WillScot Mobile Mini (WSC) - 2022 Q1 - Quarterly Report

Part I: Financial Information Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2022, covering balance sheets, income, equity, and cash flows Condensed Consolidated Balance Sheets Total assets increased to $5.86 billion, driven by rental equipment, while total liabilities rose to $3.89 billion due to debt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 (unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Total current assets | $495,596 | $483,040 | | Total assets | $5,857,773 | $5,773,599 | | Total current liabilities | $529,272 | $517,645 | | Total liabilities | $3,891,588 | $3,776,836 | | Total shareholders' equity | $1,966,185 | $1,996,763 | Condensed Consolidated Statements of Operations Total revenues for Q1 2022 increased 19.7% to $508.9 million, with net income rising substantially to $51.2 million and diluted EPS at $0.22 Q1 2022 vs. Q1 2021 Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Total revenues | $508,894 | $425,323 | | Gross profit | $266,815 | $213,380 | | Operating income | $97,909 | $75,284 | | Net income | $51,171 | $4,447 | | Diluted EPS | $0.22 | $0.02 | Condensed Consolidated Statements of Comprehensive Income Total comprehensive income for Q1 2022 significantly increased to $49.4 million, driven by net income offset by foreign currency translation adjustments Comprehensive Income (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net income | $51,171 | $4,447 | | Total other comprehensive (loss) income | $(1,753) | $7,211 | | Total comprehensive income | $49,418 | $11,658 | Condensed Consolidated Statements of Changes in Equity Shareholders' equity decreased to $1.97 billion, primarily due to $77.4 million in stock repurchases, partially offset by $51.2 million in net income - Total shareholders' equity decreased by $30.6 million during Q1 2022, primarily due to stock repurchases of $77.4 million, partially offset by net income of $51.2 million[16] Condensed Consolidated Statements of Cash Flows Operating cash flow increased to $145.5 million, but investing activities used $148.4 million due to acquisitions and equipment purchases Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $145,527 | $122,071 | | Net cash used in investing activities | $(148,360) | $(30,911) | | Net cash provided by (used in) financing activities | $1,586 | $(89,220) | | Net change in cash and cash equivalents | $(1,378) | $1,997 | Notes to the Condensed Consolidated Financial Statements Notes provide detailed information on business operations, revenue disaggregation, lease obligations, debt, equity, segment performance, and fair value measurements - The company is a business services provider specializing in flexible workspace and portable storage solutions in the US, Canada, Mexico, and the UK[19] Revenue by Geography - Q1 2022 vs Q1 2021 (in thousands) | Geographic Area | Q1 2022 Revenue | Q1 2021 Revenue | | :--- | :--- | :--- | | US | $451,968 | $371,269 | | Canada | $25,273 | $23,584 | | UK | $27,439 | $27,007 | | Mexico | $4,214 | $3,463 | | Total | $508,894 | $425,323 | - The company's share repurchase program authorizes up to $1.0 billion During Q1 2022, $77.4 million of stock and equivalents were repurchased, leaving $879.3 million available[58] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes Q1 2022 financial performance, covering operations, segment results, liquidity, and non-GAAP measures, highlighting strong revenue growth and capital expenditures Executive Summary and Outlook The company reports strong Q1 performance with total revenues up 19.7% and leasing revenue up 24.5%, driven by organic growth and acquisitions - The company operates a network of approximately 280 branch locations with over 162,000 modular space units and over 214,000 portable storage units[98] - Key Q1 2022 highlights include a 19.7% increase in total revenues, a 24.5% increase in leasing revenue, and a 17.2% increase in Adjusted EBITDA compared to Q1 2021[105][107] - During Q1 2022, the company repurchased $77.4 million of Common Stock and equivalents and had $879.3 million remaining under its $1 billion share repurchase authorization[104] Consolidated Results of Operations Total revenue increased 19.7% to $508.9 million, primarily from leasing, with gross profit up 25.1% to $266.8 million and improved margins Consolidated Results of Operations - Q1 2022 vs Q1 2021 (in thousands) | Metric | Q1 2022 | Q1 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $508,894 | $425,323 | $83,571 | 19.7% | | Gross profit | $266,815 | $213,380 | $53,435 | 25.1% | | Operating income | $97,909 | $75,284 | $22,625 | 30.1% | | Net income | $51,171 | $4,447 | $46,724 | 1050.7% | - Modular space average monthly rental rates increased 18.1% to $802, and portable storage average