WillScot Mobile Mini Reports Fourth Quarter 2023 and Full Year 2023 Results

Record Financial Performance in 2023 with Strong Growth and Execution Continuing in 2024

PHOENIX - Feb. 20, 2024 (GLOBE NEWSWIRE) -- WillScot Mobile Mini Holdings Corp. (“WillScot Mobile Mini” or the “Company”) (Nasdaq: WSC), the North American leader in innovative flexible space solutions, today announced fourth quarter and full year 2023 results and provided an update on operations and the current market environment, including the following highlights:

Q4 2023

• Revenue increased 4% to $612 million and Adjusted EBITDA increased 7% year-over-year to $288 million.
• Adjusted EBITDA Margin of 47.0% expanded 160 basis points year-over-year.
• Generated Free Cash Flow of $166 million, up 35% year-over-year, and Free Cash Flow Margin of 27.2%.
• Returned $136 million to shareholders by repurchasing 3.5 million shares of Common Stock during the quarter.
• Acquired leading clearspan structures platform.
• Maintained leverage sequentially at 3.3x Net Debt to Adjusted EBITDA as of December 31, 2023, inside our target range of 3.0x to 3.5x.

Full Year 2023

• Revenue increased 10% to $2,365 million, income from continuing operations increased 24% to $342 million, and Adjusted EBITDA increased 20% to $1,061 million.
• Adjusted EBITDA Margin of 44.9% expanded 360 basis points year-over-year.
• Generated Free Cash Flow of $577 million, up 75% year-over-year, and Free Cash Flow Margin of 24.3%.
• Generated $396 million of capital available for reinvestment through divestiture of UK Storage segment in Q1 2023.
• Invested $562 million of capital in 8 acquisitions, including establishment of market leading positions in climate-controlled storage and clearspan structures.
• Generated 18% Return on Invested Capital2 ("ROIC") over the last 12 months, which increased approximately 232 basis points year-over-year.
• Returned $811 million to shareholders by repurchasing 18.5 million shares of Common Stock, reducing our share count by 8.6% over the last twelve months as of December 31, 20231.

2024 Outlook

• Issued FY 2024 Adjusted EBITDA outlook range of $1,125 million to $1,200 million, representing 6% to 13% growth in our continuing operations versus 2023.
• On January 29, 2024, WSC announced a definitive agreement to acquire McGrath RentCorp (NASDAQ: MGRC). The Company expects the transaction to close in Q2 2024. In light of this transaction, WSC intends to host its Investor Day later this year after the transaction closes and will provide additional details in due course.

Brad Soultz, Chief Executive Officer of WillScot Mobile Mini, commented, "2023 was a record year for WillScot Mobile Mini across our financial metrics. We built our platform to deliver consistent compound returns irrespective of market conditions, which is evident in our results as we enter 2024. We eclipsed our $1 billion Adjusted EBITDA milestone faster than we expected, generated $577 million of Free Cash Flow, reduced common shares outstanding to 190 million, and grew earnings per share from continuing operations by 35% year-over-year. And we delivered these results while making the right investments to position our platform for the long-term benefit of our customers, employees, and shareholders. In 2023, we upgraded our CRM system, which gives us the most scalable technology platform in the industry. We divested the UK Storage segment and reinvested those proceeds here in North America. And we extended our unmatched offering of space solutions with the addition of industry-leading platforms in climate-controlled storage and clearspan structures."

Soultz continued, "Heading into 2024, our strategy is unchanged, and we will continue to invest in capabilities to differentiate our offering. We have immediate and significant tailwinds across rates, Value-Added Products (VAPS), margins, and M&A. We are making new investments in both human capital and digital tools, leveraging a powerful combination of local market intimacy and scale, to create an unparalleled customer experience. And our innovation pipeline has never been stronger, as we commercialize new and creative temporary space solutions for our customers."

Soultz concluded, "Our pending acquisition of McGrath RentCorp (NASDAQ: MGRC) will accelerate our growth as we extend our differentiated value proposition for the benefit of all of our stakeholders. And while we work to close that transaction, we do so knowing that it complements the extraordinary opportunity set that we are already executing within our platform. Thank you to our team for delivering the strongest year in our Company's history. I am confident that our track record of growth and execution will continue in 2024 and beyond."

Fourth Quarter 2023 and Full Year 2023 Results2

Tim Boswell, President and Chief Financial Officer, commented, "2023 was a record year financially across all metrics, and we are carrying momentum into 2024 to drive another year of record performance. And we are delivering these outstanding results despite mixed commercial and market indicators in 2023, which is a testament to the strength of our business model and strategy. Across the portfolio, rental rates generally offset volume declines, which were consistent with the contraction of non-residential construction start square footage and retail demand throughout the year relative to record 2022 levels. Through the middle of February, modular unit VAPS contribution inflected to historical highs and VAPS penetration in storage units continued to build. In the same time frame, modular activations and net orders were up year-over-year, while storage activations were in line with non-residential start square footage. Margins continue to be a tailwind, with Adjusted EBITDA margin of 44.9% up 360 basis points for the year, and with in-flight initiatives across all revenue streams supporting margins as we head into 2024."

