WillScot Holdings Corp (WSC) Q3 2024 Earnings Call Highlights: Record Profitability Amid ...

GuruFocus.com10-31

Adjusted EBITDA Margin: Record level of 44.4%. Adjusted Free Cash Flow Per Share: Increased by 13% to $3.12 over the last 12 months. Revenue: $601 million, declined 1% year-over-year. Storage Leasing ...

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storage average rates up 28% year-over-year.Average Monthly Rental Rates: Storage up 9.5%, modular up 6%.Adjusted Free Cash Flow: $143 million with a 24% margin for Q3.Net Capital Expenditures: $59 million, up $16 million year-over-year.Leverage: 3.4x net debt to last 12 months adjusted EBITDA.GuruFocus has detected 5 Warning Signs with WSC.WillScot Holdings Corp  continues to see steady demand from larger projects, with strong backlogs and customer sentiment among larger national accounts.Nonresidential construction starts square footage declined by 14% year-over-year, impacting order activity and causing caution towards year-end.Revenue declined by 1% year-over-year, driven by volume headwinds impacting storage leasing and delivery and installation revenues.A: Timothy Boswell, President and CFO, explained that the av","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"WSC":"WillScot Corporation"},"translate_title":"WillScot Holdings Corp(WSC)2024年第三季度收益看涨期权亮点：创纪录的盈利能力...","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"WSC":1},"content_text":"Adjusted EBITDA Margin: Record level of 44.4%.\nAdjusted Free Cash Flow Per Share: Increased by 13% to $3.12 over the last 12 months.\nRevenue: $601 million, declined 1% year-over-year.\nStorage Leasing Revenues: Down 13% year-over-year.\nDelivery and Installation Revenues: Down 1% year-over-year.\nModular Leasing Revenues: Up 4% year-over-year.\nValue-Added Products (VAPS) Penetration: Modular units average rates up 3% year-over-year; storage average rates up 28% year-over-year.\nAverage Monthly Rental Rates: Storage up 9.5%, modular up 6%.\nAdjusted EBITDA: $260 million, up 1% year-over-year.\nAdjusted Income from Continuing Operations: $72 million.\nAdjusted Diluted Earnings Per Share: $0.38.\nAdjusted Free Cash Flow: $143 million with a 24% margin for Q3.\nNet Capital Expenditures: $59 million, up $16 million year-over-year.\nLeverage: 3.4x net debt to last 12 months adjusted EBITDA.\nWeighted Average Pretax Cost of Debt: 5.8%.\nShare Repurchase Authorization: Increased to $1 billion.\n\n\nWarning! GuruFocus has detected 5 Warning Signs with WSC.\n\nRelease Date: October 30, 2024\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.\n Positive Points \n\nAdjusted EBITDA margins reached a record level of 44.4%, indicating strong profitability.\nAdjusted free cash flow and return on invested capital were near record levels, showcasing efficient capital management.\nThe company successfully reduced variable costs by over $20 million in the quarter, demonstrating effective cost management.\nWillScot Holdings Corp (NASDAQ:WSC) continues to see steady demand from larger projects, with strong backlogs and customer sentiment among larger national accounts.\nThe company is advancing key enterprise-wide initiatives, including investments in operational efficiency and customer-focused initiatives, positioning it well for future growth.\n\n Negative Points \n\nNonresidential construction starts square footage declined by 14% year-over-year, impacting order activity and causing caution towards year-end.\nVolume-related headwinds remain a challenge, with a significant contraction in nonresidential construction square footage since the global financial crisis.\nRevenue declined by 1% year-over-year, driven by volume headwinds impacting storage leasing and delivery and installation revenues.\nThe company incurred approximately $203 million of broken deal costs, including the McGrath termination fee, affecting financial metrics.\nThe market environment continues to be worse than anticipated, with delays in encouraging order activity and election-related timing decisions affecting project starts.\n\n Q & A Highlights \nQ: Could you explain why you believe the volume headwind is moderating and break it down between the modular and storage segments? A: Timothy Boswell, President and CFO, explained that the average unit on rent deficit versus the prior year in Q3 was down about 3%, improving from a 5% deficit at the start of 2024. In storage, units on rent are approaching 130,000, indicating a sequential build. This suggests a smaller volume deficit heading into 2025, allowing for lease revenue growth.\nQ: How is pricing integrity for both the modular and storage categories currently? A: Timothy Boswell noted that storage average monthly rental rates were up 9.5% year-over-year, with traditional storage rates up about 1% year-over-year. Modular unit rental rates, excluding value-added products (VAPS), were up about 7% year-over-year. Overall, pricing remains stable with some product mix variations.\nQ: With interest rates coming down, how are you thinking about the more transactional units on the modular side? A: Timothy Boswell stated that certainty is as important as the magnitude of rate cuts. While cuts may stimulate projects, certainty allows the commercial real estate market to adjust. This can benefit the volume equation, especially among more transactional product lines. The performance of complex units is up, while transactional units face challenges.\nQ: How should we think about your pricing strategies looking ahead into 2025? A: Timothy Boswell mentioned that there is no change to the pricing strategy. They are implementing a new pricing technology platform with AI-informed recommendations and a new quote configuration system to automate bundling of products. These initiatives aim to enhance cross-selling and value-added product offerings.\nQ: How quickly do you think activation volumes or units on rent can recover, considering the current macro environment? A: Bradley Soultz, CEO, indicated that the slowest part of the year is November to February, with improvements expected in March. This aligns with potential benefits from rate improvements and clarity on political outcomes. Retail remodels in Q2 could also drive volume.\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.This article first appeared on \nGuruFocus.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2479718720"}