WillScot Corporation Announces Third Quarter 2018 Results

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BALTIMORE, Nov. 08, 2018 (GLOBE NEWSWIRE) -- WillScot Corporation (“WillScot” or the "Company") (NASDAQ: WSC) today announced its third quarter 2018 financial results.

1 - WillScot (formerly known as Double Eagle Acquisition Corp.) acquired Williams Scotsman International, Inc. (“WSII”) on November 29, 2017 (the "Business Combination"). The Business Combination was accounted for as a reverse acquisition of Double Eagle Acquisition Corp. by WSII. Prior to completing the Business Combination, WSII’s parent company undertook an internal restructuring in which WSII’s remote accommodations business was removed from WSII. Financial results from WSII’s former remote accommodations business are presented as discontinued operations in the financial statements. As a result of the Business Combination, (i) Williams Scotsman’s consolidated financial results for periods prior to November 29, 2017, reflect the financial results of WSII and its consolidated subsidiaries, as the accounting predecessor to Williams Scotsman, and (ii) for periods from and after this date, Williams Scotsman’s financial results reflect those of Williams Scotsman and its consolidated subsidiaries (including WSII and its subsidiaries) as the successor following the Business Combination.2 - Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of Adjusted EBITDA, as well as segment-level results to net loss, have been provided in the financial statement tables included in this press release. An explanation of these non-GAAP financial measures is included below under the heading “Non-GAAP Financial Measures.” Please see the non-GAAP reconciliation tables included at the end of this press release.3 - Acton, Tyson, and ModSpace acquisitions closed December 20, 2017, January 3, 2018, and August 15, 2018, respectively.

In the third quarter, we closed our previously announced acquisition of ModSpace, the largest privately held provider of office trailers, portable storage units and modular buildings in the US and Canada, with over 80 operating locations for a total purchase price of $1.2 billion. 

We subsequently initiated our plan to integrate ModSpace's operations into the WillScot organizational structure, branch footprint, shared services, and information technology platform in line with management’s expectations.  In particular,

Brad Soultz, President and Chief Executive Officer of WillScot commented, “I am extremely happy with our third quarter Adjusted EBITDA results of $64.6 million, which is up 100.6% year over year for our Modular Segments and up 54.2% sequentially over the second quarter of 2018. 

Over the past year, we have doubled the size of the company and as part of that journey have combined forces with some outstanding peer companies and hundreds of talented people that are committed to bringing our customers an expanded fleet of Ready to Work solutions.  Tremendous effort has gone into safely and efficiently integrating these companies and, although we still have work to do, we have made significant progress having integrated the field sales and operations teams as of November 1st.  This  milestone was critical to begin to unlock the significant earnings growth embedded in the portfolio through the realization of cost synergies, further penetration of value added products and services (“VAPS”), and price optimization."   

Tim Boswell, Chief Financial Officer commented, "In addition to the outstanding financial results and progress with our integration activities, our core commercial drivers remain strong with pro-forma modular space average rental rates in our Modular - US Segment up 13.4% year over year, which is now the fourth quarter in a row with growth exceeding 10% driven by both continued improvement in base rental rates and expansion of our Ready to Work value proposition.  These core fundamentals will drive our growth as we head into 2019 and beyond."

Total consolidated revenues increased 88.4% to $218.9 million, as compared to $116.2 million in the prior year quarter.

Capital expenditures for rental equipment from continuing operations increased $21.2 million, or 83.1%, to $46.7 million for the three months ended September 30, 2018, from $25.5 million for the three months ended September 30, 2017. Net capital expenditures for rental equipment also increased $18.3 million, or 97.3%, to $37.1 million for the three months ended September 30, 2018. For the nine months ended September 30, 2018, capital expenditures for rental equipment from continuing operations increased $35.7 million, or 47.1% to $111.5 million from $75.8 million for the nine months ended September 30, 2017. Net capital expenditures for rental equipment also increased $31.4 million, or 53.7% to $89.9 million for the nine months ended September 30, 2018. The increases for both periods were driven by increased spend for refurbishments, new fleet, and VAPS to drive modular space unit on rent and revenue growth, and maintenance of a larger fleet following our Acton, Tyson, and ModSpace acquisitions.

During the nine months ended September 30, 2018, our total long-term debt balance increased by $1,026.7 million to $1,651.6 million primarily related to debt raised to finance the ModSpace acquisition in the third quarter, and to a lesser extent, to fund the Tyson acquisition in the first quarter, continued capital investments in our fleet, and increased working capital.

To fund the ModSpace acquisition, in the third quarter we entered into or amended several agreements to fund the cash consideration paid in the acquisition on a permanent basis and to pay related fees and expenses.  In effect, we:

 As of September 30, 2018, we had $552.9 million of availability under the ABL Facility.

On November 6, 2018, we entered into an interest rate swap transaction with a financial counterparty that effectively converts $400.0 million in aggregate notional amount of its variable-rate debt into fixed-rate debt. The fixed rate paid by us is 3.06% and the variable rate received resets monthly to a one-month LIBOR rate. The swap transaction, which matures on May 29, 2022, was consummated to mitigate the interest rate risk inherent in our floating-rate ABL Facility, which also matures on May 29, 2022, and not for trading or speculative purposes.

