WillScot Mobile Mini Holdings Reports Third Quarter 2022 Results
Commercial Momentum Continues and Divestiture Proceeds Reinvested to Compound Growth
- Execution across organic and inorganic growth levers in continuing operations resulted in third quarter revenue of
$604 million , income from continuing operations of$86 million and Adjusted EBITDA of$251 million . These results exclude our prior Tank and Pump segment, which was divested onSeptember 30 th and is reported as discontinued operations in all periods. Including results from discontinued operations, net income was$129 million and Adjusted EBITDA was$264 million . - Adjusted EBITDA Margin from continuing operations of 41.6% expanded 270 basis points year-over-year.
- Generated $210 million of Cash From Operations and $83 million of Free Cash Flow in the quarter, up 61.3% and 6.2% respectively, year-over-year, with Free Cash Flow Margin of 12% over the last twelve months.
- Closed four acquisitions of regional and local storage and modular companies in Q3 2022 and 13 acquisitions in the last twelve months with consistent pipeline heading into 2023.
- Returned
$197 million to shareholders by repurchasing 5.3 million shares of Common Stock during the quarter, reducing economic share count by 6.4% over the last twelve months as ofSeptember 30, 2022 1. - Reduced leverage to 3.4x Net Debt to LTM Adjusted EBITDA.
- Updated full-year 2022 Adjusted EBITDA outlook range from continuing operations to between
$910 million and$930 million , representing 30% to 33% growth versus 2021.
Soultz continued, "The consistent, compounding growth of our core segments and the successful divestiture of the Tank and Pump segment during the quarter together reduced leverage from 3.7x in Q2 to 3.4x in Q3 and comfortably within our target 3.0x - 3.5x range. The capital from the divestiture is already being redeployed consistent with our capital allocation framework, including re-investment in our Modular and Storage segments, continued M&A, and returns to shareholders."
Soultz concluded, "With Adjusted EBITDA from continuing operations of
Three Months Ended |
Nine Months Ended |
||||||||||||||
(in thousands, except share data) | 2022 | 2021 | 2022 | 2021 | |||||||||||
Revenue | $ | 604,173 | $ | 461,047 | $ | 1,632,339 | $ | 1,295,634 | |||||||
Income from continuing operations | $ | 85,728 | $ | 57,113 | $ | 200,099 | $ | 75,278 | |||||||
Adjusted EBITDA2 | $ | 251,339 | $ | 179,203 | $ | 652,529 | $ | 499,359 | |||||||
Adjusted EBITDA Margin (%)2 | 41.6 | % | 38.9 | % | 40.0 | % | 38.5 | % | |||||||
Net cash provided by operating activities | $ | 210,385 | $ | 130,447 | $ | 544,238 | $ | 392,055 | |||||||
Free Cash Flow2,5 | $ | 83,386 | $ | 78,493 | $ | 207,428 | $ | 251,709 | |||||||
Fully Diluted Shares Outstanding | 217,927,725 | 231,868,397 | 223,933,319 | 234,084,800 | |||||||||||
Free Cash Flow Margin (%)2,5 | 13.1 | % | 16.0 | % | 12.0 | % | 18.3 | % | |||||||
Return on |
16.3 | % | 12.7 | % | 14.2 | % | 11.1 | % |
Three Months Ended |
Nine Months Ended |
||||||||||
Adjusted EBITDA by Segment (in thousands)2 | 2022 | 2021 | 2022 | 2021 | |||||||
NA Modular | $ | 140,673 | $ | 106,825 | $ | 372,502 | $ | 307,741 | |||
NA Storage | 98,695 | 59,123 | 243,282 | 154,971 | |||||||
11,971 | 13,255 | 36,745 | 36,647 | ||||||||
Consolidated Adjusted EBITDA | $ | 251,339 | $ | 179,203 | $ | 652,529 | $ | 499,359 |
Third Quarter 2022 Results2
Boswell continued, "With the close of the Tank and Pump divestiture, we reduced leverage to 3.4x, which when combined with the expected predictable growth of our cash flows heading into 2023 gives us extraordinary capital allocation flexibility. In the third quarter, we continued to invest organically in storage fleet, modular refurbishments, and VAPS. We invested
Boswell concluded, "Given our performance year to date and excluding results from the divested Tank and Pump segment, we are raising our full year guidance for our continuing operations to
Consolidated Q3 2022 Results
- Revenue of
$604.2 million increased by 31.1% year-over-year due to organic revenue growth levers in the business and due to the impact of acquisitions. Recent acquisitions contributed approximately$22.4 million to total revenues. - Adjusted EBITDA of
$251.3 million increased by 40.2% year-over-year and Consolidated Adjusted EBITDA margin of 41.6% increased by 270 basis points year-over-year due to strong pricing and volume trends and an 870 basis point expansion of delivery and installation margins, partially offset by increased variable leasing costs from higher activity levels, as well as continuing inflationary pressures. - Including results from discontinued operations, Adjusted EBITDA was
$264.4 million .
