WillScot Corporation Announces Third Quarter 2019 Results
Third Quarter 2019 Financial Highlights1,2
- Revenues of
$272.3 million , representing a 24.4% (or$53.4 million ) year over year increase, driven by growth in core leasing and services revenues of$64.7 million , or 34.3%.- Modular space average monthly rental rate increased to
$630 representing a 12.3% increase year over year. Pro forma modular space average monthly rental rates increased 13.9% year over year, driven primarily by a 15.1% year over year increase in our core Modular - US segment, marking the 8th consecutive quarter of double digit rate growth in the segment. Growth of 15.1% was driven 60% from unit rate growth, with the remaining 40% driven by growth in value added products and services ("VAPS"). - Modular leasing revenue increased 7.9% on a pro forma basis, reflecting continued strong organic growth.
- Modular space average monthly rental rate increased to
- Adjusted EBITDA of
$88.4 million represents a 36.8% (or$23.8 million ) year over year increase.- Adjusted EBITDA margin increased 300 basis points ("bps") year over year and 600 bps on a pro forma basis to 32.5%.
- 70% of the expected
$70 million annualized cost synergies were in our third quarter 2019 results, marking the one-year anniversary of the ModSpace acquisition.
- Net income of
$0.8 million (including$8.4 million of discrete costs from acquisition and integration activities) increased by$37.5 million , and free cash flow of$1.3 million increased by$43.2 million year over year, consistent with our planned transition to net profitability and cash generation. - Management reaffirmed its run-rate expectation of
$400 million Adjusted EBITDA and$200 million of discretionary free cash flow heading into 2020.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||
Revenue | $ | 272,340 | $ | 218,924 | $ | 793,473 | $ | 494,008 | ||||||
Consolidated net income (loss) | $ | 762 | $ | (36,729 | ) | $ | (22,174 | ) | $ | (43,185 | ) | |||
Net cash provided by operating activities | $ | 39,022 | $ | (3,220 | ) | $ | 99,076 | $ | 15,580 | |||||
Free Cash Flow1 | $ | 1,261 | $ | (41,877 | ) | $ | (23,698 | ) | $ | (76,742 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Adjusted EBITDA1 by Segment (in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||
Modular - US | $ | 80,424 | $ | 58,454 | $ | 238,572 | $ | 129,170 | ||||||
Modular - Other North America | 7,953 | 6,164 | 23,040 | 12,856 | ||||||||||
Consolidated Adjusted EBITDA | $ | 88,377 | $ | 64,618 | $ | 261,612 | $ | 142,026 |
Management Commentary1,2,3
Third Quarter 2019 Results1,2
Total revenues increased 24.4% to
- Modular - US segment revenue increased 25.4% to
$247.7 million , as compared to$197.6 million in the prior year quarter, with core leasing and services revenues up$59.6 million , or 35.1%, year over year.- Modular space average monthly rental rate of
$632 , increased 13.1% year over year including the dilutive impacts of acquisitions. Pro forma modular space monthly rental rates increased 15.1% year over year. Improved pricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increased VAPS penetration across our customer base. - Average modular space units on rent increased 14,075, or a 20.7% year over year increase, due to an additional 1.5 months of contribution from the ModSpace acquisition in the third quarter of 2019. Pro forma units on rent decreased 5.6% year over year, and pro forma utilization decreased by 170 bps year over year.
- Modular space average monthly rental rate of
- Modular - Other
North America segment revenue increased 15.5% to$24.6 million , compared to$21.3 million in the prior year quarter, with modular space average units on rent up 23.5% and average monthly rental rate up 5.3% compared to the prior year quarter.- On a pro forma basis, Modular - Other
North America segment modular space rental rate increased 6.4% compared to the prior year quarter. Pro forma modular space units on rent decreased 0.8% to 9,180, and pro forma utilization for our modular space units increased to 57.2%, up 40 bps from 56.8%.
