What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-10-24 compared with 2024-07-25 · 167 added, 154 removed, 446 unchanged (42% of the section changed)

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

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.

In the nine months ended September 30, 2024, Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex contributed 69%, 17%, 11% and 3% of the Company’s income from continuing operations before provision for taxes (the equivalent of “pretax income”), respectively, compared to 60%, 23%, 18% and negative 1% 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.

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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 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 rental operations include rental and rental related service revenues which comprised approximately 71% and 74% of consolidated revenues from continuing operations in the nine months ended September 30, 2024 and 2023, respectively.

Of the total continuing rental operations revenues for the nine months ended September 30, 2024, Mobile Modular, Portable Storage and TRS-RenTelco comprised 69%, 14% and 17%, respectively, compared to 64%, 16% and 20%, 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).

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

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.

For the nine months ended September 30, 2024 and 2023, sales and other revenues of modular, container and electronic test equipment comprised approximately 29% and 26% of the Company’s consolidated revenues from continuing operations, respectively.

Of the total sales and other revenues from continuing operations for the nine months ended September 30, 2024 and 2023, Mobile Modular and Enviroplex together comprised 85% and 82%, respectively, Portable Storage comprised 3% in both periods, and TRS-RenTelco comprised 12% and 16%, 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.

Selling and administrative expenses primarily include personnel and benefit costs, which include share-based compensation, depreciation and amortization, bad debt expense, advertising costs, and professional service fees.

Transaction costs incurred by the Company attributed to the terminated Merger Agreement with WillScot Mobile Mini were considered non-operating and excluded from Selling and administrative expenses.

The Company believes that sharing of common facilities, financing, senior management, and operating and accounting systems by all of the Company’s operations results in an efficient use of overhead.

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Recent Developments

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

On January 28, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with WillScot Mobile Mini Holdings Corp., a Delaware corporation (“WillScot Mobile Mini”), Brunello Merger Sub I, Inc., a California corporation and a direct wholly owned subsidiary of WillScot Mobile Mini and Brunello Merger Sub II, LLC, a Delaware limited liability company and direct wholly owned subsidiary of WillScot Mobile Mini.

The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Merger Sub I will merge with and into the Company (the “First-Step Merger”), with the Company surviving the First-Step Merger and, immediately thereafter, the Company will merge with and into Merger Sub II (the “Second-Step Merger” and together with the First-Step Merger, the “Transaction”), with Merger Sub II surviving the Second-Step Merger as a wholly owned subsidiary of WillScot Mobile Mini.

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, 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 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.

Mutual Decision to Terminate Merger Agreement with WillScot Mobile Mini

As previously disclosed, on January 28, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), with WillScot Mobile Mini Holdings Corp., a Delaware corporation ("WillScot Mobile Mini”), Brunello Merger Sub I, Inc., a California corporation and a direct wholly owned subsidiary of WillScot Mobile Mini, and Brunello Merger Sub II, LLC, a Delaware limited liability company and direct wholly owned subsidiary of WillScot Mobile Mini.

On September 17, 2024, the Company and WillScot Mobile Mini agreed to terminate the Merger Agreement effective upon WillScot Mobile Mini's cash payment of $180.0 million to the Company, which was received on September 20, 2024.

On September 9, 2024, the Company announced that the Board of Directors declared a quarterly cash dividend of $0.475 per common share for the quarter ended September 30, 2024, an increase of 2% over the prior year’s comparable quarter.

Results of Operations

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 June 30, 2024, on a consolidated basis from continuing operations:

Three Months Ended September 30, 2024 Compared to

Three Months Ended September 30, 2023

Consolidated revenues for the three months ended September 30, 2024, increased 10% to $266.8 million, from $243.5 million for the same period in 2023.

Consolidated net income for the three months ended September 30, 2024, increased $109.0 to $149.3 million, from $40.4 million for the same period in 2023.

Earnings per diluted share for the three months ended September 30, 2024, increased by $4.43 to $6.08, compared to $1.65 for the same period in 2023.

