UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended | |||||
OR | |||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ________ to ________ | |||||
| Commission File Number: | |||||
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) | |||||||
(Address, including zip code, of principal executive offices)
(480 ) 894-6311
(Registrant’s telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
The | ||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer ☐ | |||||
Non-accelerated filer ☐ | Smaller reporting company | ||||
Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
Shares of Common Stock, par value $0.0001 per share, outstanding: 182,389,573 shares at April 29, 2025.
WILLSCOT HOLDINGS CORPORATION
Quarterly Report on Form 10-Q
Table of Contents
PART I Financial Information | |||||||||||
Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 (audited) | |||||||||||
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and 2024 | |||||||||||
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2025 and 2024 | |||||||||||
Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2025 and 2024 | |||||||||||
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 | |||||||||||
2
ITEM 1. Financial Statements
WillScot Holdings Corporation
Condensed Consolidated Balance Sheets
| (in thousands, except share data) | March 31, 2025 (unaudited) | December 31, 2024 | |||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Trade receivables, net of allowances for credit losses at March 31, 2025 and December 31, 2024 of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Assets held for sale | |||||||||||
| Total current assets | |||||||||||
| Rental equipment, net | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease assets | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other non-current assets | |||||||||||
| Total long-term assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and equity | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses | |||||||||||
| Accrued employee benefits | |||||||||||
| Deferred revenue and customer deposits | |||||||||||
| Operating lease liabilities – current | |||||||||||
| Current portion of long-term debt | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred tax liabilities | |||||||||||
| Operating lease liabilities - non-current | |||||||||||
| Other non-current liabilities | |||||||||||
| Long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
Preferred Stock: $ | |||||||||||
Common Stock: $ | |||||||||||
| Additional paid-in-capital | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total shareholders' equity | |||||||||||
| Total liabilities and shareholders' equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
WillScot Holdings Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| (in thousands, except share data) | 2025 | 2024 | |||||||||
| Revenues: | |||||||||||
| Leasing and services revenue: | |||||||||||
| Leasing | $ | $ | |||||||||
| Delivery and installation | |||||||||||
| Sales revenue: | |||||||||||
| New units | |||||||||||
| Rental units | |||||||||||
| Total revenues | |||||||||||
| Costs: | |||||||||||
| Costs of leasing and services: | |||||||||||
| Leasing | |||||||||||
| Delivery and installation | |||||||||||
| Costs of sales: | |||||||||||
| New units | |||||||||||
| Rental units | |||||||||||
| Depreciation of rental equipment | |||||||||||
| Gross profit | |||||||||||
| Other operating expenses: | |||||||||||
| Selling, general and administrative | |||||||||||
| Other depreciation and amortization | |||||||||||
| Currency losses, net | |||||||||||
| Other expense, net | |||||||||||
| Operating income | |||||||||||
| Interest expense, net | |||||||||||
| Income before income tax | |||||||||||
| Income tax expense | |||||||||||
| Net income | $ | $ | |||||||||
| Earnings per share: | |||||||||||
| Basic | $ | $ | |||||||||
| Diluted | $ | $ | |||||||||
| Weighted average shares: | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
WillScot Holdings Corporation
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
| Three Months Ended March 31, | |||||||||||
(in thousands) | 2025 | 2024 | |||||||||
| Net income | $ | $ | |||||||||
| Other comprehensive (loss) income: | |||||||||||
Foreign currency translation adjustment, net of income tax expense of $ | ( | ||||||||||
Net (loss) gain on derivatives, net of income tax (benefit) expense of $( | ( | ||||||||||
| Total other comprehensive (loss) income | ( | ||||||||||
| Total comprehensive income | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
WillScot Holdings Corporation
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended March 31, 2025 | ||||||||||||||||||||
| Common Stock | Additional Paid-in-Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Shareholders' Equity | ||||||||||||||||
| (in thousands) | Shares | Amount | ||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||
| Net income | — | — | — | — | ||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | ( | ||||||||||||||
| Withholding taxes on net share settlement of stock-based compensation | — | — | ( | — | — | ( | ||||||||||||||
| Common Stock-based award activity | — | — | — | |||||||||||||||||
| Repurchase and cancellation of Common Stock | ( | — | ( | — | — | ( | ||||||||||||||
| Cash dividends declared | — | — | ( | — | — | ( | ||||||||||||||
| Issuance of Common Stock from the exercise of options | — | — | — | |||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||
| Common Stock | Additional Paid-in-Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Shareholders' Equity | ||||||||||||||||
| (in thousands) | Shares | Amount | ||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||
| Net income | — | — | — | — | ||||||||||||||||
| Other comprehensive income | — | — | — | — | ||||||||||||||||
| Withholding taxes on net share settlement of stock-based compensation | — | — | ( | — | — | ( | ||||||||||||||
| Common Stock-based award activity | — | — | — | |||||||||||||||||
| Issuance of Common Stock from the exercise of options | — | — | — | |||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
WillScot Holdings Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended March 31, | |||||||||||
(in thousands) | 2025 | 2024 | |||||||||
| Operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Provision for credit losses | |||||||||||
| Gain on sale of rental equipment and other property, plant and equipment | ( | ( | |||||||||
| Amortization of debt discounts and debt issuance costs | |||||||||||
| Stock-based compensation expense | |||||||||||
| Deferred income tax (benefit) expense | ( | ||||||||||
| Unrealized currency gains, net | |||||||||||
| Other | |||||||||||
| Changes in operating assets and liabilities | |||||||||||
| Trade receivables | ( | ||||||||||
| Inventories | ( | ( | |||||||||
| Prepaid expenses and other assets | |||||||||||
| Operating lease assets and liabilities | |||||||||||
| Accounts payable and other accrued expenses | |||||||||||
| Deferred revenue and customer deposits | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| Investing activities: | |||||||||||
| Acquisitions, net of cash acquired | ( | ( | |||||||||
| Purchase of rental equipment and refurbishments | ( | ( | |||||||||
| Proceeds from sale of rental equipment | |||||||||||
| Purchase of property, plant and equipment | ( | ( | |||||||||
| Proceeds from sale of property, plant and equipment | |||||||||||
| Purchase of investments | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Financing activities: | |||||||||||
| Receipts from borrowings | |||||||||||
| Repayment of borrowings | ( | ( | |||||||||
| Payment of financing costs | ( | ||||||||||
| Payments on finance lease obligations | ( | ( | |||||||||
| Receipts from issuance of Common Stock from the exercise of options | |||||||||||
| Repurchase and cancellation of Common Stock | ( | ||||||||||
| Taxes paid on employee stock awards | ( | ( | |||||||||
| Dividends paid | ( | ||||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
| Net change in cash and cash equivalents | |||||||||||
| Cash and cash equivalents at the beginning of the period | |||||||||||
| Cash and cash equivalents at the end of the period | $ | $ | |||||||||
| Supplemental cash flow information: | |||||||||||
| Interest paid, net | $ | $ | |||||||||
| Income taxes paid, net | $ | $ | |||||||||
| Capital expenditures accrued or payable | $ | $ | |||||||||
| Accrued Common Stock repurchases | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
WillScot Holdings Corporation
Notes to the Condensed Consolidated Financial Statements (Unaudited)
NOTE 1 - Summary of Significant Accounting Policies
Organization and Nature of Operations
WillScot Holdings Corporation (“WillScot” and, together with its subsidiaries, the “Company”) is a leading business services provider specializing in innovative and flexible turnkey space solutions in the United States (“US”), Canada, and Mexico. The Company leases, sells, delivers and installs modular space solutions (modular office complexes, mobile offices, classrooms, blast-resistant modules, clearspan structures and sanitation solutions) and portable storage products (portable storage containers and climate-controlled containers and trailers) through an integrated network of branch locations. WillScot also offers its customers a thoughtfully curated selection of solutions with Value-Added Products ("VAPS"), such as workstations, furniture, appliances, media packages, power and solar solutions, telematics, connectivity and data solutions, security and protection products, entrance packages, electrical and lighting products, organization and space optimization assets, perimeter solutions and other items that improve the overall customer experience. The Company operates a hybrid in-house and outsourced logistics and service infrastructure that provides delivery, site work, installation, disassembly, removal and other services to customers for an additional fee as part of leasing and sales operations.
Basis of Presentation and Principles of Consolidation
The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
Recently Issued Accounting Standards
ASU 2023-09. Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires entities to disclose more detailed information in their reconciliation of their statutory tax rate to their effective tax rate. ASU 2023-09 also requires entities to disclose more detailed information about income taxes paid, including by jurisdiction; pretax income (or loss) from continuing operations; and income tax expense (or benefit). ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its income tax disclosures.
ASU 2024-03. Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
In November 2024, the FASB issued Accounting Standards Update No. 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). ASU 2024-03 requires incremental disclosures about specific expense categories, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization, and selling expenses. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. The Company is currently evaluating ASU 2024-03 to determine its impact on the Company's disclosures.
