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Item 7. Management’s Discussion and Analysis

2022-02-25 compared with 2021-02-26 · 477 added, 433 removed, 597 unchanged (60% of the section changed)

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The discussion of results of operations in this MD&A is presented on a historical basis, as of or for the year ended December 31, 2021 or prior periods.

As the Merger was completed on July 1, 2020, unless the context otherwise requires, the terms “we”, “us”, “our” “Company” and “WillScot Mobile Mini” means WillScot and its subsidiaries when referring to periods prior to July 1, 2020 (prior to the Merger) and to WillScot Mobile Mini and its subsidiaries when referring to periods on or after July 1, 2020 (after the Merger).

On July 1, 2020, in connection with the closing of the Merger, Mobile Mini, Inc.

("Mobile Mini") became a wholly-owned subsidiary of WillScot and the Company changed it's name to WillScot Mobile Mini Holdings Corp.

As the Merger was completed on July 1, 2020, unless the context otherwise requires, the terms “we”, “us”, “our” “Company” and “WillScot Mobile Mini” as used in these financial statements mean WillScot and its subsidiaries when referring to periods prior to July 1, 2020 (prior to the Merger) and to WillScot Mobile Mini and its subsidiaries when referring to periods on or after July 1, 2020 (after the Merger).

The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the US (“GAAP”).

We use certain non-GAAP financial information that we believe is important for purposes of comparison to prior periods and development of future projections and earnings growth prospects.

We use certain pro forma calculations as non-GAAP financial information that we believe is important for purposes of comparison to the prior period due to the addition of significant acquisitions during the reported financial reporting periods.

This information is also used by management to measure the performance of our ongoing operations and analyze our business performance and trends.

Reconciliations of non-GAAP measures are provided in the Other Non-GAAP Financial Data and Reconciliations section.

This information is used by investors for the purposes of development of future projections and earnings growth prospects.

In addition, we use certain non-GAAP financial metrics to supplement the GAAP reported results in order to highlight key operational metrics that are used by management to evaluate Company performance.

Reconciliations of GAAP financial information to the disclosed non-GAAP measures are provided in the Reconciliation of Non-GAAP Financial Measures section.

Executive Summary

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Our lease revenue is highly predictable due to its recurring nature and the underlying stability and diversification of our lease portfolio.

However, given that our customers value flexibility, they consistently extend their leases or renew on a month-to-month basis such that the average effective duration of our lease portfolio, is 32 months.

Furthermore, given that our customers value flexibility, they consistently extend their leases or renew on a month-to-month basis such that the average effective duration of our lease portfolio, excluding seasonal portable storage units, is nearly 31 months.

We complement our core leasing business by selling both new and used units, allowing us to leverage scale, achieve purchasing benefits and redeploy capital employed in our lease fleet.

We remain focused on our core priorities of growing leasing revenues by increasing units on rent, both organically and through our consolidation strategy, delivering “Ready to Work” solutions to our customers with value added products and services ("VAPS"), and on continually improving the overall customer experience.

The year ended December 31, 2020 was another transformational year for WillScot Mobile Mini as we completed the Merger with Mobile Mini on July 1, 2020 at which time Mobile Mini became a wholly-owned subsidiary of WillScot.

Concurrent with the closing of the Merger, we changed our name to WillScot Mobile Mini Holdings Corp.

During 2021, the Company acquired certain assets and liabilities of seven regional and local modular space and storage businesses, which consisted primarily of 15,700 storage units and 5,800 modular units.

We also achieved a significant milestone in our integration of the WillScot and Mobile Mini businesses, consolidating onto a single ERP system in the second quarter of 2021.

This full integration to SAP enabled an expedited integration of the acquisitions.

For the year ended December 31, 2021, key drivers of our financial performance included:

• Total revenues increased by $303.9 million, or 28.6%, attributable to the addition of Mobile Mini's revenues to our consolidated results once the Merger closed on July 1, 2020.

• Leasing revenue increased $257.2 million, or 34.6%, delivery and installation revenue increased $54.1 million, or 24.6%, rental unit sales decreased $1.4 million, or 3.5%, and new sales revenue decreased $6.0 million, or 10.2%.

Key leasing revenue drivers include:

• Total revenues increased by $527.3 million, or 38.6%, attributable to the addition of Mobile Mini's revenues to our consolidated results once the Merger closed on July 1, 2020 and due to organic revenue growth levers in the business.

Leasing revenue increased $410.7 million, or 41.0%, delivery and installation revenue increased $100.5 million, or 36.7%, rental unit sales increased $16.3 million, or 41.9%, and new unit sales revenue decreased $0.2 million, or 0.4%.

Key leasing revenue drivers included:

– Average modular space units on rent increased 10,876 units, or 10.9%, and average portable storage units on rent increased 77,318 units, or 91.9%.

Both increases were primarily driven by the Mobile Mini Merger.

Average portable storage units on rent also grew as a result of organic increases in average portable storage units driven by increased economic activity in 2021 and due to units on rent acquired during 2021 from several smaller entities.

– Average modular space monthly rental rate increased $86, or 13.1%, to $744 driven by a $124, or 18.1% increase in the NA Modular segment, offset partially by the dilutive impact of lower rates due to mix on the Mobile Mini modular space units.

– Average portable storage monthly rental rate increased $12, or 10.0%, to $132 driven primarily by the accretive impact of higher rates from the Mobile Mini portable storage fleet.

– Average utilization for modular space units decreased 180 basis points ("bps") to 70.2% and average utilization for portable storage units increased to 75.9%, or 10.1 percentage points, driven by higher utilization of the Mobile Mini portable storage units.

• NA Modular segment revenue, which represents the activities of WillScot prior to the Merger and represented 76.9% of consolidated revenue for the year ended December 31, 2020, decreased $12.5 million, or 1.2%, to $1,051.2 million driven by decreased sales volumes of $26.6 million, or 26.8%, and a $12.0 million, or 5.5%, reduction in delivery and installation revenues as a result of reductions in demand for new project deliveries.