NA Modular
- Revenue of
$375.4 million increased by 25.5% year-over-year.- Average modular space monthly rental rate increased
$157 year-over-year, or 18.8%, to$991 . - Average modular space units on rent increased 3,146 units year-over-year, or 3.7%, to 87,364. Units on rent have grown 5.1% year-to-date from
12/31/2021 to 9/30/2022 , which has been split evenly between organic growth and via acquisition. - Value Added Products (VAPS) average monthly rate, a component of average modular space monthly rental rate above, increased
$56 year-over-year, or 24%, to$287 . For delivered units over the last 12 months, VAPS average monthly rate increased$57 year-over-year, or 15%, to$439 .
- Average modular space monthly rental rate increased
- Adjusted EBITDA of
$140.7 million increased by 31.8% year-over-year and Adjusted EBITDA Margin of 37.5% expanded by 176 basis points.
NA Storage
- Revenue of
$202.6 million increased by 51.3% year-over-year.- Average portable storage monthly rental rate increased
$42 year-over-year, or 27.1%, to$197 . - Average portable storage units on rent increased by 38,823 units year-over-year, or 28.3%, to 175,946. Of this increase, approximately 19,000 of the units on rent increase was driven by organic volume growth. The remainder of the increase was driven by the acquisition of approximately 20,000 average units on rent from Q4 2021 to Q3 2022.
- Average portable storage monthly rental rate increased
- Adjusted EBITDA of
$98.7 million increased by 66.9% year-over-year and Adjusted EBITDA Margin of 48.7% expanded by 455 basis points.
- Revenue of
$26.2 million decreased 6.8% year-over-year and Adjusted EBITDA of$12.0 million decreased by 9.8%, driven entirely by the weakening of the British Pound relative to the US Dollar. In local currency, revenue increased 9.1% year-over-year, driven by a 13.6% increase in portable storage average monthly rental rates and an 8.4% increase in average portable storage units on rent, and Adjusted EBITDA increased by 5.7% year-over-year.
Tank and Pump (Discontinued Operations)
- Completed divestiture of Tank and Pump segment effective
September 30, 2022 . Earnings from the Tank and Pump segment are reported as discontinued operations in the third quarter of 2022 and all prior periods. Proceeds from the sale, valued at approximately$323 million , were used to reduce the outstanding balance on our asset backed revolving credit facility and pay off related capital leases. The divestiture resulted in a one-time gain on sale of discontinued operations of$34.0 million in the quarter.
Capitalization and Liquidity Update2
As of
- Repurchased 5.3 million shares of Common Stock for
$197 million in the third quarter 2022, contributing to a 6.4% reduction in our economic share count over the last twelve months. - Maintained
$1 .1 billion of excess availability under the asset-backed revolving credit facility; a flexible covenant structure and expected free cash flow acceleration will provide ample liquidity to fund multiple capital allocation priorities. - As of
September 30, 2022 , weighted average interest rate was approximately 4.75% and annual cash interest expense based on the current debt structure and benchmark rates was approximately$142 million . - No debt maturities prior to 2025.
- Reduced leverage to 3.4x last twelve months Adjusted EBITDA from continuing operations of
$852 million , within our target range of 3.0x to 3.5x, while supporting strong organic demand, executing four tuck-in transactions, and repurchasing shares.
2022 Outlook 2, 3, 4
This guidance is subject to risks and uncertainties, including those described in "Forward-Looking Statements" below.
$M | 2021 Results Including T&P |
Previous ' 22 Outlook Including T&P for FY'22 |
Current '22 Outlook Including T&P for FY'22 |
2021 Results Excluding T&P |
Current '22 Outlook Excluding T&P for FY'22 |
||
Revenue | |||||||
Adjusted EBITDA2,3 | |||||||
Net CAPEX3,4 |
1 - Assumes common shares outstanding plus treasury stock method from warrants outstanding as of
2 - Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Free Cash Flow Margin, and Return on
3 - Information reconciling forward-looking Adjusted EBITDA and Net CAPEX to GAAP financial measures is unavailable to the Company without unreasonable effort and therefore no reconciliation to the most comparable GAAP measures is provided.
4 - Net CAPEX is a non-GAAP financial measure. Please see the non-GAAP reconciliation tables included at the end of this press release.
