What changed in this filing

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Item 1A. Risk Factors

2023-07-27 compared with 2023-05-04 · 20 added, 30 removed, 402 unchanged (11% of the section changed)

27 unchanged sentences

changes in, and application of, accounting rules;

changes in the regulations applicable to us;

litigation matters.

changes in the regulations applicable to our business operations;

claims and litigation matters.

As a result of these factors, our historical financial results are not necessarily indicative of our future results or stock price.

17 unchanged sentences

These broad market fluctuations and any other negative economic trends may cause declines in the market price of our common stock and may be based upon factors that have little or nothing to do with our Company or its performance, and these fluctuations and trends could materially reduce our stock price.

The impact of COVID-19 on our operations, and the operations of our customers, suppliers and logistics providers, may harm our business.

We continue to monitor the ongoing impact of COVID-19 outbreak around the globe.

This includes evaluating the impact on our customers, suppliers, and logistics providers as well as evaluating governmental actions being taken to curtail the spread of the virus.

Significant uncertainty continues to exist concerning the magnitude of the impact and duration of the COVID-19 pandemic and related variants.

While the Company’s operating segments and branch locations currently continue to operate, the Company’s results of operations may be negatively impacted by project delays, supply chain delays or disruptions;

elevated costs for materials and labor;

early returns of equipment currently on rent with customers;

overall decreased customer demand for new rental orders, rental related services and sales of new and used rental equipment;

and payment delay, or non-payment, by customers who are significantly impacted by COVID-19.

Our ability to retain our executive management and to recruit, retain and motivate key qualified employees is critical to the success of our business.

16 unchanged sentences

Our investigation revealed that an unauthorized third party copied some personal information relating to certain current and former employees, directors, contractor workers and their dependents and certain other persons.

Upon detection, we promptly undertook steps to address the incident, restored network systems and resumed normal operations.

Upon detection, we promptly undertook steps

to address the incident, restored network systems and resumed normal operations.

The attack did not result in any material disruption to our operations or ability to service our customers and did not affect our financial performance.

14 unchanged sentences

We have engaged in acquisitions and may engage in future acquisitions that could negatively impact our results of operations, financial condition and business.

In the first quarter of 2023, the Company acquired Vesta Modular, a portfolio company of Kinderhook Industries, that is a leading provider of temporary and permanent modular space solutions, and the assets of Brekke Storage, that is a regional provider of portable storage solutions in the Colorado market.

In the first half of 2023, the Company acquired Vesta Modular, a portfolio company of Kinderhook Industries, that is a leading provider of temporary and permanent modular space solutions, the assets of Brekke Storage, that is a regional provider of portable storage solutions in the Colorado market, and the assets of Dixie Storage, a regional provider of portable storage solutions in the South Carolina market.

We anticipate that we will continue to consider acquisitions in the future that meet our strategic growth plans.

32 unchanged sentences

If we do not realize the expected benefits of any divestiture transaction, our consolidated financial position, results of operations and cash flows could be negatively impacted.

In addition, divestitures of businesses involve a number of risks, including significant costs and expenses, the loss of customer relationships and a decrease in revenues and

earnings associated with the divested business.

In addition, divestitures of businesses involve a number of risks, including significant costs and expenses, the loss of customer relationships and a decrease in revenues and earnings associated with the divested business.

Furthermore, divestitures potentially involve significant post-closing separation activities, which could involve the expenditure of material financial resources and significant employee resources.

1 unchanged sentence

If we determine that our goodwill and intangible assets have become impaired, we may incur impairment charges, which would negatively impact our operating results.

At March 31, 2023, we had $391.9 million of goodwill and intangible assets, net, on our consolidated balance sheets.

At June 30, 2023, we had $391.0 million of goodwill and intangible assets, net, on our consolidated balance sheets.

Goodwill represents the excess of cost over the fair value of net assets acquired in business combinations.

27 unchanged sentences

Modular asset management requires designing and building the product for a long life that anticipates the needs of our customers, including anticipating potential changes in legislation, regulations, building codes and local permitting in the various markets in which the Company operates.

Electronic test equipment asset management requires understanding, selecting and investing in equipment technologies that support market demand, including anticipating

technological advances and changes in manufacturers’

Electronic test equipment asset management requires understanding, selecting and investing in equipment technologies that support market demand, including anticipating technological advances and changes in manufacturers’

selling prices.

9 unchanged sentences

properties or at third party landfill and disposal sites.

These liabilities can be imposed on the parties generating, transporting or disposing of such substances or on the owner or operator of any affected property, often without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous substances.