8
NOTE 2 - Revenue
Revenue Disaggregation
Geographic Areas
The Company had total revenue in the following geographic areas for the three months ended March 31, 2025 and 2024 as follows:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| US | $ | $ | |||||||||
| Canada | |||||||||||
| Mexico | |||||||||||
| Total revenues | $ | $ | |||||||||
Major Product and Service Lines
Equipment leasing is the Company's core business and the primary driver of the Company's revenue and cash flows. This includes turnkey space solutions along with VAPS. Leasing is complemented by new unit sales and sales of rental units. In connection with its leasing and sales activities, the Company provides services including delivery and installation, maintenance, removal, and other ad hoc services. The Company’s revenue by major product and service line for the three months ended March 31, 2025 and 2024 was as follows:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
Modular space leasing revenue(a) | $ | $ | |||||||||
| Portable storage leasing revenue | |||||||||||
VAPS and third party leasing revenues(b) | |||||||||||
Other leasing-related revenue(b),(c) | |||||||||||
| Leasing revenue | |||||||||||
| Delivery and installation revenue | |||||||||||
| Total leasing and services revenue | |||||||||||
| New unit sales revenue | |||||||||||
| Rental unit sales revenue | |||||||||||
| Total revenues | $ | $ | |||||||||
(a) Includes revenue from clearspan structures.
(b) Includes $9.2 million and $7.5 million of service revenue for the three months ended March 31, 2025 and 2024, respectively.
Leasing and Services Revenue
The majority of revenue (76 % and 77 % for the three months ended March 31, 2025 and 2024, respectively) was generated by lease income subject to the guidance of Accounting Standards Update No. 2016-02, Leases (Topic 842) ("ASC 842"). The remaining revenue was generated by performance obligations in contracts with customers for services or the sale of units subject to the guidance in Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606").
Receivables
The Company manages credit risk associated with its accounts receivable at the customer level. Because the same customers generate the revenues that are accounted for under both ASC 842 and ASC 606, the discussions below on credit risk and the Company's allowance for credit losses address the Company's total revenues.
Concentration of credit risk with respect to the Company's receivables is limited because of a large number of geographically diverse customers who operate in a variety of end markets. The Company manages credit risk through credit approvals, credit limits, and other monitoring procedures.
The Company's allowance for credit losses reflects its estimate of the amount of receivables that the Company will be unable to collect. The estimated losses are calculated using the loss rate method based upon a review of outstanding receivables, related aging, and historical collection experience. The Company's estimate is sensitive to changing circumstances, and the Company may be required to increase or decrease its allowance in future periods in response to
9
changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Specifically identifiable lease revenue receivables and sales receivables not deemed probable of collection are recorded as a reduction of revenue following the completion of collection efforts. The remaining provision for credit losses is recorded as selling, general and administrative expense.
Activity in the allowance for credit losses was as follows:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Balance at beginning of period | $ | $ | |||||||||
| Provision for credit losses, net of recoveries | |||||||||||
| Write-offs recorded as a reduction to revenue | ( | ( | |||||||||
| Foreign currency translation and other | |||||||||||
| Balance at end of period | $ | $ | |||||||||
Contract Assets and Liabilities
When customers are billed in advance for services, the Company defers recognition of revenue until the related services are performed, which generally occurs at the end of the contract. The balance sheet classification of deferred revenue is determined based on the contractual lease term. For contracts that continue beyond their initial contractual lease term, revenue continues to be deferred until the services are performed. As of March 31, 2025 and December 31, 2024, the Company had approximately $134.8 million and $139.4 million, respectively, of deferred revenue related to service revenue billed in advance. During the three months ended March 31, 2025, $34.7 million of deferred revenue related to service revenue billed in advance was recognized as revenue.
The Company does not have material contract assets, and it did not recognize any material impairments of any contract assets. The Company's uncompleted contracts with customers have unsatisfied (or partially satisfied) performance obligations. For the future services revenues that are expected to be recognized within twelve months, the Company has elected to utilize the optional disclosure exemption made available regarding transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations. The transaction price for performance obligations that will be completed in greater than twelve months is variable based on the market rate in place at the time those services are provided, and therefore, the Company is applying the optional exemption to omit disclosure of such amounts.
The primary costs to obtain contracts for new and rental unit sales with the Company's customers are commissions. The Company pays its sales force commissions on the sale of new and rental units. For new and rental unit sales, the period benefited by each commission is less than one year. As a result, the Company has applied the practical expedient for incremental costs of obtaining a sales contract and expenses commissions as incurred.
NOTE 3 - Inventories
Inventories at the respective balance sheet dates consisted of the following:
(in thousands) | March 31, 2025 | December 31, 2024 | |||||||||
| Raw materials | $ | $ | |||||||||
| Finished units | |||||||||||
| Inventories | $ | $ | |||||||||
NOTE 4 - Rental Equipment
Rental equipment, net at the respective balance sheet dates consisted of the following:
(in thousands) | March 31, 2025 | December 31, 2024 | |||||||||
| Modular space units | $ | $ | |||||||||
| Portable storage units | |||||||||||
| Value added products | |||||||||||
| Total rental equipment | |||||||||||
| Less: accumulated depreciation | ( | ( | |||||||||
| Rental equipment, net | $ | $ | |||||||||
10
NOTE 5 - Intangible Assets
Intangible assets other than goodwill at the respective balance sheet dates consisted of the following:
| March 31, 2025 | |||||||||||||||||||||||||||||
| (in thousands) | Weighted average remaining life (in years) | Gross carrying amount | Accumulated impairment loss | Accumulated amortization | Net book value | ||||||||||||||||||||||||
| Intangible assets subject to amortization: | |||||||||||||||||||||||||||||
Customer relationships | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Technology | ( | ||||||||||||||||||||||||||||
| Trade names | ( | ( | |||||||||||||||||||||||||||
| Indefinite-lived intangible assets: | |||||||||||||||||||||||||||||
| Trade name – WillScot | — | — | |||||||||||||||||||||||||||
| Total intangible assets other than goodwill | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||
| (in thousands) | Weighted average remaining life (in years) | Gross carrying amount | Accumulated impairment loss | Accumulated amortization | Net book value | ||||||||||||||||||||||||
| Intangible assets subject to amortization: | |||||||||||||||||||||||||||||
Customer relationships | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Technology | ( | ||||||||||||||||||||||||||||
| Trade names | ( | ( | |||||||||||||||||||||||||||
| Indefinite-lived intangible assets: | |||||||||||||||||||||||||||||
| Trade name – WillScot | — | — | |||||||||||||||||||||||||||
| Total intangible assets other than goodwill | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||
Amortization expense related to intangible assets was $11.3 million and $7.4 million for the three months ended March 31, 2025 and 2024, respectively.
As of March 31, 2025, the expected future amortization expense for intangible assets was as follows for the years ended December 31:
| (in thousands) | |||||
| 2025 (remaining) | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Total | $ | ||||
11
NOTE 6 - Debt
The carrying value of debt outstanding at the respective balance sheet dates consisted of the following:
| (in thousands, except rates) | Interest rate | Year of maturity | March 31, 2025 | December 31, 2024 | |||||||||||||||||||
| 2025 Secured Notes | 2025 | $ | $ | ||||||||||||||||||||
| ABL Facility | Varies | 2027 | |||||||||||||||||||||
| 2028 Secured Notes | 2028 | ||||||||||||||||||||||
| 2029 Secured Notes | 2029 | ||||||||||||||||||||||
| 2030 Secured Notes | 2030 | ||||||||||||||||||||||
| 2031 Secured Notes | 2031 | ||||||||||||||||||||||
| Finance Leases | Varies | Varies | |||||||||||||||||||||
| Total debt | |||||||||||||||||||||||
| Less: current portion of long-term debt | |||||||||||||||||||||||
| Total long-term debt | $ | $ | |||||||||||||||||||||
Maturities of debt, including finance leases, during the periods subsequent to March 31, 2025 are as follows:
| (in thousands) | |||||
| 2025 (remaining) | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total | $ | ||||
Asset Backed Lending Facility
On July 1, 2020, certain subsidiaries of the Company, including Williams Scotsman, Inc. ("WSI"), entered into an asset-based credit agreement. As amended on June 30, 2022, the agreement provides for revolving credit facilities in the aggregate principal amount of up to $3.7 billion, consisting of: (i) a senior secured asset-based US dollar revolving credit facility in the aggregate principal amount of $3.3 billion (the “US Facility”), (ii) a $400.0 million senior secured asset-based multicurrency revolving credit facility (the "Multicurrency Facility," and together with the US Facility, the "ABL Facility"), available to be drawn in US Dollars, Canadian Dollars, British Pounds Sterling or Euros, and (iii) an accordion feature that permits the Company to increase the lenders' commitments in an aggregate amount not to exceed the greater of $750.0 million and the amount of suppressed availability (as defined in the ABL Facility), plus any voluntary prepayments that are accompanied by permanent commitment reductions under the ABL Facility, subject to the satisfaction of customary conditions including lender approval. The ABL Facility is scheduled to mature on June 30, 2027.
The applicable margin for Canadian Bankers' Acceptance Rate, Term Secured Overnight Financing Rate ("SOFR"), British Pounds Sterling and Euro loans is 1.50 %. In addition to the applicable margin, the facility includes a credit spread adjustment of 0.10 %. The applicable margin for base rate and Canadian Prime Rate loans is 0.50 %. The applicable margins are subject to one step down of 0.25 % or one step up of 0.25 % based on the Company's leverage ratio and excess availability from the prior quarter. The ABL Facility requires the payment of a commitment fee on the unused available borrowings of 0.20 % annually. As of March 31, 2025, the weighted average interest rate for borrowings under the ABL Facility, as adjusted for the effects of the interest rate swap agreements, was 5.33 %. Refer to Note 9 for a more detailed discussion on interest rate management.
