WillScot Holdings Corp
For the period ended Sep 30, 2024. Filed Oct 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 30, 2024
WSC$18.86+5.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001647088-24-000143
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0001647088-24-000159
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 190 previous paragraphs and 189 current paragraphs.
98 unchanged; 74 reworded; 16 added; 14 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Termination of Agreement to Acquire McGrath RentCorp
Current report
On January 28, 2024, we entered into an agreement and plan of merger (the “Merger Agreement”) with McGrath RentCorp ("McGrath"). On September 17, 2024, the Company and McGrath mutually agreed to terminate the Merger Agreement. In accordance with the terms of the Merger Agreement, during the three months ended September 30, 2024, we paid McGrath a$180.0 million termination fee, which was treated as an operating expense in the quarter. During the three and nine months ended September 30, 2024, we recorded $8.8 million and $41.3 million respectively, in legal and professional fees primarily related to the McGrath transaction within selling, general and administrative expense ("SG&A").
Current report
Restructuring
Current report
In June 2024, the Company implemented a cost-reduction plan to be completed by the end of 2024. During thethree and nine months ended September 30, 2024, restructuring costs incurred under this plani ncluded employee termination costs of$2.3 million and $8.5 million, respectively.
Current report
Acquisitions
Current report
Third Quarter Highlights
Current report
•Total revenues decreased $3.4 million, or 0.6%. Leasing revenue decreased $11.2 million, or 2.4%, and delivery and installation revenue decreased $0.8 million, or 0.7%. These decreases were partially offset by an increase in new unit sales revenue of $7.7 million, or 75.8%, and an increase in rental unit sales revenue of $0.9 million, or 7.5%.
Current report
•Generated a Free Cash Flow deficit of $60.1 million for the three months ended September 30, 2024, representing a decrease of $207.9 million as compared to the same period in 2023, which was driven by the $180.0 million termination fee paid to McGrath and related transaction costs. Excluding one-time, nonrecurring payments of $180.0 million for the McGrath termination fee and $23.3 million for transaction costs from terminated acquisitions, Adjusted Free Cash Flow was $143.1 million for the three months ended September 30, 2024 as compared to $147.8 million for the three months ended September 30, 2023. During the three months ended September 30, 2024, we acquired a national provider of premium large clearspan structures for $13.9 million. We also returned $61.7 million to shareholders through stock repurchases, reducing outstanding Common Stock by 1,587,785 shares.
Current report
Termination fee: We paid the termination fee of $180.0 million to McGrath related to the termination of the Merger Agreement during the three months ended September 30, 2024, which was treated as an operating expense.
Current report
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Current report
Comparison of Nine Months Ended September 30, 2024 and 2023
Current report
Termination fee: We paid the termination fee of $180.0 million to McGrath related to the termination of the Merger Agreement during the nine months ended September 30, 2024, which was treated as an operating expense.
Current report
Net cash provided by operating activities for the nine months ended September 30, 2024 was $382.7 million as compared to $541.9 million for the nine months ended September 30, 2023, a decrease of $159.2 million. The decrease in net cash provided by operating activities was primarily due to the payment of $212.5 million for the McGrath termination fee and transaction costs from terminated acquisitions during the nine months ended September 30, 2024.
Current report
Free Cash Flow and Adjusted Free Cash Flow
Current report
Free Cash Flow for the nine months ended September 30, 2024 was $204.7 million as compared to $410.3 million for the nine months ended September 30, 2023, a decrease of $205.7 million. Free Cash Flow decreased principally as a result of the $159.2 million decrease in cash provided by operating activities, a $40.9 million increase in cash used in the purchase of rental equipment and refurbishments, and a $12.1 million decrease in proceeds from the sale of property, plant, and equipment. The $159.2 million decrease in cash provided by operating activities was driven by $212.5 million of cash paid for the McGrath termination fee and transaction costs from terminated acquisitions. The $205.7 million decrease in Free Cash Flow was partially offset by a $5.9 million increase in proceeds from the sale of rental equipment. Adjusted Free Cash for the nine months ended September 30, 2024 was $417.1 million as compared to $410.3 million for the nine months ended September 30, 2023, an increase of $6.8 million.
Current report
•our stock price volatility; and
Removed paragraphs (14)
Previous report
On January 28, 2024, we entered into an agreement and plan of merger (the “Merger Agreement”) with McGrath RentCorp ("McGrath"). Upon consummation of the merger, each outstanding share of McGrath common stock shall be converted into the right to receive either (i) $123.00 in cash or (ii) 2.8211 shares of the Company’s common stock. Under the terms of the Merger Agreement, we expect McGrath’s shareholders will own approximately 12.6% of the Company following the McGrath acquisition. The McGrath acquisition has been approved by the Company's and McGrath’s respective boards of directors and McGrath's shareholders. The McGrath acquisition is subject to the satisfaction or waiver of certain customary closing conditions, including receipt of regulatory approval, and is expected to close in 2024.
Previous report
We recorded $22.9 million and $35.2 million in legal and professional fees primarily related to the acquisition of McGrath within selling, general and administrative expense ("SG&A") during the three and six months ended June 30, 2024, respectively.