- On a pro forma basis, Modular - Other
Adjusted EBITDA of
- Modular - US segment Adjusted EBITDA increased 37.7% to
$80.4 million , and Modular - OtherNorth America segment Adjusted EBITDA increased$1.8 million to $8.0 million from the prior year quarter. - Adjusted EBITDA margins improved by 300 bps year over year driven by a 100 bps improvement in gross profit margin as a result of improved delivery and installation rates and improved sales margins, as well as a 230 bps reduction in selling, general and administrative expenses, offset slightly by other items. We estimate that incremental cost synergies of approximately
$10.0 million related to theActon and ModSpace acquisitions were realized in the third quarter bringing total estimated synergies realized from the dates of the acquisitions to approximately$31.2 million . Approximately 70% of the annualized forecasted cost synergies of over$70 million were in our run rate as ofSeptember 30, 2019 .
Net income of
Capitalization and Liquidity Update
Capital expenditures increased
During the three months ended
As of
2019 Outlook
Management reaffirmed the Company's outlook for the full year 2019, which we previously updated on
Current Outlook | |
Total revenue | $1.05 billion - $1.10 billion |
Adjusted EBITDA1,3 | $355 million - $365 million |
Net Capital Expenditures (after rental unit sales)4 | $150 million - $160 million |
1 - Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow are non-GAAP financial measures. Further information and reconciliations for these Non-GAAP measures to the most directly comparable financial measure under generally accepted accounting principles in the US ("GAAP") is included at the end of this press release.
2 - The pro forma financial information and performance metrics contained in this press release include the results of
3 - Information reconciling forward-looking Adjusted EBITDA and Net Capital Expenditures 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 Capital Expenditures is a non-GAAP financial measure. Please see the non-GAAP reconciliation tables included at the end of this press release.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, Free Cash Flow, pro forma revenue, and Net Capital Expenditures. Adjusted EBITDA is defined as net income (loss) before income tax expense, net interest expense, depreciation and amortization adjusted for non-cash items considered non-core to business operations including net currency gains and losses, goodwill and other impairment charges, restructuring costs, costs to integrate acquired companies, costs incurred related to transactions, non-cash charges for stock compensation plans, and other discrete expenses. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue. 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. Net Capital Expenditures is defined as capital expenditures for purchases and capitalized refurbishments of rental equipment, plus purchases of property, plant and equipment, reduced by proceeds from the sale of rental equipment. Net Capital Expenditures for Rental Equipment is defined as capital expenditures for purchases and capitalized refurbishments of rental equipment, reduced by proceeds from the sale of rental equipment. Pro forma revenue is defined the same as revenue, but includes pre-acquisition results from ModSpace for all periods presented.
Information reconciling forward-looking Adjusted EBITDA to GAAP financial measures is unavailable to
Conference Call Information
About
Headquartered in
Forward-Looking Statements
This news release contains forward-looking statements (including the earnings guidance/outlook contained herein) within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. The words “estimates,” “expects,” “anticipates,” “believes,” “forecasts,” “plans,” “intends,” “may,” “will,” “should,” “shall,” "outlook" and variations of these words and similar expressions identify forward-looking statements, which are generally not historical in nature. Forward-looking statements are subject to a number of risks, uncertainties, assumptions and other important factors, many of which are outside our control, which could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Although
Additional Information and Where to Find It
Additional information can be found on our investor relations website at http://investors.willscot.com.