Borrowing availability under the US Facility and the Multicurrency Facility is equal to the lesser of (i) the aggregate revolver commitments and (ii) the borrowing base ("Line Cap"). At March 31, 2025, the Line Cap was $3.2 billion and the Company had $1.6 billion of available borrowing capacity under the ABL Facility, including $1.4 billion under the US Facility and $185.9 million under the Multicurrency Facility. Borrowing capacity under the ABL Facility is made available for up to $220.0 million of letters of credit and $220.0 million of swingline loans. At March 31, 2025, the available capacity was $193.5 million of letters of credit and $186.0 million of swingline loans. At March 31, 2025, letters of credit and bank guarantees carried fees of 1.625 %. The Company had issued $26.5 million of standby letters of credit under the ABL Facility at March 31, 2025.
12
The Company had approximately $1.5 billion of outstanding borrowings under the ABL Facility at March 31, 2025. Debt issuance costs of $15.9 million and $19.0 million were included in the carrying value of the ABL Facility at March 31, 2025 and December 31, 2024, respectively. As of March 31, 2025, the Company had no outstanding principal borrowings on the Multicurrency Facility and $1.2 million of related debt issuance costs, which were recorded in other non-current assets on the condensed consolidated balance sheet.
The ABL Facility and related guarantees are secured by a first priority security interest in substantially all of the assets of WSI and the Company’s other subsidiaries that are borrowers or guarantors under the ABL Facility (collectively the “ABL Loan Parties”), subject to customary exclusions.
Senior Secured Notes
On March 26, 2025, WSI completed a private offering of $500.0 million in aggregate principal amount of its 6.625 % senior secured notes due 2030 (the "2030 Secured Notes") to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended and to non-U.S. persons outside the U.S. in accordance with Regulation S under the Securities Act. The 2030 Secured Notes mature on April 15, 2030 and bear interest at a rate of 6.625 % per annum. Interest is payable semi-annually on April 15 and October 15 of each year, beginning October 15, 2025. Unamortized deferred financing costs pertaining to the 2030 Secured Notes were $6.8 million as of March 31, 2025.
On March 27, 2025, net proceeds from the offering of the 2030 Secured Notes, together with $33.0 million of additional borrowings under the ABL Facility, were used to (i) redeem all of WSI's outstanding 6.125 % senior secured notes due 2025 (the "2025 Secured Notes") at a redemption price equal to 100.00 % of the principal amount of the 2025 Notes outstanding, totaling $526.5 million, plus accrued and unpaid interest to, but excluding, the redemption date and (ii) pay related fees and expenses.
The 2028 Secured Notes, 2029 Secured Notes, 2030 Secured Notes, and 2031 Secured Notes (collectively, “the Secured Notes”) are unconditionally guaranteed by certain subsidiaries of the Company (collectively, “the Note Guarantors”). WillScot is not a guarantor of the Secured Notes. The Note Guarantors are guarantors or borrowers under the ABL Facility. To the extent lenders under the ABL Facility release the guarantee of any Note Guarantor, such Note Guarantor will also be released from obligations under the Secured Notes. The Secured Notes and related guarantees are secured by a second priority security interest in substantially the same assets of WSI and the Note Guarantors securing the ABL Facility. Upon the repayment of the 2028 Secured Notes, if the lien associated with the ABL Facility represents the only lien outstanding on the collateral under the 2029 Secured Notes, 2030 Secured Notes, and the 2031 Secured Notes (other than certain permitted liens), the collateral securing the 2029 Secured Notes, 2030 Secured Notes, and the 2031 Secured Notes will be released and the 2029 Secured Notes, 2030 Secured Notes, and the 2031 Secured Notes will become unsecured subject to satisfaction of customary conditions.
Finance Leases
The Company maintains finance leases primarily for transportation-related equipment. At March 31, 2025 and December 31, 2024, obligations under the finance leases were $147.0 million and $143.8 million, respectively.
Covenant Compliance
The Company was in compliance with all debt covenants and restrictions associated with its debt instruments as of March 31, 2025.
NOTE 7 – Equity
Common Stock
In connection with the stock compensation vesting and stock option exercises described in Note 11, the Company issued 639,241 shares of Common Stock during the three months ended March 31, 2025.
Dividends
On February 18, 2025, the Company's Board of Directors approved a quarterly dividend program. Under the program, subject to quarterly approval and declaration by the Board of Directors, dividends will be payable on the third Wednesday of the third month of each calendar quarter to stockholders of record as of the first Wednesday of that same month.
In February 2025, the Board of Directors declared a quarterly dividend of $13.0 million or $0.07 per share. Dividends paid were $12.9 million for the three months ended March 31, 2025.
Stock Repurchase Program
In September 2024, the Board of Directors approved a reset of the share repurchase program authorizing the Company to repurchase up to $1.0 billion of its outstanding shares of Common Stock. The stock repurchase program does not obligate the Company to purchase any particular number of shares, and the timing and exact amount of any repurchases will depend on various factors, including market pricing, business, legal, accounting, and other considerations.
During the three months ended March 31, 2025, the Company repurchased 1,094,932 shares of Common Stock for $32.0 million, excluding excise tax. As of March 31, 2025, $789.8 million of the authorization for future repurchases of Common Stock remained available.
13
Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive income (loss) ("AOCI"), net of tax, for the three months ended March 31, 2025 and 2024 were as follows:
| Three Months Ended March 31, 2025 | |||||||||||||||||
| (in thousands) | Foreign currency translation | Unrealized gains on hedging activities | Total | ||||||||||||||
| Balance at December 31, 2024 | $ | ( | $ | $ | ( | ||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||
| Reclassifications from AOCI to income | ( | ( | |||||||||||||||
| Balance at March 31, 2025 | $ | ( | $ | $ | ( | ||||||||||||
| Three Months Ended March 31, 2024 | |||||||||||||||||
| (in thousands) | Foreign currency translation | Unrealized gains on hedging activities | Total | ||||||||||||||
| Balance at December 31, 2023 | $ | ( | $ | $ | ( | ||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ||||||||||||||||
| Reclassifications from AOCI to income | ( | ( | |||||||||||||||
| Balance at March 31, 2024 | $ | ( | $ | $ | ( | ||||||||||||
For the three months ended March 31, 2025 and 2024, gains of $2.4 million and $5.3 million, respectively, were reclassified from AOCI into the condensed consolidated statements of operations within interest expense related to the interest rate swaps. The interest rate swaps are discussed in Note 9. Associated with these reclassifications, the Company recorded tax expense of $0.6 million and $1.4 million for the three months ended March 31, 2025 and 2024, respectively.
NOTE 8 – Income Taxes
The Company recorded $17.9 million and $17.1 million of income tax expense for the three months ended March 31, 2025 and 2024, respectively. The Company’s effective tax rate for the three months ended March 31, 2025 and 2024 was 29.4 % and 23.3 %, respectively.
NOTE 9 - Derivatives
In January 2023, the Company entered into two interest rate swap agreements with financial counterparties relating to $750.0 million in aggregate notional amount of variable-rate debt under the ABL Facility. Under the terms of the agreements, the Company receives a floating rate equal to one-month term SOFR and makes payments based on a fixed interest rate of 3.44 % on the notional amount. In January 2024, the Company entered into two interest rate swap agreements with financial counterparties relating to $500.0 million in aggregate notional amount of variable-rate debt under the ABL Facility. Under the terms of the agreements, the Company receives a floating rate equal to one-month term SOFR and makes payments based on a fixed interest rate of 3.70 % on the notional amount.
The swap agreements were designated and qualified as hedges of the Company's exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility. The swap agreements terminate on June 30, 2027. At March 31, 2025, the floating rate that the Company received under the terms of these swap agreements was 4.32 %.
The location and the fair value of derivative instruments designated as hedges were as follows:
| (in thousands) | Balance Sheet Location | March 31, 2025 | December 31, 2024 | ||||||||
| Cash Flow Hedges: | |||||||||||
| Interest rate swaps | Prepaid expenses and other current assets | $ | $ | ||||||||
| Interest rate swaps | Other non-current assets | $ | $ | ||||||||
| Interest rate swaps | Other non-current liabilities | $ | ( | $ | |||||||
14
The fair value of the interest rate swaps was based on dealer quotes of market forward rates, a Level 2 input on the fair value hierarchy (see Note 10), and reflected the amount that the Company would receive or pay for contracts involving the same attributes and maturity dates.
The following table discloses the impact of the interest rate swaps, excluding the impact of income taxes, on other comprehensive income (“OCI”), AOCI and the Company’s condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| (Loss) gain recognized in OCI | $ | ( | $ | ||||||||
| Location of gain recognized in income | Interest expense, net | Interest expense, net | |||||||||
| Gain reclassified from AOCI into income | $ | ( | $ | ( | |||||||
NOTE 10 - Fair Value Measures
The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Company utilizes the following accounting guidance for the three levels of inputs that may be used to measure fair value:
| Level 1 - | Observable inputs such as quoted prices in active markets for identical assets or liabilities; | ||||
| Level 2 - | Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and | ||||
| Level 3 - | Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions | ||||
The Company has assessed that the fair values of cash and short-term deposits, marketable securities, trade receivables, trade payables, and other current liabilities approximate their carrying amounts. The Company's nonfinancial assets, which are measured at fair value on a nonrecurring basis, include rental equipment, property, plant and equipment, goodwill, intangible assets and certain other assets. Based on the borrowing rates currently available for bank loans with similar terms and average maturities, the fair values of finance leases at March 31, 2025 and December 31, 2024 approximate their respective book values. The carrying value of the ABL Facility, excluding debt issuance costs, approximates fair value as the interest rates are variable and reflective of current market rates.
