CIBC World Markets 2 nd Annual Mid & Small Cap Best Ideas Conference November 2006
Introduction Note: This presentation is North America - focused and therefore excludes the recent acquisition of Wiron unless otherwise indicated. Forward-looking Statements 2 All statements other than statements of historical fact included in this presentation are forward-looking statements and involve expectations, beliefs, plans, intentions or strategies regarding the future. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it assumes no responsibility for the accuracy and completeness of these forward-looking statements and gives no assurance that these expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed under "Risk Factors" and elsewhere in the Company's 10-K, 10-Q and other SEC filings. The Company assumes no obligation to update any forward-looking statement. EBITDA The Company defines EBITDA as earnings before deducting interest, loss on extinguishment of debt, income taxes, and depreciation and amortization. A reconciliation of EBITDA to the most comparable GAAP measure is disclosed in the Company s earnings press releases and in prior SEC filings.
Why Invest in Williams Scotsman? Leading Market Position Largest modular space solutions provider in North America Significant market share in the $3 billion modular space industry #1 or #2 in every region Leader in most market segments Highly Attractive Business Model Focus on leasing Long asset life Recurring revenue and high profitability Quick return on investment Significant Barriers to Entry 86 branch offices throughout North America Superior customer service > 1,300 sales and service personnel Substantial scale > 101,000 units; $1.3B of invested capital Effective fleet management Management depth and experience Compelling Growth Opportunities Favorable units on rent, utilization and pricing trends Multiple growth opportunities in North America and Europe Capitalizing on the highly fragmented portable storage market Significant revenue and earnings growth from operating leverage Attractive sales business opportunities 3
Our Customers Determine Their Space Need Temporary Lease Fleet Permanent Modular Product Sales 4
Fulfilling Temporary Requirements with Flexible and Diverse Lease Fleet Single-Wide Modular Space Units Section Modulars 38% of Total Fleet 32% of Total Fleet Classrooms Storage Products 24% of Total Fleet 6% of Total Fleet 5 Note: Based on gross book value.
Answering Permanent Needs Commercial Education Government Airports Concurrent Construction TM Accelerates Completion 6
Compelling Business Model Sales Related 38% Revenues (1) (LTM September 2006) Gross Profit (1) (LTM September 2006) Sales Related 20% Leasing Related 62% Leasing Related 80% Attractive Leasing Fundamentals Long Asset Life Estimated useful life of 20 years Quick Return on Investment Average unit investment recapture of approximately 4 years Recurring Revenue Average lease duration of approximately 27 months Highly Versatile Fleet 10-year historical average utilization of 82% High Profitability Approximately 55% gross margin (includes D&A) 7 (1) Includes delivery, installation and other ancillary revenues generated from Leasing and Sales Businesses. Gross profit includes D&A.
Product Versatility Drives High Utilization Airports Financial Aid Offices Pro Shops Auto Dealerships Breathalyzer Trailers Business Offices Car Rental Offices Celebrity Dressing Rooms Classrooms Clinical Labs Construction Headquarters Day Care Centers Designated Smoking Facilities Emergency Command Posts First Aid Stations Fitness Centers Guard Houses HMO Clinics Hospitals Lunch/Break Rooms Media Centers Olympic Complexes Police Stations Press Boxes Prisons Radio & TV Facilities R&D Labs Real Estate Sales Offices Seminar Centers Shower Trailers Special Event Headquarters Storage Units Surveillance Units Visitor Centers Weigh Stations Zoos 10-year historical average utilization of 82% 8
Leading Market Position with Attractive Industry Dynamics North American Modular Space Market Share by Units Williams Scotsman Other GE Capital Modular Space Mobile Mini McGrath In the $3 billion modular space industry, we have the #1 or #2 share in most markets 9 Source: Management estimates.
