Transformational 2019 Highlighted By Fourth Quarter 2019 Consolidated Net Income of $8.9 million, Adjusted EBITDA1 of $98.2 million, and Free Cash Flow1 of $43.7 Million
Announces Combination with Mobile Mini, Creating the North American Leader in Modular Space and Portable Storage Solutions
BALTIMORE, March 02, 2020 (GLOBE NEWSWIRE) -- WillScot Corporation ("WillScot" or the "Company") (Nasdaq: WSC) today announced its fourth quarter and full year 2019 financial results and provided its 2020 outlook.
Fourth Quarter 2019 Financial Highlights1,2
2019 Full Year Financial Highlights1,2
Announced Combination with Mobile Mini
Today, in a separate press release, WillScot announced that it has entered into a definitive merger agreement with Mobile Mini. The combination will create an industry-leading specialty leasing platform with unrivaled scale and product breadth, a broad and strategic footprint, and substantial free cash flow and liquidity with which to pursue multiple organic and inorganic growth opportunities. The combined company will operate a fleet consisting of over 360 thousand units with predictable recurring revenue supported by average useful asset lives of over 20 years and average lease durations greater than 30 months. The approximately $6.6 billion enterprise value combination will take form in an all-stock merger in which Mobile Mini shareholders will receive 2.4050 WillScot shares for every one share of Mobile Mini owned. The combination is expected to close in the third quarter of 2020.
|Three Months Ended|
|Year Ended |
|Consolidated net income (loss)||$||8,928||$||(10,387||)||$||(11,543||)||$||(53,572||)|
|Net cash provided by operating activities||$||73,490||$||21,569||$||172,566||$||37,149|
|Free Cash Flow1||$||43,682||$||(20,165||)||$||19,984||$||(96,907||)|
|Three Months Ended|
|Year Ended |
|Adjusted EBITDA1 by Segment (in thousands)||2019||2018||2019||2018|
|Modular - US||$||88,800||$||67,240||$||325,068||$||196,410|
|Modular - Other North America||9,417||6,267||31,480||19,123|
|Consolidated Adjusted EBITDA||$||98,217||$||73,507||$||356,548||$||215,533|
Brad Soultz, President and Chief Executive Officer of WillScot, commented, "WillScot delivered another quarter of substantial Adjusted EBITDA growth completing a truly transformational year for WillScot. Revenue and Adjusted EBITDA for the fourth quarter were up 8.0% and 33.6% organically over the prior year, and our Adjusted EBITDA margin of 35.3% increased 670 bps versus the fourth quarter of 2018. We've achieved this through our increased scale, solid synergy realization, and our rate and VAPS growth. We remain committed to de-leveraging organically, and our free cash flow generation of $43.7 million in the fourth quarter heading into 2020 gives us confidence that we will de-lever well below 4x during the course of 2020 based on our guidance."
Tim Boswell, Chief Financial Officer commented, "In Q4 we delivered solid year over year modular leasing revenue growth of $14.5 million or 8.1% organically, which is the best indicator of our trajectory heading into 2020. Modular space average rental rates in our Modular - US segment increased 15.1% year over year, due to the continued churn of our acquired portfolios and increased VAPS penetration and pricing on rental contracts. Organic lease revenue growth and cost synergy realization drove 670 bps of year over year Adjusted EBITDA margin expansion with approximately 80.0% of Acton and ModSpace synergies realized in Q4. All of this drove positive net income in the fourth quarter of $8.9 million and free cash flow of $43.7 million realizing our planned transition to net profitability and cash generation. We deployed the free cash flow to reduce debt and completed our transition to Large Accelerated Filer status, accomplishing all of the fundamental objectives we set for the year. Together these achievements represent a strong foundation from which to embark on WillScot’s next chapter of transformation."
“Finally, today we announced a strategic combination with Mobile Mini, the world’s leading provider of portable storage solutions serving customers in the U.S., U.K., and Canada. We are very excited to join together our two leading companies with complementary capabilities and cultures, best-in-class teams, and proven track records of driving profitable growth and shareholder value creation,” Brad Soultz, continued.