These liabilities can be imposed on the parties generating, transporting or disposing of such substances or on the owner or operator of any

affected property, often without regard to whether the owner or operator knew of, or was responsible for, the presence of hazardous substances.

Several aspects of our businesses involve risks of environmental and health and safety liability.

24 unchanged sentences

Even if the outcome of a claim proves favorable to us, litigation can be time consuming and costly and may divert management resources.

In addition, our

organizational documents require us to indemnify our senior executives to the maximum extent permitted by California law.

In addition, our organizational documents require us to indemnify our senior executives to the maximum extent permitted by California law.

We maintain directors’

8 unchanged sentences

We believe our insurance policies have adequate limits and deductibles to mitigate the potential loss exposure of our business.

We do not maintain financial reserves for policy deductibles and our insurance policies contain exclusions that are customary for our industry, including exclusions for earthquakes, flood and terrorism.

We do not maintain financial reserves for policy deductibles and our insurance policies contain exclusions that are customary for our industry, including

exclusions for earthquakes, flood and terrorism.

If any of our facilities or a significant amount of our rental equipment were to experience a catastrophic loss, it could disrupt our operations, delay orders, shipments and revenue recognition and result in expenses to repair or replace the damaged rental equipment and facility not covered by insurance, which could have a material adverse effect on our results of operations.

15 unchanged sentences

These interest rate adjustments could cause periodic fluctuations in our operating results and cash flows.

Our annual debt service obligations increase by approximately $5.6 million per year for each 1% increase in the average interest rate we pay based on the $558.8 million balance of variable rate debt outstanding at March 31, 2023.

Our annual debt service obligations increase by approximately $5.7 million per year for each 1% increase in the average interest rate we pay based on the $572.7 million balance of variable rate debt outstanding at June 30, 2023.

If interest rates rise in the future, and, particularly if they rise significantly, interest expense will increase and our net income will be negatively affected.

3 unchanged sentences

Since the Company’s effective tax rate depends on business levels, personnel and assets located in various jurisdictions, further expansion into new markets or acquisitions may change the effective tax rate in the future and may make it, and consequently our earnings, less predictable going forward.

Further, the enactment of future tax law changes by federal and state taxing authorities may impact the Company’s current

period tax provision and its deferred tax liabilities.

Further, the enactment of future tax law changes by federal and state taxing authorities may impact the Company’s current period tax provision and its deferred tax liabilities.

In addition, the amount and timing of stock-based compensation may also impact the Company’s current tax provision.

29 unchanged sentences

To the extent public school districts’

funding is reduced for the

rental and purchase of modular buildings, our business could be harmed and our results of operations negatively impacted.

funding is reduced for the rental and purchase of modular buildings, our business could be harmed and our results of operations negatively impacted.

We believe that interruptions or delays in the passage of facility bond measures or completion of state budgets, an insufficient amount of state funding, a significant reduction of funding to public schools, or changes negatively impacting enrollment may reduce the rental and sale demand for our educational products.

3 unchanged sentences

School districts with class sizes in excess of state limits have been and continue to be a significant source of our demand for modular classrooms.

In California, efforts to address aging infrastructure and deferred maintenance have resulted in modernization and reconstruction projects by public school districts including seismic retrofitting, asbestos abatement and various building repairs and upgrades, which has been another source of demand for our modular classrooms.

In California, efforts to address aging infrastructure and

deferred maintenance have resulted in modernization and reconstruction projects by public school districts including seismic retrofitting, asbestos abatement and various building repairs and upgrades, which has been another source of demand for our modular classrooms.

The most recent economic recession caused state and local budget shortfalls, which reduced school districts’

54 unchanged sentences

Some of our competitors in the modular building leasing industry, notably WillScot Mobile Mini Holdings Corp, have a greater range of products and services, greater financial and marketing resources, larger customer bases, and greater name recognition than we have.

These combined competitors may be better able to respond to changes in the relocatable modular building market, to finance acquisitions, to fund internal growth and to compete for market share, any of which could harm our business.

These competitors may be better able to respond to changes in the relocatable modular building market, to finance acquisitions, to fund internal growth and to compete for market share, any of which could harm our business.

We may not be able to quickly redeploy modular units returning from leases, which could negatively affect our financial performance and our ability to expand, or utilize, our rental fleet.

As of March 31, 2023, 60% of our modular portfolio had equipment on rent for periods exceeding the original committed term.

As of June 30, 2023, 61% of our modular portfolio had equipment on rent for periods exceeding the original committed term.

Generally, when a customer continues to rent the modular units beyond the contractual term, the equipment rents on a month-to-month basis.

92 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors