WillScot Mobile Mini (US:WSC)2022-02-25 19:03Financial Data and Key Metrics Changes - The company generated $1.9 billion in revenue, $740 million in adjusted EBITDA, and over $300 million in free cash flow for 2021, exceeding original guidance by approximately 8% for revenue and 6% for adjusted EBITDA [8][27] - The adjusted gross profit percentage expanded by 70 basis points for the year, while EBITDA margins expanded by 30 basis points, and net income increased by 113% [38] - The return on invested capital was up 180 basis points in the quarter and over 200 basis points for the year, demonstrating profitability expansion at all levels [38] Business Line Data and Key Metrics Changes - The North America Modular segment achieved a Value-Added Products and Services (VAPS) delivered rate of $393, up 26% year-over-year [19] - Average monthly rental rates for North America Modular increased by about 20% year-over-year, while North America Storage saw a 9% increase in average monthly rental rates for portable storage units, the largest increase on record [22][23] - The company added 15,700 storage units and about 5,800 modular units to its North America fleet through acquisitions [11] Market Data and Key Metrics Changes - The company experienced robust demand across diverse end markets, with a 30% year-over-year increase in the unit on rent portfolio for the Storage segment [60] - Delivery rates increased by 4% year-over-year throughout 2021, with expectations for similar increases in 2022 [59] - The company reported that total revenues were 18% above 2019 levels, indicating resilience through the pandemic [34] Company Strategy and Development Direction - The company plans to leverage growth initiatives highlighted in the Investor Day to drive substantial value creation, focusing on VAPS and expanding offerings in Modular and portable storage units [15][49] - The company aims to harmonize CRMs and enhance data analytics capabilities to target local opportunities while leveraging its national footprint [16] - The M&A pipeline remains robust, with a focus on integrating acquisitions to compound organic growth [16][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a $500 million free cash flow run rate milestone in the second half of 2022 and a goal of exceeding $1 billion in EBITDA [18][49] - The company is focused on managing inflationary pressures, particularly in labor and fuel costs, while maintaining margin expansion [96][98] - Management highlighted the importance of human capital investments to support growth initiatives and the overall strategy [31][70] Other Important Information - The company returned $364 million to shareholders through share repurchases, reducing the economic share count by about 4% [9] - The company is committed to ESG initiatives, focusing on sustainability, safety, and diversity [14] Q&A Session Summary Question: Investments to support growth and margin performance - Management noted that significant investments in human capital and M&A teams were made to support growth, which contributed to margin pressure in the quarter [55] Question: Dynamics on orders and returns - Return rates for Modular units are down about 11% relative to 2019 levels, while delivery rates were up 4% year-over-year [58] Question: Dilutive impact of acquisitions - The dilutive impact from acquisitions was estimated at about 100 basis points in Q4, with expectations for revenue growth from these acquisitions in 2022 [63] Question: Run rate for SG&A - SG&A will be carefully managed, with investments in marketing, data analytics, and operations excellence to support growth [66][68] Question: M&A contribution to adjusted EBITDA - Management reiterated that the expected adjusted EBITDA contribution from M&A remains unchanged, with a focus on tuck-in acquisitions [74] Question: Pricing dynamics in Storage - The company has seen a 9% increase in Storage pricing, driven by both market and company-specific factors, with expectations for continued pricing power [82][84]