the lag longer of spot back portfolio changes our in which extends across see portfolio duration and in XXXX, than lease you average Furthermore, it

And portfolio. were increasing. you our XX% the spot QX include than products, still XXXX, average combined rate spot of is over across U.S. our As rate value-added when higher our rates

So XXXX. spread to triple be growth that's These we and have back on are saw rate into the rate market. market this And allow laser-focused in embedded leader, some well we believe us the look into of we the more market conditions. in irrespective confidence, than mechanics realizing performance will with portfolio that rental average as XXXX, the current

this Core Year-over-year to turn revenue past a strong QX, flat, basically and last revenue QX, onetime in X.X%, can and flat briefly our were biannual of by does sales decline more I'll was our a offsetting revenue. really Adjusted margins by clearly on meaningful our sales. shift recent increased XX by expense rate the time the in let's the cost increased the and mix meeting, which to XXXX $X.X of service Now like of offset note saw of when $X from business, the growth leasing heading XXX over leasing and million improvements reductions. reductions it favoring SG&A although any feel run with but were the ago. into sales related for contribution another ModSpace partly in runoff nonrecurring and of purposes you of up was Slide long sales points QX see we EBITDA quarter mix year-over-year revenues, basis left-hand as cost result QX. approximately million is chart.

we timing of million is top to in have year-over-year accelerate basis. payments did saw sales from vendors up a million $X we flow right on note, free of $XX our chart, that and QX approximately $XX roughly to on million late a QX, real as in positively, to cash simply did free QX, cash was flow smaller I'll related. In continues inflect so slipped the estate there headwind March, many we

we bit a to back flow ahead cash inflection and free that in the started QX. Jumping more on Slide XX,

of than year. provided prior to growing and QX. QX, net that was in by operating with basis tripled margins had from cash the in expanding, EBITDA line about year-over-year Starting half capital, we had stabilized. X.Xx up more in in recall in down XXX points will been a QX, X.X% leasing QX first You has revenues aligned activities which activities. operating QX, and levers Top cash another XXXX, Interest been multiple working was headwind expense drive have versus

trends in these Mobile cash we as integration although QX, Mini expect work closing. costs We progress continue to start to into we the related incur will towards some to transaction

you in basis. net in Net page, resulted the At from and year in of of seeing be expect was this reductions favorable trend combined manage our which completion integration. year-over-year the and mentioned, delivery QX, brad of by These into ability activities. QX a XXXX down that our bottom and XX% XX%, delivery similar of volumes cash are year, on XX% used cash the Heading investing seasonal similar as fleet to efficiently respectively, QX QX versus from lows. investing volumes our more down following the be to we to ModSpace will prior means QX a

products. I QX levels allocated net comparable With this value-added growth to with to be levels CapEx So down year. XXXX, last capital will below since have QX incremental from approximately those invested of and to expect XX% we trend, maintenance volume but

how been, the Given fleet we see cycle environment approximately allocation so will based for to CapEx, the a we shifted reevaluate we dynamic QX in on allocations capital market have that June. data for has X-week

financial is dynamic have planning flow a is normal. outlook. in growth, business outlook help deliveries demand prior here unit for obviously of than year. reduction here the should that and outcomes QX an for Given free cash of every to stronger our in XX, unprecedented should framework and we for year assumed XX% our enough Slide in revise original be different scenario, versus provided Nevertheless, than we punchline the think margins ranges right now, comparable EBITDA is much we disruption, about but be try our This pretty albeit with visibility wider potential on is a financial that, the and Sitting we're XXXX down XXXX. in such modest a environment, to do economic year, and

to many billing up dates are due delivery into orders market uncertainty, and year-over-year, pending slip total we mentioned, expect Brad but QX. As initial to

hand, cost pricing, primarily products we value-added adverse gives fixed is so on this see in delivery to maintain variable volumes structure, a costs. other which and on don't or already touched versus duration, near-term lease of chart at XX% consider if margin year. if to flex declining decrementals XX% the dropped more volume structural half that we the a only believe least second demand sensitivity cost suggests decremental implement we remains a environment. Brad variable the variable great any us and our if flexibility The depressed of outlook costs, impact we margins the sensitivity the reductions would On in of we