Previous report
Asset Acquisitions
Previous report
Second Quarter Highlights
Previous report
•Total revenues increased $22.5 million, or 3.9%. Leasing revenue increased $9.3 million, or 2.1%, new unit sales revenue increased $12.4 million, or 137.4%, and rental unit sales increased $5.5 million, or 49.6%. These increases were partially offset by a decrease in delivery and installation revenue of $4.6 million, or 4.1%.
Previous report
•Generated Free Cash Flow of $120.9 million for the three months ended June 30, 2024, representing a decrease of $38.7 million as compared to the same period in 2023. We deployed this Free Cash Flow to acquire two local providers of storage and modular space solutions with portfolios of approximately 500 storage units and 30 modular units for $29.6 million. We returned $78.7 million to shareholders through stock repurchases, reducing outstanding Common Stock by 2,035,513 shares.
Previous report
Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Previous report
Comparison of Six Months Ended June 30, 2024 and 2023
Previous report
Net cash provided by operating activities for the six months ended June 30, 2024 was $384.3 million as compared to $350.9 million for the six months ended June 30, 2023, an increase of $33.4 million. The increase was due to a change of $104.2 million in the net movements of the operating assets and liabilities, partially offset by a decrease of $70.8 million of net income, adjusted for non-cash items.
Previous report
Free Cash Flow
Previous report
Free Cash Flow for the six months ended June 30, 2024 was $264.8 million as compared to $262.5 million for the six months ended June 30, 2023, an increase of $2.2 million. Free Cash Flow increased principally as a result of the $33.4 million increase in cash provided by operating activities and the $5.4 million increase in proceeds from the sale of rental equipment. The increase was partially offset by the $34.9 million increase in cash used in the purchase of rental equipment and refurbishments.
Previous report
On January 28, 2024, the Company entered into an agreement and plan of merger (the “Merger Agreement”) with McGrath RentCorp ("McGrath"). Upon consummation of the merger, each outstanding share of McGrath common stock shall be converted into the right to receive either (i) $123.00 in cash or (ii) 2.8211 shares of the Company’s common stock. Under the terms of the Merger Agreement, the Company expects McGrath’s shareholders will own approximately 12.6% of the Company following the McGrath acquisition. The McGrath acquisition has been approved by the Company's and McGrath’s respective boards of directors and McGrath's shareholders. The McGrath acquisition is subject to the satisfaction or waiver of certain customary closing conditions, including receipt of regulatory approval, and is expected to close in 2024.
Previous report
•our stock price volatility;
Previous report
•risks associated with the completion of the McGrath acquisition within the expected timeframe, the completion of the McGrath acquisition, and the realization of anticipated synergies from the McGrath acquisition; and
Reworded paragraphs (74)
Previous wording
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand WillScot Holdings Corporation ("WillScot") operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes thereto, contained in Part I, Item 1 of this report. The discussion of results of operations in this MD&A is presented on a historical basis, as of or for the three and six months ended June 30, 2024 or prior periods.
Current wording
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand WillScot Holdings Corporation ("WillScot") operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes thereto, contained in Part I, Item 1 of this report. The discussion of results of operations in this MD&A is presented on a historical basis, as of or for the three and nine months ended September 30, 2024 or prior periods.
Previous wording
On January 31, 2023, the Company completed the sale of its former United Kingdom ("UK") Storage Solutions segment. This MD&A presents the historical financial results of the former UK Storage Solutions segment as discontinued operations for all periods presented.
Current wording
On January 31, 2023, the Company completed the sale of its former United Kingdom ("UK") Storage Solutions segment. This MD&A presents the historical financial results of the former UK Storage Solutions segment as discontinued operations for all periods presented. On July 29, 2024, the Company amended and restated its certificate of incorporation to effect a change of the Company’s name from “WillScot Mobile Mini Holdings Corp.” to “WillScot Holdings Corporation."
Previous wording
We are a leading business services provider specializing in innovative and flexible turnkey temporary space solutions. We service diverse end markets across all sectors of the economy throughout the United States ("US"), Canada, and Mexico. As of June 30, 2024, our branch network included approximately 260 branch locations and additional drop lots to service our over 85,000 customers. We offer our customers an extensive selection of “Ready to Work” temporary space solutions with over 152,000 modular space units and over 206,000 portable storage units in our fleet.
Current wording
We are a leading business services provider specializing in innovative and flexible turnkey temporary space solutions. We service diverse end markets across all sectors of the economy throughout the United States ("US"), Canada, and Mexico. As of September 30, 2024, our branch network included approximately 260 branch locations and additional drop lots to service our over 85,000 customers. We offer our customers an extensive selection of “Ready to Work” temporary space solutions with over 152,000 modular space units and over 210,000 portable storage and cold storage units in our fleet.
Previous wording
Our customers operate in a diversified set of end markets, including construction, commercial and industrial, retail and wholesale trade, energy and natural resources, education, government and institutions and healthcare. Core to our operating model is the ability to redeploy standardized assets across end markets. We track several market leading indicators to predict demand, including those related to our two largest end markets, the commercial and industrial sector and the construction sector, which collectively accounted for approximately 86% of our revenues for the six months ended June 30, 2024.