Contact Information | |
Investor Inquiries: | Media Inquiries: |
Mark Barbalato | Scott Junk |
investors@willscot.com | scott.junk@willscot.com |
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands, except share and per share data) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Revenues: | |||||||||||||||
Leasing and services revenue: | |||||||||||||||
Modular leasing | $ | 191,294 | $ | 141,660 | $ | 557,025 | $ | 340,171 | |||||||
Modular delivery and installation | 61,883 | 46,777 | 168,643 | 104,440 | |||||||||||
Sales revenue: | |||||||||||||||
New units | 11,536 | 20,920 | 38,064 | 33,584 | |||||||||||
Rental units | 7,627 | 9,567 | 29,741 | 15,813 | |||||||||||
Total revenues | 272,340 | 218,924 | 793,473 | 494,008 | |||||||||||
Costs: | |||||||||||||||
Costs of leasing and services: | |||||||||||||||
Modular leasing | 58,168 | 39,215 | 160,476 | 93,506 | |||||||||||
Modular delivery and installation | 54,364 | 42,390 | 146,175 | 98,038 | |||||||||||
Costs of sales: | |||||||||||||||
New units | 7,421 | 15,089 | 26,298 | 23,780 | |||||||||||
Rental units | 5,092 | 5,750 | 19,608 | 9,328 | |||||||||||
Depreciation of rental equipment | 43,869 | 35,534 | 128,940 | 82,849 | |||||||||||
Gross profit | 103,426 | 80,946 | 311,976 | 186,507 | |||||||||||
Expenses: | |||||||||||||||
Selling, general and administrative | 68,159 | 71,897 | 213,267 | 164,845 | |||||||||||
Other depreciation and amortization | 3,707 | 3,720 | 9,878 | 7,726 | |||||||||||
Impairment losses on long-lived assets | — | — | 5,076 | — | |||||||||||
Restructuring costs | 1,980 | 6,137 | 9,083 | 7,214 | |||||||||||
Currency losses (gains), net | 234 | (425 | ) | (436 | ) | 1,171 | |||||||||
Other income, net | (1,053 | ) | (594 | ) | (3,293 | ) | (5,013 | ) | |||||||
Operating income | 30,399 | 211 | 78,401 | 10,564 | |||||||||||
Interest expense | 30,857 | 43,447 | 95,353 | 67,321 | |||||||||||
Loss on extinguishment of debt | — | — | 7,244 | — | |||||||||||
Loss from operations before income tax | (458 | ) | (43,236 | ) | (24,196 | ) | (56,757 | ) | |||||||
Income tax benefit | (1,220 | ) | (6,507 | ) | (2,022 | ) | (13,572 | ) | |||||||
Net Income (loss) | 762 | (36,729 | ) | (22,174 | ) | (43,185 | ) | ||||||||
Net income (loss) attributable to non-controlling interest, net of tax | 273 | (3,210 | ) | (1,449 | ) | (3,715 | ) | ||||||||
Net income (loss) attributable to WillScot | $ | 489 | $ | (33,519 | ) | $ | (20,725 | ) | $ | (39,470 | ) | ||||
Net income (loss) per share attributable to WillScot - basic | $ | 0.00 | $ | (0.37 | ) | $ | (0.19 | ) | $ | (0.48 | ) | ||||
Net income (loss) per share attributable to WillScot - diluted | $ | 0.00 | $ | (0.37 | ) | $ | (0.19 | ) | $ | (0.48 | ) | ||||
Weighted average shares - basic | 108,720,857 | 90,726,920 | 108,646,741 | 82,165,909 | |||||||||||
Weighted average shares - diluted | 112,043,866 | 90,726,920 | 108,646,741 | 82,165,909 | |||||||||||
Unaudited Segment Operating Data
Three Months Ended
Three Months Ended September 30, 2019 | |||||||||||
(in thousands, except for units on rent and rates) | Modular - US | Modular - Other North America |
Total | ||||||||
Revenue | $ | 247,701 | $ | 24,639 | $ | 272,340 | |||||
Gross profit | $ | 94,257 | $ | 9,169 | $ | 103,426 | |||||
Adjusted EBITDA | $ | 80,424 | $ | 7,953 | $ | 88,377 | |||||
Capital expenditures for rental equipment | $ | 44,951 | $ | 2,838 | $ | 47,789 | |||||
Modular space units on rent (average during the period) | 82,053 | 9,180 | 91,233 | ||||||||
Average modular space utilization rate | 73.2% | 57.2% | 71.2% | ||||||||
