What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-07-25 compared with 2024-04-25 · 281 added, 96 removed, 319 unchanged (54% of the section changed)

14 unchanged sentences

and (4) its classroom manufacturing business selling modular buildings used primarily as classrooms in California (“Enviroplex”).

In the three months ended March 31, 2024, Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex contributed 61%, 27%, 15% and negative 3% of the Company’s income from continuing operations before provision for taxes (the equivalent of “pretax income”), respectively, compared to 18%, 52%, 37% and negative 7% for the same period in 2023.

In the six months ended June 30, 2024, Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex contributed 62%, 24%, 12% and 2% of the Company’s income from continuing operations before provision for taxes (the equivalent of “pretax income”), respectively, compared to 50%, 31%, 23% and negative 4% for the same period in 2023.

The Company generates its revenues primarily from the rental of its equipment on operating leases and from sales of equipment occurring in the normal course of business.

18 unchanged sentences

Electronic test equipment revenues are primarily affected by the business activity within these industries related to research and development, manufacturing, and communication infrastructure installation and maintenance.

The Company’s rental operations include rental and rental related service revenues which comprised approximately 80% and 84% of consolidated revenues from continuing operations in the three months ended March 31, 2024 and 2023, respectively.

Of the total continuing rental operations revenues for the three months ended March 31, 2024, Mobile Modular, Portable Storage and TRS-RenTelco comprised 67%, 15% and 18%, respectively, compared to 62%, 16% and 22%, respectively, in the same period of 2023.

The Company’s rental operations include rental and rental related service revenues which comprised approximately 75% and 79% of consolidated revenues from continuing operations in the six months ended June 30, 2024 and 2023, respectively.

Of the total continuing rental operations revenues for the six months ended June 30, 2024, Mobile Modular, Portable Storage and TRS-RenTelco comprised 68%, 15% and 17%, respectively, compared to 63%, 16% and 21%, respectively, in the same period of 2023.

The Company’s direct costs of rental operations include depreciation of rental equipment, rental related service costs, impairment of rental equipment (if applicable), and other direct costs of rental operations (which include direct labor, supplies, repairs, insurance, property taxes, license fees, cost of sub-rentals and amortization of certain lease costs).

1 unchanged sentence

In addition, Enviroplex sells new modular buildings used primarily as classrooms in California.

For the three months ended March 31, 2024 and 2023, sales and other revenues of modular, container and electronic test equipment comprised approximately 20% and 16% of the Company’s consolidated revenues from continuing operations, respectively.

Of the total sales and other revenues from continuing operations for the three months ended March 31, 2024 and 2023, Mobile Modular and Enviroplex together comprised 74% and 73%, respectively, Portable Storage comprised 6% and 4%, respectively, and TRS-RenTelco comprised 20% and 23%, respectively.

For the six months ended June 30, 2024 and 2023, sales and other revenues of modular, container and electronic test equipment comprised approximately 25% and 21% of the Company’s consolidated revenues from continuing operations, respectively.

Of the total sales and other revenues from continuing operations for the six months ended June 30, 2024 and 2023, Mobile Modular and Enviroplex together comprised 81% and 78%, respectively, Portable Storage comprised 4% and 3%, respectively, and TRS-RenTelco comprised 15% and 19%, respectively.

The Company’s cost of sales includes the carrying value of the equipment sold and the direct costs associated with the equipment sold, such as delivery, installation, modifications and related site work.

4 unchanged sentences

Recent Developments

On February 21, 2024, the Company announced that the Board of Directors declared a quarterly cash dividend of $0.475 per common share for the quarter ended March 31, 2024, an increase of 2% over the prior year’s comparable quarter.

On June 5, 2024, the Company announced that the Board of Directors declared a quarterly cash dividend of $0.475 per common share for the quarter ended June 30, 2024, an increase of 2% over the prior year’s comparable quarter.

Proposed Acquisition by WillScot Mobile Mini

2 unchanged sentences

On the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the First-Step Merger (the “Effective Time”), each share of common stock, no par value, of the Company (“Company Common Stock”) issued and outstanding immediately prior to the Effective Time, other than shares of Company Common Stock owned by WillScot Mobile Mini or any subsidiary of WillScot Mobile Mini or the Company, and shares held by shareholders who did not vote in favor of the Transaction (or consent thereto in writing) and who are entitled to demand and properly demands appraisal of such shares, will be automatically converted into the right to receive either (1) $123 in cash or (2) 2.8211 shares of validly issued, fully paid and nonassessable shares of common stock, par value $0.0001, of WillScot Mobile Mini (“WillScot Mobile Mini Common Stock”), as determined pursuant to the election and allocation procedures set forth in the Merger Agreement.

The consummation of the Transaction is subject to certain closing conditions, including (i) the approval of the Company’s shareholders, (ii) the expiration or termination of all waiting periods applicable to the transactions contemplated by the Merger Agreement under the Hart-Scott Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), (iii) the absence of any order by any governmental authorities or other legal restraint or prohibition preventing the consummation of the transactions contemplated by the Merger Agreement, (iv) the effectiveness of the Merger Proxy Statement (as defined below) filed with SEC relating to the registration of shares of WillScot Mobile Mini Common Stock to be issued to the Company’s shareholders pursuant to the Merger Agreement and (v) other customary conditions specified in the Merger Agreement.

The parties have submitted their respective filings under the HSR Act with the U.S.

Department of Justice and the Federal

Trade Commission as contemplated by the Merger Agreement.

The consummation of the Transaction is subject to certain closing conditions, including (i) the approval of the Company’s shareholders, which was obtained on July 11, 2024, (ii) the expiration or termination of all waiting periods applicable to the transactions contemplated by the Merger Agreement under the Hart-Scott Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), relating to which WillScot Mobile Mini and the Company have committed to the Federal Trade Commission that they would not close the Transaction prior to September 27, 2024, (iii) the absence of any order by any governmental authorities or other legal restraint or prohibition preventing the consummation of the transactions contemplated by the Merger Agreement, (iv) the effectiveness of the Merger Proxy Statement (as defined below) filed with SEC relating to the registration of shares of WillScot Mobile Mini Common Stock to be issued to the Company’s shareholders pursuant

to the Merger Agreement, which was granted on June 7, 2024, and (v) other customary conditions specified in the Merger Agreement.

The closing of the Transaction is not subject to any financing condition.