monthly rental rates increased 14.8% to $155 in Q1 2022 vs Q1 2021[113][114] Business Segment Results All four segments reported revenue and Adjusted EBITDA growth, with NA Storage leading at 40.5% revenue increase, driven by volume, acquisitions, and pricing Segment Adjusted EBITDA - Q1 2022 vs Q1 2021 (in thousands) | Segment | Q1 2022 Adj. EBITDA | Q1 2021 Adj. EBITDA | % Change | | :--- | :--- | :--- | :--- | | NA Modular | $103,948 | $97,371 | 6.7% | | NA Storage | $63,825 | $46,322 | 37.8% | | UK Storage | $12,544 | $11,064 | 13.4% | | Tank and Pump | $11,506 | $8,828 | 30.3% | | Total | $191,823 | $163,585 | 17.2% | - NA Modular revenue increased 12.6% to $299.7 million, driven by a 19.9% increase in average modular space monthly rental rates[131] - NA Storage revenue grew 40.5% to $151.5 million, fueled by a 44.0% increase in average portable storage units on rent and higher rental rates[135] Reconciliation of Non-GAAP Financial Measures This section defines and reconciles non-GAAP measures like Adjusted EBITDA ($191.8 million for Q1 2022) and Adjusted Gross Profit Percentage (64.7%) Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net income | $51,171 | $4,447 | | Depreciation and amortization | $81,820 | $74,022 | | Interest expense | $30,990 | $29,964 | | Income tax expense | $15,748 | $10,481 | | Other adjustments | $12,094 | $41,324 | | Adjusted EBITDA | $191,823 | $163,585 | Liquidity and Capital Resources Liquidity sources include cash from operations and a $2.4 billion ABL facility with $646.9 million available, though Free Cash Flow decreased to $54.6 million due to CAPEX - At March 31, 2022, the company had $646.9 million of available borrowing capacity under its $2.4 billion ABL Facility[158] Free Cash Flow Reconciliation (in thousands) | Line Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $145,527 | $122,071 | | Net CAPEX | $(90,903) | $(30,911) | | Free Cash Flow | $54,624 | $91,160 | - Material cash requirements include total debt of $2.9 billion and operating lease obligations of $282.2 million as of March 31, 2022[167][168] Critical Accounting Policies and Estimates No significant changes occurred in critical accounting policies during Q1 2022, with full details available in the 2021 Annual Report on Form 10-K - There were no significant changes to the company's critical accounting policies during the three months ended March 31, 2022[173] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rate fluctuations on its variable-rate ABL Facility and foreign currency exchange rates - The company is exposed to interest rate risk on its $1.7 billion of outstanding variable-rate debt under the ABL Facility A 100 basis point increase in rates would increase quarterly interest expense by approximately $2.7 million[178][180] - An interest rate swap agreement effectively converts $400.0 million of variable-rate debt into fixed-rate debt at a synthetic fixed rate of 5.19%[179] - The company is exposed to foreign currency risk from its operations in Canada, Mexico, and the UK, but has not entered into any hedging arrangements for this risk[181][182] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2022[183] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[184] Part II: Other Information Item 1. Legal Proceedings The company is involved in various legal proceedings, but management believes their outcome will not materially affect financial position, results, or cash flows - The company believes that outstanding lawsuits, claims, and legal proceedings will not, individually or in the aggregate, have a material adverse effect on its financial condition[186] Item 1A. Risk Factors No material changes occurred to the risk factors previously disclosed in the 2021 Annual Report on Form 10-K - The risk factors discussed in the 2021 Annual Report on Form 10-K have not materially changed[187] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 2.07 million shares and equivalents for $77.4 million under its $1.0 billion share repurchase program, with $879.3 million remaining Q1 2022 Share Repurchases | Period | Total Shares and Equivalents Purchased (in thousands) | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2022 | 992.8 | $37.41 | | Feb 2022 | 242.4 | $37.31 | | Mar 2022 | 834.8 | ~$37.93 | | Total | 2,070.0 | $37.37 | - As of March 31, 2022, $879.3 million remained available for repurchases under the $1.0 billion share repurchase program[188] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[189] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[190] Item 5. Other Information The company reported no other information for this item - None[191] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and Interactive Data Files (XBRL) - Exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and XBRL data files[192]