Average modular space monthly rental rate | $ | 632 | $ | 618 | $ | 630 | |||||
Portable storage units on rent (average during the period) | 15,993 | 423 | 16,416 | ||||||||
Average portable storage utilization rate | 63.3% | 54.3% | 63.0% | ||||||||
Average portable storage monthly rental rate | $ | 123 | $ | 106 | $ | 123 |
Three Months Ended September 30, 2018 | |||||||||||
(in thousands, except for units on rent and rates) | Modular - US | Modular - Other North America |
Total | ||||||||
Revenue | $ | 197,625 | $ | 21,299 | $ | 218,924 | |||||
Gross profit | $ | 73,007 | $ | 7,939 | $ | 80,946 | |||||
Adjusted EBITDA | $ | 58,454 | $ | 6,164 | $ | 64,618 | |||||
Capital expenditures for rental equipment | $ | 43,007 | $ | 3,735 | $ | 46,742 | |||||
Modular space units on rent (average during the period) | 67,978 | 7,435 | 75,413 | ||||||||
Average modular space utilization rate | 73.8% | 57.3% | 71.8% | ||||||||
Average modular space monthly rental rate | $ | 559 | $ | 587 | $ | 561 | |||||
Portable storage units on rent (average during the period) | 15,373 | 408 | 15,781 | ||||||||
Average portable storage utilization rate | 68.3% | 56.4% | 68.0% | ||||||||
Average portable storage monthly rental rate | $ | 120 | $ | 101 | $ | 120 |
Nine Months Ended
Nine Months Ended September 30, 2019 | |||||||||||
(in thousands, except for units on rent and rates) | Modular - US | Modular - Other North America |
Total | ||||||||
Revenue | $ | 718,038 | $ | 75,435 | $ | 793,473 | |||||
Gross profit | $ | 284,336 | $ | 27,640 | $ | 311,976 | |||||
Adjusted EBITDA | $ | 238,572 | $ | 23,040 | $ | 261,612 | |||||
Capital expenditures for rental equipment | $ | 153,113 | $ | 7,764 | $ | 160,877 | |||||
Modular space units on rent (average during the period) | 83,285 | 9,014 | 92,299 | ||||||||
Average modular space utilization rate | 74.3% | 56.2% | 72.1% | ||||||||
Average modular space monthly rental rate | $ | 606 | $ | 592 | $ | 605 | |||||
Portable storage units on rent (average during the period) | 16,427 | 412 | 16,839 | ||||||||
Average portable storage utilization rate | 65.0% | 52.9% | 64.6% | ||||||||
Average portable storage monthly rental rate | $ | 121 | $ | 111 | $ | 121 |
Nine Months Ended September 30, 2018 | |||||||||||
(in thousands, except for units on rent and rates) | Modular - US | Modular - Other North America |
Total | ||||||||
Revenue | $ | 444,525 | $ | 49,483 | $ | 494,008 | |||||
Gross profit | $ | 169,556 | $ | 16,951 | $ | 186,507 | |||||
Adjusted EBITDA | $ | 129,170 | $ | 12,856 | $ | 142,026 | |||||
Capital expenditures for rental equipment | $ | 104,462 | $ | 7,043 | $ | 111,505 | |||||
Modular space units on rent (average during the period) | 54,592 | 6,144 | 60,736 | ||||||||
Average modular space utilization rate | 71.9% | 57.1% | 70.1% | ||||||||
Average modular space monthly rental rate | $ | 553 | $ | 568 | $ | 555 | |||||
Portable storage units on rent (average during the period) | 13,964 | 379 | 14,343 | ||||||||
Average portable storage utilization rate | 68.6% | 56.5% | 68.3% | ||||||||
Average portable storage monthly rental rate | $ | 124 | $ | 111 | $ | 123 | |||||
Condensed Consolidated Balance Sheets
(in thousands, except share data) | September 30, 2019 (unaudited) |
December 31, 2018 | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 3,951 | $ | 8,958 | ||||
Trade receivables, net of allowances for doubtful accounts at September 30, 2019 and December 31, 2018 of $15,113 and $9,340, respectively | 250,488 | 206,502 | ||||||
Inventories | 15,956 | 16,218 | ||||||
