WillScot Holdings Corporation (WSC) Q2 2020 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to the WillScot Mobile Mini Holdings Corporation Second Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will follow at the time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, speaker, Emily Tadano, Director of Treasury and Investor Relations. Please go ahead, ma’am.

Thank you, and good morning. Before we begin, I’d like to remind you that our press release, comments made on today’s call and responses to your questions may contain forward-looking statements. Our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control and consequently actual results may differ materially from these forward-looking statements. A summary of these uncertainties is included in the Safe Harbor statement contained in our press release. For a more complete description of these and other possible risks, please refer to our 2019 Form 10-K and our other various SEC filings, including our quarterly reports on Form 10-Q. Please note, WillScot Mobile Mini assumes no obligation and makes no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations. You should not place undue reliance on these forward-looking statements, all of which speak only as of today. You should also note that our press releases in today’s call include references to certain financial information expressed on a non-GAAP basis. We have included reconciliations to the comparable GAAP information, please refer to the tables and slide presentation accompanying today’s earnings release. The press release we issued this morning and the presentation for today’s call are posted on the Investor Relations section of our website. A copy of the release will also be included in an 8-K submitted to the SEC. We will make a replay of this conference call available via webcast on the company website. A Mobile Mini, Inc. standalone earnings presentation for the second quarter of 2020 can be found on the WillScot Mobile Mini Holdings Corp. Investor Relations website. Later today, we will also be filing our 10-Q with the SEC for the second quarter of 2020. Quarterly information and the related management’s discussion and analysis of financial condition and results of operations of Mobile Mini, Inc. for the quarterly period ended June 30, 2020 will also be filed by the company and an 8-K with the SEC. All documents that I just referenced will be available on the Investor Relations section of our website. The documents filed with the SEC will also be available through the SEC as well. Today’s discussion of results of operations in Q2 2020 is intended to cover historical results for WillScot Corporation and Mobile Mini individually for the three months ended June 30, 2020 or prior period. On July 1, 2020, WillScot through it’s subsidiary, closed the merger with Mobile Mini, Inc. and changed its name to WillScot Mobile Mini Holdings Corp. Unless the content, otherwise requires the terms company and WillScot Mobile Mini referred to the combined company. Now with me today, I have Brad Soultz, CEO of WillScot Mobile Mini; Kelly Williams, President and Chief Operating Officer; and Tim Boswell, our CFO. With that, I’ll turn the call over to Brad.

Thank you, Emily, and good morning, everyone. I’m Brad Soultz, CEO of WillScot Mobile Mini Holdings, and I’d like to welcome everyone to our company’s second quarter 2020 earnings call. Please turn to Slide 4 of our investor presentation. As a quick reminder, we completed the transformational merger between WillScot and Mobile Mini on July 1, establishing the North America market leader for both turnkey modular space and portable storage solutions, with pro forma LTM revenues and adjusted EBITDA of $1.65 billion and $619 million, respectively. As we work hand in hand with Kelly and the Mobile Mini team to prioritize our integration and execution efforts, both companies individually delivered Q2 operating and financial results that I can simply classify as broad outperformance. This execution, in light of the unexpected and unprecedented pandemic, confirms the resilience of these two great business, which will be even stronger together. I want to extend our sincerest thanks to all WillScot and Mobile Mini employees for their commitment to employee and customer safety and well-being, all while maintaining their focus on the execution. Moving to Slide 6. This merger was rooted in compelling strategic and financial rationale. Importantly, it’s worth reiterating, WillScot and Mobile Mini are truly complementary businesses. These two companies’ business models are both based on strong recurring revenues from long duration leases and similar asset characteristics, such as long lives, low maintenance, high margin, short payback periods, and strong cash flow generation. By combining our fleets totaling over 365,000 units, our offering becomes more strategic and valuable to customers. The diversity of our portfolio improves and we enhanced the scale and profitability of the business. We’ve identified $50 million of clearly actionable annual cost synergies related to this merger, which is in addition to the $20 million of remaining cost synergies, which are associated with WillScot’s prior acquisitions. We’ll continue to increase penetration of turnkey solution or VAPS across the combined portfolio. And further, we estimate up to 80% of our combined end-markets use both modular office and storage, yet only 40% of our customers are currently renting from both WillScot and Mobile Mini, resulting in significant opportunities for cross-sell and customer pull-through for modular space to portable storage and vice versa. Putting it all together, we believe the combined company will produce approximately $0.5 billion in annual free cash flow once fully integrated, largely independent of market cycles. Now, please turn to Slide 8 for a snapshot of our Q2 results and our updated 2020 outlook, which reinforces the resilience of the business model. As previously noted, both standalone businesses broadly outperformed in an extremely challenging period. While Kelly and Tim will provide additional context later, I would like to highlight Q2 adjusted EBITDA margin expansion year-over-year of 480 basis points and 470 basis points for WillScot and Mobile Mini, respectively; and pro forma free cash flow generation of $70 million, driven by $39 million from WillScot and $31 million from Mobile Mini, both of which included some one-time merger and integration-related cash expenditures. Both companies remained extremely disciplined with respect to pricing, with WillScot delivering its 11th consecutive quarter of double-digit rate growth across its US Modular division and Mobile Mini increasing North America Storage rates by over 3%. With our combined scale expansion of our price optimization tools and increasing value-added products and service penetration, we are confident in continuing to drive rate improvement as we look ahead. This broad outperformance, executed during the crisis, provides us with great confidence in updating our full-year 2020 guidance, which at the midpoint, would result in pro forma adjusted EBITDA growth of 5% on flat revenues and reduction in capital expenditures of 25% versus the prior year. Now turning to Slide 9, I’d like to highlight our unique unit level economics. I remind, approximately 90% of the pro forma adjusted gross profits are derived from very predictable recurring leases of long-lived assets, with long average lease durations of greater than 30 months across our core asset classes. Steel storage containers, which represent just over half of our assets by account and 21% of our net book value, yield IRRs of 30% over a 30-year useful life. Modular office, which represents about a third of our assets by count and 62% of our net book value, yield IRRs of 25% over a 20-year useful life. We believe these already great returns across these assets can be even further improved as we integrate, leverage our combined scale, expand price optimization processes, continue to drive apps, and we relentlessly pursue operating efficiencies. Slide 10 provides a historical perspective as to the free cash flow resilience of the two standalone companies following the last global financial crisis. While we did not anticipate this pandemic, we expected to experience a cycle at some point and had our playbooks ready to execute. Both companies reacted immediately to the associated net decrease in demand for new lease activations by reducing capital and variable cost. Our respective Q2 2020 outperformance reaffirms the resilience of these two standalone platforms. Now please turn to Slide 11, where we’ll provide a high-level update of our demand outlook across our diverse end markets. As a combined company, we have approximately 85,000 customers, with the top 50 customers accounting for only 15% of the total revenues, demonstrating how little customer concentration we have. We also estimate that 75% of our revenue are from recurring customers. Obviously, all end markets are still adjusting following the COVID shock, with some offsets from incremental social distancing needs and screening. While we’ve seen stabilization and some sequential improvements headed into August, we remain extremely cautious on the volume outlook and our curtailing capital spending accordingly. Turning to Slide 12, while the one aspect of our multi-level – lever profitable growth equation that we do not control is demand for new activations, together, WillScot and Mobile Mini have a myriad of idiosyncratic top and bottom line levers and an extremely agile capital allocation process, all of which are fully in our control. Working down the page, I’ll highlight several of these powerful growth levers. First, both WillScot and Mobile Mini have proven track records of price leadership, which is only further enhanced as we integrate the business and leverage our collective scale. This provides for multi-year revenue growth tailwinds, which we intend to further bolster. We have another multi-year organic revenue growth tailwind of $150 million across the combined business associated with simply maintaining the VAPS penetration on new activations that we’ve already achieved over the last 12 months. As we continue to further increase VAPS penetration towards our long-term stated target of 80%, we’d further increase and extend this growth. We have, as mentioned, over $70 million of identified and actionable cost synergies yet to be realized from this merger and prior acquisitions. And following the close of the transaction, Tim and Kelly and I have been able to spend sometime in the field. And we’re now even more excited about the further upside associated with cross-selling opportunities across the combined customer base. We’re also deploying technology for real-time operational decision-making, business optimization and enhanced customer service. But we’re confident in our ability to execute this plan, all in the foundation of a robust balance sheet, over $950 million of liquidity and an immediate robust free cash flow generation, which we plan to deploy towards a long-term multifaceted capital allocation strategy. The strategy prioritizes rapid deleveraging into the 3 to 3.5 terms by the end of 2021, continued organic growth while achieving the cost and commercial synergies associated with the merger, as well as returning further value to shareholders in the form of share repurchases. With that, I’m pleased to turn the call over to Kelly.