Fourth Quarter 2019 Results1,2
Total revenues increased 8.0% to $278.0 million, as compared to $257.4 million in the prior year quarter driven by a 7.7% increase in leasing and services revenue due to improved pricing and growth of VAPS.
Adjusted EBITDA of $98.2 million was up 33.6% compared to $73.5 million in the prior year quarter, and Adjusted EBITDA margins improved 670 bps year over year to 35.3%.
Net income of $8.9 million for the three months ended December 31, 2019 includes $7.9 million of discrete costs expensed in the period related to our integration and acquisition-related activities, including $2.7 million of integration costs, $2.7 million of restructuring costs, lease impairment expense and other related charges, $0.2 million of other impairments and $2.3 million of other expense. Net income of $8.9 million was up $19.3 million from a consolidated net loss of $10.4 million for the same period in 2018, which included $5.3 million of transaction costs, $8.3 million of restructuring costs, and $15.1 million of integration costs related to the Acton and ModSpace acquisitions.
Full Year 2019 Results1,2
Total revenues increased 41.6% to $1,063.7 million, as compared to $751.4 million in the prior year driven by a 43.3% increase in leasing and services revenue due to increased volumes from acquisitions, improved pricing, and growth of VAPS. Pro forma revenues decreased $0.4 million, or 0.0%, driven by reduced sales revenues, which declined $46.9 million, or 32.1%, driven primarily by one large new sale recognized in 2018 in the amount of $29.0 million in our Modular - US segment. The impact of the decline in non-recurring sales versus the prior year was nearly offset by continued strong organic growth in our core modular leasing revenues, which increased $53.4 million on a pro forma basis, or 7.7%, driven primarily by a 13.7% increase in pro forma average modular space monthly rental rates. The adoption of ASC 842 included a reclassification of amounts previously accounted for as bad debt expense from selling, general and administrative expenses, resulting in a $10.0 million reduction to revenue for the year and no change to net income, upon adoption in Q4 retroactive to January 1, 2019.
Adjusted EBITDA of $356.5 million, including $4.4 million of costs related to finance leases reclassified as operating leases upon adoption of ASC 842, was up 65.4% compared to $215.5 million in the prior year, and Adjusted EBITDA margins improved 480 bps year over year to 33.5%.
Net loss of $11.5 million for the year ended December 31, 2019 includes $46.0 million of discrete costs expensed in the period related to integration and acquisition-related activities, including $26.6 million of integration costs, $11.5 million of impairment of long-lived assets and lease impairment expense and other related charges, $3.8 million of restructuring cost, and $4.1 of other expense. This is down $42.1 million from a consolidated net loss of $53.6 million in 2018, which included $20.1 million of transaction costs, $15.5 million of restructuring costs, and $30.0 million of integration costs related to the Acton and ModSpace acquisitions.
Capitalization and Liquidity Update
Capital expenditures decreased $4.9 million, or 9.6%, to $46.0 million for the three months ended December 31, 2019, from $50.9 million for the three months ended December 31, 2018. Net CAPEX4 decreased $11.9 million, or 28.5%, to $29.8 million for the three months ended December 31, 2019. The decrease was driven primarily by completion of the ModSpace integration in 2019, which allowed for more precise capital allocation decisions in Q4 2019 relative to Q4 2018. Capital expenditures increased $47.9, or 28.9%, to $213.4 million for the year ended December 31, 2019, from $165.5 million for the year ended December 31, 2018. Net CAPEX4 increased $18.5, or 13.8%, to $152.6 million for the year ended December 31, 2019. The increase was driven primarily by increased investments to support our larger fleet subsequent to the ModSpace acquisition in August 2018.
During the three months ended December 31, 2019, we generated $43.7 million of Free Cash Flow1, representing an increase of $63.9 million as compared to the three months ended December 31, 2018. Free Cash Flow1 increased $116.9 million to $20.0 for the year ended December 31, 2019. Total long-term debt as of December 31, 2019 was $1,632.6 million. Net cash provided by operating activities of $172.6 million offset net cash used in investing activities of $152.6 million. As of December 31, 2019, we had $509.1 million of available borrowing capacity under our ABL Facility.