5 - Free Cash Flow incorporates results from discontinued operations. For comparability, reported revenue is adjusted to include results from discontinued operations to calculate Free Cash Flow Margin.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Free Cash Flow Margin, Return on
Information reconciling forward-looking Adjusted EBITDA to GAAP financial measures is unavailable to the Company without unreasonable effort. We cannot provide reconciliations of forward-looking Adjusted EBITDA to GAAP financial measures because certain items required for such reconciliations are outside of our control and/or cannot be reasonably predicted, such as the provision for income taxes. Preparation of such reconciliations would require a forward-looking balance sheet, statement of income and statement of cash flow, prepared in accordance with GAAP, and such forward-looking financial statements are unavailable to the Company without unreasonable effort. Although we provide a range of Adjusted EBITDA that we believe will be achieved, we cannot accurately predict all the components of the Adjusted EBITDA calculation. The Company provides Adjusted EBITDA guidance because we believe that Adjusted EBITDA, when viewed with our results under GAAP, provides useful information for the reasons noted above.
Conference Call Information
About
Forward-Looking Statements
This press release contains forward-looking statements (including the guidance/outlook contained herein) within the meaning of the
Additional Information and Where to Find It
Additional information can be found on the company's website at www.willscotmobilemini.com.
Contact Information | ||
Investor Inquiries: | Media Inquiries: | |
investors@willscotmobilemini.com | jetaylor@willscotmobilemini.com | |
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended |
Nine Months Ended |
||||||||||||
(in thousands, except share and per share data) | 2022 | 2021 | 2022 | 2021 | |||||||||
Revenues: | |||||||||||||
Leasing and services revenue: | |||||||||||||
Leasing | $ | 447,535 | $ | 342,599 | $ | 1,226,206 | $ | 965,894 | |||||
Delivery and installation | 132,837 | 91,910 | 341,027 | 252,914 | |||||||||
Sales revenue: | |||||||||||||
New units | 9,901 | 15,370 | 26,232 | 35,915 | |||||||||
Rental units | 13,900 | 11,168 | 38,874 | 40,911 | |||||||||
Total revenues | 604,173 | 461,047 | 1,632,339 | 1,295,634 | |||||||||
Costs: | |||||||||||||
Costs of leasing and services: | |||||||||||||
Leasing | 111,898 | 77,967 | 288,774 | 222,747 | |||||||||
Delivery and installation | 95,680 | 74,221 | 256,130 | 209,963 | |||||||||
Costs of sales: | |||||||||||||
New units | 6,007 | 11,175 | 15,469 | 24,322 | |||||||||
Rental units | 7,097 | 5,468 | 21,123 | 22,441 | |||||||||
Depreciation of rental equipment | 69,159 | 52,990 | 192,228 | 165,027 | |||||||||
Gross profit | 314,332 | 239,226 | 858,615 | 651,134 | |||||||||
Expenses: | |||||||||||||
Selling, general and administrative | 145,444 | 127,346 | 445,319 | 356,651 | |||||||||
Other depreciation and amortization | 17,066 | 16,459 | 50,895 | 51,793 | |||||||||
Lease impairment expense and other related charges | — | 601 | 254 | 2,328 | |||||||||
Restructuring costs | — | 1,856 | (86 | ) | 11,956 | ||||||||
Currency losses, net | 236 | 127 | 247 | 196 | |||||||||
Other (income) expense, net | (2,526 | ) | 1,475 | (7,642 | ) | 202 | |||||||
Operating income | 154,112 | 91,362 | 369,628 | 228,008 | |||||||||
Interest expense | 38,165 | 29,006 | 102,362 | 87,793 | |||||||||
Fair value loss on common stock warrant liabilities | — | — | — | 26,597 | |||||||||
Loss on extinguishment of debt | — | — | — | 5,999 | |||||||||
Income from continuing operations before income tax | 115,947 | 62,356 | 267,266 | 107,619 | |||||||||
Income tax expense from continuing operations | 30,219 | 5,243 | 67,167 | 32,341 | |||||||||
Income from continuing operations | 85,728 | 57,113 | 200,099 | 75,278 | |||||||||
Discontinued operations: | |||||||||||||
Income from discontinued operations before income tax | 10,802 | 5,391 | 24,488 | 14,255 | |||||||||
Income tax expense from discontinued operations | 1,986 | 1,401 | 5,496 | 3,612 | |||||||||
Gain on sale of discontinued operations | 34,049 | — | 34,049 | — | |||||||||
Income from discontinued operations | 42,865 | 3,990 | 53,041 | 10,643 | |||||||||
Net income | $ | 128,593 | $ | 61,103 | $ | 253,140 | $ | 85,921 | |||||