structural rate way reductions insurers our they would if those we'll recovery. and and in So support it implemented, run lead position are into were a when XXXX, in do that to a the still

flat revised midpoint EBITDA CapEx, basically circumstances. the is which as And team cash offsetting At I'm line to the and primarily the due duration, the for growth CapEx and chart, these the free with are or biggest year our of less cost net revenues of This flexibility we X%, adjusted of the a up to approximately unprecedented And by reductions the above right highlights importantly, by model structure. of business building unlevered our blocks the in value the cost proud coupled driven of for margins in Most and and guidance resilience flow, pricing value-added in our EBITDA grateful year. range, original long products, result. guidance X bottom in headwind. prior and volume of see modestly execution lease our

quick any Mobile that, for Q&A. closing back merger, on I'll to Mini Brad comments a the it update With hand and

Bradley Soultz

Thanks, Tim.

I'm of proud face of our in of So our team sum QX by to COVID-XX the in importantly, the and I'm the WillScot the extremely compassion, accomplishments pandemic. grit humbled Most revised outlook. up, and perseverance confident

and continue the the to our shareholder increase forward We I'm value, the Mobile to to team looking right with and Mini. long-term combination strategy have right transformational

Storage of to Mini's As with Mobile of much reach Mini will very and of similar solution Space value proposition for and has the we X the and certainly we will the assets very alike, important, lease more economics, strong scope Modular cultures company than it's stronger collective even creation growth we how time long-lived customers. value solutions as continued all team, to and X the Equally the Mobile revenues, are great Together, and different, bring unit that be attractive WillScot's together. long-term These drive predictable Portable companies companies. our stockholders. our be each reinforced enhance management spent which

like thank operator, us you to I'd would to please for And the the prepared taking This remarks. time join today. our concludes With you open that, line?

Operator

Instructions]. [Operator

Our of question from comes first Oppenheimer. Schneeberger Scott

Scott Schneeberger

way. orders just to The -- please the -- on and industrial the you're for at besides well? offset deck, end social then could presentation I point bit category, in XX, elaborate distancing? could thank doing this Are markets at hear for commercial any like Glad as that detailed to elaborate additional for little you very by across care? government workspace seeing looking anecdotally I'd distribution start well. you health And you Slide that guess on the and I'm curious, you also this of warehousing a

Bradley Soultz

and distancing we're as Thanks everyone the et us. absolutely more space the the Scott, evidence of for joining sites, sites, cetera, additional reality norm. social new on project seeing it's Yes, for Brad. than schools, anecdotal contemplates office need

some we're they customers something it's that's So in cases, on, there's for going working have. be with more requirement the actively reconfiguring a furniture office to In cases, in space. many

especially a a for additional folks come just, this at they're within kind coming to of addition also to job job as in an likely back you phase, to if sites, screen as this office, the site, distancing restart social these buildings need economies on will, we're let's In say, seeing online.

Scott Schneeberger

discuss much managing how you're down curious the not lag in business. and And how energy quarter. too category, bad just follow-up, you quick don't I just staying seen know the April, this real but we've because in you've on certainly what seen a on about a on slide, thoughts want first down, to that

Bradley Soultz

such largely portion for percentage XXXX. a small do. since been the It's is Yes. certainly, of The term, what we upstream stable long

customer So significant further the providing we're mix that given declines just services group. expect of I don't

Scott Schneeberger

it's for cadence you be but predict, difficult the then of what then, bringing Tim, the for how All I look of kind hear year. discussion adverse quarter mix. on balance know just to right. And impact, the on duration thoughts guess, second Thank the back impact? EBITDA of depending distancing? margins. you very it in And your half consideration just over I to And may may the on curious scenarios social decremental various into of the

