WSC - Earnings call transcript Q2 2021 | WillScot Holdings Corporation

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Operator

Welcome to the Second Quarter 2021 WillScot Mobile Mini Earnings Conference Call. My name is Catlin, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. the Investor to Relations. turn of Girardi, now and Treasury will call Nick over Director I Nick, may you begin.

Nick Girardi

today's harbor Soultz, Good WillScot of morning, Boswell, be XXXX X on found quarter Slide Mobile Chief Mobile Mini include statement. and welcome presentation our Investor contains to Mini earnings the Financial Officer. on calls. website. material and the Executive the Officer; Chief WillScot Today's second call safe Tim Brad may Participants section Relations

statements during forward-looking presentation and We session. making will the our Q&A be

and operations and business control. are are Our variety subject of uncertainties, beyond to risks which a many of our

As a our results from may differ result, comments. today's actual materially

safe description and call our presentation harbor For complete of a the differ that and our results other filings could more With the please cause turn with that, risks, I'll Soultz. to the statement actual possible SEC. over in factors to Brad to refer

Brad Soultz

thank Brad to commitments pride also WillScot delivering joining morning, for Thanks, for yet performance value us you I to their Good extending by start Mini. I'm take thank today. business, for strong our Mobile to gratitude my you. everyone, and entire Nick. quarter. their continued to and team appreciate another of customers CEO I and Soultz, our our support. in on We your want want in

look Times We holding we'll Before Day I Square. get there. into to on NASDAQ this I'm of excited an you Investor be in X quarter's announce that seeing outstanding to results, November many in forward

our rates at second portfolio all Delivery our improved and while diversified results corresponding improved trends of outcomes. accelerating volumes across pace. Our superb in record quarter demonstrate segments,

raise Mobile Mobile on again major process this after a maturation the successfully increase SAP pleased In in our quarter step We May. to platform legacy to by quarter. I'm Mini's turn, WillScot also last the guidance migrating in WillScot business Mini's achieved

a and a pro a function KPIs EBITDA outlook is again relative forma revenue rate on a X% our run growth for adjusted basis, XX% of to growth implies a business to stronger XX% latest XXXX. to XXXX which XX% indicates accelerating Our and across

across return returned XX storage of which we centers cash and as as XX% and the in levels store events year-over-year. of of and biggest in our In bucket to continued growth Architectural term. last free quarter, to this This mover media, most on across to our by are increased since significant and end – began of over the flow that deliveries XXX the the in building XX, Starting strategy Vegas. data is the supports warehouses XX from our remodels than basis. deployment more activity since, in our nonresidential we've strong restrictions indicator, positive largest strong year-over-year medium which all in in COVID and industrial everything quarters. go, confirm customers this Our near and the a Hyperloop with this hotels Retail February over arts, the last leading deliveries This greater we construction, Las saw where a of than expect note that continue customers continued for had and repurchased in progress Page XX% throughout March execution months capital increase shares to activity and XX-month opportunity on entertainment, to million The we There's to is Virgin XX%. in normal in deliveries special up I'll Commercial as rebound ABI, quarter. a indicate X. nine a second more three March certainly risk or segment. in the XXXX relax. Index, continued the four of over products deliveries continued go We augmented was and we trend margin month increased deliveries. has markets by our starts. Billing evident each The

You XX warehousing and for units can provide League at Amazon game temporary of Major All-Star customers HBO. build in a Other helping production Facebook, Denver where contracts an where centers see include with miniseries Baseball these media and on continue segment in complexes great of of Energy Page States. to smaller examples also for our in to a we're and United we strong upcoming data for resources, natural inventory, were infrastructure. This both component of the saw and of passage the rising which energy GDP monitor throughout customer bill infrastructure quarter. And prices, correlates which is we'll base, distribution with and both deliveries. the flexible

from However, not impact incremental do spending assume for we our by Congress. XXXX significant any outlook,

previously, I've projects. tailwinds on stated draft in of of to take provide these current our And infrastructure the shovels bill any roughly the all ground almost of following hit passage end As mind, the before infrastructure-related months will XX across would keep it XX markets.

XX tailwinds Regardless occur associated North XXXX any with increased and at our by expect strong Page continuation a we'd or expect beyond. XX%. deliveries out market America Modular segment Modular to of segment. we quarter in stimulus, breaks deliveries further demand. without So of in rate in a the space

this starts. economy for earlier As typically stronger the project we our quarter, and expected deliveries in are second improved outlook accelerated year, as the what months seasonal beginning in

the Deliveries expect ERP delivering our all rebound the across all third We end Storage This reflects discussed. strong deliveries. begin America levels. I year-over-year markets exceeded North in continue now increased to XXXX container quarter. of our quarter, America our previously trend second in demand Storage In XX% the this that segment successful and migration, North segment following

activity in operating will markets. network improved benefits form utilization legacy the numerous in our into and among Consolidating others. all is legacy as it the efficiencies, rental managed portable of Mini in customer Mobile had So well of container have as our America most as the segment branch legacy storage previously Storage portable units both geographic Mobile the service, storage North WillScot Mini of logistics

America In space Modular Turning modular deliveries resulted the to slide increase first in stable in on the North segment, quarter. units from sequentially rent XX. our