Earnings per share from continuing operations: | |||||||||||||
Basic | $ | 0.40 | $ | 0.25 | $ | 0.91 | $ | 0.33 | |||||
Diluted | $ | 0.39 | $ | 0.24 | $ | 0.89 | $ | 0.32 | |||||
Earnings per share from discontinued operations: | |||||||||||||
Basic | $ | 0.20 | $ | 0.02 | $ | 0.24 | $ | 0.05 | |||||
Diluted | $ | 0.20 | $ | 0.02 | $ | 0.24 | $ | 0.05 | |||||
Earnings per share: | |||||||||||||
Basic | $ | 0.60 | $ | 0.27 | $ | 1.15 | $ | 0.38 | |||||
Diluted | $ | 0.59 | $ | 0.26 | $ | 1.13 | $ | 0.37 | |||||
Weighted average shares: | |||||||||||||
Basic | 213,636,876 | 225,998,202 | 219,312,260 | 227,557,664 | |||||||||
Diluted | 217,927,725 | 231,868,397 | 223,933,319 | 234,084,800 |
Unaudited Segment Operating Data
Comparison of Three Months Ended
Three Months Ended |
|||||||||||||||
(in thousands, except for units on rent and rates) | NA Modular | NA Storage | Total | ||||||||||||
Revenue | $ | 375,364 | $ | 202,645 | $ | 26,164 | $ | 604,173 | |||||||
Gross profit | $ | 156,852 | $ | 141,035 | $ | 16,445 | $ | 314,332 | |||||||
Adjusted EBITDA | $ | 140,673 | $ | 98,695 | $ | 11,971 | $ | 251,339 | |||||||
Capital expenditures for rental equipment | $ | 81,052 | $ | 41,246 | $ | 4,605 | $ | 126,903 | |||||||
Average modular space units on rent | 87,364 | 18,052 | 8,569 | 113,985 | |||||||||||
Average modular space utilization rate | 67.8 | % | 73.7 | % | 71.5 | % | 68.9 | % | |||||||
Average modular space monthly rental rate | $ | 991 | $ | 746 | $ | 391 | $ | 907 | |||||||
Average portable storage units on rent | 556 | 175,946 | 27,794 | 204,296 | |||||||||||
Average portable storage utilization rate | 63.1 | % | 88.8 | % | 89.7 | % | 88.9 | % | |||||||
Average portable storage monthly rental rate | $ | 227 | $ | 197 | $ | 88 | $ | 182 |
Three Months Ended |
|||||||||||||||
(in thousands, except for units on rent and rates) | NA Modular | NA Storage | Total | ||||||||||||
Revenue | $ | 299,051 | $ | 133,897 | $ | 28,099 | $ | 461,047 | |||||||
Gross profit | $ | 127,854 | $ | 92,496 | $ | 18,876 | $ | 239,226 | |||||||
Adjusted EBITDA | $ | 106,825 | $ | 59,123 | $ | 13,255 | $ | 179,203 | |||||||
Capital expenditures for rental equipment | $ | 31,789 | $ | 11,920 | $ | 11,649 | $ | 55,358 | |||||||
Average modular space units on rent | 84,218 | 16,316 | 9,298 | 109,832 | |||||||||||
Average modular space utilization rate | 67.6 | % | 77.6 | % | 83.4 | % | 70.1 | % | |||||||
Average modular space monthly rental rate | $ | 834 | $ | 602 | $ | 454 | $ | 767 | |||||||
Average portable storage units on rent | 493 | 137,123 | 25,632 | 163,248 | |||||||||||
Average portable storage utilization rate | 48.0 | % | 83.2 | % | 89.1 | % | 83.9 | % | |||||||
Average portable storage monthly rental rate | $ | 179 | $ | 155 | $ | 90 | $ | 145 |
Comparison of Nine Months Ended
Nine Months Ended |
|||||||||||||||
(in thousands, except for units on rent and rates) | NA Modular | NA Storage | Total | ||||||||||||
Revenue | $ | 1,022,720 | $ | 529,347 | $ | 80,272 | $ | 1,632,339 | |||||||
Gross profit | $ | 439,573 | $ | 367,585 | $ | 51,457 | $ | 858,615 | |||||||
Adjusted EBITDA | $ | 372,502 | $ | 243,282 | $ | 36,745 | $ | 652,529 | |||||||
Capital expenditures for rental equipment | $ | 221,111 | $ | 95,699 | $ | 21,824 | $ | 338,634 | |||||||
Average modular space units on rent | 86,310 | 18,223 | 8,470 | 113,003 | |||||||||||
Average modular space utilization rate | 67.5 | % | 74.7 | % | 72.0 | % | 68.9 | % | |||||||
Average modular space monthly rental rate | $ | 936 | $ | 673 | $ | 409 | $ | 853 | |||||||
Average portable storage units on rent | 498 | 161,331 | 27,612 | 189,441 | |||||||||||
Average portable storage utilization rate | 56.5 | % | 86.0 | % | 89.8 | % | 86.4 | % | |||||||
Average portable storage monthly rental rate | $ | 201 | $ | 184 | $ | 92 | $ | 171 |
Nine Months Ended |
|||||||||||||||
(in thousands, except for units on rent and rates) | NA Modular | NA Storage | Total | ||||||||||||
Revenue | $ | 854,657 | $ | 357,439 | $ | 83,538 | $ | 1,295,634 | |||||||
Gross profit | $ | 356,992 | $ | 240,836 | $ | 53,306 | $ | 651,134 | |||||||
Adjusted EBITDA | $ | 307,741 | $ | 154,971 | $ | 36,647 | $ | 499,359 | |||||||
Capital expenditures for rental equipment | $ | 120,288 | $ | 24,165 | $ | 22,645 | $ | 167,098 | |||||||
