WillScot Holdings Corporation

Welcome to the third quarter 2023 Will Scott Mobile Mini Earnings Conference Call. My name is Tanya, 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. I will now turn the call over to Nick Girardi, Senior Director of Treasury and Investor Relations. Nick, you may begin.

Good morning, and welcome to the Will Scott Mobile Mini third quarter 2023 earnings call. Participants on today's call include Brad Soltz, 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 2 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. Thank you for joining us today. I'm Brad Soltz, Chief Executive Officer of Will Scott Mobile Mini. Starting on slide 16, our company is delivering record financial performance. Revenue, adjusted EBITDA, margins, free cash flow, and return on invested capital are at their highest levels in our history. Our strong return profile and cash flow generation are driven by consistent execution by our team, as well as the many idiosyncratic levers that we've built into our portfolios. We have multiple ways to win in any macro environment, which makes our financial performance very predictable. Over the last 12 months, we've generated almost $3 of free cash flow per share. And using our share repurchase authorization, we've reduced our economic share count by 9.2 percent over the last 12 months and by nearly 20 percent over the last three years. We believe the combination of capital allocation and our continued operational execution represents a reliable formula to deliver consistent compound returns to our long-term shareholders over time. Now, when I'm thinking about investing in our company, my thesis comes down to three main points. First, our $1 billion of idiosyncratic and very predictable growth levels are largely within our control. Keep in mind that we initially defined this $1 billion growth level portfolio in late 2021, and it is still a $1 billion portfolio. Meanwhile, we've been consistently harvesting and reloading it whilst we've grown EBITDA by over 300 million. And you'll recall that our ever-expanding VAPS portfolio represents 500 million, or about half of this portfolio. Among other points that Tim will highlight later, I was pleased to see our most recent modular VAPS deliver rates inflect strongly following the CRM changes we implemented in August. Second, our disciplined approach to capital allocation drives returns with accretive organic and inorganic investments, which we can execute while returning excess capital to shareholders. And third, given our visibility into free cash flow, we're confident that we'll surpass our next milestone of $4 of free cash flow in the coming years. Speaking of investments in the future, we extended our offering of space solutions with several exciting acquisitions in the recent month. In Q3, we built out our cold storage leasing platform, and are now the North America leader in that business. And in October, we acquired a provider of premium large clear span structures, which will allow us to offer even larger and more flexible spaces to customers across almost all of our end markets. All these capabilities are simply extensions of the spectrum of space solutions that we can provide our customers. Both businesses are rapidly growing in high value segments of supply chain and expand our total addressable market creating even more opportunities to serve our customers, our current customers and new customers, as the only total space solution provider in North America. We expect to grow both businesses meaningful by leveraging our core competencies in pricing, value-added products, operational excellence, and M&A. And the addition of these capabilities highlights the scalability of our platform, given our significant technology investments over the past few years. It goes without saying we're very excited that the potential of these platforms will provide for additional growth levers above and beyond the $1 billion idiosyncratic growth levers, which are already in flight. And we look forward to talking about these in greater detail on our upcoming Investor Day. To that end, I'm excited to share that we'll be holding our second Investor Day in March of 2024. Our company has outperformed or is accelerating towards all of the milestones we set in our last Investor Day. We have high confidence in our $1 billion of aforementioned growth levers. In March, we'll describe next milestones on our growth trajectory. It's pretty obvious that we have upside in many of our key metrics. For example, the midpoint of our guidance this year suggests 44.5% adjusted EBITDA margin, which is at the high end of our 40% to 45% operating target range. Similarly, return on invested capital is at 18% over the last 12 months. well above the 10% to 15% operating range that we thought was reasonable in late 2021. Coinciding with this investor day, we will also plan on issuing our inaugural sustainability report. Now, touching briefly on end markets, the market environment is largely unchanged from our Q2 expectations. The modular segment is performing a bit better relative to our assumptions, while the storage segment is just a bit worse. Modular segment quoting has remained up 9% year over year, although conversion to activations has remained a bit slower. The modular segment added modular units on rent through Q3. Storage units on rent dropped by approximately 2% during the quarter before beginning to increase in October. Altogether, this paints a stable picture as we look into 2024. And the mixed shift in non-residential starts activity favoring larger-scale industrial projects place to our strengths from a competitive standpoint. Finally, let me reiterate how excited I am for 2024 and beyond. We're closing out 2023 on a strong foundation, and we spent the last 18 months thinking about the next horizon of our growth trajectory. That's a fun job when there are so many opportunities for value generation as there are in our business, made even more so by the quality, creativity, and diligence of our team. We look forward to sharing those details with you in New York in March. With that, I'll hand it over to Tim.