WillScot Corporation (WSC), a leading provider of modular space and portable storage solutions, saw its shares tumble over 6% in pre-market trading on Wednesday, following the release of its third-quarter 2024 financial results.

While the company reported record profitability, with an adjusted EBITDA margin of 44.4% and a 13% increase in adjusted free cash flow per share over the past 12 months, its top-line performance was dampened by ongoing volume headwinds.

Revenue for the quarter declined 1% year-over-year to $601 million, primarily driven by a 13% drop in storage leasing revenues and a 1% decrease in delivery and installation revenues. The modular leasing segment, however, showed resilience with a 4% year-over-year increase in revenues.

According to Timothy Boswell, President and CFO of WillScot, the company experienced a significant contraction in nonresidential construction square footage since the global financial crisis, impacting order activity. However, he noted that the average unit on rent deficit versus the prior year improved from a 5% deficit at the start of 2024 to around 3% in Q3, indicating a moderating volume headwind.

In addition, WillScot faced challenges from approximately $203 million of broken deal costs, including a termination fee related to the McGrath acquisition, which affected financial metrics.

Despite the volume headwinds, the company maintained strong pricing power, with average monthly rental rates up 9.5% for storage units and 6% for modular units, excluding value-added products (VAPS).