WillScot Q2 2025 Earnings Report

WillScot EPS Results

• Actual EPS: $0.27
• Consensus EPS: $0.36
• Beat/Miss: Missed by -$0.09
• One Year Ago EPS: $0.39

WillScot Revenue Results

• Actual Revenue: $589.08 million
• Expected Revenue: $587.07 million
• Beat/Miss: Beat by +$2.02 million
• YoY Revenue Growth: -2.60%

WillScot Announcement Details

• Quarter: Q2 2025
• Date: 7/31/2025
• Time: After Market Closes
• Conference Call Date: Thursday, July 31, 2025
• Conference Call Time: 5:30PM ET

WillScot (NASDAQ:WSC) provides workspace and portable storage solutions in the United States, Canada, and Mexico. It operates in two segments, Modular Solutions and Storage Solutions. Its modular solutions include panelized and stackable offices, single-wide modular space units, section modulars and redi-plex, classrooms, ground level offices, blast-resistant modules, clearspan structures, and other modular space; and portable storage solutions, such as portable and cold storage containers, as well as trailers. The company leases modular space and portable storage units to customers in the construction, commercial and industrial, retail and wholesale trade, energy and natural resources, education, government and institutions, and healthcare markets. The company offers its solutions primarily under the WillScot and Mobile Mini brand names. The company was formerly known as WillScot Mobile Mini Holdings Corp. and changed its name to WillScot Holdings Corporation in July 2024. WillScot Mobile Mini Holdings Corp. is headquartered in Phoenix, Arizona.

WillScot Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: WillScot delivered Q2 adjusted EBITDA of $249 million (42.3% margin) and generated $130 million in adjusted free cash flow (22.1% margin), both in line with expectations and showing sequential improvement.
• Positive Sentiment: The company invested $134 million in tuck-in acquisitions, notably adding a leading regional climate-controlled storage business to capitalize on strong customer demand.
• Positive Sentiment: Operational enhancements—such as the AI‐enabled pricing engine, upgraded SalesHQ platform, and order-to-cash optimizations—drove days sales outstanding to an 18-month low and bolstered cash flow.
• Negative Sentiment: Due to softer small-project activity, H2 demand is expected below prior forecasts, prompting narrowed full-year guidance to $2.30–2.35 billion in revenue and $1.00–1.02 billion in adjusted EBITDA.
• Positive Sentiment: New federal tax legislation extends 100% bonus depreciation and limits interest deductibility, eliminating meaningful U.S. federal cash taxes in 2025 and boosting free cash flow guidance to $500–550 million.

Presentation

[Operator]

Welcome to the Second Quarter twenty twenty five WillScot Earnings Conference Call. My name is Sherry, 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.

[Operator]

I will now turn the call over to Charlie Woolhutter. Charlie, you may begin.

[Charlie Wohlhuter, Senior Director - IR at WillScot Mobile Mini]

All right. Thank you, Sherry. Good afternoon, and welcome to the WolfScot Second Quarter twenty twenty five Earnings Call. Participants on today's call include Brad Solz, Chief Executive Officer Tim Boswell, President and Chief Operating Officer and Matt Jacobson, Chief Financial Officer. Today's presentation material may be found on our Investor Relations website at investors.willscott.com.

[Charlie Wohlhuter, Senior Director - IR at WillScot Mobile Mini]

I'd like to direct your attention to slide two containing our Safe Harbor statements. We will be making forward looking statements during the presentation in our Q and A session. Our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control. Therefore, our actual results may differ materially from comments made on today's call. For a more complete description 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.

[Charlie Wohlhuter, Senior Director - IR at WillScot Mobile Mini]

With that, it's my pleasure to turn the call over to Brad Soultz to begin.

[Bradley Soultz, CEO at WillScot Mobile Mini]

Thanks, Charlie. Good afternoon, everyone, and thank you for joining us today. I'm Brad Soultz, Chief Executive Officer, Will Scott. Please turn to Slide seven in our Q2 earnings release deck. Our second quarter financial results were broadly in line with our expectations.

[Bradley Soultz, CEO at WillScot Mobile Mini]

We delivered adjusted EBITDA of $249,000,000 representing a 42.3% margin or an increase of 140 basis points sequentially. On a trailing twelve month basis, our adjusted EBITDA margin stands at 43.8%. I was pleased with both the sequential improvement in lease revenues and our continued robust adjusted free cash flow performance of 130,000,000 at 22.1% margin in the quarter and 23.6% margin over the past twelve months, which will continue to be supported by the impact of recent legislation changes, which Matt will discuss later. During the quarter, we continued to execute against our long term capital allocation framework, funding growth CapEx investments in our flex, complex fleet and new adjacencies, and we deployed $134,000,000 towards tuck in acquisitions, which included the addition of a leading regional climate controlled temporary storage business. Customer demand for this product is high and fits well with our portfolio and service capabilities.

[Bradley Soultz, CEO at WillScot Mobile Mini]

We also continue to return value to shareholders through share repurchases and dividends. Our focus on further advancing service excellence is also showing positive signs in customer satisfaction as we optimize our platform. Addressing feedback from our customer base has been a major focal point for us and is being recognized through higher net promoter scores, particularly in the work we're doing to improve our ordered cash process, which Tim will further expand upon. Both process driven and technological enhancements are elevating the customer experience, increasing the ease of doing business with us and beginning to unlock some of our working capital opportunities we previously highlighted. This is just one of the many internal opportunities we have that set us up for achieving the milestones we outlined at our March 2025 Investor Day, achieving 3,000,000,000 in revenue, 1,500,000,000.0 in adjusted EBITDA and $700,000,000 in adjusted free cash flow, all in the next three to five years.