The increase in consolidated net income and earnings per diluted share during the period was primarily attributed to the $180.0 million gain on merger termination, partly offset by $39.4 million in transaction costs attributed to the terminated Merger Agreement, net of provision for income taxes.

Excluding the gain and transaction costs attributed to the merger termination in the current year, the Company's net income increased by approximately $5.5 million, or 14%, to $45.9 million, and diluted earnings per share increased $0.22, or 13%, to $1.87.

There was no revenue, income or earnings per share from discontinued operations for the three months ended September 30, 2024 and 2023.

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

• Gross profit increased $12.4 million, or 11%, to $124.0 million in 2024.

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

Mobile Modular’s gross profit increased $13.8 million, or 18%, primarily due to higher gross profit on rental, sales and rental related services revenues.

Portable Storage's gross profit decreased $2.2 million, or 13%, 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.

TRS-RenTelco’s gross profit decreased $1.6 million, or 10%, primarily due to lower gross profit on rental revenues.

Enviroplex’s gross profit increased $2.5 million, due to higher sales revenue and an increase in sales margins 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.

• Selling and administrative expenses increased 2% to $49.3 million.

During the period ended September 30, 2024, the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant and required separate presentation on the condensed consolidated statements of income.

Due to this determination, the Company has excluded the transaction costs incurred by the Company from Selling and administrative expenses for all reportable business segments for the period ended September 30, 2024.

• Interest expense increased $1.6 million to $12.6 million, which was primarily attributed to $86.2 million higher average debt levels of the Company and a higher effective interest rate in 2024 of 6.63%, compared to 6.52% for the same period in 2023.

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.

The 13% increase in average debt when compared to 2023 was primarily the result of the funding of rental equipment purchases and transaction costs regarding the terminated merger with WillScot Mobile Mini.

• Pre-tax income contribution by Mobile Modular, Portable Storage and TRS-RenTelco was 71%, 12% and 9%, respectively, compared to 70%, 15% and 13%, respectively, for the comparable 2023 period.

These results are discussed on a segment basis below.

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.

Enviroplex pre-tax income contribution was 5% and 2% in 2024 and 2023, respectively.

• The provision for income taxes resulted in an effective tax rate of 26.4% and 27.3%, for the quarters ended September 30, 2024 and 2023, respectively.

• Adjusted EBITDA increased $12.2 million, or 13%, to $104.0 million in 2024.

Mobile Modular

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.

For the three months ended September 30, 2024, Mobile Modular’s total revenues increased $23.0 million, or 14%, to $191.4 million compared to the same period in 2023, primarily due to higher sales, rental related services and rental revenues.

The revenue increase, together with higher gross profit on rental, sales and rental related services revenues, partly offset by $2.2 million higher selling and administrative expenses, resulted in a $6.9 million increase in pre-tax income to $45.8 million for the three months ended September 30, 2024, from $38.9 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.

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Three Months Ended

September 30,

Increase (Decrease)

13 unchanged sentences

Selling and administrative expenses 5

Other income, net

Income from operations

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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.

During the period ended September 30, 2024, the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant.

Due to this determination, the Company reclassified $29.5 million in transaction costs from Selling and administrative expenses in 2024, and reported such expenses separately under the Corporate segment.

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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:

Mobile Modular’s gross profit for the three months ended September 30, 2024, increased $13.3 million, or 17%, to $89.8 million.

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

• Gross Profit on Rental Revenues – Rental revenues increased $6.7 million, or 9%, due to 5% higher average rental equipment on rent and 4% higher average monthly rental rates in 2024.

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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 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.

The increase in revenues coupled with higher gross margin percentage of 35% in 2024, compared to 33% in 2023, resulted in rental related services gross profit increasing $3.6 million, or 32%, to $15.0 million in 2024.

• Gross Profit on Sales – Sales revenues increased $8.3 million, or 14%, compared to 2023, due to higher new equipment sales.