The fair values of the Secured Notes are based on their last trading price at the end of each period obtained from a third party. The following table shows the carrying amounts and fair values of these financial liabilities measured using Level 2 inputs:
| March 31, 2025 | December 31, 2024 | |||||||||||||
(in thousands) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||
| 2025 Secured Notes | $ | $ | $ | $ | ||||||||||
| 2028 Secured Notes | ||||||||||||||
| 2029 Secured Notes | ||||||||||||||
| 2030 Secured Notes | ||||||||||||||
| 2031 Secured Notes | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||
As of March 31, 2025, the carrying values of the 2028 Secured Notes, the 2029 Secured Notes, the 2030 Secured Notes, and the 2031 Secured Notes included $4.1 million, $7.3 million, $6.8 million, and $5.6 million, respectively, of unamortized debt issuance costs, which were presented as a direct reduction of the corresponding liability. As of December 31, 2024, the carrying values of the 2025 Secured Notes, the 2028 Secured Notes, the 2029 Secured Notes, and the 2031 Secured Notes included $1.2 million, $4.4 million, $7.5 million, and $5.7 million, respectively, of unamortized debt issuance costs, which were presented as a direct reduction of the corresponding liability.
The location and the fair value of derivative assets and liabilities in the condensed consolidated balance sheets are disclosed in Note 9.
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NOTE 11 - Stock-Based Compensation
Stock-based compensation expense includes grants of stock options, time-based restricted stock units ("Time-Based RSUs") and performance-based restricted stock units ("Performance-Based RSUs," together with Time-Based RSUs, the "RSUs"). In addition, stock-based payments to non-executive directors include grants of restricted stock awards ("RSAs"). Time-Based RSUs and RSAs are valued based on the intrinsic value of the difference between the exercise price, if any, of the award and the fair market value of WillScot's Common Stock on the grant date. Performance-Based RSUs are valued based on a Monte Carlo simulation model to reflect the impact of the Performance-Based RSU's market condition. The probability of satisfying a market condition is considered in the estimation of the grant-date fair value for Performance-Based RSUs and the compensation cost is not reversed if the market condition is not achieved, provided the requisite service has been provided.
Restricted Stock Awards
The following table summarizes the Company's RSA activity for the three months ended March 31, 2025 and 2024:
| 2025 | 2024 | ||||||||||||||||||||||
| Number of Shares | Weighted-Average Grant Date Fair Value | Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||||||||
| Outstanding at beginning of period | $ | $ | |||||||||||||||||||||
| Outstanding at end of period | $ | $ | |||||||||||||||||||||
Compensation expense for RSAs recognized in selling, general and administrative ("SG&A") expense on the condensed consolidated statements of operations was $0.3 0.3 million and was expected to be recognized over the remaining weighted average vesting period of 0.2 years.
Time-Based RSUs
The following table summarizes the Company's Time-Based RSU activity for the three months ended March 31, 2025 and 2024:
| 2025 | 2024 | ||||||||||||||||||||||
| Number of Shares | Weighted-Average Grant Date Fair Value | Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||||||||
| Outstanding at beginning of period | $ | $ | |||||||||||||||||||||
| Granted | $ | $ | |||||||||||||||||||||
| Forfeited | ( | $ | ( | $ | |||||||||||||||||||
| Vested | ( | $ | ( | $ | |||||||||||||||||||
| Outstanding at end of period | $ | $ | |||||||||||||||||||||
Compensation expense for Time-Based RSUs recognized in SG&A expense on the condensed consolidated statements of operations was $2.4 million and $2.3 million for the three months ended March 31, 2025 and 2024, respectively. At March 31, 2025, unrecognized compensation cost related to Time-Based RSUs totaled $25.9 million and was expected to be recognized over the remaining weighted average vesting period of 3.2 years.
Performance-Based RSUs
The following table summarizes the Company's Performance-Based RSU award activity for the three months ended March 31, 2025 and 2024:
| 2025 | 2024 | ||||||||||||||||||||||
| Number of Shares | Weighted-Average Grant Date Fair Value | Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||||||||
| Outstanding at beginning of period | $ | $ | |||||||||||||||||||||
| Granted | $ | $ | |||||||||||||||||||||
| Forfeited | ( | $ | ( | $ | |||||||||||||||||||
Vested(a) | ( | $ | ( | $ | |||||||||||||||||||
| Outstanding at end of period | $ | $ | |||||||||||||||||||||
(a) The Performance-Based RSUs vested at 77 % of target, or 462,886 shares, and 200 % of target, or 706,646 shares, for the three months ended March 31, 2025 and 2024, respectively.
16
Compensation expense for Performance-Based RSUs recognized in SG&A expense on the condensed consolidated statements of operations was $5.6 million and $6.4 million for the three months ended March 31, 2025 and 2024, respectively. At March 31, 2025, unrecognized compensation cost related to Performance-Based RSUs totaled $37.2 million and was expected to be recognized over the remaining weighted average vesting period of 1.6 years.
Certain Performance-Based RSUs cliff vest based on achievement of the relative total stockholder return ("TSR") of the Company's Common Stock as compared to the TSR of the constituents in the S&P MidCap 400 Index at the grant date over the performance period of three years . The target number of RSUs may be adjusted from 0 % to 200 % based on the TSR attainment levels defined by the Company's Compensation Committee. The 100 % target payout is tied to performance at the 50 % percentile, with a payout curve ranging from 0 % (for performance less than the 25 % percentile) to 200 % (for performance above the 85 % percentile).
For 555,790 Performance-Based RSUs granted in 2021, the awards cliff vest based on achievement of specified share prices of the Company's Common Stock at annual measurement dates over performance periods of 4.5 years to 4.8 years. The target number of RSUs may be adjusted from 0 to 1,333,334 based on the stock price attainment levels defined by the Company's Compensation Committee. The target payout for the 555,790 Performance-Based RSUs is tied to a stock price of $47.50 , with a payout ranging from 0 RSUs (for a stock price less than $42.50 ) to 1,333,334 RSUs (for a stock price of $60.00 or greater).
Stock Options
The following table summarizes the Company's stock option activity for the three months ended March 31, 2025:
| WillScot Options | Weighted-Average Exercise Price per Share | Converted Mobile Mini Options | Weighted-Average Exercise Price per Share | ||||||||||||||||||||
| Outstanding at beginning of period | $ | $ | |||||||||||||||||||||
| Exercised | $ | ( | $ | ||||||||||||||||||||
| Outstanding at end of period | $ | $ | |||||||||||||||||||||
Fully vested and exercisable options, March 31, 2025 | $ | $ | |||||||||||||||||||||
The following table summarizes the Company's stock option activity for the three months ended March 31, 2024:
| WillScot Options | Weighted-Average Exercise Price per Share | Converted Mobile Mini Options | Weighted-Average Exercise Price per Share | ||||||||||||||||||||
| Outstanding at beginning of period | $ | $ | |||||||||||||||||||||
| Exercised | $ | ( | $ | ||||||||||||||||||||
| Outstanding at end of period | $ | $ | |||||||||||||||||||||
Fully vested and exercisable options, March 31, 2024 | $ | $ | |||||||||||||||||||||
NOTE 12 - Commitments and Contingencies
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NOTE 13 - Segment Reporting
The Company has one reportable segment. Refer to Note 2 for revenue by geographic area and revenue by major product and service lines. Refer to the Condensed Consolidated Balance Sheets for total assets. Refer to the Condensed Consolidated Statements of Cash Flows for total expenditures for additions to long-lived assets.
The Company defines EBITDA as net income (loss) plus interest (income) expense, income tax (benefit) expense, depreciation and amortization. The Company reflects further adjustments to EBITDA (“Adjusted EBITDA”) to exclude certain non-cash items and the effect of what the Company considers transactions or events not related to its core and ongoing business operations. The measure of profit or loss used by the CODM to evaluate operating segment performance and allocate resources is Adjusted EBITDA. Management believes that evaluating operating segment performance excluding such items is meaningful because it provides insight with respect to the intrinsic and ongoing operating results of the Company. The Company considers Adjusted EBITDA to be an important metric because it reflects the business performance of the segments, inclusive of indirect costs.
The following table sets forth certain information regarding significant expense categories for the three months ended March 31, 2025 and 2024, respectively.
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Revenues: | |||||||||||
| Leasing and services revenue: | |||||||||||
| Unit leasing and other rental-related | $ | $ | |||||||||
| VAPS and third party leasing | |||||||||||
| Delivery revenue | |||||||||||
| Installation revenue | |||||||||||
| Sales revenue: | |||||||||||
| New units | |||||||||||
| Rental units | |||||||||||
| Total revenues | |||||||||||
Less:(a) | |||||||||||
| Costs of leasing and services: | |||||||||||
| Unit leasing | |||||||||||
| VAPS and third party leasing | |||||||||||
| Delivery | |||||||||||
| Installation | |||||||||||
| Costs of sales: | |||||||||||
| New units | |||||||||||
| Rental units | |||||||||||
Employee SG&A expense(b) | |||||||||||
Other segment items(c) | |||||||||||
| Adjusted EBITDA | $ | $ | |||||||||
(a) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
(b) Employee SG&A expense consists of salaries and wages, bonuses, commissions, payroll taxes, and employee benefits.
(c) Other segment items consist of service agreements and professional fees, real estate and occupancy costs, travel, bad debt expense, marketing and advertising, taxes, and other miscellaneous expenses.
