WillScot Corporation (WSC) Misses Q1 EPS by 11c, Revenues Miss; Lowers FY20 Revenue Outlook

WillScot Corporation (NASDAQ: WSC) reported Q1 EPS of ($0.03), $0.11 worse than the analyst estimate of $0.08. Revenue for the quarter came in at $255.8 million versus the consensus estimate of $258.49 million.

First Quarter 2020 Financial Highlights1,4

• Revenues of $255.8 million, representing an 0.8% (or $2.1 million) year over year increase, driven by growth in core leasing and services revenues of $12.2 million, or 5.4%.
  • Modular space average monthly rental rate increased to $653, a 13.6% increase year over year, driven by a 14.2% increase year over year in the Modular - US segment.
• Adjusted EBITDA of $89.5 million represents a 7.3% (or $6.1 million) year over year increase.
  • Adjusted EBITDA margin of 35.0% increased 210 basis points ("bps") year over year.
• Consolidated net loss of $3.7 million (including $12.7 million of discrete costs from acquisition and integration-related activities) improved by $6.3 million year over year.
• Free Cash Flow increased by $34.4 million year over year to $7.8 million, representing our fourth consecutive quarter of positive free cash generation. An additional $505.8 million of available borrowing capacity under our ABL Facility provides ample operating liquidity.

Management Commentary

Brad Soultz, President and Chief Executive Officer of WillScot, commented, "In this unprecedented environment, I am humbled by the grit and perseverance of our front-line workers who have safely maintained essential services for our customers and our communities. The safety of our employees, vendors, and customers is always our top priority, and I'm extremely proud of our team for pivoting and innovating solutions for the COVID-19 response in a rapidly changing demand environment. WillScot delivered another quarter of substantial Adjusted EBITDA growth with Revenue and Adjusted EBITDA for the first quarter up 0.8% and 7.3% over the prior year and Adjusted EBITDA margin of 35.0%, which increased 210 bps versus the first quarter of 2019. Free cash flow increased $34.4 million year over year to $7.8 million in the first quarter, representing our fourth consecutive quarter of positive Free Cash Flow. While the COVID-19 pandemic did not impact our first quarter financial results significantly, it has introduced uncertainty into our 2020 outlook such that we've reduced and expanded our expected 2020 Adjusted EBITDA outlook range to $350 - $400 million to reflect the severity and duration of any demand disruption. I'm confident we have the right team and the right playbook to respond in the short-term, while maintaining our enthusiasm and commitment to future strategic growth and our combination with Mobile Mini."

Tim Boswell, Chief Financial Officer of WillScot, commented, "We are very pleased with the first quarter results, in particular our modular leasing revenue growth of $11.1 million, or 6.3% year over year. Modular space average monthly rate increased 14.2% year over year in the US segment - we will remain laser focused on price performance and value-added products heading into the remainder of 2020 and have a clear line of sight to continue average monthly rate growth into 2021. Since mid-March, we have responded decisively to the demand shock resulting from the COVID-19 pandemic, through reductions to variable costs and capital expenditures. Meanwhile, over 90% of our revenue is derived from reoccurring leasing operations where we believe our 34 month average lease durations provide some insulation from temporary demand shocks, as well as forward visibility into our modular leasing revenues. This fundamental business attribute, combined with the flexibility in our cost structure, allows us to manage our discretionary free cash flow, which we expect to increase in the remainder of the year. Additionally, we have over $500 million of available borrowing capacity under the ABL Facility as of March 31, 2020, and we believe we have no near term liquidity or covenant concerns. The current operating environment reinforces the resilient nature of our business model, and our team remains focused on executing on behalf of our customers and investors."

GUIDANCE:

WillScot Corporation sees FY2020 revenue of $1-1.1 billion, versus prior guidance of $1.1-1.2 billion and the consensus of $1.06 billion.

2020 Updated Outlook

Given the expected decline in new project delivery volumes in the second quarter amid the COVID-19 pandemic, management has adjusted its 2020 outlook. Our expected results will be determined by the impact on future demand for new projects beyond the second quarter of 2020 and will depend greatly on the degree and duration to which governments restrict business and personal activities going forward and when businesses resume normal operations. This guidance is subject to other risks and uncertainties, including those described in "Forward-Looking Statements" below.

For earnings history and earnings-related data on WillScot Corporation (WSC) click here.

You May Also Be Interested In

• Tesla plans 'flying' Roadster stunt at SpaceX Texas site as early as August
• JD.com (JD) Reiterated at Buy by Benchmark Amid Earnings Recovery
• Sinda raises $331M in IPO, reports Q2 net loss of $16.6M