WillScot Corporation Provides 2019 Guidance and Reaffirms 2018
Guidance
WillScot Corporation (“WillScot” or the "Company") (NASDAQ: WSC)
today provided guidance for 2019 and reaffirmed its guidance for
the year ended December 31, 2018.
- 2019 guidance:
- Total revenue between $1.05 and $1.15 billion.
- Adjusted EBITDA1 between $345 and $365 million.
- Net capital expenditures2 (after gross rental unit sales)
between $130 and $160 million.
2019 Outlook
Brad Soultz, President and Chief Executive Officer of WillScot
commented, “In 2018, we transformed WillScot into a market leading
provider of specialty rental services and temporary space solutions
in North America. Since returning to the public market in 2017, our
team has executed at a very high level, posting five consecutive
quarters of accelerating Adjusted EBITDA growth and consistent
increases in utilization, average monthly rental rates, and
penetration of our ‘Ready to Work’ solutions.”
Soultz continued, “Supplementing our robust organic leasing
fundamentals, we have completed three strategic acquisitions that
will more than double our total revenue and Adjusted EBITDA and
create an undisputed industry leader. We expect 2019 will be
another exciting year, with full-year Adjusted EBITDA growth
forecasted to exceed 60% compared to 2018 and an expected Adjusted
EBITDA run-rate of approximately $400 million as we head into 2020.
Importantly, we believe this outlook is largely within management’s
control due to the substantial organic earnings growth potential
embedded in our portfolio.”
Additional information associated with the 2019 outlook:
- Revenue and Adjusted EBITDA growth forecasts driven by
continued strength and diversity of end markets, future revenue
visibility resulting from 30 month average lease durations,
embedded growth driven by ‘Ready to Work’ solutions, and
accelerating synergy realization.
- Forecasted total revenue between $1.05 and $1.15 billion,
representing a 45.7% increase over the midpoint of the Company’s
2018 total revenue guidance, reflects organic growth and does not
reflect any future acquisition activity.
- Forecasted Adjusted EBITDA between $345 and $365 million
represents a 65.1% increase over the midpoint of the Company’s 2018
Adjusted EBITDA guidance, as well as Adjusted EBITDA margin3
expansion of over 350 basis points to 32.3% at the midpoint of the
2019 guidance range.
Tim Boswell, Chief Financial Officer commented, “We have a
simple formula to deliver another year of outstanding growth in
2019 through the continued steady execution by our team. Our
business has significant revenue visibility due to our 30 month
average lease durations and approximately $125 million of embedded
revenue growth potential from pricing and penetration of ‘Ready to
Work’ solutions over the next several years. We also have concrete
plans to eliminate redundant costs, which we expect to contribute
to earnings growth and over 350 basis points of Adjusted EBITDA
margin expansion in 2019 and margins approximating 35% heading into
2020. These earnings growth levers are largely internal and within
our control.”
Capital Expenditures and Liquidity
Boswell commented, “Our capital expenditures are highly
discretionary in the short-run, and we reevaluate these investments
quarterly based on market conditions. Based on the continued
strength in our end markets, we expect net capital expenditures of
$130 to $160 million, with the investments heavily weighted to
refurbishment of existing fleet assets and the expansion of our
Ready to Work value proposition.”
The Company anticipates net debt to Adjusted EBITDA of
approximately 4x by the end of the second quarter of 2020.
Boswell continued, “Our balance sheet is solid and supports our
growth initiatives. Approximately 70% of our debt bears interest at
a fixed-rate, we have no debt maturities before 2022, we have ample
liquidity under our ABL revolver, and we can evaluate opportunities
to reduce our weighted average cost of debt as the business
de-levers naturally. As integration costs subside and we realize
cost synergies and organic revenue growth, we expect net income and
free cash flow to accelerate in the second half of 2019, resulting
in steady deleveraging towards our 4x target by the second quarter
of 2020. We remain committed to our goal of creating long-term
value for all shareholders and are excited about the outlook for
2019.”
ModSpace Integration Update
Soultz noted, “We achieved a critical milestone with the
ModSpace integration on January 7, 2019, when ModSpace’s billing
system was migrated onto the WillScot operating platform ahead of
schedule. This represents an extraordinary accomplishment by
our combined team that gives us complete control and visibility
across the combined portfolio, and enables the next phase of value
realization across our network. This value will build throughout
2019 as we continue the consolidation of our branch network and
shared services.”
Soultz continued, “As we exit 2019, we expect our annual
Adjusted EBITDA run-rate of approximately $400 million to include
over 80% of the approximately $70 million of identified
acquisition-related cost synergies, with the remainder to be
executed in 2020. Moreover, we expect over 90% of total integration
costs to be expensed by the end of second quarter 2019, with more
than 90% of related cash payments being disbursed by the end of
2019. After production consolidation in November 2018, the
completion of our IT system cutover this month, and our exit of
approximately 75% of redundant leased properties expected by
December 2019, we anticipate entering 2020 with the integration
largely behind us and remain focused on executing our growth
initiatives.”