For additional information regarding the Transaction, please refer to the Company’s current report on Form 8-K and Amendment No.

1 on Form 8-K/A, each filed with the SEC on January 29, 2024, as well as the preliminary Registration Statement on S-4/Proxy Statement filed by WillScot Mobile Mini with the SEC on April 8, 2024 (the “Merger Proxy Statement”).

1 on Form 8-K/A, each filed with the SEC on January 29, 2024, as well as the special proxy statement filed by the Company with the SEC on June 10, 2024 (the “Merger Proxy Statement”).

Because the Transaction is not yet complete, and except as otherwise specifically stated, the descriptions and disclosures presented elsewhere in this Form 10-Q assume the continuation of the Company as a public company.

Results of Operations

Three Months Ended March 31, 2024 Compared to

Three Months Ended March 31, 2023

Consolidated revenues for the three months ended March 31, 2024, increased 8% to $187.8 million, from $173.2 million for the same period in 2023.

Consolidated net income for the three months ended March 31, 2024, increased 79% to $22.8 million, from $12.8 million for the same period in 2023, excluding the gain on sale of discontinued operations from the divestiture of Adler Tanks.

Earnings per diluted share for the three months ended March 31, 2024, decreased by $1.99 to $0.93, compared to $2.92 for the same period in 2023.

The reduction in earnings per diluted share during the current period was attributed to the prior period gain on sale of discontinued operations, which previously contributed $2.40 to the earnings per diluted share in 2023.

During the three months ended March 31, 2024, the Company sold a property, resulting in a net gain of $9.3 million, which was recorded in Other income, net, and contributed $0.28 in earnings per diluted share.

The increase in consolidated net income during the current period was primarily attributed to the property sale and higher gross profit from Mobile Modular.

There were no revenues from discontinued operations for the three months ended March 31, 2024, compared to $9.4 million for the same period in 2023.

There was no income or earnings per diluted share from discontinued operations for the three months ended March 31, 2024.

Income from discontinued operations for the same period in 2023 was $60.1 million, which included the $58.9 million gain on sale of discontinued operations, and earnings per diluted share from discontinued operations for the three months ended March 31, 2023 was $2.45.

Three Months Ended June 30, 2024 Compared to

Three Months Ended June 30, 2023

Consolidated revenues for the three months ended June 30, 2024, increased 5% to $212.6 million, from $203.0 million for the same period in 2023.

Consolidated net income for the three months ended June 30, 2024, decreased 33% to $20.6 million, from $30.6 million for the same period in 2023.

Earnings per diluted share for the three months ended June 30, 2024, decreased by $0.41 to $0.84, compared to $1.25 for the same period in 2023.

The reduction in earnings per diluted share during the current period was primarily attributed to $14.3 million higher selling and administrative expenses, which included $12.4 million in transaction costs attributed to the pending Willscot Mobile Mini merger.

There was no revenue, income or earnings per share from discontinued operations for the three months ended June 30, 2024.

There were no revenues from discontinued operations for the three months ended June 30, 2023, and income from discontinued operations of $2.6 million, primarily attributed to final working capital adjustments from the divestiture of Adler Tanks.

Earnings per diluted share from discontinued operations for the three months ended June 30, 2023 was $0.11.

For additional information on discontinued operations and the divestiture of Adler Tanks, refer to Note 5 of the condensed consolidated financial statements.

For the three months ended March 31, 2024, on a consolidated basis from continuing operations:

For the three months ended June 30, 2024, on a consolidated basis from continuing operations:

• Gross profit increased $8.8 million, or 9%, to $103.4 million in 2024.

Mobile Modular’s gross profit increased $15.7 million, or 34%, largely due to higher gross profit on rental revenues.

Portable Storage's gross profit increased $1.7 million, or 11%, primarily due to higher gross profit on rental revenues.

TRS-RenTelco’s gross profit decreased $1.7 million, or 11%, primarily due to lower gross profit on rental revenues.

Mobile Modular’s gross profit increased $10.2 million, or 17%, largely due to higher gross profit on rental and sales revenues.

Portable Storage's gross profit decreased $1.2 million, or 7%, primarily due to lower gross profit on rental and rental related services revenues.

TRS-RenTelco’s gross profit decreased $2.9 million, or 18%, primarily due to lower gross profit on rental and sales revenues.

Enviroplex’s gross profit increased $2.7 million, due to higher sales revenue and an increase in sales margins in 2024.

• Selling and administrative expenses increased $2.3 million to $59.8 million, primarily due to an increase in employees' salaries and benefit costs of $3.8 million, partly offset by a $2.2 million decrease in marketing and administrative costs.

Included in marketing and administrative costs was $14.1 million in Vesta acquisition and Adler divestiture related transaction costs in 2023 and $9.4 million in transaction costs attributed to the pending merger with WillScot Mobile Mini in 2024.

• Selling and administrative expenses increased $14.3 million to $61.4 million, primarily due to $12.4 million in transaction costs, which were included in marketing and administrative costs, attributed to the pending merger with WillScot Mobile Mini and an increase in employees' salaries and benefit costs of $2.6 million.

• Interest expense increased $3.1 million to $13.0 million, which was primarily attributed to $123.1 million higher average debt levels of the Company and a higher effective interest rate in 2024 of 6.57%, compared to 5.94% for the same period in 2023.

The 38% increase in average debt when compared to 2023 was primarily the result of the funding of business acquisitions during 2023, net of proceeds from the sale of discontinued operations.

The 18% increase in average debt when compared to 2023 was primarily the result of the funding of rental equipment purchases, taxes paid attributed to the gain on sale of discontinued operations and transaction costs regarding the pending merger with WillScot Mobile Mini.

• Pre-tax income contribution by Mobile Modular, Portable Storage and TRS-RenTelco was 65%, 21% and 8%, respectively, compared to 61%, 24% and 18%, respectively, for the comparable 2023 period.

These results are discussed on a segment basis below.

Enviroplex pre-tax income contribution was negative 3% and negative 7% in 2024 and 2023, respectively.

• The provision for income taxes resulted in an effective tax rate of 23.6% and 23.8%, for the quarters ended March 31, 2024 and 2023, respectively.

Enviroplex pre-tax income contribution was 6% and negative 3% in 2024 and 2023, respectively.