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The following table presents reconciliations of the Company’s net income to Adjusted EBITDA for the three months ended March 31, 2025 and 2024, respectively:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Net income | $ | $ | |||||||||
| Income tax expense | |||||||||||
| Interest expense, net | |||||||||||
| Depreciation and amortization | |||||||||||
| Currency losses, net | |||||||||||
| Restructuring costs, lease impairment expense and other related charges | |||||||||||
| Transaction costs | |||||||||||
| Integration costs | |||||||||||
| Stock compensation expense | |||||||||||
| Other | |||||||||||
| Adjusted EBITDA | $ | $ | |||||||||
NOTE 14 - Earnings Per Share
The following table reconciles the weighted average shares outstanding for the basic earnings per share calculation to the weighted average shares outstanding for the diluted earnings per share calculation:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Numerator: | |||||||||||
| Net income | $ | $ | |||||||||
| Denominator: | |||||||||||
| Weighted average Common Shares outstanding – basic | |||||||||||
| Dilutive effect of outstanding securities: | |||||||||||
| RSAs | |||||||||||
| Time-based RSUs | |||||||||||
| Performance-based RSUs | |||||||||||
| Stock options | |||||||||||
| Weighted average Common Shares outstanding – dilutive | |||||||||||
The following potential common shares were excluded from the computation of dilutive EPS because their effect would have been anti-dilutive:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Time-based RSUs | |||||||||||
| Performance-based RSUs | |||||||||||
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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's ("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 months ended March 31, 2025 or prior periods.
The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). We use certain non-GAAP financial metrics to supplement the GAAP reported results to highlight key operational metrics that are used by management to evaluate Company performance. Reconciliations of GAAP financial information to the disclosed non-GAAP measures are provided in the Reconciliation of Non-GAAP Financial Measures section of MD&A.
Executive Summary
We are a leading business services provider specializing in innovative and flexible turnkey space solutions. We offer our customers an extensive selection of space solutions with over 152,000 modular space units and over 209,000 portable storage units in our fleet. Our diverse product offering includes modular space solutions (modular office complexes, mobile offices, classrooms, blast-resistant modules, clearspan structures and sanitation solutions) and portable storage solutions (portable storage containers and climate-controlled containers and trailers). We also offer our customers a thoughtfully curated selection of solutions with Value-Added Products ("VAPS"), such as workstations, furniture, appliances, media packages, power and solar solutions, telematics, connectivity and data solutions, security and protection products, entrance packages, electrical and lighting products, organization and space optimization assets, perimeter solutions, and other items that improve the customer experience. We operate a hybrid in-house and outsourced logistics and service infrastructure that provides delivery, site work, installation, disassembly, removal and other services to our customers for an additional fee as part of our leasing and sales operations. We service diverse end markets across all sectors of the economy throughout the United States ("US"), Canada, and Mexico. As of March 31, 2025, our branch network included approximately 260 branch locations and additional drop lots to service our over 85,000 customers.
We primarily lease, rather than sell, our space solutions to customers, which results in a highly diversified and predictable recurring revenue stream. Over 90% of new lease orders are on our standard lease agreement, pre-negotiated master lease or national account agreements. Rental contracts with customers are generally based on a 28-day or monthly rate and billing cycle. The initial lease periods vary, and our leases are customarily renewable on a month-to-month basis after their initial term and continue until cancelled by the customer or us. Given that our customers value flexibility, they consistently extend their leases or renew on a month-to-month basis such that the average effective duration of our consolidated lease portfolio, excluding seasonal portable storage units, is approximately 41 months. We believe our lease revenue is highly predictable due to its recurring nature and the underlying stability and diversification of our lease portfolio. We complement our core leasing business by selling both new and used units, allowing us to leverage scale, achieve purchasing benefits, and redeploy capital employed in our lease fleet.
Our customers operate in a diversified set of end markets, including construction and infrastructure, commercial and industrial, energy and natural resources, and government and institutions. Core to our operating model is the ability to redeploy standardized assets across end markets. We track several leading market indicators to predict demand, including Gross Domestic Product in North America, the Architecture Billings Index, and non-residential construction square foot starts. These indicators, among others, support our demand forecast for our two largest end markets, the commercial and industrial sector and the construction and infrastructure market, which collectively accounted for approximately 83% of our revenues for the three months ended March 31, 2025.
Significant Developments
Financing Activities
On March 26, 2025, Williams Scotsman, Inc. ("WSI") completed a private offering of $500.0 million in aggregate principal amount of its 6.625% senior secured notes due 2030 (the "2030 Secured Notes") to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended.
On March 27, 2025, net proceeds of the offering of the 2030 Secured Notes, together with $33.0 million of additional borrowings under the ABL Facility, were used to (i) redeem all of WSI's outstanding 6.125% senior secured notes due 2025 (the "2025 Secured Notes") at a redemption price equal to 100.00% of the principal amount of the 2025 Notes outstanding, totaling $526.5 million, plus accrued and unpaid interest to, but excluding, the redemption date and (ii) pay related fees and expenses.
20
Dividends
On February 18, 2025, our Board of Directors approved a quarterly dividend program. Under the program, subject to quarterly approval and declaration by the Board of Directors, dividends will be payable on the third Wednesday of the third month of each calendar quarter to stockholders of record as of the first Wednesday of that same month. In February 2025, our Board of Directors declared a quarterly dividend of $13.0 million or $0.07 per share. Dividends paid were $12.9 million for the three months ended March 31, 2025.
Share Repurchases
During the three months ended March 31, 2025, we repurchased 1,094,932 shares of Common Stock for $32.0 million, excluding excise tax. As of March 31, 2025, $789.8 million of the authorization for future repurchases of the Common Stock remained available. We believe our Adjusted Free Cash Flow is predictable (with the exception of isolated events). As such, we believe that repurchases will be a recurring capital allocation priority.
First Quarter Highlights
For the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, results and key drivers of our financial performance included:
•Total revenues decreased $27.6 million, or 4.7%, to $559.6 million. Leasing revenue decreased $26.2 million, or 5.7%, driven by a decrease in total average units on rent of 26,108, or 11.5%, and partially offset by increased pricing and VAPS penetration. Reductions in non-residential construction project start activity as a result of higher interest rates reduced demand for our services, which resulted in fewer deliveries. This same trend caused delivery and installation revenue to decrease by $11.7 million, or 11.7%. New unit sales revenue increased $8.9 million, or 66.2%, and rental unit sales revenue increased $1.3 million, or 10.6%.
•Generated net income of $43.1 million for the three months ended March 31, 2025, representing a decrease of $13.2 million, or 23.4%, as compared to the same period in 2024. Discrete costs in the period were $3.7 million, including $0.3 million of integration costs and $0.7 million of restructuring, lease impairment expense, and other related charges.
•Generated Adjusted EBITDA from operations of $228.8 million for the three months ended March 31, 2025, representing a decrease of $19.2 million, or 7.8%, as compared to the same period in 2024.
•Net cash provided by operating activities decreased $2.0 million to $206.6 million for the three months ended March 31, 2025 from $208.7 million net cash provided by operating activities for the three months ended March 31, 2024.
•Net cash used in investing activities, excluding cash used for acquisitions, decreased by $5.7 million. Capital expenditures for rental equipment increased $0.1 million for the three months ended March 31, 2025. Purchases of property, plant, and equipment decreased $1.9 million for the three months ended March 31, 2025. Proceeds from the sale of rental equipment decreased $0.1 million. Proceeds from the sale of property, plant, and equipment increased $1.3 million. Net CAPEX decreased $2.9 million for the three months ended March 31, 2025.
•Generated Adjusted Free Cash Flow of $144.8 million for the three months ended March 31, 2025 as compared to $145.0 million for the three months ended March 31, 2024. During the three months ended March 31, 2025, we deployed Adjusted Free Cash Flow to:
–Repurchase $32.0 million of our Common Stock, reducing outstanding Common Stock by 1,094,932 shares.
–Declare and pay a $0.07 dividend, returning $13.0 million to our shareholders.
–Reduce debt by $85.8 million.
•We believe that the predictability of our Adjusted Free Cash Flow allows us to pursue multiple capital allocation priorities opportunistically, including investing in organic opportunities that we see in the market, maintaining leverage in our stated range, opportunistically executing accretive acquisitions, and returning capital to shareholders via share repurchases and dividend distributions.
In addition to using GAAP financial measurements to evaluate our operating results, we use Adjusted EBITDA, Net CAPEX, and Adjusted Free Cash Flow, which are non-GAAP financial measures. 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."