Average modular space units on rent | 84,589 | 16,371 | 9,256 | 110,216 | |||||||||||
Average modular space utilization rate | 67.6 | % | 78.5 | % | 83.8 | % | 70.2 | % | |||||||
Average modular space monthly rental rate | $ | 790 | $ | 570 | $ | 428 | $ | 727 | |||||||
Average portable storage units on rent | 9,566 | 118,598 | 25,284 | 153,448 | |||||||||||
Average portable storage utilization rate | 64.1 | % | 78.0 | % | 90.0 | % | 78.7 | % | |||||||
Average portable storage monthly rental rate | $ | 129 | $ | 152 | $ | 86 | $ | 140 |
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share data) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 15,442 | $ | 12,699 | ||||
Trade receivables, net of allowances for credit losses at |
439,309 | 368,856 | ||||||
Inventories | 44,873 | 32,092 | ||||||
Prepaid expenses and other current assets | 39,691 | 36,539 | ||||||
Assets held for sale - current | 951 | 32,854 | ||||||
Total current assets | 540,266 | 483,040 | ||||||
Rental equipment, net | 3,227,735 | 2,946,008 | ||||||
Property, plant and equipment, net | 311,526 | 282,247 | ||||||
Operating lease assets | 225,955 | 235,344 | ||||||
1,064,582 | 1,078,699 | |||||||
Intangible assets, net | 431,291 | 451,928 | ||||||
Other non-current assets | 8,909 | 10,797 | ||||||
Assets held for sale - non-current | — | 285,536 | ||||||
Total long-term assets | 5,269,998 | 5,290,559 | ||||||
Total assets | $ | 5,810,264 | $ | 5,773,599 | ||||
Liabilities and equity | ||||||||
Accounts payable | $ | 160,262 | $ | 110,270 | ||||
Accrued expenses | 123,300 | 95,592 | ||||||
Accrued employee benefits | 53,477 | 65,927 | ||||||
Deferred revenue and customer deposits | 212,005 | 159,612 | ||||||
Operating lease liabilities - current | 51,971 | 51,103 | ||||||
Current portion of long-term debt | 13,497 | 11,968 | ||||||
Liabilities held for sale - current | — | 23,173 | ||||||
Total current liabilities | 614,512 | 517,645 | ||||||
Long-term debt | 2,935,800 | 2,676,985 | ||||||
Deferred tax liabilities | 385,854 | 337,784 | ||||||
Operating lease liabilities - non-current | 174,777 | 184,199 | ||||||
Other non-current liabilities | 18,182 | 15,737 | ||||||
Liabilities held for sale - non-current | — | 44,486 | ||||||
Long-term liabilities | 3,514,613 | 3,259,191 | ||||||
Total liabilities | 4,129,125 | 3,776,836 | ||||||
Commitments and contingencies | ||||||||
Preferred Stock: |
— | — | ||||||
Common Stock: |
22 | 22 | ||||||
Additional paid-in capital | 3,112,076 | 3,616,902 | ||||||
Accumulated other comprehensive loss | (93,009 | ) | (29,071 | ) | ||||
Accumulated deficit | (1,337,950 | ) | (1,591,090 | ) | ||||
Total shareholders' equity | 1,681,139 | 1,996,763 | ||||||
Total liabilities and shareholders' equity | $ | 5,810,264 | $ | 5,773,599 |
Reconciliation of Non-GAAP Financial Measures
In addition to using GAAP financial measurements, we use certain non-GAAP financial information that we believe is important for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of our ongoing operations and analyze our business performance and trends.
We evaluate business segment performance on Adjusted EBITDA, a non-GAAP measure that excludes certain items as described below. We believe that evaluating segment performance excluding such items is meaningful because it provides insight with respect to intrinsic operating results of the Company.
We also regularly evaluate gross profit by segment to assist in the assessment of the operational performance of each operating segment. We consider Adjusted EBITDA to be the more important metric because it more fully captures the business performance of the segments, inclusive of indirect costs.
We also evaluate Free Cash Flow, a non-GAAP measure that provides useful information concerning cash flow available to fund our capital allocation alternatives.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before income tax expense (benefit), net interest (income) expense, depreciation and amortization adjusted for certain items considered non-core to our business operations including net currency (gains) losses, goodwill and other impairment charges, restructuring costs, transaction costs, costs to integrate acquired companies, non-cash charges for stock compensation plans, gains and losses resulting from changes in fair value and extinguishment of common stock warrant liabilities, and other discrete expenses.