However, these reductions were partially offset by an increase in leasing revenue of $26.1 million, or 3.5%, due to continued growth of pricing and value-added products.

– Average portable storage monthly rental rate increased $12, or 9.1%, to $144 driven primarily by the accretive impact of higher rates from the Mobile Mini portable storage fleet and price increases achieved throughout 2021.

– Average utilization for modular space units decreased 10 basis points ("bps") to 70.1% and average utilization for portable storage units increased to 81.5%, from 75.6% from the same period in 2020, driven by higher utilization of the Mobile Mini portable storage units and increased demand for this product category driven by increased economic activity throughout 2021.

• NA Modular segment revenue represented 61.4% of consolidated revenue for the year ended December 31, 2021, and increased $113.0 million, or 10.7%, to $1,164.2 million driven by increased leasing revenue of $94.6 million, or 12.3%, an increased sales volumes of $7.1 million, or 9.8%, and a $11.3 million, or 5.4%, increase in delivery and installation revenues.

NA Modular revenue drivers for the year ended December 31, 2021 include:

– Modular space average monthly rental rate of $809 for the year, increased 18.1% representing a continuation of the long-term price optimization initiative and VAPS penetration opportunities across our portfolio.

– Average modular space units on rent for the year decreased 4,808 units, or 5.2% driven by lower deliveries, including reduced demand for new project deliveries as a result of the COVID-19 pandemic in 2020.

Average modular space units on rent dropped 0.5% sequentially from Q3 into Q4 to 86,011, which compares to a 1.3% drop from Q3 to Q4 in 2019, as delivery volumes returned to prior year levels and return volumes remained lower than 2019 levels.

– Average modular space units on rent for the year decreased 2,350 units, or 2.7% driven by increased returns during 2021 and by lower, although improving, delivery demand as compared to historical levels seen pre-pandemic.

However, average modular space units on rent increased 0.1% sequentially from Q3 into Q4 to 84,328, which compares to a 0.5% drop from Q3 to Q4 in 2020.

– Average modular space monthly utilization decreased 130 basis points to 67.6% for the year ended December 31, 2021, but only dropped 10 basis points sequentially from Q3 into Q4.

• Generated consolidated net income of $71.9 million for the year ended December 31, 2020, represented an increase of $83.4 million, and included a $42.4 million loss on extinguishment of debt related to our recent financing activities and $93.8 million of discrete costs expensed in the period related to transaction and integration activities, partly offset by a $51.5 million non-cash income tax benefit.

Discrete costs in the period included $64.1 million of Merger transaction costs, $18.3 million of integration costs, and $11.4 million of restructuring costs, lease impairment expense and other related charges.

As discussed in Note 13 to the consolidated financial statements, the $51.5 million income tax benefit was primarily driven by the reversal of $54.6 million of the federal valuation allowance and certain state valuation allowances during the year ended December 31, 2020 due to the Merger, which partly offset these other discrete costs.

• Generated consolidated net income of $160.1 million for the year ended December 31, 2021, representing an increase of $84.8 million versus the year ended December 31, 2020.

Net Income Excluding Gain/Loss from Warrants of $186.7 million for the year ended December 31, 2021, represented an increase of $114.8 million, or 159.7%, versus the year ended December 31, 2020, and included a $6.0 million loss on extinguishment of debt related to our financing activities in the first and second quarter of 2021 and $44.6 million of discrete costs expensed in the period related to transaction and integration activities.

Discrete costs in the period included $1.4 million of transaction costs, $28.4 million of integration costs, and $14.8 million of restructuring costs, lease impairment expense and other related charges.

• Generated Adjusted EBITDA of $740.4 million for the year ended December 31, 2021, representing an increase of $210.1 million, or 39.6%, as compared to 2020.

Of this increase, $135.5 million was driven by the addition of Mobile Mini to our consolidated results and the remainder was driven by strong organic growth in our NA Modular segment.

– Adjusted EBITDA in our NA Modular segment, which represents the activities of WillScot prior to the Merger, increased $38.3 million, or 10.7% primarily driven by increases in leasing gross profit driven by increased pricing, including VAPS, and significant cost reductions both from acquisition synergy realization and actions taken to reduce variable costs in a reduced demand environment during the second and third quarters of 2020.

– Consolidated Adjusted EBITDA Margin was 38.8% and increased 530 bps versus prior year driven by a 410 bps increased in the NA Modular segment, as well as the addition of the higher margin Mobile Mini operations.

Of this increase, $181.9 million was driven by including a full year of Mobile Mini in our consolidated results, including strong year over year organic growth within the NA Storage, UK, and Tank and Pump segments, and the remainder was driven by strong organic growth across all of our segments.

– Adjusted EBITDA in our NA Modular segment, which represents the activities of WillScot prior to the Merger, increased $28.2 million, or 7.1% primarily driven by increases in leasing gross profit driven by increased pricing, including VAPS, partially offset by increased variable costs as a result of higher activity levels in the current year as compared to 2020.

– Consolidated Adjusted EBITDA Margin was 39.1% and increased 30 b ps versus prior year driven by the addition of the higher margin Mobile Mini operations.

This was partially offset by a 130 bps decrease in the NA Modular segment, driven by an expected higher proportion of delivery and installation revenues to total revenues and increased variable costs.

• Generated Free Cash Flow of $303.0 million for the year ended December 31, 2021, representing an increase of $140.7 million as compared to 2020.

Net cash provided by operating activities increased $235.1 million to $539.9 million.

Additionally, net cash used in investing activities, excluding cash acquired from the Merger, decreased $10.0 million as a result of reduced capital spending needs across all segments given reduced demand for new project deliveries.

Excluding the impact of $64.1 million of Merger transaction costs paid during the year, we generated $226.3 million of free cash flow for year ended December 31, 2020 and have repaid approximately $162.4 million of the 2020 ABL Facility since the Merger that closed on July 1, 2020.

