WillScot Holdings Corporation

Welcome to the fourth quarter 2021 Will Scott Mabal Mini Earnings Conference Call. My name is Ruel and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Please note that this conference is being recorded. Now, I would like to turn over the call to Nick Girardi, Senior Director of Treasury and Investor Relations. Nick, you may begin.

Good morning and welcome to the Will Scott Mobile Mini fourth quarter 2021 earnings call. Participants on today's call include Brad Saltz, Chief Executive Officer, and Tim Boswell, President and 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 sessions. 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 the 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. One other item to note before I pass the mic to Brad. Going forward and based on feedback from the investment and analyst community, we will be moving our press release dates to Wednesday afternoons after market close and our conference call to Thursday mornings the following day. We typically target our earnings release 30 days after our quarter close and 60 days after our year end close, and we'll continue to notify you of these dates approximately two weeks in advance via press release. With that, I'll turn the call over to Brad Soltz.

Thanks, Nick. Good morning, everyone, and thank you for joining us today. I'm Brad Soltz, CEO of Will Scott Mobile Mini. Turning to slide five, we are a category of one, and we proved it yet again this year with excellent operating and financial results. Consistent with our ready-to-work value proposition, we extended our market leadership by executing on idiosyncratic growth initiatives with our two industry-leading brands, generating $1.9 billion of revenue 740 million of adjusted EBITDA, and over 300 million of free cash flow in 2021. This strong performance gave us full optionality for capital allocation. We returned 364 million to our shareholders via our 1 billion share repurchase authorization, reducing our economic share count by about 4% relative to the end of 2020. We acquired seven leading regional and local modular and storage companies, for $147 million, and we invested in our organic operations with $237 million of net capex. Proportionally, we allocated our capital spending about 50% to share repurchases, 20% to M&A, and 30% to net capex, which is in line with the framework we've presented at our inaugural Investor Day in November. In support of our financial metrics, we achieved several key strategic initiatives this year as well. In May, we migrated the legacy Will Scott operations onto legacy Mobile Mini's world-class ERP system. It was a labor of many nights and weekends to make this transition a success, both before and after implementation. The combined ERP is enabling the $50 million of cost synergies from the Will Scott Mobile Mini merger, which we are now harvesting. It opened the door to better inventory management, harmonization of our CRM platforms, and deployment of stronger business intelligence and data science capabilities, all of which are priorities in 2022, and present the next phase of optimization for our unique operating platform. And finally, we can even more seamlessly integrate acquisitions, which furthers our strategy to compound robust organic growth with a creative M&A. Now, about 10 months after GoLive, I'm pleased to repeat my comments from our second quarter call, We're one of the few companies to use the terms on-time, successful, and SAP in the same sentence. And speaking of M&A, we were busy in the second half of the year with seven tuck-in acquisitions. We added 15,700 storage units and about 5,800 modular units to our North America fleet, as well as over 100 employees to our high-performing organization, primarily in the field. Tim will spend more time here in his remarks, but suffice to say, that we know we are the best owner and operator of modular and storage assets in the markets we serve and are delighted with how immediately our new colleagues are embracing and extending our value proposition to the benefit of both new and existing customers. In addition to the new employees who joined our team via acquisitions, we expanded our team within our existing footprint. We are investing in our human capital across our organizational. Operationally, we are focused on career development, particularly for skilled trades and commercial truck drivers in our branch locations, as well as our diversity and inclusion initiatives at all levels. From a corporate perspective, we are targeting expertise in operations, sales, marketing, data analytics, and M&A to support our strategic growth initiatives. Our ESG program, which we deployed over the course of 2021, supports all of these efforts. Our products are inherently sustainable, and we are focused on reducing emissions and waste. We promote safety and inclusion and diversity because it's the right thing to do and for the benefit of our employees, our customers, and the communities within which we work. Our governance efforts are focused on risk management and improving board diversity, and we engage with owners of over 30% of our shares outstanding in 2021 on ESG