• The provision for income taxes resulted in an effective tax rate of 28.8% and 25.7%, for the quarters ended June 30, 2024 and 2023, respectively.

• Adjusted EBITDA increased $6.7 million, or 9%, to $83.7 million in 2024.

Mobile Modular

For the three months ended March 31, 2024, Mobile Modular’s total revenues increased $23.7 million, or 23%, to $127.6 million compared to the same period in 2023, primarily due to higher rental, sales and rental related services revenues.

The revenue increase, together with higher gross profit on rental, sales and rental related services revenues, and a $6.2 million allocated net gain on the sale of a corporate property, resulted in a $15.9 million increase in pre-tax income to $18.2 million for the three months ended March 31, 2024, from $2.3 million for the same period in 2023.

For the three months ended June 30, 2024, Mobile Modular’s total revenues increased $5.7 million, or 4%, to $144.5 million compared to the same period in 2023, primarily due to higher rental and rental related services revenues, partly offset by lower sales revenues.

The revenue increase, together with higher gross profit on rental and sales revenues, partly offset by $11.2 million higher selling and administrative expenses, which included $9.0 million in allocated transaction costs attributed to the pending merger with WillScot Mobile Mini, resulted in a $3.9 million decrease in pre-tax income to $18.8 million for the three months ended June 30, 2024, from $22.8 million for the same period in 2023.

The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.

17 unchanged sentences

Selling and administrative expenses

Other income, net

Income from operations

16 unchanged sentences

nm = Not meaningful

Mobile Modular’s gross profit for the three months ended March 31, 2024, increased $15.7 million, or 34%, to $61.8 million.

For the three months ended March 31, 2024, compared to the same period in 2023:

Mobile Modular’s gross profit for the three months ended June 30, 2024, increased $10.2 million, or 17%, to $71.3 million.

For the three months ended June 30, 2024, compared to the same period in 2023:

• Gross Profit on Rental Revenues – Rental revenues increased $7.3 million, or 10%, due to 6% higher average rental equipment on rent and 4% higher average monthly rental rates in 2024.

As a percentage of rental revenues, depreciation was 13% and 14% in 2024 and 2023, respectively, and other direct costs were 30% in 2024 and 38% in 2023, which resulted in gross margin percentages of 57% in 2024, compared to 49% in 2023.

As a percentage of rental revenues, depreciation was 13% in both 2024 and 2023, and other direct costs were 27% in 2024 and 33% in 2023, which resulted in gross margin percentages of 60% in 2024, compared to 54% in 2023.

The higher rental revenues and higher rental margins, resulted in gross profit on rental revenues increasing $8.8 million, or 23%, to $46.8 million in 2024.

1 unchanged sentence

The increase in rental related services revenues was primarily attributable to higher delivery, return delivery and dismantle revenues and higher site related services.

The increase in revenues accompanied by higher gross margin percentage of 35% in 2024, compared to 34% in 2023, resulted in rental related services gross profit increasing $1.0 million, or 14%, to $8.4 million in 2024.

• Gross Profit on Sales – Sales revenues increased $8.4 million, or 49%, compared to 2023, due to higher new equipment sales.

The lower gross margin percentage of 31% in 2024 compared to 37% in 2023, together with higher sales revenue, resulted in gross profit on sales increasing $1.7 million, or 27%, to $7.9 million.

The lower gross margin on sales in 2024 was primarily due to a higher mix of new versus used sales.

The increase in revenues accompanied by lower gross margin percentage of 31% in 2024, compared to 34% in 2023, resulted in rental related services gross profit decreasing $0.3 million, or 3%, to $9.1 million in 2024.

• Gross Profit on Sales – Sales revenues decreased $2.3 million, or 6%, compared to 2023, due to lower new equipment sales.

The higher gross margin percentage of 38% in 2024 compared to 31% in 2023, together with lower sales revenue, resulted in gross profit on sales increasing $2.0 million, or 17%, to $13.8 million.

The higher gross margin on sales in 2024 was primarily due to a higher mix of used versus new sales.

Sales occur routinely as a normal part of Mobile Modular’s rental business;

however, these sales and related gross margins can fluctuate from quarter to quarter and year to year depending on customer requirements, the scope of work to be performed, equipment availability and funding.

For the three months ended March 31, 2024, selling and administrative expenses increased $1.6 million, or 4%, to $40.1 million.

For the three months ended June 30, 2024, selling and administrative expenses increased $11.2 million, or 36%, to $42.3 million.

Included within selling and administrative expenses was $11.3 million higher allocated corporate costs, which included $9.0 million in allocated transaction costs from the pending merger with WillScot Mobile Mini.

In addition, 2023 included $7.5 million in Vesta acquisition related transaction costs, which did not recur in 2024.

Employee salaries and benefit costs increased $2.0 million, or 16%, in 2024.

Portable Storage

For the three months ended March 31, 2024, Portable Storage’s total revenues increased $2.0 million, or 9%, to $24.8 million compared to the same period in 2023, primarily due to higher rental and sales revenues.

Higher gross profit on rental and sales revenues, and a $1.7 million allocated net gain on the sale of a corporate property, partly offset by $1.0 million higher selling and administrative expenses, resulted in an increase in pre-tax income of $1.5 million, or 23%, to $8.0 million in 2024.

For the three months ended June 30, 2024, Portable Storage’s total revenues decreased $1.4 million, or 6%, to $24.0 million compared to the same period in 2023, primarily due to lower rental and rental related services revenues.

Lower gross profit on rental and rental related services revenues, coupled with $1.7 million higher selling and administrative expenses, which included $1.4 million of allocated transaction costs attributed to the pending merger with WillScot Mobile Mini, resulted in a decrease in pre-tax income of $3.1 million, or 34%, to $6.0 million in 2024.

The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.

17 unchanged sentences

Selling and administrative expenses

Other income, net

Income from operations

16 unchanged sentences

nm = Not meaningful

Portable Storage’s gross profit for the three months ended March 31, 2024, increased $1.7 million, or 11%, to $17.1 million.

For the three months ended March 31, 2024, compared to the same period in 2023:

Portable Storage’s gross profit for the three months ended June 30, 2024, decreased $1.2 million, or 7%, to $16.3 million.

For the three months ended June 30, 2024, compared to the same period in 2023:

• Gross Profit on Rental Revenues – Rental revenues decreased $0.7 million, or 4%, due to 6% lower average rental equipment on rent, partly offset by 3% higher average monthly rental rates in 2024.