Current wording
Our customers operate in a diversified set of end markets, including construction, commercial and industrial, retail and wholesale trade, energy and natural resources, education, government and institutions and healthcare. Core to our operating model is the ability to redeploy standardized assets across end markets. We track several market leading indicators to predict demand, including those related to our two largest end markets, the commercial and industrial sector and the construction sector, which collectively accounted for approximately 85% of our revenues for the nine months ended September 30, 2024.
Previous wording
In connection with the Merger Agreement, we entered into a commitment letter dated January 28, 2024, which was amended and restated on June 13, 2024 and modified by a Notice of Reduction of Bridge Commitments on June 28, 2024 (the "Commitment Letter"), pursuant to which certain financial institutions have committed to make available, in accordance with the terms of the Commitment Letter, (i) a $500 million eight-year senior secured bridge credit facility and (ii) an upsize to the existing $3.7 billion ABL Facility (as defined below) of Williams Scotsman, Inc., a subsidiary of the Company ("WSI"), by $750 million to $4.5 billion to repay McGrath's existing unsecured revolving lines of credit and notes, fund the cash portion of the consideration, and pay the fees, costs and expenses incurred in connection with the McGrath acquisition and the related transactions.
Current wording
In connection with the proposed acquisition of McGrath, we entered into a commitment letter dated January 28, 2024, which was amended and restated on June 13, 2024 and modified by a Notice of Reduction of Bridge Commitments on June 28, 2024 (the "Commitment Letter"), pursuant to which certain financial institutions committed to make available, in accordance with the terms of the Commitment Letter, (i) a senior secured bridge credit facility and (ii) an upsize to the existing ABL Facility (as defined below). As a result of the termination of the Merger Agreement, the Commitment Letter was terminated.
Previous wording
On June 28, 2024, WSI completed a private offering of $500.0 million in aggregate principal amount of 6.625% senior secured notes due 2029 (the "2029 Secured Notes")to qualified institutional buyers pursuant to Rule 144A. Proceeds were used to repay approximately $495.0 million of outstanding indebtedness under the ABL Facility and certain fees and expenses.
Current wording
On June 28, 2024, Williams Scotsman, Inc. ("WSI") completed a private offering of $500.0 million in aggregate principal amount of 6.625% senior secured notes due 2029 (the "2029 Secured Notes")to qualified institutional buyers pursuant to Rule 144A. Proceeds were used to repay approximately $495.0 million of outstanding indebtedness under the ABL Facility and certain fees and expenses.
Previous wording
In the second quarter of 2024, we determined that a review of the carrying value of the Mobile Mini trade name was necessary based on the Company's plan to rebrand under a single WillScot brand name and discontinue the use of the Mobile Mini trade name. As of June 30, 2024, the Mobile Mini trade name was tested for impairment using the relief from royalty valuation method. After determining the estimated fair value, we recorded an impairment charge of $132.5 million during the three months ended June 30, 2024. This non-cash charge was recorded to impairment loss on intangible asset on the consolidated statement of operations. As of June 30, 2024, the remaining net book value of the Mobile Mini trade name was $31.5 million, which will be amortized over a remaining useful life of approximately 3.1 years.
Current wording
In the second quarter of 2024, we determined that a review of the carrying value of the Mobile Mini trade name was necessary based on the Company's plan to rebrand under a single WillScot brand name and discontinue the use of the Mobile Mini trade name. As of June 30, 2024, the Mobile Mini trade name was tested for impairment using the relief from royalty valuation method. After determining the estimated fair value, we recorded an impairment charge of $132.5 million during the three months ended June 30, 2024. This non-cash charge was recorded to impairment loss on intangible asset on the consolidated statement of operations. After the impairment charge, the remaining net book value of the Mobile Mini trade name was $31.5 million, which is being amortized over a remaining useful life.
Previous wording
During the six months ended June 30, 2024, we acquired certain assets and assumed certain liabilities of three local storage and modular companies, which consisted primarily of approximately 600 storage units and 800 modular units, for $70.6 million. As of the acquisition dates, the fair value of rental equipment acquired was $67.7 million.
Current wording
During the nine months ended September 30, 2024, we acquired certain assets and assumed certain liabilities of three local storage and modular companies, which consisted primarily of approximately 600 storage units and 800 modular units, and one national provider of premium large clearspan structures for $84.5 million. As of the acquisition dates, the fair value of rental equipment acquired was $80.7 million.
Previous wording
During the six months ended June 30, 2024, we repurchased 2,035,513 shares of Common Stock for $78.7 million, excluding excise tax. As of June 30, 2024, $419.5 million of the authorization for future repurchases of the Common Stock remained available. Given that we believe our free cash flow is predictable, we believe that repurchases will be a recurring capital allocation priority.
Current wording
During the nine months ended September 30, 2024, we repurchased 3,623,298 shares of Common Stock for $140.4 million, excluding excise tax. As of September 30, 2024, $951.9 million of the authorization for future repurchases of the Common Stock remained available. Given that we believe our free cash flow is predictable (with the exception of isolated events), we believe that repurchases will be a recurring capital allocation priority.
Previous wording
In January 2024, we completed the unification of our go-to market structure by integrating our modular and storage divisions under a single leadership team organized by metropolitan statistical area (MSA), which enables us to consistently deliver our portfolio of solutions to our entire customer base. In connection with this change in operating model, we realigned the composition of our operating and reportable segments. As a result, we concluded that our two operating segments (US and Other North America) are aggregated into one reportable segment.
