What changed in this filing

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Item 1A. Risk Factors

2025-02-19 compared with 2024-02-21 · 47 added, 95 removed, 362 unchanged (28% of the section changed)

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In that event, the market price for our common stock could decline, and you may lose all or part of your investment.

RISKS RELATED TO THE PROPOSED ACQUISITION BY WILLSCOT MOBILE MINI:

There are material uncertainties and risks associated with the proposed Transaction, including the timing of the consummation of the Transaction, which may adversely affect our business and ongoing operations, financial condition and results of operations, employees, customers, shareholders, other parties and business prospects, and a failure to complete the Transaction on the terms reflected in the Merger Agreement, if at all, could have a material and adverse effect on our business, financial condition, results of operations, cash flows and stock price.

• The announcement and pendency of the proposed Transaction may adversely affect our business, financial condition and results of operations.

• On January 28, 2024, we entered into the Merger Agreement with WillScot Mobile Mini.

Uncertainty about the effect of the proposed Transaction on our employees, customers, shareholders and other parties may have an adverse effect on our business, financial condition and results of operation regardless of whether the proposed Transaction is completed.

The risks to our business include the following, all of which could be exacerbated by a delay in the completion of the proposed Transaction:

• the impairment of our ability to attract, retain, and motivate our employees, including key personnel;

• the diversion of significant management time and resources towards the completion of the proposed Transaction;

• difficulties maintaining relationships with customers, suppliers, and other business partners;

• delays or deferments of certain business decisions by our customers, suppliers, and other business partners;

• the inability to pursue alternative business opportunities or make appropriate changes to our business because the Merger Agreement requires us to use reasonable best efforts to conduct our business in the ordinary course of business and not engage in certain kinds of transactions prior to the completion of the proposed Transaction;

• litigation relating to the proposed Transaction and the costs related thereto;

• the incurrence of significant costs, expenses, and fees for professional services and other transaction costs in connection with the proposed Transaction.

Additionally, in approving the Merger Agreement, our Board of Directors considered a number of factors and potential benefits, including the fact that the Transaction consideration to be received by holders of our common stock represented an approximate 10% premium over the Company’s closing stock price of $111.75 on January 26, 2024, the last full trading day prior to the announcement of the proposed Transaction.

If the Transaction is not completed, neither we nor the holders of our common stock may realize this benefit of the Transaction.

• Failure to consummate the proposed Transaction within the expected timeframe or at all could have a material adverse impact on our business, financial condition and results of operations.

There can be no assurance that the proposed Transaction will be consummated.

The consummation of the proposed Transaction is subject to certain regulatory approvals and customary closing conditions.

The obligation of each party to consummate the Transaction is also conditioned upon the other party’s representations and warranties being true and correct to the extent specified in the Merger Agreement and the other party having performed in all material respects its obligations under the Merger Agreement.

There can be no assurance that these and other conditions to closing will be satisfied in a timely manner or at all.

The Merger Agreement also includes customary termination provisions for both the Company and WillScot Mobile Mini, and we may be required to pay WillScot Mobile Mini a termination fee equal to $120 million in certain specified circumstances, including, among other circumstances, if WillScot Mobile Mini terminates the Merger Agreement following a Company Adverse Recommendation Change prior to receipt of Company Shareholder Approval (each as defined in the Merger Agreement) or (ii) the Company terminates the Merger Agreement to enter into an alternative acquisition agreement in respect of a Superior Proposal (as defined in the Merger Agreement).

If we are required to make this payment, doing so may materially adversely affect our business, financial condition and results of operations.

There can be no assurance that a remedy will be available to us in the event of a breach of the Merger Agreement by WillScot Mobile Mini or its affiliates or that we will wholly or partially recover for any damages incurred by us in connection with the proposed Transaction.

A failed transaction may result in negative publicity and a negative impression of us among our customers or in the investment community or business community generally.

Furthermore, any disruptions to our business resulting from the announcement and pendency of the proposed Transaction, including any adverse changes in our relationships with our customers, partners, suppliers and employees, could continue or accelerate in the event of a failed transaction.

In addition, if the proposed Transaction is not completed, and there are no other parties willing and able to acquire the Company at a price of $123.00 per share or higher, on terms acceptable to us, the share price of our common stock will likely decline to the extent that the current market price of our common stock reflects an assumption that the proposed Transaction will be completed.