Prepaid expenses and other current assets | 24,684 | 21,828 | ||||||
Assets held for sale | 9,155 | 2,841 | ||||||
Total current assets | 304,234 | 256,347 | ||||||
Rental equipment, net | 1,952,829 | 1,929,290 | ||||||
Property, plant and equipment, net | 186,956 | 183,750 | ||||||
Goodwill | 234,597 | 247,017 | ||||||
Intangible assets, net | 128,103 | 131,801 | ||||||
Other non-current assets | 4,641 | 4,280 | ||||||
Total long-term assets | 2,507,126 | 2,496,138 | ||||||
Total assets | $ | 2,811,360 | $ | 2,752,485 | ||||
Liabilities and equity | ||||||||
Accounts payable | $ | 101,532 | $ | 90,353 | ||||
Accrued liabilities | 96,395 | 84,696 | ||||||
Accrued interest | 13,386 | 20,237 | ||||||
Deferred revenue and customer deposits | 87,702 | 71,778 | ||||||
Current portion of long-term debt | 2,025 | 1,959 | ||||||
Total current liabilities | 301,040 | 269,023 | ||||||
Long-term debt | 1,710,160 | 1,674,540 | ||||||
Deferred tax liabilities | 67,583 | 67,384 | ||||||
Deferred revenue and customer deposits | 11,265 | 7,723 | ||||||
Other non-current liabilities | 37,373 | 31,618 | ||||||
Long-term liabilities | 1,826,381 | 1,781,265 | ||||||
Total liabilities | 2,127,421 | 2,050,288 | ||||||
Commitments and contingencies | ||||||||
Class A common stock: $0.0001 par, 400,000,000 shares authorized at September 30, 2019 and December 31, 2018; 108,751,354 and 108,508,997 shares issued and outstanding at September 2019 and December 31, 2018, respectively | 11 | 11 | ||||||
Class B common stock: $0.0001 par, 100,000,000 shares authorized at June 30, 2019 and December 31, 2018; 8,024,419 shares issued and outstanding at September 30, 2019 and December 31, 2018 | 1 | 1 | ||||||
Additional paid-in-capital | 2,394,091 | 2,389,548 | ||||||
Accumulated other comprehensive loss | (68,908 | ) | (68,026 | ) | ||||
Accumulated deficit | (1,703,699 | ) | (1,683,319 | ) | ||||
Total shareholders' equity | 621,496 | 638,215 | ||||||
Non-controlling interest | 62,443 | 63,982 | ||||||
Total equity | 683,939 | 702,197 | ||||||
Total liabilities and equity | $ | 2,811,360 | $ | 2,752,485 |
Reconciliation of Non-GAAP Financial Measures
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 in the reconciliation of our consolidated net income (loss) to Adjusted EBITDA reconciliation 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 meet future debt service obligations and working capital requirements.
Adjusted EBITDA
We define EBITDA as net income (loss) plus interest expense, income tax benefit, depreciation and amortization. Our Adjusted EBITDA reflects the following further adjustments to EBITDA to exclude certain non-cash items and the effect of what we consider transactions or events not related to our core business operations:
- Currency losses (gains), net: on monetary assets and liabilities denominated in foreign currencies other than the subsidiaries’ functional currency. Substantially all such currency losses (gains) are unrealized and attributable to financings due to and from affiliated companies.
- Non-cash impairment charges associated with goodwill and other long-lived assets.
- Restructuring costs associated with restructuring plans designed to streamline operations and reduce costs including employee and lease termination costs.
- Transaction costs including legal and professional fees and other transaction specific related costs.
- Costs to integrate acquired companies, including outside professional fees, fleet relocation expenses, employee training costs and other costs.
- Non-cash charges for stock compensation plans.
