BALTIMORE, May 01, 2020 (GLOBE NEWSWIRE) -- WillScot Corporation ("WillScot" or the "Company") (Nasdaq: WSC) today announced its first quarter 2020 financial results, provided an update on operating activities and the current market environment, and updated its 2020 outlook.
First Quarter 2020 Financial Highlights1,4
|Three Months Ended March 31,|
|Consolidated net income (loss)||$||(3,674||)||$||(10,029||)|
|Net cash provided by operating activities||$||38,348||$||15,256|
|Free Cash Flow1||$||7,808||$||(26,558||)|
|Three Months Ended March 31,|
|Adjusted EBITDA1 by Segment (in thousands)||2020||2019|
|Modular - US||$||81,685||$||75,946|
|Modular - Other North America||7,859||7,408|
|Consolidated Adjusted EBITDA||$||89,544||$||83,354|
Brad Soultz, President and Chief Executive Officer of WillScot, commented, "In this unprecedented environment, I am humbled by the grit and perseverance of our front-line workers who have safely maintained essential services for our customers and our communities. The safety of our employees, vendors, and customers is always our top priority, and I'm extremely proud of our team for pivoting and innovating solutions for the COVID-19 response in a rapidly changing demand environment. WillScot delivered another quarter of substantial Adjusted EBITDA growth with Revenue and Adjusted EBITDA for the first quarter up 0.8% and 7.3% over the prior year and Adjusted EBITDA margin of 35.0%, which increased 210 bps versus the first quarter of 2019. Free cash flow increased $34.4 million year over year to $7.8 million in the first quarter, representing our fourth consecutive quarter of positive Free Cash Flow. While the COVID-19 pandemic did not impact our first quarter financial results significantly, it has introduced uncertainty into our 2020 outlook such that we've reduced and expanded our expected 2020 Adjusted EBITDA outlook range to $350 - $400 million to reflect the severity and duration of any demand disruption. I'm confident we have the right team and the right playbook to respond in the short-term, while maintaining our enthusiasm and commitment to future strategic growth and our combination with Mobile Mini."
Tim Boswell, Chief Financial Officer of WillScot, commented, "We are very pleased with the first quarter results, in particular our modular leasing revenue growth of $11.1 million, or 6.3% year over year. Modular space average monthly rate increased 14.2% year over year in the US segment - we will remain laser focused on price performance and value-added products heading into the remainder of 2020 and have a clear line of sight to continue average monthly rate growth into 2021. Since mid-March, we have responded decisively to the demand shock resulting from the COVID-19 pandemic, through reductions to variable costs and capital expenditures. Meanwhile, over 90% of our revenue is derived from reoccurring leasing operations where we believe our 34 month average lease durations provide some insulation from temporary demand shocks, as well as forward visibility into our modular leasing revenues. This fundamental business attribute, combined with the flexibility in our cost structure, allows us to manage our discretionary free cash flow, which we expect to increase in the remainder of the year. Additionally, we have over $500 million of available borrowing capacity under the ABL Facility as of March 31, 2020, and we believe we have no near term liquidity or covenant concerns. The current operating environment reinforces the resilient nature of our business model, and our team remains focused on executing on behalf of our customers and investors."
First Quarter 2020 Results1,4
Total revenues increased 0.8% to $255.8 million, as compared to $253.7 million in the prior year quarter driven by a 5.4% increase in leasing and services revenue due to improved pricing and growth of VAPS.
Adjusted EBITDA of $89.5 million was up 7.3% compared to $83.4 million in the prior year quarter, and Adjusted EBITDA margins improved 210 bps year over year to 35.0%.
Net loss of $3.7 million for the three months ended March 31, 2020 includes $12.7 million of discrete costs expensed in the period related to acquisition and integration activities, including $9.4 million of transaction costs related to the announced Mobile Mini merger, $1.7 million of integration costs, and $1.6 million of lease impairment and other related charges and restructuring costs.
Capitalization and Liquidity Update1,3
Net cash provided by operating activities increased by $23.0 million year over year to $38.3 million in the first quarter of 2020. Net CAPEX decreased $11.3 million, or 27.0%, to $30.5 million for the three months ended March 31, 2020. During the three months ended March 31, 2020, Free Cash Flow increased by $34.4 million to $7.8 million as compared to the three months ended March 31, 2019.
Total long-term debt as of March 31, 2020 was $1,625.8 million. As of March 31, 2020, we had $505.8 million of available borrowing capacity under our ABL Facility and no debt maturities until 2022. The ABL Facility has no maintenance covenants as long as we maintain 10% excess availability in the facility, and the Company remains compliant with the 1.0x Fixed Charge Coverage and 5.5x Total Net Leverage ratios that would apply when excess availability is less than 10%.
