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Welcome to the First Quarter 2025 WillScot Earnings Conference Call. My name is Cherie, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I would now turn the call over to Charlie Wohlhuter. Charlie, you may begin.
Great. Thank you, Cherie. Good afternoon, everyone, and welcome to WillScot first quarter 2025 earnings call. Participants on today's call include Brad Soultz, Chief Executive Officer; Tim Boswell, President and Chief Operating Officer; and Matt Jacobsen, Chief Financial Officer. Today's presentation material may be found on the Investor Relations section of the WillScot website. I'd like to direct your attention to slide 2, containing our safe harbor statements. We will be making forward-looking statements during the presentation and our Q&A session. Our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control. As a result, our actual results may differ materially from today's comments. For a more complete description of the factors that could cause actual results to differ and other possible risks, please refer to the safe harbor statements in our presentation and our filings with the SEC With that, I'll turn the call over to Brad Soultz.
Thanks, Charlie. Good afternoon, everyone, and thank you for joining us today. I'm Brad Soultz, CEO of WillScot. Please turn to Slide 7 of our Q1 earnings release deck. Our first quarter financial results were consistent with our expectations and support reaffirming our full year 2025 outlook. While there remains macro-related end market uncertainty, our current pending order book is up 7% year-over-year for both modular and storage products. These pending order levels should support our expected new lease activation levels in the second quarter. In Q1, our team delivered adjusted EBITDA margins of 41%, yielding $145 million of adjusted free cash flow at a 26% margin. We returned $45 million to shareholders, and we progressed our acquisition pipeline. On an LTM basis, our adjusted EBITDA margins are 44%, adjusted free cash flow margins are 23%, ROIC is at 16%, yielding $3 of free cash flow per share.
We expect to build on these metrics to drive shareholder value through our margin expansion initiatives and our portfolio of $2.5 billion of growth levers. Importantly, we believe our portfolio of growth levers provides multiple paths to achieve our goals through different end market backdrops. The Board and I have confidence in our team's ability to achieve our three-to-five-year financial milestones of $3 billion in revenue, $1.5 billion in adjusted EBITDA, and $700 million in adjusted free cash flow. Additionally, we have multiple paths to drive free cash flow per share from $3 today to the top end of our revised three-to-five-year range of $4 to $6 per share. Now before I turn it over to Tim and Matt for additional context, I'd like to thank our team for their steadfast commitment to our customers, to each other, and to our business. And on behalf of our Board of Directors, I'd like to thank Erik Olsson for his years of stewardship and Worthing Jackman as he succeeds Erik as our nonexecutive Independent Chairman.
And finally, I would like to welcome Dominick Zarcone, who in June will represent the fourth new Independent Director added to the Board in the past three years and is indicative of our commitment to enhance our large-scale industrial operational expertise. We collectively believe that we have the right strategy and, as importantly, the right team to achieve our goals for 2025 and beyond, creating multiple paths to shareholder value creation along the way. Tim?
Thanks, Brad, and good afternoon, good evening, everybody. We, of course, just met to discuss strategy and operations in detail at the March Investor Day. So thank you again to those of you who made the trip and hopefully enjoyed what is our peak tourism season here in Phoenix. Relative to what we discussed in March, we continue to see stability commercially and progress across all of the internal initiatives that we've prioritized. So altogether on track with what we presented at Investor Day with a variety of levers to improve growth and returns in our business. Let's start commercially. When we met in March, our total pending order book was up 6% year-over-year, and that has remained consistent through April and is up 7% year-over-year today, as Brad mentioned, so progressing generally in line with our original volume expectations for the year. That order growth is coming entirely from our larger accounts, offsetting continued weakness in our local accounts, which is consistent with the mix of end market activity that we've been discussing for some time.
Headlines related to Trade Policy change daily, creating a level of uncertainty that is greater than we expected two months ago. The Architectural Billings Index was 44 in March and Q1 non-residential construction square footage starts were down 17% year-over-year. So we remain cautious for all of those reasons. That said, we also have internal initiatives in-flight to drive performance across our local and enterprise accounts, which we think can allow the order book to continue to outperform those market data points, and we're pleased with the build in the order book year-to-date. We are actively adding sales resources across our local and enterprise teams, increasing sales headcount sequentially by 4% in the quarter and still expecting to increase the sales team by 10% to 20% overall through the course of the year. And in May, we're rolling out both our enhanced sales HQ workbench in our CRM and our new pricing engine as planned.