Timothy Boswell

clearly of of lasts. will least long rate quarters, be lease how more -- probably demand installed reason, really EBITDA EBITDA impacted disruption predict run year, to portfolio base would of just the just the depressed that didn't the I'd each We end a of relative sequential the given inability the end guidance be that give And churn generating demand year. the through Yes. to but is decline any the the given through expect if for is the to very slow, the the revenue. our of QX current

all severity it of So the and really the the is down of what your view comes to duration disruption.

we've as expect. think a performing base of very view we exactly and at point, is I got QX installed the would this good

Scott Schneeberger

And sneak one more in. it quick just can I one, if

what's mix the thought the from a on Just and on was contribution the rate from VAPS. pricing the what and contribution

investing the in current still and You update that. gave you're

looking contribution would change stay So fairly at that balance Or that I'm mix the just the over you're what now? year of on wondering right if consistent? should

Timothy Boswell

to Sitting here changed products rate not and right we're our value-added now, now. drive have strategy, continuing we right

We change. happened crisis. during expect right of mix here historical now, what did to view sitting financial the provide kind don't the of So the I

the in lease historically. change business chart spot DSR a saw ARR. you I lag rate this is seen not change and XX-month duration did happen in between think that have trajectory. in of delivered the beauty But beauty and the change the of that We that in It

there was long a So how change longer pricing severe over again, and continues through extends how change. an then, is are demand rate depending mean, goes, I where this period in than to pop DSR back the the again, on time. of between it logically rental that just right average which Because, today and duration lease business scenarios XX% disruption time

Operator

of Kevin from comes question Crédit next Our McVeigh Suisse.

Kevin McVeigh

XX to is did average XX all that think Great, hope that the If Brad months, safe. you see -- months? so, and Tim, I you right? from up staying duration that's are lease or

Timothy Boswell

this over up time XX is It's been some Tim, Kevin. for Yes --

by what XXXX, ticked is a up entire that to in in back than month little It's trend, XX duration consistent last And the lease the like financial month that stability seen that consistently what portfolio. that's XX-or-so lease of per over XX, crisis Going the range. less X has been period. was provides you've over year years, it a fundamental long-term the very and

at tend when it the mix that had Acton It smaller, more a wide saw durations. Kevin, you that integrated stay pop to of Then ModSpace. on we higher bit, down acquired a dropped back complexes longer a You offices. single move, we saw rent mobile bit Acton They trick like for portfolio. up when

metric only the in the historical mix have a it's over really, years But that been longer-term changes last acquisition. just a So march perspective, take X upwards. driven by if been fleet steady you

Kevin McVeigh

is the versus versus order looked shutdown? kind how you just is, helpful. kind physical all scheduled, of hesitancy? it at then in Or scheduling the kind of frame the delay there chart way shutdown the That's any to physical much And of the the of delivery where is

Bradley Soultz

It's They've the rent. that the more few weighted, -- to noted, uncertainty remained again, with projects largely new as right? So are come starting back have starts, just Kevin, impacted, been to on online.

to is specifically orders, less uncertainty with as start. they'll shift to yes, attributed that largely new when So

Kevin McVeigh

Great. I'll and And quick in. then just one jump one, back

just shutdown. many a the targets? get on, what's synergy On that? timing congrats. Or bit Obviously, Any there's on updates I was around any going pushed situation. given given just the little government surprised didn't -- pretty fluid the a well, with out thoughts

Bradley Soultz

mean, The And before. to closely, have synergies I that that's we've developing articulated are. said this probably process, that. providing both we to from the extremely closing XXX working in third organized add, been sides, in which million very very the well. close thing we've colleagues that's to like only plans, I'd all integration we're in going cost And the $XX just quarter, confidence we've forward Look we confident

