WillScot Q1 Earnings Call Highlights

Key Points

• WillScot beat first-quarter expectations as stronger large-project activity and higher activations helped offset weakness in local markets. Revenue came in at $549 million, while adjusted EBITDA was $211 million with a 38.5% margin.
• The company raised full-year 2026 guidance to about $2.25 billion in revenue and $915 million in adjusted EBITDA, citing a stronger project pipeline and better visibility. Management said it expects leasing revenue to turn positive year over year in the second half of 2026.
• Enterprise and large projects are driving momentum, including data centers, power generation, manufacturing and infrastructure work. Enterprise account revenue rose 12%, and pending orders were up across modular, storage and climate-controlled storage categories.

WillScot NASDAQ: WSC reported first-quarter 2026 results that management said exceeded its expectations, as stronger large-project activity and rising activations helped offset continued softness in some local markets.

The company raised its full-year outlook, citing improved visibility from its order book and growing demand tied to larger, more complex projects. President and CEO Tim Boswell said the operating environment “remains uneven,” but added that internal indicators across the business were encouraging and consistent with a return to organic top-line growth in the second half of 2026.

“All metrics are consistent with the progression towards organic top-line growth, which continues to be our focus for the second half of 2026,” Boswell said on the earnings call.

First-quarter revenue dips, but leasing and services improve

Chief Financial Officer Matt Jacobsen said total revenue for the first quarter was $549 million, modestly lower than the prior-year period because of reduced sales activity, but ahead of the company’s outlook. Leasing and services revenue increased $2 million, or about 0.5%, year over year.

Leasing revenue totaled $426 million, down about 2% from a year earlier. Jacobsen said the decline reflected ongoing pressure in local markets, with lower container unit-on-rent volumes driving most of the decrease. Pricing and product mix offset part of the volume pressure, while value-added products revenue rose modestly and increased 50 basis points to 17.7% of total revenue.

Delivery and installation revenue increased more than 12% to $100 million, reflecting higher activation volumes and large project activity. Modular unit activations rose 8% year over year, marking the second straight quarter of year-over-year activation growth. Boswell said total activations across the business were up 10% in the quarter and increased across all product lines.

Adjusted EBITDA was $211 million, with an adjusted EBITDA margin of 38.5%. Jacobsen said margins declined year over year because of higher variable costs and a greater mix of delivery and installation activity. He said unit preparation costs related to increased volumes are typical when activations rise ahead of leasing revenue growth.

Adjusted net income was $39 million, and adjusted diluted earnings per share were $0.21.

Guidance raised on stronger project pipeline

WillScot now expects full-year 2026 revenue of approximately $2.25 billion, adjusted EBITDA of approximately $915 million and net capital expenditures of approximately $325 million. Jacobsen said the updated outlook reflects stronger-than-expected project activity and better visibility into the middle of the year.

The company said it has increased confidence that leasing revenue can turn positive year over year at some point in the second half of 2026. Management emphasized that the outlook does not assume a recovery in local markets.

For the second quarter, WillScot expects revenue of approximately $585 million, up about 7% sequentially from the first quarter, driven by higher leasing and delivery and installation revenue. The company expects adjusted EBITDA of approximately $223 million. Jacobsen said second-quarter margins are expected to decline by about 30 basis points sequentially because of additional unit preparation costs and a higher mix of delivery and installation revenue, including activity related to the World Cup.

In response to an analyst question, Jacobsen said he would not expect that margin pressure to persist into the third and fourth quarters. He said the company could see “some pretty good expansion” after the second quarter as leasing revenue rises.

Enterprise accounts and large projects drive momentum

Boswell said WillScot is seeing strength in enterprise accounts and in larger projects, including World Cup-related logistics, data centers, power generation, manufacturing and infrastructure projects. He said these projects align with the company’s value proposition because they require coordination at scale and dependable execution.

Enterprise accounts revenue increased 12% year over year in the first quarter, which Boswell said was higher than the company’s expected full-year growth rate for that segment. The pending order book for enterprise accounts was up more than 25% year over year, excluding the World Cup.

During the question-and-answer session, Boswell said overall pending modular orders were up 14% year over year, while storage pending orders were up 7%. He said pending orders for climate-controlled storage were up about 100% year over year.

Boswell also said the company’s customer relationship management data showed the volume of large and mega data center projects it is tracking was up 70% year over year. He clarified that WillScot still expects new activated revenue in the data center vertical to be up about 50% this year, and added that data centers represent only about 25% of the large and mega projects the company is pursuing.

Local markets remain cautious, but stable

Management said local market demand remains a source of caution. Boswell noted that nonresidential construction starts square footage declined 6% year over year and that the Architecture Billings Index remained in contraction during the quarter. However, executives said they are not assuming either a recovery or further deterioration in local markets in the updated outlook.

Asked about local demand, Jacobsen said the market appears more stable and that the pace of decline has reduced. Boswell added that WillScot is still adding to its sales force, which he said indicates the company believes there is opportunity in the market.

On pricing, Boswell said he did not see major concerns. He said ground-level office pricing has been under pressure but appears to be stabilizing, while complex modular and FLEX products are showing better price momentum. Jacobsen said modular pricing growth could decelerate somewhat in the second quarter because of mix related to smaller units used for the World Cup, but that opportunities remain in FLEX and complex equipment.

Cash flow, capital spending and balance sheet

WillScot generated $191 million in net cash from operating activities in the quarter, including about $14 million of costs tied to network optimization and executive transition expenses. Adjusted free cash flow was $116 million, representing a 21% margin.

Net capital expenditures were $89 million in the quarter, up about 40% year over year. Jacobsen said the increase reflected investments in higher-value product categories and the company’s project demand pipeline. Boswell said incremental capital spending is largely directed toward complex modular products, including FLEX, along with smaller categories such as perimeter solutions and ClearSpan.

The company returned $20 million to shareholders through share repurchases and its quarterly dividend, while reducing debt balances by $76 million. WillScot ended the quarter with $3.5 billion of net debt and leverage of 3.7 times. Jacobsen said the company has no debt maturities until August 2028 and about $1.5 billion of availability under its asset-based lending facility.

Boswell said WillScot remains focused on initiatives within its control, including sales execution, operational improvements, network optimization and service levels. He said the company’s recordable incident rate fell below 0.5 over the last three months and that WillScot was recertified as a Great Place to Work for the fourth consecutive year.

About WillScot NASDAQ: WSC

WillScot NASDAQ: WSC is a leading North American provider of modular space and portable storage solutions. The company designs, manufactures, leases and sells temporary and permanent modular buildings to serve sectors such as education, healthcare, construction, industrial and government. Its modular space offerings range from single‐unit office trailers and classrooms to complex multi‐unit configurations tailored to diverse project requirements.

In addition to modular structures, WillScot offers a broad portfolio of portable storage containers and related services, including site logistics, customization, delivery and installation.

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