- Currency (gains) losses, net: on monetary assets and liabilities denominated in foreign currencies other than the subsidiaries’ functional currency. Substantially all such currency gains (losses) are unrealized and attributable to financings due to and from affiliated companies.
Goodwill and other impairment charges related to non-cash costs associated with impairment charges to goodwill, other intangibles, rental fleet and property, plant and equipment.- Restructuring costs, lease impairment expense, and other related charges associated with restructuring plans designed to streamline operations and reduce costs including employee termination costs.
- Transaction costs including legal and professional fees and other transaction specific related costs.
- Costs to integrate acquired companies, including outside professional fees, non-capitalized costs associated with system integrations, non-lease branch and fleet relocation expenses, employee training costs, and other costs required to realize cost or revenue synergies.
- Non-cash charges for stock compensation plans.
- Gains and losses resulting from changes in fair value and extinguishment of common stock warrant liabilities.
- Other expense includes consulting expenses related to certain one-time projects, financing costs not classified as interest expense, and gains and losses on disposals of property, plant, and equipment.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider the measure in isolation or as a substitute for net income (loss), cash flow from operations or other methods of analyzing the Company’s results as reported under US GAAP. Some of these limitations are:
- Adjusted EBITDA does not reflect changes in, or cash requirements for our working capital needs;
- Adjusted EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;
- Adjusted EBITDA does not reflect our tax expense or the cash requirements to pay our taxes;
- Adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
- Adjusted EBITDA does not reflect the impact on earnings or changes resulting from matters that we consider not to be indicative of our future operations;
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
- other companies in our industry may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.
Because of these limitations, Adjusted EBITDA should not be considered as discretionary cash available to reinvest in the growth of our business or as measures of cash that will be available to meet our obligations.
The following table provides unaudited reconciliations of Income from continuing operations to Adjusted EBITDA:
Three Months Ended |
Nine Months Ended |
|||||||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||
Income from continuing operations | $ | 85,728 | $ | 57,113 | $ | 200,099 | $ | 75,278 | ||||
Income tax expense from continuing operations | 30,219 | 5,243 | 67,167 | 32,341 | ||||||||
Loss on extinguishment of debt | — | — | — | 5,999 | ||||||||
Fair value loss on common stock warrant liabilities | — | — | — | 26,597 | ||||||||
Interest expense | 38,165 | 29,006 | 102,362 | 87,793 | ||||||||
Depreciation and amortization | 86,225 | 69,449 | 243,123 | 216,820 | ||||||||
Currency losses, net | 236 | 127 | 247 | 196 | ||||||||
Restructuring costs, lease impairment expense and other related charges | — | 2,457 | 168 | 14,284 | ||||||||
Transaction costs | — | 303 | 35 | 1,147 | ||||||||
Integration costs | 3,902 | 8,242 | 13,182 | 23,206 | ||||||||
Stock compensation expense | 7,180 | 6,157 | 22,628 | 14,305 | ||||||||
Other | (316 | ) | 1,106 | 3,518 | 1,393 | |||||||
Adjusted EBITDA from continuing operations | 251,339 | 179,203 | 652,529 | 499,359 | ||||||||
Adjusted EBITDA from discontinued operations | 13,048 | 10,946 | 37,016 | 29,870 | ||||||||
Adjusted EBITDA including discontinued operations | $ | 264,387 | $ | 190,149 | $ | 689,545 | $ | 529,229 |
The following table presents unaudited reconciliations of Income from discontinued operations before income tax to Adjusted EBITDA from discontinued operations for the Tank and Pump business for the three and nine months ended
Three Months Ended |
Nine Months Ended |
||||||||||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||
Income from discontinued operations before income tax | $ | 10,802 | $ | 5,391 | $ | 24,488 | $ | 14,255 | |||||||
Interest expense | 144 | 195 | 512 | 584 | |||||||||||
Depreciation and amortization | 3,096 | 5,828 | 14,248 | 16,993 | |||||||||||
Restructuring costs, lease impairment expense and other related charges | — | — | — | 2 | |||||||||||
Integration costs | — | 5 | — | 5 | |||||||||||
Stock compensation expense | (221 | ) | 102 | 18 | 175 | ||||||||||
Other | (773 | ) | (575 | ) | (2,250 | ) | (2,144 | ) | |||||||
Adjusted EBITDA from discontinued operations | $ | 13,048 | $ | 10,946 | $ | 37,016 | $ | 29,870 |
Income From Continuing Operations Excluding Gain/Loss from Warrants
