WillScot Holdings Corporation

Welcome to the fourth quarter 2020 Will Scott Mobile Mini Earnings Conference Call. My name is Thea, and I will be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct the question and answer session. Please note that this conference is being recorded. I will now turn the call over to Nick Girardi, Director of Treasury and Investor Relations. Nick, you may begin.

Good morning, and welcome to the Will Scott Mobile Mini fourth quarter earnings call. Participants on today's call include Brad Soltz, Chief Executive Officer, Kelly Williams, President and Chief Operating Officer, and Tim Boswell, Chief Financial Officer. Today's presentation material may be found on the investor relations section of the Will Scott Mobile Mini website. Slide two contains our safe harbor statement. We will be making forward-looking statements during the presentation and our Q&A session. Our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control. As a result, our actual results may differ materially from today's comments. For a more complete description of factors that could cause actual results to differ and other possible risks, please refer to the Safe Harbor Statement in our presentation and our filings with the SEC. With that, I'll turn the call over to Brad Salt.

Thanks, Nick. Good morning, everyone, and thank you for joining us today. As you saw in our press release yesterday, Will Scott Mobile Mini had a tremendous and transformational 2020. Our team rose to a set of challenges unlike any we've tackled before, and I'm proud of and grateful for their efforts. From our safe and rapid response to COVID-19 pandemic to our transformational merger between Will Scott and Mobile Mini, our business, portfolio, and team demonstrated their resilience and ability to create value for all stakeholders, most importantly of which our customers. Now, before discussing earnings, and on behalf of the entire Will Scott Mobile Mini board, I'd like to start by thanking Kelly Williams for many contributions he's made as Mobile Mini CEO and Will Scott Mobile Mini COO. Kelly's decided to transition for our company in July. Kelly has built an incredible enterprise in Mobile Mini, and he was instrumental in planning and executing our integration. His impact will be felt for many years to come. I speak for everyone at Will Scott Mobile Mini when I express our gratitude for his leadership and partnership, and I wish him the best of luck as he pursues the next phase of his personal and professional journey. Now turning to page five of our presentation, as you know, we are a leading business services provider specializing in innovative, flexible workspace, and portable storage solutions. We serve diverse end markets across all sectors of the economy from a network of over 275 branch locations and additional drop lots in North America and UK. The business attributes listed here constitute a formula for sustained growth and returns, and we see clear evidence of each one in our fourth quarter results, which were outstanding. First, leasing revenues increased by 4% year-over-year on a pro forma basis in our North American modular and storage segments, illustrating the durability of our revenue streams. This was driven by a 13% year-over-year pricing and value-added products growth in the modular segment, illustrating the expanding value proposition that we offer our customers. Adjusted EBITDA of $180 million increased 8% and adjusted EBITDA margin of 41%, expanded 580 basis points versus prior year on a pro forma basis. Our sequential progression from the third quarter was exceptional, with a 190 basis points increase and adjusted EBITDA margin, all underpinned by continued VAPS penetration, core price increases, and stable units on rent. For the full year 2020, we generated $646 million, a pro forma adjusted EBITDA, an impressive achievement given the unprecedented operating environment. We also generated $87 million of free cash flow and a 20% free cash flow margin in the fourth quarter, well on our way to our target of $500 million of annual run rate free cash flow by the second half of 2022. Now, despite the pandemic and the major integration effort that is underway, our financial results have accelerated. And this is entirely due to the commitment and determination of the combined Will Scott Mobile Mini team. You have kept one another safe. You've executed at the highest level. You've always kept the customer first and are truly a best-in-class organization. Now, successful as 2020 was, I'm even more excited for our future. New order rates, pricing, and value-added products penetration continue to trend favorably across the portfolio. and we expect to deliver 6% revenue and 8% adjusted EBITDA growth organically at the midpoint of our 2021 guide. Tim will discuss guidance in detail later, but the key drivers of our business as well as our strategy are unchanged. Volumes are stable and expected to improve over the course of 2020. We have powerful tailwinds from pricing and value-added products. The benefit of M&A continues to flow to our bottom line, and we