- 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 WillScot’s results as reported under 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 an unaudited reconciliation of Net income (loss) to Adjusted EBITDA:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net income (loss) | $ | 762 | $ | (36,729 | ) | $ | (22,174 | ) | $ | (43,185 | ) | ||||
Income tax benefit | (1,220 | ) | (6,507 | ) | (2,022 | ) | (13,572 | ) | |||||||
Loss on extinguishment of debt | — | — | 7,244 | — | |||||||||||
Interest expense | 30,857 | 43,447 | 95,353 | 67,321 | |||||||||||
Depreciation and amortization | 47,576 | 39,254 | 138,818 | 90,575 | |||||||||||
Currency losses (gains), net | 234 | (425 | ) | (436 | ) | 1,171 | |||||||||
Goodwill and other impairments | — | — | 5,076 | — | |||||||||||
Restructuring costs | 1,980 | 6,137 | 9,083 | 7,214 | |||||||||||
Transaction costs | — | 10,672 | — | 14,790 | |||||||||||
Integration costs | 5,483 | 7,453 | 23,863 | 14,868 | |||||||||||
Stock compensation expense | 1,813 | 1,050 | 5,003 | 2,225 | |||||||||||
Other expense | 892 | 266 | 1,804 | 619 | |||||||||||
Adjusted EBITDA | $ | 88,377 | $ | 64,618 | $ | 261,612 | $ | 142,026 |
(Loss) Income from Operations to Adjusted EBITDA Non-GAAP Reconciliations
The following tables present an unaudited reconciliation of the Company’s (loss) income from operations before income tax to Adjusted EBITDA by segment for the three and nine months ended
Three Months Ended September 30, 2019 | ||||||||||
(in thousands) | Modular - US | Modular - Other North America |
Total | |||||||
(Loss) income from operations before income taxes | $ | (1,768 | ) | $ | 1,310 | $ | (458 | ) | ||
Interest expense | 30,253 | 604 | 30,857 | |||||||
Depreciation and amortization | 42,699 | 4,877 | 47,576 | |||||||
Currency losses, net | 45 | 189 | 234 | |||||||
Restructuring costs | 1,886 | 94 | 1,980 | |||||||
Integration costs | 4,609 | 874 | 5,483 | |||||||
Stock compensation expense | 1,813 | — | 1,813 | |||||||
Other expense | 887 | 5 | 892 | |||||||
Adjusted EBITDA | $ | 80,424 | $ | 7,953 | $ | 88,377 |
Three Months Ended September 30, 2018 | |||||||||||
(in thousands) | Modular - US | Modular - Other North America |
Total | ||||||||
(Loss) income from operations before income taxes | $ | (44,519 | ) | $ | 1,283 | $ | (43,236 | ) | |||
Interest expense | 42,831 | 616 | 43,447 | ||||||||
Depreciation and amortization | 35,105 | 4,149 | 39,254 | ||||||||
Currency gains, net | (112 | ) | (313 | ) | (425 | ) | |||||
Restructuring costs | 5,895 | 242 | 6,137 | ||||||||
Integration costs | 7,443 | 10 | 7,453 | ||||||||
Stock compensation expense | 1,050 | — | 1,050 | ||||||||
Transaction costs | 10,490 | 182 | 10,672 | ||||||||
Other expense (income) | 271 | (5 | ) | 266 | |||||||
Adjusted EBITDA | $ | 58,454 | $ | 6,164 | $ | 64,618 |
Nine Months Ended September 30, 2019 | |||||||||||
(in thousands) | Modular - US | Modular - Other North America |
Total | ||||||||
(Loss) income from operations before income taxes | $ | (26,866 | ) | $ | 2,670 | $ | (24,196 | ) | |||
Loss on extinguishment of debt | 7,244 | — | 7,244 | ||||||||
Interest expense | 93,354 | 1,999 | 95,353 | ||||||||
Depreciation and amortization | 123,991 | 14,827 | 138,818 | ||||||||
Currency gains, net | (160 | ) | (276 | ) | (436 | ) | |||||
Goodwill and other impairments | 4,507 | 569 | 5,076 | ||||||||
Restructuring costs | 8,460 | 623 | 9,083 | ||||||||
Integration costs | 21,221 | 2,642 | 23,863 | ||||||||
Stock compensation expense | 5,003 | — | 5,003 | ||||||||
Other expense (income) | 1,818 | (14 | ) | 1,804 | |||||||
Adjusted EBITDA | $ | 238,572 | $ | 23,040 | $ | 261,612 |
Nine Months Ended September 30, 2018 | |||||||||||
(in thousands) | Modular - US | Modular - Other North America |
Total | ||||||||
Loss from operations before income taxes | $ | (55,360 | ) | $ | (1,397 | ) | $ | (56,757 | ) | ||
Interest expense | 65,654 | 1,667 | 67,321 | ||||||||
