Williams Scotsman International, Inc. Reports Record Third Quarter Results and Increases Outlook for 2006

Williams Scotsman International, Inc. (NASDAQ:WLSC), a leading provider of modular space solutions, reported today its financial results for the third quarter of 2006. Revenues for the third quarter were $187.6 million, a 15% increase from $163.5 million in the comparable period of 2005. Gross profit was $74.4 million, a 34% increase as compared to $55.6 million for the comparable prior year quarter. EBITDA for the current quarter was $59.1 million, which was up 36% from $43.6 million in the comparable period of 2005. The Company reported net income for the quarter ended September 30, 2006 of $16.2 million or $0.37 per diluted share as compared to a net loss for the quarter ended September 30, 2005 of ($14.7) million or ($0.59) per diluted share. Net income for the third quarter of 2006 includes a $3.0 million income tax benefit resulting from a reduction of the Company’s tax valuation allowance related to net operating loss carryforwards as a result of increases in estimates of taxable income, as well as the decrease in income tax expense during the third quarter of 2006, from reductions to enacted Canadian income tax rates. During the third quarter of 2005, the Company recorded a loss on the early extinguishment of debt of $25.5 million resulting from the write-off of deferred financing and other costs associated with our refinancing activities during 2005, a $2.4 million non-cash stock compensation charge related to the Company’s initial public offering, a $1.0 million charge for the estimated damage to the Company’s assets related to hurricanes occurring during the quarter offset by recoveries from prior period storms. The effect of these charges was a reduction to net income of $17.6 million (net of related tax benefit of $11.3 million) or $0.71 per share. Net income for the three months ended September 30, 2006 and September 30, 2005 excluding the items discussed above was $13.2 million or $0.30 per diluted share and $2.9 million or $0.12 per diluted share, respectively. The effects of these adjustments for the three months ended are summarized as follows: (in millions, except per share data) September 30, 2006 September 30, 2005 Net income Diluted EPS Net income Diluted EPS   Net income (loss), as reported $ 16.2  $ 0.37  $ (14.7) $ (0.59)   Loss on early extinguishment of debt, net of tax —  —  15.5  0.63  Non-cash stock compensation charge related to initial public offering, net of tax —  —  1.5  0.06  Hurricane-related charge, net of tax —  —  0.6  0.02  Effect of changes to income taxes as a result of change in valuation allowance and change in enacted Canadian tax rate (3.0) (0.07) —  —    Net income, excluding adjustments $ 13.2  $ 0.30  $ 2.9  $ 0.12  Gerry Holthaus, Chairman, President and CEO, commented, "We produced another outstanding quarter of financial results. We experienced a 19% improvement in leasing revenue for the third quarter of 2006 as compared to 2005 which was driven by our North American activities. In North America, overall utilization of 82% in the third quarter of 2006 was equal to the third quarter of 2005; however, our average rental rates increased from $264 to $291, and average units on rent increased 3,100 units for the quarter as compared to the prior year quarter. Utilization of our modular equipment increased from 82% to 84%, while the average rental rate increased from $309 to $343 for the third quarter of 2006 as compared to the prior year quarter. Leasing gross margins were 55% during the quarter as compared to 51% in the third quarter of 2005. Sales of new units and rental equipment increased by 14% as compared to the prior year quarter as a result of strong unit sales in the central southwest and Canadian regions of the Company. Delivery and installation and other revenue again showed positive results, consistent with the growth we experienced in our lease and sale business. "As we reported previously, we acquired Wiron Construcciones Modulares, S.A. (Wiron), a Spanish company, on August 18, 2006. While the impact of Wiron to our net income for the third quarter ended September 30, 2006 was not material, we are continuing with operational and financial initiatives to assimilate Wiron into the Company. We have been very pleased with our efforts to date. "We are making excellent progress in achieving our goals for 2006 and look forward to continued growth for Williams Scotsman.” Nine Months ended September 30, 2006 Results Revenues for the nine months ended September 30, 2006 were $511.7 million, a 21% increase from $424.6 million in the comparable period of 2005. Gross profit was $207.6 million, a 32% increase as compared to $157.5 million for the prior