As a percentage of rental revenues, depreciation was 6% and 5% in 2024 and 2023, respectively, and other direct costs were 9% in both 2024 and 2023, which resulted in gross margin percentage of 86% in both 2024 and in 2023.

The lower rental revenues and comparable rental margins resulted in gross profit on rental revenues decreasing $0.6 million, or 4%, to $15.3 million in 2024.

• Gross Profit on Rental Related Services – Rental related services revenues was $4.6 million, compared to $5.4 million during the same period in 2023.

The gross margin on rental related services revenues was 4% in 2024, compared to 13% in 2023.

The lower revenues coupled with lower gross margins in 2024, resulted in rental related services gross profit decreasing $0.5 million, when compared to 2023.

• Gross Profit on Sales – Sales revenues increased $0.2 million, primarily due to higher used equipment sales.

The higher sales revenues and increased gross margins of 43% in 2024, compared to 38% in 2023, resulted in sales gross profit increasing $0.1 million, or 31%, to $0.6 million in 2024.

Sales occur routinely as a normal part of Portable Storage’s rental business;

however, these sales can fluctuate from period to period depending on customer requirements, equipment availability and funding.

For the three months ended June 30, 2024, Portable Storage’s selling and administrative expenses increased $1.7 million, or 23%, to $8.9 million, primarily due to $1.3 million higher allocated corporate costs, which included $1.4 million in allocated transaction costs attributed to the pending WillScot Mobile Mini merger, and $0.3 million higher employee salary and benefit costs.

For the three months ended June 30, 2024, TRS-RenTelco’s total revenues decreased $5.2 million to $32.7 million, compared to the same period in 2023, primarily due to lower rental and sales revenues.

Lower gross profit on rental and sales revenues, coupled with higher selling and administrative expenses, which included $1.9 million in allocated transaction costs attributed to the pending merger with WillScot Mobile Mini, resulted in a 65% decrease in pre-tax income to $2.4 million for the three months ended June 30, 2024, from $6.7 million for the same period in 2023.

The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.

TRS-RenTelco – Three Months Ended 6/30/24 compared to Three Months Ended 6/30/23 (Unaudited)

(dollar amounts in thousands)

Three Months Ended

Increase (Decrease)

Rental related services

Rental operations

Total revenues

Costs and Expenses

Direct costs of rental operations:

Depreciation of rental equipment

Rental related services

Total direct costs of rental operations

Costs of sales

Total costs of revenues

Rental related services

Rental operations

Total gross profit

Selling and administrative expenses

Income from operations

Interest expense allocation

Foreign currency exchange loss

Pre-tax income

Other Selected Information

Adjusted EBITDA

Average rental equipment 1

Average rental equipment on rent

Average monthly total yield 2

Average utilization 3

Average monthly rental rate 4

Period end rental equipment 1

Period end utilization 3

Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.

Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment, for the period.

Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new rental equipment inventory and accessory equipment.

Average utilization for the period is calculated using the average month end costs of rental equipment.

Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent, for the period.

nm = Not meaningful

TRS-RenTelco’s gross profit for the three months ended June 30, 2024 decreased $2.9 million, or 18%, to $13.0 million.

For the three months ended June 30, 2024 compared to the same period in 2023:

• Gross Profit on Rental Revenues – Rental revenues decreased $3.3 million, or 11%, depreciation expense decreased $1.1 million, or 9%, and other direct costs decreased by $0.4 million, or 6%, resulting in a 16% decrease in gross profit on rental revenues to $9.0 million.

As a percentage of rental revenues, depreciation was 44% and 43% in 2024 and 2023, respectively, and other direct costs were 20% and 19%, in 2024 and 2023, respectively, which resulted in a gross margin percentage of 36% and 38% in 2024 and 2023, respectively.

The decrease in rental revenues was primarily due to a 10% reduction in average rental equipment on rent and 2% lower average monthly rental rates in 2024, as compared to 2023.

• Gross Profit on Sales – Sales revenues decreased $1.7 million, or 22%, to $5.8 million in 2024.

Gross profit on sales decreased $1.0 million, or 23%, to $3.1 million, with a comparable gross margin percentage of 54% in 2024 and 2023.

Sales occur as a normal part of TRS-RenTelco’s rental business;

however, these sales and related gross margins can fluctuate from quarter to quarter depending on customer requirements and related mix of equipment sold, equipment availability and funding.

For the three months ended June 30, 2024, selling and administrative expenses increased $1.4 million, or 19%, to $8.5 million.

The increase was primarily due to $1.5 million higher allocated corporate expenses, which includes $1.9 million in transaction costs attributed to the pending merger with WillScot Mobile Mini.

Six Months Ended June 30, 2024 Compared to

Six Months Ended June 30, 2023

Consolidated revenues for the six months ended June 30, 2024, increased 6% to $400.4 million, from $376.2 million for the same period in 2023.

Consolidated net income for the six months ended June 30, 2024, increased 7% to $43.5 million, from $40.7 million for the same period in 2023, excluding the gain on sale of discontinued operations from the divestiture of Adler Tanks.

Earnings per diluted share for the six months ended June 30, 2024, decreased by $2.40 to $1.77, compared to $4.17 for the same period in 2023.

The reduction in total earnings per diluted share was primarily attributed to the prior period gain on sale of discontinued operations, which contributed $2.40 to earnings per diluted share in 2023.

During the six months ended June 30, 2024, the Company sold a property, resulting in a net gain of $9.3 million, which was recorded in Other income, net, and contributed $0.28 in earnings per diluted share.

The increase in consolidated net income during the current period, excluding the gain on sale of discontinued operations, was primarily attributed to the property sale and higher gross profit from Mobile Modular, partly offset by $21.7 million in transaction costs attributed to the pending merger with WillScot Mobile Mini.

There were no revenues from discontinued operations for the six months ended June 30, 2024, compared to $9.4 million for the same period in 2023.

There was no income or earnings per diluted share from discontinued operations for the six months ended June 30, 2024.

Income from discontinued operations for the same period in 2023 was $62.8 million, which included the $61.5 million net gain on sale of discontinued operations, and earnings per diluted share from discontinued operations for the six months ended June 30, 2023 was $2.56.