Thanks, Brad. Good morning, everyone. I’m Kelly Williams, WillScot Mobile Mini’s President and Chief Operating Officer. To begin, like Brad, I want to thank all of our WillScot Mobile Mini employees for their commitment and dedication in these uncertain times. Their safety and health is most important to us. I’m happy to report that our integration is progressing as planned. The WillScot Mobile Mini team is focused on integration and execution, in addition to driving the business forward. The strength of the team aligned around these priority – priorities positions the company to operate with better efficiency and achieve greater profitability than WillScot and Mobile Mini each did as standalone companies. Today, I will discuss the second quarter KPIs, as well as provide an update to our demand trends during the COVID-19 pandemic. The strong Q2 results of WillScot and Mobile Mini demonstrate the resilience of our business model. The installed base or units that were at customer sites pre-COVID-19 has behaved as expected as a result of project completions and unit returns slowing relative to last year. We continue to see this today. In the second quarter, WillScot’s units on rent were only down 2% sequentially from the first quarter. Mobile Mini’s North America Storage core units on rent were essentially flat sequentially from the first quarter. Slide 14 lays out the demand trends in Q2 and in July. The demand indicators for both businesses have been improving on a sequential monthly basis since April 2020, and you can see from the top charts on this page. Starting with the top left, the green bars represent monthly order rates for the US Modular business in 2020. Similarly, on the top right, the blue bars represent monthly net new orders, excluding seasonal units at North America Storage in 2020. The gray shadow bars behind both of them represent the order rates for the same period in 2019. While the leading indicators of demand across our diverse end markets has decelerated in April, we are steadily narrowing the gap from prior year in both core segments. US Modular’s July order rates at WillScot were down 5% versus prior year, which compares to order rates being down approximately 20% year-over-year during the second quarter. North America Storage’s net new orders, excluding seasonal units at Mobile Mini in July were down 4% versus prior year, which compares to order rates being down greater than 20% year-over-year during the second quarter. These two charts show that the new order trend is moving in the right direction with the new orders improving on a sequential monthly basis since the end of April 2020. The bottom chart show a snapshot of the pending deliveries. The green and blue portions of the bars respectively reflect the portion of orders at US Modular and North America Storage, which have delivery dates scheduled over the next four weeks, while the gray reflects those scheduled for delivery beyond the next four weeks. Pending orders with scheduled delivery dates in the next four weeks for both businesses are down compared to the same time last year. But compared to the pending orders in April 2020, both businesses have experienced a meaningful improvement in scheduling and customer certainty to project start dates over the past three months. US Modular’s pending orders as of August 1, 2020 for modular units scheduled for delivery over the next four weeks are down approximately 8% to prior year versus having been down 25% year-over-year as of April 26, 2020. North America Storage solutions pending orders, excluding seasonal units as of August 1, 2020, scheduled to deliver over the next four weeks are down approximately 11% to prior year versus having been down greater than 25% year-over-year as of May 1, 2020. Mobile Mini’s North America Storage business experiences a routine increase in seasonal demand every year in Q4 due to holiday-related demand for big box retailers. We refer to these as seasonal units, which are ordered nationwide and large volume for storage of additional holiday shopping inventory onsite. Heading into the pre-holiday season now, we are anticipating seasonal demand from big box retailers in Q4 to be similar to prior year. Q4 seasonal performance for 2018 and 2019 were record years for Mobile Mini. Mobile Mini’s seasonal business is a nice complement to WillScot seasonal slowdown in Q4 and Q1. Now turning to Slide 15. The majority of the combined companies installed bases behaved as expected. They remain on rent today with no change to customer collections. WillScot US Modular had a total average units on rent of approximately 103,000 for the three months ended June 30, 2020, a decrease of 1.3% sequentially from Q1. Mobile Mini’s North America Storage Solutions had a total average units on rent for the same period of approximately 117,000, which was 3.1% decrease sequentially from Q1. However, Mobile Mini’s core units on rent was essentially flat on a sequential quarterly basis. This low churn proves the resilience of our business model, which is based on recurring leasing of long-lived assets with an average lease duration of nearly three years. With regard to the installed base, we have not seen an acceleration of units returning to our branches in either of our two core segments, US Modular and North America Storage. In fact, the cadence of unit returns has actually slowed slightly during the COVID period. The charts on this slide further depict the complementary seasonality of the core segments’ volume. Now on to Slide 16. Both business’ strong rate performance during the past few months in the face of COVID-related headwinds demonstrates the beauty of the business model. WillScot achieved another great quarter, in which modular space average monthly rental rates also known as AMR, increased 9.5% year-over-year to $669. The US Modular segment’s AMR increased 11.3% year-over-year to $681. Q2 marked the 11th consecutive quarter of double-digit rate growth for this segment, and we expect the momentum to continue as we look ahead. US Modular’s AMR increase of 11.3% year-over-year was driven by a combination of our price optimization tools and processes, as well as continued growth in our Ready to Work solutions and deepen the value-added products and services, or VAPS, penetration across WillScot customer base. We also saw sequential increases in AMR from Q1 into Q2, so that pricing tailwinds in the modular portfolio continue to increase and drive sequential increases in modular leasing revenues. As of the end of the second quarter, the average monthly rate for our VAPS units increased 13.3% year-over-year. VAPS continues to represent both in organic revenue growth stream for existing WillScot fleet and also a great cross-selling opportunity to bundle with Mobile Mini’s steel ground-level offices, or GLOs. Mobile Mini’s North America Storage also achieved an increase in year-over-year rental rates of 3.2% for Q2 2020. The three months ended June 30, 2020 marked the 30th consecutive quarter of year-over-year rental rate increases for this segment. Our ability to increase rates annually is based on servicing our customers with high-quality products, high levels of customer service, a large sales force and the use of technology, including Mobile Mini Connect, our customer portal. Looking at Slide 17. Throughout the second quarter, our top priority was the health and safety of our employees, customers and vendors, while executing on our business model. All of our branches remained operational throughout the quarter with limited disruption. We continued and will continue for as long as the pandemic persists, our safety protocols at all locations. As a combined company, we are helping customers to fight the pandemic across our full platform of complementary products that include additional space on project sites, office sites, schools, hospitals, and more to facilitate the new social distancing norm, temporary testing facilities and screening sites, screening checkpoints at the front entrance of job sites, additional storage for supplies related to testing and screening and managed services hand washing stations bundled with our office and storage solutions. Finally, please turn to Slide 18. In Q2, both businesses closely managed costs in order to offset the impact of current revenue trends in the market conditions. We also proactively address semi variable expenses and overhead optimization. These actions drove adjusted EBITDA margin expansion of 470 bps or more for each business, highlighting the potential flexibility at WillScot Mobile Mini to adjust both the cost structure and capital expenditures based on market conditions in order to preserve margins and free cash flow. To date, given the uncertainty around the duration of the downturn, we’ve auctioned – actioned the variable components aggressively. As always, we’ll let order delivery data that we see from the field on a real-time basis, drive our decision-making on any further necessary cost adjustments. Our demand-driven model allows us to proactively respond to this current economic situation. The majority of net CapEx spend is discretionary and we can flex capital expenditures fairly quickly, if necessary. Tim will touch on this later and provide updated CapEx guidance. While customers remain uncertain about project start dates, it’s important to note we continue to experience increases in pricing and VAPS penetration and no material change in customer payment behavior. Return of units to our yards has not accelerated and we remain focused on continuing to service our customers as an essential service provider from our fully operational branch network. With that, I’ll turn the call over to Tim