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Consolidated Results of Operations
Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024
Certain consolidated results of operations for the three months ended March 31, 2025 and 2024 are presented below.
| Three Months Ended March 31, | 2025 vs. 2024 $ Change | ||||||||||||||||
(in thousands) | 2025 | 2024 | |||||||||||||||
| Revenues: | |||||||||||||||||
| Leasing and services revenue: | |||||||||||||||||
| Leasing | $ | 434,390 | $ | 460,601 | $ | (26,211) | |||||||||||
| Delivery and installation | 88,661 | 100,362 | (11,701) | ||||||||||||||
| Sales revenue: | |||||||||||||||||
| New units | 22,437 | 13,499 | 8,938 | ||||||||||||||
| Rental units | 14,063 | 12,719 | 1,344 | ||||||||||||||
| Total revenues | 559,551 | 587,181 | (27,630) | ||||||||||||||
| Costs: | |||||||||||||||||
| Costs of leasing and services: | |||||||||||||||||
| Leasing | 88,070 | 102,394 | (14,324) | ||||||||||||||
| Delivery and installation | 73,796 | 77,842 | (4,046) | ||||||||||||||
| Costs of sales: | |||||||||||||||||
| New units | 15,198 | 8,273 | 6,925 | ||||||||||||||
| Rental units | 8,169 | 6,876 | 1,293 | ||||||||||||||
| Depreciation of rental equipment | 73,952 | 74,908 | (956) | ||||||||||||||
| Gross profit | 300,366 | 316,888 | (16,522) | ||||||||||||||
| Other operating expenses: | |||||||||||||||||
| Selling, general and administrative | 157,146 | 168,314 | (11,168) | ||||||||||||||
| Other depreciation and amortization | 23,140 | 17,920 | 5,220 | ||||||||||||||
| Currency losses, net | 223 | 77 | 146 | ||||||||||||||
| Other expense, net | 423 | 631 | (208) | ||||||||||||||
| Operating income | 119,434 | 129,946 | (10,512) | ||||||||||||||
| Interest expense, net | 58,469 | 56,588 | 1,881 | ||||||||||||||
| Income before income tax | 60,965 | 73,358 | (12,393) | ||||||||||||||
| Income tax expense | 17,910 | 17,118 | 792 | ||||||||||||||
| Net income | $ | 43,055 | $ | 56,240 | $ | (13,185) | |||||||||||
| Three Months Ended March 31, | 2025 vs. 2024 Change | ||||||||||||||||
| (in thousands, except for units on rent and monthly rental rate) | 2025 | 2024 | |||||||||||||||
| Adjusted EBITDA | $ | 228,785 | $ | 248,009 | $ | (19,224) | |||||||||||
| Capital expenditures for rental equipment | $ | 72,552 | $ | 72,417 | $ | 135 | |||||||||||
| Net CAPEX | $ | 61,832 | $ | 64,776 | $ | (2,944) | |||||||||||
| Average modular space units on rent | 90,548 | 95,817 | (5,269) | ||||||||||||||
| Average modular space utilization rate | 59.3 | % | 62.5 | % | (320) | bps | |||||||||||
| Average modular space monthly rental rate | $ | 1,209 | $ | 1,149 | $ | 60 | |||||||||||
| Average portable storage units on rent | 110,175 | 131,014 | (20,839) | ||||||||||||||
| Average portable storage utilization rate | 52.6 | % | 62.1 | % | (950) | bps | |||||||||||
| Average portable storage monthly rental rate | $ | 267 | $ | 262 | $ | 5 | |||||||||||
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Comparison of Three Months Ended March 31, 2025 and 2024
Revenue: Total revenue decreased $27.6 million, or 4.7%, to $559.6 million for the three months ended March 31, 2025 from $587.2 million for the three months ended March 31, 2024. Leasing revenue decreased $26.2 million, or 5.7%, as compared to the same period in 2024, driven by a decrease of 26,108 total average units on rent. Delivery and installation revenue decreased $11.7 million, or 11.7%, due to decreased deliveries and returns. Rental unit sales increased $1.3 million, or 10.6%, and new unit sales increased $8.9 million, or 66.2%.
Total average units on rent for the three months ended March 31, 2025 and 2024 were 200,723 and 226,831, respectively, representing a decrease of 26,108 units, or 11.5%. Portable storage average units on rent decreased by 20,839 units, or 15.9%, for the three months ended March 31, 2025 driven by lower demand in 2025. Lower demand was driven by reduced new construction project starts. The average portable storage unit utilization rate during the three months ended March 31, 2025 was 52.6% as compared to 62.1% during the same period in 2024. Modular space average units on rent decreased 5,269 units, or 5.5%, for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The average modular space utilization rate during the three months ended March 31, 2025 was 59.3% as compared to 62.5% during the same period in 2024.
Modular space average monthly rental rates increased 5.2% year over year to $1,209 for the three months ended March 31, 2025, driven by our long-term price optimization strategies and VAPS penetration opportunities. Average portable storage monthly rental rates increased 1.9% year over year to $267 for the three months ended March 31, 2025 as a result of our price management tools, VAPS penetration, and mix effects from higher rates on climate-controlled containers and refrigerated storage units. Total VAPS revenues, which are included in leasing revenue, were $96.3 million for both the three months ended March 31, 2025 and 2024.
Gross profit: Gross profit decreased $16.5 million, or 5.2%, to $300.4 million for the three months ended March 31, 2025 from $316.9 million for the three months ended March 31, 2024. The decrease in gross profit was a result of a $11.9 million decrease in leasing gross profit and decreased delivery and installation gross profit of $7.7 million. The decrease was partially offset by a $2.1 million increase in new and rental unit sales gross profit. The decrease in leasing gross profit was primarily driven by lower demand in 2025. Cost of leasing and services decreased by $18.4 million, or 10.2%, for the three months ended March 31, 2025 versus the three months ended March 31, 2024, driven by a decrease in subcontractors costs of $4.8 million, or 8.5%, a decrease in labor costs of $7.5 million, or 10.3%, and a decrease in materials costs of $4.8 million, or 19.6% as we reduced variable costs to match demand. Cost of sales increased by $8.2 million, or 54.2%, which is directionally in line with the 39.2% increase in sales revenue for the three months ended March 31, 2025. Our resulting gross profit percentage was 53.7% and 54.0% for the three months ended March 31, 2025 and 2024, respectively.
Selling, general and administrative expense ("SG&A"): SG&A decreased $11.2 million, or 6.6%, to $157.1 million for the three months ended March 31, 2025, as compared to $168.3 million for the three months ended March 31, 2024. Employee SG&A excluding stock compensation decreased $2.4 million, or 3.4%, due to lower employee headcount. The decrease was further driven by a $9.9 million decrease in discrete expenses for certain one-time projects and a $6.2 million decrease in our provision for credit losses, net of write offs. These decreased costs were partially offset by a $5.2 million increase in travel costs associated with our bi-annual Company meeting, a $2.4 million, or 12.7%, increase in service agreements and professional fees, excluding discrete expenses for certain one-time projects, a $2.0 million increase in real estate and occupancy costs, and a $0.6 million increase in marketing and advertising expense.
Adjusted EBITDA: Adjusted EBITDA decreased $19.2 million, or 8%, to $228.8 million for the three months ended March 31, 2025 from $248.0 million for the three months ended March 31, 2024. The decrease was driven by a $11.9 million decrease in leasing gross profit, decreased delivery and installation gross profit of $7.7 million, and increased SG&A, excluding discrete costs, of $2.1 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The decrease was partially offset by a $2.1 million increase in new and used sales gross profit.
Other depreciation and amortization: Other depreciation and amortization increased $5.2 million to $23.1 million for the three months ended March 31, 2025 as compared to $17.9 million for the three months ended March 31, 2024, primarily related to the amortization of the Mobile Mini tradename beginning in the third quarter of 2024.
Currency losses, net: Currency losses, net increased by $0.1 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Other expense, net: Other expense, net was $0.4 million for the three months ended March 31, 2025 as compared to $0.6 million for the three months ended March 31, 2024.
Interest expense, net: Interest expense, net increased $1.9 million, or 3.3%, to $58.5 million for the three months ended March 31, 2025 from $56.6 million for the three months ended March 31, 2024. The increase in interest expense was a result of higher overall weighted average interest rates as a result of increased benchmark rates. See Note 6 to the condensed consolidated financial statements for further discussion of our debt.
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Income tax expense: Income tax expense was $17.9 million for the three months ended March 31, 2025 compared to $17.1 million for the three months ended March 31, 2024, a change of $0.8 million. The increase was primarily driven by a discrete tax expense related to equity compensation for the three months ended March 31, 2025 as compared to a discrete tax benefit related to equity compensation for the three months ended March 31, 2024. This was offset by a decrease in income before income tax for the three months ended March 31, 2025.
Capital expenditures for rental equipment: Capital expenditures for rental equipment increased $0.1 million, to $72.6 million for the three months ended March 31, 2025 from $72.4 million for the three months ended March 31, 2024. Net CAPEX decreased $2.9 million, or 5%, to $61.8 million for the three months ended March 31, 2025 from $64.8 million for the three months ended March 31, 2024 driven by a $1.9 million decrease in purchases of property, plant and equipment and a $1.3 million increase in proceeds from the sale of property, plant, and equipment.
Reconciliation of Non-GAAP Financial Measures
In addition to using GAAP financial measurements, we use certain non-GAAP financial measures to evaluate our operating results. As such, we include in this Quarterly Report on Form 10-Q reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures. Set forth below are definitions and reconciliations to the nearest comparable GAAP measure of certain non-GAAP financial measures used in this Quarterly Report on Form 10-Q along with descriptions of why we believe these measures provide useful information to investors as well as a description of the limitations of these measures. Each of these non-GAAP financial measures has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for analysis of, results reported under GAAP. Our measurements of these metrics may not be comparable to similarly titled measures of other companies.
Adjusted EBITDA
We define EBITDA as net income (loss) plus interest (income) expense, income tax expense (benefit), depreciation and amortization. Our adjusted EBITDA ("Adjusted EBITDA") reflects the following further adjustments to EBITDA to exclude certain non-cash items and the effect of what we consider transactions or events not related to our core business operations:
•Currency (gains) losses, net on monetary assets and liabilities denominated in foreign currencies other than the subsidiaries’ functional currency.
•Goodwill and other impairment charges related to non-cash costs associated with impairment charges to goodwill, other intangibles, rental fleet and property, plant and equipment.
•Restructuring costs, lease impairment expense, and other related charges associated with restructuring plans designed to streamline operations and reduce costs including employee and lease termination costs.
•Transaction costs including legal and professional fees and other transaction specific related costs.
•Costs to integrate acquired companies, including outside professional fees, non-capitalized costs associated with system integrations, non-lease branch and fleet relocation expenses, employee relocation and training costs, and other costs required to realize cost or revenue synergies.
