WillScot Holdings Corp Q1 FY2025 earnings call

• Brad Soultz noted Q1 financial results were consistent with expectations, pending order book up 7% year-over-year for modular and storage, adjusted EBITDA margins 41%, adjusted free cash flow $145 million, returned $45 million to shareholders, and progressed acquisition pipeline.
• Tim Boswell mentioned pending order book up 7% year-over-year, stable unit pricing on new contracts, value-added products and services over 17% of revenue, field operations focusing on logistics with delivery and installation margins contracting, but seeing opportunity for margin expansion, and centralized operations saw $30 million reduction in accounts receivable.
• Matt Jacobsen discussed Q1 revenue of $560 million, VAPs surpassing 17% of revenue, successful refinancing of 2025 senior secured notes, $62 million of net CapEx in Q1, and reaffirmed full-year 2025 outlook with Q2 revenue expected to improve sequentially.

In Q1, total revenue was $560 million, down 5% year-over-year due to lower volumes. Average units on rent for modular were down 5% year-over-year and for storage down 16% year-over-year. Pricing in value-added products and services (VAPs) helped mitigate volume decline. VAPs represented over 17% of revenue in the quarter. Adjusted EBITDA for Q1 was $229 million at a margin of 40.9%. Adjusted free cash flow was $145 million at a 26% margin, and on an LTM basis, adjusted EBITDA margins were 44%, adjusted free cash flow margins were 23%, ROIC was 16%, and free cash flow per share was $3.

• Reaffirmed full-year 2025 outlook, with Q2 revenue expected to be down approximately 2.5% year-over-year rather than nearly 5% as in Q1. Midpoint of 2025 guidance remains $2.375 billion in revenue, $1.045 billion in adjusted EBITDA, and $265 million in net CapEx. Anticipates modest top line year-over-year growth in the second half of 2025 driven by rate and VAPs growth and expanded product offerings.
• Notes that direct tariff-related impacts are manageable, with about a 2% to 4% annual direct impact from tariffs, mostly affecting net CapEx, and expects to price through cost increases to mitigate impact.

• Macro-related end market uncertainty, including tariffs creating demand uncertainty in the near term. Labor and input uncertainties, as well as potential unit on rent deterioration in the second half of the year due to economic uncertainty, which could impact revenues below the midpoint of guidance.

Q: Comment on order book conversion time, pauses, delays, cancellations given 7%+ order book increase?

A: Tim Boswell said quoting activity over last 30 days up 10% year-over-year, no change in conversion or cancellation rates observed, cancellation rates through Q2 so far slightly down relative to prior year, and watching for any slowdowns but encouraged with order book build year-to-date.

Q: About Q2 top line outlook and sequential volume change?

A: Matt Jacobsen said generally not expecting typical Q2 sequential volume decline as orders in book moving forward, especially in modular which is typical busy season, and delivery and installation expected to grow in Q2.

Q: Thoughts on share repurchases vs M&A?

A: Matt Jacobsen said M&A transacts when it transacts, will continue to work pipeline, and will be active with share repurchases consistent with long-term capital allocation framework, and also returning capital via dividends.

Q: Correlation of pending orders to activations, delivery, UOR?

A: Tim Boswell said net orders take out cancellations, timing element exists but order book weighted more towards next 4-5 weeks relative to last year, giving confidence in Q2 activation levels, and need several quarters of sustained delivery growth to inflect unit on rent portfolio.

Q: Logistics margins contraction and improvement outlook?

A: Tim Boswell said lower margin seasonal transportation activity and in-sourcing initiatives not yet at full productivity drove delivery and installation margins contraction in Q1, but initiatives like cross training, new scheduling capability, and route optimization expected to drive margin expansion in second half of year.

Q: Pricing difference between LTM delivered and reported for storage and modular, and thoughts on inflationary environment?

A: Tim Boswell said spot rates for product categories have been stable, inflationary environment supportive, own fleet gives cost control advantage, and unclear demand implications but activity year-to-date encouraging.

Q: New activations in modular and storage, order book trend?

A: Matt Jacobsen said modular activations flat year-over-year, storage up about 3% in March and April, order book consistent at 6% as of March and 7% currently, and Tim Boswell said order book build year-to-date steeper than last year.

Q: Divergence between quoting activity, pending orders and ABI/construction data?

A: Tim Boswell said larger project activity driving order book, local account weakness still present, and efforts being made to attack both local and enterprise markets with sales resources and productivity tools.

Q: Accounts receivable progress and days sales outstanding?

A: Matt Jacobsen said $30 million reduction in accounts receivable in Q1, early progress, and focus on working capital management to continue progress.

Q: Actual activations trend in recent months vs seasonality?

A: Matt Jacobsen said order book ramped up more this year towards normal seasonality, modular activations flat year-over-year, storage up 3% in March and April combined over last year.

Q: Pricing trend in modular and storage, sequential changes?

A: Tim Boswell said spot rates for product categories sequentially flat for last several quarters, modest sequential gains expected in 2025, modular driven by spots above portfolio average, storage by mix benefit of climate control.

Q: Ability to stay on construction sites beyond Phase I/II, market share increase?

A: Tim Boswell said focus on being present through project duration, need for collaboration between enterprise and local teams, and build in order book relative to market data points shows holding market share, with advantage in deploying capacity efficiently.

Q: Vertical providing withstand of headwinds among construction, energy, etc.?

A: Matt Jacobsen said increases from large DCs, infrastructure, manufacturing, expected sequential growth in retail and wholesale related to retail remodels, and subcontractors on smaller projects more challenged.