Also, we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed Transaction, for which we will have received little or no benefit if the proposed Transaction is not completed.

Many of these fees and costs will be payable by us even if the proposed Transaction is not completed and may relate to activities that we would not have undertaken other than to complete the proposed Transaction.

• Prior to the completion of the Transaction or the termination of the Merger Agreement in accordance with its terms, we are prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to us and our shareholders.

After the date of the Merger Agreement and prior to the Effective Time, the Merger Agreement restricts us from taking specified actions without the consent of WillScot Mobile Mini (which consent may not be unreasonably withheld, conditioned or delayed) and requires that our business be conducted in all material respects in the ordinary course of business.

These restrictions may prevent us from making appropriate changes to our businesses or organizational structures or from pursuing attractive business opportunities that may arise prior to the completion of the Transaction and could have the effect of delaying or preventing other strategic transactions.

Adverse effects arising from the pendency of the Transaction could be exacerbated by any delays in consummation of the Transaction or termination of the Merger Agreement.

• The Transaction, including uncertainty regarding the Transaction, may cause customers, suppliers, distributors or strategic partners to delay or defer decisions, which could negatively affect our business and adversely affect our ability to effectively manage our business.

The Transaction will be consummated only if certain conditions are met.

Many of the conditions are outside of our control, and both we and WillScot Mobile Mini also have the right to terminate the Merger Agreement in certain circumstances.

Accordingly, there may be uncertainty regarding the completion of the Transaction.

This uncertainty may cause customers, suppliers, distributors, strategic partners or others that deal with us to delay or defer entering into contracts with us or making other decisions concerning us or seek to change or cancel existing business relationships, which could negatively affect our business.

Any delay or deferral of those decisions or changes in existing agreements could have a material adverse effect on our business, regardless of whether the Transaction is ultimately completed.

• The Transaction may cause difficulty in attracting, motivating and retaining employees.

Our current and prospective employees may experience uncertainty about their future role with the Company until strategies with regard to these employees are announced or executed, which may impair our ability to attract, retain and motivate key management, operational and customer-facing employees and other personnel prior to the Transaction.

If we are unable to retain and replace personnel, we could face disruptions in our operations, loss of existing customers, loss of key information, expertise or know-how, and unanticipated additional recruitment and training costs.

• The Merger Agreement limits our ability to pursue alternatives to the Transaction and may discourage other companies from trying to acquire us for greater consideration than what WillScot Mobile Mini has agreed to pay.

The Merger Agreement contains provisions that make it more difficult for us to sell our business to a company other than WillScot Mobile Mini.

These provisions include a general prohibition on us soliciting any acquisition proposal or offer for a competing transaction.

To date, no party has made an acquisition proposal following the execution of the Merger Agreement.

If we terminate the Merger Agreement in connection with our Board of Directors’ authorization for us to enter into a definitive agreement to consummate an alternative transaction contemplated by a Superior Proposal, we will be required to pay a termination fee of $120 million.

We may also be required to pay the $120 million termination fee if we or WillScot Mobile Mini terminate the Merger Agreement under certain other circumstances specified in the Merger Agreement.

These provisions might discourage a third party that has an interest in acquiring all or a significant part of the Company from considering or proposing an acquisition, even if the party were prepared to pay consideration with a higher per share cash or market value than the Merger Consideration, or

might result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.

• Stockholder litigation could result in substantial costs and may delay or prevent the Transaction from being completed.

In connection with the announcement of the Transaction, as is common in the context of mergers and acquisitions of publicly-traded companies, we (along with our directors and officers) may attract lawsuits seeking to enjoin us from proceeding with or consummating the Transaction, or seeking to have the Transaction rescinded after its consummation.

Defending against such claims, even those without merit, could result in substantial costs and divert management’s time and resources, which may negatively impact our financial condition and adversely affect our business and results of operations.

Such claims could prevent or delay the consummation of the Transaction, including through an injunction, and result in additional costs to us.

The ultimate resolution of any such lawsuit cannot be predicted, and an adverse ruling in any such lawsuit may cause the Transaction to be delayed or not to be completed, which could cause us not to realize some or all of the anticipated benefits of the Transaction.

