It seemed like adding the $525M of maturing debt to the ABL was a done deal - until it wasn't; and is the aged-out fleet actually a competitive advantage? We think not.
"That is not a fleet. That is an inventory of potential spare parts." 😂 1. Do you think a large part of the unusable inventory was the result of poor due diligence on the Mobile Mini merger? Capex vs depreciation confirms your research. 2. Capex exceeds depreciation from 2017-2019 but falls below in 2020, post-merger (excluding a pop in 2022). Construction costs went up by 40% in 2021-22, so back of the envelope looks like they are behind on capex by at least $300 million. Do you have an estimate of how much needs to be scrapped or improved?
Poor due diligence - no, I don't. I think MINI managed their fleet better and focused on longer-lived assets. Also, the merger provided WSC with a stealth debt restructuring, allowing the firm to up capacity and extend due dates. Good catch on CapEx. Correct. Most companies acquired by WSC had younger fleets. I believe they would acquire and then age/use up the fleet, allowing them to downshift on maintenance and CapEx. Added benefit that they do not count acquisitions as CapEx although ~90% of the cost is allocated to equipment. It makes their version of free cash flow look good. I haven't estimated the total bill to revamp the fleet, but if we think about the how much it would take to bring the average age of a 150,000 unit modular fleet down to the industry average age of 10-12, it is a shit ton.
"That is not a fleet. That is an inventory of potential spare parts." 😂 1. Do you think a large part of the unusable inventory was the result of poor due diligence on the Mobile Mini merger? Capex vs depreciation confirms your research. 2. Capex exceeds depreciation from 2017-2019 but falls below in 2020, post-merger (excluding a pop in 2022). Construction costs went up by 40% in 2021-22, so back of the envelope looks like they are behind on capex by at least $300 million. Do you have an estimate of how much needs to be scrapped or improved?
Poor due diligence - no, I don't. I think MINI managed their fleet better and focused on longer-lived assets. Also, the merger provided WSC with a stealth debt restructuring, allowing the firm to up capacity and extend due dates. Good catch on CapEx. Correct. Most companies acquired by WSC had younger fleets. I believe they would acquire and then age/use up the fleet, allowing them to downshift on maintenance and CapEx. Added benefit that they do not count acquisitions as CapEx although ~90% of the cost is allocated to equipment. It makes their version of free cash flow look good. I haven't estimated the total bill to revamp the fleet, but if we think about the how much it would take to bring the average age of a 150,000 unit modular fleet down to the industry average age of 10-12, it is a shit ton.