Executive Summary / Key Takeaways

• WillScot Holdings Corporation is undergoing a strategic transformation, shifting from a traditional modular and storage rental model to a higher-value, diversified solutions provider, leveraging its integrated platform and differentiated offerings. This pivot is crucial for driving sustainable growth and enhancing returns amidst a challenging macroeconomic backdrop.
• The company's technological differentiators, including FLEX units, climate-controlled storage, and an expanding suite of Value-Added Products (VAPS) like solar solutions, are key to its competitive moat, enabling superior customer solutions and driving higher revenue per unit.
• Recent financial performance reflects a mixed environment, with overall revenue declines in the first nine months of 2025 primarily due to accounts receivable write-offs and softer demand in transactional segments. However, underlying leasing revenues show sequential stability, and Adjusted EBITDA margins are expanding due to operational efficiencies.
• WillScot's revised 2025 outlook, while conservative, signals management's commitment to setting achievable targets and underscores confidence in strategic initiatives like network optimization and organic growth drivers, particularly within enterprise accounts and new product categories.
• The company maintains a robust capital allocation strategy, balancing organic investments, tuck-in acquisitions, share repurchases, and a newly initiated quarterly dividend, all supported by strong and predictable free cash flow generation.

WillScot's Strategic Blueprint: Unlocking Value Through Differentiated Solutions and Operational Rigor

WillScot Holdings Corporation, founded in 1944, has evolved into a leading business services provider specializing in innovative and flexible turnkey space solutions across North America. The company's core business revolves around leasing, selling, delivering, and installing modular space solutions and portable storage products, complemented by a growing portfolio of Value-Added Products (VAPS). This model generates a diversified and predictable recurring revenue stream, with rental contracts typically based on a 28-day or monthly rate and an average effective lease duration of approximately 41 months for its consolidated portfolio, excluding seasonal portable storage units.

The company operates in a competitive landscape alongside diversified equipment rental giants like United Rentals Inc. and Herc Holdings Inc. , as well as more specialized modular and storage providers such as McGrath RentCorp . WillScot's strategic positioning emphasizes its specialized expertise in modular and portable storage, aiming to differentiate itself through tailored, ready-to-use solutions and a comprehensive service infrastructure. This focus allows WillScot to compete effectively in niche segments where customization and rapid deployment are critical, potentially countering the broader scale and diversified offerings of larger rivals.

Technological Edge and Innovation Driving Differentiation

WillScot's competitive advantage is increasingly rooted in its technological differentiation and innovative product offerings. The company's Value-Added Products (VAPS) are a cornerstone of this strategy, encompassing everything from workstations and furniture to advanced power and solar solutions, telematics, and security products. These VAPS are designed to enhance the customer experience and drive higher revenue per unit. In the second quarter of 2025, VAPS represented 17% of total revenue, with management targeting 20% to 25% of total revenue from VAPS within three to five years. VAPS revenues on a per-unit basis were up 5% year-over-year for modular units and approximately 22% for storage units in Q3 2025.

Beyond VAPS, WillScot is innovating with specialized fleet types. Its FLEX units, which are panelized stackable office units, represent the fastest-growing product within its modular portfolio, with units on rent increasing 30% year-over-year. These units offer a higher return on capital, a higher price per square foot, and greater versatility for customers. Similarly, climate-controlled storage units are experiencing robust demand, with units on rent up 44% year-over-year by the end of October 2025, and order rates surging approximately 60% year-over-year. This growth significantly contributes to the portable storage segment's average monthly rental rate, which increased 9.6% year-over-year in Q3 2025. Newer offerings like ClearSpan structures and perimeter solutions are also being commercialized, expected to ramp up their contributions into 2026.

To enhance commercial execution, WillScot rolled out an AI-enabled pricing engine and an enhanced sales HQ platform in Q2 2025. These tools are designed to improve sales productivity, conversion rates, and pricing attainment through better segmentation, as well as streamline product bundling. Furthermore, the company's in-house production, transportation, setup, and service capabilities are considered best-in-class, providing a unique advantage in an environment of uncertain labor and input costs. WillScot is uniquely positioned with minimal supply chain constraints, ready to leverage significant operating leverage within its fleet and field operations. The introduction of "Solar Power by WillScot," a proprietary power solution, further exemplifies its commitment to bringing clean, reliable energy to job sites, unlocking new possibilities for how and where people work.

Strategic Evolution and Operational Excellence

WillScot's history, marked by uninterrupted top-line growth since 2017 and a transition to profitability in 2020, laid the groundwork for its current strategic evolution. A pivotal year was 2024, with the merger of Mobile Mini and WillScot field sales and operations teams, major systems integrations, and the consolidation of field service and dispatch platforms. The company's rebranding under WillScot Holdings Corporation in July 2024, which included a $132.5 million impairment loss on the Mobile Mini trade name, signaled a unified market approach.

The leadership transition, with Tim Boswell succeeding Brad Soultz as CEO in January 2026 and Worthing Jackman assuming the role of Executive Chairman, underscores a renewed focus on accountability and strategic execution. Management acknowledges past shortfalls in meeting expectations and is adopting a more conservative guidance approach, aiming to set expectations against controllable outcomes and provide a cushion against market unknowns. This conservative external guidance is coupled with internal plans and incentive compensation targets that hold teams accountable for delivering results above these communicated expectations.

Operational excellence is a central pillar of WillScot's strategy. Efforts to improve the order-to-cash process have yielded tangible results, including a roughly 10% year-over-year decline in days sales outstanding to the low 70s by Q3 2025, significantly improving customer satisfaction scores and cash flow. The company is also undertaking a multi-year network optimization initiative, evaluating its branch network and fleet storage acreage to reduce its real estate footprint and associated costs. This plan could reduce leased acreage by over 20% and avoid $20 million to $30 million in annual real estate and facility cost increases over the next three to five years. As part of this, WillScot plans to dispose of $250 million to $350 million in rental fleet units, primarily long-idle or high-repair-cost assets, representing about 10% of its total fleet, without compromising its ability to meet future demand.

Financial Performance and Resilience

WillScot's financial performance in the first nine months of 2025 reflects a mixed operating environment. Total revenues decreased 4.3% year-over-year to $1.72 billion for the nine months ended September 30, 2025, and 5.8% year-over-year to $566.8 million for Q3 2025. This decline was primarily driven by a $37.6 million increase in accounts receivable write-offs (9M 2025) and lower delivery and installation revenues due to fewer activations and a large project in the prior year. Excluding these write-offs, underlying leasing revenues showed sequential stability from Q2 to Q3 2025 and were down only 1.3% year-over-year in Q3 2025, indicating that the cleanup efforts created noise in the top line.

Despite revenue headwinds, WillScot demonstrated profitability resilience. Adjusted EBITDA for Q3 2025 was $243.3 million, representing a 42.9% margin, a 60 basis point sequential improvement from Q2 2025. For the nine months ended September 30, 2025, Adjusted EBITDA was $721 million. The net impact to Adjusted EBITDA from accounts receivable write-offs and the provision for credit losses was a $4.3 million positive impact year-over-year in Q3 2025. Selling, general, and administrative (SGA) expenses decreased $15.6 million in Q3 2025, largely due to lower legal fees and a reduction in the provision for credit losses. Net income for Q3 2025 significantly increased to $43.3 million, up 161.5% year-over-year, primarily due to the absence of a $180 million termination fee and associated legal costs incurred in Q3 2024.

The company's cash flow generation remains a core strength. WillScot generated $191.2 million in net cash from operating activities in Q3 2025, leading to $122.2 million in Adjusted Free Cash Flow after net capital expenditures. For the nine months ended September 30, 2025, Adjusted Free Cash Flow was $397.3 million. The company's capital allocation strategy is robust, balancing organic investments, tuck-in acquisitions (e.g., a regional provider of climate-controlled containers for $115.6 million in 9M 2025), share repurchases ($80.2 million in 9M 2025), and a newly initiated quarterly cash dividend ($0.07 per share declared in February, May, and July 2025). WillScot also proactively refinanced its 2025 senior secured notes, issuing $500 million in 6.62% notes due 2030, and amended its ABL facility to extend maturity to October 2030 and reduce borrowing costs by an estimated $5 million annually. This leaves no debt maturities until 2028, excluding finance leases.

Competitive Landscape and Strategic Positioning

WillScot operates in a highly competitive environment, facing both direct and indirect rivals. Direct competitors like United Rentals (URI), McGrath RentCorp (MGRC), and Herc Holdings (HRI) offer overlapping services. URI, a diversified equipment rental leader, boasts an extensive network and broad offerings, often leading in overall revenue growth and cash flow. WillScot, in contrast, specializes in modular and portable space solutions, leveraging its focused expertise for niche customization and faster deployment in specialized projects. While URI's scale provides a broader market reach, WillScot's differentiated technology and in-house capabilities allow it to maintain pricing power in targeted segments.