RISKS RELATED TO OUR STRATEGY AND OPERATION:

RISKS RELATED TO OUR STRATEGY AND OPERATIONS:

Our future operating results may fluctuate, fail to match past performance or fail to meet expectations, which may result in a decrease in our stock price.

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• changes in, and application of, accounting rules;

• changes in the regulations applicable to our business operations;

• changes in the law and regulations applicable to our business operations;

• claims and litigation matters.

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• any sales of common stock by our directors, executive officers and our other large shareholders, particularly in light of the limited trading volume of our stock;

• any merger and acquisition activity that involves us or our competitors;

• any merger, acquisition or divestiture activity that involves us or our competitors;

• other announcements or developments affecting us, our industry, customers, suppliers or competitors.

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If we cannot successfully recruit and retain qualified personnel, our operating results and stock price may suffer.

We believe that our success is directly linked to the competent people in our organization, including our executive officers, senior managers and other key personnel, and in particular, Joe Hanna, our Chief Executive Officer.

We believe that our success is directly linked to the competent people in our organization, including our executive officers, senior managers and other key personnel.

Personnel turnover can be costly and could materially and adversely impact our operating results and can potentially jeopardize the success of our current strategic initiatives.

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We rely upon our information technology systems and infrastructure for our business.

We sustained an immaterial cybersecurity attack in 2021 involving ransomware that impacted certain of our systems but was unsuccessful in its ability to disrupt our network.

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

Upon detection, we promptly undertook steps

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

We sustained an immaterial cybersecurity attack in 2021.

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

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

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Similarly, additional data privacy breaches by those who access our systems may pose a risk that sensitive data, including intellectual property, trade secrets or personal information belonging to us, our employees, customers or other business partners, may be exposed to unauthorized persons or to the public.

The immaterial breach of our information technology system that we suffered in 2021 and any future breaches could subject us to reputational damage.

Any future breaches could subject us to reputational damage.

Cyber-attacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect.

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However, given that the techniques used to obtain unauthorized access or to sabotage systems change frequently, and often are not identified until they are launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures in time to stop a cyber incident.

Thus, there can be no assurance that our efforts to protect our data and information technology systems will prevent future breaches in our systems (or that of our third-party providers).

Thus, there can be no assurance that our efforts to protect our data and information technology systems will prevent future breaches in our systems

(or that of our third-party providers).

Such breaches could adversely affect our business and result in financial and reputational harm to us, theft of trade secrets and other proprietary information, legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties.

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

During 2023, the Company acquired Vesta Modular, a portfolio company of Kinderhook Industries, that was a leading provider of temporary and permanent modular space solutions, the assets of Brekke Storage and Inland Leasing, regional providers of portable storage solutions in the Colorado market, and the assets of Dixie Storage, a regional provider of portable storage solutions in the South Carolina market.

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

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• difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets may have stronger market positions;

• regulatory hurdles in completing the transaction;

• difficulties in complying with regulations applicable to any acquired business, such as environmental regulations, and managing risks related to an acquired business;

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We also could incur costs or liabilities related to waste disposal or remediating soil or groundwater contamination at our properties, at our customers’ properties or at third party landfill and disposal sites.

These liabilities

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

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

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

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Enforcement of environmental and health and safety requirements is also frequent.

Such proceedings are invariably expensive, regardless of the merit of the plaintiffs’ or prosecutors’ claims.

Such proceedings are

invariably expensive, regardless of the merit of the plaintiffs’ or prosecutors’ claims.

We may be named as a defendant in the future, and there can be no assurance, irrespective of the merit of such future actions, that we will not be required to make substantial settlement payments in the future.

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

replace the damaged rental equipment and facility not covered by insurance, which could have a material adverse effect on our results of operations.

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

INTEREST RATE AND INDEBTEDNESS RISKS:

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Public policies that create demand for our products and services may change, resulting in decreased demand for or the pricing of our products and services, which could negatively affect our revenues and operating income.

Various states that we operate enacted laws and constitutional amendments to provide funding for school districts to limit the number of students that may be grouped in a single classroom.

Various states where we operate enacted laws and constitutional amendments to provide funding for school districts to limit the number of students that may be grouped in a single classroom.

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

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Significant equipment returns may result in lower utilization until equipment can be redeployed or sold, which may cause rental rates to decline and negatively affect our revenues and operating income.