Those of you in Phoenix got a glimpse of these tools in March. So we expect to have both greater overall resources and productivity levers in place heading into the second half of the year. Unit pricing on new contracts across all product categories has been stable for several quarters now. We have deployed enhanced segmentation methodologies for our out-of-term pricing and expect targeted increases on new contracts once we've stabilized in the new pricing engine. And value-added products and services continue to grow relative to the overall business, representing over 17% of revenue in the quarter, which Matt will touch on later. In terms of field operations, logistics continue to be our biggest area of focus with delivery and installation margins contracting year-over-year in Q1, driven by a combination of lower margin seasonal transportation activity and in-sourcing initiatives that are not yet at full productivity.
As we discussed in March, this is an area where we see opportunity for significant margin expansion and competitive differentiation. Fleet availability and production continue to be key advantages for WillScot, especially in all of the larger project activity that we're seeing. And we saw solid expansion in year-over-year leasing margins in the quarter. We know that our in-house production, transportation, setup, and service capabilities are best in class in the market and will become more valuable by the day with continued uncertainty around labor and inputs. We are uniquely positioned without any significant supply chain constraints, while ready to unlock significant operating leverage within our fleet and field operations. And in our centralized operations, we saw encouraging improvements in performance levels by the team and a $30 million reduction of accounts receivable in the quarter, which is a good first step towards realizing the longer-term working capital and earnings opportunities that we discussed in March.
So overall, we have clear initiatives and performance levers that are within our control and give us confidence in the outlook for the year, so we're staying focused on those. And I'd like to thank the entire team for their solid execution in Q1. Matt?
Thank you, Tim. Turning to Slide 22, we provide a brief overview of the quarter. As Brad noted, Q1 results were in line with our expectations to begin the year and support our reaffirmed full year outlook for 2025. Looking at the first quarter, total revenue of $560 million declined 5% year-over-year or mid-single digits as we had expected due to lower volumes. Average units on rent were down 5% year-over-year for modular and down 16% year-over-year for storage, broadly in line with our expectations. Pricing in value-added products continued to help mitigate some of the impact from the volume declines in the quarter. Average monthly rental rates were up 5% year-over-year for modular and up 2% year-over-year for storage. I'll touch on value-added products in a bit more detail shortly. Total leasing revenue was down $26 million or 6% year-over-year, while delivery and installation revenue was down $12 million or 12%.
This was partially offset by higher sales, which increased $10 million or 39%, most of which was driven by increased new sales activity. Adjusted EBITDA for the quarter amounted to $229 million at a margin of 40.9%. The margin decline year-over-year of 130 basis points was generally in line with our expectations, but impacted slightly more due to a greater mix of new sales in the quarter versus 2024. The increase in sales mix drove approximately 40 basis points of the margin compression year-over-year in the quarter. Turning back up to Slide 20. This is a new addition to our quarterly earnings presentation introduced to align the discussion we had during our March 2025 Investor Day. Tim mentioned value-added products briefly in his remarks, but this slide highlights the percentage of revenue contributed by value-added products and services on a quarterly basis back to 2022. This quarter, we surpassed the 17% mark, moving steadily towards our long-term goal of generating 20% to 25% of total revenue from value-added products over a three-to-five-year horizon.
This achievement is particularly noteworthy given the 11.5% decline in consolidated units on rent, underscoring the strength and resilience of our value-added products portfolio. It reflects deeper penetration of these offerings across our core product lines and reinforces our ability to drive growth through levers within our control. Turning to cash flows on Slide 23. We generated $145 million of adjusted free cash flow at a 26% margin in the quarter, which was 120 basis points higher year-over-year. This equates to adjusted free cash flow per share of $0.79 at our current share count or $3.02 over the last 12 months. The stability of our cash flows continues to be a compelling part of our business model and affords us great optionality to allocate our capital, allowing us to reinvest at strong returns for continued value creation. Moving on to Slide 24. We successfully refinanced our 2025 senior secured notes during the quarter, extending the maturity to 2030 at a fixed interest rate of 6.625%.