10 Geographically Diverse Branch Network
Highly Diversified Customer Base Real Estate 2% Chemicals & Pharm aceuticals 1% Utilities 2% Healthcare 2% Membership Organizations 2% Recreation Services 2% Non-Residential 24% Residential 5% Professional Services 3% Total Construction 29% Governm ent 9% Commercial/Industrial & Other 20% Education 28% More than 25,000 customers in multiple industries 10 largest customers are approximately 11% of revenues 11
Significant Barriers to Entry Customer Service Focus Over 1,300 sales and service personnel with extensive local market knowledge and experience Full service from design to delivery / installation to returns Service intensive business with over 115,000 lease transactions (deliveries and returns) Substantial Scale > 101,000 unit lease fleet from $1.3 billion of invested capital Breadth and depth of lease fleet at the local level Over 300 national accounts Effective Fleet Management Standardized fleet increases versatility, maximizes utilization and facilitates re-rentability Fleet code management enables rapid fleet redeployment Integrated IT platform drives real-time customer service Experienced Management Team Field management experience and tenure is a differentiator > 20 years average in the industry > 10 years average with Williams Scotsman Experienced senior management team 12
Capturing Growth Opportunities Key Organic Growth Opportunities Attractive Acquisition Landscape Increase Utilization & ARR European Opportunities Further Penetrate Education Sector Continue Other Growth Initiatives Grow Portable Storage Business 13
Positive Long-Term Non-Residential Construction Outlook Non-Residential Building Construction ($ in billions) $550 Source: FMI Third Quarter 2006 Report $500 $446 $450 $412 $400 $379 $350 $350 $482 8% CAGR $518 $300 $250 $200 2005 2006E 2007E 2008E 2009E 2010E Non-res. construction starts (per MHC Construction Outlook 2007) 2006: +14% 2007: +6% 14
Continued Core Business Momentum Positive Indicators Average Rental Rates (ARR) Favorable non-residential construction trends Strong quote and close volume Increase in Utilization and Units on Rent $295 $290 $285 $280 $275 $1.00 Increase = $1.0 Million of Additional Annual Leasing Revenue (1) $270 Positive Turn Rate Proactive pricing management Increase in ARR $265 $260 $255 $250 $245 $240 March-00 through Sep-06 Units on Rent Utilization 84,000 86% 1% Increase = $3.6 Million of Additional Annual Leasing Revenue (1) 82,000 84% 80,000 78,000 82% 76,000 74,000 80% 72,000 78% 70,000 68,000 76% 66,000 74% March-00 through Sep-06 March-00 through Sep-06 15 (1) Based on 09/30/06 fleet size and rental rates
Further Penetrate Education Sector The long-term demand for classroom space remains considerable Educational building is expected to increase 5% in 2006 and 6% in 2007 on a square footage basis. Competitive advantage through purchasing cooperatives such as the Association of Educational Purchasing Agencies and The Cooperative Purchasing Network. K-12 Enrollment: 2005-2015 Increase 10% or more Increase 5% to 10% Increase 0% to 5% Decrease 0% to 15% States with class-size reduction initiatives 16 Source: McGraw Hill Construction Outlook 2007 and National Center for Education Statistics
The Education Opportunity California Proposition 1D Passes Proposed Uses of Bond Funds ($B): K-12 Opportunities for Williams Scotsman Temporary Permanent Std. Product Classrooms Modular Modernization $3.3 a a a New construction 1.9 Severe overcrowding 1.0 Other 1.1 a a a 7.3 Higher education 3.1 a a a $10.4 Similar initiatives are being considered in several other states including North Carolina, New York, Florida, New Jersey and Massachusetts. 17
Continue to Expand Portable Storage Business Highly fragmented and growing industry Complementary product line to modular space units Leverage existing branch network, sales force, customer base and management information systems Portable storage fleet of nearly 24,000 units U.S. Portable Storage Market Share by Units Mobile Mini Mobile Storage Others Williams Scotsman 18 Source: Management estimates.