[Bradley Soultz, CEO at WillScot Mobile Mini]

Now turning to the broader macroeconomic environment. Although large projects do continue to remain robust, we're expecting second half demand to be below our prior expectations, giving lingering questions around the ultimate implications from trade and U. S. Monetary policies resulting in ongoing certainty in many of our end markets. Many customers are continuing to take a wait and see approach which is influencing current and near term demand.

[Bradley Soultz, CEO at WillScot Mobile Mini]

This is generally contained among the smaller projects which tend to be more interest rate and economic sensitive. Unlike the larger projects where demand remains strong and our ability to serve is unmatched. Looking ahead, I'm very excited about how our strategic initiatives are evolving and set us up for continued success. I'll now turn it over to Tim to discuss these initiatives in more detail.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

Thanks, Brad, and hello, everybody. I'll pick up where Brad left off and provide a bit more color on commercial activity since that's probably the biggest variable impacting near term results. The mix of end market activity favoring larger scale projects and larger customers has continued for some time now and remained consistent through Q2, so there's nothing new there to highlight. In terms of the things that are within our control, in which we talked about in March, we're taking specific actions to build our enterprise account relationships, improve execution across our field sales team and reposition our offering in favor of higher value added services. Starting with enterprise accounts, we added new leadership to this team in Q2 and made significant progress building out the organization to focus on developing underpenetrated industry verticals.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

The enterprise portfolio has been outperforming the overall business simply based on the mix of end market activity, and we expect to build on this strength by reallocating resources here. Modular units on rent were up 4% year over year and storage units on rent were down only 1% year over year as of the end of Q2, which gives you a feel for the relative strength that we see in the enterprise portfolio. Our value proposition resonates very well with these customers, and we announced deals with organizations like Penske and the FIFA Club World Cup in the quarter, just as examples of the success we see when we target these opportunities more proactively. Execution across our field sales organization is improving, although not yet to our target productivity levels. Overall, organizational stability and turnover has improved meaningfully into Q2, which is a good and necessary first step.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

As we talked about in March, we rolled out our AI enabled pricing engine as well as our enhanced SalesHQ platform in Q2 as planned. As we talked about in March, these are best in class tools to drive sales productivity, and our team is in the early stages of adopting and optimizing these. Sales staffing increased by approximately 9% sequentially from Q1 to Q2, which is a somewhat slower pace than we originally planned for the year, just given we're still taking a cautious view on end markets. Whether or not we drive towards budgeted levels will be a function of both end market activity and our own productivity levels, all of which are contemplated in the guidance range that Matt will talk about. Within the offering itself, we see some pockets of very strong performance within each of our core product categories, which validates our focus on our higher value added offerings.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

Within storage, our climate controlled units on rent are up 30% year over year, both organically and through the acquisition of Portable in April. We have very strong conviction in this area and are continuing to deploy capital across the network to build this portfolio. Similarly, within modular, our flex units on rent are also up by 30% year over year as of the June, primarily supporting large scale, longer duration projects where we have a truly unrivaled value proposition. So within both the storage and modular categories, we are driving mix changes that are positive both strategically and financially. And value added products remain an opportunity.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

VAPS revenues are up approximately 7% year over year on a per unit basis on modular units and about 12% on storage units, although slightly behind our plans for the year. So this remains an area of focus for the sales team. I'll highlight several of the other operational initiatives that are ongoing under the hood and that are supporting margins and cash flows, both of which are outperforming our original plans through Q2. In our field operations, we have a focus across our network on optimizing our logistics and field service resources. Service call management and billing and cross training and dispatching of our drivers all support gross profit margins customer experience.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

We're making significant investments in these team members, given the critical role they play in our business, especially relative to the competition who largely outsource these activities. And in our centralized operations, we're seeing the impact of the organizational and operational changes that we made to start the year with an initial focus on the order to cash process. You will note modest improvement in days sales outstanding, progressing towards the low 70s and achieving an eighteen month low as of June. If sustained, this will drive reductions in bad debt expense in the P and L as we head into 2026, so we're on track to unlock the working capital and margin opportunities that we highlighted in March. You can see the impact in cash flow from operations, which were up 17% year over year in the second quarter despite a flat revenue environment.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

And you can see the impact in our net promoter and customer satisfaction scores, which are up sequentially since we met in March, with the biggest improvements in our billing and collections functions. So overall, we remain focused on executing the plans we articulated in March. The team is aligned and energized around these plans. I'm humbled by the passion and urgency that the team brings to WillScot every day. And as we execute these building blocks, they put us on track to achieve the longer term milestones that we have committed to.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

With that, I'll pass it over to Matt to talk about Q2 financials and the outlook. Matt?