Given the current interest rate environment, we view this as a proactive step to further strengthen our balance sheet to preserve ample liquidity in our ABL, which remained at over $1.6 billion as of March 31. It also increases our financial flexibility, allowing us to allocate capital towards accretive investments and future growth initiatives, including both organic growth and potential M&A opportunities. We appreciate the continued support and confidence of our debt investors in our long-term strategy and our operational execution. Moving on to Slide 25. We continue to prioritize our capital investments, first towards organic growth, and we invested $62 million of net CapEx in the quarter, which was down just slightly to the prior year of $65 million. We continue to invest in fleet refurbishments and new fleet in select categories to meet demand, including office complexes, flex, value-added products and also into growth CapEx into our newer product categories, such as climate-controlled units, Clearspan, and perimeter solutions.
We will also continue pursuing acquisitions that fit our criteria, and that pipeline continues to develop. Lastly, in Q1, we returned $45 million to shareholders by repurchasing approximately 1.1 million shares of common stock and paying our first quarterly cash dividend of $13 million. Given the recent trading activity, we continue to be opportunistic with repurchases and repurchased an additional 741,000 shares for $18.1 million during April. Our leverage during the quarter remained flat at 3.5x. We expect our leverage to naturally decrease largely through earnings growth from 3.5x currently into our three-to-five-year target range of 2.5x to 3.25x. And finally, on Slide 27, as Brad mentioned, we are reaffirming our 2025 financial outlook. As discussed during our Investor Day on March 7, we anticipated that year-over-year units on rent headwinds would persist into the first quarter before beginning to ease over the remainder of the fiscal year.
First quarter results were consistent with those expectations, and our current pending orders support the underlying volume assumptions in our second quarter outlook. Looking ahead to the rest of the year, we expect continued easing of volume headwinds such that rate and value-added product growth, along with our expanded product offerings, will drive modest top-line year-over-year growth in the second half of the year. What that means for the second quarter is that we expect total revenues to improve sequentially, such that revenue will be down approximately 2.5% year-over-year rather than nearly 5% as they were in the first quarter. From an EBITDA margin perspective, we expect margins in the second quarter to expand sequentially similar to or slightly better than they did in the prior year, and we expect flattish adjusted EBITDA margins year-over-year in the second half of the year. We remain poised to invest in our fleet, which will drive higher net CapEx versus last year as we continue fleet refurbishments and fleet repurchases in select categories to meet demand, including, again, some of our newer product categories that are driving the incremental spend year-over-year.
At the midpoint of our guidance ranges, we still expect to deliver $2.375 billion in revenue, $1.045 billion in adjusted EBITDA, and $265 million in net CapEx for full year 2025. This is no change to the base case of our 2025 outlook from when we first provided it back in late February, and we continue to have opportunities that could take us up in the range and additional risks that could take us lower in the range. We're cognizant of concerns over the broader market right now, driven by tariffs, labor, and other evolving policies, and we're closely monitoring these trends and the potential impact on the broader North American economy and the indirect impact on our business. The midpoint of our revenue guidance assumes that demand remains consistent with our original expectations for the year, supported by our first quarter results and by our current pending order book, which is up 7% versus last year, as Brad noted earlier.
We see little direct impact from tariffs within our P&L, but there remains uncertainty about how these could influence demand in the second half of the year. As a result, we've maintained a wider revenue outlook range than we generally would sitting here on March 1. To move up from the midpoint of the revenue range, we would expect to see a combination of increased demand, incremental pricing performance, and our greater penetration of value-added products. Downside risks primarily include unit on rent deterioration in the second half of the year should customer demand reduce meaningfully due to economic uncertainty, which could move revenues below the midpoint. Should the demand environment change, we can quickly adapt by flexing our variable cost base to match demand levels as we have in the past to support margins while still supporting our customers. But as of today, we continue to see an order book that supports continued investment, both in the form of our fleet and our sales organization, as Tim noted earlier.