For additional information on discontinued operations and the divestiture of Adler Tanks, refer to Note 5 of the condensed consolidated financial statements.

For the six months ended June 30, 2024, on a consolidated basis from continuing operations:

• Gross profit increased $24.7 million, or 14%, to $196.7 million in 2024.

Mobile Modular’s gross profit increased $25.9 million, or 24%, largely due to higher gross profit on rental and sales revenues.

Portable Storage's gross profit increased $0.4 million, or 1%, primarily due to higher gross profit on rental revenues.

TRS-RenTelco’s gross profit decreased $4.7 million, or 15%, primarily due to lower gross profit on rental revenues.

Enviroplex’s gross profit increased $3.1 million, due to higher sales revenue and an increase in sales margins in 2024.

• Selling and administrative expenses increased $16.7 million to $121.2 million, primarily due to an increase in marketing and administrative costs of $9.3 million.

Included in marketing and administrative costs was $21.7 million in transaction costs attributed to the pending merger with WillScot Mobile Mini in 2024 and $14.3 million in business acquisition and Adler divestiture related transaction costs in 2023.

In addition, salaries and benefit costs increased $5.0 million in 2024.

• Interest expense increased $8.3 million to $25.7 million, which was primarily attributed to $165.3 million higher average debt levels of the Company and a higher effective interest rate in 2024 of 6.59%, compared to 5.77% for the same period in 2023.

The 27% increase in average debt when compared to 2023 was primarily the result of the funding of rental equipment purchases, taxes paid attributed to the gain on sale of discontinued operations and transaction costs regarding the pending merger with WillScot Mobile Mini.

• Pre-tax income contribution by Mobile Modular, Portable Storage and TRS-RenTelco was 62%, 24% and 12%, respectively, compared to 50%, 31% and 23%, respectively, for the comparable 2023 period.

These results are discussed on a segment basis below.

Enviroplex pre-tax income contribution was 2% and negative 4% in 2024 and 2023, respectively.

• The provision for income taxes resulted in an effective tax rate of 26.2% and 21.5%, for the periods ended June 30, 2024 and 2023, respectively.

The increase in effective tax rate during the current period was largely attributed to increased business activity in higher tax rate states.

• Adjusted EBITDA increased $17.0 million, or 12%, to $155.7 million in 2024.

Mobile Modular

For the six months ended June 30, 2024, Mobile Modular’s total revenues increased $29.4 million, or 12%, to $272.1 million compared to the same period in 2023, primarily due to higher rental, sales and rental related services revenues.

The revenue increase, together with higher gross profit on rental, sales and rental related services revenues, and a $6.2 million allocated net gain on the sale of a corporate property, resulted in a $11.9 million increase in pre-tax income to $37.0 million for the six months ended June 30, 2024, from $25.1 million for the same period in 2023.

The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.

Mobile Modular – Six Months Ended 6/30/24 compared to Six Months Ended 6/30/23 (Unaudited)

(dollar amounts in thousands)

Six Months Ended

Increase (Decrease)

Rental related services

Rental operations

Total revenues

Costs and Expenses

Direct costs of rental operations:

Depreciation of rental equipment

Rental related services

Total direct costs of rental operations

Costs of sales

Total costs of revenues

Rental related services

Rental operations

Total gross profit

Selling and administrative expenses

Other income, net

Income from operations

Interest expense allocation

Pre-tax income

Other Selected Information

Adjusted EBITDA

Average rental equipment 1

Average rental equipment on rent

Average monthly total yield 2

Average utilization 3

Average monthly rental rate 4

Period end rental equipment 1

Period end utilization 3

Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.

Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment, for the period.

Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new equipment inventory and accessory equipment.

Average utilization for the period is calculated using the average month end costs of rental equipment.

Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent, for the period.

nm = Not meaningful

Mobile Modular’s gross profit for the six months ended June 30, 2024, increased $25.9 million, or 24%, to $133.1 million.

For the six months ended June 30, 2024, compared to the same period in 2023:

• Gross Profit on Rental Revenues – Rental revenues increased $19.7 million, or 15%, due to 13% higher average rental equipment on rent and 2% higher average monthly rental rates in 2024.

As a percentage of rental revenues, depreciation was 5% in both 2024 and 2023, and other direct costs were 8% and 10% in 2024 and 2023, respectively, which resulted in gross margin percentage of 87% in 2024 compared to 85% in 2023.

As a percentage of rental revenues, depreciation was 13% in both 2024 and 2023, and other direct costs were 28% in 2024 and 35% in 2023, which resulted in gross margin percentages of 59% in 2024, compared to 51% in 2023.

The higher rental revenues and higher rental margins, resulted in gross profit on rental revenues increasing $21.5 million, or 31%, to $90.7 million in 2024.

• Gross Profit on Rental Related Services – Rental related services revenues was $4.7 million, unchanged from 2023.

• Gross Profit on Rental Related Services – Rental related services revenues increased $3.7 million, or 7%, compared to 2023.

The increase in rental related services revenues was primarily attributable to higher delivery, return delivery and dismantle revenues and higher site related services.

The increase in revenues accompanied by lower gross margin percentage of 33% in 2024, compared to 34% in 2023, resulted in rental related services gross profit increasing $0.7 million, or 4%, to $17.4 million in 2024.

• Gross Profit on Sales – Sales revenues increased $6.0 million, or 11%, compared to 2023, due to higher new and used equipment sales.

The higher gross margin percentage of 35% in 2024 compared to 33% in 2023, together with higher sales revenue, resulted in gross profit on sales increasing $3.7 million, or 21%, to $21.7 million.

The higher gross margin on sales in 2024 was primarily due to a higher mix of new versus used sales.

Sales occur routinely as a normal part of Mobile Modular’s rental business;

For the six months ended June 30, 2024, selling and administrative expenses increased $12.8 million, or 18%, to $82.4 million.

Included within selling and administrative expenses was $17.2 million higher allocated corporate costs, which included $15.5 million in allocated transaction costs attributed to the pending merger with WillScot Mobile Mini.

In addition, 2023 included $7.6 million in Vesta acquisition related transaction costs and $5.4 million in allocated divestiture transaction costs, which did not recur in 2024.

Portable Storage

For the six months ended June 30, 2024, Portable Storage’s total revenues increased $0.6 million, or 1%, to $48.8 million compared to the same period in 2023, primarily due to higher sales and rental revenues, partly offset by lower rental related services revenues.