The higher gross margin percentage of 34% in 2024 compared to 32% in 2023, together with higher sales revenue, resulted in gross profit on sales increasing $3.7 million, or 20%, to $22.4 million.

The higher gross profit on sales in 2024 was primarily due to higher new equipment 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 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.

For the three months ended September 30, 2024, selling and administrative expenses increased $2.2 million, or 7%, to $34.0 million.

Portable Storage

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.

For the three months ended September 30, 2024, Portable Storage’s total revenues decreased $3.0 million, or 11%, to $23.1 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, partly offset by lower selling and administrative expenses, resulted in a decrease in pre-tax income of $1.0 million, or 12%, to $7.4 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.

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Three Months Ended

September 30,

Increase (Decrease)

13 unchanged sentences

Selling and administrative expenses 5

Other income, net

Income from operations

15 unchanged sentences

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.

During the period ended September 30, 2024, the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant.

Due to this determination, the Company reclassified $3.5 million in transaction costs from Selling and administrative expenses in 2024, and reported such expenses separately under the Corporate segment.

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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.

Portable Storage’s gross profit for the three months ended September 30, 2024, decreased $1.8 million, or 10%, to $15.5 million.

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

• Gross Profit on Rental Revenues – Rental revenues decreased $2.2 million, or 11%, due to 12% lower average rental equipment on rent.

As a percentage of rental revenues, depreciation was 6% and 5% in 2024 and 2023, respectively, and other direct costs were 8% and 11% in 2024 and 2023, respectively, which resulted in gross margin percentage of 86% in 2024 and 84% in 2023.

The lower rental revenues and higher rental margins resulted in gross profit on rental revenues decreasing $1.5 million, or 9%, to $14.7 million in 2024.

• Gross Profit on Rental Related Services – Rental related services revenues was $4.4 million, compared to $5.3 million during the same period in 2023.

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The lower revenues coupled with lower gross margins in 2024, resulted in rental related services gross profit decreasing $0.3 million, when compared to 2023.

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

• Gross Profit on Sales – Sales revenues increased $0.3 million to $1.4 million, primarily due to higher used equipment sales.

The higher sales revenues and increased gross margins of 36% in 2024, compared to 32% in 2023, resulted in sales gross profit increasing $0.1 million, or 40%, to $0.5 million in 2024.

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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.

For the three months ended September 30, 2024, Portable Storage’s selling and administrative expenses decreased $1.2 million, or 15%, to $6.8 million.

For the three months ended September 30, 2024, TRS-RenTelco’s total revenues decreased $4.3 million to $34.8 million, compared to the same period in 2023, primarily due to lower rental and sales revenues.

Lower gross profit on rental revenues, partly offset by higher gross profit on sales and lower selling and administrative expenses, resulted in a 21% decrease in pre-tax income to $5.7 million for the three months ended September 30, 2024, from $7.3 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.

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Three Months Ended

September 30,

Increase (Decrease)

13 unchanged sentences

Selling and administrative expenses 5

Other income, net

Income from operations

Interest expense allocation

Foreign currency exchange loss

Foreign currency exchange (gain) loss

Pre-tax income

13 unchanged sentences

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.

During the period ended September 30, 2024, the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant.

Due to this determination, the Company reclassified $6.4 million in transaction costs from Selling and administrative expenses in 2024, and reported such expenses separately under the Corporate segment.

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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.

TRS-RenTelco’s gross profit for the three months ended September 30, 2024 decreased $1.6 million, or 10%, to $14.1 million.

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

• Gross Profit on Rental Revenues – Rental revenues decreased $3.0 million, or 10%, depreciation expense decreased $1.2 million, or 10%, and other direct costs increased by $0.3 million, or 5%, resulting in a 18% decrease in gross profit on rental revenues to $9.4 million.

As a percentage of rental revenues, depreciation was 42% in both 2024 and 2023 and other direct costs were 21% and 18%, in 2024 and 2023, respectively, which resulted in a gross margin percentage of 37% and 40% in 2024 and 2023, respectively.