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Thanks, Tim. Hello, everyone. Before we dive in, I'll cover just a few highlights for the quarter. Revenue and adjusted EBITDA performed just as we expected, and we continue to progress towards a return to revenue growth. Our cash from operations was up 17% year over year, as Tim noted, with free cash flow in the quarter of January which were both above our expectations and reaffirm the strength and stability of our business model.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

I'll begin my more detailed remarks on Slide 22. Total revenue of $589,000,000 and leasing revenues of $443,000,000 were both in line with the expectations we laid out in our Q1 call. This represented a 3% year over year decline in leasing revenues and both delivery and installation and sales revenues were flat. However, on a sequential basis, leasing revenues grew 2% in the second quarter versus a sequential decline of 0.4% in 2024. Importantly, this is the first quarter since 2023 of sequential leasing revenue growth, excluding Q4 seasonal impacts.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

So we're seeing our rental revenues beginning to inflect positive sequentially, which is an important first step in returning to year over year revenue growth. Looking to our KPIs, positive contributions from pricing and VAPS drove average monthly rental rate up 5% year over year for modular products and up 7% for storage driven by favorable mix from growth in our climate controlled storage business. That said, average monthly rental rates for steel containers have held steady with growth in average monthly rental rate of approximately 2%, both year over year and sequentially. These benefits offset much of the impact from lower volumes as average units on rent for modular products were down 5.6 year over year and down 3.8% for storage. Adjusted EBITDA was $249,000,000 and in line with our expectations and down 6% year over year.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Adjusted EBITDA margin was 42.3%, an increase of 140 basis points sequentially from the first quarter as we had guided with sequential improvements to delivery and installation margins, sales margins and reductions in SG and A. Versus prior year, EBITDA margin was down 130 basis points, which is primarily driven by our delivery and installation margins. As Tim touched on in his comments, we've been progressing our in sourcing initiative and there is upfront investment required to drive margin expansion in the medium term. But that investment along with negative operating leverage in the business due to lower activity is creating some near term margin compression year over year as we expected, though improving sequentially. Flipping quickly back to Slide 20.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Our contributions from value added products and services in the quarter represented 17% of total revenue, with the last twelve months at 16.9%. VAPS as a percentage of revenue both in the quarter and over the last twelve months increased by 40 basis points year over year, underscoring the growing demand for VAPS and the opportunity that we see for this category going forward. On Slide 23, you'll see several charts detailing our cash flows for the quarter. Q2 was another strong quarter with cash from operations increasing 17% year over year to $2.00 $5,000,000 including some early benefits from the increased focus on back office productivity and working capital management, as Tim noted. We continue to fund planned increases in net CapEx, which I'll touch on a bit more in a minute.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

And we delivered adjusted free cash flow of $130,000,000 in the quarter and an adjusted free cash flow margin of 22.1%, which was 80 basis points higher than the previous year. Adjusted free cash flow per share was $0.72 for the quarter. And over the past twelve months, we generated $555,000,000 of adjusted free cash flow, achieving a 24% margin and $3.5 per share. The recent tax legislation is another positive development for our business as well, which I'll touch on in a bit more detail in our outlook. The consistency of our cash flows remains key strength of our business model, providing us with meaningful flexibility to deploy capital and reinvest at attractive returns.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Moving on to Slide 25. We invested $75,000,000 in net CapEx in Q2, representing a 37% increase over the $55,000,000 invested in the prior year, driven largely by continued refurbishments, investments in our Flex and larger complexes to support the strength in large projects that we're seeing and organic investments in VAPS, namely Perimeter Solutions and our new solar offering. We completed two tuck in acquisitions this quarter, Portable, a climate controlled storage provider serving the Eastern U. S. And Gulf Region and a local market ClearSpan provider to support our strategy of bringing more adjacent offerings to new and existing customers.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

We continue to work the pipeline with a number of tuck in opportunities that can still be actioned in the year. We returned $53,000,000 to shareholders during the quarter through share repurchases and our dividend. We repurchased approximately 1,500,000.0 shares for $40,000,000 in Q2 and have reduced our share count by 3.4% over the last twelve months. Lastly, we issued $13,000,000 in dividends. Given the M and A activity of $134,000,000 in the quarter, our leverage exiting Q2 was up slightly at 3.6 times and we're comfortable progressing gradually into our three to five year target range as the business inflects.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Now turning to our updated full year 2025 outlook on Slide '27. As we said entering this year and with last quarter's results, we deliberately maintain wider guidance ranges for the year to account for the macroeconomic uncertainty and noted that non residential construction starts activity remained a gating factor to near term volume growth and a key factor in determining where results would fall within the range. As Tim noted in his comments, demand for large projects continues to perform well and we continue to see strong activity on our large complex product types. However, we have not seen improvement in small projects and our smaller modular units and containers continue to face end market demand headwinds. This has resulted in lower units on rent exiting the second quarter than what was implied at the midpoint of our prior full year outlook.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Due to the macroeconomic outlook, we do not expect an inflection in units on rent to occur by the end of the year and have narrowed our revenue outlook to a range of $2,300,000,000 to $2,350,000,000 and adjusted EBITDA to a range of $1,000,000,000 to $1,020,000,000 As I noted earlier, we were pleased to see sequential leasing revenue inflect positively in the second quarter by 2%, which is the first step in a return to year over year revenue growth. We anticipate modest sequential revenue growth to continue in the third quarter as the headwinds continue to subside and expect total revenue in the third quarter to be down around 3% year over year. It's important to note that we did have a very large project with the Rams last year in the third quarter that elevated our delivery and installation revenues pretty significantly. This project won't recur this year and this accounts for a large portion of the year over year change in total revenues expected in Q3. And for margins, we expect to see continued progress on a sequential basis of 50 to 100 basis points of expansion compared to Q2 as we continue our focus on optimizing our logistics and field service resources, including further cross training of our drivers and adjusting other variable costs in the business in line with demand.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

And finally, year to date cash from operations of $412,000,000 and adjusted free cash flow of $275,000,000 have been continued strength of the business supported in part by modest improvements in days sales outstanding and working capital as our central operations team drives continued improvements. Additionally, as a result of the corporate tax legislation enacted on July 4 that permanently extended 100% bonus depreciation and modified interest expense deductibility to EBITDA from EBIT, we no longer expect to pay meaningful U. S. Federal cash taxes this year. All of this together gives us confidence in raising our expectations for free cash flow for the year to a range of 500,000,000 to $550,000,000 Before I hand it back to Brad, I want to close and thank our team for a solid quarter performance in a tough economic environment.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

I'm encouraged by the sequential rental revenue growth that we delivered in the second quarter. Additionally, our adjusted free cash flow continues to be a positive attribute of the business and will continue to drive the margin enhancing initiatives that we laid out at our Investor Day to support margin expansion into our 45% to 50% EBITDAR margin range. I'll now hand it back to Brad for some closing remarks.

