S&P lifts WillScot

S&P said it raised its ratings on WillScot Mobile Mini Holdings Corp. to BB from BB- and its senior secured notes to BB- from B+. The recovery rating is unchanged at 5 (rounded estimate: 20%).

“We expect WillScot's operating performance and credit metrics to remain strong through 2024. We expect the company to benefit from higher rental rates, in both the modular- and storage-leasing segments, considering the healthy spreads between spot pricing markets and the company's contracted pricing. As a result, we expect WillScot to continue to increase prices to customers through the contract renewal process. The growth in rental rates is also supported by the increasing penetration of its higher-margin ancillary product offerings (referred to as value-added products and services [VAPS]),” S&P said in a statement.

However, the agency said it anticipates weaker macroeconomic conditions and labor constraints to counterbalance the positive trends.

S&P said it projects the company's EBIT interest coverage to stay in the low-3x area in 2023 from 3.3x in 2022, before improving about mid-3x in 2024, and funds from operations to debt to improve to the 23%-24% range through 2024, from 22.5% in 2022. “We expect debt to capital to weaken to the 75%-80% area through 2024 in comparison to 67.8% in 2022.”

The outlook is stable.

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