•Non-cash charges for stock compensation plans.
•Other expense, including consulting expenses related to certain one-time projects, financing costs not classified as interest expense, and gains and losses on disposals of property, plant, and equipment, and unrealized gains and losses on investments.
Our Chief Operating Decision Maker ("CODM") evaluates business performance utilizing Adjusted EBITDA as shown in the reconciliation of the Company’s consolidated net income to Adjusted EBITDA below. Management believes that evaluating performance excluding such items is meaningful because it provides insight with respect to the intrinsic and ongoing operating results of the Company and captures the business performance inclusive of indirect costs.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider the measure in isolation or as a substitute for net income, cash flow from operations or other methods of analyzing WillScot’s results as reported under GAAP. Some of these limitations are:
•Adjusted EBITDA does not reflect changes in, or cash requirements, for our working capital needs;
•Adjusted EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;
•Adjusted EBITDA does not reflect our tax expense or the cash requirements to pay our taxes;
•Adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
•Adjusted EBITDA does not reflect the impact on earnings or changes resulting from matters that we consider not to be indicative of our future operations;
•Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
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•Other companies in our industry may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.
Because of these limitations, Adjusted EBITDA should not be considered as discretionary cash available to reinvest in the growth of our business or as a measure of cash that will be available to meet our obligations. The following table provides reconciliations of net income to Adjusted EBITDA:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Net income | $ | 43,055 | $ | 56,240 | |||||||
| Income tax expense | 17,910 | 17,118 | |||||||||
| Interest expense, net | 58,469 | 56,588 | |||||||||
| Depreciation and amortization | 97,092 | 92,828 | |||||||||
| Currency losses, net | 223 | 77 | |||||||||
| Restructuring costs, lease impairment expense and other related charges | 702 | 746 | |||||||||
| Transaction costs | 34 | — | |||||||||
| Integration costs | 227 | 2,877 | |||||||||
| Stock compensation expense | 8,341 | 9,099 | |||||||||
| Other | 2,732 | 12,436 | |||||||||
| Adjusted EBITDA | $ | 228,785 | $ | 248,009 | |||||||
Net CAPEX
We define Net CAPEX 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. Management believes that the presentation of Net CAPEX provides useful information regarding the net capital invested in our rental fleet and property, plant and equipment each year to assist in analyzing the performance of our business. The following table provides reconciliations of Net CAPEX:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Purchase of rental equipment and refurbishments | $ | (72,552) | $ | (72,417) | |||||||
| Proceeds from sale of rental equipment | 14,063 | 14,195 | |||||||||
| Net CAPEX for Rental Equipment | (58,489) | (58,222) | |||||||||
| Purchase of property, plant and equipment | (4,634) | (6,554) | |||||||||
| Proceeds from sale of property, plant and equipment | 1,291 | — | |||||||||
| Net CAPEX | $ | (61,832) | $ | (64,776) | |||||||
Adjusted Free Cash Flow
We define Adjusted Free Cash Flow as net cash provided by operating activities; less purchases of rental equipment and property, plant and equipment and plus proceeds from sale of rental equipment and property, plant and equipment, which are all included in cash flows from investing activities; excluding one-time, nonrecurring payments for the McGrath termination fee and transaction costs from terminated acquisitions. Management believes that the presentation of Adjusted Free Cash Flow provides useful additional information concerning cash flow available to fund our capital allocation alternatives.
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The following table provides a reconciliation of net cash provided by operating activities to Adjusted Free Cash Flow.
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Net cash provided by operating activities | $ | 206,627 | $ | 208,676 | |||||||
| Purchase of rental equipment and refurbishments | (72,552) | (72,417) | |||||||||
| Proceeds from sale of rental equipment | 14,063 | 14,195 | |||||||||
| Purchase of property, plant and equipment | (4,634) | (6,554) | |||||||||
| Proceeds from sale of property, plant and equipment | 1,291 | — | |||||||||
Cash paid for transaction costs from terminated acquisitions | — | 1,115 | |||||||||
| Adjusted Free Cash Flow | $ | 144,795 | $ | 145,015 | |||||||
Liquidity and Capital Resources
Overview
WillScot is a holding company that derives its operating cash flow from its operating subsidiaries. Our principal sources of liquidity include cash flows generated from operating activities of our subsidiaries, borrowings under our ABL Facility, and issuance of debt securities. We have consistently accessed the debt and equity capital markets both opportunistically and as necessary to support the growth of our business, desired leverage levels, and other capital allocation priorities. We believe we have ample liquidity in the ABL Facility and are generating substantial Adjusted Free Cash Flow, which together support both organic operations and other capital allocation priorities. We believe that our liquidity sources are sufficient to satisfy our anticipated operating, debt service, and capital cash requirements over the next twelve months and thereafter for the foreseeable future.
We continuously review available acquisition opportunities with the awareness that any such acquisition may require us to incur additional debt to finance the acquisition and/or to issue shares of our Common Stock or other equity securities as acquisition consideration or as part of an overall financing plan. In addition, we continue to evaluate alternatives to optimize our capital structure, which could include the issuance or repurchase of additional unsecured and secured debt, equity securities and/or equity-linked securities. There can be no assurance as to the timing of any such issuance or repurchase. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. Availability of financing and the associated terms are inherently dependent on the debt and equity capital markets and subject to change. From time to time, we may also seek to streamline our capital structure and improve our financial position through refinancing or restructuring our existing debt or retiring certain of our securities for cash or other consideration.
Our revolving credit facility provides an aggregate principal amount of up to $3.7 billion, consisting of: (i) a senior secured asset-based US dollar revolving credit facility in the aggregate principal amount of $3.3 billion (the “US Facility”) and (ii) a $400.0 million senior secured asset-based multicurrency revolving credit facility (the "Multicurrency Facility," and together with the US Facility, the “ABL Facility”). Borrowing availability under the ABL Facility is equal to the lesser of $3.7 billion and the applicable borrowing bases. The borrowing bases are a function of, among other considerations, the value of the assets in the relevant collateral pool, of which our rental equipment represents the largest component. At March 31, 2025, we had $1.6 billion of available borrowing capacity under the ABL Facility.
Cash Flows
The following summarizes our change in cash and cash equivalents for the periods presented:
| Three Months Ended March 31, | |||||||||||
(in thousands) | 2025 | 2024 | |||||||||
| Net cash provided by operating activities | $ | 206,627 | $ | 208,676 | |||||||
| Net cash used in investing activities | (64,955) | (110,967) | |||||||||
| Net cash used in financing activities | (139,929) | (95,622) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (65) | 102 | |||||||||
Net change in cash and cash equivalents | $ | 1,678 | $ | 2,189 | |||||||
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Comparison of the Three Months Ended March 31, 2025 and 2024
Cash flows from operating activities
Net cash provided by operating activities for the three months ended March 31, 2025 was $206.6 million as compared to $208.7 million for the three months ended March 31, 2024, a decrease of $2.0 million. The decrease in net cash provided by operating activities was primarily due to a $22.2 million decrease in net income, adjusted for non-cash items, partially offset by an increase of $20.1 million in the net movements of the operating assets and liabilities during the three months ended March 31, 2025.
Cash flows from investing activities
Net cash used in investing activities for the three months ended March 31, 2025 was $65.0 million as compared to $111.0 million for the three months ended March 31, 2024, a $46.0 million decrease in net cash used in investing activities. The decrease in net cash used in investing activities resulted from a $40.3 million decrease in cash used in acquisitions, net of cash acquired and a $2.7 million decrease in the purchase of investments during the three months ended March 31, 2025.
Cash flows from financing activities
Net cash used in financing activities for the three months ended March 31, 2025 was $139.9 million as compared to $95.6 million for the three months ended March 31, 2024, an increase of $44.3 million. The increase was primarily due to a $22.0 million increase in cash used for the repurchase of common stock, a $12.9 million increase in cash used to pay dividends, and a $10.8 million increase in repayments of borrowings, net of receipts from borrowings in the three months ended March 31, 2025.
Material cash requirements
The Company’s material cash requirements include the following contractual and other obligations:
Debt
The Company has outstanding debt related to its ABL Facility, 2028 Secured Notes, 2029 Secured Notes, 2030 Secured Notes, 2031 Secured Notes, and finance leases totaling $3.6 billion as of March 31, 2025, $25.4 million of which is obligated to be repaid within the next twelve months. Refer to Note 6 for further information regarding outstanding debt.
Operating leases
The Company has commitments for future minimum rental payments relating to operating leases, which are primarily for real estate. As of March 31, 2025, the Company had lease obligations of $299.9 million, with $72.8 million payable within the next twelve months.
Other
In addition to the cash requirements described above, the Company has a Share Repurchase program authorized by the Board of Directors, which allows the Company to repurchase up to $1.0 billion of outstanding shares of Common Stock. This program does not obligate the Company to repurchase any specific amount of shares. As of March 31, 2025, $789.8 million of the authorization for future repurchases of our common stock remained available.
Critical Accounting Estimates
Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. GAAP requires that we make estimates and judgments that affect the reported amount of assets, liabilities, revenue, expenses, and the related disclosure of contingent assets and liabilities. We base these estimates on historical experience and on various other assumptions that we consider reasonable under the circumstances and reevaluate our estimates and judgments as appropriate. Our actual results may differ materially and adversely from our estimates. For a complete discussion of our significant critical accounting estimates, see the “Critical Accounting Estimates” section in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Annual Report on Form 10-K"). There were no significant changes to our critical accounting estimates during the three months ended March 31, 2025.
