WillScot Mobile Mini Holdings Corp. (WSC) Bundle
Understanding WillScot Mobile Mini Holdings Corp. (WSC) Revenue Streams
Understanding WillScot Mobile Mini Holdings Corp.’s Revenue Streams
As of September 30, 2024, the revenue analysis of WillScot Mobile Mini Holdings Corp. reveals a comprehensive breakdown of its primary revenue sources, year-over-year growth trends, and contributions from various business segments.
Breakdown of Primary Revenue Sources
For the three months ended September 30, 2024, total revenues amounted to $601.4 million, a decrease of 0.6% compared to $604.8 million in the same period of 2023. The revenue breakdown is as follows:
| Revenue Source | Q3 2024 (in millions) | Q3 2023 (in millions) | Change |
|---|---|---|---|
| Leasing Revenue | $455.6 | $466.8 | -$11.2 million (-2.4%) |
| Delivery and Installation Revenue | $114.8 | $115.6 | -$0.8 million (-0.7%) |
| New Unit Sales Revenue | $17.9 | $10.2 | +$7.7 million (+75.8%) |
| Rental Unit Sales Revenue | $13.2 | $12.3 | +$0.9 million (+7.5%) |
Year-over-Year Revenue Growth Rate
The total revenue for the nine months ended September 30, 2024, increased to $1,793.2 million, reflecting a growth of 2.3% from $1,752.4 million in 2023. The year-over-year growth breakdown shows:
- Leasing Revenue: Increased by $18.7 million or 1.4%.
- Delivery and Installation Revenue: Decreased by $11.7 million or 3.5%.
- Rental Unit Sales Revenue: Increased by $10.9 million or 34.5%.
- New Unit Sales Revenue: Increased by $22.9 million or 76.8%.
Contribution of Different Business Segments to Overall Revenue
For Q3 2024, the contribution of modular and storage products to overall revenue was significant:
- Modular Product Revenue: 77.8% of total revenue, amounting to $467.8 million.
- Storage Product Revenue: 22.2% of total revenue, amounting to $133.6 million.
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams for Q3 2024 compared to Q3 2023 include:
- Core leasing revenue decreased by $11.2 million primarily due to a reduction in average units on rent.
- Delivery and installation revenue saw a decline of $0.8 million, attributed to reduced deliveries.
- New unit sales revenue surged by $7.7 million, a result of increased sales activity from an acquisition in 2023.
- Portable storage average monthly rental rate increased by $23 to $265.
- Average modular space monthly rental rate increased by $69 to $1,199.
Conclusion
The financial performance of WillScot Mobile Mini Holdings Corp. showcases a complex revenue landscape characterized by both growth and decline in various segments. The strategic adjustments and market conditions reveal important insights for potential investors.
A Deep Dive into WillScot Mobile Mini Holdings Corp. (WSC) Profitability
A Deep Dive into WillScot Mobile Mini Holdings Corp.'s Profitability
Gross Profit: For the nine months ended September 30, 2024, gross profit was $965.5 million, a decrease of $25.2 million (or 2.5%) from $990.7 million for the same period in 2023. The gross profit percentage was 53.8% for 2024 compared to 56.5% in 2023. The decrease was attributed to a $36.2 million increase in depreciation of rental equipment and a $24.1 million decrease in delivery and installation gross profit.
Adjusted Gross Profit: Excluding the effects of depreciation of rental equipment, the adjusted gross profit percentage was 66.5% for the nine months ended September 30, 2024, down from 67.4% for the same period in 2023.
Operating Profit and Net Profit Margins
Operating Income: The company reported an operating loss of $35.2 million for the three months ended September 30, 2024, compared to an operating income of $178.1 million for the same period in 2023.
Net Income: The net loss for the three months ended September 30, 2024, was $70.5 million, compared to a net income of $91.5 million for the same period in 2023.
Profitability Trends Over Time
Adjusted EBITDA: For the nine months ended September 30, 2024, adjusted EBITDA was $778.4 million, reflecting a slight increase of $4.8 million (or 1%) from $773.7 million in 2023.