As a reminder, 95% of our revenues are generated by maintaining and re-leasing our existing owned assets. Our views related to the direct impacts of tariffs haven't changed much from when we spoke at Investor Day back in March. Based on our supply chain across our entire expense base, both in the P&L and within CapEx, we estimate about a 2% to 4% annual direct impact from tariffs, with the vast majority of the increase in cost impacting our net CapEx. Generally, these pressures will impact competitors as well. And as we have historically, we've been able to price through cost increases to help mitigate the impact. Based on all of this, we expect the direct tariff-related impacts to be quite manageable. While tariffs might create demand uncertainty in the near term, if the intended impacts are successful in balancing trade and spurring increased investment in domestic manufacturing and other industries, our business could benefit from the multiyear tailwinds as we partner with our customers to transition their operations in the future.
Transition is generally good for our business and supportive of increased demand for our solutions. Wrapping things up, our start to the year was in line with our expectations and our pending order book should support our expected new lease activation levels in the second quarter. Customer demand will continue to guide our 90-day zero-based planning process, including appropriate adjustments in our cost structure and our capital spending, and we have great flexibility to adjust to changing demand, which leaves us very comfortable with our current outlook ranges. I will now hand it back to Brad for some closing remarks.
Thank you, Tim and Matt. Thank you to our customers for your continued business and thank you to our team for their focus on safety and customer satisfaction. And thank you to our shareholders for your trust with your capital. We look forward to connecting with you over the course of the quarter at various conferences and meetings. I wish all of you listening today continued safety and good health. This concludes our prepared remarks. Operator, would you please open the line for questions?
分析師問答
Thank you. Our first question will come from Andrew Wittman with Baird. Your line is open.
Great. Excuse me. Thanks for taking my questions this afternoon, guys. I appreciate it. I guess, just on the order book, 7% plus, I think, is a good result considering everything that's going on out there. These are the order book. And so I was just wondering if you would comment a little bit about the conversion time. Is the order-to-delivery time expanding given some of the economic uncertainty? Are there pauses, delays, cancellations? Are things coming in and out of the order book and netting to 7% plus? Maybe just some of the characteristics that underpin that that might give us a flavor for the overall demand environment that resides under that nice 7% level that you're highlighting today?
Yes, Andy, this is Tim. It's a great question. And it might be a little bit too soon to observe some of the concerns that you're raising, so we're watching it carefully. I can say that quoting activity, for example, over the last thirty days since Liberation Day has been up about 10% year-over-year across all product categories. So you're continuing to see healthy new customer inquiries coming into the funnel. We have not observed any change in conversion rates or cancellation rates. I mean, cancellation rates through Q2 so far are actually down slightly relative to the prior year. So you're raising the logical concerns that are on our mind, but we just haven't observed any data yet that tells us those things are happening. And in terms of the progress through the course of the year, as long as we see this type of progress in our leading indicators, we have added to the sales force, we've got some productivity tools in the CRM and the pricing engine that should allow our teams to be more effective in the field. But to the extent we see any slowdowns or changes in customer behavior, those things are all levers that we can pull in the other direction if necessary. So we're watching it carefully, though encouraged with the order book build year-to-date.
Great. That's really helpful color. And then for my follow-up question, I guess, it's probably for Matt. Matt, I wanted to ask about the value-added products. Just historically, you've provided, kind of average and spot value-added products and kind of use that to talk about your goal of getting up to $600 per unit per month at least on the modular side there. I didn't see that here. So I thought I would ask if you could provide the average in spot value-added products for both the modular and the portable storage segments, so we can understand the underpinning dynamics to that 717% of total revenue that you articulated here already?
Yes, I can certainly explain that. The main reason for the shift is our expanded portfolio of value-added products, including Perimeter Solutions and some solar products. These orders are now processed separately, and their timing differs from our modular and storage products, making it difficult to attribute them accurately. That's why we now measure this as a percentage of revenue. What really matters is that as we grow, add more units for rent, and increase rates, we also provide each customer or job site with a comprehensive solution. This percentage approach is a more effective way to capture all of this.
Okay. Got it, Troy. Thank you. I appreciate the perspective on that. Have a good evening.
Thank you. One moment for our next question. And that will come from the line of Sherif El-Sabbahy with Bank of America. Your line is open.