This was possible due to our resilient lease revenues and strong margin expansion and capex reductions across the NA Modular, NA Storage, and UK segments, as well as reduced interest costs due to our financing activity during the year.

Free cash flow increased sequentially to $87.4 million in the fourth quarter of 2020, including $7.4 million of integration costs, which is the best indicator of our run-rate heading into 2021.

Net cash used in investing activities, excluding cash acquired or used as part of acquisitions, increased $94.3 million as a result of increased capital spending to support growing demand for new project deliveries across all segments.

The referenced Free Cash Flow along with additional net borrowings under the ABL was deployed to acquire storage and modular units of several smaller entities for a total of $147.2 million and to repurchase $363.6 million of our common stock and warrants.

This was possible due to our resilient lease revenues and strong margin expansion, reduced interest costs due to our financing activities during the year and our strong financial position.

In addition to using GAAP financial measurements, we use Adjusted EBITDA and Free Cash Flow, which are non-GAAP financial measures, to evaluate our operating results.

As such, we include in this Annual Report on Form 10-K reconciliations to their most directly comparable GAAP financial measures.

These reconciliations and descriptions of why we believe these measures provide useful information to investors as well as a description of the limitations of these measures are included in "Item 6.

Selected Financial Data."

Recent Developments

Refer to the Recent Developments section in Part I, Item 1, Business, herein for further information about the Mobile Mini Merger and certain related financing transactions and the impact of COVID-19 on our business.

These reconciliations and descriptions of why we believe these measures provide useful information to investors as well as a description of the limitations of these measures are included in "Reconciliation of non-GAAP Financial Measures."

Significant Developments

Refer to the Significant Developments section in Part I, Item 1, Business, herein for further information about the Mobile Mini Merger, other acquisitions, financing activities, share and warrant repurchases, and the impact of COVID-19 on our business.

Business Environment and Outlook

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Market fundamentals underlying these end markets were impacted in 2020 as a result of the COVID-19 pandemic which resulted in delivery volume declines, primarily in the second and third quarters, in response to shelter-in-place orders and other market restrictions.

Gross Domestic Product ("GDP") in the US, where the majority of our revenues are generated, is estimated to have declined by over 2% in 2020, and estimates from Dodge Data & Analytics suggest that non-residential construction square footage starts in the US declined by over 15% as compared to 2019.

Based on our analyses of industry forecasts and macroeconomic indications, we expect modest market recovery in 2021 following the declines experienced in 2020, and expect both GDP and non-residential construction square footage starts in the US to grow 2-3% in 2021.

During 2021, market fundamentals recovered to varying degrees across our product offerings with portable storage demand back above pre-pandemic levels.

Demand for modular space products as measured by new project deliveries have partially recovered from the lower demand seen in 2020, but still remained approximately 4% below pre-pandemic delivery levels in 2021.

Real Gross Domestic Product ("real GDP") in the US, where the majority of our revenues are generated, is estimated to have increased by over 5.6% in 2021, and estimates from Dodge Data & Analytics suggest that non-residential construction square footage starts in the US increased by 17% as compared to 2020.

Based on our analyses of industry forecasts and macroeconomic indications, we expect continued market recovery in 2022 as we saw during 2021, and expect both real GDP and non-residential construction square footage starts in the US to grow 4-7% in 2022, which would also exceed pre-pandemic levels seen in 2019.

Core to our operating model is the ability to redeploy standardized assets across end markets, and we have recently serviced emerging demand in the healthcare and government sectors related to COVID-19, as well as expanded space requirements related to social distancing.

Current improving market conditions, potential market catalysts such as increased infrastructure spending, and idiosyncratic growth levers such as continued penetration of our customer base with our VAPS offering, long-term pricing tailwinds, cross-selling between our Modular and Storage segment customers, and other commercial best practice sharing between our segments provide us confidence in our continued organic growth outlook.

Our Business and Growth Strategies

We will maintain a leading market position and continue pursuing the following strategies, all of which we have demonstrated in our historical results and are contributing to our growth, expanding profitability and free cash flow, and overall growth in return on invested capital:

Optimize Pricing Across Fleet

We continue to advance multiple pricing strategies across our fleet to drive revenue growth.

Leveraging our expertise developed in NA Modular, we plan to implement dynamic pricing, customer segmentation, and contract standardization in our other segments.

Our long history of success, demonstrated by 13 consecutive quarters of double-digit rate growth as of December 31, 2020 in the U.S.

within our NA Modular segment, gives us confidence that we can successfully deploy this strategy.

The turnover of our fleet, with average lease durations of nearly three years, creates natural and recurring opportunities to capture incremental price increases.

As the market leader in our industry, with an estimated 45% market share in the modular sector and 25% market share in the storage sector, we offer the broadest fleet portfolio, the most differentiated turnkey VAPS, and the most consistent service capabilities across the largest branch network to help our customers be 'Ready to Work'.

Expand Penetration of Value-Added Products and Services

As of December 31, 2020, we estimate that we have over $150 million of annual organic revenue growth opportunity as the average VAPS rate of our units on rent in our NA Modular segment converges over time to the VAPS price and penetration levels achieved on our most recently delivered units, and as we begin to cross-sell this offering into our NA Storage segment ground level office fleet.

We believe this growth opportunity could be substantially larger if we successfully penetrate more of our modular space orders, and expand our VAPS offering for portable storage units.

Enhance Cross-Selling Between Segments

The combination of WillScot and Mobile Mini created a leading business services provider specializing in innovative flexible work space and portable storage solutions.

At the outset of the merger, we recognized that there was 80% end-market overlap and 40% customer overlap, a clear strategic opportunity for our complementary product lines.

By offering a combined product suite, we simplify our customers' procurement needs and enable productivity from start to finish for projects.

We believe cross-selling will also increase utilization and yield of our combined fleet.