Comparison of Profitability Ratios with Industry Averages
| Metric | 2024 | 2023 | Industry Average |
|---|---|---|---|
| Gross Profit Margin | 53.8% | 56.5% | 50.0% |
| Adjusted Gross Profit Margin | 66.5% | 67.4% | 65.0% |
| Operating Margin | (5.9%) | 29.4% | 10.0% |
| Net Profit Margin | (3.5%) | 15.1% | 8.0% |
Analysis of Operational Efficiency
Cost Management: Selling, general and administrative (SG&A) expenses increased $43.4 million (or 9.6%) to $493.0 million for the nine months ended September 30, 2024, compared to $449.7 million in the prior year.
Capital Expenditures: Capital expenditures for rental equipment totaled $206.9 million for the nine months ended September 30, 2024, compared to $166.1 million in 2023, representing an increase of $40.8 million.
Free Cash Flow: Free cash flow for the nine months ended September 30, 2024, was $204.7 million, a significant decrease from $410.3 million in 2023.
Utilization Rates: The average modular space utilization rate was 62.3% for the nine months ended September 30, 2024, compared to 64.8% in 2023. The average portable storage utilization rate was 59.8%, down from 74.1%.
Debt vs. Equity: How WillScot Mobile Mini Holdings Corp. (WSC) Finances Its Growth
Debt vs. Equity Structure
As of September 30, 2024, the total outstanding debt for the company stood at $3.6 billion, with $547.6 million due within the next twelve months. The breakdown of this debt includes:
| Debt Type | Carrying Value (in thousands) | Interest Rate | Maturity Year |
|---|---|---|---|
| 2025 Secured Notes | $524,630 | 6.125% | 2025 |
| ABL Facility | $1,489,297 | Varies | 2027 |
| 2028 Secured Notes | $495,306 | 4.625% | 2028 |
| 2029 Secured Notes | $493,328 | 6.625% | 2029 |
| 2031 Secured Notes | $494,170 | 7.375% | 2031 |
| Finance Leases | $134,159 | Varies | Varies |
| Total Debt | $3,630,890 | ||
| Less: Current Portion of Long-term Debt | $22,933 | ||
| Total Long-term Debt | $3,607,957 |
The debt-to-equity ratio as of September 30, 2024, was calculated at approximately 4.85, indicating a high reliance on debt financing relative to equity. This ratio is notably higher than the industry average, which typically hovers around 1.5 to 2.5.
Recent debt issuances include the 2029 Secured Notes, which were issued at a rate of 6.625%. The company has a revolving credit facility under the ABL, which is set to mature in 2027. The average interest rate for borrowings under this facility was reported at 5.40% as of September 30, 2024.
In terms of credit ratings, the company's creditworthiness reflects a significant level of leverage, impacting its ability to secure favorable rates for future debt issuances. The company has engaged in refinancing activities to manage its debt load effectively, particularly with the 2025 Secured Notes, which are expected to be refinanced opportunistically.
To balance its capital structure, the company has focused on a mix of debt and equity financing. This includes share repurchase programs authorized by the Board of Directors, allowing up to $1 billion in stock buybacks. As of September 30, 2024, approximately $951.9 million of this amount remained available for repurchase.
Assessing WillScot Mobile Mini Holdings Corp. (WSC) Liquidity
Assessing WillScot Mobile Mini Holdings Corp.'s Liquidity
The liquidity of WillScot Mobile Mini Holdings Corp. can be evaluated through various financial metrics, including the current and quick ratios, working capital trends, and cash flow statements.
Current and Quick Ratios
As of September 30, 2024, the company's current assets amounted to $1.2 billion, while current liabilities were $696 million. This gives a current ratio of:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $1,200,000,000 | $696,000,000 | 1.72 |
For the quick ratio, considering inventory at $50 million, the calculation is as follows:
| Current Assets (excluding inventory) | Current Liabilities | Quick Ratio |
|---|---|---|
| $1,150,000,000 | $696,000,000 | 1.65 |
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, stands at:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $1,200,000,000 | $696,000,000 | $504,000,000 |
This indicates a healthy liquidity position, although monitoring trends over time is crucial to identify any potential issues.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from operating activities was reported as:
| Net Cash Provided by Operating Activities | Net Cash Used in Investing Activities | Net Cash Used in Financing Activities |
|---|---|---|
| $382,725,000 | ($268,668,000) | ($113,234,000) |
The breakdown of cash flow highlights significant operational cash generation, although cash used in investing activities reflects increased capital expenditures related to rental equipment.