Against McGrath RentCorp, a direct competitor in modular buildings and portable storage, WillScot's integrated workspace solutions and rebranded identity offer advantages in customer service and market adaptability. MGRC's P/E ratio of 17.17 and P/B ratio of 2.09 are lower than WillScot's TTM P/E of 14.31 and P/B of 3.02, suggesting MGRC might be perceived as having a more attractive valuation by some investors, though WillScot's strategic shift aims to enhance its long-term value. Herc Holdings, with its focus on heavy equipment and industrial rentals, competes with WillScot in portable storage for industrial use. WillScot's specialized solutions prioritize flexibility and quick setup, potentially leading to better customer satisfaction in certain segments, while HRI's industrial focus drives different growth dynamics.

WillScot's overall market positioning is strong in its specialized segments, with its growth trajectory aligned with industry expansion in niche areas. Its operational execution in customized solutions, coupled with its brand strength and service specialization, provides an edge. However, the company remains vulnerable to cyclical downturns in non-residential construction and the commoditized nature of traditional dry storage, which has historically masked growth in its higher-value offerings. The ongoing network optimization initiative and the strategic shift towards differentiated products are critical responses to these competitive pressures, aiming to improve efficiency and focus on more defensible, higher-margin businesses.

Outlook and Growth Catalysts

WillScot's revised full-year 2025 guidance reflects a more conservative stance, with expected revenue of approximately $2.26 billion and Adjusted EBITDA of roughly $970 million. Adjusted Free Cash Flow is projected at approximately $475 million, including about $275 million in net capital expenditures. For Q4 2025, the company anticipates revenue of approximately $545 million and Adjusted EBITDA of approximately $250 million. This outlook factors in the absence of a typical seasonal uplift, continued progress on order-to-cash improvements, and a slower-than-expected ramp in ClearSpan and Perimeter solutions.

Despite near-term headwinds, several catalysts are expected to drive future growth. The enterprise portfolio, with its focus on non-construction verticals and expanded relationships, is projected to achieve mid-to-high single-digit growth rates into 2026. Differentiated offerings like FLEX units and climate-controlled storage are expected to continue their strong growth trajectory. Broad industry trends, such as AI-driven data center growth and power demands, could significantly benefit WillScot through increased demand for modular solutions in construction and infrastructure projects. The company's lowest marginal cost in the industry for refurbishing its fleet positions it well to capitalize on any market recovery.

Risks and Mitigation

WillScot faces several pertinent risks, including ongoing cyclical headwinds in non-residential construction, which have led to slower project starts and reduced demand for transactional products. The company's high debt-to-equity ratio of 3.60 and a current ratio of 0.79 suggest liquidity challenges, with an Altman Z-Score of 0.87 indicating potential financial distress. The stock's beta of 1.54 implies higher volatility compared to the broader market.

To mitigate these risks, WillScot is actively adjusting its cost structure and implementing operational improvement initiatives to maintain free cash flow and its return profile. The network optimization plan aims to reduce structural costs and enhance efficiency. The strategic shift towards higher-value, differentiated offerings is designed to reduce revenue variability and improve predictability. Furthermore, the company's disciplined capital allocation, including debt reduction, share repurchases, and a new dividend program, demonstrates a commitment to financial flexibility and shareholder returns. The leadership transition and renewed focus on accountability are expected to drive better execution and more consistent performance.

Conclusion

WillScot Holdings Corporation is at a pivotal juncture, strategically transforming its business model to emphasize differentiated, higher-value solutions and operational excellence. While recent financial results reflect the impact of macroeconomic headwinds and internal cleanup initiatives, the underlying stability in core leasing revenues and expanding Adjusted EBITDA margins underscore the resilience of its business. The company's technological advancements, from innovative FLEX units and climate-controlled storage to AI-enabled sales tools and proprietary solar power solutions, are critical to its competitive differentiation and long-term growth.

The conservative 2025 outlook, coupled with ambitious long-term targets, signals a disciplined approach to managing expectations while maintaining a clear vision for value creation. WillScot's robust capital allocation framework, supported by strong free cash flow, provides the flexibility to invest in organic growth, pursue strategic acquisitions, and return capital to shareholders. As the company continues to execute its network optimization plan and deepen its penetration in enterprise accounts and new product categories, its ability to leverage a unique service infrastructure and differentiated offerings will be key to outperforming in a competitive market and delivering sustainable shareholder value.