Execute Other Growth Initiatives Geographic Expansion Canada Mexico Europe LTM 9/06 Revenues: $62 million Units: 5,000+ Acquired American Homes International in March 2006 Completed acquisition of Wiron in August 2006 Growth Initiatives 32 acquisitions completed in the last 12 years M&A Fleet expansion Industry consolidation Growth Markets Government Oil & Gas Healthcare 19
Growth Markets Canadian Oil & Gas 20
Growth Markets (continued) Government Healthcare 21
European Opportunities Similar size as the U.S. market Earlier in the life cycle Transfer operating experience Fragmented market with numerous acquisition opportunities Foothold in Spain with acquisition of Wiron According to the World Bank s most recent profile Spain, with GDP of $1 trillion, has emerged as the world s eighth largest economy 22 Source: Management estimates and public filings.
Wiron Highlights Acquired in August 2006 Second largest player in Spain Excellent brand recognition Leasing and manufacturing operations National footprint with 14 branches Growing lease fleet, currently at 14,000 units Williams Scotsman executive leadership in place 23
Wiron Meeting Customers Needs 24
Key Financial Highlights (Total Company) Strong core financial trends Significant deleveraging Substantial cash flow generation 25
Impressive Operating Results LTM Revenues LTM EBITDA (1) $700 $230 ($ in Millions) $650 $600 $550 $500 $450 $400 ($ in Millions) $220 $210 $200 $190 $180 $170 $160 $150 $140 $350 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 $130 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Attractive Financial Trends Rolling LTM results demonstrate favorable impact of underlying trends Eight consecutive quarters of double-digit EBITDA growth year over year 26 (1) LTM EBITDA excludes (i) a $19.4 million non-cash write-down for asset impairment in Q403 and (ii) a $2.4 million accelerated stock compensation charge associated with the IPO in Q305.
Growing Net Income & EPS Since IPO Net income (in millions) $15.0 $13.0 $11.0 $9.0 $7.0 $5.0 $3.0 $1.0 $0.12 $2.9 $0.20 $7.8 $0.26 $10.4 $0.27 $11.6 $0.30 $13.2 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 Earnings Per Share ($1.0) 3Q '05 4Q '05 1Q '06 2Q '06 3Q '06 (a) (a) $0.00 Net Income EPS (a) Excludes one-time charges as described in earnings release dated November 1, 2006. 27
Improved Capital Structure Leverage Ratio Capitalization 7.00x 6.50x 6.00x 5.50x 5.00x 4.50x 4.00x 3.50x 3.00x 2Q '05 3Q '05 4Q '05 1Q '06 2Q '06 3Q '06 ($ in millions) 9/30/06 Moody's S&P ABL Facility (1) $431 B2 BB 8.5% Senior Notes - due 2015 452 B3 B+ WS Europe 22 Capital Leases 5 Total Debt 910 B2 BB- Market Capitalization (2) 915 Total Capitalization $1,825 Fixed/ Variable Debt % 50% / 50% (1) Total commitment of $650M (term and revolver) (2) Based on stock price of $21.36 at Sep 30, 2006 and shares outstanding of 42.8 m illion (3) Corporate rating Ratings (3) 28
Significant Cash Flow Drives Discretionary Spending ($ in millions) 2004 2005 LTM 9/06 Cash flow from operating activities $57 $68 $97 PF interest adjustment (1) 29 22 1 PF Cash flow from operating activities $86 $90 $98 Cap-x: Fleet-related Replace used unit sales (2) $6 $14 $18 Factory purchases 25 53 54 Betterments and other 14 31 32 46 99 104 Property and equipment 8 12 13 Acquisitions 49 5 60 Total Cap-x $103 $115 $177 (1) Pro forma for the recapitalization. (2) Net of used sales proceeds. 29
Other Key Financial Information Significant NOL carryforwards of $265 million as of 12/31/05 generated primarily from accelerated tax depreciation Return on invested capital of approximately 11.0% (LTM September 2006) vs. WACC of 8.6% return is based on pre-tax operating income as company pays no cash taxes 30
Reasons to Invest in Williams Scotsman s Future Market leader in modular space industry Highly attractive business model Geographically diverse branch network Significant barriers to entry Highly diversified business Proven management team with significant operating experience Recent geographic expansion into international markets Multiple growth opportunities Visit us on the web at www.willscot.com 31