• Revenue: $560 million, declined 5% year-over-year.
• Adjusted EBITDA: $229 million at a margin of 40.9%.
• Adjusted Free Cash Flow: $145 million at a 26% margin.
• Adjusted Free Cash Flow Per Share: $0.79 for the quarter, $3.02 over the last 12 months.
• Average Units on Rent: Down 5% year-over-year for modular, down 16% for storage.
• Average Monthly Rental Rates: Up 5% year-over-year for modular, up 2% for storage.
• Leasing Revenue: Down $26 million or 6% year-over-year.
• Delivery and Installation Revenue: Down $12 million or 12% year-over-year.
• Sales Revenue: Increased $10 million or 39% year-over-year.
• Value-Added Products and Services (VAPS): Represented over 17% of revenue in the quarter.
• Accounts Receivable Reduction: $30 million reduction in the quarter.
• Capital Expenditures: $62 million of net CapEx in the quarter.
• Shareholder Returns: $45 million returned, including repurchasing 1.1 million shares and paying $13 million in dividends.
• Leverage: Remained flat at 3.5x.
• Pending Order Book: Up 7% year-over-year.

• Warning! GuruFocus has detected 6 Warning Signs with WSC.

Release Date: May 01, 2025

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

Positive Points

• WillScot Holdings Corp (NASDAQ:WSC) reported a 7% year-over-year increase in their pending order book for both modular and storage products, indicating strong demand.
• The company achieved adjusted EBITDA margins of 41% in Q1, with $145 million in adjusted free cash flow at a 26% margin.
• WillScot Holdings Corp (NASDAQ:WSC) returned $45 million to shareholders and progressed its acquisition pipeline, demonstrating a commitment to shareholder value.
• The company successfully refinanced its 2025 senior secured notes, extending maturity to 2030 at a fixed interest rate of 6.625%, enhancing financial flexibility.
• Value-added products and services (VAPS) represented over 17% of revenue in the quarter, moving towards a long-term goal of 20% to 25% of total revenue.

Negative Points

• Total revenue of $560 million declined 5% year-over-year due to lower volumes, with average units on rent down 5% for modular and 16% for storage.
• Delivery and installation margins contracted year-over-year in Q1, driven by lower-margin seasonal transportation activity and in-sourcing initiatives not yet at full productivity.
• The Architectural Billings Index was 44% in March, and Q1 nonresidential construction square footage starts were down 17% year-over-year, indicating potential market challenges.
• There is ongoing macro-related end market uncertainty, with trade policy changes creating a level of uncertainty greater than expected two months ago.
• The company faces potential downside risks, including unit-on-rent deterioration in the second half of the year if customer demand reduces due to economic uncertainty.

Q & A Highlights

Q: Can you comment on the order book's 7% increase and whether economic uncertainty is affecting order-to-delivery times? A: (Timothy Boswell, President, COO) It's too soon to observe significant impacts from economic uncertainty. Quoting activity is up 10% year-over-year, and cancellation rates are slightly down. We haven't seen changes in conversion rates, and we're encouraged by the order book build year-to-date.

Q: Could you provide details on the average and spot VAPS for modular and portable storage segments? A: (Matthew Jacobsen, CFO) As our portfolio has expanded, attributing VAPS to specific units doesn't work well anymore. We've moved to reporting VAPS as a percentage of revenue, which better captures the overall growth and customer solutions.

Q: How do you expect Q2 volumes to trend, given historical patterns? A: (Matthew Jacobsen, CFO) Typically, Q1 is the bottom, and volumes build through Q2 and Q3. We expect modular volumes to drive forward, with stable trends throughout the year, especially in modular, which is in its busy season.

Q: Can you discuss the anticipated improvement in the retail customer segment this year? A: (Timothy Boswell, President, COO) There hasn't been a change in our view on retail demand. Conversations with larger accounts are ongoing, contributing to order book growth, particularly in storage. We're seeing better cross-selling activity with climate-controlled storage.

Q: How are you balancing stock buybacks with M&A opportunities? A: (Matthew Jacobsen, CFO) Our approach remains consistent. We'll transact on M&A opportunities that make sense and continue with our capital allocation framework, including share repurchases and dividends, to return capital to shareholders.

Q: How reliable is the pending order book as a leading indicator for activations and deliveries? A: (Timothy Boswell, President, COO) The order book reflects net orders, accounting for cancellations. Timing appears shorter this year, giving confidence in Q2 activations. We forecast 90 days out, and absent changes in cancellation rates, orders convert to deliveries.

Q: What are your expectations for volume inflection and AMR growth in 2025? A: (Bradley Soultz, CEO) We expect to ease volume headwinds throughout the year, approaching flat by year-end. Modular rates may grow as VAPS expand, and storage rates will benefit from climate-controlled storage mix.

Q: Can you elaborate on logistics challenges and margin improvement expectations? A: (Timothy Boswell, President, COO) Logistics margins contracted due to seasonal transportation and in-sourcing initiatives. We expect improvement as we leverage resources and optimize scheduling and routes, driving profitability in delivery and installation.

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