DF says WillScot holders left with ancient fleet, equity could be worthless

DF Research’s Keith Dalrymple says that “there were none of the obligatory ‘great quarter, guys’ preambles” to analyst questions on the Q2 WillScot (WSC) conference call. “It was not a good quarter or a good call. As we noted in our commentary on WSC’s 1Q25 results, the company is facing a slow moving, but perfect storm… Poor results were more or less expected. We want to focus on the two elements in the quarter we didn’t’ expect, both of which support our thesis that WSC has an end-of-life fleet and a looming debt bomb. Management highlighted two sub-segments of the business that are experiencing strong growth… Additionally, WSC increased rental equipment depreciation cost substantially without explanation, despite lower leasing revenues and units on rent. We believe the change in depreciation could well reflect a negotiation with auditors on how to write-down the value of the fleet – one painful impairment or slowly and quietly. We believe shareholders may be left with an ancient fleet, a large portion of which is unrentable, and a large pile of debt. That scenario implies the equity may be worthless,” DF’s report reads.