2020 Updated Outlook
Given the expected decline in new project delivery volumes in the second quarter amid the COVID-19 pandemic, management has adjusted its 2020 outlook. Our expected results will be determined by the impact on future demand for new projects beyond the second quarter of 2020 and will depend greatly on the degree and duration to which governments restrict business and personal activities going forward and when businesses resume normal operations. This guidance is subject to other risks and uncertainties, including those described in "Forward-Looking Statements" below. The 2020 guidance includes:
|Previous Outlook||Updated Outlook|
|Total revenue||$1.1 billion - $1.2 billion||$1.0 billion - $1.1 billion|
|Adjusted EBITDA1,2||$410 million - $430 million||$350 million - $400 million|
|Net CAPEX2,3||$160 million - $180 million||$100 million - $150 million|
Mobile Mini Transaction Update
On March 2, 2020, we announced that we have entered into an Agreement and Plan of Merger with Mobile Mini, Inc. (“Mobile Mini”). The pending merger with Mobile Mini is subject to customary closing conditions, including receipt of regulatory approvals and stockholder approvals from the Company's and Mobile Mini’s stockholders. We are working collaboratively with our counterparts at Mobile Mini to satisfy these closing conditions and plan the integration of the two businesses with the expectation of closing in the third quarter of 2020. We believe that the merger will result in strategic and financial benefits by combining the two industry leaders in the complementary modular space and portable storage solutions markets.
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 - 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.
3 - Net CAPEX is a non-GAAP financial measure. Please see the non-GAAP reconciliation tables included at the end of this press release.
4 - 2019 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, 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 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 first quarter 2020 results and outlook at 10 a.m. Eastern Time on Friday, May 1, 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 First Quarter 2020 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 is the public holding company for the Williams Scotsman family of companies. WillScot 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. WillScot 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, WillScot serves a broad customer base from approximately 120 locations throughout the United States, Canada and Mexico, with a fleet of approximately 150,000 modular space and portable storage units.
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. Certain of these forward-looking statements relate to the proposed business combination (the "Proposed Transaction") involving the Company and Mobile Mini, including: expected scale; operating efficiency; stockholder, employee and customer benefits; key assumptions; timing of closing; the amount and timing of revenue and expense synergies; future financial benefits and operating results; and integration spend, which reflects management's beliefs, expectations and objectives as of the date hereof. 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.
Important Information About the Proposed Transaction
In connection with the Proposed Transaction, the Company filed a registration statement on Form S-4 (No. 333-237746), which includes a preliminary prospectus of the Company and a preliminary joint proxy statement of the Company and Mobile Mini (the “joint proxy statement/prospectus”), and each party will file other documents regarding the Proposed Transaction with the SEC. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY, IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT STOCKHOLDERS SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING THE PROPOSED TRANSACTION. A definitive joint proxy statement/prospectus will be sent to the Company’s stockholders and Mobile Mini’s stockholders. Investors and security holders will be able to obtain these documents (if and when available) free of charge from the SEC’s website at www.sec.gov. The documents filed by the Company with the SEC may also be obtained free of charge from the Company by requesting them by mail at WillScot Corporation, 901 S. Bond Street, Suite 600, Baltimore, Maryland 21231. The documents filed by Mobile Mini may also be obtained free of charge from Mobile Mini by requesting them by mail at Mobile Mini, Inc. 4646 E. Van Buren Street, Suite 400, Phoenix, Arizona 85008.
Participants in the Solicitation
The Company, Mobile Mini, their respective directors and executive officers and other members of management and employees and certain of their respective significant stockholders may be deemed to be participants in the solicitation of proxies in respect of the Proposed Transaction. Information about the Company’s directors and executive officers is available in the Company’s proxy statement, dated March 20, 2020, as supplemented by the supplement dated April 13, 2020, for the 2020 Annual Meeting and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on March 2, 2020. Information about Mobile Mini’s directors and executive officers is available in Mobile Mini’s proxy statement, dated March 16, 2020 as supplemented by the supplement dated April 10, 2020, for its 2020 Annual Meeting of Stockholders and Mobile Mini’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on February 3, 2020. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holding or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the Proposed Transaction when they become available. Investors should read the joint proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from the SEC, the Company or Mobile Mini as indicated above.
No Offer or Solicitation
This release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
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)
|Three Months Ended|
|(in thousands, except share and per share data)||2020||2019|
|Leasing and services revenue:|
|Modular delivery and installation||51,070||50,000|
|Costs of leasing and services:|
|Modular delivery and installation||43,865||43,343|
|Costs of sales:|
|Depreciation of rental equipment||45,948||41,103|
|Selling, general and administrative||74,968||73,319|
|Other depreciation and amortization||3,074||2,784|
|Impairment losses on long-lived assets||—||2,290|
|Lease impairment expense and other related charges||1,661||3,085|
|Currency losses (gains), net||898||(316||)|
|Other expense (income), net||276||(951||)|
|Loss from operations before income tax||(2,884||)||(9,651||)|
|Income tax expense||790||378|
|Net loss attributable to non-controlling interest, net of tax||(130||)||(758||)|
|Net loss attributable to WillScot||$||(3,544||)||$||(9,271||)|
|Net loss per share attributable to WillScot - basic and diluted||$||(0.03||)||$||(0.09||)|
|Weighted average shares - basic and diluted||109,656,646||108,523,269|
|Unaudited Segment Operating Data|
|(in thousands, except for units on rent and rates)||Modular - US||Modular - Other North America||Total|
|Capital expenditures for rental equipment||$||37,006||$||2,642||$||
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