WillScot Mobile Mini (WSC) - 2025 Q1 - Quarterly Report

PART I Financial Information Item 1. Financial Statements The unaudited condensed consolidated financial statements for Q1 2025 show a slight decrease in total assets and liabilities, with revenues of $559.6 million and net income of $43.1 million, while operating cash flow remained stable at $206.6 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $518,454 | $557,510 | | Total assets | $5,961,676 | $6,034,911 | | Total current liabilities | $621,368 | $585,008 | | Total liabilities | $4,950,314 | $5,016,318 | | Total shareholders' equity | $1,011,362 | $1,018,593 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total revenues | $559,551 | $587,181 | | Gross profit | $300,366 | $316,888 | | Operating income | $119,434 | $129,946 | | Net income | $43,055 | $56,240 | | Diluted EPS | $0.23 | $0.29 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $206,627 | $208,676 | | Net cash used in investing activities | $(64,955) | $(110,967) | | Net cash used in financing activities | $(139,929) | $(95,622) | | Net change in cash and cash equivalents | $1,678 | $2,189 | Notes to the Condensed Consolidated Financial Statements This section details the company's business operations, financial instruments, and capital allocation strategies - The company's primary business involves providing turnkey space solutions, including leasing modular spaces and portable storage, complemented by Value-Added Products (VAPS) and services across the US, Canada, and Mexico[18] Revenue by Geography (in thousands) | Geography | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | US | $531,046 | $553,433 | | Canada | $23,199 | $26,532 | | Mexico | $5,306 | $7,216 | | Total | $559,551 | $587,181 | - In March 2025, the company issued $500.0 million of 6.625% senior secured notes due 2030, using proceeds to redeem all outstanding 6.125% senior secured notes due 2025[45][46] - The Board of Directors approved a quarterly dividend program in February 2025, declaring a dividend of $0.07 per share; the company also repurchased 1.1 million shares for $32.0 million in Q1 2025, with $789.8 million remaining under authorization[51][52][54] Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $43,055 | $56,240 | | Adjustments (Taxes, Interest, D&A, etc.) | $185,730 | $191,769 | | Adjusted EBITDA | $228,785 | $248,009 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a 4.7% decrease in total revenues to $559.6 million for Q1 2025, driven by an 11.5% decrease in average units on rent, while generating $144.8 million in Adjusted Free Cash Flow used for debt reduction, share repurchases, and dividends Key Operational Metrics Comparison | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Average modular space units on rent | 90,548 | 95,817 | (5,269) | | Average modular space monthly rental rate | $1,209 | $1,149 | +$60 | | Average portable storage units on rent | 110,175 | 131,014 | (20,839) | | Average portable storage monthly rental rate | $267 | $262 | +$5 | | Adjusted EBITDA (in thousands) | $228,785 | $248,009 | ($19,224) | - Total revenues decreased by $27.6 million (4.7%) year-over-year, primarily due to a $26.2 million (5.7%) drop in leasing revenue from fewer units on rent, a result of reduced demand from higher interest rates impacting non-residential construction[92][95] - Adjusted EBITDA decreased by $19.2 million (7.8%) year-over-year, driven by lower leasing and delivery gross profit, partially offset by an increase in new and used unit sales gross profit[100] - The company generated $144.8 million in Adjusted Free Cash Flow, which was used to repurchase $32.0 million of stock, pay $13.0 million in dividends, and reduce debt by $85.8 million[92] - The company's principal sources of liquidity are cash from operations and its $3.7 billion ABL Facility, which had $1.6 billion of available borrowing capacity as of March 31, 2025[114][116] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to interest rate risk from its variable-rate ABL Facility and foreign currency risk from Canadian and Mexican operations, mitigating interest rate risk with $1.25 billion in interest rate swap agreements - The company manages interest rate risk on its ABL Facility using swap agreements; as of March 31, 2025, swaps covered $1.25 billion of the $1.5 billion outstanding principal, fixing rates at 3.70% and 3.44% on respective notional amounts[127] - Foreign currency risk exists through operations in Canada and Mexico, which account for approximately 5% of consolidated net revenues; a strengthening U.S. dollar could negatively impact reported revenues from these regions[128] Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[130] - No changes occurred during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[131] PART II Other Information Legal Proceedings The company is involved in various legal proceedings arising in the ordinary course of business, with management believing outcomes will not materially adversely affect financial position, results of operations, or cash flows - As of March 31, 2025, the company does not expect outstanding legal matters to have a material adverse effect on its financial condition or results[133] Risk Factors The company's risk factors remain largely unchanged from its 2024 Annual Report on Form 10-K, with an updated risk concerning trade policies and potential cost increases from tariffs on materials like steel, aluminum, and lumber - The company notes that risk factors are largely unchanged from the 2024 10-K, but provides an updated disclosure on the risk of trade policies and tariffs[134] - A key risk is that tariffs on imported materials (e.g., steel, lumber) could materially increase product and raw material costs, which the company may not be able to pass on to customers, potentially harming financial results[135] Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2025, the company repurchased 1,094,900 shares of Common Stock for approximately $32.0 million, with $789.8 million remaining under its $1.0 billion share repurchase program Share Repurchase Activity - Q1 2025 | Period | Shares Purchased (thousands) | Average Price Paid per Share | Remaining Authorization (millions) | | :--- | :--- | :--- | :--- | | Jan 2025 | — | $— | $821.8 | | Feb 2025 | — | $— | $821.8 | | Mar 2025 | 1,094.9 | $29.21 | $789.8 | - The company's share repurchase program was reset in September 2024, authorizing up to $1.0 billion in repurchases; as of March 31, 2025, $789.8 million remained available[137]