[Bradley Soultz, CEO at WillScot Mobile Mini]

Thank you, Charlie, Tim and Matt. Thank you to our customers for their continued business. Thank you to our team for their focus on each other, safety and customer satisfaction. And thank you to our shareholders for their trust and their capital. I wish all of you listening today continued safety and good health.

[Bradley Soultz, CEO at WillScot Mobile Mini]

This concludes our prepared remarks. Operator, would you please open the line for questions?

[Operator]

Thank you. Due to time restraints, we ask And our first question will come from the line of Angel Castillo with Morgan Stanley. Your line is open.

[Angel Castillo, Executive Director - Head of US Machinery & Construction Equity Research at Morgan Stanley]

Hi, good evening. Thanks for taking my question. Just wanted to touch base a little bit more, I guess, on modular side. There were some kind of subtle improvements in the data there, both the rental rate and utilization kind of on a sequential basis. Can you just help us unpack that a little bit more?

[Angel Castillo, Executive Director - Head of US Machinery & Construction Equity Research at Morgan Stanley]

Just what drove that? Was it just kind of seasonality mix? Or are there any other kind of inflections in what you're seeing? And I thought it was notable. I think you called out 7% growth in VAPS.

[Angel Castillo, Executive Director - Head of US Machinery & Construction Equity Research at Morgan Stanley]

If I'm not mistaken, that's kind of the best we've seen in several quarters. So just yes, if you could just kind of unpack that a little bit more and maybe why that doesn't give you maybe a little bit more confidence for second half.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

Angel, this is Tim, and I'll let my colleagues jump in with anything they'd like to add. But this has been going on for some time now where we've seen kind of a bifurcation of performance within the overall portfolio with modular outperforming storage. And within the modular portfolio, I commented in my remarks that flex units on rent, for example, were up 30% year over year. We've had very solid performance across all of the complex product line within the modular category. So there is an underlying mix shift in that category that is helpful in many ways, and that's a reflection of the nature of the project activity that we see in our end markets.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

And it's also highly levered to our enterprise accounts. And I noted that those modular units on rent are up 4% year over year as of June. So there is quite a bit of nuance in there. If we break the modular portfolio down and just look at pricing and VAPS performance, largely flat from pricing in terms on new contracts. And when I was talking about value added products per modular unit on rent, that was up 7%.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

And we have kind of renewed our focus there across the sales organization to get that back on track. So overall, I'm actually really happy with the modular trajectory. Sitting here today, the overall order book is up about 1% year over year, and it's been up all year really since we met together in March. The order rates in the business did plateau in kind of the April, May timeframe kind of going into June, but have stabilized in Modular. So overall, that's a bright spot in the business, and we've kind of extrapolated that trend, I would say, in Matt's guidance.

[Angel Castillo, Executive Director - Head of US Machinery & Construction Equity Research at Morgan Stanley]

That's very helpful. And then could you help us understand, I guess, the second half? I think just maybe to what degree that's some amount of just kind of conservatism given, again, what we've seen thus You mentioned some of the kind of exit rates out of the second quarter. Just because as we talk to other companies, also hear, for instance, the one big beautiful bill and potential inflection higher kind of in construction. So are you just is it simply you're not assuming any of that improvement happens?

[Angel Castillo, Executive Director - Head of US Machinery & Construction Equity Research at Morgan Stanley]

Or is there something about the portable storage business or other aspects of your business that maybe kind of makes it more of a muted impact this second half?

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Yes. Andrew, this is Matt. I think that's some of the points you hit there are right on. Tim talked about the strength in the larger complexes. We're not seeing the same strength on the smaller projects and smaller units that we have in the modular business.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

And so in aggregate, exiting the second quarter, modular units on rent were down a little bit from where we had anticipated in that original outlook. And so as you look at the second half, that's really bringing in kind of that change in the exit point. But your point around the big beautiful bill and some of the investments there, similar what could happen with changes in interest rates. Those are all things that could stimulate incremental small project activity, which is very important to help drive the demand on some of our smaller projects. So I would say that we've probably got some of that within the full range that we've anticipated.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

If that were to accelerate more quickly, could that change something potentially? But right now, we don't see an immediate near term impact of that.

[Bradley Soultz, CEO at WillScot Mobile Mini]

And you'll probably this is Brad. The only thing I would add just on the margin is you'll remember there's a seasonality aspect of the modular. You're typically not going to see improvements in demand until March, April of next year timeframe if you don't see it in the third quarter. So, I am pretty optimistic in terms of the outlook going forward. I just think now we're not going to see much of it this year.

[Angel Castillo, Executive Director - Head of US Machinery & Construction Equity Research at Morgan Stanley]

Makes a lot of sense. Thank you.

[Operator]

One moment for our next question. And that will come from the line of Brent Thielman with D. A. Davidson. Your line is open.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Hey, great. Thank you. Hey, Matt, I was hoping to get a little more color or clarification on the drivers behind the sequential margin expansion you're looking for in the third quarter, just given some of the sustaining demand pressures that you're seeing on the business?