Failure to comply with applicable regulations could harm our business and financial condition, resulting in lower operating results and cash flows.

Similar to conventionally constructed buildings, the modular building industry, including the manufacturers and lessors of portable classrooms, are subject to regulations by multiple governmental agencies at the federal, state and local level relating to environmental, zoning, health, safety, energy efficiency, labor and transportation matters, among other matters.

Additionally, declining public school enrollment could lead to decreased demand for our products and services.

Our business is subject to various federal, state and local laws and regulations, which can change from time to time, governing construction, environmental health and safety, labor and employment, government contracts, transportation, immigration, anti-corruption, anti-trust and privacy, among others.

Failure to comply with applicable laws and regulations could harm our business and financial condition, resulting in lower operating results and cash flows.

zoning, health, safety, energy efficiency, labor and transportation matters, among other matters.

Failure to comply with these laws or regulations could impact our business or harm our reputation and result in higher capital or operating expenditures or the imposition of penalties or restrictions on our operations.

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If we are unable to pass these increased costs on to our customers, our profitability, operating cash flows and financial condition could be negatively impacted.

Expansions of our modular and portable storage operations into new markets may negatively affect our operating results.

In the past we have expanded our modular and portable storage operations into new geographies and states.

There are risks inherent in the undertaking of such expansion, including the risk of revenue from the business in any new markets not meeting our expectations, higher than expected costs in entering these new markets, risk associated with compliance with applicable state and local laws and regulations, response by competitors and unanticipated consequences of expansion.

In addition, expansion into new markets may be affected by local economic and market conditions.

Expansion of our operations into new markets will require a significant amount of attention from our management, a commitment of financial resources and will require us to add qualified management in these markets, which may negatively impact our operating results.

We are subject to laws and regulations governing government contracts.

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In addition, any failure to comply with these laws and regulations might result in administrative penalties or even in the suspension of these contracts and as a result, the loss of the related revenues which would harm our business and results from operations.

Seasonality of our educational business may have adverse consequences for our business.

Expansions of our modular and portable storage operations into new markets may negatively affect our operating results.

In the past we have expanded our modular and portable storage operations into new geographies and states.

In addition, expansion into new markets may be affected by local economic and market conditions.

Expansion of our operations into new markets will require a significant amount of

attention from our management, a commitment of financial resources and will require us to add qualified management in these markets, which may negatively impact our operating results.

Seasonality of our educational business may have adverse consequences for our modular building business.

A significant portion of the modular sale and rental revenues is derived from the educational market.

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We face strong competition in our modular building and portable storage markets and we may not be able to effectively compete.

The modular building leasing industry is highly competitive in our states of operation and we expect it to remain so.

The modular building and portable storage leasing industries are highly competitive in our states of operation and we expect it to remain so.

The competitive market in which we operate may prevent us from raising rental fees or sales prices to pass any increased costs on to our customers.

We compete on the basis of a number of factors, including equipment availability, quality, price, service, reliability, appearance, functionality and delivery terms.

We compete on the basis of a number of factors, including equipment and labor availability, quality, price, service, reliability, appearance, functionality and delivery terms.

We may experience pricing pressures in our areas of operation in the future as some of our competitors seek to obtain market share by reducing prices.

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If a significant number of our rented units were returned during a short period of time, particularly those units that are rented on a month-to-month basis, a large supply of units would need to be remarketed.

Our failure to effectively remarket a large influx of units returning from leases could negatively affect our financial performance and our ability to continue expanding our

rental fleet.

Our failure to effectively remarket a large influx of units returning from leases could negatively affect our financial performance and our ability to continue expanding our rental fleet.

In addition, if returned units stay off rent for an extended period of time, we may incur additional costs to securely store and maintain them.

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

Historically, these industries have been cyclical and have experienced periodic downturns, which can have a material

adverse impact on the industry’s demand for equipment, including our rental electronic test equipment.

Historically, these industries have been cyclical and have experienced periodic downturns, which can have a material adverse impact on the industry’s demand for equipment, including our rental electronic test equipment.

In addition, the severity and length of any downturn in an industry may also affect overall access to capital, which could adversely affect our customers and result in excess inventory and impairment charges.