North average growth of As Modular, function long-duration on will a America unit in lag our leases, rent volume. months, delivery XX which

we're So the and the the of bottom and we And is first and the activity ample utilization, near-term than by fleet part North North with the year-over-year in first segment America order the increased this market. in Storage increased to Thanks which across retail, end XXXX unit Portable X% to A any end strength in the America toward of from stabilization on Modular. at on store delivery XX% X.X%. return and inventory on renovation XX% path and I'm grow compared segment. the thinking average quarter, testament have seeing markets. left volume to America encouraged highly faster North the storage in growth, without to units expansion. modular wholesale recovered our step rent sequentially trade

continued see – North the of with types of a on the is gears return second on remodel, increased to smashing we The page core events the the remodels these services we storage most XXXX. a delivered on rates XX%. XX in major delivered can newly last example the Modular came monthly of America major XX, representative retailer of impact quarter, pricing VAPS page by the You units nearly rates of year-over-year to previous slide was XX. increase from penetration to half back the non-mall-based remainder where Shifting driven of larger-than-normal XX% $XXX Roughly on of XX provide QX from year-over-year increase shorter-duration in record rental which months. relative average an containers for retailers.

Looking back on markets the pricing rapidly last XX the expanded were into months, our pandemic. and heading

We're seeing for as further trajectory on growth year, of VAPS the related. acceleration continuation new and bit quarters, and and in both mix prior the of in last QX pricing prepandemic slowed discussed a phenomenal. trajectories a has VAPS been deliveries As performance and price QX largely now

XX on up XX, Our in month. units XX% per VAPS to rate last monthly as on months, delivered page per new is unit depicted $XXX the

setting we're in dramatically So higher second our now this Storage area. segment North in America in XX% sights up also Rates quarter. year-over-year the our increased

the office a is offering on containers, new in Our value-added and under to very results. our identified rate activation which starting fleet, parallel, for evident VAPS development. our In and provide for products in focus now team focused is ground-level we're we've is storage optimizing

continued with on up segment nearly is are our XX% We're year-over-year. quarter. with up also are end XX%. And and segment Tank tremendous brilliant U.K. rent Units Rates another thrilled is progress. as inflected up markets Our our its EBITDA progress XX%, recovered. Pump strongly & adjusted

capturing However, outperforming market the we're here. share clearly and

into is mid-XXs, now XXXX and EBITDA utilization the above Our QX. up year-over-year levels. in is are which OEC Revenue

outperforming peers our also So – which run & rate, contributing Tank to increased fantastic. our XXXX, business now QX Pump our XXXX is while is in

results on in before ERP the segments to want technology exciting which coming Tim, will underpin coming further and these over very our years. have I together, road We spend support to for map pass some time call I migration. And all

previously, mentioned migrated quarter. the first I business on world-class of to on We legacy live Mobile As we SAP entire in WillScot company went this across earlier platform week time Mini's the SAP May. the

Mini single to been and three operating our intensive of weekends for days, for we're the our planning, for year to in collaboration for analytics, successful platform There's customers, system, trends. can dedication, cutover. a as how it make internal colleagues it's led no migration detail So to that enabler that, management our training, our we've Many navigate new and transition is now a have fronts. really successful the efficiently meticulous change across operating ERP of ERP learning delivery this system reporting been a several up No team's but a is transition been WillScot on branches. product you our as nights serving years, of easy, us our And pricing SAP refining months, This massive critical we've minimally distracted legacy change And and there disruptive various while on appreciation. to months implementation. for segments see and hasn't the from four gratitude been change from a and a resulted our success. we value-added but still worked legacy branch attention Mobile

and $XX First, premise pretty between it merger WillScot straightforward. million this Mobile Mini. synergy But cost is in enables the frankly, the

development data mark it phase refinement us to of enables management, and up of platform, science stronger the near-term which CRM our business Second, in include intelligence will road map, the next our of capabilities. on harmonization of inventory technology

complete, be the be highly able and I'm flawlessly, accretive to outstanding more an seamlessly M&A. compound to with cutover humbled forward, even acquisitions growth executed strategy to organic And team. robust such expand. cross-selling, Third, and each the host of products, I'm Price to levers opportunities operation multiyear represent our to that continue in our four segments. optimization, the redirect of growth excited together is that operating migration team now value-added integrate efficiencies, to our fourth, going we'll all continuing with any We associated

We the to of are of in can on time, sentence. the that, With use companies Tim. small group and very that it terms same one success I'll few SAP great over the hand

Tim Boswell

presents and high-level Jumping the good Page you, a to morning, Brad, Thank XX, quarter. everyone. summary it of

repeat related I increases observations we highest us While WillScot operations to Brad legacy the to it say thank largely to clearly team. established undertaking priority on with top XX in last consistent the into accomplished Mobile the time won't risk our behind platform. the than it Brad's page, outlook. so announced about our merger, the mentioned, months We successfully to again line to ago that you the was quarter, have SAP the in the we as This the was migrate other confidence is Mini's merger. when

ability across it and as we in the advantage both we a operational these collaborate. And execute capability our proves drivers. creates a when and the organization field of redeploy in frankly, commercial complexity importantly, the service of competitive huge functions, resources centers, More other shared to this value to project all this

and that was all going XX% Leasing basis. top everyone growing across forma that all I'll this all last pro year-over-year, increased operating year remind our on our were KPIs segments. with results a And of quarter on in While of lease revenues revenues is acceleration outstanding. on, leasing every

space down many not prior Accelerating prior is through quarterly from prior versus of recovering the basis, not in and increased drove growth platform we million. into we pro expected. XXXX. year-over-year maintenance lower-margin Adjusted We increased to basis and as forma pretty XX headwinds. completion our year XX% as generated of we our over cash despite pro on expand can adjusted calls. which playing the months transportation mix a get and costs, compounding forma expect on is cost points discussed merger, basis integration margins million pandemic to the say So pandemic, On still as migration EBITDA contracted that. $XXX savings. out allow margin cost costs our the the will much a variable companies a XX.X% us since approximately the of XX% XXX and cash XXX free simply And ERP QX EBITDA basis we've we are during a deliveries generated other margin realizing two start bring to points and higher revenues expected In year the head free flow will we the quarter. The integration flow $XX to

