Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• WillScot Holdings Corp (NASDAQ:WSC) achieved record levels of revenue and adjusted EBITDA in 2024, demonstrating resilience despite challenging market conditions.
• The company successfully integrated Mobile Mini and WillScot field sales and operations teams, enhancing execution and customer service.
• WillScot Holdings Corp (NASDAQ:WSC) introduced a quarterly cash dividend, reflecting confidence in its strategic growth outlook and cash flow resilience.
• The company expanded its product offerings through five acquisitions, investing $121 million to enhance its portfolio.
• WillScot Holdings Corp (NASDAQ:WSC) is focusing on commercial execution and operational excellence, with plans to add sales headcount and improve customer satisfaction.

Negative Points

• Total revenue for the fourth quarter declined by about 2% year over year, with leasing revenue down about 3%.
• Nonresidential construction start square footage was down 2% year over year in Q4, following declines in the mid-10s for several quarters.
• The company faces volume headwinds, with modular activation volumes down low single digits and storage activations down high single digits.
• WillScot Holdings Corp (NASDAQ:WSC) anticipates increased federal cash taxes in 2025, impacting free cash flow margins.
• The company is cautious about macroeconomic uncertainties, including higher interest rates and potential tariff implications, which could affect demand.

Q & A Highlights

• Warning! GuruFocus has detected 8 Warning Signs with WSC.

Q: Can you discuss the long-term CapEx requirements for WillScot, particularly in terms of maintenance and growth CapEx? A: Matt Jacobson, CFO, explained that maintenance capital is estimated at around $200 million. The company is investing in product areas like cold storage and clear span structures. For 2025, the CapEx midpoint reflects a neutral volume environment, with adjustments based on volume assumptions.

Q: What is the current spread between spot and average monthly rental rates (AMR) for modular units, and how do you see this evolving in 2025? A: Matt Jacobson noted that the spread for modular units is consistent with the previous quarter, around 11%. The company plans to continue pushing for rate improvements each quarter through their normal process.

Q: Can you elaborate on the factors influencing the 2024 to 2025 EBITDA bridge, including cost savings and investments? A: Matt Jacobson highlighted that the company is starting with a volume headwind, with modular rates and value-added products offsetting some of this. Cost savings from Q2 2024 actions will carry into 2025, but there will be some variable compensation costs and investments in sales resources.

Q: What are the expectations for value-added products (VAPs) penetration in 2025, and what initiatives are in place to drive this? A: Tim Boswell, CEO, mentioned that the company is introducing new quoting processes and bundling features to improve VAPs penetration. The focus is on performance management of the sales team, with a conversion rate of 70% to 80% when VAPs are quoted.

Q: How does the company view the impact of macroeconomic factors like political certainty and interest rates on customer sentiment and business outlook? A: Tim Boswell noted mixed signals from the market, with some optimism post-election but caution due to high interest rates and potential tariff implications. The company is monitoring these factors closely as they could impact construction demand and project timelines.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.