The decrease in rental revenues was primarily due to a 9% reduction in average rental equipment on rent and 1% lower average monthly rental rates in 2024, as compared to 2023.

• Gross Profit on Sales – Sales revenues decreased $1.1 million, or 13%, to $7.6 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.

Gross profit on sales increased $0.8 million, or 27%, to $3.9 million, with a higher gross margin percentage of 52% in 2024, compared to 35% in 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 the three months ended September 30, 2024, selling and administrative expenses decreased $0.4 million, or 5%, to $6.6 million.

Nine Months Ended September 30, 2024 Compared to

Nine Months Ended September 30, 2023

Consolidated revenues for the nine months ended September 30, 2024, increased 9% to $667.2 million, from $610.3 million for the same period in 2023.

Consolidated net income for the nine months ended September 30, 2024, increased $50.2 million to $192.8 million, from $142.6 million for the same period in 2023.

Earnings per diluted share for the nine months ended September 30, 2024, increased by $2.04 to $7.85, compared to $5.81 for the same period in 2023.

The increase in consolidated net income and earnings per diluted share during the period was primarily attributed to the $180.0 million gain on merger termination, partly offset by $61.2 million in transaction costs attributed to the terminated merger agreement.

Excluding the gain and transaction costs attributed to the merger termination in the current year and the gain on sale of discontinued operations in 2023, the Company's net income increased by approximately $25.4 million, or 32%, to $105.2 million, and diluted earnings per share increased $1.03, or 32%, to $4.28.

There were no revenues from discontinued operations for the nine months ended September 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 nine months ended September 30, 2024.

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:

For the nine months ended September 30, 2024, on a consolidated basis from continuing operations:

• Gross profit increased $37.2 million, or 13%, to $320.7 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.

Mobile Modular’s gross profit increased $39.7 million, or 22%, largely due to higher gross profit on rental, sales and rental related services revenues.

Portable Storage's gross profit decreased $1.8 million, or 4%, primarily due to lower gross profit on rental related services and rental revenues.

TRS-RenTelco’s gross profit decreased $6.2 million, or 13%, primarily due to lower gross profit on rental revenues.

Enviroplex’s gross profit increased $5.5 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.

• Selling and administrative expenses decreased $4.3 million to $148.8 million, primarily due to $14.3 million in transaction costs incurred by the Company in 2023, attributed to the acquisitions of Vesta Modular, Brekke Storage, Dixie Storage and Inland Leasing, and the divestiture of Adler Tanks, partly offset by an increase in employee salaries and benefit costs of $5.1 million in 2024.

• Interest expense increased $9.9 million to $38.4 million, which was primarily attributed to $138.7 million higher average debt levels of the Company and a higher effective interest rate in 2024 of 6.60%, compared to 5.96% 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.

The 22% 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 terminated merger with WillScot Mobile Mini.

• Pre-tax income contribution by Mobile Modular, Portable Storage and TRS-RenTelco was 69%, 17% and 11%, respectively, compared to 60%, 23% and 18%, respectively, for the comparable 2023 period.

1 unchanged sentence

Enviroplex pre-tax income contribution was 3% and negative 1% 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 provision for income taxes resulted in an effective tax rate of 26.3% and 24.5%, for the periods ended September 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.

1 unchanged sentence

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.

For the nine months ended September 30, 2024, Mobile Modular’s total revenues increased $51.9 million, or 13%, to $463.5 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 $34.3 million increase in pre-tax income to $98.3 million for the nine months ended September 30, 2024, from $64.0 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)

Mobile Modular – Nine Months Ended 9/30/24 compared to Nine Months Ended 9/30/23 (Unaudited)

(dollar amounts in thousands)

Six Months Ended

Nine Months Ended

September 30,

Increase (Decrease)

31 unchanged sentences

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.

The Company reported such expenses separately under the Corporate segment and excluded such costs from Selling and administrative expenses.