So offering our very the repurchased at this leverage TDR cash common warrants, We stock flow free secondary trajectory times on $XXX conjunction of with track. the million much mostly is we and quarter, Capital. in X.X as from maintained

we simplifying as economic closing continues our a be the to Altogether, exciting us will delivered itself the forma be trajectory was all warrants, well for XX basis. excited of million structure. putting the all And share traction million up as metrics $XXX by other ERP last both announced an the migration into revenue, the our of We our organizing X%, the the over million revenues we've details pro gain and of future. reasons from quarter. to obviously it $XXX versus we've and the the Since pick fantastic some lot including XXXX. of capital count year, XX% the XX% initiatives up view of on impact the in XXXX between were We the capital confidence reduced to allocation. Again, elimination and merger up up EBITDA of as past quarter financial XX months. XXXX heading that a which May, Our as been outlook a with the Page in from outlook improve, we in markets organic year, on XX% segments. about $XXX

in variability half adjusted half growth the the up a it's the increase volume approximately with the increase heading across About segments, increase, is with million volumes. a again structure delivery were normal into of would costs of down. relative in of we, all saw our We to generated the segments. mechanic And volumes rates this last due year of dynamic in variable year-over-year XX% XX%. million these run modular cost the in board EBITDA, for the segment, year cost in fluctuations. prior We fluctuations, the course, but all $XXX margin to gross are business So of leasing that strong. and when same increase was benefited to this ended significant periods second year Normalizing $XX of quite we in our quarter with a which from flow-through EBITDA north have in been impacting

long-term to the EBITDA basis year-over-year flat track. margin with will delivery XXX the expansion is into headed QX. easy in on it's down commentary XXXX, continue months. consistent QX. volumes So past we and see fourth to sequentially the accelerate Adjusted quarter expansion Then which expect our into in points that XXX still as should This be as deliveries is for QX, trend margin dynamic in six normalize of margins

and So sequentially, the Page EBITDA trends. little as from with our operations in exactly relative both expected, revenue generation, business on performed cash original and see better our with can actually grew strong KPIs continued XX. which lease a acceleration year-over-year we you of and outlook Cash commercial line to

normal record I delivery increased think increase CapEx this actually. was support a to activity. sequentially company Net seasonal in the

in for and You months that right XX% see free last the the a period. has cash bottom range over average in predictable flow been can margin XX

long-term metric of through completion CapEx realization upside synergy timing, the here bit integration. to fluctuate the and due mostly while growth, a So have the we will

was XX. leverage We driver The the to at by repurchasing Turning equivalents. the while million Page X.X maintained activity secondary Capital. of TDR times $XXX offering largest share of repurchase

would June shares XX XX our and target funds leverage we as our about Over note in share XXX repurchases used X.X X% million of for our just treasury which consistent reduced year-end that count we've the toward with last for stock months, deleveraging, times, redirected method. economic the is had over have leverage by QX using achievable. I'll share readily been to ratio

have As our a $XXX remaining in share we repurchase million reminder, authorization.

executed to average our also X.X%, reduced We tactical interest which rate the annualized $XX quarter, million. and weighted in to refinancing some cash interest our

Given our in predictable don't sheet growth trajectory, is the and see allocation balance from great any I constraints shape, capital standpoint. a

revenue driven at fundamentals. as outlook, track We shows million. XXX expand This XXXX. leasing between revised expect billion midpoint variable to points million to Speaking XXX the growth of are is again XX in in margins and trajectory, $X.XX increase $X.X now and previous between basis our meaningfully the the should adjusted for billion, a strong $XXX X% Page XXXX. on EBITDA by improving with and normalize costs $XXX simply relative expand the Again, to QX outlook

to change expectations. no So those

Our CapEx strong to range certain the market slightly environment and fleet in markets. increased constraints reflect

to assumes spend year and We in XX% implied be out levels. are expense a $X point tax that QX due driven typically range in rate the that compared XX% we prior went noncash I'll increase increase XX% sequentially from expect. to the into QX was which United our the lastly, to to QX tax will effective guidance above would the by that Kingdom, planning to expense an statutory XX%. rate million XX% And This

from expense. to and in over material had impact noncash that years. couple million Again, our no next $X revalue UK recognizing we the liability deferred additional tax the So cash of of

will our we fiscal tax GAAP normalize range. XX% effective XXXX to to XX% the expect rate the For year,

noise some created no had tax although QX. to cash our this material in change it outlook, So long-term