We define Income from Continuing Operations Excluding Gain/Loss from Warrants as income from continuing operations plus or minus the impact of the change in the fair value of the common stock warrant liability. Management believes that the presentation of our financial statements excluding the impact of the mark-to-market adjustment provides useful information regarding our results of operations and assists in the review of our actual operating performance. The following table provides unaudited reconciliations of Income from Continuing Operations to Income from Continuing Operations Excluding Gain/Loss from Warrants:
Three Months Ended |
Nine Months Ended |
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(in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||
Income from continuing operations | $ | 85,728 | $ | 57,113 | $ | 200,099 | $ | 75,278 | |||
Fair value loss on common stock warrant liabilities | — | — | — | 26,597 | |||||||
Income from Continuing Operations Excluding Gain/Loss from Warrants | $ | 85,728 | $ | 57,113 | $ | 200,099 | $ | 101,875 |
Adjusted EBITDA Margin
Adjusted EBITDA Margin is a non-GAAP measure defined as Adjusted EBITDA divided by Revenue. Management believes that the presentation of Adjusted EBITDA Margin provides useful information to investors regarding the performance of our business. The following table provides unaudited reconciliations of Adjusted EBITDA Margin:
Three Months Ended |
Nine Months Ended |
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(in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||
Adjusted EBITDA (A) | $ | 251,339 | $ | 179,203 | $ | 652,529 | $ | 499,359 | |||||||
Revenue (B) | 604,173 | 461,047 | 1,632,339 | 1,295,634 | |||||||||||
Adjusted EBITDA Margin (A/B) | 41.6 | % | 38.9 | % | 40.0 | % | 38.5 | % | |||||||
Income from continuing operations (C) | $ | 85,728 | $ | 57,113 | $ | 200,099 | $ | 75,278 | |||||||
Income from Continuing Operations Margin (C/B) | 14.2 | % | 12.4 | % | 12.3 | % | 5.8 | % |
Free Cash Flow and Free Cash Flow Margin
Free Cash Flow is a non-GAAP measure. Free Cash Flow is defined as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and equipment, which are all included in cash flows from investing activities. Free Cash Flow Margin is defined as Free Cash Flow divided by Total Revenue including discontinued operations. Management believes that the presentation of Free Cash Flow and Free Cash Flow Margin provides useful additional information concerning cash flow available to fund our capital allocation alternatives.
The following table provides unaudited reconciliations of Free Cash Flow and Free Cash Flow Margin:
Three Months Ended |
Nine Months Ended |
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(in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||
Net cash provided by operating activities | $ | 210,385 | $ | 130,447 | $ | 544,238 | $ | 392,055 | |||||||
Purchases of rental equipment and refurbishments | (135,076 | ) | (60,374 | ) | (360,465 | ) | (178,191 | ) | |||||||
Proceeds from sale of rental equipment | 17,183 | 11,597 | 52,263 | 42,034 | |||||||||||
Purchases of property, plant and equipment | (10,000 | ) | (3,386 | ) | (30,253 | ) | (20,836 | ) | |||||||
Proceeds from the sale of property, plant and equipment | 894 | 209 | 1,645 | 16,647 | |||||||||||
Free Cash Flow (A) | $ | 83,386 | $ | 78,493 | $ | 207,428 | $ | 251,709 | |||||||
Revenue from continuing operations (B) | $ | 604,173 | $ | 461,047 | $ | 1,632,339 | $ | 1,295,634 | |||||||
Revenue from discontinued operations | 33,988 | 29,505 | 96,356 | 81,343 | |||||||||||
Total Revenue including discontinued operations (C) | 638,161 | 490,552 | 1,728,695 | 1,376,977 | |||||||||||
Free Cash Flow Margin (A/C) | 13.1 | % | 16.0 | % | 12.0 | % | 18.3 | % | |||||||
Net cash provided by operating activities (D) | $ | 210,385 | $ | 130,447 | $ | 544,238 | $ | 392,055 | |||||||
Net cash provided by operating activities margin (D/B) | 34.8 | % | 28.3 | % | 33.3 | % | 30.3 | % |
Adjusted Gross Profit and Adjusted Gross Profit Percentage
Adjusted Gross Profit is a non-GAAP measure defined as gross profit plus depreciation of rental equipment. Adjusted Gross Profit Percentage is defined as Adjusted Gross Profit divided by Revenue. Adjusted Gross Profit and Adjusted Gross Profit Percentage are not measurements of our financial performance under GAAP and should not be considered as an alternative to gross profit, gross profit percentage, or other performance measures derived in accordance with GAAP. In addition, our measurement of Adjusted Gross Profit and Adjusted Gross Profit Percentage may not be comparable to similarly titled measures of other companies. Our management believes that the presentation of Adjusted Gross Profit and Adjusted Gross Profit Percentage provides useful information to investors regarding our results of operations because it assists in analyzing the performance of our business.