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:

Mobile Modular’s gross profit for the nine months ended September 30, 2024, increased $39.2 million, or 21%, to $222.9 million.

For the nine months ended September 30, 2024, compared to the same period in 2023:

• Gross Profit on Rental Revenues – Rental revenues increased $26.4 million, or 13%, due to 10% higher average rental equipment on rent and 3% higher average monthly rental rates in 2024.

3 unchanged sentences

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.

The increase in revenues accompanied by comparable gross margin percentage of 34% in 2024, resulted in rental related services gross profit increasing $4.4 million, or 16%, to $32.5 million in 2024.

• Gross Profit on Sales – Sales revenues increased $14.3 million, or 13%, compared to 2023, due to higher new and used equipment sales.

The higher gross margin percentage of 35% in 2024 compared to 32% in 2023, together with higher sales revenue, resulted in gross profit on sales increasing $7.4 million, or 20%, to $44.1 million.

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

The higher gross margin on sales in 2024 was primarily due to higher margins on both new and used equipment 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.

For the nine months ended September 30, 2024, selling and administrative expenses decreased $0.5 million to $100.9 million, when compared to the same period in 2023.

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.

For the nine months ended September 30, 2024, Portable Storage’s total revenues decreased $2.4 million, or 3%, to $71.8 million compared to the same period in 2023, primarily due to lower rental related services and rental revenues, partly offset by higher sales revenues.

Lower gross profit on rental related services and rental revenues, coupled with a $1.3 million allocated net gain on the sale of a corporate property, resulted in a comparable pre-tax income of $23.9 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)

Portable Storage – Nine Months Ended 9/30/24 compared to Nine Months Ended 9/30/23 (Unaudited)

(dollar amounts in thousands)

Six Months Ended

Nine Months Ended

September 30,

Increase (Decrease)

31 unchanged sentences

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.

The Company reported such expenses separately under the Corporate segment and excluded such costs from Selling and administrative expenses.

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.

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 86% in both 2024 and 2023.

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.

Portable Storage’s gross profit for the nine months ended September 30, 2024, decreased $1.3 million, or 3%, to $48.9 million.

For the nine months ended September 30, 2024, compared to the same period in 2023:

• Gross Profit on Rental Revenues – Rental revenues decreased $1.5 million, or 3%, due to 5% 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 8% and 10% in 2024 and 2023, respectively, which resulted in gross margin percentage of 86% and 85% in 2024 and 2023, respectively.

The lower rental revenues and higher rental margins resulted in gross profit on rental revenues decreasing $0.6 million, or 1%, to $46.0 million in 2024.

• Gross Profit on Rental Related Services – Rental related services revenues was $13.8 million, a decrease of $1.6 million compared to 2023.

2 unchanged sentences

• Gross Profit on Sales – Sales revenues increased $1.0 million, primarily due to higher used equipment sales.

The higher sales revenues and lower gross margins of 40% in 2024, compared to 42% in 2023, resulted in sales gross profit increasing $0.3 million, or 36%, to $1.0 million in 2024.

The higher sales revenues and higher gross margins of 39% in 2024, compared to 38% in 2023, resulted in sales gross profit increasing $0.4 million, or 37%, to $1.5 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 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.

For the nine months ended September 30, 2024, Portable Storage’s selling and administrative expenses decreased $1.2 million when compared to the same period in 2023.

The reduction in selling and administrative expenses was primarily the result of allocated transaction costs of $1.1 million in 2023, attributed to the acquisitions of Vesta Modular, Brekke Storage, Dixie Storage and Inland Leasing, and the divestiture of Adler Tanks.