have an incredible opportunity to drive long-term growth and value creation for years to come simply by building upon the best practices that are already in place at Will Scott Mobile Mini. Page 11 begins to frame the opportunities that we see internally. Our portfolio of multi-year growth levers continues to expand. As premised in the merger announcement, we continue to optimize pricing across our fleet as we work to implement dynamic pricing, customer segmentation, and contract standardization across our segments. VAPS penetration continues to grow in the modular segment with a 13% increase in the last 12 months delivered VAPS rate versus those of the prior year. We have also now began to implement VAPS in the legacy mobile mini ground level offices and storage fleet. Through the course of the pandemic, our team has effectively offset the non-residential headwinds, by leveraging our unique value proposition to capture incremental demand across our diverse end markets as well as geographies, as well as we began sharing cross-selling and sharing leads across our storage and modular platforms. The combined talent and expertise of this sales force is absolutely one of our biggest competitive advantages. The expanding application of technology is helping us maximize cash flow, creating operational efficiencies and opportunities to further reduce costs. We are well on our way to integrating the legacy Will Scott and mobile mini back office infrastructure, which supports our cost synergies and back office efficiencies. Our system migration is on track for the first half of this year, and we have a growing list of operational improvement opportunities, which will continue to contribute to margin expansion in 2021 and future years. We will continue to deploy capital strategically. We use a rolling 90-day zero-based capital allocation process, which helps us react quickly to changes in customer demand, which you saw fully on display in the second and third quarter of last year. Based upon the demand we see today, our guidance implies that we intend to reinvest in growth in 2022. Our scale and organic initiatives enable us to drive value, and our successful M&A track record gives us confidence to continue to pursue accretive acquisitions. Finally, we'll continue to reduce leverage and return capital to shareholders. We reduced leverage to 3.8 turns in the fourth quarter, well on our way to a targeted range of 3 to 3.5 by the end of 2021. Our $250 million share repurchase authorization is in place, which we used in the fourth quarter to opportunistically repurchase $35 million of warrants and share equivalents. Now, moving to slide 12, leveraging our strong core values and the inherently sustainable value proposition in our temporary modular and storage solutions, we are developing our ESG roadmap. Our Chief Human Resource Officer, Hezron Lopez, is leading our ESG planning efforts in partnership with a recent addition to our team, Jamie Bohan. She's our vice president of ESG. Our board of directors is actively engaged in this process, and we'll share key focus areas in the 2021 proxy and a more comprehensive roadmap by this time next year. Our ESG strategy will align with our core values and our business strategy to drive both value and sustainability. Stay tuned for more to come over the next year. Turning to page four. I'm sorry, 14. Despite ongoing non-residential headwinds during the fourth quarter, we saw a 3% increase in year-over-year deliveries in our modular segment and only a 5% decrease in our monthly deliveries in the storage segment. Modular utilization was stable sequentially, and storage utilization increased year-over-year. Looking ahead, we expect modest sequential unit-owned rent growth across the portfolio as we continue to offset the non-residential construction headwinds by serving our customers' needs for additional space to accommodate screening and social distancing across our diverse end markets, as well as leveraging new opportunities, such as the support of vaccination distribution, return to schools across all of our geographies. Expected modest improvements in non-residential construction would result in modest year-over-year volume growth by the end of the year. Our branch network is ramping and staffed to support this demand, even as our corporate resources are laser-focused on integration. We have strong and sustainable tailwinds as pricing accelerated across both modular and storage segments, along with increased VAPS penetration. We've delivered the 13th consecutive quarter of double-digit modular price increases with a 13% year-over-year in the fourth quarter. In our North America storage segment, rental rates increased 3%, marking the 32nd consecutive quarter of year-over-year rental rate increases. And our U.K. segment continues to achieve outstanding results with an 18% year-over-year price increase. These fundamental improvements, underpinned by the outstanding financial results in the fourth quarter, form the foundation of our outlook heading into 2021, which Tim will further address. With that, I'll hand it over to Tim.