WillScot Holdings Corporation

Welcome to the fourth quarter 2025 Will Scott earnings conference call. My name is Cherie 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 Charlie Wohlhutter. Charlie, you may begin.

All right. Thank you, Cherie. Good afternoon, everyone, and welcome to our fourth quarter year-end 2025 earnings call. With me in the room today are Worthing Jackman, Executive Chairman, Tim Boswell, President and Chief Executive Officer, and Matt Jacobson, Chief Financial Officer. Today's presentation material may be found in our investor relations website at investors.willscott.com. Before we begin, I'd like to direct your attention to slide number two, containing our safe harbor statements. 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 comments made on today's call. For a more complete version of the factors that could cause actual results to differ and other possible risks, please refer to the Safe Harbor Statements in our presentation and our filings with the SEC. And now it's my pleasure to turn the call over to our president and new chief executive officer, Tim Boswell.

Thank you, Charlie, and good afternoon, everybody. We appreciate you joining us on today's call for a discussion of the operating environment, our strategic priorities, our fourth quarter 2025 results, and our outlook for 2026. I'd like to begin by saying that I'm grateful for and humbled by the opportunity to lead and support this remarkable company and its people on our next chapter of evolution. After spending considerable time across our operations in 2025, and as I approach my 14th anniversary with the company, I'm very excited about how we're positioned in the market, our talent level, the alignment of our team around priorities, and our culture and values that define how we show up every day for our customers and for one another. Today, our business is emerging from a period of rapid transformation with an opportunity to set a new standard of performance in our industry through focused execution of our strategy. As we will discuss today, we are beginning to see momentum from our commercial initiatives to improve local market execution, develop our enterprise accounts and industry verticals, and expand our more differentiated value-added offerings. We're backing this up with the strongest operational capabilities in the industry. Dependable execution is at the core of our right from the start value proposition. And we are executing a multi-year continuous improvement roadmap to further improve both our customer experience and our margins. This is a simple formula that builds upon the already outstanding financial characteristics of our business that include industry-leading free cash flow conversion and strong returns on capital. And while we have not assumed any turnaround for purposes of our guidance, we do see encouraging signs of progress across the business, and the entire organization is aligned to drive a return to growth and shareholder value creation. This obviously starts with stabilizing the top line. Matt will cover the details of our Q4 results. The total revenue is down 2% year over year in the quarter, excluding write-offs, with the decline nearly all attributable to lower seasonal storage demand from one customer. Revenue from modular products was effectively flat year over year, so the lease portfolio is stabilizing as a result of our initiatives, despite the continued contraction of non-residential square footage starts in Q4. Adjusted EBITDA of $250 million in the quarter was right on top of our guidance, although the 44% margin was a bit lower driven by the revenue mix and some SG&A items. Cash generation remained strong with $91 million of adjusted free cash flow in the quarter, and we returned $30 million to shareholders through share repurchases and our quarterly cash dividend, while reducing $41 million of debt balances. Capital allocation was balanced as we managed leverage prudently and prioritized opportunities with the strongest returns. And overall, there were no surprises in the quarter from my perspective, which is important as our team focuses on getting back to more consistent and dependable execution for shareholders. Looking ahead to 2026, our initial guidance is intentionally conservative, consistent with the approach that we articulated after the third quarter, and does not assume any improvement in business trends. Our internal plans and compensation targets comfortably exceed this outlook, although the market backdrop remains mixed, and we think the conservatism is prudent given our recent trends. That said, our top priority is returning the business to steady organic growth, and we believe there is a path to deliver positive organic revenue growth inflection in the second half of the year. And we're seeing early results from our initiatives that, if sustained, would get us there. First, entering 2026, sales staffing is up 13% year over year, and with greater tenure, stronger sentiment, and lower turnover across the sales organization. In Q4, we strengthened our regional sales management layer so that we have consistent oversight and accountability at the local level, clearly aligned incentives, and improved sales enablement systems. We absolutely have a productivity tailwind from this team, and I'm very happy with the changes that we've implemented. Second, enterprise accounts is accelerating with our focus on developing existing accounts and under-penetrated industry verticals. Enterprise account revenue was up 7% year-over-year for the full year in 2025, and up 10% year-over-year in Q4, excluding one large seasonal container customer. We expect to carry this momentum through 2026, delivering mid to high single-digit revenue growth from the enterprise portfolio. And third, our expanded offering and focus on the customer experience absolutely complement these efforts, giving us more ways to win on every opportunity, and in some cases, opening new opportunities that we may not have pursued historically. This is all consistent with what we shared in Q3, although we are a bit further along with the implementation and with clear visibility into the impact on our leading indicators. From an order perspective, our modular pending order book is up 17% year over year, with a significant impact from large RFP wins in the enterprise accounts portfolio, which are often tied to large project demands such as data centers, power generation, and large-scale manufacturing. This excludes demand related to the upcoming World Cup, which we expect will be an additional 2,000 units of demand in Q2 and Q3, albeit on short duration. If we exclude all enterprise account activity, modular pending orders are up 5% year-over-year, so we are seeing increasing order volumes across customer segments, and across all product lines within our modular offering. This is on the heels of 3% year-over-year activation growth in the fourth quarter on our modular products and with strong order growth continuing into January and February. We've also seen order rates on our portable storage product lines up 11% year-over-year over the last 13 weeks, with that growth all coming from RFP wins within enterprise accounts. including some shorter-duration retail store remodels. So it is good to see growth in the storage order rates, but it is not yet as broad-based as we are seeing in modular. So it is early in the year, though our commercial team is well-organized, and with a significant order backlog, we are increasingly focused on operational readiness to support demand and have three key initiatives in flight across our field and centralized operations. First, as Matt will discuss, We are advancing our network optimization plan following approval by the Board of Directors in December. This will allow us to exit surplus real estate positions and idle fleet while maintaining full service and coverage capabilities in all markets that we serve. Second, heading into Q2, we will be rolling out our enhanced scheduling and route optimization platform, which we expect will improve our dispatch function and transportation margins as well as customer service. And third, we're continuing to make improvements across our support center operations, resulting in accelerated cash collections, reduced day sales outstanding, and significant improvements in net promoter scores related to our invoicing and customer service functions. We prioritized each of these initiatives to improve efficiency and the customer experience. And these will be sources of operating leverage when activity levels pick up across the network, and reasons we're confident in our longer-term target range for EBITDA margins. Before I turn the floor over to Matt, I'd like to thank the entire Will Scott team again for their support through our recent leadership transition. Over the last several months, we have worked hard and collaboratively to align on our strategic priorities, and we have a shared understanding that our success will be defined by disciplined execution that delivers consistent, repeatable results across the organization. The initiatives we have in motion, from strengthening our go-to-market strategy to continuous improvement of our operations, create a pathway back to sustainable organic growth and shareholder value creation, which is our focus.