For the nine months ended September 30, 2024, TRS-RenTelco’s total revenues decreased $11.8 million to $101.2 million, compared to the same period in 2023, primarily due to lower rental and sales 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 13% decrease in pre-tax income to $16.2 million for the nine months ended September 30, 2024, from $18.6 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 – Six Months Ended 6/30/24 compared to Six Months Ended 6/30/23 (Unaudited)

TRS-RenTelco – Nine Months Ended 9/30/24 compared to Nine Months Ended 9/30/23 (Unaudited)

(dollar amounts in thousands)

Six Months Ended

Nine Months Ended

September 30,

Increase (Decrease)

16 unchanged sentences

Interest expense allocation

Foreign currency exchange loss (gain)

Foreign currency exchange gain

Pre-tax income

13 unchanged sentences

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.

The Company reported such expenses separately under the Corporate segment and excluded such costs from Selling and administrative expenses.

nm = Not meaningful

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:

TRS-RenTelco’s gross profit for the nine months ended September 30, 2024 decreased $6.2 million, or 13%, to $40.9 million.

For the nine months ended September 30, 2024 compared to the same period in 2023:

• Gross Profit on Rental Revenues – Rental revenues decreased $10.0 million, or 12%, depreciation expense decreased $3.2 million, or 9%, and other direct costs decreased by $0.5 million, or 3%, resulting in a 19% decrease in gross profit on rental revenues to $27.5 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 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.

• Gross Profit on Sales – Sales revenues decreased $1.1 million, or 5%, to $20.3 million in 2024.

Gross profit on sales was $10.9 million, an increase of $0.9 million when compared to 2023, with a gross margin percentage of 54% in 2024, up from 47% in 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 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.

For the nine months ended September 30, 2024, selling and administrative expenses decreased $3.1 million, or 13%, to $20.5 million, when compared to the same period in 2023.

The reduction in selling and administrative expenses was primarily the result of allocated transaction costs of $1.4 million in 2023, attributed to the acquisitions of Vesta Modular, Brekke Storage, Dixie Storage and Inland Leasing, and the divestiture of Adler Tanks.

Adjusted EBITDA

To supplement the Company’s financial data presented on a basis consistent with accounting principles generally accepted in the United States of America (“GAAP”), the Company presents “Adjusted EBITDA”, which is defined by the Company as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs and gains on property sales.

The Company presents Adjusted EBITDA as a financial measure as management believes it provides useful information to investors regarding the Company’s liquidity and financial condition and because management, as well as the Company’s lenders, use this measure in evaluating the performance of the Company.

4 unchanged sentences

Adjusted EBITDA is not in accordance with or an alternative for GAAP and may be different from non−GAAP measures used by other companies.

Unlike EBITDA, which may be used by other companies or investors, Adjusted EBITDA does not include share-based compensation charges, transaction costs and gains on property sales.

Unlike EBITDA, which may be used by other companies or investors, Adjusted EBITDA does not include share-based compensation charges, transaction costs, gains on property sales and non-operating transactions.

The Company believes that Adjusted EBITDA is of limited use in that it does not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and does not accurately reflect real cash flow.

7 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Twelve Months Ended

September 30,

Income from continuing operations

5 unchanged sentences

Other income, net 4

Gain on merger termination from WillScot Mobile Mini 5

Adjusted EBITDA 1

Adjusted EBITDA margin 2

Adjusted EBITDA is defined as income from operations before interest expense, provision for income taxes, depreciation, amortization, share-based compensation, transaction costs and other income, net.

Adjusted EBITDA is defined as income from operations before interest expense, provision for income taxes, depreciation, amortization, share-based compensation, other income, net and non-operating transactions.

Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenues for the period.

1 unchanged sentence

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

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 gain on merger termination from WillScot Mobile Mini was considered a non-operating transaction and is excluded from Adjusted EBITDA.

For the nine months ended September 30, 2024, total Adjusted EBITDA from both continuing and discontinued operations was $259.7 million, compared to $234.2 million for the same period in 2023, excluding the gain on sale of the divestiture of Adler Tanks.

For the nine months ended September 30, 2024 and 2023, the total Adjusted EBITDA from continuing operations was $259.7 million

and $230.5 million, respectively.