This guidance is subject to risks and uncertainties, including those described in "Forward-Looking Statements" below. The 2020 guidance includes:
|Total revenue||$1.1 billion - $1.2 billion|
|Adjusted EBITDA1,3||$410 million - $430 million|
|Net CAPEX4||$160 million - $180 million|
1 - Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow are non-GAAP financial measures. Further information and reconciliations for these Non-GAAP measures to the most directly comparable financial measure under generally accepted accounting principles in the US ("GAAP") is included at the end of this press release.
2 - The pro forma financial information and performance metrics contained in this press release include the results of WillScot and ModSpace on a pro forma basis for all periods presented. The ModSpace acquisition closed August 15, 2018.
3 - Information reconciling forward-looking Adjusted EBITDA and Net CAPEX to GAAP financial measures is unavailable to the Company without unreasonable effort and therefore no reconciliation to the most comparable GAAP measures is provided.
4 - Net CAPEX is a non-GAAP financial measure. Please see the non-GAAP reconciliation tables included at the end of this press release.
5 - Quarterly amounts were adjusted for the adoption of Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) ("ASC 842"), effective retroactively to January 1, 2019, of and therefore do not agree to the Quarterly Reports filed on Form 10-Q for the respective periods of 2019. See reconciliation of the impact of adopting ASC 842 included at the end of this press release.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, Free Cash Flow, pro forma revenue, and Net CAPEX. Adjusted EBITDA is defined as net income (loss) before income tax expense, net interest expense, depreciation and amortization adjusted for non-cash items considered non-core to business operations including net currency gains and losses, goodwill and other impairment charges, restructuring costs, costs to integrate acquired companies, costs incurred related to transactions, non-cash charges for stock compensation plans, and other discrete expenses. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue. Free Cash Flow is defined as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and equipment, which are all included in cash flows from investing activities. Net CAPEX is defined as as purchases of rental equipment and refurbishments and purchases of property, plant and equipment (collectively, "Total Capital Expenditures"), less proceeds from sale of rental equipment and proceeds from the sale of property, plant and equipment (collectively, "Total Proceeds"), which are all included in cash flows from investing activities. Our management believes that the presentation of Net CAPEX provides useful information to investors regarding the net capital invested into our rental fleet and plant, property and equipment each year to assist in analyzing the performance of our business. Pro forma revenue is defined the same as revenue, but includes pre-acquisition results from ModSpace for all periods presented. WillScot believes that Adjusted EBITDA and Adjusted EBITDA margin are useful to investors because they (i) allow investors to compare performance over various reporting periods on a consistent basis by removing from operating results the impact of items that do not reflect core operating performance; (ii) are used by our board of directors and management to assess our performance; (iii) may, subject to the limitations described below, enable investors to compare the performance of WillScot to its competitors; and (iv) provide additional tools for investors to use in evaluating ongoing operating results and trends. WillScot believes that pro forma revenue is useful to investors because they allow investors to compare performance of the combined Company over various reporting periods on a consistent basis WillScot believes that Net CAPEX provide useful additional information concerning cash flow available to meet future debt service obligations. However, Adjusted EBITDA is not a measure of financial performance or liquidity under GAAP and, accordingly, should not be considered as an alternative to net income or cash flow from operating activities as an indicator of operating performance or liquidity. These non-GAAP measures should not be considered in isolation from, or as an alternative to, financial measures determined in accordance with GAAP. Other companies may calculate Adjusted EBITDA and other non-GAAP financial measures differently, and therefore WillScot’s non-GAAP financial measures may not be directly comparable to similarly-titled measures of other companies. For reconciliation of the non-GAAP measures used in this press release (except as explained below), see “Reconciliation of non-GAAP Financial Measures" included in this press release.