Thanks, Kelly. Let’s jump into the financial review section for a bit more on the Q2 results, our improved post-merger capital structure and our updated 2020 guidance. Slide 21 captures the WillScot Q2 highlights and we’re extremely proud of the results, given the unprecedented operating environment and the completion of another transformational merger with Mobile Mini. Our revenues proved to be extremely resilient, reflecting both the end market diversification, as well as the long lease durations that lend stability and predictability to our top line. While total revenue was down slightly versus prior year, our modular leasing revenue increased 2.3% from 2019. Modular leasing revenue also increased sequentially from Q1, demonstrating that our tailwinds in pricing and value-added products persisted through the worst months of the pandemic, and our lease revenue run rate continues to increase heading into Q3. Profitability and margins continued to improve both versus prior year and sequentially. Adjusted EBITDA increased by $10 million, despite the $7 million decline in revenue. The revenue decline was confined to our lower-margin in sales and delivery and installation revenues, partly offset by growth in our modular leasing revenues. So while revenue mix contributed to the margin expansion, modular leasing revenues themselves expanded by 430 basis points year-over-year due to variable cost reductions. We realized another approximately $5 million benefit from ModSpace acquisition synergies and executed targeted reductions in other areas due to lower demand. Together, these factors drove the 11.4% increase in adjusted EBITDA and 480 basis points of margin expansion versus prior year taking adjusted EBITDA margin to 38%. GAAP net income also increased by $24 million to $12.8 million in Q2, so we delivered strong and expanding profitability across all metrics, which is exactly what we expected in this environment. In the top right chart, free cash flow continues to inflect positively, totaling $39 million in Q2 and representing our fifth consecutive quarter of free cash generation. Slide 22 highlights these accelerating free cash flow trends. Cash provided by operating activities doubled sequentially from Q1 and was up 65% versus prior year. The formula is pretty simple. Adjusted EBITDA is up due to modular leasing revenue growth and cost reductions, interest expense is down 10% year-over-year, and working capital was a modest source of cash in the quarter with stabilized accounts receivable and increases in cash from customer deposits. At the bottom of the page, we’re continuing to operate at reduced CapEx levels due to the demand environment. Net cash used in investing has been down year-over-year in each of the past three quarters and it was down 15% in Q2 versus prior year, which is roughly in line with the year-over-year delivery volume declines. Our cash used in investing over the last 12 months is approximately $135 million. And I expect, we’ll stay at about this run rate on the Modular side of the business for the foreseeable future, unless the demand environment changes materially one way or the other. Overall, we expect operating free cash flows from the Modular business to remain on this trajectory in the second-half of the year. We will have approximately $51 million of remaining transaction costs, which will be expensed and paid in cash in Q3 and another $25 million of merger-related costs that had been accrued previously and were paid at closing. Again, most of these one-time costs were paid at closing in our July 1 debt balance, but I wanted to flag this since they will appear as a headwind in both our Q3 income statement and cash from operating activities. Turning to Slide 24, I have the privilege of sharing another quarter of solid financial results from Mobile Mini. In Mini’s Q2 results, we see a similar story of portfolio resilience, supported by long lease durations and pricing power, extraordinary profitability driven by flexibility in both the cost structure and capital expenditures and consistent free cash generation, with this being Mobile Mini is 50th consecutive quarter of positive free cash flow. That’s over 12-years. Remarkably, adjusted EBITDA of $56.3 million was essentially flat to prior year, despite an $18 million decline in revenue and margins expanded 470 basis points to 42.6%. Mobile Mini’s team did an outstanding job rightsizing the cost structure to align with the Q2 demand environment, taking out approximately $6 million of cost in the quarter. Over half of the revenue decline was driven by Mobile Mini’s Tank & Pump segment, with the remainder driven by trucking revenues due to lower delivery and return activity. Similar to rental revenue trends in the WillScot business, Mobile Mini’s Storage Solutions business was remarkably resilient due to diversification and long lease duration in the portfolio and increases in pricing and managed services. Managed services generated $3.1 million of net revenue in the quarter and was up nearly 82% from Q2 of 2019. GAAP net income increased by 22% to $17.2 million and free cash flow increased 38% sequentially from Q1 to $31 million in Q2 and would have totaled $44 million if we exclude merger-related costs. Similar to the WillScot results, Mobile Mini delivered solid profitability and expanded margins at all levels. Page 25 breaks down Mobile Mini’s cash flows further. In the top chart, operating free cash flows of $39 million increased sequentially by $6 million. The decline relative to prior year is a bit misleading. We incurred $13 million of cash costs in Q2 2020 related to the merger. And in 2019, Mobile Mini drove sharp improvement in accounts receivable with days sales outstanding dropping by approximately 10 days into the low-60s. Most of that improvement occurred in the first-half of 2019, representing a $21 million source of cash last year and Mobile Mini has done a great job maintaining those DSOs into low-60s. In the bottom chart, net CapEx dropped by 65% to $8 million in Q2, with most of that investment going towards ground level office conversions, which has continued to grow units on rents in the market and achieved a 7.2% rental rate increase year-over-year in Q2. This highlights the extreme flexibility we have to manage discretionary CapEx in these businesses and this flexibility is even greater across the storage asset class. Altogether, the Mobile Mini team delivered an outstanding second quarter. Shifting quickly to our debt structure on Page 26. Given the merger closed on July 1, the right-hand column showing the July 1 debt structure is more relevant than our June 30 balance sheet, because it shows the net result of the merger-related financing activity and represents our debt structure heading into the third quarter. As reported previously, we put in place a new $2.4 billion ABL credit facility, secured by the combined asset base of WillScot Mobile Mini. At merger close, we had over $915 million of availability. So combined with our accelerating free cash flows, we have significant excess liquidity available to support any potential operating requirements. The ABL credit facility has a variable interest rate of LIBOR plus 1.875%, which is a lower spread than in WillScot’s prior facility and there is no LIBOR floor, so we are benefiting fully from the exceptionally low interest rate environment. Concurrent with closing the merger, we refinanced our old 2022 notes by issuing the new 2025 notes. We issued the 2025 notes in June contingent on closing the merger, so they show up on the June balance sheet, along with $655 million of restricted cash. And you see the 2022 notes are gone as of early July. Overall, in the pro forma financial statements that we’ll file today, you’ll see that pro forma interest expense for the combined company is down approximately $32 million, or 20% on an annualized basis relative to the combined reported 2019 results. Our annual cash interest expense going forward is approximately $115 million, excluding amortization of deferred financing costs; and our weighted average cost of debt is approximately 4.4%, representing significant value accretion to shareholders, resulting from the recapitalization of the company. We subsequently announced the redemption of 10% of our 2023 notes, which will close tomorrow, and we will continue to optimize the debt structure opportunistically. Overall, we’ve put in place a simple debt structure that gives us all of the liquidity and covenant flexibility necessary to operate this business over the long-term. Quickly shifting to our equity structure on Page 27. Similar to the debt discussion, the merger-related equity issuance took place on July 1. So you see the June 30 common share count increase by 106 million shares on July 1 to approximately $228 million – 228 million shares outstanding currently. Importantly, on June 30, TDR Capital exchanged its minority interest in our subsidiary, WillScot Holdings Corp., for 10.6 million common shares, which allowed us to collect the prior Class A and Class B structure into a single common share class. You’ll note, this also eliminates the minority interest on our June 30 balance sheet and will eliminate the minority interest in our income statement going forward. We remain committed to simplifying our equity structure over time, and moving to a single share class is an important milestone on that journey. Our revised 2020 guidance on Page 28 is the best way to wrap up the financial review and give you a sense for where we are headed. While this has already been an extraordinary year due to the pandemic in the merger, WillScot Mobile Mini expects to deliver solid 5% adjusted EBITDA growth and approximately $460 million of adjusted EBITDA less net CapEx at the midpoint of our updated guidance ranges on a pro forma basis as if we had been together since 2019. You can think of the midpoint of the guidance as approximately $390 million of EBITDA contribution from WillScot and approximately $240 million from Mobile Mini. There’s a limited synergy realization until we consolidate ERPs in the first-half of 2021, so that’s a clean kind of year-over-year comparison versus 2019. The top line will be flat on a pro forma basis, with growth in core modular and storage rental revenues being offset by lower sales and transportation revenues due to the lower demand environment, as well as declines in our Tank & Pump business. We expect adjusted EBITDA will be up 5% for the year at the midpoint of our guidance, with margins expanding 240 basis points to 38% on a combined pro forma basis. And under the hood, we think adjusted EBITDA will be up year-over-year in every operating segment with the exception of Tank & Pump. This is truly extraordinary performance in this market. And perhaps more importantly, sitting here in August, we can look confidently into 2021, given the visibility provided by lease duration, our superior competitive position and the powerful value drivers inherent in this merger that we are only beginning to execute. With that, I’ll hand it back to Brad.