Hi, good afternoon. I just wanted to touch on the Q2 top line outlook. Obviously, with the guidance down 2.5%, it's improving sequentially notably. Within that, historically, Q2 volumes have come down sequentially. Is that something you still expect to happen in the second quarter?
Generally, no. Typically, during a normal seasonal cycle for our business, we tend to reach a low point around the Q1 timeframe, after which we see growth leading into the busier Q2 and Q3 seasons. Therefore, we do not anticipate that happening as we continue to see orders progressing, particularly in the modular segment, which is usually very active during this period. There are some seasonal variations in the storage sector, especially with Q4, which is somewhat different. However, for modular, we expect consistent growth as we move forward throughout the year.
Understood. And looking just at the modular delivery and installation, obviously, it's varied a little bit with the change in volumes. Could you give us an idea of what cadence you expect for that side of the business?
Yes. So it will grow with that increase in activity, right, in the second quarter. We would expect growth, I don't know, maybe somewhere in that 10-ish percentage range as you start to get more activity there in the second quarter. So not to nail down maybe specific numbers, but yes, definitely the delivery and installation will grow into the second quarter as we have more activity.
Thank you. One moment for our next question. And that will come from the line of Scott Schneeberger with Oppenheimer. Your line is open.
Thank you very much. To begin, I'm interested in discussing the end markets we serve. There's a quote on Slide 13 regarding retail, and I would like to explore that further. It suggests an anticipated improvement in the retail customer segment this year, which I believe you have mentioned previously. Have the updates related to Liberation Day influenced your outlook for the latter half of the season, particularly midyear and beyond? Thank you.
Hey, Scott. This is Tim. I think the short answer is no. There hasn't been a real change in our view as to retail-related demand over the last thirty days. We've had pretty in-depth conversations with some of the larger accounts within that sector, and those conversations predate Liberation Day, and they're ongoing. And they're certainly contributing to the year-over-year growth in the order book, particularly in the storage side of the business, which we're very encouraged about. And some of that we expected, if you rewind to where we were maybe a year ago, giving the pause in some of the store remodel activity among some of the larger retailers, which we do see coming back. So we haven't seen any incremental or decrement specific to the tariff policy. But again, we're deeply engaged in those conversations. Encouragingly, in the retail sector, historically, as you'll know, that's primarily been a storage clientele, and we are seeing better cross-selling activity with climate-controlled storage and some of the rest of the offering as we engage those accounts more strategically.
Thanks, Tim. I appreciate that. You were active with share repurchases this quarter, which seems to be a sensible decision. I'm curious, Matt, or anyone else, how are you considering ongoing stock buybacks compared to potential mergers and acquisitions? Could you share your thoughts on that and the current state of opportunities in that area? Thank you.
Yes. Scott, I don't think it's any different than the way we've approached it the last few years. As you know, M&A can be transactional when it transacts, so it can be a little bit bumpy. But we'll continue to work that pipeline. And for those deals that come to us and make sense, we'll absolutely transact. And then we'll continue to be active with our or consistent with our long-term capital allocation framework. Sorry, as it relates to repurchases. And you saw again today that we announced the second dividend, the dividend for Q2, which will be another way for us to return capital to shareholders.
Thank you. One moment for our next question. And that will come from the line of Manav Patnaik with Barclays. Your line is open.
Hi. This is Ronan Kennedy on for Manav. Thank you for taking my questions. Can I just dive a little deeper, in relation to the quote on the pending orders as a follow-up to Andy's question? What's the historic correlation there, say, to activations, actual delivery and installation and ultimately units on rent? How should we think about that as for the reliability of that as a leading indicator?
Ronan, this is Tim. So we're talking about net orders, right? So that will take out cancellations, right, when we're thinking about the net order rates that we're seeing in the business. There can be a timing element. So depending on how much lead time a customer is giving us between the time of order and delivery. It does appear, if you look at the order book, that the timing waiting is shorter or near term this year relative to last year, which gives us more confidence in the activation levels that we're expecting for Q2 specific to that guidance. So relative to last year, all else equal, the book is weighted a little bit more towards the next four or five weeks relative to where we would have been last year. The flip side of that is maybe not as much visibility into the second half, but as you know with our lead times, that's almost always the case, and we're kind of forecasting 90 days out on a rolling basis. So yes, absent any change in cancellation rate or project timeline, those orders convert to deliveries. And as you know, given you've got about three-year lease duration in the business, you need several quarters of sustained year-over-year delivery growth to cause a unit on rent portfolio to inflect.