Current wording
In January 2024, we completed the unification of our go-to market structure by integrating our modular and storage divisions under a single leadership team organized by metropolitan statistical area (MSA), which enables us to consistently deliver our portfolio of solutions to our entire customer base. In connection with this change in operating model, we realigned the composition of our operating and reportable segments. As a result, we concluded we have two operating segments (US and Other North America) that aggregate into one reportable segment.
Previous wording
•Modular product revenue, which represented 77.8% of consolidated revenue for the three months ended June 30, 2024, increased $32.6 million, or 7.5%, to $470.4 million. The increase was driven by our core leasing revenue, which increased $12.3 million, or 3.6%, due to continued growth of pricing and VAPS, as well as increased delivery and installation revenue, which increased $2.0 million, or 2.4%. Rental unit sales increased $5.4 million, or 64.8%, and new unit sales increased $12.9 million, or 170.2%.
Current wording
•Modular product revenue, which represented 77.8% of consolidated revenue for the three months ended September 30, 2024, increased $17.3 million, or 3.8%, to $467.8 million. The increase was driven by delivery and installation revenue, which increased $7.2 million, or 8.6%, new unit sales revenue, which increased $8.2 million, or 92.5%, and rental unit sales revenue, which increased $1.2 million, or 12.3%. Core leasing revenue increased $0.7 million, or 0.2%.
Previous wording
•Modular space average monthly rental rate increased $85, or 7.8%, year over year to $1,176 representing a continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio.
Current wording
•Modular space average monthly rental rate increased $69, or 6.1%, year over year to $1,199 representing a continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio.
Previous wording
•Average modular space units on rent decreased 3,268, or 3.3%, year over year.
Current wording
•Average modular space units on rent decreased 3,270, or 3.3%, year over year.
Previous wording
•Average modular space monthly utilization decreased 230 basis points ("bps") to 62.5%.
Current wording
•Average modular space monthly utilization decreased 180 basis points ("bps") to 62.1%.
Previous wording
•Storage product revenue, which represented 22.2% of consolidated revenue for the three months ended June 30, 2024, decreased $10.1 million, or 7.0%, to $134.1 million. The decrease was driven by delivery and installation revenue, which decreased $6.6 million, or 22.1%, driven reduced delivery volumes, as well as a decrease in core leasing revenue of $3.0 million, or 2.8%, driven by reduced portable storage container volumes, partially offset by increased rates on portable storage containers and increased revenue from acquired climate-controlled containers and refrigerated storage units. Rental unit sales remained flat at $2.7 million, and new unit sales decreased $0.5 million, or 37.8%. Storage revenue drivers for the three months ended June 30, 2024 included:
Current wording
•Storage product revenue, which represented 22.2% of consolidated revenue for the three months ended September 30, 2024, decreased $20.7 million, or 13.4%, to $133.6 million. The decrease was driven by a decrease in core leasing revenue of $11.9 million, or 10.1%, driven by reduced portable storage container volumes, partially offset by increased rates on portable storage containers and increased revenue from acquired climate-controlled containers and refrigerated storage units. Delivery and installation revenue also decreased $8.0 million, or 25.0%, driven by reduced delivery volumes and decreased pricing. Rental unit sales revenue decreased $0.3 million, or 9.1%, and new unit sales decreased $0.5 million, or 40.6%. Storage revenue drivers for the three months ended September 30, 2024 included:
Previous wording
•Portable storage average monthly rental rate increased $40, or 17.9%, year over year to $263 as a result of our price management tools, processes and benefits from increased VAPS penetration opportunities, as well as higher rates on the climate-controlled containers and refrigerated storage units acquired in 2023 and 2024.
Current wording
•Portable storage average monthly rental rate increased $23, or 9.5%, year over year to $265 as a result of our price management tools, processes and benefits from increased VAPS penetration opportunities, as well as higher rates on the climate-controlled containers and refrigerated storage units acquired in 2023 and 2024.
Previous wording
•Average portable storage units on rent decreased 30,872, or 19.8%, year over year driven by lower demand for the three months ended June 30, 2024. The lower demand was driven largely by decreased new construction project starts over the past year as compared to higher activity levels experienced during 2021 and 2022 and less demand in the retail and wholesale trade customer segment.
Current wording
•Average portable storage units on rent decreased 27,551, or 18.3%, year over year driven by lower demand for the three months ended September 30, 2024. The lower demand was driven largely by decreased new construction project starts over the past two years as compared to higher activity levels experienced during 2021 and 2022 and less demand in the retail and wholesale trade customer segment.
Previous wording
•Average portable storage monthly utilization decreased 14.1% to 59.2% for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.
Current wording
•Average portable storage monthly utilization decreased 12.1% to 58.1% for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.
Previous wording
•Generated a loss from continuing operations of $46.9 million for the three months ended June 30, 2024, which included discrete costs in the period of $165.5 million, including a $132.5 million impairment loss on intangible asset, $22.9 million of legal and professional fees primarily related to the acquisition of McGrath, $3.1 million of integration costs, and $6.2 million of lease impairment expense, restructuring, and other related charges primarily related to employee termination costs as a result of a cost-reduction plan implemented in June 2024. Gross profit margin for the three months ended June 30, 2024 was 54.1%.