Recently Issued Accounting Standards
Refer to Part I, Item 1, Note 1 of the notes to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for our assessment of recently issued accounting standards.
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Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Act of 1934, as amended. The words “estimates,” “expects,” “anticipates,” “believes,” “forecasts,” “plans,” “intends,” “may,” “will,” “should,” “shall,” “outlook,” “guidance” and variations of these words and similar expressions identify forward-looking statements, which are generally not historical in nature and relate to expectations for future financial performance or business strategies or objectives. 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, the Company can give no assurance that any such forward-looking statement will materialize. Important factors that may affect actual results or outcomes include, among others:
•economic conditions and changes therein, including financial market conditions and levels of end market demand;
•our ability to effectively compete in the modular space and portable storage industries;
•our ability to effectively manage our credit risk, collect on our accounts receivable, or recover our rental equipment;
•laws and regulations governing antitrust, climate related disclosures, cybersecurity and information technology, privacy, government contracts, anti-corruption, and the environment;
•the actions of activist shareholders;
•our ability to successfully acquire and integrate new operations;
•risks associated with cybersecurity threats and IT systems disruptions, including our ability to manage the business in the event a cybersecurity incident or a disaster shuts down or materially impacts our management information systems;
•trade policies and changes in trade policies, including the imposition and enforcement of tariffs, trade restrictions, and broader economic measures and their consequences;
•fluctuations in interest rates and commodity prices;
•risks associated with labor relations, labor costs and labor disruptions;
•changes in the competitive environment of our customers as a result of the economic climate in which they operate and/or economic or financial disruptions to their industry;
•our ability to adequately protect our intellectual property and other proprietary rights that are material to our business;
•natural disasters and other business disruptions such as pandemics;
•our ability to establish and maintain the appropriate physical presence in our markets;
•property, casualty or other losses not covered by our insurance;
•our ability to close our unit sales transactions;
•our ability to maintain an effective system of internal controls and accurately report our financial results;
•evolving public disclosure, financial reporting, internal controls, and corporate governance expectations;
•our ability to achieve our environmental, social, and governance goals;
•operational, economic, political, and regulatory risks;
•effective management of our rental equipment;
•the effect of changes in state building codes on our ability to remarket our buildings;
•foreign currency exchange rate exposure;
•significant increases in the costs and restrictions on the availability of raw materials and labor;
•fluctuations in fuel costs or a reduction in fuel supplies;
•our reliance on third party manufacturers and suppliers;
•impairment of our goodwill, intangible assets and indefinite-life intangible assets;
•our ability to use our net operating loss carryforwards and other tax attributes;
•our ability to recognize deferred tax assets, such as those related to tax loss carryforwards, and utilize future tax savings;
•unanticipated changes in tax obligations, adoption of a new tax legislation, or exposure to additional income tax liabilities;
•our ability to access the capital and credit markets or the ability of key counterparties to perform their obligations to us;
•our ability to service our debt and operate our business;
•our ability to incur significant additional amounts of debt and avoid risks associated with substantial indebtedness;
•covenants that limit our operating and financial flexibility;
•our stock price volatility; and
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•such other risks and uncertainties described in the periodic reports we file with the SEC from time to time (including our 2024 Annual Report on Form 10-K), 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 undertakes no obligation, and 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.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to certain market risks from changes in foreign currency exchange rates and interest rates. Changes in these factors cause fluctuations in our earnings and cash flows. We evaluate and manage exposure to these market risks as follows:
Interest Rate Risk
We are primarily exposed to interest rate risk through our ABL Facility, which bears interest at variable rates. We had $1.5 billion in outstanding principal under the ABL Facility at March 31, 2025. To manage interest rate risk, in January 2024 and January 2023, respectively, we executed interest rate swap agreements relating to an aggregate of $500.0 million and $750.0 million in notional amount of variable-rate debt under our ABL Facility. The January 2024 and January 2023 swap agreements provide for us to pay effective fixed interest rates of 3.70% and 3.44% per annum, respectively, and receive a variable interest rate equal to one-month term SOFR, with maturity dates of June 30, 2027. After taking into account the impact of the swaps, an increase in interest rates by 100 basis points on our ABL Facility would have increased quarter to date interest expense by approximately $0.7 million based on outstanding borrowings at March 31, 2025.
Foreign Currency Risk
We currently generate approximately 95% of our consolidated net revenues in the US, and the reporting currency for our consolidated financial statements is the US dollar. However, we are exposed to currency risk through our operations in Canada and Mexico. For the operations outside the US, we bill customers primarily in their local currency, which is subject to foreign currency rate changes. As our net revenues and expenses generated outside of the US increase, our results of operations could be adversely impacted by changes in foreign currency exchange rates. Since we recognize foreign revenues in local foreign currencies, if the US dollar strengthens, it could have a negative impact on our foreign revenues upon translation of those results into the US dollar for consolidation into our financial statements.
In addition, we are exposed to gains and losses resulting from fluctuations in foreign currency exchange rates on transactions generated by our foreign subsidiaries in currencies other than their local currencies. These gains and losses are primarily driven by intercompany transactions and rental equipment purchases denominated in currencies other than the functional currency of the purchasing entity. These exposures are included in currency (gains) losses, net, on the consolidated statements of operations.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 as amended (the "Exchange Act") as of March 31, 2025. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2025.
Changes in Internal Controls
There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2025 that materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
ITEM 1. Legal Proceedings
The Company is involved in various lawsuits, claims and legal proceedings that arise in the ordinary course of business. The Company assesses these matters on a case-by-case basis as they arise and establishes reserves as required. As of March 31, 2025, with respect to these outstanding matters, the Company believes that the amount or range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on the consolidated financial position, results of operations, or cash flows of the Company. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties.
ITEM 1A. Risk Factors
The Company’s financial position, results of operations and cash flows are subject to various risks, many of which are not exclusively within the Company’s control, which may cause actual performance to differ materially from historical or projected future performance. In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Item 1A. of our 2024 Annual Report on Form 10-K, which have not materially changed, except as set forth below:
Trade policies and changes in trade policies, including the imposition of or increases in tariffs, their enforcement, downstream consequences, including any resulting changes in international trade relations, may materially adversely affect our business, results of operations, and outlook.
Tariffs and/or other developments with respect to trade policies, trade agreements and government regulations may materially adversely affect our business, financial condition and results of operations. From time to time, the US government has historically imposed and may in the future impose tariffs on steel, aluminum, lumber, and other imports from certain countries or countries generally, which could result in increased costs to us for these materials. Without limitation, (i) tariffs currently in place and (ii) the imposition by the federal government of new tariffs on imports to the US could materially increase (a) the cost of our products that we are offering for sale or lease, (b) the cost of certain products that we source from foreign manufacturers, and (c) the cost of certain raw materials or products that we utilize. We may not be able to pass such increased costs on to our customers, and we may not be able to secure sources of certain products and materials that are not subject to tariffs on a timely basis. The current US administration has implemented or increased, or announced plans to implement or increase tariffs, including on products manufactured in China, Canada, and Mexico, though it remains unclear what specific actions will be implemented or be maintained. The implementation or maintenance of tariffs announced to date or announced in the future, or any escalation of trade tensions, additional tariffs, retaliatory measures by foreign governments or shifts in US or international trade policies could increase uncertainty and adversely impact our supply chain, increase costs, and reduce demand for our products, directly or indirectly due to negative effects on our customers, the US economy, the economies of other countries in which we operate or the global economy, any or all of which developments may materially adversely affect our business, financial condition, and results of operations. Further, the duration and scope of these potential effects are unknown. Although we actively monitor our procurement policies and practices to avoid undue reliance on foreign goods subject to tariffs, when practicable, there is no assurance that any actions we implement as a result will allow us to avoid these potential effects.
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ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table summarizes our purchase of Common Stock during the first quarter of 2025.
Period | Total Number of Shares and Equivalents Purchased (in thousands) | Average Price Paid per Share | Total Number of Shares and Equivalents Purchased as part of Publicly Announced Plan (in thousands) | Maximum Dollar Value of Shares and Equivalents that May Yet Be Purchased Under the Plans (in millions) | |||||||||||||||||||
| January 1, 2025 to January 31, 2025 | — | $ | — | — | $ | 821.8 | |||||||||||||||||
| February 1, 2025 to February 28, 2025 | — | $ | — | — | $ | 821.8 | |||||||||||||||||
| March 1, 2025 to March 31, 2025 | 1,094.9 | $ | 29.21 | 1,094.9 | $ | 789.8 | |||||||||||||||||
| Total | 1,094.9 | 1,094.9 | |||||||||||||||||||||
A share repurchase program authorizes the Company to repurchase its outstanding shares of Common Stock. In September 2024, the Board of Directors approved a reset of the share repurchase program authorizing the Company to repurchase up to $1.0 billion of its outstanding shares of Common Stock. As of March 31, 2025, $789.8 million of the $1.0 billion share repurchase authorization remained available for use.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information
During the three months ended March 31, 2025, no director or Section 16 officer of the Company adopted terminated
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ITEM 6. Exhibits
| Exhibit No. | Exhibit Description | ||||
31.1* | |||||
31.2* | |||||
32.1** | |||||
32.2** | |||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | ||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||||
| 104* | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. | ||||
* Filed herewith
** Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange Act
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| WillScot Holdings Corporation | |||||||||||
By: | /s/ MATTHEW T. JACOBSEN | ||||||||||
Dated: | May 1, 2025 | Matthew T. Jacobsen | |||||||||
| Chief Financial Officer (Principal Financial Officer and Duly Authorized Signing Officer) | |||||||||||
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