There were no adjusted earnings from discontinued operations during the nine months ended September 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

September 30,

Nine Months Ended

September 30,

Twelve Months Ended

September 30,

Adjusted EBITDA 1

10 unchanged sentences

Net cash provided by operating activities

Adjusted EBITDA is defined as income from operations before interest expense, provision for income taxes, depreciation, amortization, share-based compensation and transaction costs.

Adjusted EBITDA is defined as income from operations before interest expense, provision for income taxes, depreciation, amortization, share-based compensation and non-operating transactions.

Adjusted EBITDA is a component of two restrictive financial covenants for the Company’s unsecured Credit Facility, the Note Purchase Agreement, Series D Senior Notes, Series E Senior Notes and Series F Senior Notes (as defined and more fully described under the heading “Liquidity and Capital Resources” in this MD&A).

1 unchanged sentence

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

At September 30, 2024, the actual ratio was 3.07 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 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.

At September 30, 2024, the actual ratio was 1.75 to 1.

At September 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 six months ended June 30, 2024 compared to the same period in 2023 are summarized as follows:

Cash flows for the Company for the nine months ended September 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 $337.6 million in 2024, compared to $118.9 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.

The $218.7 million increase in net cash provided by operating activities was primarily attributable to the gain on merger termination from WillScot Mobile Mini after transaction costs, which provided $87.6 million of net income during the period.

Further, operating activities provided for a $61.9 million increase in deferred income taxes, a $29.1 million reduction in accounts receivable and a $25.4 million reduction in prepaid expenses and other assets, which contributed to the net cash provided by operating activities during the period.

Cash Flows from Investing Activities:

Net cash used in investing activities was $140.8 million in 2024, down from $331.5 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 $190.7 million decrease in net cash used was primarily due to the $461.8 million paid for the business acquisitions of Vesta Modular, Brekke Storage, Dixie Storage and Inland Leasing 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 $193.8 million in net cash used by investing activities.

Cash Flows from Financing Activities:

Net cash provided by financing activities was $3.8 million in 2024, compared to $230.0 million in 2023.

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, Brekke Storage and Dixie Storage business acquisitions.

Net cash used in financing activities was $193.6 million in 2024, compared to $213.6 million in net cash provided during 2023.

The $407.2 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, Brekke Storage, Dixie Storage and Inland Leasing business acquisitions.

Further, during the 2024 period the Company made net payments of $154.4 million under bank lines of credit, primarily attributable to proceeds received from the merger termination with WillScot Mobile Mini.

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, 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 Credit Facility provides for a $650.0 million unsecured revolving credit facility (which may be further increased to $950.0 million, of which as of September 30, 2024, $73.0 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.

12 unchanged sentences

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.

At September 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 $360.6 million was outstanding and had capacity to borrow up to an additional $289.4

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

At September 30, 2024, the actual ratio was 3.07 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 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.

At September 30, 2024, the actual ratio was 1.75 to 1.

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

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

At September 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 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):

At September 30, 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):

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

At September 30, 2024, the actual ratio was 3.07 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 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.

At September 30, 2024, the actual ratio was 1.75 to 1.

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

Although no assurance can be given, the Company believes it will continue to be able to negotiate general bank lines of credit and issue senior notes adequate to meet capital requirements not otherwise met by operational cash flows and proceeds from sales of rental equipment.

Common Stock Purchase

The Company has in the past made purchases of shares of its common stock from time to time in over-the-counter market (NASDAQ) transactions, through privately negotiated, large block transactions and through a share repurchase plan, in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.

In August 2015, the Company’s Board of Directors authorized the Company to repurchase up to 2,000,000 shares of the Company's outstanding common stock (the “Repurchase Plan”).

The amount and time of the specific repurchases are subject to prevailing market conditions, applicable legal requirements and other factors, including management’s discretion.

All shares repurchased by the Company are canceled and returned to the status of authorized but unissued shares of common stock.

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 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 six month period ended June 30, 2024.

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

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

2 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 2. Management’s Discussion and Analysis