Slide framework unchanged. As XX, is capital calls, allocation I on stated our on previous

on which the business ERP growth numerous complete. organic and levers now focused migration are completely have that We is our we visibility excellent in

track X.X opportunities, to an we in on ERP $XXX months could which and to derisks envisioned delever step by are to that, bringing balance milestone, ahead less integration end our turn, free schedule us the target important repurchases. QX. flow of of gives more in Completion the million XXXX achieved XX closer sheet synergy ago. unlock easily And M&A and cash We the that for confidence use the to times and have than of outlook us

commercial as forward seeing excited in as all the that on merger, Investor I am that more you we've On execute. portfolio York our our are in I look and the year Brad, team of one of eight to we about well and of the operational in detail. ever at anniversary November that beginning progress value our than you. to made drivers more back to Day New all and discuss

Brad Soultz

our efficiency. We're capital up system on Tim. running, now prepared and execution of ERP with can creation all businesses support And for you we the that expect Operator, remarks. today I wish continued for our to you continued value would good and I the come. the This add years Thanks, We our with health. to frugal employ. line please listening ever-increasing questions? we concludes M&A. shareholder and platform is to smart transact quickly open can other safety

Operator

Instructions] of Scott the line comes first Oppenheimer. [Operator from question from Your Schneeberger

Your open sir. line is

Scott Schneeberger

portable core and you guess, could curious and if the containers versus North big road and Good Thanks. noticed Thanks going forward, everyone. just step-up GLOs I pricing, morning speak very to the in American map that much. a category? rationale guys, I on storage that for container in

Brad Soultz

seeing to what you I Brad. mean Scott, if X% there been Yes. remember, driving rate is, has CAGR. Mobile is Mini X.X% historically, you're this

exclusively before, by was we've that almost discussed GLOs. As driven

all of now on a that now also seeing and you're continued GLO in what continuation is themselves. performance step-up So containers improvement rates new with

used for So the years. deploying we're simply we've playbook

storage as the on still far either optimization as VAP with yet nor we're the have really to goals significantly before, begin have from that traction ground-level we we've deploy that noted to units. all map, rate modular offices we see VAPS and side or to portfolio the the As road

as we to storage a furniture development, as well out that's started quite the rolling offices As containers we've had if place, well is portfolio VAPS now under to in XXXX. themselves, that now GLOs with expect my I starting in remarks, in have WillScot for I will, deliver architected, mentioned and you bundling ground-level we'll the which and be

Scott Schneeberger

just from seen earlier XX.X%, to robust number. Tim Thanks. on obviously, That stay context, then theme while. my a a on, different to in wasn't pricing going but an very mentioned comp. I'm North swing the the Excellent. a this over And necessarily then and America against we've And maybe was And it biggest Modular. follow-up in easy increase

just the the a to seem go double-digit said I but to years increases here. hey, in can with and think more we So a few achieved past, tier out with – contribution, rate we have new VAPS regard you've Brad,

this Thank could the So speak just reasonable category? be we would quarters for if to what you. expectations coming in

Tim Boswell

this a how Modular Scott, pleased are I sure with the XX% too Tim. rates future, I'm out is that would into the North and extremely far in shot. products extrapolate not progressing but I'll in UK give we're as well. America and value-added

growth perspective. I last actually from revenue year-over-year out, know rate it leading XX, they're delivered products products rates XX% is in months, and contracts reoccurring services, charge our on the don't year-over-year. we I to value-added but called up think the the Page so XX value-added a In if the

and organic rates. sales growth acceleration that an we've have that for we our revenue been million both customers. with $XXX time we've meanwhile force adoption, maintained now, of opportunity clearly some talking our those about seen So And delivered plus growing

due just virtually start those There are push. COVID. a XX% special So big of America continue element year-over-year short-term the seeing increases, of in remainder in coming year. increase we we some which our AMR AMR contributor. to in come is a The America about Modular to events last core the driving we North in rate of to North It's from back. And is mix had portfolio increase that's Modular. zero

expect good component fundamentally, we've there this underlying think I it. to continue we a that's under bit number. a But and the So mixed that contributing of very XX.X% got pushing is trends, year hood, to

Scott Schneeberger

Thanks, Tim.

that short-term. it nothing quick going that's Just your trend average? above normal disrupt that there? pull little just that's a concerned Is – anything to Could month get about Or follow-up just XX Thanks. to it's on down? a the and

Tim Boswell

least it's business, would about No, in we're normal of duration. of is of one side pilot just that tournaments practices Think year in service technique at. that and trend. part QX. our golf last they of the the It's anywhere country, music pricing of that types it's at right? every above just duration-based PGA reoccurring other shorter as do happen in that the typically NASCAR fares, have we business commercial a we mostly and that festivals, may modular things. to This And QX the not test those example business. year, That's a opportunity It's an normal looking cross-pollination best segments, didn't we normal races, community have in of kind

Scott Schneeberger

job. Great I'll turn Thanks. Understood. over.

Operator

Your of next the Kevin question Credit from line comes McVeigh Suisse. from

Your line is open.