Thanks, Tim and Kelly. Now as we step back and reflect upon where we are today, we remain convicted in our ability to deliver on our commitments, all while creating an exciting future for our customers, business partners and colleagues. The resilience of our business model built on recurring rental revenues, long-lived assets, increasing rates, and slow churn of the portfolio, in addition to the new idiosyncratic revenue and earnings growth levers associated with the merger, all together will continue to provide substantial shareholder value creation for years to come. Turning to Slide 29, I’d like to outline our capital allocation priorities. Above all, we’re committed to rapidly – rapid deleveraging to achieve a target leverage ratio range of 3.0 to 3.5x by the end of 2021, while funding all organic growth opportunities And while we’re prioritizing the integration of WillScot and Mobile Mini in the next 12 months, we’ll continue to opportunistically consider smart accretive acquisitions and further portfolio optimization. We’re also introducing a 250 million share repurchase program as an initial step to further supplement shareholder returns using our robust free cash flow. This authorization program is multi-year with no expiration date and offers us flexibility in the amount and timing of repurchases. We are not paying the dividend at this time. Although the Board of Directors will continue to review capital allocation priorities on an ongoing basis. In closing, please turn to Slide 30. I’d like to finish by extending a sincere thank you to the collective WillScot Mobile Mini team, who is going above and beyond to serve our company and our loyal customer base during both the merger and the ongoing pandemic. Importantly, the two teams have collaborated to establish a harmonized vision and values for the new combined company. And these principles will guide how we operate as both the team in the marketplace and in our communities. While we’re proud of our respective WillScot and Mobile Mini cultures, we’ve reaffirmed our belief that we’re more alike than different and are extremely excited about our future. We will absolutely be stronger together. I wish all of you listening today, continued safety and good health. Thank you for taking the time to join us today. This concludes our prepared remarks. Operator, would you please open the line?