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However, any prolonged economic downturn could result in unexpected bankruptcies or reduced support from our manufacturers.

Failure to properly select, manage and respond to the technological needs of our customers and changes to our products through their technology life cycle may cause certain electronic test equipment to become obsolete, resulting in impairment charges, which may negatively impact operating results and cash flows.

Failure to properly select, manage and respond to

the technological needs of our customers and changes to our products through their technology life cycle may cause certain electronic test equipment to become obsolete, resulting in impairment charges, which may negatively impact operating results and cash flows.

If we do not effectively compete in the rental equipment market, our operating results will be materially and adversely affected.

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If this should occur, we may not be able to secure necessary equipment from an alternative source on acceptable terms and our business and reputation may be materially and adversely affected.

If we are not able to anticipate and mitigate the risks associated with operating internationally, there could be a material adverse effect on our operating results.

Our business is subject to various federal, state and local laws and regulations, in each of the jurisdictions in which we conduct business within the U.S.

and internationally, related to government contracts, immigration, export control, anti-corruption, anti-trust, privacy, environmental health and safety, labor and employment, among others.

Failure to comply with applicable laws and regulations could harm our business and financial condition, resulting in lower operating results and cash flows.

More specifically, if we are not able to anticipate and mitigate the risks associated with operating internationally, there could be a material adverse effect on our operating results.

Currently, total foreign country customers and operations account for less than 10% of the Company’s revenues.

In recent years some of our customers have expanded their international operations faster than domestic operations, and this trend may continue.

time, the amount of our international business may increase if we focus on international market opportunities.

Over time, the amount of our international business may increase if we focus on international market opportunities.

Operating in foreign countries subjects the Company to additional risks, any of which may adversely impact our future operating results, including:

• international political, economic and legal conditions including tariffs and trade barriers;

• our ability to comply with customs, anti-corruption, import/export and other trade compliance regulations, together with any unexpected changes in such regulations;

• international political, economic and legal conditions including political unrest and conflict, sanctions, tariffs and trade barriers;

• our ability to comply with customs, anti-corruption, import/export and other trade compliance regulations, under U.S.

and applicable foreign laws, together with any unexpected changes in such regulations;

• greater difficulty in our ability to recover rental equipment and obtain payment of the related trade receivables;

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dollars subjects us to fluctuations in currency exchange rates.

If the currency exchange rates change unfavorably, the value of net receivables we receive in foreign currencies and later convert to U.S.

If the currency exchange rates change unfavorably, the value of net

receivables we receive in foreign currencies and later convert to U.S.

dollars after the unfavorable change would be diminished.

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Adverse economic conditions in the United States and globally, as well as geopolitical tensions, could have a negative effect on our business, results of operations, financial condition and liquidity.

Adverse macroeconomic conditions in the United States and globally, including inflation, slower than expected growth or recession, changes to fiscal and monetary policy, tightening of the credit markets, higher interest rates and currency fluctuations, could negatively impact our business, financial condition, results of operations and liquidity.

Adverse macroeconomic conditions in the United States and globally, including inflation, cost increases from tariffs, slower than expected growth or recession, changes to fiscal and monetary policy, tightening of the credit markets, higher interest rates and currency fluctuations, could negatively impact our business, financial condition, results of operations and liquidity.

These factors could negatively affect demand for our business.

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Environmental, social and governance (ESG) matters may impact our business and reputation.

Governmental authorities, non-governmental organizations, customers, investors, external stakeholders and employees are increasingly sensitive to ESG concerns.

This focus on ESG concerns may lead to new requirements that could result in increased costs for our business.

Governmental authorities, non-governmental organizations, customers, investors, external stakeholders and employees have sensitivities to ESG concerns.

Our ability to compete could also be affected by changing customer preferences and requirements, such as growing demand for more environmentally friendly products, supplier practices, or by failure to meet such customer expectations or demand.

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Managing these changes has required, and may continue to require, significant expenditures and allocation of valuable management resources.

We have provided disclosures about this new segment reporting structure, but there is no guarantee that investors or the market will understand this change to our financial reporting.

We have provided disclosures about this new

segment reporting structure, but there is no guarantee that investors or the market will understand this change to our financial reporting.

There is also no guarantee that this change will have the desired effect.

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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-K

Item 1A. Risk Factors