Our sales force is optimally positioned to improve efficiency by leveraging our management information systems and using real-time information to monitor and optimize conversion of customer opportunities across our core segments.

In turn, we expect that our broadened and enhanced fleet will attract new customers, increase customer retention, and increase margins and return on invested capital.

Generate Cash Flow Through Operational Efficiencies, Cost Reductions, and Technology

We are implementing many initiatives designed to improve operations and increase profitability.

We continually assess our branch operating footprint, vendor base, and operating structure to maximize revenue generation while minimizing costs.

The Merger provides us with increased scale, numerous operational best practices from both the legacy WillScot and legacy Mobile Mini businesses, and a state-of-the-art SAP ERP platform, all of which we believe will significantly improve the operating efficiency of the combined businesses.

We have a proven track record of efficiently integrating acquisitions and quickly eliminating operational redundancies while maintaining acquired customer relationships.

Deploy Capital to Strategically Support Organic Growth and Optimize Returns

We maintain a disciplined focus on our return on capital and the Merger allows us to invest opportunistically across multiple attractive asset classes prioritizing our investments to where we see the strongest potential returns.

We continually assess both our existing lease fleet and customer demand for opportunities to deploy capital more efficiently.

We manage our maintenance capex and growth capex to align with the economic conditions in which we operate.

Within our existing lease fleet, we examine the potential cash and earnings generation of an asset sale versus continuing to lease the asset.

In addition, we examine the relative benefits of organic expansion opportunities versus expansion through acquisition to obtain a favorable return on capital.

Leverage Scale and Organic Initiatives with Accretive Acquisitions

Our markets for modular space and portable storage solutions are fragmented.

We estimate that approximately 55% of the modular market and approximately 75% of the portable storage market in North America are supplied by regional and local competitors.

We have the broadest network of operating branches in North America, as well as a scalable corporate center and information technology systems, which position us to continue to acquire and integrate other companies while expanding the products and services available and offered to acquired customers.

Furthermore, we have realized over $60 million of cost synergies from acquisitions in the past three years and have identified nearly $60 million of additional cost reductions that we have yet to execute.

We expect to pursue acquisitions opportunistically that will provide further scale efficiencies and allow us to improve returns generated by the acquired assets.

We continually evaluate our portfolio of businesses to ensure that our operations remain in line with our broader strategic goals.

Use Free Cash Flow to Drive Value Creation

Free cash flow generation has accelerated rapidly in recent years, and we expect this trend to continue as we execute our strategy.

While we see numerous organic and inorganic opportunities to re-invest in our core businesses, we believe we can generate surplus free cash flow with which we can both reduce leverage and return capital to shareholders over time.

We view this as an additional powerful value creation lever, and we are committed to deploying this capital as productively as possible in the interests of our shareholders.

Components of Our Consolidated Historical Results of Operations

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Average portable storage monthly rental rate $ 144 $ 132 $ 120

Average tank and pump solutions rental fleet utilization based on original equipment cost 61.7 % — % — %

Average tank and pump solutions rental fleet utilization based on original equipment cost 72.3 % 61.7 % N/A

In addition to leasing revenue, we also generate revenue from sales of new and used modular space and portable storage units to our customers, as well as delivery, installation, maintenance, removal services and other incidental items related to accommodation services for our customers.

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Transaction Costs

Transaction costs include discrete expenses incurred related to the Merger and the 2018 acquisition of ModSpace.

Transaction costs include discrete expenses incurred related to the Merger and other acquisitions.

Other Depreciation and Amortization

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Our restructuring plans are generally country or region specific and are typically completed within a one-year period.

Prior to the adoption of FASB ASC Topic 842, Leases (" ASC 84 2") effective January 1, 2019, restructuring costs incurred under these plans included (i) one-time termination benefits related to employee separations, (ii) contract termination costs and, (iii) other related costs associated with exit or disposal activities including, but not limited to, costs for consolidating or closing facilities.

After the adoption of ASC 842, restructuring costs include one-time termination benefits related to employee separation costs.

The restructuring costs incurred in 2020, 2019 and 2018 primarily relate to the integration of our acquisitions.

Restructuring costs include one-time termination benefits related to employee separation costs.

The restructuring costs incurred in 2021, 2020, and 2019 primarily generally relate to the integration of our acquisitions.

Costs related to the integration of acquired businesses that do not meet the definition of restructuring under ASC 420, such as employee training costs, duplicate facility costs, and professional services expenses, are included within SG&A expense.

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Currency (gains) losses, net include unrealized and realized gains and losses on monetary assets and liabilities denominated in foreign currencies other than our functional currency at the reporting date.

Other Income, Net

Other income, net primarily consists of the gain (loss) on disposal of non-operational property, plant and equipment, other financing related costs and other non-recurring charges.

Other (Income) Expense, Net

Other (income) expense, net primarily consists of the gain (loss) on disposal of non-operational property, plant and equipment, other financing related costs and other non-recurring charges.

Interest Expense

Interest expense consists of the costs of external debt including the Company’s ABL credit facility, 2022 Secured Notes, 2023 Secured Notes, 2025 Secured Notes, 2028 Secured Notes, and the senior unsecured notes due November 15, 2023 (the "Unsecured Notes") and interest on obligations under finance leases.

Fair Value (Gain) Loss on Common Stock Warrant Liabilities

Fair value (gain) loss on common stock warrant liabilities consists of non-cash gains and losses recorded related to changes in the fair value of common stock warrant liabilities as the common stock warrant liabilities are marked-to-market liabilities.

It also includes gains and losses recorded related to the settlement of common stock warrant liabilities.

Loss on Extinguishment of Debt

In connection with the Merger and related financing transactions in 2020, using proceeds from the 2025 Secured Notes, we redeemed all of our 2022 Secured Notes.

In 2021, using cash on hand and borrowings on the 2020 ABL Facility, we redeemed $123.5 million of our 2025 Secured Notes and recorded loss on extinguishment of debt.