Kevin McVeigh

And more SAP. a Great. incremental time of on Just does just to you give existing Brad, more I Is that it Tim, of the on to through much. then as synergies any spent as work sort SAP. well. on Thanks thoughts, relates as strategy the given side? guess, opportunity there Congratulations you've it And potential importantly, then synergies M&A, I M&A you related that worked process? you so as lot well. through guess, M&A

Brad Soultz

we quicker platform. that have Yes. of companies M&A lot I now and easier, mean right? acquisitions. the and have four with make successful over been it would A years be storage the This the SAP just last We office. and both seamlessly we've interested will in pretty will integrating

EBITDA on allows efficiencies. as really been yes, realizing model not you that we that with with to SAP. largely lot even and they swift, The was on refine will, out synergies more margins incremental cost if I synergies, of a definitely it So calls, had their Mobile they as expect frankly, Mini front. us efficiencies growth, far as really operating expanding to be due pointed previous were ERP,

So in as the remarks. continuation I mentioned refine expect our prepared analytics, reporting we as of and our we that

Tim Boswell

a most allows the road journey, And business. I transaction Tim, thing the management The journey biggest transaction SAP other out exciting started pricing the only capabilities, about CRM the sophisticated of call is the team to got the this the other virtue that of by America capabilities, And this that. customer our is ones. would our harmonization of capabilities, part serve. down repository excited a business more which science data completion all that the on data of the enabler that the for big of we've of really into really us our get the thing our is And data is technology in advantage recruiting of that advantage. of data, Kevin, North actively historically, moving two perpetual perspective competitive add, think, migration we the and virtually are path huge we I'm we is intelligence markets of with to of team our then and take on an harmonization rest overnight is the of I very SAP, for of our have a from map, inventory side system modular

products, containment, cost efficient time being value-added efficient on be spending more being with our more something XXXX. inventory, you we're if about fair our a that's going to going think with So amount into of that

very So SAP can where the about those migration are time think, complete. focus just our we two, tangible I examples with now

Kevin McVeigh

be on opportunity to to that follow-up kind point, give the maybe of utilization to still in peak high? to increase just utilizations normal that does And that would overall? expect Or you you an

Tim Boswell

us those opportunities think I drive for are projects returns. of both to

and utilization it's returns. being driving pricing efficient with whether more growth or So we're or the on balance focused sheet,

Kevin McVeigh

follow-up, fair about thoughts been Or flexing any just COVID-related quick business there's last of But same? is bit like has seasonal extending to then way that and coming a one It seems revenue COVID-related been maybe bit? seasonal you it. on the on some a or like demand Got I expected, that. Is that? as little year, had? it's it little more of nice. of of the a hedge like if a could. the back And Because kind the the that given it? out Has seems How about the up work is kind think it trends,

Brad Soultz

it's Yes, fair.

calls, testing we're seeing and as end demand previous recovery dissemination think just mentioned we've I ebbs, vaccine for markets. on as COVID the across other

Kevin McVeigh

Awesome. Thanks much. so

Operator

Your Hauke of from line Baird. the question comes next from Justin

open. Your line is

Brad Soultz

can't we if question. have hear you, Justin, you

Justin Hauke

now? Can sorry. you hear I'm me

Brad Soultz

Yes.

Justin Hauke

right, great. All

But was drill you VAPS on that question talked more GLOs here, bit portable in that like I that. looks of kind lot I they guess guys as there had So up storage how a and it the if storage. X%, because to on a flattish. have about were little the portable the pricing wanted strip X% you the XX.X% that been driven in on base a that of earlier into out, well, units

there is pricing you're the way core the Or on we GLOs? should changed that's pricing units the just VAPS how in So the think without about there? that anything

Brad Soultz

years. to rates that's the has that And driven exclusively This response. containers CAGR numbers. also just seeing Yes. prior accelerated. by and core continued – that pricing. implement And for my start Mini I XX.X% you're The but the if apologize offices, I We've in pull you've confused that been delivering X.X% That almost office, was the for ground-level exclusively started VAPS in to new to for up. got you're see ground-level now beginning

pricing, will, thus And what And ground-level we we're new VAPS do time, as on over of core play say as we've that's doing on about for will, VAPS just So that expanding engineered doing November. think forward we been more predominantly and is think further is a pricing mentioned I from see optimized a I And I under And us exclusively what before, before, a always excites offices. shouldn't and deliveries. opportunity, is Day XXXX we've of going benefit. portfolio, benefits is if what an at this but rates which development. is penetration I simply core talk mentioned we'll this you initial together the Investor as then containers when far in

Justin Hauke

here guys of more guess on that. from and the in I got Okay. pricing. clarification you in talked specifically. space XQ were know margins there'd kind I and just you out pressure putting second actually area my so modular appreciate flattish, But be the some XQ. on I the have about much how deliveries is volumes the question

I increases about Anything that that were were on weighed an well? kind should on there margin as trajectory for the and of for modular a So to returns there things XQ XQ we variable cost as of lot the other think that guess, offset? or space margins

Tim Boswell

Justin, it's Tim.

units So QX Modular to from sequentially rent America QX. on in North flat were

XXXX Deliveries by So volume equaled year-over-year, going not sequentially XX% them volume to definition, delivery the part. into most did although and we for to return expect QX. increase again levels, accelerate

entire several rent on unit lagging of the have In modular year-over-year requires on the in think then growth. to to the expected very of much have we the drive always to indicator. delivery guidance and original as that modest of end you turnover quarters growth a portfolio for our year, rent order So year, by volume unit growth

So that's lease the portfolio, three-year the impact all you're seeing of and on very turns duration here it over predictably. is

I'd EBITDA to in when pro last year-over-year. It's cost up. picked QX then QX, drive selling margin will pretty you perspective. a from getting maintenance expected saw to were on will year our volumes really there some delivery margins volumes in QX still our we to as QX, Delivery no compression costs. volume into that expect the We QX. that delivery and variable stay get close flat were forma the And surprises So basis normal. down be which sequentially

of And means And so range XXX at basis this points. see year, margin the if that XXX noise. again expansion normal we're there's no that again you'll to year-over-year in

So more this forecasted North as little we America It's we forward is than really with originally rolling a Modular. pricing for a very predictable predicted upside portfolio.