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Yes. So Q2 to Q3, you're asking, Brent?

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Yes.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

No, I think that's typically, it's pretty similar to what we actually saw from the first quarter to the second quarter. So as we went from Q1 to Q2, there's a little bit of seasonality in that as well. But the 140 basis point expansion we saw there, a good chunk of that was coming from our delivery and installation margins, so our logistics. And like we talked about the investments we've made upfront to in source more of that activity to cross train drivers. That is a continued process.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

We're not done with that. And as we look forward in each quarter, that is an area we expect to continue to expand margins. So that's probably the first one I would point to. And there's a little bit of SG and A leverage as well, that occurs here in the third quarter, going into it. So those are the two big that I would point to.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

They kind of get you that 50 to 100 basis points of expansion that I talked about for Q3.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Okay. And then in context of some of the more, I guess, complex solutions you offer, I mean, you mentioned climate controlled up 30%, I think flex up 30%. Are those sort of sustaining run rates for those solutions into the second half of the year, even against this sort of backdrop of end markets? Just curious because it's impressive growth there.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

There are smaller and newer categories, Brent. This is Tim. And whether we sustain 30%, I don't know. I can say the pending order book for Flex and just the backlog of larger project activity that's on the radar going into the second half is very encouraging and supportive of continued flex unit on rent growth. I'm not going to estimate the exact magnitude.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

And sitting here right now, looking at order rates, for example, in our climate controlled Storage business, they're up about 60% year over year. And I expect we have an interesting level of seasonal demand for that product category as well in Q4. So whether it stays at exactly that trajectory, Brent, I don't know, but we are seeing strong trends across those categories.

[Brent Thielman, MD & Senior Research Analyst at D.A. Davidson]

Very good. Thank you.

[Operator]

One moment for our next question. And that will come from the line of Steven Ramsey with Thompson Research Group. Your line is open.

[Steven Ramsey, Deputy Director of Research at Thompson Research Group]

Hi, good evening. Wanted to dig in on enterprise leasing revenue up 4%. First, can you clarify if that's Q2 or year to date? And then secondly, can you dissect the drivers of that, the units on rent and the pricing dynamics that support that result?

[Timothy Boswell, President & COO at WillScot Mobile Mini]

Hi, Stephen. This is Tim. My comments in the prepared remarks was specific to volumes within the enterprise portfolio. And I mentioned that modular units on rent as of the June in the enterprise portfolio were up 4% year over year, and storage units on rent were down just one percent year over year. So I was just trying to contrast the activity levels that we're seeing among our enterprise customers with the rest of the portfolio.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

And those enterprise customers tend to be focused on larger, longer duration projects. They tend to be biased towards our modular complex fleet. And there are associated pricing and value added products opportunities when you see projects of those of that nature. So just trying to compare and contrast a little bit where we're seeing strength in the business versus relative weakness. And as we talked about in March, we're putting a lot of effort behind our enterprise strategy.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

This is something that we had kind of built out and developed through the second half of last year, and we've moved into execution mode in kind of the April, May time frame, bolstering kind of the leadership team there, adding resources. So it's not just an account management function, but we actually have a proactive business development capability within each of our target verticals focused on penetrating sectors outside of construction and outside of the legacy retail relationships, where the current enterprise portfolio is heavily weighted today. We see very interesting opportunities in energy and industrial, government, professional services and special events. I mentioned FIFA, for example, is just one example of that, where we're serving a dozen locations across North America all at once with all of our product offering in a very sophisticated way in terms of the logistics and service capabilities that are involved. So those are examples of areas where I think we've got opportunity over the next three to five years.

[Steven Ramsey, Deputy Director of Research at Thompson Research Group]

That's helpful, super helpful. And then wanted to continue that line of thought on enterprise and large projects, which have been a good guy for now a couple of years, while local markets have been weak now for a couple of years. Are you nearing a crossover point where that dynamic alone could stabilize the revenue base? Or do you really need local markets to come back to shift the units on rent upward?

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

I mean, I would look at more from a revenue perspective. And we saw at least sequentially, right? We saw in the second quarter that 2% increase sequentially. And that is our first step to get to year over year revenue growth. So I think we are seeing some of that stability here.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

We just got to sustain that going forward and we'll flip to year over year growth here. So that's been going on, as you said, in the business for quite some time and continues to be where we see the strength. So if some of the local market stuff can increase as well, that maybe gets us there quicker.

[Steven Ramsey, Deputy Director of Research at Thompson Research Group]

Great. Thank you.

[Operator]

One moment for our next question. And that will come from the line of Phil Ng with Jefferies. Your line is open.

[Maggie Grady Miller, VP - Equity Research at Jefferies]

Hey, guys. It's Maggie on for Phil. I wanted to first dig into the storage side of the business. You know, the last few years, that retail remodel activity piece has been a little noisy. So just wondering if there's any update on what your conversations with those customers are like for the outlook.

[Maggie Grady Miller, VP - Equity Research at Jefferies]

I think we're kind of past the point in 'twenty five where that would be a big impact, but maybe planning assumptions for 'twenty six, how that could factor into volumes next year?