Higher gross profit on rental and sales revenues, coupled with a $1.3 million allocated net gain on the sale of a corporate property, partly offset by $2.6 million higher selling and administrative expenses, which included $2.6 million in allocated transaction costs attributed to the pending merger with WillScot Mobile Mini, resulted in a decrease in pre-tax income of $1.6 million, or 10%, to $14.0 million in 2024.

The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.

Portable Storage – Six Months Ended 6/30/24 compared to Six Months Ended 6/30/23 (Unaudited)

(dollar amounts in thousands)

Six Months Ended

Increase (Decrease)

Rental related services

Rental operations

Total revenues

Costs and Expenses

Direct costs of rental operations:

Depreciation of rental equipment

Rental related services

Total direct costs of rental operations

Costs of sales

Total costs of revenues

Rental related services

Rental operations

Total gross profit

Selling and administrative expenses

Other income, net

Income from operations

Interest expense allocation

Pre-tax income

Other Selected Information

Adjusted EBITDA

Average rental equipment 1

Average rental equipment on rent

Average monthly total yield 2

Average utilization 3

Average monthly rental rate 4

Period end rental equipment 1

Period end utilization 3

Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.

Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment, for the period.

Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new rental equipment inventory and accessory equipment.

Average utilization for the period is calculated using the average month end costs of rental equipment.

Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent, for the period.

nm = Not meaningful

Portable Storage’s gross profit for the six months ended June 30, 2024, increased $0.4 million, or 1%, to $33.4 million.

For the six months ended June 30, 2024, compared to the same period in 2023:

• Gross Profit on Rental Revenues – Rental revenues increased $0.7 million, or 2%, due to 4% higher average monthly rental rates, partly offset by 2% lower average rental equipment on rent in 2024.

The higher rental revenues and comparable rental margins resulted in gross profit on rental revenues increasing $0.9 million, or 3%, to $31.3 million in 2024.

• Gross Profit on Rental Related Services – Rental related services revenues was $9.4 million, a decrease of $0.7 million compared to 2023.

The gross margin on rental related services revenues was 5% in 2024, compared to 10% in 2023.

The comparable revenues coupled with lower gross margins in 2024, resulted in rental related services gross profit decreasing $0.1 million, when compared to 2023.

The lower revenues coupled with lower gross margins in 2024, resulted in rental related services gross profit decreasing $0.6 million, when compared to 2023.

• Gross Profit on Sales – Sales revenues increased $0.7 million, primarily due to higher used equipment sales.

2 unchanged sentences

however, these sales can fluctuate from period to period depending on customer requirements, equipment availability and funding.

For the three months ended March 31, 2024, Portable Storage’s selling and administrative expenses increased $1.0 million, or 12%, to $9.0 million, primarily due to $0.3 million higher allocated corporate costs and $0.3 million higher marketing and administrative costs.

For the three months ended March 31, 2024, TRS-RenTelco’s total revenues decreased $2.4 million to $33.8 million, compared to the same period in 2023, primarily due to lower rental revenues, partly offset by higher sales revenues.

Lower gross profit on rental revenues and higher gross profit on sales revenues and a $1.7 million allocated net gain on the sale of a corporate property, resulted in a 3% decrease in pre-tax income to $4.5 million for the three months ended March 31, 2024, from $4.7 million for the same period in 2023.

For the six months ended June 30, 2024, Portable Storage’s selling and administrative expenses increased $2.6 million, or 17%, to $17.9 million, primarily due to $1.5 million higher allocated corporate costs, which included $2.6 million in allocated transaction costs attributed to the pending merger with WillScot Mobile Mini.

For the six months ended June 30, 2024, TRS-RenTelco’s total revenues decreased $7.5 million to $66.4 million, compared to the same period in 2023, primarily due to lower rental revenues.

Lower gross profit on rental revenues, partly offset by a $1.7 million allocated net gain on the sale of a corporate property, resulted in a 39% decrease in pre-tax income to $6.9 million for the six months ended June 30, 2024, from $11.3 million for the same period in 2023.

The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.

TRS-RenTelco – Three Months Ended 3/31/24 compared to Three Months Ended 3/31/23 (Unaudited)

TRS-RenTelco – Six Months Ended 6/30/24 compared to Six Months Ended 6/30/23 (Unaudited)

(dollar amounts in thousands)

Three Months Ended

Six Months Ended

Increase (Decrease)

13 unchanged sentences

Selling and administrative expenses

Other income, net

Income from operations

17 unchanged sentences

nm = Not meaningful

TRS-RenTelco’s gross profit for the three months ended March 31, 2024 decreased $1.8 million, or 11%, to $13.9 million.

For the three months ended March 31, 2024 compared to the same period in 2023:

TRS-RenTelco’s gross profit for the six months ended June 30, 2024 decreased $4.7 million, or 15%, to $26.8 million.

For the six months ended June 30, 2024 compared to the same period in 2023:

• Gross Profit on Rental Revenues – Rental revenues decreased $7.0 million, or 12%, depreciation expense decreased $2.0 million, or 8%, and other direct costs decreased by $0.7 million, or 7%, resulting in a 19% decrease in gross profit on rental revenues to $18.1 million.

1 unchanged sentence

The decrease in rental revenues was primarily due to a 10% reduction in average rental equipment on rent and 2% lower average monthly rental rates in 2024, as compared to 2023.

• Gross Profit on Sales – Sales revenues increased $1.7 million, or 33%, to $6.8 million in 2024.

Gross profit on sales increased $1.0 million, or 34%, to $3.9 million, with a higher gross margin percentage of 57% in 2024, compared to 56% in 2023.

• Gross Profit on Sales – Sales revenues were comparable at $12.7 million in 2024.

Gross profit on sales was $7.0 million, unchanged from 2023, with a gross margin percentage of 55% in 2024, unchanged from 2023.

Sales occur as a normal part of TRS-RenTelco’s rental business;

however, these sales and related gross margins can fluctuate from quarter to quarter depending on customer requirements and related mix of equipment sold, equipment availability and funding.

For the three months ended March 31, 2024, selling and administrative expenses decreased $0.5 million, or 6%, to $8.9 million.

The decrease was primarily due to $0.4 million lower allocated corporate expenses.