Brad Soultz

Operator, progress, perhaps yes. we

Operator

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

open Your is sir. line

Ross Gilardi

guys. morning Good Hey.

Brad Soultz

Ross. morning, Good

Ross Gilardi

answered question. Tim, you the just

I'm there's in I to more business. scratching know your question, on this, still nuance So my mean but if I any don't pricing XX% you just got head too. my core

back down the material margins that, is variable is up, and associated there's It's are just that got business. year-on-year. I I mean margins I acceleration. with are You costs get don't coming why of – improving, know. I into your buckets get but picking these costs Demand are still don't that volume down? if totally

Brad Soultz

the the and Ross, almost we the cost costs right? in keep right, business, the costs of platform out quarter, variable on took – stripped all second platform. massive the out in We of legacy variable Mini both post-COVID, mind, last WillScot year,

to foreshadowing been we've So and in. and talking those back come expecting costs about

cost resumption to normal of kind of had demand. you plus kind this incremental So

I it and So expected as was – that's mean to me, straightforward. pretty

Tim Boswell

this which also we year talking we outset the Ross, we're across for going sequentially margins guidance And process the the heading in of are just equipment, again of as stabilize contract in pop delivery terms run, in branch And network, start will up QX. were that to what to we that in And that we XXXX every QX. So year back right? meaningfully the modular to materials not about saw. segment. business, in get saw direct QX, maintaining labor at the storage assumed about year-over-year our QX equipment talking then and we we're and volumes in but about the used how talked for going into pick to is we

the how as Brad of this So coming of in remarks, described that's function of not what and back mentioned strongly coming my turns in in bit this pretty normal was just of over. is, year the this again, and here of business lot a then and I mechanics costs usually a what pronounced It's anomaly year. that a QX out QX an kind last

Ross Gilardi

in so or – at I sharply mean least correctly. quarters, improvement? bound between follow-up you for to rates interpreting the something. side would rate about been see – I sorry, I be along XX% Modular range bit the but the and last – of clearly guess great up Okay. I'm utilization space fleet to to Maybe mean expect Can slides I'll the would afterwards. utilization I rate the three the kind your rate's if just a utilization just up with missing more four business, talk going much, relationship been little I the it's at XX% of has but I'm acceleration,

talk you can about little bit? a So that

Tim Boswell

year-over-year coming from AMR is of products. value-added the XX% increase Remember,

new we're rental revenue regardless services. So and come of to AMR unit $XXX per units of whether were branches, back and month down, utilization our per going is from as to customers get growth reincurring that value-added moving it years then up just with products to ago rented and rent turnover or

a environment, So volume-neutral in look that. you at

value-added price over million component. got as think. from pronounced products $XXX volume it's as And growth might the revenue elasticity we You all test do of know just you not you've the And time.

interesting what when the is at with rates. look utilization looking to but it's we're deciding to only at, we're So variable do not

Brad Soultz

look VAPS. as between would mean, well that delivery I improvements on significant as storage to rates together out, both modular pointed rates storage is And the rates. Tim thing I only in right, really The you at step delivery if modular is, quarter, and saw big add you the and in as and

Ross Gilardi

Now normalize guess, VAPS-related incremental that we things you the kind the what pricing? sort EBITDA it, or slice margin want in here, coming of costs and back core on versus pricing business are however of expect I should from to

Tim Boswell

are And to of And get volumes as starting Well, that so north pronounced, QX just because a heading I then come last you from if you and currently, storage it a same not said kind on have kind similar to in down from percent not flow-through they in or the probably side as volume, volumes pricing, think into the think my in bit QX, services we were get of in kind remarks, maybe I XX% Ross, can as higher in and of of XXXX. then those be side break as of we the dynamic, environment business. I XX-ish year. of back flow-through the flow-through modular fluctuating XX-ish a the are from normal business, percent XX% much least products at as value-added

Ross Gilardi

Thanks. Okay.

Operator

Thompson line comes from Research. Steven Ramsey question next Your from of the

Your line is open.

Steven Ramsey

it period the do taking this would modular again? environment? but volumes better on stage in to I something stabilization Hi. Or to long expect and this Good morning. It's you guess you this longer lag expect stabilization, growth maybe to to is last what's further to getting getting how and clarify this been than this the discussed, Is normal?

Brad Soultz

end just as the year think at the I lease duration. expected we to year. No, right, long into see simple initially, we looked volumes And of function modular had of this the that's recover

time takes to deliveries, increase it you get there. as So

remarks, keep where in mind, right So puts interesting expectation are expect slightly revenues, – where of into to head simple a lease are we as XXXX. I we and ahead our combination, volume, combination of in unit us And position and and rate into that pretty our VAPS, mentioned now. prepared today

portfolio XX that's for it takes So rent a on no, large months. time to turn

Steven Ramsey

of in shortages of you material to to project on starting are and to labor sense over longer there time lease home, And that Okay. a factors up seeing the going residential to all on follow the frames one years at driving commercial side a forward, three projects? dynamics get the dynamic time that's a longer given that, as to the of be Trying market. could impact continue next these finishing

Brad Soultz

– this. seeing there. we're impacts I we'll anything our material I any we were on mean eye portfolio, across don't I expect our diversified now. keep not mean, significant

earlier lease these But start time. So that have over been some in later. durations the and future, stable how means projects whether out. some plays We'll pretty it see

before, project of on like one of small points large of these very last any off mentioned projects. projects, first the costs, the we're percentage we kind XX As basis critical of these

stable it's here. think material So I don't been significant I anything over or expect time.

