WillScot Mobile Mini (WSC)

Temporary space provider WillScot (NASDAQ:WSC) fell short of the market’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 11.1% below analysts’ consensus estimates.

Company Overview

Originally focusing on mobile offices for construction sites, WillScot (NASDAQ:WSC) provides ready-to-use temporary spaces, largely for longer-term lease.

Construction and maintenance services companies not only boast technical know-how in specialized areas but also may hold special licenses and permits. Those who work in more regulated areas can enjoy more predictable revenue streams - for example, fire escapes need to be inspected every five years. More recently, services to address energy efficiency and labor availability are also creating incremental demand. But like the broader industrials sector, construction and maintenance services companies are at the whim of economic cycles as external factors like interest rates can greatly impact the new construction that drives incremental demand for these companies’ offerings.

Competitors in the modular space and portable storage industry include Mobile Modular Management (NASDAQ:MGRC), and private companies Modular Space, AKA ModSpace, and Pac-Van.

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, WillScot Mobile Mini’s sales grew at an incredible 17.3% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. WillScot Mobile Mini’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 2.4% over the last two years was well below its five-year trend.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Leasing and Delivery and Installation, which are 77.6% and 15.8% of revenue. Over the last two years, WillScot Mobile Mini’s Leasing revenue (recurring) averaged 3.3% year-on-year growth. On the other hand, its Delivery and Installation revenue (non-recurring) averaged 4.9% declines.

This quarter, WillScot Mobile Mini missed Wall Street’s estimates and reported a rather uninspiring 4.7% year-on-year revenue decline, generating $559.6 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 1.4% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its products and services will face some demand challenges.

WillScot Mobile Mini has best-in-class unit economics for an industrials company, enabling it to invest in areas such as research and development. Its margin also signals it sells differentiated products, not commodities. As you can see below, it averaged an elite 54.5% gross margin over the last five years. Said differently, roughly $54.46 was left to spend on selling, marketing, R&D, and general administrative overhead for every $100 in revenue.

In Q1, WillScot Mobile Mini produced a 53.7% gross profit margin, in line with the same quarter last year. Zooming out, WillScot Mobile Mini’s full-year margin has been trending down over the past 12 months, decreasing by 1.4 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

WillScot Mobile Mini has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 19.8%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, WillScot Mobile Mini’s operating margin decreased by 4.4 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, WillScot Mobile Mini generated an operating profit margin of 21.3%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

WillScot Mobile Mini’s EPS grew at a decent 8.6% compounded annual growth rate over the last five years. However, this performance was lower than its 17.3% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.

Diving into the nuances of WillScot Mobile Mini’s earnings can give us a better understanding of its performance. As we mentioned earlier, WillScot Mobile Mini’s operating margin was flat this quarter but declined by 4.4 percentage points over the last five years. Its share count also grew by 64.5%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For WillScot Mobile Mini, its two-year annual EPS declines of 10% mark a reversal from its five-year trend. We hope WillScot Mobile Mini can return to earnings growth in the future.

In Q1, WillScot Mobile Mini reported EPS at $0.24, down from $0.35 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects WillScot Mobile Mini’s full-year EPS of $1.50 to grow 10.7%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

WillScot Mobile Mini has shown terrific cash profitability, putting it in an advantageous position to invest in new products, return capital to investors, and consolidate the market during industry downturns. The company’s free cash flow margin was among the best in the industrials sector, averaging 27.4% over the last five years.

Taking a step back, we can see that WillScot Mobile Mini’s margin dropped by 5 percentage points during that time. Continued declines could signal it is in the middle of an investment cycle.

WillScot Mobile Mini’s free cash flow clocked in at $144.8 million in Q1, equivalent to a 25.9% margin. The company’s cash profitability regressed as it was 8.4 percentage points lower than in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

WillScot Mobile Mini historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6.5%, somewhat low compared to the best industrials companies that consistently pump out 20%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, WillScot Mobile Mini’s ROIC averaged 1.8 percentage point increases over the last few years. This is a good sign, and we hope the company can continue improving.

WillScot Mobile Mini reported $10.68 million of cash and $3.88 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.04 billion of EBITDA over the last 12 months, we view WillScot Mobile Mini’s 3.7× net-debt-to-EBITDA ratio as safe. We also see its $112.3 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We struggled to find many positives in these results. Its EPS missed significantly and its Leasing revenue fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock remained flat at $25.63 immediately after reporting.

Updated: May 22, 2025 at 11:06 PM EDT

Are you wondering whether to buy WillScot Mobile Mini or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

WillScot Mobile Mini isn’t a terrible business, but it isn’t one of our picks. Although its revenue growth was exceptional over the last five years, it’s expected to deteriorate over the next 12 months and its cash profitability fell over the last five years. And while the company’s admirable gross margins indicate the mission-critical nature of its offerings, the downside is its declining operating margin shows the business has become less efficient.

WillScot Mobile Mini’s P/E ratio based on the next 12 months is 16.5x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $36.75 on the company (compared to the current share price of $27.45).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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