Okay. Thank you. And then for the guidance at the midpoint, can I confirm what the underlying expectation is with regards to volume inflection, if and when that's expected to happen? And if you're able to give a reminder on the contemplated average monthly rental growth and units on rent growth for both segments to the extent possible, please?
Yes, Ronan, maybe I'll just hit it kind of broadly. I think consistent with the outlook we would have given at the beginning of the year, not a whole lot has really changed. We're expecting to continue to kind of eat into that volume headwind as we move throughout the year sequentially. And so by the end of the year, you're kind of maybe getting close to flattish, right? Pick your point. That's kind of the way that we view the volume side of things. On rates, I think it's consistent with what we've been seeing here recently. So if you're looking at our modular units, you're starting to grow that a little bit more as you get a bit more contribution from some of the expansions we're doing in value-added products and those things. So you might start to move up in that range that we provided, the 5% to 10%. And then on storage, you'll see a similar move from where we are today, the 2% in the first quarter. As mix moves a little bit more again to the cold storage or temperature-controlled storage, you'll continue to see positive contributions from that as you move throughout the year. So we expect some further progress there, I guess, is what I'm saying.
Yes. Hi. Thank you. Tim, you talked about logistics as the biggest area of focus and we did see delivery and installation margins contracting. You mentioned sort of lower margin seasonal transportation activity. So just talk a little bit more about that. So what does that really mean? And how quickly do you think we can see margins improve in that particular area?
Yes, Faiza. So a couple of different things going on there, and I do think these margins can move relatively quickly. We did have a stronger seasonal storage quarter in Q4 last year than in recent years, which is a good thing. And the return activity on much of that volume did stretch into January and February. And on certain of those contracts, we did have flat mileage-based pricing, which in some cases came in at a lower margin. Though overall, from a cash contribution on that business, we were actually really, really happy with the season, but it was a put some pressure on the margin in the quarter. You also have heard us talk about in-sourcing activity, and we are bringing more of that fixed cost in-house to eliminate third-party trucking. That is a work in progress and I'd say we added more of those resources in the quarter in anticipation of volume pickups going into Q2 and Q3. So maybe a temporary burden in the quarter that we expect to get some operating leverage out of as we progress into the second half of the year.
So across logistics, the types of initiatives that we have in place once you have those resources in house, we talked about it in March, the cross-training of those resources to work across both the storage and modular product lines as well as climate-controlled storage. We are actively pursuing a new scheduling capability that will allow our dispatchers to utilize those resources more efficiently. And then route optimization is kind of the last piece of that puzzle as we look forward into 2026. So those are all things that the team is working on to drive profitability at the delivery and installation level.
Thank you. I wanted to follow up on pricing. If you could provide the difference between the last twelve months delivered and reported pricing for storage and modular, that would be helpful. Additionally, I’d like to understand if we should view a potential inflationary environment differently this time. Previously, post-COVID, you benefited from higher pricing due to increased demand and initial pricing initiatives. I'm curious if that context, rather than just broader inflation, influenced those results. I would appreciate your overall thoughts on this.
Faiza, this is Tim. I'll start and I'll look to the rest of the team here to jump in. And I would tend to agree with you that inflationary environment tends to be supportive for our business. Obviously, many input costs continue to inflate in this environment. When it comes to our biggest cost, which is our fleet, we already own it. And that's the nice thing about how we're positioned. And on top of that, we have the in-house capability to ready, remanufacture, deliver, and install, which is pretty unique in our industry. So we feel like we've got our piece of the cost puzzle under control, which I think is a relative advantage in the marketplace for others who might need to either source new equipment or use third parties to deploy that equipment. The analysis is maybe a little bit different on the container side of the business, but certainly at a high level, I think we've demonstrated in the past that we can take advantage of inflationary environments and pass those costs through. As I said at the outset, unclear what the implications are from a demand standpoint. And ultimately, that's where the rubber meets the road and that's where we're being most vigilant. But activity year-to-date has been encouraging.