Operator

Our next Courtney from Yakavonis question Stanley. of comes Morgan

Courtney Yakavonis

just at for balance there kind that secondly, units of gone now maybe of you down range the have revenues, or looking all either XQ from outcomes has the maybe the $XX how, You've outlined changes negative. down you have or million year. kind If revenue of in want just of scenarios are CapEx And this also on mentioned CapEx potential year? you're the for $XX address just to the customer net range million comment, then you certain that Tim, But prior been in of with groups? rent collecting I can you any to can just first, guys confirm, lease right cycles,

be this would to to that really So how be bad scenario around? time have revenues for a

Timothy Boswell

Yes. This Courtney. Tim, is

And it's Let's the as would commented, installed first base. start we I exactly expect. performing with

pricing, or We seen changes rental not in any payment have activity, return activity. duration

But So into clearly, portfolio at total changes no there or percentage paying receipts you week, the been or week that's of QX. the the or have of payments per look average per April. there's week number end per through going if risk there

we is unusual changes regular a our customers portfolio there always work around of the on basis. So discussions no would in have expect, and as But performing been we kind terms. rental with

the of terms Page we realistic we've range, presentation, I that now In scenarios provided, CapEx XX a sitting see. here you think, the at for the of look range if right

just the the kind the investment similar of the books, net on to something in we expect based demand right of QX, that's see So to QX, in I'd that million that simply in support $XX-ish now.

reduction material we'd rate since a take that's that CapEx and demand further been to lower. to down on So see good pretty a run need we've significantly QX, in

$XXX into and extreme the our already the take QX. year, XXXX, scenario example in the maybe going sustained of the severe million-or-so it's or in end XX% of you CapEx if sensitivity the mind. So decline invested in that's very level, so a having after charts, that's to $XX down a That million go would to demand through

So that's of to taking obviously hard extrapolation. way -- And a but at you're type beginning that in as to well, be see at XXXX look point that make scenario. premature that material some very we'd cuts

Courtney Yakavonis

and looking your isn't we're cause just if you what scenario, conclude to you're XX, on Okay. I if deal between the XQ. downturn what you Can in on right that Slide also, down going comment seen? and or think, office at then storage? broken modular into I And for there deal? has prolonged portable that more what just discrepancies also Brad, any That's for helpful. And about But any the storage seen there's would that different has that And comments big obvious, there. end appreciate, think seeing the is you portable this markets it to a anything time also becomes this point

Bradley Soultz

No.

it's if end business. is But storage a perfectly markets, our I behavior. complementary position order a at Again, think relatively you look by small. it's activities very similar

same you So it's kind if impacts, will. of the

Operator

from Phil next Ng comes Our Jefferies. of question

Philip Ng

assuming help this standpoint Within that it rest demand like if you're a from it's what midpoint, for spot us and an the table to year. decline XX% looks your of from guidance, on sensitivity understanding what translates units I'm and levels? the in understand Can the AMR assuming about XQ rent, correctly, on you rate

Timothy Boswell

Phil, Tim. this is

assumed if or in our of change terms haven't trajectory. value-added much guidance for outlook pricing think really we about you the original So the year, products

quarter a year unit to the a just and either demand range XX% on hand basically that But decline be potential the for from charts, XX% significant, and outcomes, for are and the of decline of demand for too or In So headwind though, still variable right an the on we're in The rent you really flat bottom the talking a here. cost demand if sensitivity unit year. try rent right those broad is on EBITDA the sensitivity you rest a you're of quadrant, kind give corner focus kind way about standpoint. guidance. of of that primary bottom will erosion right-hand

that and but and offsetting We're on we be that activity executing way products. roughly from ModSpace sale pricing all volume well as to then is still synergies, headwind to delivery also So some value-added there the as think is have cost is going of of the a tailwinds installation.

together, all here the mix extreme base scenarios than that think right that kind it's scenario we at year but don't this we see possible reasonably a that point. you and case, the of So worse certainly is now. It's not flat sitting under

Bradley Soultz

we'd that be only add, in Phil, the quadrant, the adjusting The Yes. year. such, and look fixed into bottom right half thing we if second cost aggressively I'd we of structures is were as

Philip Ng

Got it.