Current wording
•Generated loss from continuing operations of $70.5 million for the three months ended September 30, 2024, which included the $180.0 million termination fee paid to McGrath and other discrete costs in the period of $13.4 million, including $8.8 million of legal and professional fees related to the proposed acquisition of McGrath, $1.7 million of integration costs, and $2.5 million of restructuring, lease impairment expense, and other related charges primarily related to employee termination costs as a result of a cost-reduction plan implemented in June 2024. Gross profit margin for the three months ended September 30, 2024 was 53.5%.
Previous wording
•Generated Adjusted EBITDA from continuing operations of $263.6 million for the three months ended June 30, 2024, representing an increase of $2.2 million, or 1%, as compared to the same period in 2023.
Current wording
•Generated Adjusted EBITDA from continuing operations of $266.9 million for the three months ended September 30, 2024, representing an increase of $1.4 million, or 0.5%, as compared to the same period in 2023.
Previous wording
•Adjusted EBITDA margin from continuing operations was 43.6% for the three months ended June 30, 2024 and decreased 130 bps versus prior year. Leasing margins increased 51 bps versus prior year and delivery and installation margins decreased 291 bps versus prior year.
Current wording
•Adjusted EBITDA margin from continuing operations was 44.4% for the three months ended September 30, 2024 and increased 50 bps versus prior year. Leasing margins increased 127 bps versus prior year and delivery and installation margins decreased 896 bps versus prior year.
Previous wording
•Net cash provided by operating activities decreased $26.5 million to $175.6 million for the three months ended June 30, 2024. Net cash used in investing activities, excluding cash used for acquisitions, increased by $12.6 million. Capital expenditures for rental equipment increased $9.6 million for the three months ended June 30, 2024 as a result of increased new fleet purchases, including additional investment in climate-controlled containers and refrigerated storage units. Purchases of property, plant, and equipment increased $1.8 million for the three months ended June 30, 2024. Proceeds from the sale of rental equipment decreased $1.0 million. Net CAPEX increased $12.1 million for the three months ended June 30, 2024.
Current wording
•Net cash (used in) provided by operating activities decreased $192.6 million to $1.6 million net cash used in operating activities for the three months ended September 30, 2024 from $191.0 million net cash provided by operating activities for the three months ended September, 30, 2023. Net cash used in investing activities, excluding cash used for acquisitions, increased by $18.2 million. Capital expenditures for rental equipment increased $6.0 million for the three months ended September 30, 2024 as a result of increased new fleet purchases, including additional investment in climate-controlled containers and refrigerated storage units. Purchases of property, plant, and equipment decreased $2.2 million for the three months ended September 30, 2024. Proceeds from the sale of rental equipment increased $0.5 million. Proceeds from the sale of property, plant, and equipment decreased $12.1 million. Net CAPEX increased $15.3 million for the three months ended September 30, 2024.
Previous wording
•We believe the predictability of our Free Cash Flow allows us to pursue multiple capital allocation priorities opportunistically, including investing in organic opportunities we see in the market, maintaining leverage in our stated range, opportunistically executing accretive acquisitions, and returning capital to shareholders.
Current wording
•With the exception of isolated events, we believe the predictability of our Free Cash Flow allows us to pursue multiple capital allocation priorities opportunistically, including investing in organic opportunities we see in the market, maintaining leverage in our stated range, opportunistically executing accretive acquisitions, and returning capital to shareholders.
Previous wording
In addition to using GAAP financial measurements, we use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Gross Profit, Adjusted Gross Profit Margin, Net CAPEX and Free Cash Flow, which are non-GAAP financial measures, to evaluate our operating results. As such, we include in this Form 10-Q reconciliations to their most directly comparable GAAP financial measures. These reconciliations and descriptions of why we believe these measures provide useful information to investors as well as a description of the limitations of these measures are included in "Reconciliation of non-GAAP Financial Measures" and "Liquidity and Capital Resources".
Current wording
In addition to using GAAP financial measurements, we use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Gross Profit, Adjusted Gross Profit Percentage, Net CAPEX and Free Cash Flow, which are non-GAAP financial measures, to evaluate our operating results. As such, we include in this Form 10-Q reconciliations to their most directly comparable GAAP financial measures. These reconciliations and descriptions of why we believe these measures provide useful information to investors as well as a description of the limitations of these measures are included in "Reconciliation of non-GAAP Financial Measures" and "Liquidity and Capital Resources."
Previous wording
Revenue: Total revenue increased $22.5 million, or 3.9%, to $604.6 million for the three months ended June 30, 2024 from $582.1 million for the three months ended June 30, 2023. Leasing revenue increased $9.3 million, or 2.1%, as compared to the same period in 2023, driven by improved pricing and value added products penetration, partially offset by a decrease of 34,140 average total units on rent, which was primarily driven by a decrease in portable storage containers on rent. Delivery and installation revenues decreased $4.6 million, or 4.1%, due to decreased deliveries and returns. Rental unit sales increased $5.5 million, or 49.6%, primarily driven by a single large project in the quarter, and new unit sales increased $12.4 million, or 137.4%, primarily related to sales activity from a company we acquired in the third quarter of 2023.