year period. EBITDA was $167.1 million for the nine months ended September 30, 2006, which was up 33% from $125.2 million in the comparable period of 2005. The Company reported net income for the nine months ended September 30, 2006 of $38.2 million or $0.90 per diluted share as compared to net loss of ($18.2) million or ($0.76) per diluted share for the nine months ended September 30, 2005. Net income for the nine months ended September 30, 2006, includes the impact of favorable tax adjustments of $3.0 million discussed above. During the nine months ended September 30, 2005, the Company recorded a loss on early extinguishment of debt of $30.7 million, a $2.4 million non-cash stock compensation charge related to the Company’s initial public offering, and a $1.0 million charge for estimated damage to the Company’s assets related to hurricanes occurring during the quarter, offset by recoveries from prior period storms as described above. The effect of these charges was a reduction of net income of $20.7 million (net of related tax benefit of $13.4 million) or $0.86 per share. Net income for the nine months ended September 30, 2006 and September 30, 2005 excluding these items was $35.2 million or $0.83 per diluted share and $2.6 million or $0.11 per diluted share, respectively. The effects of these adjustments for the nine months ended are summarized as follows: (in millions, except per share data) September 30, 2006 September 30, 2005 Net income Diluted EPS Net income Diluted EPS   Net income (loss), as reported $ 38.2  $ 0.90  $ (18.2) $ (0.76)   Loss on early extinguishment of debt, net of tax —  —  18.7  0.78  Non-cash stock compensation charge related to initial public offering, net of tax —  —  1.5  0.06  Hurricane-related charge, net of tax —  —  0.6  0.03  Effect of changes to income taxes as a result of change in valuation allowance and change in enacted Canadian tax rate (3.0) (0.07) —  —    Net income, excluding adjustments $ 35.2  $ 0.83  $ 2.6  $ 0.11  Business Outlook The following statements of anticipated results are based on current expectations. These statements are forward-looking, and actual results may differ materially. The Company estimates the following performance measures for the fourth quarter and year ending December 31, 2006: (in millions, except per share data)   Quarter Ended Year Ended 31-Dec-06 31-Dec-06 Low High Low High Range Range   Operating income $ 33.5  $ 35.5  $ 144  $ 146    Depreciation and amortization 20.5  20.5  77  77    Net income 9  10  47.2  48.2    Earnings per share - diluted $ 0.2  $ 0.23  $ 1.1  $ 1.13  The Business Outlook published in this press release reflects only the Company's current best estimate and the Company assumes no obligation to update the information contained in this press release, including the Business Outlook, at any time prior to its next earnings release. Williams Scotsman International, Inc. has scheduled a conference call for November 1, 2006 at 10:00 AM Eastern Time to discuss its third quarter results. To participate in the conference call, dial 888-433-1674 for domestic (212-748-2817 for international) and ask to be placed into the Williams Scotsman call. To listen to a live call, go to www.willscot.com and click on the Investor Relations section. Please go to the website 15 minutes early to download and install any necessary audio software. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until 11:59 PM on November 15, 2006. To access the replay, domestic callers can dial 800-633-8284 and enter access code 21306720 (international callers can dial 402-977-9140). About Williams Scotsman International, Inc. Williams Scotsman International, Inc., headquartered in Baltimore, Maryland, through its subsidiaries, is a leading provider of mobile and modular space solutions for the construction, education, commercial, healthcare and government markets. The company serves over 25,000 customers, operating a fleet of over 115,000 modular space and storage units that are leased through a network of 100 locations throughout North America and Spain. Williams Scotsman provides delivery, installation, and other services, and sells new and used mobile office products. Williams Scotsman also manages large modular building projects from concept to completion. Williams Scotsman is a publicly traded company (NASDAQ:WLSC) with operations in the United States, Canada, Mexico, and Spain. All statements other than statements of historical fact included in this press release are forward-looking statements and involve expectations, beliefs, plans, intentions or strategies regarding the future. Although the company believes that the expectations reflected in these forward-looking statements are reasonable, it assumes no responsibility for the accuracy and