The following table provides unaudited reconciliations of gross profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage.
Three Months Ended |
Nine Months Ended |
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(in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||
Revenue (A) | $ | 604,173 | $ | 461,047 | $ | 1,632,339 | $ | 1,295,634 | |||||||
Gross profit (B) | $ | 314,332 | $ | 239,226 | $ | 858,615 | $ | 651,134 | |||||||
Depreciation of rental equipment | 69,159 | 52,990 | 192,228 | 165,027 | |||||||||||
Adjusted Gross Profit (C) | $ | 383,491 | $ | 292,216 | $ | 1,050,843 | $ | 816,161 | |||||||
Gross Profit Percentage (B/A) | 52.0 | % | 51.9 | % | 52.6 | % | 50.3 | % | |||||||
Adjusted Gross Profit Percentage (C/A) | 63.5 | % | 63.4 | % | 64.4 | % | 63.0 | % |
Net CAPEX
Net Capital Expenditures ("Net CAPEX") is defined as purchases of rental equipment and refurbishments and purchases of property, plant and equipment (collectively "Total Capital Expenditures"), less proceeds from sale of rental equipment and proceeds from the sale of property, plant and equipment (collectively "Total Proceeds"), which are all included in cash flows from investing activities. Our management believes that the presentation of Net CAPEX provides useful information to investors regarding the net capital invested into our rental fleet and property, plant and equipment each year to assist in analyzing the performance of our business. The following table provides unaudited reconciliations of Net CAPEX:
Three Months Ended |
Nine Months Ended |
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(in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||
Total purchases of rental equipment and refurbishments | $ | (135,076 | ) | $ | (60,374 | ) | $ | (360,465 | ) | (178,191 | ) | ||||
Total proceeds from sale of rental equipment | 17,183 | 11,597 | 52,263 | 42,034 | |||||||||||
Net CAPEX for Rental Equipment | (117,893 | ) | (48,777 | ) | (308,202 | ) | (136,157 | ) | |||||||
Purchase of property, plant and equipment | (10,000 | ) | (3,386 | ) | (30,253 | ) | (20,836 | ) | |||||||
Proceeds from sale of property, plant and equipment | 894 | 209 | 1,645 | 16,647 | |||||||||||
Net CAPEX | $ | (126,999 | ) | $ | (51,954 | ) | $ | (336,810 | ) | $ | (140,346 | ) |
Return on
Return on
The following table provides unaudited reconciliations of Return on
Three Months Ended |
Nine Months Ended |
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(in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||
Total Assets | $ | 5,810,264 | $ | 5,644,181 | $ | 5,810,264 | $ | 5,644,181 | |||||||
(1,064,582 | ) | (1,178,290 | ) | (1,064,582 | ) | (1,178,290 | ) | ||||||||
Intangible assets, net | (431,291 | ) | (467,289 | ) | (431,291 | ) | (467,289 | ) | |||||||
Total Liabilities | (4,129,125 | ) | (3,687,597 | ) | (4,129,125 | ) | (3,687,597 | ) | |||||||
Long Term Debt | 2,935,800 | 2,598,300 | 2,935,800 | 2,598,300 | |||||||||||
Net Assets excluding interest bearing debt and goodwill and intangibles | $ | 3,121,066 | $ | 2,909,305 | $ | 3,121,066 | $ | 2,909,305 | |||||||
$ | 3,147,195 | $ | 2,882,975 | $ | 3,117,986 | $ | 2,853,939 | ||||||||
Adjusted EBITDA | $ | 251,339 | $ | 190,149 | $ | 676,497 | $ | 529,229 | |||||||
Depreciation | (79,851 | ) | (68,490 | ) | (234,644 | ) | (213,196 | ) | |||||||
Adjusted EBITA (B) | $ | 171,488 | $ | 121,659 | $ | 441,853 | $ | 316,033 | |||||||
Statutory Tax Rate (C) | 25 | % | 25 | % | 25 | % | 25 | % | |||||||
Estimated Tax (B*C) | $ | 42,872 | $ | 30,415 | $ | 110,463 | $ | 79,008 | |||||||
Adjusted earnings before interest and amortization (D) | $ | 128,616 | $ | 91,244 | $ | 331,390 | $ | 237,025 | |||||||
ROIC (D/A), annualized | 16.3 | % | 12.7 | % | 14.2 | % | 11.1 | % | |||||||
Operating income (E) | $ | 154,112 | $ | 96,948 | $ | 383,682 | $ | 242,847 | |||||||
Total Assets (F) | $ | 5,810,264 | $ | 5,644,181 | $ | 5,810,264 | $ | 5,644,181 | |||||||
Operating income / Total Assets (E/F), annualized | 10.5 | % | 6.9 | % | 8.7 | % | 5.8 | % | |||||||
Source: WillScot Mobile Mini Holdings Corp.