Current wording
Revenue: Total revenue decreased $3.4 million, or 0.6%, to $601.4 million for the three months ended September 30, 2024 from $604.8 million for the three months ended September 30, 2023. Leasing revenue decreased $11.2 million, or 2.4%, as compared to the same period in 2023, driven by a decrease of 30,821 total average units on rent, which was primarily driven by a decrease in portable storage units on rent. Delivery and installation revenues decreased $0.8 million, or 0.7%, due to decreased deliveries and returns. Rental unit sales increased $0.9 million, or 7.5%, and new unit sales increased $7.7 million, or 75.8%, primarily related to sales activity from a company we acquired in the middle of the third quarter of 2023.
Previous wording
Total average units on rent for the three months ended June 30, 2024 and 2023 were 220,414 and 254,554, respectively, representing a decrease of 34,140 units, or 13.4%. Portable storage average units on rent decreased by 30,872 units, or 19.8%, for the three months ended June 30, 2024 driven by lower demand in 2024. The lower demand was driven largely by decreased new construction project starts over the past year as compared to higher activity levels experienced during 2021 and 2022 and less demand in the retail and wholesale trade customer segment. The average portable storage unit utilization rate during the three months ended June 30, 2024 was 59.2% as compared to 73.3% during the same period in 2023. Modular space average units on rent decreased 3,268 units, or 3.3%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, which was also driven largely by decreased new construction project starts over the past year as compared to higher activity levels experienced during 2021 and 2022. The average modular space unit utilization rate during the three months ended June 30, 2024 was 62.5% as compared to 64.8% during the same period in 2023.
Current wording
Total average units on rent for the three months ended September 30, 2024 and 2023 were 217,629 and 248,450, respectively, representing a decrease of 30,821 units, or 12.4%. Portable storage average units on rent decreased by 27,551 units, or 18.3%, for the three months ended September 30, 2024 driven by lower demand in 2024. The lower demand was driven largely by decreased new construction project starts over the past two years as compared to higher activity levels experienced during 2021 and 2022 and less demand in the retail and wholesale trade customer segment. The average portable storage unit utilization rate during the three months ended September 30, 2024 was 58.1% as compared to 70.2% during the same period in 2023. Modular space average units on rent decreased 3,270 units, or 3.3%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, which was also largely driven by decreased new construction project starts over the past two years as compared to higher activity levels experienced during 2021 and 2022. The average modular space utilization rate during the three months ended September 30, 2024 was 62.1% as compared to 63.9% during the same period in 2023.
Previous wording
Modular space average monthly rental rates increased 7.8% year over year to $1,176 for the three months ended June 30, 2024. Increases were driven by a continuation of the long-term price optimization and VAPS penetration opportunities. Average portable storage monthly rental rates increased 17.9% year over year to $263 for the three months ended June 30, 2024 as a result of our price management tools, processes and benefits from increased VAPS penetration opportunities, as well as higher rates on the climate-controlled containers and refrigerated storage units acquired in 2023 and 2024.
Current wording
Modular space average monthly rental rates increased 6.1% year over year to $1,199 for the three months ended September 30, 2024. Increases were driven by a continuation of the long-term price optimization and VAPS penetration opportunities. Average portable storage monthly rental rates increased 9.5% year over year to $265 for the three months ended September 30, 2024 as a result of our price management tools, processes and benefits from increased VAPS penetration opportunities, as well as higher rates on the climate-controlled containers and refrigerated storage units acquired in 2023 and 2024. Total VAPS revenues, which are included in leasing revenues, increased $0.3 million, or 0.3%, to $100.2 million for the three months ended September 30, 2024 from $99.9 million for the three months ended September 30, 2023.
Previous wording
Gross profit: Gross profit decreased $0.8 million, or 0.2%, to $327.1 million for the three months ended June 30, 2024 from $327.9 million for the three months ended June 30, 2023. The decrease in gross profit was a result of decreased delivery and installation gross profit of $4.4 million and increased depreciation expense of $11.2 million, and was partially offset by a $9.6 million increase in leasing gross profit and a $5.3 million increase in new and rental unit sales gross profit. The increase in leasing gross profit was primarily a result of increased revenues due to favorable average monthly rental rates including VAPS across both portable storage and modular space units, which offset lower unit on rent volumes. Cost of leasing and services decreased by $0.5 million, or 0.3%, for the three months ended June 30, 2024 versus the three months ended June 30, 2023, driven by a decrease in subcontractors costs of $4.8 million, or 7.5%, and a decrease in materials costs of $2.6 million, or 9.8%. These decreased costs were partially offset by an increase in labor costs of $5.8 million, or 9.0%. Cost of sales increased by $12.6 million, or 127.6%, which is directionally in line with increased sales revenues of 89.1% for the three months ended June 30, 2024.