For the six months ended June 30, 2024, selling and administrative expenses increased $0.9 million, or 5%, to $17.4 million.

The increase was primarily due to $1.1 million higher allocated corporate expenses, which included $3.6 million in allocated transaction costs attributed to the pending merger with WillScot Mobile Mini.

Adjusted EBITDA

16 unchanged sentences

Three Months Ended

Six Months Ended

Twelve Months Ended

12 unchanged sentences

Other income, net consists of net gains on property, plant and equipment sales that are infrequent in nature and excluded from Adjusted EBITDA.

As of March 31, 2024, total Adjusted EBITDA from both continuing and discontinued operations was $72.1 million, compared to $65.4 million for the same period in 2023, excluding the gain on sale of the divestiture of Adler Tanks.

For the three months ended March 31, 2024 and 2023, the total Adjusted EBITDA from continuing operations was $72.1 million and $61.8 million, respectively.

There were no adjusted earnings from discontinued operations during the first quarter of 2024 and total Adjusted EBITDA from discontinued operations of $3.7 million during the comparable period in 2023.

For the six months ended June 30, 2024, total Adjusted EBITDA from both continuing and discontinued operations was $155.7 million, compared to $142.4 million for the same period in 2023, excluding the gain on sale of the divestiture of Adler Tanks.

For the six months ended June 30, 2024 and 2023, the total Adjusted EBITDA from continuing operations was $155.7 million and $138.7 million, respectively.

There were no adjusted earnings from discontinued operations during the six months ended June 30, 2024, and total Adjusted EBITDA from discontinued operations of $3.7 million during the comparable period in 2023.

The following table reconciles Adjusted EBITDA on a combined basis, including both continuing and discontinued operations, to the net cash provided by operating activities on the Company's condensed consolidated statement of cash flows.

2 unchanged sentences

Three Months Ended

Six Months Ended

Twelve Months Ended

15 unchanged sentences

• Permit the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Facility and the Note Purchase Agreement (as defined and more fully described under the heading “Liquidity and Capital Resources” in this MD&A)) of Adjusted EBITDA (as defined in the Credit Facility and the Note Purchase Agreement) to fixed charges as of the end of any fiscal quarter to be less than 2.50 to 1.

At March 31, 2024, the actual ratio was 3.11 to 1.

At June 30, 2024, the actual ratio was 3.08 to 1.

• Permit the Consolidated Leverage Ratio of funded debt (as defined in the Credit Facility and the Note Purchase Agreement) to Adjusted EBITDA at any time during any period of four consecutive quarters to be greater than 2.75 to 1.

At March 31, 2024, the actual ratio was 2.43 to 1.

At March 31, 2024, the Company was in compliance with each of the aforementioned covenants.

At June 30, 2024, the actual ratio was 2.37 to 1.

At June 30, 2024, the Company was in compliance with each of the aforementioned covenants.

There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, although, significant deterioration in our financial performance could impact the Company’s ability to comply with these covenants.

1 unchanged sentence

The Company’s rental businesses are capital intensive and generate significant cash flows.

Cash flows for the Company for the three months ended March 31, 2024 compared to the same period in 2023 are summarized as follows:

Cash flows for the Company for the six months ended June 30, 2024 compared to the same period in 2023 are summarized as follows:

Cash Flows from Operating Activities:

The Company’s operations provided net cash of $59.4 million in 2024, compared to net cash provided of $35.7 million in 2023.

The $23.7 million increase in net cash provided by operating activities was primarily attributable to a $50.2 million change in deferred income taxes, partly offset by a $22.4 million decrease in accounts payable, primarily due to lower income taxes payable.

The Company’s operations provided net cash of $138.6 million in 2024, compared to $71.5 million in 2023.

The $67.1 million increase in net cash provided by operating activities was primarily attributable to a $51.1 million change in deferred income taxes, a $13.9 million increase in deferred income and a $10.2 million decrease in accounts receivable, partly offset by a $6.2 million increase in purchased inventories.

Cash Flows from Investing Activities:

Net cash used in investing activities was $78.1 million in 2024, compared to $263.5 million in 2023.

The $185.4 million decrease in net cash used was primarily due to the $453.6 million paid for the business acquisitions of Vesta Modular and Brekke Storage in the first quarter of 2023, which was partly offset by $262.4 million in proceeds from the sale of discontinued operations during the same period.

Net cash used in investing activities was $133.9 million in 2024, down from $300.2 million in 2023.

The $166.3 million decrease in net cash used was primarily due to the $456.3 million paid for the business acquisitions of Vesta Modular, Brekke Storage and Dixie Storage acquisitions in 2023, which was partly offset by $268.0 million in proceeds from the sale of discontinued operations during the same period.

The net effect of these transactions in 2023 was $188.3 million in net cash used by investing activities.

2 unchanged sentences

The $226.2 million change was primarily attributable to reduced borrowings under bank lines of credit and note

purchase agreements in 2024, as during 2023 the net borrowings were required for the funding of the Vesta Modular and Brekke Storage business acquisitions.

purchase agreements in 2024, as during 2023 the net borrowings were required for the funding of the Vesta Modular, Brekke Storage and Dixie Storage business acquisitions.

Significant capital expenditures are required to maintain and grow the Company’s rental assets.

5 unchanged sentences

On July 15, 2022, the Company entered into an amended and restated credit agreement with Bank of America, N.A., as Administrative Agent, Swing Line Lender, L/C Issuer and lender, and other lenders named therein (the “Credit Facility”).

The Credit Facility provides for a $650.0 million unsecured revolving credit facility (which may be further increased to $950.0 million by adding one or more tranches of term loans and/or increasing the aggregate revolving commitments), which includes a $40.0 million sublimit for the issuance of standby letters of credit and a $20.0 million sublimit for swingline loans.

The Credit Facility provides for a $650.0 million unsecured revolving credit facility (which may be further increased to $950.0 million, of which $75.0 million was utilized through the term loan entered on April 23, 2024, by adding one or more tranches of term loans and/or increasing the aggregate revolving commitments), which includes a $40.0 million sublimit for the issuance of standby letters of credit and a $20.0 million sublimit for swingline loans.

The proceeds of the Credit Facility are available to be used for general corporate purposes, including permitted acquisitions.

3 unchanged sentences

The Credit Facility matures on July 15, 2027 and replaced the Company’s prior $420.0 million credit facility dated March 31, 2020 with Bank of America, N.A., as agent, as amended.