In 2020, in connection with the Merger and related financing transactions, using proceeds from the 2025 Secured Notes, we redeemed all of our 2022 Secured Notes.

We also completed a private offering of our 2028 Secured Notes in August 2020 and used the offering proceeds to repay our 2023 Secured Notes.

As a result of these transactions, we recorded losses on extinguishment of debt.

Income Tax Benefit

Income Tax Expense (Benefit)

We are subject to income taxes in the US, Canada, Mexico and the UK.

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Our consolidated statements of net income (los s) for the years ended December 31, 2021, 2020, and 2019 are presented below.

The below results only include results from Mobile Mini and ModSpace for the periods subsequent to their acquisition dates and do not include any incremental unrealized cost savings, revenue growth, or pro forma adjustments that management expects to result from the integration of the acquired businesses.

The below results only include results from Mobile Mini for the periods subsequent to the Merger and do not include any incremental unrealized cost savings, revenue growth, or pro forma adjustments that management expects to result from the integration of the acquired business.

Years Ended December 31, 2021 vs.

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Restructuring costs 11,868 6,527 3,755 5,341 2,772

Currency (gains) losses, net (355) (688) 2,454 333 (3,142)

Other income, net (1,718) (2,200) (4,574) 482 2,374

Currency losses (gains), net 548 (355) (688) 903 333

Other expense (income), net 1,780 (1,718) (2,200) 3,498 482

Operating income 360,273 182,715 117,525 177,558 65,190

Interest expense 117,987 119,886 122,504 (1,899) (2,618)

Fair value loss (gain) on common stock warrant liabilities 26,597 (3,461) 109,622 30,058 (113,083)

Loss on extinguishment of debt 5,999 42,401 8,755 (36,402) 33,646

Income (loss) before tax 20,428 (13,734) (92,172) 34,162 78,438

Income tax benefit (51,451) (2,191) (38,600) (49,260) 36,409

Income (loss) before income tax 209,690 23,889 (123,356) 185,801 147,245

Income tax expense (benefit) 49,546 (51,451) (2,191) 100,997 (49,260)

Net income (loss) 160,144 75,340 (121,165) 84,804 196,505

Net income (loss) attributable to non-controlling interest, net of tax — 1,213 (421) (1,213) 1,634

Net income (loss) attributable to WillScot Mobile Mini 70,666 (11,122) (49,040) 81,788 37,918

Non-cash deemed dividend related to warrant exchange — — (2,135) — 2,135

Net income (loss) attributable to WillScot common shareholders $ 160,144 $ 74,127 $ (120,744) $ 86,017 $ 194,871

Cash Flow Data:

Net cash from operating activities $ 539,902 $ 304,812 $ 172,566 $ 235,090 $ 132,246

Net cash from investing activities $ (384,047) $ (125,360) $ (152,582) $ (258,687) $ 27,222

Net cash from financing activities $ (167,887) $ (158,958) $ (26,063) $ (8,929) $ (132,895)

Other Financial Data:

Consolidated Adjusted EBITDA(a) $ 740,393 $ 530,307 $ 356,548 $ 210,086 $ 173,759

Free Cash Flow(a) $ 303,027 $ 162,279 $ 19,984 $ 140,748 $ 142,295

Adjusted Gross Profit(a) $ 1,205,745 $ 860,554 $ 587,992 $ 345,191 $ 272,562

Net CAPEX(a) $ 236,875 $ 142,533 $ 152,582 $ 94,342 $ (10,049)

Balance Sheet Data (end of year):

Cash and cash equivalents $ 12,699 $ 24,937 $ 3,045 $ (12,238) $ 21,892

Rental equipment, net $ 3,080,981 $ 2,931,646 $ 1,944,436 $ 149,335 $ 987,210

Total assets $ 5,773,599 $ 5,572,205 $ 2,897,649 $ 201,394 $ 2,674,556

Total debt, excluding current portion $ 2,694,319 $ 2,453,809 $ 1,632,589 $ 240,510 $ 821,220

Total shareholders’ equity $ 1,996,763 $ 2,063,873 $ 490,609 $ (67,110) $ 1,573,264

(a) WillScot Mobile Mini presents Adjusted EBITDA, Free Cash Flow, Adjusted Gross Profit and Net CAPEX, which are measurements not calculated in accordance with GAAP and are defined below in the section "Reconciliation of non-GAAP Financial Measures," because they are key metrics used by management to assess financial performance.

Our business is capital intensive, and these additional metrics allow management to further evaluate its operating performance.

See below for reconciliations of non-GAAP financial measures.

Quarterly Consolidated Results for the Year Ende d December 31, 2021

(in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Full Year

Revenue $ 425,323 $ 461,102 $ 490,552 $ 517,920 $ 1,894,897

Gross profit $ 213,380 $ 222,810 $ 253,549 $ 278,469 $ 968,208

Adjusted EBITDA $ 163,585 $ 175,495 $ 190,149 $ 211,164 $ 740,393

Net income $ 4,447 $ 20,371 $ 61,103 $ 74,223 $ 160,144

Net CAPEX $ 30,911 $ 57,481 $ 51,954 $ 96,529 $ 236,875

Modular space units on rent (average during the period) 110,349 110,468 109,832 110,961 110,402

Average modular space utilization rate 70.3 % 70.3 % 70.1 % 69.8 % 70.1 %

Average modular space monthly rental rate $ 679 $ 736 $ 767 $ 792 $ 744

Portable storage units on rent (average during the period) 145,360 151,736 163,248 185,518 161,466

Average portable storage utilization rate 74.4 % 77.7 % 83.9 % 88.4 % 81.5 %

Average portable storage monthly rental rate $ 135 $ 139 $ 145 $ 153 $ 144

Average tank and pump solutions rental fleet utilization based on original equipment cost 67.4 % 71.2 % 74.8 % 75.5 % 72.3 %

