2025 Outlook and Growth Cadence
Q: How will margins and growth progress in 2025?
A: The first half of 2025 is likely to be flat in revenue growth due to lost momentum at year-end. However, with market stabilization, commercial initiatives, progress on newer product lines, and pricing levers, we expect modest growth with margin expansion for the year.

Units on Rent vs. AMR Growth
Q: How are you thinking about units on rent versus AMR growth next year?
A: Units on rent will start 2025 down, but not as much as last year. We have a strong tailwind in modular average monthly rental rates (AMR), good traction in storage value-added products (VAPS), and signs of growth in modular VAPS. New product offerings could potentially double run rates, and we expect margins to improve by optimizing processes and leveraging technology investments.

Expected AMR Growth in Modular and Storage
Q: Is high single-digit AMR growth in modular still expected? What about storage AMR?
A: To achieve AMR growth, we need spot rates on traditional containers to increase. Cold storage growth and value-added products, up 16% year-over-year in traditional storage, will help. With a 12% spread in modular, AMR growth may reach low to mid-single digits without further spot rate improvements.

Volume Headwinds Moderating
Q: Are volume headwinds expected to moderate in 2025?
A: Yes, the average units on rent deficit was about 3% in Q3, down from 5% at the start of 2024. We expect this deficit to continue decreasing, leading to a smaller volume headwind as we enter 2025.

Gap Between Spot and Reported Pricing
Q: What's the gap between spot pricing and reported pricing for storage and modular?
A: In modular, there's about a 12% favorable spread. For storage, it's about flat, but with a growing spread in the cold storage segment.

Interest Rates Impact on Modular Units
Q: When will transactional modular units rebound with lower interest rates?
A: Certainty is as important as rate cuts. Rate cuts may stimulate projects that didn't meet economic hurdles, benefiting volume in transactional product lines. Complex units are up slightly year-over-year, driven by FLEX products, but transactional single units remain challenging.

Capital Allocation Plans
Q: How will you allocate capital among CapEx, M&A, and buybacks?
A: We plan to invest about 25% of capital into maintenance and growth, including VAPS and adjacencies. We've deployed over $1 billion into acquisitions, about one-fourth in modular and the rest in storage, including clearspan and cold storage. We see ample pipeline for tuck-in M&A and will continue consistent share repurchases to compound returns.

Storage Units Increase Heading into Q4
Q: Are you still expecting a sequential increase of storage units in Q4?
A: Yes, the retail side is performing as expected. We anticipate ending October with nearly 130,000 storage units on rent, up from 122,700 average in Q3. Overall delivery expectations have been reduced by about 10%, but the retail component aligns with prior expectations.

Return Volume Dynamics Amid Low Starts
Q: Are returning units creating additional headwinds in a low-starts environment?
A: As the units on rent portfolio decreases, return volumes also decrease proportionately. Total returns in modular dropped from over 70,000 units in 2022 to forecasts of just over 60,000 units this year. This dynamic mitigates new demand headwinds.

Pricing Strategies for 2025
Q: How are you approaching pricing strategies for next year?
A: We're implementing a new pricing technology platform with AI-informed recommendations. This will help automate bundling of value-added products and improve cross-selling. We're also testing different inflationary escalators in out-of-term processes.