matters, and we are committed to continue this engagement going forward. In 2022, we'll remain tactically focused on leveraging the growth initiatives that we highlighted in our Investor Day in November in order to drive substantial value creation for all stakeholders for years to come. Value-added products or services, or VAPs, will continue to anchor our unique value proposition. We'll continue to expand our offering in a modular, and we'll roll out our initial offering for portable storage units. As always, our offering is based on robust customer research, and demand. Our entire team is laser-focused on rate optimization, which you'll see in our Q4 to results across all segments. In 2022, I see particular opportunities as we harmonize CRMs, leverage our unrivaled transaction database, and build out our account management and vertical strategies. Complementing these changes, our data analytics are becoming ever more sophisticated and allowing us to target opportunities relentlessly and surgically at a local level while leveraging our national footprint and scale and supporting our market penetration objectives. Our M&A pipeline remains robust, so look for us to stay active in that space. And we are continuing to experience robust demand across the diverse end markets that we serve. Earlier this month, we gathered over 250 of our top storage and modular leaders for a business update and to ascertain that our human capital remains laser-focused on the highest-priority growth initiatives. Their enthusiasm for both the commercial and operating momentum with which we have entered 2022 and the long-term growth was flat-out infectious. I continue to be humbled by the caliber of the team we've assembled and have full confidence in their ability to continue to execute at the highest levels. 2022 will be yet another transformative year for Will Scott Mobility. But frankly, we're kind of used to that by now. We are progressing towards our 500 million free cash flow run rate milestone in the second half of the year and leading into 2023. As Tim characterized, it's a matter of when, not if, we eclipse the 1 billion EBITDA milestone, and our aspirations are far greater than that. We want to thank you again for another great quarter. We thank our employees and thank our customers for their continued support. Now, turning to slide 13, our portfolio of largely idiosyncratic growth levers altogether represent $1 billion of potential revenue growth. The anchor to that revenue growth stems from the continuation and expansion of the VAPS playbook, which we've been executing for decades and flowed through to EBITDA at 75% to 80%. Over the last 12 months, our North American modular segment achieved VAPS delivered rate of 393, up 26% year-over-year. VAPS has been a differentiator for our customers and relative to our competition, and there's not an end in sight. The convergence of the entire North America portfolio to this rate represents $150 million of organic revenue growth opportunity over three years. Further achievement of the $600 per unit per month milestone as laid out in November represents yet another $200 million of revenue and a very predictable and durable growth opportunity. We see a clear path to this milestone via thoughtful introduction of new products, increased penetration, rate optimization, and inventory management. As mentioned, we're also in the process of rolling out VAPs to our storage branches. By the end of 2022, every storage branch will have a VAPs offer for ground-level office, representing another $50 million of revenue opportunity. And I'm extremely excited about the initial customer interest in our VAPS offering for portable storage units, which represents another $50 million of incremental revenue, which will be piloted and launched in 2022. Altogether, VAPS alone represents a half a billion in revenue growth. Now, rate optimization is another key growth lever that goes hand-in-hand with VAPS. For the third consecutive quarter, North America modular average monthly rental rates increased by about 20% year-over-year, consistent with our prior quarter's Roughly 40% of that increase came from the continued VAPS penetration with the remainder from core pricing. This represents a 12% CAGR since 2017. In North America storage, average monthly rental rates for portable storage units increased 9% year-over-year, which is the largest increase on record. We are focusing on rates with new activations, product positioning, and aligning commercial best practices across the organization. We see continued opportunities for rate optimization across the portfolio of legacy acquired assets as we extend the deployment of our technology and tools. And we are extremely well positioned to benefit from the current macroeconomic backdrop of strong end markets coupled with continued supply chain constraints and our unrivaled market leadership position. We're equally confident in the additional growth associated with expanded market penetration, logistics, and M&A. This portfolio of growth is real, largely in our control, and we are investing financial and human capital with purpose accordingly. With that, I'll pass the call over to Tim.