Steven Ramsey

Great. Thank you.

Operator

Your line comes from England Sam next the question from of Berenberg.

Your line is open.

Sam England

taking question. for Hi guys. Thanks the

the perhaps in the particularly that sort around the I is was just overlap about And national given already from is some you've cross-selling Mini I'm on line your the integration in deal, the touched on First of wondering synergies on revenue of in delivering you've sort ERP now what thinking one, the time earlier minds account the talked call. done? past, the of and

Brad Soultz

Yes.

the this that. was into pretty synergy That's more that quantified November. started dozen Mini's think together already if WillScot We've you and portfolio in we're when than Furniture branches of fleet. putting only the revenue is talk another happening about we remember, in office the expanding I with more at rapidly. we'll But merger, associated Mobile a the time ground-level

characterized falls of million is EBITDA, that revenue and fleet. $XX So $XX as the America it That before. ground-level frankly, beginning. million we've both across, opportunity office was That a through like North U.K.

and way, going now. to our our we're under well that's work do So

mentioned, VAPS capital in cross-selling of And all expanding only that focus this most containers, toward we've the the with cutover. ERP portfolio. the can etc. massive along now. we unlocking turn human across that's all our market optimization rate value the into opportunities, lifting terms As had And we storage what's storage storage, ESG exciting on share

November. think do we'll bit I and that's work, So really in forward some more detail something to a together in look sharing we're when we

Sam England

target Thanks. basis that getting unit least. then And internal Is about Okay. at talked close you Great. that past LTM now quite VAPS on a $XXX you're $XXX to the an in think? in in time, do sort longer-term target another the at to still point talk you to over your time? minds Is you plan of moving do And some up that target?

Brad Soultz

$XXX, We think sights Yes, I at it's sustaining back XXXX, level. with that And our moving set that kissing up. we we were in the many we're on clearly, areas, – when $XXX the marketing level. company $XXX

them. set usually sure with another talk these So I'm November, but yes, milestones to we'll one we in that's about eclipse intentions

Sam England

maybe incurring seeing sort then terms by wondered something units what you're replacement I the And on of there? going it – more. just are is at And largely you're just buying Great. sort dynamics inflation Okay. in of what delaying just one unit moment. cost the of

Tim Boswell

rest in to capacity whether Certainly, been buying in-house modular just luxury container modular that, container that's year. shipping looking we're is larger ports. through out not from the on this that the are next pricing, it's is handle in a branches, the up. totally other certainly from or lines heading is. business, our any There's the China. of right that Shipping our in got, point differentiation, and market. we've path are buying scale into of going and which I think, that fleet at China there's of side tripper used – really a what units that coming There But we think bring is new some some and time we're on we than flat the costs unit on now pressure temporary from and other control, the real plenty in already utilization another we all refurbishment there out within of equipment We're where of year the given refurbish competitive modulars

in we more a perhaps So everywhere, controlling constraints I but yes, our destiny are bit think supply luxury the have market. than the of others there

Sam England

Okay. leave Great. Thanks much. it so there. I'll

Brad Soultz

Thanks.

Operator

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

Your open. line is

Phil Ng

guys. your so earlier both Congrats a hop if a question. great always of for the you've been this very growth Hey the Q&A and portion bit, I deals modular has off for space your a quarter. There's strategy, little on strategy. another M&A been I apologize part portable. answered big few in

any you shaking helpful. are curious, super seeing So multiples the And how a I'm out? more color on the front? little competition And kind of pipeline are on M&A would be

Brad Soultz

Yes.

robust. the think we've pipeline's before, characterized as I

been we've our play the deals smart we weren't think While also ERP, was miss shareholders. right on didn't laser-focused we any we going nor the we've that said to for to anything were compelled do

our missed Pipeline It's robust. with core of right, anything should. So is accretive part we've think I M&A. organic continue just been outstanding opportunities a to don't strategy, compound we

been it's expect and it be. to I continue DNA, our part of will So

Phil Ng

And mean, competition for the the a great just how is it's I business. assets? valuation

days? the So what's these profile valuation

Tim Boswell

point say. I to one It's out hard to transactions there. they're two or that maybe can

And market from months. any those. I last valuations generally have So up over XX want conclusions been don't draw the to

the still very in there, active out we're next be interesting, opportunities So expect seeing a six very here to and I we accretive will XX months.

Phil Ng

a of you've presence, international background, down a or really business less of for your you this and and maybe capital, because behind an it. seems Brad get Is from guys, it seeing guys. but you just strong U.K. to Got then, guys, And having Tim, you organic this it's portable nicely more for just more and always you want hunker inorganic, business to invest value has been growth. whether run businesses core on home kind fit pretty really

Brad Soultz

of than So more storage, Yes. and storage we although blend right? the it's I would comment labeled, that it's a modular U.S. in it's really call how nice what that's

there. with alignment performance the what do, outstanding great team So by we

deploying capital pleased quite that. I'm to we their So And support are with growth.

merger. go it's What a But have this with kind this is stand-alone buy pleased said we to quite now geography prior wouldn't business, we as of we're that I the great. business. that another before business So business in

Phil Ng

Thank Superb. Great. Okay. you.

