WillScot Mobile Mini's Sustainable Rental Rate Growth Driving Profits: Analyst

Oppenheimer analyst Scott Schneeberger reiterated an Outperform rating on WillScot Mobile Mini Holdings Corp. WSC, raising the price target from $53 to $55.

The analyst anticipates another solid quarter in 2Q as WSC's Y/Y growth/margin expansion story grinds higher.

With progressive sales and a merger with similarly-positioned Specialty Rental peer Mobile Mini, the analyst anticipates continued scale benefits for WillScot Mobile.

While many areas of the economy are uncertain, WSC's end markets are relatively well-positioned within the industrial space overall, the analyst adds.

This is further aided as large manufacturing facility construction jobs have been announced, and infrastructure bill funds are starting to flow.

For 2Q, the analyst expects revenue to grow 9.7% Y/Y to $573.7 million. Adjusted EBITDA is expected to jump 17% to $244.2 million. Gross Margin is expected to expand by 260 basis points to 55.2%

The analyst remains remarkably upbeat on the sustainability of WillScot Mobile's elevated rental rate growth, driven partly by Valued Added Product & Services, or VAPS, penetration (e.g., furniture rentals within modular/ storage assets).

Schneeberger also applauds the company's long average rental durations (30+ months) of its modular office portable storage container assets.

For FY23, Schneeberger's total revenue and adjusted EBITDA estimates for continuing operations remain $2.350 billion (+10% y/y pro-forma) and $1.025 billion (+16% y/y pro-forma), respectively.

For FY24, the analyst predicts total revenue and adjusted EBITDA estimates of $2.482 billion (+6% y/y pro-forma) and $1.106 billion (+8% y/y pro-forma), respectively.

Price Action: WSC shares are trading higher by 0.35% to $48.59 on the last check Wednesday.