Earnings per share - basic $ 0.02 $ 0.09 $ 0.27 $ 0.33 $ 0.71

Earnings per share - diluted $ 0.02 $ 0.08 $ 0.26 $ 0.32 $ 0.69

Weighted average shares - basic 228,293,197 228,406,812 225,998,202 223,436,603 226,518,931

Weighted average shares - diluted 234,720,295 236,536,713 231,868,397 229,965,703 232,793,902

Quarterly Consolidated Results for the Year Ended December 31, 2020

(in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Full Year

Revenue $ 255,821 $ 256,862 $ 417,315 $ 437,647 $ 1,367,645

Gross profit $ 106,190 $ 109,964 $ 209,564 $ 234,255 $ 659,973

Adjusted EBITDA $ 89,544 $ 97,520 $ 163,559 $ 179,684 $ 530,307

Net income (loss) $ 91,655 $ (14,130) $ (6,051) $ 3,866 $ 75,340

Net income (loss) attributable to Willscot Mobile Mini $ 91,785 $ (15,473) $ (6,051) $ 3,866 $ 74,127

Net CAPEX $ 30,540 $ 36,383 $ 33,323 $ 42,287 $ 142,533

Modular space units on rent (average during the period) 87,989 87,096 111,227 111,793 99,526

Average modular space utilization rate 69.2 % 68.5 % 70.6 % 70.9 % 70.2 %

Average modular space monthly rental rate $ 653 $ 669 $ 640 $ 670 $ 658

Portable storage units on rent (average during the period) 16,346 15,869 143,840 160,538 84,148

Average portable storage utilization rate 64.1 % 62.5 % 73.2 % 81.2 % 75.9 %

Average portable storage monthly rental rate $ 119 $ 120 $ 131 $ 136 $ 132

Average tank and pump solutions rental fleet utilization based on original equipment cost N/A N/A 58.2 % 65.2 % 61.7 %

Earnings (loss) per share - basic $ 0.84 $ (0.14) $ (0.03) $ 0.02 $ 0.44

Earnings (loss) per share - diluted $ 0.05 $ (0.14) $ (0.03) $ 0.02 $ 0.25

Weighted average shares - basic 109,656,646 110,692,426 226,649,993 228,637,826 169,230,177

Weighted average shares - diluted 112,672,997 110,692,426 226,649,993 233,625,946 177,268,383

Quarterly Consolidated Results for the Year Ended December 31, 2019

(in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 Q4 Full Year

Revenue $ 253,685 $ 263,713 $ 268,222 $ 278,045 $ 1,063,655

Gross profit $ 103,331 $ 101,484 $ 99,308 $ 109,190 $ 413,313

Adjusted EBITDA $ 83,354 $ 87,554 $ 87,424 $ 98,216 $ 356,548

Net loss $ (27,574) $ (56,836) $ (1,197) $ (35,558) $ (121,165)

Net loss attributable to Willscot Mobile Mini $ (26,816) $ (56,004) $ (1,492) $ (36,432) $ (120,744)

Net CAPEX $ 41,814 $ 43,199 $ 37,761 $ 29,808 $ 152,582

Modular space units on rent (average during the period) 93,309 92,300 91,233 90,013 91,682

Average modular space utilization rate 72.4 % 71.9 % 71.2 % 70.7 % 72.0 %

Average modular space monthly rental rate $ 575 $ 611 $ 630 $ 641 $ 614

Portable storage units on rent (average during the period) 17,419 16,544 16,416 16,944 16,878

Average portable storage utilization rate 66.1 % 63.3 % 63.0 % 66.1 % 65.8 %

Average portable storage monthly rental rate $ 119 $ 121 $ 123 $ 118 $ 120

Loss per share - basic $ (0.25) $ (0.52) $ (0.01) $ (0.33) $ (1.11)

Loss per share - diluted $ (0.25) $ (0.52) $ (0.02) $ (0.33) $ (1.11)

Weighted average shares - basic 108,523,269 108,693,924 108,720,857 108,793,847 108,683,820

Weighted average shares - diluted 108,523,269 108,693,924 109,508,360 108,793,847 108,683,820

Comparison of Years Ended December 31, 2021 and 2020

Total revenue increased $527.3 million, or 38.6%, to $1,894.9 million for the year ended December 31, 2021 from $1,367.6 million for the year ended December 31, 2020.

The increase was driven primarily by the addition of Mobile Mini's revenues to our consolidated results.

Leasing revenue increased $410.7 million, or 41.0%, as compared to the same period in 2020 driven by an increase of 88,194, or 48.0%, total average modular space and portable storage units on rent and improved pricing and value-added products in our NA Modular segment.

Delivery and installation revenues increased $100.5 million, or 36.7%, due to increased overall activity.

New unit sales decreased $0.2 million, or 0.4%, and rental unit sales increased $16.3 million, or 41.9%.

Total average modular space and portable storage units on rent for the years ended December 31, 2021 and 2020 were 271,868 and 183,674, respectively.

The increase was due primarily to the units acquired as part of the Merger with Mobile Mini, which closed on July 1, 2020.

In total, modular space average units on rent increased 10,876 units, or 10.9%, for the year ended December 31, 2021 as compared to the year ended December 31, 2020.

Modular space average monthly rental rates increased 13.1% to $744 for the year ended December 31, 2021.

Improved pricing was driven by a continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio, partially offset by the dilutive impact of lower rates on the Mobile Mini modular space units due to product mix.

Portable storage average units on rent increased by 77,318 units, or 91.9%, for the year ended December 31, 2021.

Average portable storage monthly rental rates of $144 represented an increase of $12, or 9.1%, compared to the year ended December 31, 2020.

This increase was driven by the accretive impact of higher rates from the Mobile Mini portable storage fleet.

The average modular space unit utilization rate during the year ended December 31, 2021 was 70.1%, as compared to 70.2% during the same period in 2020.

The average portable storage unit utilization rate during the year ended December 31, 2021 was 81.5%, as compared to 75.9% during the same period in 2020.