[Operator Instructions] First question is from the line of Scott Schneeberger of Oppenheimer. Your line is open. Again, Scott Schneeberger of Oppenheimer, your line is open.

Thanks very much operator. Good morning, everyone. The – Brad, I think I’ll pick up where you just left off with your prioritization going forward and then use of capital. Just could you elaborate a little bit more on the Board’s decision of no dividend and the size of share repurchase, and then, obviously, the prioritization of debt reduction in use of cash process?

Yes. Hey, Scott, as we’ve talked on prior calls, this is not an either or platform, right, with nearly $05 billion of free cash flow we’ll be generating, it can be in all of the above. As mentioned, first and foremost, we’re prioritizing deleveraging into that 3 to 3.5 ratio range by the end of 2021. We think we have ample cash flow to pursue all the organic – any opportunistic M&A that might come along, such that we’ll be realizing the opportunity to return incremental value to shareholders, good healthy debate, as well as outside advice with respect to preference for dividends versus share repurchases. And the Board landed unanimously on the share repurchases as the preferred path, if you will, at this point in time. And the sizing, Scott, is simply – it’s a multi-year approval. As we mentioned before, there’s no end date and provides us ample flexibility, if you will, over the next several years.

Thanks, Brad. I appreciate it. Just two more from me, if I could. Curious on the primary drivers of the guidance increase, you just gave an update on where would have been, where would the contribution from WSC and many standalone. Just curious what from each company where the puts and takes as far as looking at the guidance increase overall for the rest of the year? Thanks.

Hey, Scott, this is Tim. So on the WillScot side of the business, you’ll recall kind of the grid we gave you back in Q1, and we’re tracking solidly in that kind of 15-ish percent down volume assumption and likely through the end of the year. So I think that aligns pretty well with the $390 million of EBITDA guide at the midpoint. And we’ve done what we’ve needed to do in terms of managing the cost structure in order to deliver that as evidenced by the margin expansion on the WillScot platform. So I view that as certainly a net positive to where we were sitting at the end of April in our last call. And I think we’re confident in that outlook. On the Mobile Mini side of the business, they’re positioned to deliver a basically a flat EBITDA year at about $240 million, which is the midpoint of the guidance. So I just think that’s a tremendous outcome, given you’ve got a pretty substantial year-over-year headwind in the Tank & Pump business, being offset by growth in the core Storage Solutions business. I’ll offer, Kelly, if you want to elaborate any more on the outlook, but I think we feel very good about the updated range.

Yes, I would agree. I think, Scott, I think, the business trends are certainly more stable, as we mentioned in the prepared remarks. There’s certainly non-resi construction is a headwind, but we continue to remain very assertive in terms of our sales force. We see all the productivity measurements are up. And so I think we’re fairly optimistic here about managing the business kind of at this new norm. And we’ve certainly been able to see increases in flow-through across both companies and remain optimistic for the remainder of the year.

Thanks. I appreciate all really job well done. And then the final question I alluded to, Tim, could you address at the bottom of Slide – all of slide 14. So the order book is up substantially for Mobile Mini and down a bit year-over-year for WillScot. Could you just speak to what that says going forward? And maybe a little bit of the difference between the two operating units? Just curious about that. Thanks.

Yes. It’s – again, if you recall, back in April and then even in June, we had been showing an order book that on the WillScot side, that was up call it 10-ish percent year-over-year. And I don’t get too hung up in exact, these will fluctuate a bit, depending on the point in time you’re looking at it. What’s encouraging on the WillScot side, is you’ve got a much stronger percentage of that order book scheduled. And if you just look at the top charts in the order rates relative to prior year, they’re actually remarkably similar across the two businesses. And as of July, trending down mid single digits year-over-year. So I wouldn’t get too lost in just the overall magnitude of the order book. I think the takeaway here is that the order deficit to prior year has converged every month sequentially since April, when we started reporting this. And I think that – those order rate trends are very comparable across the two businesses.

Yes. I would just add, I think that’s spot on. And, Scott, if you look at that, overall, order book at Mobile Mini up 26%, I think, I’d really hone in on the 30-day outlook, which is very similar in terms of the orders that are scheduled in the next four weeks being high single digits – down high single digits for both. There’s – the National Account Program at Mobile Mini certainly allows us to book these orders earlier. But some of that business is more forward-looking into late Q4 and even early Q1 into 2021. So very similar new order rates actually consistently across both brands.

Excellent. Thanks. I’ll turn it over.

Your next question comes from the line of Kevin McVeigh of Credit Suisse. Your line is open.

Great, thanks. And let me add my congratulations to all the folks on the transaction. Brad, you’d made a comment, I think that your 80% of your clients use both Modular and Storage, but only 40% use both Mobile Mini and I think it was WillScot, I think. Is there any sense of what the opportunity can be, to the extent, you’re able to step up at the kind of the rate to kind of that 80%, or how are you thinking about that opportunity?