[Timothy Boswell, President & COO at WillScot Mobile Mini]

Maggie, it's Tim. I'll start. Matt, you can jump in. We have been seeing some of that activity this year. I wouldn't say not at the same scale that we may have experienced going back a few years.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

Those tend to be shorter duration, right? They can be less than six months in duration. So at least the activity that we're seeing so far this year, we did have meaningful remodel demand in Q1, but a lot of that also cycled out in Q2 and So heading into it's generating revenue, right? It's not necessarily building the unit on rent base given the duration of that activity, but we're definitely seeing some of that come back. I can't really comment on remodels specifically for 2026. I did mention in the remarks, we are engaged with many of the larger retailers right now as it relates to seasonal storage demand, and that seems to be shaping up reasonably well. But there's definitely a range of potential outcomes around that, given we're still pretty early in the order taking process as it relates to seasonal storage demand.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

I don't think I have much else to add there, Maggie, other than we haven't heard any change for '26 at this point regarding retail remodel activity. So that's one we'll just have to keep an eye on as we later into the year.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

Okay. Okay, that's

[Maggie Grady Miller, VP - Equity Research at Jefferies]

helpful. And then you've talked for several quarters now about the larger projects outperforming kind of that smaller transactional activity. And I think you talked about customers taking more of a wait and see approach on those transactional units. Maybe if you could just give us more context around what they're looking for. Is it tariff uncertainty?

[Maggie Grady Miller, VP - Equity Research at Jefferies]

Is it interest rates? What could happen that would, I guess, give them more clarity to make that decision and how we should think about maybe that factoring into the back half of this year?

[Bradley Soultz, CEO at WillScot Mobile Mini]

I think there are three factors that play with those smaller regional projects and that is certainly clarity around monetary policy and interest rates, clarity around trade policy and such. And then as we said, there's always an interplay of labor constraints here. I think it's those three factors and see it as something that's kind of moving sideways at high level right now.

[Maggie Grady Miller, VP - Equity Research at Jefferies]

Okay, great. Thanks, guys.

[Operator]

One moment for our next question. And that will come from the line of Scott Schneeberger with Oppenheimer. Your line is open.

[Scott Schneeberger, Managing Director at Oppenheimer & Co. Inc.]

Thanks very much. Good afternoon all. I'm going be asking first one on generation of cash and then second one on use of capital. So first off, thanks Matt for the color on the new federal tax legislation. How much of that is driving the improved guidance and how much of it is the working capital?

[Scott Schneeberger, Managing Director at Oppenheimer & Co. Inc.]

And then kind of the follow-up to that part is, how much of that federal tax legislation benefit is going to carry over into 2026 and 2027 that you can tell thus far? Thanks.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Yes, I'll start with the tax legislation, Scott. Yes, so the if you recall back to our year end call and kind of our guidance at the beginning of the year, we did expect about $50,000,000 of federal cash taxes in the year. The 100% depreciation as well as some of the changes in the interest deductions, etcetera, is basically going to push all that out of 2025. So we don't expect any meaningful remaining federal cash taxes in 2025. We're still got to work either still lots of assumptions around this with acquisition levels and those types of things.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

But I think we probably see a similar type of benefit next year and even potentially for the next couple of years after that. So it does meaningfully push us to the right from a tax payment perspective, Scott. So I think there's a kind of a three, four year impact of this for us to the net positive, which just great to see from a cash flow perspective. On the working capital piece, if I look at kind of where we've gone here from the end of the year, I think we're down around 12,000,000 or so in AR. And we've been working through some of the cleanup as well, right?

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

We've had a reserve that's bigger. We've kept it open for longer than we would have if we hadn't had as much of the system changes that we've had and the team is really working through that. So we're making great progress there. It's contributing somewhere in that kind of 10,000,000 to $15,000,000 I think in working cap on that piece, Scott. But it's one that also probably leaves our range of the 500,000,000 to $550,000,000 a little bit wider than it might have otherwise, because I think there's really good potential for that to accelerate.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

But it's still early in that process and we've got some other things that we're doing there with systems that will help us. So both very positive things for us are really driving cash from the business and we're excited with what we can continue to do there over the next coming years.

[Scott Schneeberger, Managing Director at Oppenheimer & Co. Inc.]

Thanks. Appreciate that. And then on the follow-up on the use of capital, the M and A, it was big in the quarter, the largest in about a couple of years. A couple of parts to this. One, what multiple it looks like you did two acquisitions and it looks like the climate controlled storage was probably the bigger, but could you give a sense of size of each and then kind of multiple paid, which what I'm getting at is what is going to be the EBITDA contribution from those in this year and going forward?

[Scott Schneeberger, Managing Director at Oppenheimer & Co. Inc.]

And then the follow-up to all this is just are we going to see a lot more M and A over the balance of the year or is it going be buybacks? What's the decision process there? Thanks.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Yes. A couple of pieces to unpack there. So I'll just talk portable was the bigger of the two by quite a bit. I'm not going to get into the specific multiple that we paid, but I can't say in the quarter. It was about $3,000,000 of revenue contribution and maybe $1,000,000 but that was only of EBITDA, but that was only a partial piece.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

And similar to A and M, so we talked about this at Investor Day, right? This product category, is one where typically logistic margins are kind of at a zero breakeven margin. And we see really big opportunities here using our internal logistics network to be able to really expand the margins in this business. So, might be a little bit more than that average of eight, but still when you take the whole thing into consideration and you know what that synergies, what you can do from a margin perspective, it kind of gets you back into a range that we've been comfortable with here in the past. Related to I'm trying Scott, I'm sorry, I'm missing the second

[Scott Schneeberger, Managing Director at Oppenheimer & Co. Inc.]