Current wording
Gross profit: Gross profit decreased $18.2 million, or 5.4%, to $321.5 million for the three months ended September 30, 2024 from $339.7 million for the three months ended September 30, 2023. The decrease in gross profit was a result of decreased delivery and installation gross profit of $10.5 million, increased depreciation expense of $9.3 million, and a $2.9 million decrease in leasing gross profit. The decrease was partially offset by a $4.5 million increase in new and rental unit sales gross profit. The decrease in leasing gross profit was primarily driven by lower demand in 2024. Cost of leasing and services increased by $1.4 million, or 0.8%, for the three months ended September 30, 2024 versus the three months ended September 30, 2023, driven by an increase in subcontractors costs of $7.7 million, or 11.5%, and an increase in labor costs of $0.8 million, or 1.1%. These increased costs were partially offset by a decrease in materials costs of $6.1 million, or 21.5%. Cost of sales increased by $4.1 million, or 35.1%, which is directionally in line with the 38.4% increase in sales revenues for the three months ended September 30, 2024.
Previous wording
Our resulting gross profit percentage was 54.1% and 56.3% for the three months ended June 30, 2024 and 2023, respectively. Our adjusted gross profit percentage, excluding the effects of depreciation, was 66.6% and 67.4% for the three months ended June 30, 2024 and 2023, respectively. The decreases, as referenced above, were mainly driven by lower utilization rates, specifically on portable storage products.
Current wording
Our resulting gross profit percentage was 53.5% and 56.2% for the three months ended September 30, 2024 and 2023, respectively. Our Adjusted Gross Profit Percentage, excluding the effects of depreciation of rental equipment, was 66.1% and 67.2% for the three months ended September 30, 2024 and 2023, respectively. The decreases, as referenced above, were mainly driven by lower utilization rates, specifically on portable storage products.
Previous wording
SG&A: Selling, general and administrative expense ("SG&A") increased $27.8 million, or 18.9%, to $174.6 million for the three months ended June 30, 2024, compared to $146.8 million for the three months ended June 30, 2023. Discrete expenses for certain one-time projects, primarily legal and professional fees related to the acquisition of McGrath, increased $21.8 million. Real estate and occupancy costs increased $4.7 million, or 22.8%. Employee SG&A excluding stock compensation increased $4.9 million, or 7.8%, primarily as a result of increased salaries and wages. Stock based compensation increased $0.3 million, or 2.8%. These increased costs were partially offset by a $2.1 million decrease in service agreements and professional fees.
Current wording
SG&A: SG&A decreased $1.1 million, or 0.7%, to $150.9 million for the three months ended September 30, 2024, as compared to $152.0 million for the three months ended September 30, 2023. Employee SG&A excluding stock compensation decreased $9.7 million, or 15.4%, primarily as a result of decreased variable compensation expense, including management incentives, and lower employee headcount as a result of the cost-reduction plan implemented in June 2024. Service agreements and professional fees, excluding discrete expenses for certain one-time projects, decreased $5.6 million, or 24.4%, and our provision for credit losses, net of write offs, decreased $1.1 million, or 10.6%. These decreased costs were partially offset by a $8.0 million increase in discrete expenses for certain one-time projects, primarily legal and professional fees related to the proposed acquisition of McGrath, a $3.2 million increase in real estate and occupancy costs, a $1.1 million increase in marketing and advertising expense, and a $1.0 million increase in travel costs.
Previous wording
Adjusted EBITDA: Adjusted EBITDA increased $2.2 million, or 1%, to $263.6 million for the three months ended June 30, 2024 from $261.3 million for the three months ended June 30, 2023. The increase was driven by a $9.6 million increase in leasing gross profit and a $5.3 million increase in new and used sales gross profit as discussed above, partially offset by decreased delivery and installation gross profit of $4.4 million and increased SG&A, excluding discrete costs, of $4.9 million, or 3.6%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.
Current wording
Adjusted EBITDA: Adjusted EBITDA increased $1.4 million, or 1%, to $266.9 million for the three months ended September 30, 2024 from $265.5 million for the three months ended September 30, 2023. The increase was driven by a $4.5 million increase in new and used sales gross profit and decreased SG&A, excluding discrete costs, of $10.2 million, or 7.2%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The increase was partially offset by a $2.9 million decrease in leasing gross profit and decreased delivery and installation gross profit of $10.5 million.
Previous wording
Other depreciation and amortization: Other depreciation and amortization increased $0.8 million to $18.1 million for the three months ended June 30, 2024 compared to $17.3 million for the three months ended June 30, 2023.
Current wording
Other depreciation and amortization: Other depreciation and amortization increased $5.3 million to $23.1 million for the three months ended September 30, 2024 as compared to $17.9 million for the three months ended September 30, 2023, primarily related to the amortization of the Mobile Mini tradename in 2024.
Previous wording
Restructuring costs: Restructuring costs of $6.2 million for the three months ended June 30, 2024 were primarily due to employee termination costs as a result of a cost-reduction plan implemented in June 2024.
Current wording
Restructuring costs: Restructuring costs of $2.3 million for the three months ended September 30, 2024 were due to employee termination costs as a result of a cost-reduction plan implemented in June 2024.
Previous wording
Currency (gains) losses, net: Currency (gains) losses, net decreased by $0.1 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.
Current wording
Currency (gains) losses, net: Currency (gains) losses, net decreased by $0.2 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.