Yes. I think we’ve got some more work to do there. But as I mentioned, getting into the field and looking a bit under the hood a bit more, we’re quite excited. What we believe is 80% of our end markets, if you just look at the stack on Slide 11, use both office and storage. What we know factually is about 40% of our customers, combined customers are pulling from both WillScot and Mobile Mini. So it implies a significant upside, if you will, the cross-sell one across the other. We need a little bit of time to continue to put our plans together to talk longer-term about this. And what I would say at a very top strategic levels, we have a combined about 45% share of the office market and about 25% share of portable storage. And we think the opportunity over time to converge those two, if you will, is the right way to think about that. But it’ll be multi-year, let us take the time to put together proper plans and we’ll talk about more in the future.

It’s awesome. And then is there anyway to frame the COVID impact? Obviously, I think, you’re seeing some step up in the revenue in terms of demand on that. But just how you’re thinking about the revenue impact from COVID in a more normalized environment? And then just from an expense perspective, are you seeing maybe incremental opportunity to optimize expense that you wouldn’t have thought otherwise?

This is Tim, Kevin. I’ll start and I would just go back…

Hey, Tim.

…in order data that we’ve presented to you. And which is through the course of Q2 was order rates at both companies down solidly 20% year-over-year. So I’d say, the bulk of that is coming from disruption in the core end markets of construction and commercial and industrial. But we are seeing some mitigating increases in demand related to social distancing. Obviously, the net result is down so far, but those order rates are improving [Technical Difficulty] There really is no impact, no measurable impact on pricing or value-added products and services. You continue to see great rental rate traction across the core Modular business and solid 3% year-over-year increases on the core Storage business. So no change there and no change in terms of inflows from customers. So that’s what we see sitting here today.

Awesome. Congrats again.

Your next question comes from the line of Brent Thielman of D.A. Davidson. Your line is open.

Great. Thank you. Good morning. Congratulations on the bridge on the merger. I guess, I had a question on the Tank & Pump business for the legacy Mobile Mini. Just wanted to get a feel for your confidence in managing that above break-even or cash break-even as you work through this tough environment?

Sure. Brent, this is Kelly. I – it’s a challenging environment. I don’t think there’s any doubt. I think, I talked about this on the last call. I mean, we really have taken – been very proactive in taking cost out of the business and managing it in line with revenue. I think there’s a couple of things. First of all, I think, the industrial softening in the second-half of 2019 was exacerbated in the first-half of 2020 by an oversupply of oil, leading to lower oil prices, reduced refinery capacity utilization, those types of things that COVID-19 hasn’t assisted with at all. So I think, this – we have stabilized at this new norm. And I think it’s probably going to take something at – as it relates to the virus for – to change substantially. So that said, this kind of new model that we’re running under, I think, we ran nearly 30% EBITDA margins in Q2. And I made mentioned this on the Q1 call, which was that, we’ll manage the business appropriately. I think the key here is, again, we’re aligned over 50% of our customers – our blue chip downstream customers, and this volatility that’s occurring in the downstream is really unprecedented. So we’re well-positioned for any sort of response here in terms of the macro to be able to get back to really getting that, that revenue source back that, that’s been lost there. But I think in the meantime, we’re managing that business very effectively. And I still would tell you, the guide towards that 30%-plus EBITDA range and no material change in the outlook from what we can see.

Okay. And then my second question, I guess, is more of a clarification. Tim, the comment that every operating segment, except Tank & Pump, would be up year-over-year for adjusted EBITDA, that was related to full-year 2020, or is that second-half 2020 over prior year or both?

Full-year. So and the second segments being WillScot U.S., WillScot other North America, North America Storage, UK in Tank & Pump.

Yep. Okay, great. Thanks, Tim.

Your next question is from the line of Philip Ng of Jefferies. Your line is open.

Hey, good morning, everyone. Congrats on a really solid quarter in a tough environment. Brad, if I ever heard you correctly, the $50 million of synergies from the combination, you’re not expected to realize much of it until the ERP system is implemented, I think, by the first-half. Can you give us a little more color in terms of how we should think about the ramp? And then until you implement that ERP system, does that limit your ability to cross-sell and perhaps optimize pricing between both platforms?

Yes, breaking out, just a reminder, the $50 million is in addition to the $20 million cross synergies that are remaining for ModSpace. And indeed, we’ll not start substantial realization of that until we cut the ERPs over early next year, such that we expect 80% of those to be in run rate a year after that. I would say the ability to cross-sell is not hindered, if you will, by not having the systems combined, nor is it fully optimized. So think of this a little bit more like phone a friend right now, getting to know each other with the branches across the street and post cutover that’ll be well automated.

Got it. Okay. And then narrow it down…

And just to maybe elaborate on the timing of the cost synergies. So the $50 million, assuming orders successful with the ERP migration in the first-half next year, we expect about 30% of that $50 million to be in our run rate in Q3 of next year and we expect 80% of the $50 million to be in our run rate in Q3 of 2022. So two years post closing, and that’s a fairly similar cadence that we would have seen, if you think back to the ModSpace integration.

Got it. Thanks for the color. And then, Brad and Kelly, you guys had a little time to kind of look under the hood for each of the businesses. On the WillScot side, you guys have done great things on the price optimization with some of the tools that you have. How does – how do both companies kind of stack up? Is there an opportunity to optimize both platforms? And I’m less familiar on the Mini side, is there an opportunity there or pricing is actually pretty solid to begin with?

I’ll – this is Kelly, I’ll jump in. Yes, I mean, first of all, I couldn’t be more impressed with what we’ve seen from WillScot. And I mean, I – I’ve made reference to this on the last call that we had, I think culture means a lot. It means a lot to both companies. Brad referenced the creation of the values between both organizations. I think that – I think both companies are certainly getting to know one another. But I think our – we’re certainly very excited about what we’ve seen. I touch on technology. I mean, it’s – technology is a huge differentiator for Mobile Mini. We operate – we believe much more efficiently since we’ve implemented SAP. We use real-time data down to the branch level to make decisions on asset management. I think when you think about the two coming together, that’s – the increasing footprint is going to allow us to increase utilization by sharing assets, being closer to the customer. The rate optimization technology, WillScot is actually ahead of Mini on that. And I think you can see, that’s going to be a big opportunity for us. Really, what the pricing on the Mini side has been more around just the discipline of setting expectations and more governance at the company level of setting 2% to 3% expectations where WillScot certainly exceeded that. So I think there’s some real opportunity there. I think, again, what will come from aligning on the platform or mobile and digital apps that many is using to reduce time in the yard, our drivers transact quickly with customers with a mobile app that allows us to be more efficient and delivering a pickup. And there’s a lot of things from a technology standpoint that will occur once we’re aligned on the platform that Mini has really been able to take advantage of it. I think I can see in the early stages, WillScot will be able to take advantage of some of those tools as well and create efficiencies and optimization that, that maybe Mini has been a couple of years ahead because of the ERP transition back in 2016.