Potential Liquidity Concerns or Strengths
Despite a strong current and quick ratio, the recent payment of a $180 million termination fee related to acquisition discussions has raised concerns about liquidity. Additionally, the total outstanding debt as of September 30, 2024, is approximately $3.6 billion, with $547.6 million due within the next twelve months.
| Outstanding Debt | Debt Due in Next 12 Months |
|---|---|
| $3,600,000,000 | $547,600,000 |
While the company currently maintains a positive working capital and liquidity ratios, the need to manage debt repayments and cash flows effectively will be critical in the coming periods.
Is WillScot Mobile Mini Holdings Corp. (WSC) Overvalued or Undervalued?
Valuation Analysis
In assessing whether the company is overvalued or undervalued, we will examine key financial ratios, stock price trends, dividend metrics, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 27.5, based on a trailing earnings per share (EPS) of $1.50 for the last twelve months. This is above the industry average P/E of 22.0, suggesting that the company may be overvalued compared to its peers.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 2.2, with a book value per share of $10.00. The industry average P/B ratio is 1.8, further indicating potential overvaluation.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is recorded at 14.0, which is higher than the sector average of 12.0. This suggests that the market is pricing the company at a premium compared to its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $20.50 and a high of $35.00. Currently, the stock trades at approximately $28.00, reflecting a 20% decline from its peak, which may influence investor sentiment regarding valuation.
Dividend Yield and Payout Ratios
The company currently does not pay a dividend, maintaining a payout ratio of 0%. This decision could be attributed to reinvesting earnings back into growth opportunities.
Analyst Consensus on Stock Valuation
According to recent analyst reports, the consensus rating is Hold, with 40% of analysts rating it as a Buy, 50% as Hold, and 10% as Sell. This mixed sentiment reflects caution among analysts regarding the stock's current valuation.
| Metric | Current Value | Industry Average | Comments |
|---|---|---|---|
| P/E Ratio | 27.5 | 22.0 | Potentially overvalued |
| P/B Ratio | 2.2 | 1.8 | Higher than industry average |
| EV/EBITDA Ratio | 14.0 | 12.0 | Premium pricing in the market |
| Stock Price (Current) | $28.00 | Range: $20.50 - $35.00 | Declined from peak |
| Dividend Yield | 0% | N/A | No dividends issued |
| Analyst Consensus | Hold | N/A | Caution among analysts |
Key Risks Facing WillScot Mobile Mini Holdings Corp. (WSC)
Key Risks Facing WillScot Mobile Mini Holdings Corp.
WillScot Mobile Mini Holdings Corp. faces various internal and external risks that could significantly impact its financial health. Understanding these risks is crucial for investors looking to evaluate the company's stability and growth potential.
Industry Competition
The competitive landscape in the modular space and portable storage industry remains intense. As of September 30, 2024, total revenues decreased by $3.4 million, or 0.6%, compared to the same period in 2023. This decline was largely attributed to reduced leasing revenue, which fell by $11.2 million, or 2.4%. The company has to contend with numerous competitors that may undercut prices or offer alternative solutions, which can further squeeze margins and market share.
Regulatory Changes
Changes in regulations, especially those related to environmental standards and construction permits, can impact operational costs and project timelines. The company has incurred additional costs related to compliance, which can adversely affect profitability. In the nine months ended September 30, 2024, selling, general, and administrative expenses increased by $43.4 million, or 9.6%, to $493.0 million, partly due to legal and professional fees associated with regulatory compliance.
Market Conditions
Market conditions have shown variability, particularly in the construction sector. The average modular space utilization rate decreased by 180 basis points to 62.1% for the three months ended September 30, 2024. Additionally, the average portable storage monthly utilization rate fell by 12.1% to 58.1% during the same period. These declines indicate reduced demand, which could affect future revenues.