All obligations outstanding under the prior credit facility as of the date of the Credit Facility were refinanced by the Credit Facility on July 15, 2022.

All obligations outstanding under the prior credit facility as of the date of the Credit Facility were refinanced by the Credit Facility on April 23, 2022.

On August 19, 2022, the Company entered into an amended and restated Credit Facility Letter Agreement and a Credit Line Note in favor of MUFG Union Bank, N.A., which provides for a $20.0 million line of credit facility related to its cash management services (“Sweep Service Facility”).

2 unchanged sentences

The Sweep Service Facility replaced the Company’s prior $12.0 million sweep service facility, dated as of March 30, 2020.

At March 31, 2024, under the Credit Facility and Sweep Service Facility, the Company had unsecured lines of credit that permit it to borrow up to $650.0 million of which $623.6 million was outstanding and had capacity to borrow up to an additional $26.4 million.

On April 23, 2024, the Company entered into a first incremental facility amendment with Bank of America, N.A., as Administrative Agent and the first incremental lender (“BoA”) and the guarantors named therein (the “First Incremental Amendment”).

The First Incremental Amendment amends the Second Amended and Restated Credit Agreement, dated as of July 15, 2022, as amended, by and among the Company, BoA, the other lenders named therein, and the guarantors named therein (the “Credit Agreement”) to institute an incremental term loan “A” facility in an aggregate principal amount of $75.0 million (the “Incremental Credit Facility”).

The proceeds from the Incremental Credit Facility were used for general corporate purposes.

Concurrently with entry into the First Incremental Amendment, the Company repaid revolving loans issued under the Credit Agreement in an aggregate amount equal to approximately $75.0 million.

At June 30, 2024, under the Credit Facility and Sweep Service Facility, the Company had unsecured lines of credit that permit it to borrow up to $650.0 million of which $544.3 million was outstanding and had capacity to borrow up to an additional $105.7 million.

The Credit Facility contains financial covenants requiring the Company to not (all defined terms used below not otherwise defined herein have the meaning assigned to such terms in the Credit Facility):

• Permit the Consolidated Fixed Charge Coverage Ratio as of the end of any fiscal quarter to be less than 2.50 to 1.

At March 31, 2024, the actual ratio was 3.11 to 1.

At June 30, 2024, the actual ratio was 3.08 to 1.

• Permit the Consolidated Leverage Ratio at any time during any period of four consecutive fiscal quarters to be greater than 2.75 to 1.

At March 31, 2024, the actual ratio was 2.43 to 1.

At March 31, 2024, the Company was in compliance with each of the aforementioned covenants.

At June 30, 2024, the actual ratio was 2.37 to 1.

At June 30, 2024, the Company was in compliance with each of the aforementioned covenants.

There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, although significant deterioration in our financial performance could impact the Company’s ability to comply with these covenants.

15 unchanged sentences

The full net proceeds from the Series F Senior Notes will primarily be used to fulfill the income tax obligations incurred from the divestiture of Adler Tanks.

At March 31, 2024, the principal balance outstanding under the Series F Senior Notes was $75.0 million.

At June 30, 2024, the principal balance outstanding under the Series F Senior Notes was $75.0 million.

2.57% Senior Notes Due in 2028

5 unchanged sentences

The full net proceeds from the Series D Senior Notes were used to pay off the Company’s $40 million Series B Senior Notes.

At March 31, 2024, the principal balance outstanding under the Series D Senior Notes was $40.0 million.

At June 30, 2024, the principal balance outstanding under the Series D Senior Notes was $40.0 million.

2.35% Senior Notes Due in 2026

5 unchanged sentences

The full net proceeds from the Series E Senior Notes were used to pay down the Company’s credit facility.

At March 31, 2024, the principal balance outstanding under the Series E Senior Notes was $60.0 million.

Among other restrictions, the Note Purchase Agreement, which has superseded in its entirety the Prior NPA, under which the Series D Senior Notes, Series E Senior Notes and Series F Senior Notes were sold, contains financial covenants requiring the Company to not (all defined terms used below not otherwise defined herein have the meaning assigned to such terms in the Note Purchase Agreement):

At June 30, 2024, the principal balance outstanding under the Series E Senior Notes was $60.0 million.

to not (all defined terms used below not otherwise defined herein have the meaning assigned to such terms in the Note Purchase Agreement):

• Permit the Consolidated Fixed Charge Coverage Ratio of EBITDA to fixed charges as of the end of any fiscal quarter to be less than 2.50 to 1.

At March 31, 2024, the actual ratio was 3.11 to 1.

At June 30, 2024, the actual ratio was 3.08 to 1.

• Permit the Consolidated Leverage Ratio of funded debt to EBITDA at any time during any period of four consecutive quarters to be greater than 2.75 to 1.

At March 31, 2024, the actual ratio was 2.43 to 1.

At March 31, 2024, the Company was in compliance with each of the aforementioned covenants.

At June 30, 2024, the actual ratio was 2.37 to 1.

At June 30, 2024, the Company was in compliance with each of the aforementioned covenants.

6 unchanged sentences

There can be no assurance that any authorized shares will be repurchased and the Repurchase Plan may be modified, extended or terminated by the Company’s Board of Directors at any time.

There were no shares repurchased in the three months ended March 31, 2024 and 2023.

As of March 31, 2024, 1,309,805 shares remained authorized for repurchase under the Repurchase Plan.

There were no shares repurchased in the six months ended June 30, 2024 and 2023.

As of June 30, 2024, 1,309,805 shares remained authorized for repurchase under the Repurchase Plan.

Contractual Obligations and Commitments

1 unchanged sentence

Critical Accounting Estimates

There were no material changes in our judgments and assumptions associated with the development of our critical accounting estimates during the period ended March 31, 2024.

There were no material changes in our judgments and assumptions associated with the development of our critical accounting estimates during the six month period ended June 30, 2024.

Refer to our 2023 Annual Report for a discussion of our critical accounting policies and estimates.

Subsequent Events

The proceeds from the Incremental Credit Facility will be used for general corporate purposes.

Concurrently with entry into the First Incremental Amendment, the Company repaid revolving loans issued under the Credit Agreement in an aggregate amount equal to approximately $75.0 million.

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

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 2. Management’s Discussion and Analysis