2018 Outlook
Management reaffirmed its 2018 guidance, as updated on October
1, 2018.
- Total revenue between $740 and $770 million.
- Adjusted EBITDA4 between $210 and $220 million.
- Net rental capital expenditures5 after gross rental unit sales
between $115 and $135 million.
Conference Call Information
WillScot will host a conference call and webcast to discuss the
2019 outlook on Wednesday, January 9, 2019, at 10:00 a.m. EST.
Participants on the call will include President and Chief Executive
Officer Brad Soultz, and Chief Financial Officer Tim Boswell.
The live call can be accessed by dialing (855)
312-9420 (US/Canada toll-free) or (210) 874-7774 (International)
and asking to be connected to the WillScot 2019 Guidance Call. A
live webcast will also be accessible via the "Events &
Presentations" section of the Company's Investor Relations website
http://investors.willscot.com. Choose "Events" and select the
information pertaining to the WillScot 2019 Guidance Call.
Additionally, there will be slides accompanying the webcast. Please
allow at least 15 minutes prior to the call to register, download
and install any necessary software. For those unable to listen to
the live broadcast, an audio webcast of the call will be available
for 60 days on the Company’s Investor Relations website.
About WillScot Corporation
Headquartered in Baltimore, Maryland, WillScot
is the public holding company for the Williams Scotsman family of
companies. WillScot trades on the NASDAQ stock exchange under the
ticker symbol "WSC," and is the specialty rental services market
leader providing innovative modular space and portable storage
solutions across North America. WillScot is the modular space
supplier of choice for the construction, education, health care,
government, retail, commercial, transportation, security and energy
sectors. With over half a century of innovative history, organic
growth and strategic acquisitions, WillScot serves a broad customer
base from over 120 locations throughout the United States, Canada
and Mexico, with a fleet of approximately 160,000 modular space and
portable storage units.
Forward-Looking Statements
This news release contains forward-looking
statements (including the earnings guidance provided herein) within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995 and Section 21E of the Securities Exchange Act of 1934, as
amended. The words “estimates,” “expects,” “anticipates,”
“believes,” “forecasts,” “plans,” “intends,” “may,” “will,”
“should,” “shall” and variations of these words and similar
expressions identify forward-looking statements, which are
generally not historical in nature. Forward-looking statements are
subject to a number of risks, uncertainties, assumptions and other
important factors, many of which are outside our control, which
could cause actual results or outcomes to differ materially from
those discussed in the forward-looking statements. Although
WillScot believes that these forward-looking statements are based
on reasonable assumptions, it can give no assurance that any such
forward-looking statement will materialize. Important factors that
may affect actual results or outcomes include, among others, our
ability to acquire and integrate new assets and operations; our
ability to manage growth and execute our business plan; our
estimates of the size of the markets for our products; the rate and
degree of market acceptance of our products; the success of other
competing modular space and portable storage solutions that exist
or may become available; rising costs adversely affecting our
profitability; potential litigation involving our Company; general
economic and market conditions impacting demand for our products
and services; implementation of tax reform; our ability to
implement and maintain an effective system of internal controls;
and such other risks and uncertainties described in the periodic
reports we file with the SEC from time to time (including our Form
10-K for the year ending December 31, 2017), which are available
through the SEC’s EDGAR system at www.sec.gov and on our website.
Any forward-looking statement speaks only at the date which it is
made, and WillScot disclaims any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
Non-GAAP Financial Measures
This press release includes non-GAAP financial
measures, including Adjusted EBITDA, Adjusted EBITDA margin, net
capital expenditures, and net rental capital expenditures. Adjusted
EBITDA is defined as net income (loss) before income tax expense,
net interest expense, depreciation and amortization adjusted for
non-cash items considered non-core to business operations including
net currency losses, change in fair value of contingent
considerations, goodwill and other impairment charges,
restructuring costs and other non-recurring expenses.