Information reconciling forward-looking Adjusted EBITDA to GAAP financial measures is unavailable to WillScot without unreasonable effort. We cannot provide reconciliations of forward looking Adjusted EBITDA to GAAP financial measures because certain items required for such reconciliations are outside of our control and/or cannot be reasonably predicted, such as the provision for income taxes. Preparation of such reconciliations would require a forward-looking balance sheet, statement of income and statement of cash flow, prepared in accordance with GAAP, and such forward-looking financial statements are unavailable to WillScot without unreasonable effort. Although we provide a range of Adjusted EBITDA that we believe will be achieved, we cannot accurately predict all the components of the Adjusted EBITDA calculation. WillScot provides Adjusted EBITDA guidance because we believe that Adjusted EBITDA, when viewed with our results under GAAP, provides useful information for the reasons noted above.
Conference Call Information
WillScot will host a conference call and webcast to discuss its fourth quarter 2019 results and outlook at 8 a.m. Eastern Time on Monday, March 2, 2020. The live call can be accessed by dialing (855) 312-9420 (US/Canada toll-free) or (210) 874-7774 (international) and asking to be connected to the WillScot call. A live webcast will also be accessible via the "Events & Presentations" section of the Company's investor relations website https://investors.willscot.com. Choose "Events" and select the information pertaining to the WillScot Fourth Quarter 2019 Conference Call. Additionally, there will be slides accompanying the webcast. Please allow at least 15 minutes prior to the call to register, download and install any necessary software. For those unable to listen to the live broadcast, an audio webcast of the call will be available for 60 days on the Company’s investor relations website.
About WillScot Corporation
Headquartered in Baltimore, Maryland, WillScot Corporation is the public holding company for the Williams Scotsman family of companies in the United States, Canada and Mexico. WillScot Corporation trades on the Nasdaq stock exchange under the ticker symbol “WSC” and is the specialty rental services market leader providing innovative modular space and portable storage solutions across North America. It is the modular space supplier of choice for the construction, education, health care, government, retail, commercial, transportation, security and energy sectors. With over half a century of innovative history, organic growth and strategic acquisitions, its fleet comprises approximately 150,000 modular space and portable storage units managed through its network of approximately 120 locations.
This news release contains forward-looking statements (including the earnings guidance/outlook contained herein) within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. The words "estimates," "expects," "anticipates," "believes," "forecasts," "plans," "intends," "may," "will," "should," "shall," "outlook" and variations of these words and similar expressions identify forward-looking statements, which are generally not historical in nature. Forward-looking statements are subject to a number of risks, uncertainties, assumptions and other important factors, many of which are outside our control, which could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Although WillScot believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance that any such forward-looking statement will materialize. Important factors that may affect actual results or outcomes include, among others, our ability to acquire and integrate new assets and operations; our ability to achieve planned synergies related to acquisitions; our ability to manage growth and execute our business plan; our estimates of the size of the markets for our products; the rate and degree of market acceptance of our products; the success of other competing modular space and portable storage solutions that exist or may become available; rising costs adversely affecting our profitability (including cost increases resulting from tariffs); potential litigation involving our Company; general economic and market conditions impacting demand for our products and services; implementation of tax reform; our ability to implement and maintain an effective system of internal controls; and such other risks and uncertainties described in the periodic reports we file with the SEC from time to time (including our Form 10-K for the year ending December 31, 2019), which are available through the SEC’s EDGAR system at www.sec.gov and on our website. Any forward-looking statement speaks only at the date which it is made, and WillScot disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Additional Information and Where to Find It
Additional information can be found on our investor relations website at http://investors.willscot.com.
|Investor Inquiries:||Media Inquiries:|
|Mark Barbalato||Scott Junk|
Consolidated Statements of Operations
(Unaudited; in thousands, except share and per share data)
|Years Ended December 31,|
|Leasing and services revenue:|
|Modular delivery and installation||220,057||154,557||89,850|
|Costs of leasing and services:|
|Modular delivery and installation||194,107||143,950||85,477|
|Costs of sales:|
|Depreciation of rental equipment||174,679||121,436||72,639|
|Selling, general and administrative||271,004||254,871||162,351|
|Other depreciation and amortization||12,395||13,304||8,653|
|Impairment losses on goodwill||—||—||60,743|
|Impairment losses on long-lived assets||2,848||1,600||—|
|Lease impairment expense and other related charges||8,674||—||—|
|Currency (gains) losses, net||(688||)||2,454||(12,878||)|
|Other (income) expense, net||(2,200||)||
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