All right. Thank you. If you don't mind, Tim or Matt, if you could just give us that difference between the...
Yes. On the value-added product side, Faiza, I don't think I have anything really to add from what Andy had asked. I mean, given the portfolio that we've expanded, it's just you can't attribute everything to one unit or the other. And that's why we've provided the update to the way that we're reporting it so that everybody can understand how that grows as the business grows.
I'll give you a good example on that one, Faiza. So think about climate-controlled storage. The majority of the value-added services that we bill on climate-controlled storages actually come either during the course of the rental or towards the end, not at the outset in the form of a delivered rate. So think about runtime charges on refrigeration equipment or telematics services and things like that. So it's really just not conducive to thinking about, okay, what's the value-added products billing at the activation of a contract versus the overall portfolio average, which is how we've talked about it in the past. In the past, we would have said we don't have the ability to deploy value-added services after the delivery of a unit. Well, that's just not true anymore. We actually do, and that's a good thing, and that's a reason to look at it a bit differently.
Hi, good evening. With the order book ramping up, given it's totally large projects driving that, does it reflect any improvement of cross-selling, a larger portfolio of your products into these projects? Or is there any way to think about WillScot's density on large projects and if there's a long-term upward trend now maybe compared to the last one or two years?
Steven, this is Tim. It's an outstanding question because this is one of the primary commercial strategies that we are focused on across the sales organization right now. And we've got a pretty good system in place where we've got clear visibility across all project activity in North America. We're absolutely looking at product penetration across all of those projects. And when we go out to do market visits or branch visits, project penetration and then cross-selling within those projects is a core focus at the market level. I will not say that we're satisfied with where we're at yet. So I think that this is a prospective opportunity for the company and not reflected in the activity that we've seen to date, but we are laser-focused on it.
Thank you. One moment for our next question. And that will come from the line of Philip Ng with Jefferies. Your line is open.
Hey, guys. Any color on new activations in the quarter for modular and storage? And then it was helpful data point on the pending order being up 7% in the quarter. Any color on how that has progressed? Last few quarters have been generally positive, has it been negative directionally would be helpful.
Yes. Phil, this is Matt. I can hit that. I think we gave some of that information through February at the Investor Day. I think modular was kind of low single digits down and storage was higher single digits down. What's been nice to see is over the last couple of months, modular activations have really been flat year-over-year, so very stable there and encouraging. And then on storage, up about 3% collectively between March and April. So we have seen an uptick there. And obviously, given where the current order book is, we are feeling good about our Q2 outlook and what that looks like. But some positive results here in the last couple of months since we last spoke. The order book's been very consistent since March, the 6% as of March and 7% as we kind of sit here today.
It really fell off towards the end of last year. I mean, the build year-to-date has been certainly steeper than it would have been just to start last year. So that piece has been encouraging.
Just on the order book, 7% plus, I think, is a good result considering everything that's going on out there. These are the order books. And so I was just wondering if you would comment a little bit about the conversion time. Is the order-to-delivery time expanding given some of the economic uncertainty? Are there pauses, delays, cancellations? Are things coming in and out of the order book and netting to 7% plus?
I think that's a fair assessment of what we're seeing. We're continually working through our leads there and the types of projects that we've seen coming through. Ultimately, we have not observed any material changes yet through our leads.
Overall, we feel quite good about what we're looking at, given that strong order growth across all our segments, and we believe that growth in all our major product lines will follow.
In terms of growth from here, we're modeling slight growth long term. We feel overall positive regarding the current business environment as we prepare for the upcoming quarters, and we believe that our order book will provide strong foundation.
I appreciate that. We see improvement in our service metrics and expect some additional pricing stability going forward as well.
We're working hard to mitigate the impacts of the economic uncertainties, and we have the right mindset across the organization to work through these challenges.
Thank you. I am showing no further questions in the queue at this time. I would now like to turn the call back over to Charlie for any closing remarks.
All right. Well, thank you very much, everyone, for your interest and participation in the call today. As Brad said, we look forward to connecting with you over the course of the quarter at various conferences and meetings. Hope you have a good night and we'll talk soon.