Boswell continued, "Our capital allocation framework remains consistent, and our allocation process remains disciplined and demand-driven. We generated $577 million of Free Cash Flow, and see a clear path to $700 million of Free Cash Flow irrespective of the recently announced McGrath acquisition. We invested $185 million of Net Capex in 2023, which approximates maintenance levels given our lower fleet utilization. We invested $562 million in M&A, expanding our offering and total addressable market. And we invested $811 million in share repurchases, resulting in an 8.6% reduction in our share count over the last 12 months. Together, the consistent application of this framework over time drove Return on Invested Capital of 18% and 35% growth in earnings per share from continuing operations in 2023."

Boswell concluded, "At the midpoint of our 2024 guidance, we expect revenue to grow by 8% to $2,560 million and Adjusted EBITDA to grow by 10% to $1,163 million, with margins up approximately 50 basis points, resulting in yet another record year financially. Our track record and outlook are the predictable result of a strategy constructed to deliver consistent growth and returns over time. And heading into 2024, our organic and inorganic investments are extending that horizon appreciably."

Capitalization and Liquidity Update2

As of and for the three months ended December 31, 2023, except where noted:

• Generated $166 million of Free Cash Flow in the fourth quarter, up 35% year-over-year.
• Invested $76 million of capital in one acquisition during the quarter, with $562 million invested in the last 12 months.
• Increased excess availability to approximately $1.2 billion under our asset backed revolving credit facility.
• Weighted average pre-tax interest rate, inclusive of both the 3.44% floating-to-fixed interest rate swap that we executed in January 2023 and the 3.70% floating-to-fixed interest rate swap that we executed in January 2024 is approximately 5.9%. Annual cash interest expense based on the current debt structure and benchmark rates is approximately $212 million. Our debt structure is approximately 77% / 23% fixed-to-floating after giving effect to all interest rate swaps.
• No debt maturities prior to 2025. We have ample liquidity available to redeem or refinance our $527 million 2025 notes, using either our asset backed revolver or other sources of capital, and intend to do so opportunistically prior to maturity in a manner that optimizes our interest costs.
• Leverage is at 3.3x last 12 months Adjusted EBITDA from continuing operations of $1,061 million, which is inside our target range of 3.0x to 3.5x.
• Repurchased 3.5 million shares of Common Stock for $136 million in the quarter, contributing to a 8.6% reduction in our share count over the last 12 months. We paused repurchasing shares in the middle of Q4 2023 as acquisition discussions advanced with McGrath RentCorp.

2024 Outlook 2, 3, 4
This guidance is subject to risks and uncertainties, including those described in "Forward-Looking Statements" below.

1 - Assumes common shares outstanding as of December 31, 2023 versus common shares outstanding as of December 31, 2022.
2 - Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Free Cash Flow Margin, Net Debt to Adjusted EBITDA and Return on Invested Capital are non-GAAP financial measures. Further information and reconciliations for these non-GAAP measures to the most directly comparable financial measure under generally accepted accounting principles in the US ("GAAP") are included at the end of this press release.
3 - Information reconciling forward-looking Adjusted EBITDA, Net CAPEX, and Free Cash Flow to GAAP financial measures is unavailable to the Company without unreasonable effort and therefore neither the most comparable GAAP measures nor reconciliations to the most comparable GAAP measures are provided.
4 - Net CAPEX is a non-GAAP financial measure. Please see the non-GAAP reconciliation tables included at the end of this press release.
5 - Free Cash Flow incorporates results from discontinued operations. For comparability, we add back discontinued operations to reported revenue to calculate Free Cash Flow Margin.
6 - During the first quarter of 2023, the ground level office business within the Modular segment was transferred to the Storage segment, and associated revenues, expenses, and operating metrics were transferred to the Storage segment. All periods presented have been retrospectively revised to reflect this change within the Modular and Storage segments. See further discussion within the Unaudited Segment Operating Data tables included at the end of this press release.

Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA Margin from continuing operations, Free Cash Flow, Free Cash Flow Margin, Return on Invested Capital, Net CAPEX and Net Debt to Adjusted EBITDA ratio. Adjusted EBITDA is defined as net income (loss) plus net interest (income) expense, income tax expense (benefit), depreciation and amortization adjusted to exclude certain non-cash items and the effect of what we consider transactions or events not related to our core business operations, including net currency gains and losses, goodwill and other impairment charges, restructuring costs, costs to integrate acquired companies, costs incurred related to transactions, non-cash charges for stock compensation plans, gains and losses resulting from changes in fair value and extinguishment of common stock warrant liabilities, and other discrete expenses. Adjusted EBITDA Margin from continuing operations is defined as Adjusted EBITDA divided by revenue.

Free Cash Flow is defined as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and equipment, which are all included in cash flows from investing activities. Free Cash Flow Margin is defined as Free Cash Flow divided by revenue. Return on Invested Capital is defined as adjusted earnings before interest and amortization divided by net assets. Adjusted earnings before interest and amortization is the sum of income (loss) before income tax expense, net interest (income) expense, amortization adjusted for non-cash items considered non-core to business operations including net currency (gains) losses, goodwill and other impairment charges, restructuring costs, costs to integrate acquired companies, non-cash charges for stock compensation plans, gains and losses resulting from changes in fair value and extinguishment of common stock warrant liabilities, and other discrete expenses, reduced by our estimated statutory tax rate.

Given we are not a significant US taxpayer due to our current tax attributes, we include estimated taxes at our current statutory tax rate of approximately 26%. Net assets is total assets less goodwill and intangible assets, net and all non-interest bearing liabilities and is calculated as a five quarter average. Net CAPEX is defined as purchases of rental equipment and refurbishments and purchases of property, plant and equipment (collectively, "Total Capital Expenditures"), less proceeds from the sale of rental equipment and proceeds from the sale of property, plant and equipment (collectively, "Total Proceeds"), which are all included in cash flows from investing activities. Net Debt to Adjusted EBITDA ratio is defined as Net Debt divided by Adjusted EBITDA.

The Company 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 the Company to its competitors; (iv) provide additional tools for investors to use in evaluating ongoing operating results and trends; and (v) align with definitions in our credit agreement. The Company believes that Free Cash Flow and Free Cash Flow Margin are useful to investors because they allow investors to compare cash generation performance over various reporting periods and against peers.

The Company believes that Return on Invested Capital provides information about the long-term health and profitability of the business relative to the Company's cost of capital. The Company believes that the presentation of Net CAPEX provides useful information to investors regarding the net capital invested into our rental fleet and plant, property and equipment each year to assist in analyzing the performance of our business. 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 the Company's non-GAAP financial measures may not be directly comparable to similarly-titled measures of other companies. For reconciliations 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 regarding the most comparable GAAP financial measures and reconciling forward-looking Adjusted EBITDA, Net CAPEX, and Free Cash Flow to those GAAP financial measures is unavailable to the Company without unreasonable effort. We cannot provide the most comparable GAAP financial measures nor reconciliations of forward-looking Adjusted EBITDA, Net CAPEX, and Free Cash Flow 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 the Company without unreasonable effort. Although we provide ranges of Adjusted EBITDA and Net CAPEX that we believe will be achieved, we cannot accurately predict all the components of the Adjusted EBITDA and Net CAPEX calculations. The Company provides Adjusted EBITDA and Net CAPEX guidance because we believe that Adjusted EBITDA and Net CAPEX, when viewed with our results under GAAP, provides useful information for the reasons noted above.

Conference Call Information
WillScot Mobile Mini will host a conference call and webcast to discuss its fourth quarter 2023 results and 2024 outlook at 5:30 p.m. Eastern Time on Tuesday, February 20, 2024. To access the live call by phone, use the following link:
https://register.vevent.com/register/BI81d07f63acf943bb8b9f71d0aaa7bafe

You will be provided with dial-in details after registering. To avoid delays, we recommend that participants dial into the conference call 15 minutes ahead of the scheduled start time. A live webcast will also be accessible via the "Events & Presentations" section of the Company's investor relations website www.willscotmobilemini.com. Choose "Events" and select the information pertaining to the WillScot Mobile Mini Holdings Fourth Quarter 2023 Conference 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 12 months on the Company’s investor relations website.

About WillScot Mobile Mini
WillScot Mobile Mini trades on the Nasdaq stock exchange under the ticker symbol “WSC.” Headquartered in Phoenix, Arizona, the Company is a leading business services provider specializing in innovative and flexible temporary space solutions. The Company’s diverse product offering includes modular office complexes, mobile offices, classrooms, temporary restrooms, portable storage containers, blast protective and climate-controlled structures, clearspan structures, and a thoughtfully curated selection of furnishings, appliances, and other services so its solutions are turnkey for customers. WillScot Mobile Mini services diverse customer segments across all sectors of the economy from a network of approximately 250 branch locations and additional drop lots throughout the United States, Canada, and Mexico.