Okay. going the or New then, was deliveries from market and And for That's I impact any of end any these particular York And the April? like to really did see Boston, where weaker year? stronger some in shape impact that's helpful. you And halted? guess, construction how of were markets,

Bradley Soultz

Yes.

impacted. the smaller I small I couple. business, a immediately special mentioned our is very obviously, mean, events, of impacted. were Retail a immediately more also piece Just

is quicker But we the York were also it's bit impacted say, response. all the and where than saw of New Boston, a demand a markets of let's geography, for others. COVID spike initial end some in the

So various there's markets that, other than geographies. the nothing really or across notable end

Philip Ng

pick some guess, I are a historical Because were from your global operators. financial to lot the perspective then, of a market you And able share? mom-and-pop still Okay. competitors there regional up in crisis,

Timothy Boswell

chart, here ModSpace and WillScot is And also that at the of obvious in you pretty business think, because is simply beauty then. formidable point, back the industry flexibility were or we've our the think I share, saw cycle back structure organically reinvestment WillScot capture reasons. and to is that the got looking complete today different. And ownership this lot for time. through recovery that at in both construct lead recovery the competitors I the a the further that today that lagged consolidation,

So and say, plan today I'd we case and how different that's we "here's I in the a what's back there say, going execute and I'd at wouldn't look say to study captured back look business, "Hey, how forward." share." it,

Operator

of Patnaik Manav from comes Barclays. question next Our

Manav Patnaik

you model, I space change and lot sensitivities, of medium lot that strategy if see think term, for the so doesn't social is, you curious was the a for and think asked. of volume, the all a sectors if the there, term, I you asking the it through add But you do maybe bit longer tweak a and been guess I as details a question, anything lot and forth. little business in put as of the seem thought have to a this, clearly, Thank didn't just and see of which near-term with you have to questions need any or because or I you me. you'll to longer-term traditionally to distancing clear have if

Bradley Soultz

Brad, services to a the that's case offices I'll -- as be remotely work social from I'll would branch employee good to in a study, our every I not own and this Yes. to So internal use essential we've talk our is on set distancing deliver required right? absolutely one, just home.

the X- you of every their and there's assure, for workspace. people, are look we're term, in distancing they're when opening, economies least layout, at back, at office to have you density the now transitioning to you take looking social X-foot medium the As and at

hallways need wider. to You be

might facilities Your et some require bathroom modification, cetera.

in So many and headquarters we're without specific the looking same. seeing we're at that customers, our of those naming of our all offices. shared And doing

numbers early space. it's So put requires distancing social there, out to more certainly, too but

crisis from would if financial on say to the not thing the education So of learned a assets, the market. the the side that's there's of this one case silver lining we on side, did in again I have demand it. is which recovery global have we bespoke

to our end infrastructure a significantly it advantage see stimulus. short-term long we'll assets. to that take them underpin new Fairly the about optimistic all catalysts, that then the on medium is of opportunities, using common obviously, could in seek lift we and I And markets, the frankly. other of that. as look Candidly, So touched we won't be term, ahead but and catalyst,

Manav Patnaik

way? lot Got you probably change it. probably of timing And Mini then strategic with just Do mind it even think the one financial makes Transaction, diversification follow-up. that better it for portfolio your -- sense on Mobile now? going kind a of either wouldn't it is Or the The of you obviously, what's guys.

Bradley Soultz

these market environments. No, I'm X stronger Definitely how excited perform X that portfolios will We more see in together. uncertain even now. companies great it about be

Timothy Boswell

Tim. Manav, this is

lease assets, in you've long-lived common common duration, causes the which got the ways. the got to portfolios churn very similar You've

on return across combined not got You've tuck-in as a well allocation as organic capital. perspective, of customer you a well profile as you've a a which capital tremendous multiple perfect provides diversification. asset of but got flow lot From basis, deleveraging, gives acquisitions overlap, opportunity just classes free optionality: as cash growth, overlap, consolidation, significant cross-selling which

that the and no are think slice together how together. stronger companies I powerful matter more one So you X up,