No worries. It's just are we going to see a lot more acquisitions in the back half or buybacks if you use the capital from here? Thanks.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Yes, I think we'll look at all those capital allocation priorities. I mentioned in my prepared comments, we continue to have a pipeline there. And there's several of those that could happen in the back half. But these things are never 100% predictable from a timing perspective. So continue to look at all the options.

[Scott Schneeberger, Managing Director at Oppenheimer & Co. Inc.]

Great. Thanks for all that, Matt. Appreciate it.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Yep.

[Operator]

One moment for our next question. And that will come from the line of Andrew Wittmann with Baird. Your line is open.

[Andrew Wittmann, Senior Research Analyst at Baird]

Great. Thanks for taking my questions, guys. So I guess I wanted to drill in on the order book because I think this was one of the things that last quarter was seen as a positive. I think you were saying at the time that the order book was like plus 7%. And if I didn't hear you incorrectly, think this quarter you said it's plus 1%.

[Andrew Wittmann, Senior Research Analyst at Baird]

So I guess, is this just a sign that the economy has given us kind of fits and starts? Or was there a seasonal dynamic going on there? I guess it's probably just catching people a little bit off guard about kind of the change that happened there. And so I thought maybe I'd give you a form to talk about that a little bit.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

Yes, Andy, it's Tim. I actually would tend to agree with the fits and starts comment. As we look at how the order book has trended through the course of the year, it actually built quite rapidly to start the year from January through March. And in the Modular business, we saw those order rates kind of plateau in the April and May timeframe. So no deceleration, but no continued acceleration that you would typically expect in a seasonal Q2 construction season in our business. So a little unusual, but still, as I zoom out in aggregate, strong and remaining up year over year, again, with strength on the complex side, which we've already talked about.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

Storage, a little bit different. You had the same acceleration to start the year. We did see the order rates decline from April into May, but have kind of stabilized from May into June. There's some noise in the storage side of the business, Andy, just due to the timing of seasonal orders, which last year would have started coming in throughout the course of July is when they really started to build, and we're probably a few weeks behind that this year just based on some changes in the procurement process at a couple of the larger retailers. But I'm not really concerned about that just given the engagement level is super high there.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

So overall, yes, the magnitude of the difference versus prior year has come down a bit, but that's a function of kind of how the order rates have sequentially trended from January through July here.

[Andrew Wittmann, Senior Research Analyst at Baird]

Got it. Okay. Thanks for that color. I guess the other thing I wanted to talk about a little bit or have you talk about a little bit was this idea of the large projects. And there's been a lot of questions on it, I wanted to ask it this way.

[Andrew Wittmann, Senior Research Analyst at Baird]

It's been now several years that the large projects have been the area of strength. And in fact, you said this quarter they're still up. But as you look at the phasing of these large projects, which you said are typically longer in duration, where are these in the large project cycle? Are they starting to ramp down? Is the total number of units on rent for large projects still going up in total?

[Andrew Wittmann, Senior Research Analyst at Baird]

Or are these starting to are they been in process long enough that some of these large projects are starting to roll off? I'm just trying to get a sense of where those are in the overall, I guess you'd say cycle or I'd say cycle.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

Yes. It's hard to put a fine point on it, Andy. This is Tim. I would point to the enterprise book that we've talked about with modular units on rent still up 4% year over year. So yes, these projects are churning, but there has been enough new project activity in that 20% of our book that is the enterprise portfolio to drive not only volume growth, but overall revenue growth among those projects.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

And as we go through our quarterly forecasting process that goes down to the region and market level, the point of strength that we see in the business persisting into the second half is still being driven by these types of larger opportunities. So we haven't seen a deceleration there. We haven't seen a unit on rent inflection downwards there. And it's a stronger part of the outlook as we look into the second half of the year. Yes.

[Andrew Wittmann, Senior Research Analyst at Baird]

Good. Thanks.

[Operator]

Thank you. One moment for our next question. And that will come from the line of Manav Patnaik with Barclays. Your line is open.

[Ronan Kennedy, Vice President at Barclays Investment Bank]

Hi. This is Ronan Kennedy on for Manav. Thank you for taking my questions. The updated guide referenced more clarity interest rate policy and trade, but interest rate policy is still pretty uncertain and trade policy volatile. I mean, rate path policy is likely dependent on the effects of tariffs.

[Ronan Kennedy, Vice President at Barclays Investment Bank]

I'm not asking you for a precise prognostication as to rates, but two part question if I may. What does your outlook contemplate? And what does your data tell you about the historical correlation between interest rates and demand? I guess third part, Matt said, if I'm not mistaken, rates could help stimulate some incremental project activity. That was contemplated to a certain extent.

[Ronan Kennedy, Vice President at Barclays Investment Bank]

But how should we think about it? Is we get outlook for a rate cut and we're off to the races on the local projects? Or is there a lag? Just some help with that, please.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Yes. I think there's hey, thanks for the question. There's quite a bit of some are saying one cut this year, some are saying no cuts. I mean, I think it's we'll see what it is. But I think the reality for this year is nobody not a huge change from a rate perspective.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

And it's probably more into 2026 where some forecasts have six, some have maybe even more than that of rate cuts. So it's not something I think that this year, there might have been earlier in the year, some thoughts that rates could come down, but it's not seeming like it's going to be a significant impact to some of those smaller projects. So we're looking more into next year probably where that's a stimulus. But the tax piece is one that we don't know yet, right? But how quickly can a project start?

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

I don't know if you have a shovel ready project that you're just waiting for something, maybe that could go quickly, but that's probably not typically the case. I think these both probably take a few quarters to stimulate some of that smaller project demand if things keep moving in that direction.