Okay, great. There seems like a lot of lessons learned on both sides that you guys could fully optimize. And in a question of buyback program, you guys announced, do you need to see your leverage target hit that 3 to 3.5 times leverage target before you step in for a buyback? Or is this more of a line of sight dynamic? And then longer-term, your philosophy on buybacks, is this going to be more opportunistic or you’re planning to use your excess cash flow systematically for buybacks? Thanks a lot, and good luck on the quarter.

Hey, Phil, this is Tim. Thanks. You understand the forward visibility that we have in this business and then across both the Storage and the Modular platforms. So we’re sitting here today 18 months out, talking about a leverage target at the end of next year that we think we can deliver. So it is very much a line of sight type thing – type of buyback authorization. And I think you can assume it’ll be kind of more opportunistic at higher leverage levels and then perhaps more of a consistent deployment of free cash flow, as we get closer and closer to that target leverage range.

Got it. Super helpful, guys. Thanks a lot.

Your next question comes from the line of Courtney Yakavonis of Morgan Stanley. Your line is open.

Hi, good morning, guys. Apologies to make you go back to the order – sequential order rate comments that, Tim, I think you cut out a bit. Can you just clarify? Are you seeing an improvement kind of in your core business sequentially? Or has most of the order improvement really come from those opportunities as a result of social distancing and COVID? And then can you also comment on whether we’ve started to see that order rate improvement reflected in units on rent? Or if that’s still going to come? I think you commented that units on rent had improved sequentially in Modular and other North America, but I don’t think the comment was made on Modular US?

Yes. The – Courtney I’ll start. The answer is it’s both. We’re seeing stabilization in some sequential gains across the various end markets. As we look at order rates heading into August, there’s also certainly some further mitigation, if you will, associated with social distancing probably across all end markets and certainly early screening for COVID side. So I think you’ve got both playing out there. And your assumption is right, we did highlight kind of sequential unit on rent growth in other North America, but we haven’t seen it yet in the US segment. Although, as Kelly mentioned, US segment was down about 1% sequentially, so certainly not catastrophic and obviously have improving order levels.

Okay, gotcha. And then I think, historically, you guys have provided your LTM VAPS delivered rate. I think you updated the VAPS opportunity of $150 million, but I just want to make sure that does include Mini’s modular office space and just any comments you can kind of share on what you’re seeing on VAPS rates?

Yes. It was effectively flat for the quarter versus the prior quarter. We’ve continued to realize significant improvements with penetration, especially over the last one or two months. There was certainly an impact associated with the events in the second quarter – second quarter’s kind of that high volume, if he will, a very short-term leases, which come with high rates, as well as high VAPS. So there was certainly a bit of a mix influence on that, but we’re pleased with where we are and we’re certainly pleased with where we’re heading as we track into the latter part of the year.

Okay, great. And then just lastly, I think, you’ve historically highlighted that when your deliveries are lower, you do tend to see a benefit to margin. So just as we see these order rates improve and theoretically deliveries improving, can just help us think through the impact that should have to margins? And then also, obviously, since Mini has some of their own delivery network. Any thoughts longer-term on how you’re thinking about delivery for the combined business?

Yes, this is Tim. I’ll start on kind of the WillScot side of the business and then maybe Kelly, you can talk a little bit about how trucking works on the Mobile Mini side. But certainly, on the WillScot side, yes, all else equal, if you’ve got more returns than deliveries, you tend to have a bit of a margin impact. That said, we’re showing delivery and installation margins in the 15% range. And we’ve got other kind of actions in place a little bit more in-sourcing across the WillScot legacy platform that we believe can support delivery installation margins in that kind of 13% to 15% range. So I don’t see a significant contraction there, maybe 200 basis points over Q3 and Q4, if delivery volumes pick up in excess of returns. But just to understand, there are some other levers that we’re trying to action internally to sustain those margins up in the mid-teens. So maybe, Kelly, can you talk about trucking on the platform?

Sure Yes. And I think, Courtney, very similar to what Tim is mentioning on the WillScot side. It’s – the trucking margin is dilutive at Mini to the overall rental margin as well. However, trucking margins have steadily gotten better, certainly over the last three or four years and I believe trucking margins on the North America Storage side were close to 40% in Q2. So it’s a real opportunity. I’ll just give you a little bit of data behind Mini. Mini runs about 85% of its trucking in-house, really the – it’s the peak seasonal volume in Q4, which needs to be outsourced there. So we certainly look to optimize our trucking through route management. About 40% of the units that we deliver actually get what we call flipped or moved from one location – the pickup location on to the next customer without actually coming back. So simple sweep out that needs to be done as long as the product quality goes out in Grade A condition. So I think the trucking piece is something we continue to utilize. And I think that to Tim’s point, bigger picture here logistics is a huge opportunity for both companies to improve margins. And I think there’s a big customer relationship piece here. It’s – the driver is typically the first and last touch point with the customer. And it does something that I certainly have many we’ve taken advantage of in terms of enhancing the customer experience. I think we’re looking very deeply into the opportunity between both organizations to optimize logistics and it’s certainly a big focal point.

Thanks. That’s helpful.

Your next question comes from the line of Ross Gilardi of Bank of America. Your line is open.

Hey guys, good morning.

Hi, Ross.

Thanks for squeezing me in. And I apologize in advance if you’ve already covered this. I had to hop on and off the call momentarily. But can you elaborate a little bit more on the roadmap to the $500 million in free cash flow that the timing for kind of getting to that debt pool run rate and just help us on the kind of the bridge between this year on a pro forma basis and future years and just address the transition and restructuring costs and whatnot, and how they impact the phasing that would be really helpful? Thanks.

