WSC Q2 Deep Dive: Guidance Cut Amid Weak Small Project Demand and Mixed End Market Trends

Temporary space provider WillScot (NASDAQ:WSC) met Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 2.6% year on year to $589.1 million. On the other hand, the company’s full-year revenue guidance of $2.33 billion at the midpoint came in 1.6% below analysts’ estimates. Its non-GAAP profit of $0.27 per share was 23.4% below analysts’ consensus estimates.

Is now the time to buy WSC? Find out in our full research report (it’s free).

StockStory’s Take

WillScot Mobile Mini’s second quarter was marked by in-line revenue but a sharp miss on non-GAAP profit, prompting a significant negative market reaction. Management attributed the quarter’s results to persistent softness in small project demand, especially among local and regional customers, as well as ongoing macroeconomic uncertainty. CEO Brad Soultz noted the contrast between robust activity in large, complex projects and sluggish performance in smaller, transaction-driven segments, stating that “many customers are continuing to take a wait-and-see approach” due to uncertainty around trade and monetary policy.

Looking ahead, WillScot Mobile Mini’s updated guidance reflects continued headwinds in small project activity, with management anticipating only modest sequential growth in rental revenues. CFO Matt Jacobsen explained that the outlook assumes no near-term inflection in units on rent, given “lower exit rates” in the second quarter and the lack of clarity on a rebound in non-residential construction. While larger projects are expected to remain stable, management cited the timing of potential interest rate cuts, trade policy, and retail remodel cycles as key factors that could influence demand into next year.

Key Insights from Management’s Remarks

Management cited mixed end market trends, ongoing operational improvements, and targeted investments in higher-value products as shaping both the quarter’s performance and revised guidance.

• Large project strength: Activity in enterprise and complex modular projects continued to outperform, with modular units on rent in the enterprise portfolio up 4% year-over-year. These projects are typically longer in duration and less sensitive to near-term economic shifts, helping to stabilize overall results despite weakness elsewhere.
• Softness in small projects: Local and regional customers remained cautious, with demand for smaller modular units and containers lagging. Management linked this to heightened uncertainty around interest rates, trade policy, and labor availability, which disproportionately affect shorter-duration projects.
• Value-Added Product (VAPS) progress: Revenues from value-added products and services grew as a percentage of total revenue, with modular VAPS revenue per unit up 7% and storage VAPS up 12% year-over-year. While this mix shift supports margins, management acknowledged it remains behind internal targets.
• Operational enhancements: Investments in AI-enabled pricing, upgraded sales platforms, and field logistics optimization drove modest improvements in sales productivity and customer satisfaction metrics. Improved days sales outstanding and streamlined billing processes contributed to better cash flow performance.
• Tuck-in acquisitions: The company completed two acquisitions, most notably a regional climate-controlled storage provider, supporting growth in higher-margin, specialized offerings. Management views these as opportunities to leverage WillScot’s logistics capabilities and expand the addressable market.

Drivers of Future Performance

Management’s guidance for the remainder of the year is shaped by ongoing macro headwinds in small project demand, while large project activity remains stable and operational improvements continue.

• Limited recovery in small projects: The outlook assumes no significant rebound in local and regional small project activity, as customers remain cautious amid persistent uncertainty around interest rates and trade policy. Management does not expect meaningful improvement until at least the start of next year’s construction season.
• Margin support from operational initiatives: Sequential margin expansion is expected to continue, driven by logistics optimization, in-sourcing of delivery and installation, and reduced SG&A costs. These measures are designed to offset revenue headwinds in the short term.
• Potential tailwinds from policy and retail cycles: Management pointed to recent federal tax changes as a positive for free cash flow, and indicated that eventual clarity on monetary policy or an uptick in retail remodel demand could stimulate incremental activity. However, these factors are not assumed in the base case outlook for this year.

Catalysts in Upcoming Quarters

In upcoming quarters, our analysts will focus on (1) whether order rates for small modular and storage projects show signs of bottoming or recovery, (2) continued margin expansion from operational and technology initiatives, and (3) the pace of integration and growth in newly acquired climate-controlled storage offerings. The evolution of interest rate and trade policy, as well as trends in retail remodel activity, will also be important to watch.

WillScot Mobile Mini currently trades at $24.35, down from $29.35 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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