WillScot (WSC) Q4 2025: Modular Pending Orders Up 17%, Signaling Second-Half Growth Potential
WillScot’s Q4 showed early traction in modular orders and enterprise account momentum, but full-year guidance remains intentionally conservative as management awaits sustained demand signals. The network optimization plan and a 13% increase in sales staffing position the business for margin expansion and operational leverage. Investors should watch for a second-half inflection if current order trends persist, particularly in data center and large project verticals.
Summary
- Modular Demand Inflection: Pending modular orders rose 17%, led by enterprise wins and project verticals.
- Operational Reset: Network optimization and sales force expansion aim to drive margin and growth leverage.
- Guidance Caution: Management’s outlook excludes potential upside from recent order and activation momentum.
Performance Analysis
WillScot’s Q4 2025 performance landed in line with expectations, reflecting stabilizing leasing revenue and resilient free cash flow despite a challenging backdrop. The modest 2% revenue decline (excluding write-offs) was almost entirely due to lower seasonal storage demand from a single customer, while modular leasing revenues held flat year over year—an important signal that the core portfolio is finding a floor even as non-residential construction starts continued to contract.
Adjusted EBITDA margins were pressured by revenue mix and elevated health insurance costs, but operational discipline kept full-year free cash flow conversion at standout industry levels. The business returned $30 million to shareholders in Q4 and reduced debt by $41 million, maintaining a balanced capital allocation approach. Notably, VAPS (Value-Added Products and Services) penetration ticked up 100 basis points year over year (to 17.8% of revenue), though management acknowledges further opportunity remains.
- Storage Weakness: Portable storage leasing revenue fell as expected, offset by modest sequential growth in climate-controlled storage offerings.
- Enterprise Account Strength: Enterprise account revenue rose 10% in Q4 (ex-large seasonal customer), with modular order growth concentrated in data center, power, and manufacturing verticals.
- Cash Flow Resilience: Adjusted free cash flow exceeded guidance, supported by disciplined CapEx and prudent leverage management.
The business enters 2026 with a modular order book up 17% and storage order rates up 11% over 13 weeks, but management is not extrapolating these trends into guidance, instead flagging them as potential upside if sustained.
Executive Commentary
"We are beginning to see momentum from our commercial initiatives to improve local market execution, develop our enterprise accounts and industry verticals, and expand our more differentiated value-added offerings. We're backing this up with the strongest operational capabilities in the industry."
Tim Boswell, President and Chief Executive Officer
"We ended up the year a little better than we had guided, and our focus on operational discipline and cost control as we position the business to support a growing order book in early 2026."
Matt Jacobson, Chief Financial Officer
Strategic Positioning
1. Modular Growth Anchored by Enterprise Accounts
Modular, the core leasing business, is showing early signs of inflection with a 17% YoY increase in pending orders and 3% activation growth in Q4. The enterprise account segment drove much of this, with data center and large project verticals (e.g., power generation, manufacturing) providing volume tailwinds. Management expects mid- to high-single-digit revenue growth from enterprise accounts in 2026, with volume—not price—being the primary driver.
2. Network Optimization and Portfolio Shift
The board-approved network optimization plan targets a 25% reduction in leased acreage over four years, unlocking $25–$30 million in annual real estate cost savings and boosting utilization by over 700 basis points (pro forma). The plan aligns with a portfolio shift toward higher-value, differentiated offerings (e.g., flex, climate-controlled storage), supporting improved margins and long-term ROIC (Return on Invested Capital).
3. Sales Force Expansion and Enablement
Sales staffing is up 13% YoY, with lower turnover, increased tenure, and improved sentiment. Enhanced regional management, CRM-driven sales enablement, and local account ownership are expected to drive productivity and order capture. Early 2026 indicators show sales teams exceeding commission targets and improved activation rates, suggesting the organization is better positioned for growth if demand persists.
4. Value-Added Products (VAPS) Opportunity
While VAPS penetration improved to 17.8% of revenue, management sees further upside, particularly as new offerings like fencing and perimeter solutions roll out nationwide. The focus remains on increasing per-unit penetration, especially in modular and furniture, to drive incremental margin and stickier customer relationships.
5. Technology and AI-Driven Efficiency
WillScot is deploying AI in pricing optimization, sales call coaching, and branch safety monitoring, with additional back-office automation underway. These efforts are expected to enhance sales effectiveness, collections, and customer service, providing operational leverage as volumes recover.
Key Considerations
WillScot’s Q4 marks a transition period as the company shifts from stabilization to positioning for organic growth. The following considerations frame the strategic context:
Key Considerations:
- Order Momentum vs. Guidance Conservatism: Management’s guidance does not factor in recent order and activation strength, creating a potential setup for upward revisions if trends hold.
- Network Optimization Execution: Successful execution of the real estate and fleet rationalization plan is critical to margin expansion and capital efficiency.
- Enterprise Account Penetration: Sustaining growth in data center and large project verticals is key to offsetting storage headwinds and broadening revenue base.
- Sales Organization Maturation: The impact of a larger, better-aligned sales force should become more visible as the year progresses, especially if local execution improvements translate to higher activations.
Risks
Guidance reflects heightened caution due to uncertainty about the sustainability of recent order momentum and macro headwinds in non-residential construction. Execution risk around network optimization, customer concentration (notably in storage), and competitive dynamics in modular and storage markets remain material. Prolonged weakness in storage or a reversal in enterprise project demand could delay the anticipated growth inflection.
Forward Outlook
For Q1 2026, WillScot guided to:
- Revenue of approximately $515 million
- Adjusted EBITDA of approximately $200 million
For full-year 2026, management maintained a conservative outlook:
- Revenue of approximately $2.175 billion
- Adjusted EBITDA of $900 million
Management highlighted several factors that shape the outlook:
- Storage headwinds of $50 million are fully embedded in the guide
- Potential upside exists if current modular and enterprise order momentum is sustained beyond early 2026
Takeaways
WillScot is at a strategic crossroads with early signals of demand recovery in modular and enterprise verticals, but management is holding to a conservative stance until trends prove durable.
- Modular Orders as Leading Indicator: The 17% YoY increase in modular pending orders could drive a second-half revenue inflection if sustained, especially in data center and large project verticals.
- Margin Expansion Hinges on Execution: Network optimization and higher-value product mix are set to improve utilization and structural margins, but require disciplined execution and demand follow-through.
- Watch for Second-Half Upside: Investors should monitor order conversion, activation rates, and sales force productivity as key signals for upward revisions and growth acceleration in 2026.
Conclusion
WillScot’s Q4 results and commentary point to a business stabilizing its core leasing portfolio and laying the groundwork for renewed growth, particularly in modular and enterprise accounts. While management’s guidance is intentionally cautious, operational and commercial indicators suggest the potential for a second-half inflection if current trends persist. Execution on network optimization and sales enablement will be critical to unlocking margin and growth leverage.
Industry Read-Through
WillScot’s modular order momentum and enterprise project wins provide a positive read-through for the broader modular space and specialty leasing sector, especially as data center demand continues to drive outsized project activity. The company’s experience highlights the importance of vertical focus (e.g., data centers, power) and operational agility in capturing large-scale, cyclical opportunities. Competitors in portable storage and modular solutions should note the shift toward higher-value offerings and network rationalization as key levers for margin and capital efficiency. The cautious guidance stance also signals that sector-wide recovery remains fragile and dependent on sustained project pipeline conversion.