Adjusted EBITDA margin is defined as Adjusted EBITDA divided by
revenue. Net capital expenditures is defined as capital
expenditures for purchases and capitalized refurbishments of rental
equipment, plus purchases of property, plant and equipment, reduced
by proceeds from the sale of rental equipment. Net rental capital
expenditures is defined as capital expenditures for purchases and
capitalized refurbishments of rental equipment, reduced by proceeds
from the sale of rental equipment. WillScot believes that
Adjusted EBITDA and Adjusted EBITDA margin are useful to investors
because they (i) allow investors to compare performance over
various reporting periods on a consistent basis by removing from
operating results the impact of items that do not reflect core
operating performance; (ii) are used by our board of directors and
management to assess our performance; (iii) may, subject to the
limitations described below, enable investors to compare the
performance of WillScot to its competitors; and (iv) provide
additional tools for investors to use in evaluating ongoing
operating results and trends. WillScot believes that net capital
expenditures and net rental capital expenditures provide useful
additional information concerning cash flow available to meet
future debt service obligations. However, Adjusted EBITDA is not a
measure of financial performance or liquidity under GAAP and,
accordingly, should not be considered as an alternative to net
income or cash flow from operating activities as an indicator of
operating performance or liquidity. These non-GAAP measures should
not be considered in isolation from, or as an alternative to,
financial measures determined in accordance with GAAP. Other
companies may calculate Adjusted EBITDA and other non-GAAP
financial measures differently, and therefore WillScot’s non-GAAP
financial measures may not be directly comparable to similarly
titled measures of other companies. For reconciliation of the
non-GAAP measures used in this press release (except as explained
below), see “Reconciliation of non-GAAP Financial Measures"
included in this press release.
Information reconciling forward-looking Adjusted
EBITDA to GAAP financial measures is unavailable to WillScot
without unreasonable effort. We cannot provide reconciliations of
forward looking Adjusted EBITDA to GAAP financial measures because
certain items required for such reconciliations are outside of our
control and/or cannot be reasonably predicted, such as the
provision for income taxes. Preparation of such reconciliations
would require a forward-looking balance sheet, statement of income
and statement of cash flow, prepared in accordance with GAAP, and
such forward-looking financial statements are unavailable to
WillScot without unreasonable effort. Although we provide a range
of Adjusted EBITDA that we believe will be achieved, we cannot
accurately predict all the components of the Adjusted EBITDA
calculation. WillScot provides Adjusted EBITDA guidance because we
believe that Adjusted EBITDA, when viewed with our results under
GAAP, provides useful information for the reasons noted above.
Additional Information and Where to Find
It
Additional information about WillScot can be
found on our Investor Relations website at
http://investors.willscot.com.
Reconciliation of Non-GAAP Financial
Measures
Net Capital Expenditures and Net Rental
Capital Expenditures non-GAAP Reconciliation
The following table provides an unaudited
reconciliation of purchase of rental equipment to Net capital
expenditures and net rental capital expenditures (outlook presented
represents the midpoint of the Company’s 2018 and 2019 guidance
ranges):
|
|
|
Outlook for the Twelve Months Ended December
31, |
(in
millions) |
2018 |
|
2019 |
Total purchase of rental equipment and refurbishments from
continuing operations |
$ |
(153 |
) |
|
$ |
(173 |
) |
Total proceeds from sale of
rental equipment |
28 |
|
|
38 |
|
Net capital
expenditures for rental equipment |
(125 |
) |
|
(135 |
) |
Purchase of property, plant
and equipment |
(7 |
) |
|
(10 |
) |
Net capital
expenditures |
$ |
(132 |
) |
|
$ |
(145 |
) |
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin
The following table provides an unaudited
reconciliation of Adjusted EBITDA Margin (outlook presented
represents the midpoint of the Company’s 2018 and 2019 guidance
ranges):
|
|
|
Outlook for the Twelve Months Ended December
31, |
(in millions, except
%) |
2018 |
|
2019 |
Adjusted EBITDA (A) |
$ |
215 |
|
|
$ |
355 |
|
Revenue (B) |
755 |
|
|
1,100 |
|
Adjusted EBITDA Margin
(A/B) |
|
28.5 |
% |
|
$ |
32.3 |
% |
|
|
|
|
|
|
|
|
Contact
Information |
|
|
|
Investor
Inquiries: |
|
Mark Barbalato |
|
investors@willscot.com |
|
|
|
Media
Inquiries: |
|
Scott Junk |
|
scott.junk@willscot.com |
|
1 Adjusted EBITDA is a non-GAAP financial measure. Information
reconciling forward-looking Adjusted EBITDA to GAAP financial
measures is unavailable to the Company without unreasonable effort,
as discussed below.
2 Net capital expenditures is a non-GAAP financial measure.
Please see the non-GAAP reconciliation tables included at the end
of this press release.
3 Adjusted EBITDA margin is a non-GAAP financial measure. Please
see the non-GAAP reconciliation tables included at the end of this
press release.
4 Adjusted EBITDA is a non-GAAP financial measure. Information
reconciling forward-looking Adjusted EBITDA to GAAP financial
measures is unavailable to the Company without unreasonable effort,
as discussed below.
5 Net rental capital expenditures is a non-GAAP financial
measure. Please see the non-GAAP reconciliation tables included at
the end of this press release
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