The increase in average portable storage utilization rate was driven by higher utilization on the acquired Mobile Mini units.

Gross Profit:

Our gross profit percentage was 51.1% and 48.3% for the years ended December 31, 2021 and 2020, respectively.

Our gross profit percentage, excluding the effects of depreciation ("adjusted gross profit percentage"), was 63.6% and 62.9% for the years ended December 31, 2021 and 2020, respectively.

Gross profit increased $308.2 million, or 46.7%, to $968.2 million for the year ended December 31, 2021 from $660.0 million for the year ended December 31, 2020.

The increase in gross profit is a result of a $321.0 million increase in leasing gross profit, increased delivery and installation gross profit of $13.7 million, and increased new and rental unit sale margins of $10.4 million.

These increases were primarily a result of increased average monthly rental rates in the NA Modular segment on modular space units as well as recent acquisitions.

These increases were offset partially by increased depreciation of $36.9 million as a result of acquired fleet and capital investments made over the past twelve months in our existing rental equipment.

SG&A Expense:

SG&A expense increased $150.8 million, or 41.8%, to $511.4 million for the year ended December 31, 2021, compared to $360.6 million for the year ended December 31, 2020.

The primary driver of the increase is related to

additional SG&A exp ense as a result of operating a larger business due to the Merger.

SG&A expense for the NA Storage, UK Storage, and Tank and Pump segments totaled $197.4 million for the year ended December 31, 2021.

Transaction Costs:

Transaction costs decreased $62.7 million to $1.4 million for the year ended December 31, 2021.

Transaction costs were primarily related to the Merger.

Other Depreciation and Amortization:

Other depreciation and amortization increased $34.8 million, or 80.6%, to $78.0 million for the year ended December 31, 2021, compared to $43.2 million for the year ended December 31, 2020.

The increase was driven by a $21.9 million increase in other depreciation and an $12.9 million increase in amortization of intangible assets primarily as a result of Mobile Mini being included in the 2021 results for a full year as compared to two quarters in 2020.

Lease Impairment Expense and Other Related Charges:

Lease impairment expense and other related charges were $2.9 million for the year ended December 31, 2021 as compared to $4.9 million for the year ended December 31, 2020.

The decrease in lease impairment expense and other related charges of $2.0 million is a result of fewer closed locations in 2021 as compared to 2020.

Restructuring Costs:

Restructuring costs were $11.9 million for the year ended December 31, 2021 as compared to $6.5 million for the year ended December 31, 2020.

The restructuring charges in the year ended December 31, 2021 were primarily due to employee terminations costs as a result of the elimination of positions due to the Merger.

The restructuring charges in the year ended December 31, 2020 were primarily due to employee terminations costs as a result of the Merger and, to a lesser extent, reductions in force across our branch network in response to COVID-19 economic conditions.

Currency (Gains) Losses, net:

Currency (gains) losses, net decreased by $0.9 million to a $0.5 million loss for the year ended December 31, 2021 compared to a $0.4 million gain for the year ended December 31, 2020.

The decrease in currency (gains) losses, net, are primarily attributable to the impact of foreign currency exchange rate changes on loans and borrowings and intercompany receivables and payables denominated in a currency other than the subsidiaries’ functional currency.

Other (Income) Expense, Net:

Other (income) expense, net was $1.8 million of expense for the year ended December 31, 2021 and $1.7 million of income for the year ended December 31, 2020, primarily related to the reversal of non-operating liabilities of $2.5 million for the year ended December 31, 2020.

Interest Expense:

Interest expense decreased $1.9 million, or 1.6%, to $118.0 million for the year ended December 31, 2021 from $119.9 million for the year ended December 31, 2020.

The decrease was driven by the redemption of the 2022 Secured Notes and the 2023 Secured Notes in the third quarter of 2020 and the redemption of $123.5 million of our 2025 Secured Notes during 2021.

Fair Value (Gain) Loss on Common Stock Warrant Liabilities:

The fair value of common stock warrant liabilities decreased $30.1 million to a loss of $26.6 million for the year ended December 31, 2021.

The decrease was primarily attributable to the change in estimated fair value of common stock warrant liabilities.

Loss on Extinguishment of Debt:

We recorded a loss on extinguishment of debt of $6.0 million for the year ended December 31, 2021 related to the redemption premium and write off of unamortized deferred financing costs associated with the redemption of $123.5 million of our 2025 Secured Notes.

For the year ended December 31, 2020, as a result of the Merger and the related financing transactions, we recorded a loss on extinguishment of debt of $42.4 million.

This loss on extinguishment of debt was comprised of the redemption premium and write off of unamortized deferred financing costs associated with the following:

(i) $15.2 million due to the redemption of the 2022 Secured Notes, (ii) $22.7 million due to the redemption of the 2023 Secured Notes, and (iii) $4.4 million associated with the 2017 ABL Facility.

Income Tax Expense:

Income tax expense increased $101.0 million to a $49.5 million expense for the year ended December 31, 2021 compared to a $51.5 million benefit for the year ended December 31, 2020.

The increase in income tax expense was a result of higher pre-tax income partially offset by a reduction of reserves for uncertain tax positions of $11.7 million and increased by nondeductible permanent adjustments and a remeasurement of deferred tax liabilities in the UK resulting from the tax rate change in the UK enacted during the year ended December 31, 2021.

The income tax benefit recognized in December 31, 2020 was primarily a result of the reversal of our valuation allowance of $56.5 million based on our assessment of deferred tax assets.

Comparison of Years Ended December 31, 2020 and 2019

Total revenue increased $303.9 million, or 28.6%, to $1,367.6 million for the year ended December 31, 2020 from $1,063.7 million for the year ended December 31, 2019.

The increase was primarily driven by the addition of Mobile Mini's revenues to our consolidated results.

The Merger closed on July 1, 2020 and drove $316.5 million of the year over year increase.