Depreciation and amortization | 79,568 | 11,007 | 90,575 | ||||||||
Currency losses, net | 159 | 1,012 | 1,171 | ||||||||
Restructuring costs | 6,962 | 252 | 7,214 | ||||||||
Integration costs | 14,858 | 10 | 14,868 | ||||||||
Stock compensation expense | 2,225 | — | 2,225 | ||||||||
Transaction costs | 14,539 | 251 | 14,790 | ||||||||
Other expense | 565 | 54 | 619 | ||||||||
Adjusted EBITDA | $ | 129,170 | $ | 12,856 | $ | 142,026 |
Adjusted EBITDA Margin Non-GAAP Reconciliation
We define Adjusted EBITDA Margin 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 unaudited tables detail the calculation of Adjusted EBITDA Margin by segment for the three and nine months ended
Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | ||||||||||||||||||||||
(in thousands) | Modular - US | Modular - Other North America |
Total | Modular - US | Modular - Other North America |
Total | |||||||||||||||||
Adjusted EBITDA (A) | $ | 80,424 | $ | 7,953 | $ | 88,377 | $ | 58,454 | $ | 6,164 | $ | 64,618 | |||||||||||
Revenue (B) | $ | 247,701 | $ | 24,639 | $ | 272,340 | $ | 197,625 | $ | 21,299 | $ | 218,924 | |||||||||||
Adjusted EBITDA Margin (A/B) | 32.5% | 32.3% | 32.5% | 29.6% | 28.9% | 29.5% |
Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2018 | ||||||||||||||||||||||
(in thousands) | Modular - US | Modular - Other North America |
Total | Modular - US | Modular - Other North America |
Total | |||||||||||||||||
Adjusted EBITDA (A) | $ | 238,572 | $ | 23,040 | $ | 261,612 | $ | 129,170 | $ | 12,856 | $ | 142,026 | |||||||||||
Revenue (B) | $ | 718,038 | $ | 75,435 | $ | 793,473 | $ | 444,525 | $ | 49,483 | $ | 494,008 | |||||||||||
Adjusted EBITDA Margin (A/B) | 33.2% | 30.5% | 33.0% | 29.1% | 26.0% | 28.7% |
Free Cash Flow
We define Free Cash Flow 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. Management believes that the presentation of Free Cash Flow provides useful information to investors regarding our results of operations because it provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements. The following table provides a reconciliation of Net cash provided by operating activities to Free Cash Flow. Free Cash Flows for the three months ended
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||
Net cash provided by operating activities | $ | 39,022 | $ | (3,220 | ) | $ | 99,076 | $ | 15,580 | |||||
Purchase of rental equipment and refurbishments | (47,789 | ) | (46,742 | ) | (160,877 | ) | (111,505 | ) | ||||||
Proceeds from sale of rental equipment | 8,421 | 9,560 | 31,504 | 21,593 | ||||||||||
Purchase of property, plant and equipment | (2,701 | ) | (1,475 | ) | (6,600 | ) | (3,091 | ) | ||||||
Proceeds from the sale of property, plant and equipment | 4,308 | — | 13,199 | 681 | ||||||||||
Free Cash Flow | $ | 1,261 | $ | (41,877 | ) | $ | (23,698 | ) | $ | (76,742 | ) |
Net
We define Net Capital Expenditures ("Net CAPEX") and Net Capital Expenditures for Rental Equipment as capital expenditures for purchases and capitalized refurbishments of rental equipment and purchases of property, plant and equipment (collectively "Total Capital Expenditures"), reduced by proceeds from the sale of rental equipment. Net
The following table provides an unaudited reconciliation of purchase of rental equipment to Net CAPEX for Rental Equipment and to Net CAPEX:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Total purchases of rental equipment and refurbishments | $ | (47,789 | ) | $ | (46,742 | ) | $ | (160,877 | ) | $ | (111,505 | ) | |||
Total proceeds from sale of rental equipment | 8,421 | 9,560 | 31,504 | 21,593 | |||||||||||
Net CAPEX for Rental Equipment | (39,368 | ) | (37,182 | ) | (129,373 | ) | (89,912 | ) | |||||||
Purchase of property, plant and equipment | (2,701 | ) | (1,475 | ) | (6,600 | ) | (3,091 | ) | |||||||
Net CAPEX | $ | (42,069 | ) | $ | (38,657 | ) | $ | (135,973 | ) | $ | (93,003 | ) | |||
Source: WillScot Corporation