Operator

comes from the Stifel. question next Stanley Elliott Your of from line

open. is line Your

Stanley Elliott

legacy thank has Hey. clip. question. all the the The of opportunity have everyone. VAPS Question it relates pretty grown products. VAPS the of at Mini on Good on some decent morning business you to a for you historically consistent And taking some as but

and items were chance that rented? As try the – on in the how to is these to go-forward want is kind is you go existing can there get you're Or maybe out rent to talk what curious on a so a see Just November. about is to moving can ramp of into market, opportunity, quickly it it's this this that to basis field?

Tim Boswell

sit and Stanley, There's unit this very is is new penetrate that opportunity to a deliveries. containers to eventually the begin the our offices Tim, that's to limited ground-level It's expectation, on go already in we out both a the the a the customer and inside where their own. sell already on problem that already field they've to benches work few for After try and furniture. on days, containers, out solved they've shelving probably figured and to example,

and here job So work for the our making can day that that ready to the be they assets one arrive site. really so the upfront transaction when opportunity is on customer simple

the so. or continue last will Modular to America it build that you XX% on expect CAGR at consistent I over nine that So saw that North years

Stanley Elliott

of for kind core talking the And you kind mentioned business. you're when XX% then about a Great. incrementals, flow-through of

year, $XX there more a and operating normalized costs better maybe lower reason what, something the costs variable why wouldn't given in of be better kind environment you is Looking here, incrementals diesel at, than When look a into was think I XX% it million plus the logistics? probably next similar.

Tim Boswell

going Certainly seems at What feels into sure a quarter, flow-through how just the variable meaningfully given margins because fluctuation. not it, ZIP the any XXXX. absolutely solid I see of But we're right in XX% look that's pretty of like having have it the like of expanding we you this as remains in here probably really seems next and QX. like in flow-through variation north the into not year, see be all again The exact delivery will normal it cost seasonality code, season And you level heading and that QX that would into would in business it's in QX. year. yes, taking if shape the same a

Stanley Elliott

thanks so a Perfect Thanks much you guys. lot. and

Tim Boswell

Thank you.

Operator

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

Your open. line is

Brent Thielman

on Modular more guess America Great. Thanks. one North volume. I

out that rebound to explanation we all average guess here. delivery plus your have we're lease of of think just to math? see about into when call understand if X/X trying theoretically too extract think I I duration, the kind rent you'll that is I with at we can growth, mean, XX% another it, go your XXXX? figure we XX-plus grow velocity of, months, deliveries. I by to least units couple the of quarters simple the of were Or returns on can

Tim Boswell

a in was into and it good bit of neutral up call a assuming original is QX, low into Heading expectation XXXX, in kind single-digit which we're getting that back to growth always the beyond little XXXX year-over-year, target. volume range

Brent Thielman

constraints of business all about orders just supply that or is these wondering Okay. a delivery new chain in guess Great. hear I we picture market, actually things bigger and about your from the helping question, perspective?

Brad Soultz

one able helping a particular to us, constraining customers – our to friction never they just fleet we're clearly it's – any of It's sure pass or in it not letting through basis, material, the our care or of make is be it rate. On geography, And that haven't If net right? we're of in encountering, to we're a we because Tim able part we're can returns, from people take and another down. as right, mentioned. scale, we've been shortage benefit got it

Tim Boswell

the only would I supplier we marginal equipment. all add this largest of that are of

or to right have just the anyone with place else more likely are customer capacity be we with whether than right in right we I the So supplier – able to the think it's market. to the in respond the asset the at existing fleet, that relationships in time the

as else equal, should supply – and well. on competitive volume us all to I be constraints certainly So to a business be allow the more side pricing the as benefit see supporting

Brent Thielman

been know And a actually customers all? just one, some last unit wondering convert of leasing. this if guys Is would new difficulty sales. to the deemphasizing that unit now to the my had that to acquiring units I I'm of sort causing trend you're right seeing is at buy Okay. traditionally you of – sort then

Brad Soultz

half just sales, with way runs The And being characterize it fleet typically strategy more the of as customers. our with typically that used would to accommodation say, I either around XX% our you revenues. current respect of maintenance of to that's of about kind sales, or

selling exception, really we'll constrained and more we're that we side are in for we're another want to need when that now, fleet little that if or dial customer, economics of So where And Modular do think six know they back. at great that's the again, they in five need are more, storage we're they return replace with new that new more a because we And you sales something as it. a such the unit unique anything or they one. a years are right selling, it

and dials as like across think shift you that ebb But we flow, utilization our our never markets bit. regard. strategy in tweak I little and demand those in So material should various a a expect end

fleet as than and anything customer think maintenance it I else. a more of

Brent Thielman

Thank Okay. you.

Operator

end the of will now back now Nick. over have to call turn reached We I the today's call.

Nick Girardi

Thank Mini. you, all interest you Mobile WillScot Kathleen. for in Thank your

If me. Thank after contact please additional call, you you. today's questions have

Operator

concludes Thank you. this gentlemen, Ladies today’s and conference.

disconnect. You now may

WillScot (WSC) 7 Aug 212021 Q2 Earnings call transcript