WillScot Holdings Corporation

Welcome to the second quarter 2022 Willscott Mobile Mini Earnings Conference call. My name is Paulie and I will be your operator for today's call. At this time, all participants are in 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, Senior Director of Treasury and Investor Relations. Nick, you may begin. Thank you.

Good morning and welcome to the Will Scott Mobile Mini second quarter 2022 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 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 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. With that, I'll turn the call over to Brad Saltz.

Thanks, Nick. Good morning, everyone, and thank you for joining us today. I'm Brad Saltz, CEO of Will Scott Mobile Mini. We continue to execute our idiosyncratic growth strategy across multiple organic and inorganic levers, irrespective of end markets. And this quarter was no exception. Before we dive into our performance in Q2, I'd like to start with our capital allocation. Capital allocation is fundamental to our strategy. From the board to our executive leadership team to our branches, our jobs are to identify opportunities where we can drive the greatest value and returns across our portfolio. This is not just financial capital. It is human capital. We have to orient over 5,000 colleagues and our supply chain partners across 300 locations towards the projects that have the biggest bang for their buck. It is an extreme luxury to have a plethora of opportunities in front of us that, if reliably executed, will continue to drive sustainable growth and returns irrespective of market conditions. First, and based on strong demands, we're fully funding organic CapEx. That means we're investing in new portable storage units, modular refurbishments, and our innovative Flex product and value-added products and services to keep pace with our demand. We anticipate landing about 13,000 new storage containers in 2022 and have increased modular production to support the increased modular deliveries, which were up 10% year over year. And following a successful rollout during the first half of the year, All of our storage branches can now offer VAPS furniture for our ground-level office fleet. Second, we're fully funding our tuck-in acquisition strategy. Over the last 12 months, we've acquired approximately 21,000 portable storage units and approximately 4,500 modular units, which demonstrates the scalability of our business. We expect that our tuck-in acquisitions from the last 12 months will contribute approximately 25 million of adjusted EBITDA year-over-year in 2022. So these are compounding powerfully with our organic growth initiatives and bring a host of other strategic, operational, and financial benefits. Finally, we've employed our share repurchase authorization to great effect. Over the last 12 months, we've repurchased $481 million of our common stock and stock equivalents. As of June 30th, 2022, That represents almost 7% of our market cap. Recognizing our compounding free cash flow, our board of directors proactively replenished our share repurchase authorization back up to one billion in July of 2022. We often talk about the trifecta as it relates to operations, specifically pricing, value-added products, and volumes. Well, there's also a trifecta for capital allocation. And over the last 12 months, we are right in line with that framework that we laid out in our investor day in November of 2021, with over $1.1 billion of capital generated and allocated to net capex, M&A, and returns to shareholders. Thank you for trusting us as stewards of your capital. Now focusing on Q2. Quotes and delivery levels were above prior year throughout the quarter for NA modular and NA storage. Modular volumes in NA modular were up 2.1% year-over-year and 2.4 percent year-to-date from the beginning of the year. About half of the year-to-date volume increase is organic, and the other half is from M&A. Portable storage units combined across North America modular and North America storage were up 24 percent year-over-year. In-market strength continues to be broad-based. The Architectural Building Index has now expanded for 17 months in a row, giving us confidence in the non-resi markets well into 2023. We've won multiple projects across our diverse end markets, both continued expansion with existing customers and orders from new customers for facility examples such as chip production, healthcare, and education. Retail remodels continue, and we are supporting incremental inventory storage needs to accommodate the unpredictable timelines between receipt and consumption of inventory. Manufacturing also remains strong, as we alluded to in the last quarter, partially driven by reshoring projects in the U.S. Combined with the immediate strength we're seeing in our year-over-year delivery volumes and all of our objective market indicators suggest end markets will remain supportive as we wrap up 22 and position for 23. And the multi-trillion dollar U.S. infrastructure bills would certainly further extend and provide additional tailwinds across our end markets starting in 2023. Again, regardless of in-market performance, we're taking practical steps to engage our customers with combined strength of Will Scott and Mobile Mini brands. We recently implemented strategies and tools to leverage our industry-leading data warehouse and transaction history to target cross-selling opportunities from our M&A transactions. And although we'll continue to improve the automation and lead sharing when we combine our two instances of selfforce.com in 2023, We're already seeing tangible results from our organic market penetration initiatives as evidence in the 24% growth in volumes of portable storage units in North America. Value-added products penetration is also expanding in North America modular and continues to roll out as planned under our mobile mini brand. In aggregate, representing a 500 million organic revenue opportunity that is entirely within our control. Tim's going to spend some time unpacking our rate performance during the quarter, but suffice it to say modular is progressing in line with historical performance, and our team continues to exceed our high expectations in storage. Given the predictability and lease duration in our portfolio, we'll enjoy the benefits from today's rate trajectory and our results for years to come. Finally, given our performance throughout the first half of 2022, we're raising our guidance by $40 million to adjusted EBITDA of $900 million to $940 million for 2022. At the midpoint, the new guidance represents a 24% increase relative to 2021. I'm thrilled with our team's performance and excited about our outlook for the remainder of the year and beyond. With that, I'll turn the call back to Tim.