Previous wording
Other expense (income), net: Other expense, net was $1.6 million for the six months ended June 30, 2024 compared to other income, net of $6.2 million for the six months ended June 30, 2023. This change was primarily attributable to insurance recoveries received in 2023 related to Hurricane Ian in the Gulf Coast area of the United States in 2022.
Current wording
Other expense (income), net: Other expense, net was $0.4 million for the three months ended September 30, 2024 as compared to other income, net of $8.3 million for the three months ended September 30, 2023. This change was primarily attributable to a gain on sale of fixed assets related to a real estate sale transaction during the three months ended September 30, 2023.
Previous wording
Interest expense, net: Interest expense increased $8.3 million, or 17.6%, to $55.5 million for the three months ended June 30, 2024 from $47.2 million for the three months ended June 30, 2023. The increase in interest expense was a result of higher overall weighted average interest rates as a result of increased benchmark rates and higher outstanding debt balances. See Note 9 to the condensed consolidated financial statements for further discussion of our debt.
Current wording
Interest expense, net: Interest expense, net increased $2.0 million, or 3.8%, to $55.8 million for the three months ended September 30, 2024 from $53.8 million for the three months ended September 30, 2023. The increase in interest expense was a result of higher overall weighted average interest rates as a result of increased benchmark rates and higher outstanding debt balances. See Note 9 to the condensed consolidated financial statements for further discussion of our debt.
Previous wording
Income tax (benefit) expense: Income tax benefit was $13.9 million for the three months ended June 30, 2024 compared to income tax expense of $31.6 million for the three months ended June 30, 2023, a change of $45.5 million. The change was primarily driven by a decrease in income from continuing operations before income tax for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.
Current wording
Income tax (benefit) expense: Income tax benefit was $20.6 million for the three months ended September 30, 2024 compared to income tax expense of $32.8 million for the three months ended September 30, 2023, a change of $53.3 million. The change was primarily driven by a decrease in income from continuing operations before income tax for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.
Previous wording
Capital Expenditures for Rental Equipment: Capital expenditures for rental equipment increased $34.9 million, or 34.0%, to $137.6 million for the six months ended June 30, 2024 from $102.7 million for the six months ended June 30, 2023 as a result of increased refurbishment spending and new fleet purchases, including additional investment in climate-controlled containers and refrigerated storage units. Net CAPEX increased $31.1 million, or 35.2%, to $119.5 million for the six months ended June 30, 2024 from $88.4 million for the six months ended June 30, 2023 driven by the increase in capital expenditures for rental equipment as described above. This increase was partially offset by a $5.4 million increase in proceeds from the sale of rental equipment for the six months ended June 30, 2024.
Current wording
Capital expenditures for rental equipment: Capital expenditures for rental equipment increased $6.0 million, or 9%, to $69.4 million for the three months ended September 30, 2024 from $63.4 million for the three months ended September 30, 2023 as a result of increased refurbishment spending and new fleet purchases, including additional investment in climate-controlled containers and refrigerated storage units. Net CAPEX increased $15.3 million, or 35%, to $58.6 million for the three months ended September 30, 2024 from $43.2 million for the three months ended September 30, 2023 driven by the increase in capital expenditures for rental equipment as described above and a $12.1 million decrease in proceeds from the sale of property, plant, and equipment, partially offset by a $2.2 million decrease in purchases of property, plant and equipment, and a $0.5 million increase in proceeds from the sale of rental equipment.
Previous wording
Our condensed consolidated statements of operations for the six months ended June 30, 2024 and 2023 are presented below.
Current wording
Our condensed consolidated statements of operations for the nine months ended September 30, 2024 and 2023 are presented below.
Previous wording
The following table and discussion summarizes our financial performance for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.
Current wording
The following table and discussion summarizes our financial performance for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The following table provides a reconciliation of net cash (used in) provided by operating activities to Free Cash Flow.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
On July 29, 2024, the Company amended and restated its certificate of incorporation to effect a change of the Company’s name from “WillScot Mobile Mini Holdings Corp.” to “WillScot Holdings Corporation."
Previous report — wording carried elsewhere
Impairment loss on intangible asset: Impairment loss on intangible asset was $132.5 million for the three months ended June 30, 2024 related to the impairment of the Mobile Mini trade name due to our plan to rebrand under a single WillScot brand name and discontinue the use of the Mobile Mini trade name.
Previous report — wording carried elsewhere
2024 and 2023, respectively. The decreases, as referenced above, were mainly driven by lower utilization rates, specifically on portable storage products.
Previous report — wording carried elsewhere
In connection with the Merger Agreement, the Company entered into a commitment letter dated January 28, 2024, which was amended and restated on June 13, 2024 and modified by a Notice of Reduction of Bridge Commitments on June 28, 2024 (the "Commitment Letter"), pursuant to which certain financial institutions have committed to make available, in accordance with the terms of the Commitment Letter, (i) a $500 million eight-year senior secured bridge credit facility and (ii) an upsize to the existing $3.7 billion ABL Facility (as defined below) of Williams Scotsman, Inc., a subsidiary of the Company ("WSI"), by $750 million to $4.5 billion to repay McGrath's existing unsecured revolving lines of credit and notes, fund the cash portion of the consideration, and pay the fees, costs and expenses incurred in connection with the McGrath acquisition and the related transactions.