WSC Q1 Earnings Call: Order Book Growth and Margin Initiatives Offset Volume Pressures

Temporary space provider WillScot (NASDAQ: WSC) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 4.7% year on year to $559.6 million. On the other hand, the company’s outlook for the full year was close to analysts’ estimates with revenue guided to $2.38 billion at the midpoint. Its non-GAAP profit of $0.24 per share was 12.5% below analysts’ consensus estimates.

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StockStory’s Take

WillScot Mobile Mini’s first quarter results reflected lower volumes in both modular and storage units, with management attributing the year-on-year revenue decline primarily to continued weakness among local accounts and macroeconomic uncertainty in non-residential construction. CEO Brad Soultz highlighted a 7% year-over-year increase in the company’s pending order book, noting that this strength was driven by larger enterprise accounts and helped offset persistent softness at the local level. Management also pointed to stable pricing and the growing contribution of value-added products and services (VAPs) as important factors in supporting margins despite volume headwinds.

Looking ahead, the company reconfirmed its full-year guidance, citing a robust order book and ongoing investments in sales resources, technology, and new product categories. CFO Matt Jacobsen explained that sequential improvement in volumes and continued expansion in VAPs are expected to drive modest top-line growth in the second half of the year. Management remains cautious about the impact of trade policy changes and tariffs but believes the company’s diversified growth levers and flexible cost structure position it well to adapt to evolving market conditions.

Key Insights from Management’s Remarks

Management’s commentary focused on the interplay between macroeconomic headwinds and internal operational initiatives, emphasizing both the challenges and levers available to drive future performance. The quarter was shaped by volume declines, stable pricing, and progress in higher-margin offerings.

• Enterprise demand offsetting local weakness: Growth in the pending order book was attributed entirely to larger enterprise accounts, counterbalancing ongoing softness in local and smaller customer segments. Management described these enterprise wins as linked to large, long-duration projects, particularly in non-residential construction and infrastructure.
• Value-added products and services (VAPs): VAPs surpassed 17% of total revenue, continuing to grow despite a decline in units on rent. Management cited deeper penetration across core product lines, especially in climate-controlled storage and the Flex modular platform, as a key lever for margin resilience and future growth.
• Logistics and operating margin focus: Delivery and installation margins contracted year-over-year, primarily due to lower-margin seasonal activity and the ramp-up of in-sourced logistics. Management outlined ongoing efforts to optimize scheduling, cross-train field teams, and implement route optimization software, which are expected to improve profitability in the second half of the year.
• Sales force and technology investment: The company increased sales headcount by 4% sequentially and plans a 10–20% increase for the year. Rollout of an enhanced CRM system and a new pricing engine in May aims to increase productivity and enable more targeted pricing across customer segments.
• Capital allocation and financial flexibility: WillScot refinanced its senior secured notes to extend maturities and maintain liquidity, while continuing to invest in fleet upgrades and new product categories. The company returned $45 million to shareholders through buybacks and issued its first quarterly dividend, signaling a balanced approach to growth and capital returns.

Drivers of Future Performance

Management’s outlook for the remainder of the year is shaped by ongoing investments in product innovation, sales resources, and technology, as well as external factors such as trade policy and end market demand. The company’s ability to grow VAPs and maintain pricing are central to its strategy.

• VAPs and product mix expansion: Continued growth in value-added products and services, along with increased penetration of climate-controlled and Flex modular units, is expected to drive both revenue and margin improvement as the year progresses.
• Salesforce productivity and technology: Higher sales headcount and the deployment of new CRM and pricing tools are designed to support order conversion and enable more effective cross-selling, particularly in local markets where performance has lagged.
• Macro and policy uncertainty: Management highlighted potential risks related to tariffs, labor shortages, and non-residential construction trends, noting that these factors could impact both volumes and costs. The company’s flexible cost structure is intended to mitigate downside risk if conditions deteriorate.

Top Analyst Questions

• Andrew Wittman (Baird): Asked about conversion times and order book reliability given economic uncertainty. Management reported no change in conversion or cancellation rates, citing healthy quoting activity and stable order flow as of Q2.
• Sherif El-Sabbahy (Bank of America): Inquired about expected seasonal trends in volumes and delivery/installation revenue. Management expects normal seasonal increases, particularly in modular, and anticipates delivery and installation revenue will grow alongside increased activity.
• Scott Schneeberger (Oppenheimer): Pressed on the outlook for retail customer demand and capital allocation between buybacks and M&A. Management confirmed stable retail demand and described a consistent approach to opportunistic buybacks and ongoing M&A pipeline development.
• Faiza Alwy (Deutsche Bank): Sought details on logistics margin contraction and pricing strategy in an inflationary environment. Management explained that seasonal activity and in-sourcing weighed on margins but expects improvement through operational initiatives; also reaffirmed the ability to pass through inflationary costs.
• Angel Castillo (Morgan Stanley): Asked about divergence between strong company order trends and weaker construction industry indicators. Management attributed positive order trends to large project activity and enterprise accounts, while acknowledging continued weakness in local markets.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be monitoring (1) whether the recent growth in the order book translates into higher lease activations and revenue, (2) the effectiveness of logistics and field operations initiatives in restoring delivery and installation margins, and (3) progress on expanding VAPs penetration and salesforce productivity. Developments in trade policy, tariffs, and non-residential construction activity will also be key signposts for assessing demand and pricing power.

WillScot Mobile Mini currently trades at a forward P/E ratio of 17.8×. At this valuation, is it a buy or sell post earnings? Find out in our free research report.

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