completeness of these forward-looking statements and gives no assurance that these expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the company's expectations are disclosed under "Risk Factors" and elsewhere in the company's 10-K, 10-Q and other SEC filings, including, but not limited to, substantial leverage and its ability to service debt, changing market trends in its industry, general economic and business conditions including a prolonged or substantial recession, its ability to finance fleet and branch expansion and to locate and finance acquisitions, its ability to implement its business and growth strategy and maintain and enhance its competitive strengths, intense industry competition, availability of key personnel and changes in, or the failure to comply with, government regulations. The company assumes no obligation to update any forward-looking statement. Certain prior year amounts have been reclassified to conform to current year presentation. Williams Scotsman International, Inc. Consolidated Balance Sheets (dollars in thousands)     September 30, December 31, 2006  2005  (Unaudited) Assets   Cash $ 1,941  $ 469  Trade accounts receivable, net 119,481  94,661  Prepaid expenses and other current assets 63,576  46,630  Rental equipment, net 1,053,386  944,629  Property and equipment, net 90,923  81,177  Deferred financing costs, net 20,081  18,042  Goodwill and other intangible assets 216,050  173,535  Other assets, net 22,904  21,477  Total assets $ 1,588,342  $ 1,380,620    Liabilities and stockholders’ equity   Accounts payable $ 57,077  $ 60,685  Accrued expenses 52,178  27,862  Accrued interest 23,724  13,245  Rents billed in advance 26,167  23,621  Revolving credit facility 281,710  364,150  Long-term debt, net 627,891  505,296  Deferred income taxes 160,156  141,020  Total liabilities 1,228,903  1,135,879  Stockholders’ equity: Common stock 556  519  Additional paid-in capital 543,105  471,406  Retained earnings 90,012  51,846  Accumulated other comprehensive income 21,704  16,908  655,377  540,679  Less treasury stock (295,938) (295,938) Total stockholders’ equity 359,439  244,741  Total liabilities and stockholders’ equity $ 1,588,342  $ 1,380,620  Williams Scotsman International, Inc. Consolidated Statements of Operations (unaudited)     Quarter ended Nine months ended September 30, September 30, 2006  2005  2006  2005  (In thousands except share and per share amounts) Revenues Leasing $ 74,718  $ 62,556  $ 213,776  $ 181,636  Sales: New units 40,914  36,921  107,655  83,458  Rental equipment 12,959  10,260  38,034  25,825  Delivery and installation 45,488  41,756  114,428  101,355  Other 13,516  11,983  37,783  32,318  Total revenues 187,595  163,476  511,676  424,592    Costs of sales and services Leasing: Depreciation and amortization 14,998  13,068  43,224  38,435  Other direct leasing costs 18,566  17,533  49,693  44,501  Sales: New units 31,200  30,571  83,841  69,115  Rental equipment 9,365  7,898  27,430  20,069  Delivery and installation 35,753  34,699  91,841  86,245  Other 3,339  4,150  8,001  8,713  Total costs of sales and services 113,221  107,919  304,030  267,078    Gross profit 74,374  55,557  207,646  157,514    Selling, general and administrative expenses (1) 30,312  25,063  83,820  70,796  Other depreciation and amortization 4,736  4,241  13,354  12,183  Operating income 39,326  26,253  110,472  74,535    Interest, including amortization of deferred financing costs 18,269  24,496  53,613  73,755  Loss on early extinguishment of debt 90  25,496  90  30,678    Income (loss) before income taxes 20,967  (23,739) 56,769  (29,898) Income tax expense (benefit) 4,816  (9,071) 18,603  (11,726) Net income (loss) $ 16,151  $ (14,668) $ 38,166  $ (18,172)   Earnings (loss) per common share $ 0.38  $ (0.59) $ 0.92  $ (0.76) Earnings (loss) per common share, assuming dilution $ 0.37  $ (0.59) $ 0.90  $ (0.76)   Weighted average common shares outstanding – basic   42,918,245    24,877,087    41,268,754    24,003,061  Weighted average common shares outstanding – diluted (2)   43,608,509    24,877,087    42,281,343    24,003,061  (1) Includes non-cash stock compensation expense of $0.8 million and $2.6 million for the three months ended September 30, 2006 and 2005, respectively and $1.5 million and $3.1 million for the nine months ended September 30, 2006 and 2005, respectively.   (2) The effect of share based payments of 1,270,056 and 1,233,417 were excluded from the calculation for the three and nine months ended September 30, 2005, respectively because the effect was antidilutive. Williams Scotsman International, Inc. Summary of Selected Consolidated Financial Information (unaudited) (Dollars in thousands)     Quarter Ended September 30, Nine Months Ended September 30, Operations Data (in thousands): 2006  2005  2006  2005    Gross profit Leasing $ 41,154  $ 31,955  $ 120,858  $ 98,700  Sales: New units 9,714  6,350  23,815  14,343  Rental equipment 3,594  2,362  10,604  5,756  Delivery and installation 9,735  7,057  22,587  15,110  Other 10,177  7,833  29,782  23,605  Total gross profit $ 74,374  $ 55,557  $ 207,646  $ 157,514  North America Rental Fleet Data: Quarter Ended September 30, 2006 Quarter Ended September 30, 2005 Modular Storage Total Modular Storage Total   Lease fleet units, as of end of period 77,800  23,700  101,500  76,900  21,400  98,300  Lease fleet units, average for period 77,700  23,200  100,900  76,800  20,900  97,700  Utilization rate based upon units, average for period 84% 77% 82% 82% 80% 82% Monthly rental rate, average over period $ 343  $ 99  $ 291  $ 309  $ 94  $ 264      Nine Months Ended September 30, 2006 Nine Months Ended September 30, 2005 Modular Storage Total Modular Storage Total   Lease fleet units, as of end of period 77,800  23,700  101,500  76,900  21,400  98,300  Lease fleet units, average for period 77,400  22,400  99,800  76,300  20,300  96,600  Utilization rate based upon units, average for period 83% 78% 82% 81% 81% 81% Monthly rental rate, average over period $ 337  $ 98  $ 287  $ 305  $ 93  $ 260  Quarter Ended September 30, Nine Months Ended September 30, Capital Expenditure Data (in thousands): 2006  2005  2006  2005  Lease fleet, net (a) $ 32,744  $ 31,438  $ 86,563  $ 81,238  Non-lease fleet 3,319  3,554  9,558  8,836  Acquisitions 52,388  14  57,511  4,630  Other Financial Data (at period end): September 30, 2006 Leverage Ratio (b) 4.02  Leverage Ratio (c) 19.8  Borrowing base availability under revolving credit facility (d) (in thousands) $ 197,228  (a) Capital expenditures are shown net of used units sold.   (b) Calculated as total debt divided by Consolidated EBITDA, see (f) below.   (c) Calculated as total debt divided by net income, the most comparable GAAP measure.   (d) Under the Company's Amended and Restated Credit Agreement, the Company is not subject to financial covenants as long as its excess availability under the revolving credit facility remains above $75 million. As of September 30, 2006, the Company's excess availability under the revolver was $197.2 million or $122.2 million in excess of the $75 million. Reconciliation of EBITDA for the quarter and nine months ended September 30, 2006 and 2005 to net income – the most comparable GAAP measure:     Quarter Ended September 30, Nine Months Ended September 30, 2006  2005  2006  2005  (in thousands) EBITDA (e) $ 59,060  $ 43,562  $ 167,050  $ 125,153  Less: Interest expense 18,269  24,496  53,613  73,755  Loss on early extinguishment of debt 90  25,496  90  30,678  Depreciation and amortization 19,734  17,309  56,578  50,618  Income tax provision (benefit) 4,816  (9,071) 18,603  (11,726)   Net income (loss) $ 16,151  $ (14,668) $ 38,166  $ (18,172) (e) The Company defines EBITDA as earnings before deducting interest, loss on extinguishment of debt, income taxes, depreciation and amortization. Reconciliation of Consolidated EBITDA, as defined below, to net income – the most comparable GAAP measure as of September 30, 2006 (in thousands):     Consolidated EBITDA – trailing 12 months (f) $ 226,159  Less: Interest expense 71,061  Depreciation and amortization 75,192  Income tax provision 23,792  Gain on sale of equipment (224) Non-cash stock compensation expense 2,161  Loss on early extinguishment of debt 90  Pro forma EBITDA impact of acquisitions 8,073  Net income, trailing 12 months $ 46,014  (f) Consolidated EBITDA is defined as the Company's net income plus interest, loss on extinguishment of debt, taxes, depreciation and amortization expenses, and excludes (gains) losses on sales of fixed assets and any other non-cash items, and non-cash stock compensation charges. Consolidated EBITDA also includes an adjustment to reflect the estimated full year EBITDA contribution of acquisitions completed during the period. Consolidated EBITDA should not be considered in isolation or as a substitute to cash flow from operating activities, net income or other measures of performance prepared in accordance with generally accepted accounting principles or as a measure of the Company's profitability or liquidity. The Company is providing Consolidated EBITDA as supplemental information so that investors can evaluate the Company's performance and debt position. The Company also utilizes Consolidated EBITDA to assess compliance with its financial covenants under the Amended and Restated Credit Facility; however, in this case, Consolidated EBITDA would be based solely on the Consolidated EBITDA of the Company's wholly owned subsidiary, Williams Scotsman Inc. and Subsidiaries.