Yes, Ross, this is Tim. I’ll get it started. And so when we first kind of introduced the $500 million free cash expectation, it was a pretty simple formula to get there. So it was predicated upon executing the $50 million of cost synergies, and again, 80% of those will be in the run rate two years from now. So I kind of view this as a second-half of 2022 or 2023 aspiration. And so over that period, how do you get there, you deliver the cost synergies, the integration costs that we’re incurring now and will incur through the end of next year, will subside naturally. And over that period, if we can generate kind of top line growth and kind of the mid single-digit range with the flow-through to EBITDA that both platforms historically have generated, those factors plus some debt and interest reduction over that time kind of gets you to the $500 million level. And I don’t think you have to get to creative to get there, if you just look at kind of the combined Q2 free cash flow of $70 million, there’s easily $15 million of merger costs in there. We’ve highlighted pro forma interest savings of $30 million annually, so let’s call it, $7.5 million per quarter, added another $12.5 million per quarter of cost synergies and you’re already at $105 million just basing – based on Q2’s results alone. So you need to generate another, call it, $20 million a quarter or $80 million a year in order to get there. And that’s mid single-digit revenue CAGR between now and 2023 in order to get to that level.

Okay. That’s helpful, Tim. And the roadmap to the leverage target of 3 to 3.5 times by year-end fiscal 2021, again, sorry, if you did go over this already. But first of all, should we consider that 3 to 3.5 times to be your leverage target through the cycle or just next year? I’m curious, your thoughts on that. And then do you get there mostly from higher EBITDA or lower debt. I’m trying to just get a sense as to what you’re baking in, assuming for free cash flow next year to get there?

Yes. We haven’t given you a free cash flow number for next year. But rest assured, it’s a combination of EBITDA growth and gross debt reduction. And I wouldn’t necessarily call it a long-term target. That’s our 18-month target that we think is very achievable based on where we are right now, both in terms of the macroeconomic environment, as well as the operating levers that we have within our control to kind of deliver that number over the next 18 months. So as we complete the integration, we reassess the operating environment 18 months from now. You would appropriately reconsider leverage levels. But based on what we know, sitting here right now today, we believe that’s achievable, again, with growth levers within our control, the ability to manage discretionary free cash flow. As you know, we can flex the CapEx, both up and down, which gives us some flexibility in terms of how we get to that 3 to 3.5 times range.

Okay. And then just lastly, the growth opportunity to really go after it in kind of a post-COVID-19 world for extra classrooms and space for health monitoring at factories and offices, and you touched on this in your formal comments. Are you really going after that right now? I mean, is that – I’m sure understand how major of an opportunity or minor of an opportunity that really is and the resources that you’re dedicating to kind of exploit that. And just get your general feel on whether or not that can be a major incremental growth driver or just something more around the adjacencies?

Yes. This is Brad. I’ll start and then Kelly, Tim jump in. We’re absolutely going after it. It’s an opportunity that we think transcends most of our end markets. As we’ve said before, there’s just a fair degree of uncertainty as we look ahead. So whatever opportunity the markets present, there’s no one better positioned to capture than us and we’ll certainly do that. You can take a look at social media or web preference – web presence can speak there. But we’re absolutely going after. And I don’t think, as I mentioned, on the last call, there’s maybe there’s some mitigation, if you will, as work from home comes a little more prolonged. So we’re not trying to get ahead of our skis here. We’re going to go after and get whatever we can. We’ll keep our eye on the end markets. With our scale, frankly, we should be able to outpace anyone in the industry. So we’re going to go get it. We just are not in a position yet to be too precise with respect to net-net-net, what this all looks like a year from now.

Yes. Yes, Ross, I – just real quickly, I would just add. I think Brad’s spot on is difficult for us to right now to identify it. But we do have software that is available for us, Mini is utilizing it today that really drives sales territory optimization to prioritize these leads. And I think right now, we do win on a fairly regular basis. And I think, Brad and I sit back and look at the non-resi construction and look at our delivery declines and feel like we’re grabbing market share, and there’s certainly a portion of that, that’s more than likely related to the pandemic. But at the same time, I think, this lead optimization tool allows us to more readily identify schools, for example, right now, where we’ve seen a lot of success winning through even on the Storage side, the removal of desks at the CVC compliance of 60, within some of these schools brings on fairly large demand. And once we’ve identified that, we’ve been able to share those similar or look alike leads across the rest of the organization. This is another opportunity from the software standpoint post-SAP that WillScot will be able to take advantage of as well.

Do you think you’ll quantify the opportunity at some point in the next six to 12 months for investors? And do you have like dedicated sales and marketing resources that are going after this? Or is it just more of you get incoming leads that obviously you’ll try to service on the best we can?

I would say, it’s the latter right now. Although we certainly have a strategy to go about and a lot of this can be driven through the National Account Program as well, which we think is another low-hanging fruit here that we really haven’t touched on that may be an early opportunity for us to address. But we certainly want to quantify it. I mean – and depending on whether there’s some sort of a cure at some point here or vaccine, I think, we’ll determine kind of how this goes. But we’re certainly looking to assertively address what is an opportunity for us right now certainly in this environment.

Okay. Thanks very much.

Your next question comes from the line of Stanley Elliott of Stifel. Your line is open.

Hey, good morning, everybody. Thank you, guys, for fitting me in. Can you talk a little bit about the M&A environment? I mean, I think you mentioned selective the opportunities here in the coming year, but you’re kind of balancing kind of what’s happening with COVID and then the much larger platform. Kind of what are some of the puts and takes to maybe being a little more aggressive, especially if some of the more regional smaller peers are struggling a bit under the pressures?

Yes. I think I characterize, this is Brad, as opportunistic. We’re in a great position where we’re not compelled to do anything. There’s really nothing else, let’s say, that’s transformational in any single transaction within the modular space or portable storage. So we’ll keep our ear to the ground and see what’s out there. I think we’re in a position where we wouldn’t have to miss anything per se. But we’ll just – we’ll be smart about what we do and we’ll be opportunistic.

Great. That’s all for me.

Hey, Stanley, you just got to put some of those opportunities in the context of the organic opportunities that we now have within the platform, whether it’s the – the cost synergies are pretty straightforward. I think the commercial synergies that Brad and Kelly have identified are extremely compelling. And the ability to deploy technology across the platform is extremely compelling. The logistics opportunity that we haven’t fully quantified is very compelling. So we’re always trying to look to deploy resources wherever we think we get the biggest bang for the buck, and obviously getting the integration right here in the near-term is a huge value driver for us.

Perfect, guys. Thanks so much.

All right. With that, well, thanks, everyone, for taking the time to join us, and we look forward to speaking to you, some of you soon, shortly after and certainly in our third quarter call. Thanks, everyone.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation, and have a wonderful day. You may now all disconnect.