[Bradley Soultz, CEO at WillScot Mobile Mini]

Yes, Rachelle. And the only bit I would add is back to my earlier comment about seasonality, right? We're already setting into the third quarter here, right? And we have the visibility or lack thereof that we have. So I think any improvement is likely to benefit 2026 potentially starting in kind of that March timeframe.

[Bradley Soultz, CEO at WillScot Mobile Mini]

Just given the normal kind of winter slowdown, if you will, with construction starts.

[Ronan Kennedy, Vice President at Barclays Investment Bank]

Got it. Thank you. And then I think it was indicated you no longer expect the positive inflection in UOR. Two part on this, if I may as well. If I'm not mistaken, there's a new chart with what looks like a forecasted non resi square footage starts for 2H.

[Ronan Kennedy, Vice President at Barclays Investment Bank]

What informs forecast? Is that straight from Dodge's forecast? Is it consensus?

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

That's right.

[Ronan Kennedy, Vice President at Barclays Investment Bank]

And so when would you contemplate a potential inflection to positive UR?

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

Yeah, Ron, I don't think we have not in the forecasting game related to non res starts. And we know that these are forecasts. This is not necessarily exactly what's going to happen. But if you look at the twenty twenty five levels, the second half is relatively consistent, at least from a forecast perspective from the last couple of years. And we haven't yet seen that turn.

[Matthew Jacobsen, EVP & CFO at WillScot Mobile Mini]

So we don't think it's based on what we know now, we're pretty sure it probably doesn't happen by the end of the year this year. But we're going to have to wait and see until we have a bit more clarity into 2026 on some of the things we just talked about, and if those will drive us to inflection.

[Ronan Kennedy, Vice President at Barclays Investment Bank]

Got it. Thank you. Appreciate it.

[Operator]

Thank you. And our next question will come from the line of Tim Mulrooney with William Blair. Your line is open.

[Tim Mulrooney, Partner & Group Head - Global Services at William Blair]

Tim, Matt, good afternoon.

[Bradley Soultz, CEO at WillScot Mobile Mini]

Hey, Tim.

[Tim Mulrooney, Partner & Group Head - Global Services at William Blair]

One on storage, portable storage. We recently heard from another larger player in the space that shipment volumes on portable storage units were up. I think they said up meaningfully in June and showing positive trends heading into the second half of the year. I'm curious if you noticed similar trends in your own storage business in the latter half of the quarter and how we should think about UOR sequentially into the third quarter here. I'm talking specifically about portable storage. Thanks.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

Tim, this is Tim Boswell. We did see sequential improvements in unit on rents across the storage portfolio within Q2. Order rates year over year are still down, right? So I'm not assuming that we see significant continued sequential growth in Q3, but it's a shorter sales cycle in that business. So it's certainly possible.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

And Matt can take you through kind of the puts and takes in the outlook, if that's helpful. But we saw a modest sequential unit on rent improvement in up through June in the storage portfolio. So that not knowing exactly who you're referring to, could be correlated.

[Tim Mulrooney, Partner & Group Head - Global Services at William Blair]

Yes. Okay. Yes. No, that's helpful, Tim. And Tim, while I got you, just for my follow-up, I'm bouncing around calls here, but I thought I heard you say in your prepared remarks or in your response to somebody else something about pricing flat on new contracts.

[Tim Mulrooney, Partner & Group Head - Global Services at William Blair]

And I didn't know if you were referring specifically to modular or new modular units on rent. Do remember saying something along those lines pricing flat on new contracts? And can you remind me what you were referring to maybe flesh that out a little bit? Thank you.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

I remember it very clearly. I was referring to the pricing on new contracts in the modular business being flat year over year, right? And actually, value added products on new contracts are roughly flat as well. So I see that as stable for sure. There are some puts and takes as you zoom in by product category as there always are.

[Timothy Boswell, President & COO at WillScot Mobile Mini]

Flex, for example, volumes and spot rates are all up year over year. Ground level offices, for example, we've got a little more spot rate pressure there. But when you mix all of the modular category together, you're in a flat spot rate environment, which is fine given the focus on driving organic volume across the business right now. So that's what we were referring to. And honestly, it's largely similar on the container side of the business Understood.

[Tim Mulrooney, Partner & Group Head - Global Services at William Blair]

Thank you very much.

[Operator]

Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Charlie Woolhutter for any closing remarks.

[Charlie Wohlhuter, Senior Director - IR at WillScot Mobile Mini]

All right. Thank you, Sherry. We appreciate your interest in Wellscott and participation in today's call. If you have additional questions, please feel free to contact me. We look forward to connecting with you at upcoming investor conferences or on our next earnings call. Thanks and have a great day.

[Operator]

This concludes today's program. Thank you all for participating. You may now disconnect.

Participants

Executives

• Charlie Wohlhuter, Senior Director - IR
• Bradley Soultz, CEO
• Timothy Boswell, President & COO
• Matthew Jacobsen, EVP & CFO

Analysts

• Angel Castillo, Executive Director - Head of US Machinery & Construction Equity Research at Morgan Stanley
• Brent Thielman, MD & Senior Research Analyst at D.A. Davidson
• Steven Ramsey, Deputy Director of Research at Thompson Research Group
• Maggie Grady Miller, VP - Equity Research at Jefferies
• Scott Schneeberger, Managing Director at Oppenheimer & Co. Inc.
• Andrew Wittmann, Senior Research Analyst at Baird
• Ronan Kennedy, Vice President at Barclays Investment Bank
• Tim Mulrooney, Partner & Group Head - Global Services at William Blair