Earnings Summary on WillScot

Key Points

• GAAP earnings per share missed analyst estimates by 26.5%, while GAAP revenue slightly exceeded expectations.

• Gross profit margin (GAAP) and return on invested capital (non-GAAP) declined compared to Q2 2024.

• Full-year FY2025 guidance for both revenue and adjusted EBITDA was narrowed, reflecting cautious near-term expectations.

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WillScot (NASDAQ:WSC), a leading provider of modular space and portable storage solutions, reported its quarterly results on July 31, 2025, for Q2 2025. The most notable takeaway was a miss on earnings per share, with Adjusted (Non-GAAP) EPS at $0.27. However, GAAP revenue edged slightly above forecasts at $589 million, surpassing the consensus estimate by $1.51 million. Adjusted EBITDA (non-GAAP) fell to $249 million from $264 million the previous year. Overall, the quarter showed resilient cash generation and ongoing business initiatives, but was marked by margin pressure and lower volumes in some segments, especially in core leasing activity.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About WillScot: Business Model and Strategic Focus

WillScot is known for its vast network and scale in North America, renting and selling modular office complexes, portable storage containers, climate-controlled storage units, and offering delivery, installation, and a range of value-added services. Its customer base spans industries such as construction, government, retail, and education.

In recent years, the company has focused on maintaining its market leadership by expanding its product offerings. Growth has been driven by value-added products and services (VAPS), sophisticated logistics investments, and targeted acquisitions. Success in this business depends on scale, efficient delivery, high-value offerings, and a diversified customer base.

Quarterly Highlights and Major Developments

The most significant result was the miss in GAAP earnings per share compared to analyst expectations. While GAAP revenue nudged ahead of forecasts, year-over-year growth remained negative. Gross profit margin (GAAP) stood at 50.3%, down from 54.1% in Q2 2024, as cost pressure and mix shifts weighed on profitability despite ongoing pricing initiatives.

Leasing revenue, which forms the core of WillScot's recurring income, declined to $443 million, a drop of 3.4% year over year (GAAP). This result came even as the company achieved higher average monthly rates for its modular space units (up 5.2%) and portable storage units (up 7.2%). The improvement in pricing was not enough to offset lower unit volumes, reflecting persistent end-market pressures. Delivery and installation revenue was stable at $108 million, but margins in these services remain under pressure due to operational investments and a push for higher productivity in logistics.

The VAPS portfolio continued to play an increasingly critical role, representing over 17% of revenue in Q1 FY2025. Value-added offerings include furnishings, appliances, security solutions, telematics, and climate controls. This strategic mix has helped manage overall revenue decline, with management emphasizing that better VAPS penetration remains a major lever for margin and long-term growth. Recent acquisitions, notably in climate-controlled storage, reinforce the commitment to high-value, differentiated product lines.

Operationally, WillScot implemented further productivity initiatives targeting logistics and working capital. The company highlighted a sequential expansion of its adjusted EBITDA margin by 1.4 percentage points from the previous quarter, citing early benefits of improved back-office productivity and a $30 million reduction in accounts receivable during Q1 2025. Investments in scheduling and dispatch technology, as well as an increase in in-house delivery resources, are actively underway, though these measures have contributed to short-term pressure on some service margins.

Market trends continued to favor large, enterprise-level projects, with all order growth during Q1 2025 coming from these accounts. Local and transactional business remains soft, and management does not currently expect improvement in these segments. The acquisition pipeline also remains active, with $134 million spent on tuck-in deals, particularly targeting climate-controlled storage.

On capital allocation, WillScot returned $53 million to shareholders through share buybacks and its dividend, resulting in a 3.4% reduction in share count over the 12 months ending June 30, 2025 compared to the prior year. Liquidity remains robust, with $1.6 billion available on its credit facility. The company's net debt to adjusted EBITDA ratio was 3.6x, slightly higher due to acquisition spending.

The quarterly dividend of $0.07 per share was paid on June 18, 2025. This continues the company’s approach of returning cash to shareholders in addition to ongoing share repurchases.

Financial Outlook and Forward View

Management updated its full-year FY2025 guidance, narrowing the expected ranges for key metrics. The new revenue outlook for 2025 stands at $2,300 million to $2,350 million, down from a previous midpoint of approximately $2,375 million. Adjusted EBITDA (non-GAAP) guidance is now $1,000 million to $1,020 million for FY2025, compared to a previous midpoint of $1,045 million. Adjusted free cash flow is expected between $500 million and $550 million for FY2025, driven in part by improvements in working capital and recent tax law changes.

No specific improvement is forecast for local or transactional markets in the near term. Management highlighted ongoing “mixed” conditions across end markets, with strength in mega projects but continued pressure in smaller accounts, especially in non-residential construction, as discussed for Q2 FY2025. The company reaffirmed its long-term financial targets, but the near-term outlook remains cautious until broad-based demand strengthens or costs improve.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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