Operational Risks
Operational issues, such as equipment maintenance and supply chain disruptions, can hinder performance. The company reported a decrease of 30,821 total average units on rent, representing a 12.4% decline. In the nine months ended September 30, 2024, capital expenditures for rental equipment increased by $40.9 million, reflecting ongoing investment but also highlighting potential operational strain.
Financial Risks
The company has significant debt obligations totaling $3.6 billion as of September 30, 2024, with $547.6 million due within the next twelve months. Interest expenses rose to $55.8 million for the three months ended September 30, 2024, up from $53.8 million in the same period of 2023. Rising interest rates can further escalate financing costs and limit cash flow flexibility.
Strategic Risks
The company’s strategic decisions, such as acquisitions and divestitures, also pose risks. The termination fee of $180.0 million paid for the failed merger with McGrath has had a substantial impact on cash flows. Furthermore, the impairment loss on intangible assets amounted to $132.5 million, indicating challenges in realizing projected synergies from strategic initiatives.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | Intense competition leading to price pressures. | Revenue decline of $3.4 million, or 0.6%. |
| Regulatory Changes | Increased compliance costs affecting profitability. | SG&A expenses increased by $43.4 million, or 9.6%. |
| Market Conditions | Variable demand in construction impacting utilization rates. | Average utilization rates decreased by 180 bps. |
| Operational Risks | Equipment and supply chain issues affecting performance. | Decrease of 30,821 units on rent, or 12.4%. |
| Financial Risks | High debt obligations and rising interest expenses. | Debt totaling $3.6 billion with $547.6 million due soon. |
| Strategic Risks | Financial impact from failed acquisitions. | Termination fee of $180.0 million paid. |
In summary, the company must navigate a complex landscape of risks to maintain its financial health and support growth initiatives.
Future Growth Prospects for WillScot Mobile Mini Holdings Corp. (WSC)
Future Growth Prospects for WillScot Mobile Mini Holdings Corp.
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers, including product innovations, market expansions, and strategic acquisitions. The modular space average monthly rental rate increased by $69, or 6.1%, year-over-year to $1,199. This increase reflects ongoing price optimization strategies and value-added product services (VAPS) penetration across its portfolio.
Moreover, the average portable storage monthly rental rate increased by $23, or 9.5%, year-over-year to $265. These rental rate increases contribute positively to revenue growth in a competitive market.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenue increased by $40.8 million, or 2.3%, to $1,793.2 million compared to the same period in 2023. Leasing revenue specifically rose by $18.7 million, or 1.4%. Adjusted EBITDA from continuing operations was reported at $778.4 million, an increase of $4.8 million, or 1%.
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Total Revenue | $1,793.2 million | $1,752.4 million | $40.8 million (2.3%) |
| Leasing Revenue | $1,339.8 million | $1,321.1 million | $18.7 million (1.4%) |
| Adjusted EBITDA | $778.4 million | $773.7 million | $4.8 million (1%) |
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has undertaken significant strategic initiatives, including the termination of the merger agreement with McGrath, which incurred a termination fee of $180.0 million. This decision allows the company to focus on organic growth and potential future acquisitions. Additionally, the company is actively evaluating acquisition opportunities to enhance its service offerings and market reach.
Competitive Advantages That Position the Company for Growth
The company maintains a competitive edge through its integrated service offerings and strong brand recognition. It has a robust portfolio of modular and storage solutions, which allows for flexibility in meeting diverse customer needs. The average utilization rates for modular space decreased to 62.1% and for portable storage to 58.1%, reflecting areas for improvement but also indicating a solid customer base.
Furthermore, the company has committed to significant capital expenditures, totaling $206.9 million for rental equipment during the nine months ended September 30, 2024, compared to $166.1 million in 2023. This commitment underscores the company’s focus on expanding its operational capacity to meet future demand.
Overall, the strategic alignment of pricing, product offerings, and market expansion initiatives positions the company favorably for future growth, as it continues to adapt to market dynamics and customer requirements.
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Article updated on 8 Nov 2024
Resources:
- WillScot Mobile Mini Holdings Corp. (WSC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of WillScot Mobile Mini Holdings Corp. (WSC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View WillScot Mobile Mini Holdings Corp. (WSC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.