WillScot Mobile Mini (WSC) - 2025 Q2 - Quarterly Report

PART I Financial Information Item 1. Financial Statements The financial statements for the period ended June 30, 2025, show total assets of $6.10 billion and a significant turnaround to $47.9 million net income in Q2 2025 Condensed Consolidated Balance Sheets Total assets increased to $6.10 billion by June 30, 2025, driven by acquisitions and rental equipment growth, with liabilities and equity also rising Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (unaudited, in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $6,104,703 | $6,034,911 | | Total current assets | $530,300 | $557,510 | | Rental equipment, net | $3,424,524 | $3,377,939 | | Goodwill | $1,257,264 | $1,201,353 | | Total Liabilities | $5,070,108 | $5,016,318 | | Total current liabilities | $655,705 | $585,008 | | Long-term debt | $3,672,856 | $3,683,502 | | Total Shareholders' Equity | $1,034,595 | $1,018,593 | Condensed Consolidated Statements of Operations Q2 2025 net income reached $47.9 million, a significant turnaround from a prior-year loss, despite a 2.6% revenue decrease Q2 2025 vs Q2 2024 Statement of Operations (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Total Revenues | $589,083 | $604,590 | | Gross Profit | $296,070 | $327,118 | | Operating Income (Loss) | $126,900 | $(5,232) | | Net Income (Loss) | $47,939 | $(46,851) | | Diluted EPS | $0.26 | $(0.25) | Six Months 2025 vs 2024 Statement of Operations (in thousands, except per share amounts) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Total Revenues | $1,148,634 | $1,191,771 | | Gross Profit | $596,436 | $644,006 | | Operating Income | $246,334 | $124,714 | | Net Income | $90,994 | $9,389 | | Diluted EPS | $0.49 | $0.05 | Condensed Consolidated Statements of Cash Flows Operating cash flow increased to $411.9 million for the first six months of 2025, while investing and financing activities used substantial cash Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $411,938 | $384,287 | | Net cash used in investing activities | $(273,099) | $(193,329) | | Net cash used in financing activities | $(135,942) | $(195,662) | | Net change in cash and cash equivalents | $3,849 | $(5,034) | - Key uses of cash in the first six months of 2025 included $136.8 million for acquisitions, $157.8 million for rental equipment purchases, $73.2 million for share repurchases, and $25.6 million for dividend payments[17] Notes to the Condensed Consolidated Financial Statements Notes detail significant accounting policies, including $115.6 million in acquisitions, debt refinancing, and new capital return programs - During the first six months of 2025, the company acquired a regional provider of climate-controlled containers for $115.6 million, adding approximately 2,100 units and recognizing $54.1 million in goodwill[24] - In March 2025, the company issued $500.0 million of 6.625% senior secured notes due 2030 and used the proceeds to redeem its 6.125% notes due 2025[50][51] - The company initiated a quarterly dividend of $0.07 per share in February 2025 and repurchased 2.6 million shares for $71.9 million in the first half of the year[56][57][59] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Q2 2025 revenue declined 2.6% due to fewer units on rent, while net income significantly improved, and the company maintained strong liquidity and active capital allocation Significant Developments Significant developments include $500 million in new debt issuance, initiation of a dividend program, share repurchases, and strategic acquisitions - Completed a private offering of $500.0 million of 6.625% senior secured notes due 2030, using proceeds to redeem outstanding 6.125% notes due 2025[92][93] - Initiated a quarterly dividend program in February 2025, paying a total of $25.6 million in dividends during the first six months[94] - Acquired a regional provider of climate-controlled containers and trailers for $115.6 million and a local provider of clearspan solutions for $18.2 million[96][97] Consolidated Results of Operations Q2 2025 revenues decreased 2.6% to $589.1 million due to fewer units on rent, despite higher rental rates, while SG&A expenses significantly declined Q2 2025 vs Q2 2024 Key Metrics | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $589.1M | $604.6M | -2.6% | | Gross Profit | $296.1M | $327.1M | -9.5% | | Net Income (Loss) | $47.9M | $(46.9)M | 202.3% | | Adjusted EBITDA | $248.9M | $263.6M | -5.6% | - The decrease in revenue was driven by a 10.3% decline in total average units on rent (from 220,414 to 197,799), attributed to reduced non-residential construction project starts[103][104] - Average monthly rental rates increased year-over-year: modular space rates rose 5.2% to $1,237, and portable storage rates rose 7.2% to $282[105] Reconciliation of Non-GAAP Financial Measures Non-GAAP measures show Q2 2025 Adjusted EBITDA at $248.9 million, a decrease from prior year, with six-month Adjusted Free Cash Flow at $275.1 million Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Net income (loss) | $47,939 | $(46,851) | | Adjustments (Taxes, Interest, D&A, etc.) | $199,849 | $179,486 | | Other Adjustments (Impairment, Transaction Costs, etc.) | $1,125 | $165,490 | | Adjusted EBITDA | $248,913 | $263,576 | Adjusted Free Cash Flow (in thousands) | | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $411,938 | $384,287 | | Net CAPEX | $(168,741) | $(150,392) | | Cash paid for terminated acquisitions | — | $9,185 | | Adjusted Free Cash Flow | $275,122 | $273,963 | Liquidity and Capital Resources The company maintains strong liquidity with $1.6 billion available under its ABL Facility, sufficient to meet future operating and debt obligations - As of June 30, 2025, the company had $1.6 billion of available borrowing capacity under its $3.7 billion ABL Facility[143] - Material cash requirements include total debt of $3.7 billion and operating lease obligations of $302.8 million[148][149] Quantitative and Qualitative Disclosures About Market Risk The company manages interest rate risk on its variable-rate ABL Facility through swaps and faces foreign currency risk from international operations - The company manages interest rate risk on its ABL Facility using swap agreements covering $1.25 billion of notional variable-rate debt, fixing rates at 3.70% and 3.44%[155] - A 100 basis point increase in interest rates would have increased Q2 interest expense by approximately $0.8 million on the unhedged portion of the ABL Facility[155] - Foreign currency risk exposure comes from operations in Canada and Mexico, which generate about 6% of total revenues[156] Controls and Procedures Management concluded that disclosure controls and procedures were effective, 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 the end of the quarter[158] - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2025[159] PART II Other Information Legal Proceedings The company is involved in ordinary course legal proceedings, which management does not expect to materially impact its financial condition - The company states that ongoing legal proceedings are not expected to have a material adverse effect on its financial condition or results[161] Risk Factors No material changes to risk factors, except for an expanded discussion on trade policies and potential cost increases from tariffs - A risk factor regarding trade policies has been updated to emphasize that tariffs on imported materials could materially increase costs and adversely affect business operations and financial results[162][163] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 1.53 million shares for $39.9 million in Q2 2025, with $750.0 million remaining under its repurchase program Q2 2025 Share Repurchases | Period | Shares Purchased (thousands) | Average Price Paid per Share ($) | | :--- | :--- | :--- | | April 2025 | 741.2 | $24.40 | | May 2025 | 268.2 | $27.94 | | June 2025 | 523.7 | $27.20 | | Total Q2 | 1,533.1 | ~ $26.02 | - As of June 30, 2025, $750.0 million remained available under the company's $1.0 billion share repurchase authorization[165] Other Information No director or Section 16 officer adopted or terminated Rule 10b5-1 trading arrangements during Q2 2025 - No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading plan during the three months ended June 30, 2025[168]