On November 8, 2018, we announced that we have commenced an exchange offer relating to certain of our warrants outstanding in order to provide an opportunity for warrant holders to realize value and increased liquidity by transitioning on a cashless basis into shares of WillScot’s Class A common stock. The exchange offer is limited to the public and private warrants issued by our predecessor in 2015 in conjunction with our IPO, and excludes warrants issued to former ModSpace investors as part of the ModSpace acquisition.  This release is not an offer to purchase or a solicitation of an offer to sell warrants or an offer to sell or a solicitation of an offer to buy any shares of common stock.

On October 1, 2018, management increased the Company's outlook for full year 2018, inclusive of the Acton, Tyson, and ModSpace acquisitions. This guidance is subject to the risks and uncertainties described in the "Forward-Looking Statements" below, and the updated guidance included:

This press release includes non-GAAP financial measures, including Adjusted EBITDA. WillScot believes that this non-GAAP measure is useful to investors because it (i) allows investors to compare performance over various reporting periods on a consistent basis by removing from operating results the impact of items that do not reflect core operating performance; (ii) is used by our board of directors and management to assess our performance; (iii) may, subject to the limitations described below, enable investors to compare the performance of WillScot to its competitors; and (iv) provides an additional tool for investors to use in evaluating ongoing operating results and trends. A metric similar to Adjusted EBITDA is also used to evaluate WillScot’s ability to service its debt. This non-GAAP measure should not be considered in isolation from, or as an alternative to, financial measures determined in accordance with GAAP. Other companies may calculate Adjusted EBITDA and other non-GAAP financial measures differently, and therefore WillScot’s non-GAAP financial measures may not be directly comparable to similarly titled measures of other companies. For reconciliation of the non-GAAP measures used in this press release, see “Reconciliation of non-GAAP Financial Measures" included in this press release.

WillScot will host a conference call and webcast to discuss its third quarter results at 10 a.m. Eastern Time on Friday, November 9, 2018. The live call can be accessed by dialing (855) 312-9420 (US/Canada toll-free) or (210) 874-7774 (international) and asking to be connected to the WillScot call. A live webcast will also be accessible via the "Events & Presentations" section of the Company's investor relations website . Choose "Events" and select the information pertaining to the Q3 WSC Earnings Conference Call. Additionally, there will be slides accompanying the webcast. Please allow at least 15 minutes prior to the call to register, download and install any necessary software. For those unable to listen to the live broadcast, an audio webcast of the call will be available for 60 days on the Company’s investor relations website.

Headquartered in Baltimore, Maryland, WillScot is the public holding company for the Williams Scotsman family of companies. WillScot trades on the NASDAQ stock exchange under the ticker symbol "WSC," and is the specialty rental services market leader providing innovative modular space and portable storage solutions across North America. WillScot is the modular space supplier of choice for the construction, education, health care, government, retail, commercial, transportation, security and energy sectors. With over half a century of innovative history, organic growth and strategic acquisitions, WillScot serves a broad customer base from over 120 locations throughout the United States, Canada and Mexico, with a fleet of approximately 160,000 modular space and portable storage units.

This news release contains forward-looking statements (including affirmation of earnings guidance) 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” 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 WillScot believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance that any such forward-looking statement will materialize. Important factors that may affect actual results or outcomes include, among others, our ability to acquire and integrate new assets and operations (including the acquired ModSpace assets and operations); our ability to manage growth and execute our business plan; our estimates of the size of the markets for our products; the rate and degree of market acceptance of our products; the success of other competing modular space and portable storage solutions that exist or may become available; rising costs adversely affecting our profitability; potential litigation involving our Company; general economic and market conditions impacting demand for our products and services; implementation of tax reform; our ability to implement and maintain an effective system of internal controls; and such other risks and uncertainties described in the periodic reports we file with the SEC from time to time (including our Form 10-K for the year ending December 31, 2017), which are available through the SEC’s EDGAR system at www.sec.gov and on our website. Any forward-looking statement speaks only at the date which it is made, and WillScot disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Additional information about the transaction can be found on our investor relations website at http://investors.willscot.com.

WillScot CorporationCondensed Consolidated Statements of Operations(Unaudited)

WillScot CorporationCondensed Consolidated Balance Sheets

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 WSC’s results as reported under GAAP. Some of these limitations are:

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 table below presents the unaudited reconciliation of net loss calculated in accordance with GAAP to Adjusted EBITDA. See “Non-GAAP Financial Measures” above for further information regarding the Company’s use of non-GAAP financial measures.

The following tables present unaudited reconciliations of the Company’s loss from continuing operations before income tax to Adjusted EBITDA by segment for the three and six months ended June 30, 2018 and 2017, respectively:

(a) The Company does not allocate expenses on a segment level. As such, we have included tax income benefit in Corporate and other for the purpose of this reconciliation.(b) For the purpose of this reconciliation, the Company has included income related to discontinued operations in Corporate and other as it all pertained to the Remote Accommodations segment which was discontinued as of November 29, 2017.

The following table provides an unaudited reconciliation of purchase of rental equipment to Net Capital Expenditures for Rental Equipment:

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Globe Newswire: 23:03 GMT Thursday 8th November 2018

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