Operator

question Wondrack of next Bank. Sean from Deutsche comes Our

Sean Wondrack

you your Brad information for what of is Thank we well the lease everyone's all really that When given better and for safe. great degree here. it about Tim, them deeper taking durations structural you think, those faster? make can behind structural you to you as the taking of these cuts just the So much line costs now? down as is sort doesn't and and I to visibility, hope think business, of is recover not that Or This what's fall the opposed longer if helpful. your the makes able market as sort now? rationale

Bradley Soultz

is It's not our That all see variable, that actioned the see, of right? we've what which -- fact cost that. of the was and to amount So significant really now. of more a address It's structure, it's right let's we adequate Sean. wait say, already

we said, want a recovery. to to in always support be position Tim a As

we is of structure. on quite And in are more as while These it's case. top retain December, that, I frame February levels levels accustomed the slide. are we're normal So degree we're quarter, time one typically course. is, in which graph not to in the -- kind seasonal nature concerning. thing cost any now, variable have of that the right at that more flexing line the sequentially January, operate is of flexing overly on other structure a note depicted fourth a of And Whereas quarter with our just down as would still a and it's the that we that such the variability, we net first cost that of reasons in demand

how So structure. the construct we it's cost

Sean Wondrack

Right.

we to Is see think capital capital Okay, great. there is helpful. too? Slide And benefits way reduced? then if working further, that's of XX there were a Would demand working sort about

Timothy Boswell

Yes.

year, the in Clearly cash I last deliver we the ModSpace year, with headwind last free end completing had that half as think at QX think part, thing been of integration I the the that's and to is the that us, capital. had we've a planned. flow happy first of working short inflection in in run, of after stabilization one allowed stabilized

a wouldn't take we payables, front, think of our of And customer would. pay however, at the a as that environment. it, will of offset. time vendors ARR huge type We on going if a side the I in bit provide I benefit opportunity is going as we're which do deposits, going just to forward, of the So an then is think portfolio down. Certainly, demand

into different view a when our don't we're planning. I scenario lot So a thinking factoring our as doing that

Operator

Brent question Davidson. of next D.A. Thielman Our comes from

Brent Thielman

seems you trying pending wondering what the that. The historically encouraging. I'm that just orders to, orders? metric or to Great. conversion handicap you Just handicap provided, actual again, pretty can if

Bradley Soultz

Yes.

these So pending are actual orders.

canceled. are that rates. no orders We've in few a seen cancellation change always there's course, Of

So are the dates the of seen associated only the with physical unit future. delivery pushed is thing the the out we've into actual longer

were order business. of year kind X this orders rolling if that seen We've a So book we for more those expected current the we next shift just the ago, It's out. -- to the week manage sitting delivery within here we window further scheduled would have by pending be weeks. of which

Brent Thielman

any and of if to value VAPS include And that proposition? degree? your products? incremental then perspective, my so, I material any From health follow-up. to safety did this And is the guess changed to of curious, I'm sort Okay. expectations sort catalog environment potentially does your expand

Bradley Soultz

It's a observation. great

have this relationships we that and bathroom turnkey customers, Much providing cetera. continued solutions, is seen us interest today. facilities, provide full I think do hand of beyond we and what et through furniture: through offices having sanitation, above our in just third-party --

it expand these they of to proposition reinforces for that, they'll to So bring one be, safer the make opportunity frankly, shareholders. can projects, our we me, continue easier for the it them, the more each customers' and just the can value the bigger be, fact can for productive as we we the

unfortunate has pandemic always reinforced and validated of So we've kind COVID I think held. this an assumption

Operator

turn further like Soultz now would with back the any to I call Brad to remarks.

Bradley Soultz

continue I uncertain and safe to right. wish to health thank everyone All periods. these navigate and as want we just everyone

a Have everyone. great day. thanks, So

Operator

conference now participating, for you and disconnect. Thank concludes this today's gentlemen, Ladies you and call. may

WillScot (WSC) 1 May 202020 Q1 Earnings call transcript