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Delivery and installation revenues increased $54.1 million, or 24.6%, due to increased overall activity as a result of the Merger, but was partially offset by lower delivery volumes due to the impact of new project cancellations and delays in the second and third quarter of 2020 as a result of the COVID-19 pandemic.

New unit sales decreased $6.0 million, or 10.2%, and rental unit sales decreased $1.4 million, or 3.5%, as a result of lower demand in 2020.

reduced new unit sales which decreased $6.0 million, or 10.2%, and rental unit sales which decreased $1.4 million, or 3.5%, as a result of lower demand in 2020.

Total average modular space and portable storage units on rent for the years ended December 31, 2020 and 2019 were 183,674 and 108,560, respectively.

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Restructuring costs were $6.5 million for the year ended December 31, 2020 as compared to $3.8 million for the year ended December 31, 2019.

The restructuring charges in the year ended December 31, 2020 were

primarily due to employee terminations costs as a result of the Merger and, to a lesser extent, reductions in force across our branch network in response to COVID-19 economic conditions.

The restructuring charges in the year ended December 31, 2019 related primarily to employee termination costs related to the ModSpace and Acton acquisitions and integrations.

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The decrease was driven by lower interest rates on our ABL facilities, the repayment of our 10% Unsecured Notes in 2019 and the lower interest rates on our 2025 Secured Notes and 2028 Secured Notes, partially offset by an $800 million increase in debt outstanding as a result of the Merger.

Fair Value (Gain) Loss on Common Stock Warrant Liabilities:

The fair value of common stock warrant liabilities increased $113.1 million, to a $3.5 million gain for the year ended December 31, 2020 from a $109.6 million loss for the year ended December 31, 2019.

The increase was primarily attributable to the change in estimated fair value of common stock warrant liabilities.

Loss on Extinguishment of Debt:

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The increase in income tax benefit was driven by a reversal of our valuation allowance of $56.5 million based on our assessment of deferred tax assets, a reduction of reserves for uncertain tax positions of $11.2 million, partially offset by tax expense from pre-tax income and non-deductible expense in the year ended December 31, 2020 as compared to discrete benefits recorded in the year ended December 31, 2019.

Comparison of Years Ended December 31, 2019 and 2018

Total revenue increased $312.3 million, or 41.6%, to $1,063.7 million for the year ended December 31, 2019 from $751.4 million for the year ended December 31, 2018.

The increase was primarily the result of a 43.3% increase in leasing and services revenue driven by increased volumes from acquisitions and improved pricing.

Improved volumes were driven by units acquired as part of the ModSpace acquisition, as well as, increased modular delivery and installation revenues on the combined rental fleet of 42.4% due to increased transaction volumes and higher revenues per transaction.

Average modular space monthly rental rates increased 11.2% for the year ended December 31, 2019, and average modular space units on rent increased 21,425 units, or 30.5%, due to the impact of an additional 8.5 months of contribution from the ModSpace acquisition.

Improved pricing was driven by a combination of our price optimization tools and processes, as well as, by continued growth in our “Ready to Work” solutions and increased VAPS penetration across our customer base, offset partially by the average modular space monthly rental rates on acquired units for ModSpace.

The increase in leasing and services revenues was further complemented by an increase of $5.5 million, or 10.3%, in new unit sales as compared to 2018.

This increase was primarily driven by increased sales as a result of the ModSpace acquisition.

Rental unit sales increased $15.3 million, or 61.2%, as compared to 2018.

Total average units on rent for the years ended December 31, 2019 and 2018 were 108,560 and 85,737, respectively.

The increase was due to units acquired as part of the ModSpace acquisition, with modular space average units on rent increased by 21,425 units, or 30.5%, for the year ended December 31, 2019.

Modular space average monthly rental rates increased 11.2% for the year ended December 31, 2019.

Portable storage average units on rent increased by 1,398 units, or 9.0%, for the year ended December 31, 2019.

Average portable storage monthly rental rates increased 0.8% for the year ended December 31, 2019.

The average modular space unit utilization rate for the year ended December 31, 2019 was 72.0%, as compared to 71.6% in 2018.

The increase in average modular space utilization rate was driven by a reduction in the combined modular space unit fleet size across the combined WillScot and ModSpace fleet in 2019.

The average portable storage unit utilization rate during the year ended December 31, 2019 was 65.8%, as compared to 68.9% in 2018.

The decrease in average portable storage utilization rate was driven by organic declines in the number of portable storage average units on rent in the Modular - US segment.

Gross Profit:

Our gross profit percentage was 38.9% and 38.5% for the years ended December 31, 2019 and 2018, respectively.

Our gross profit percentage, excluding the effects of depreciation ("adjusted gross profit percentage"), was 55.3% and 54.7% for the years ended December 31, 2019 and 2018, respectively.

Gross profit increased $123.9 million, or 42.8%, to $413.3 million for the year ended December 31, 2019 from $289.4 million for the year ended December 31, 2018.

The increase in gross profit is a result of a $291.5 million increase in modular leasing and services revenue and increased new unit sales gross profit of $0.2 million, offset by increases of $120.2 million in modular leasing and services costs.

Increases in modular leasing and services revenues and costs were primarily as a result of increased revenues due to additional units on rent as a result of recent acquisitions as well as increased margins due to favorable average monthly rental rates on modular space units and increased delivery and installation margins driven primarily by higher pricing per transaction.

These increases were partially offset by increased depreciation of $53.3 million as a result of additional rental equipment acquired as part of the ModSpace acquisition, as well as continued capital investment in our existing rental equipment.

SG&A Expense:

SG&A expense increased $16.1 million, or 6.3%, to $271.0 million for t he year ended December 31, 2019, compared to $254.9 million for the year ended December 31, 2018.

Employee costs increased $19.5 million driven by the increased size of the workforce, offset partially by employee savings achieved as a result of restructuring activities;

and occupancy costs increased $10.3 million largely due to the expansion of our branch network and storage lots, including a portion of the expected cost savings as we have now exited approximately 85% of redundant real estate locations.

Discrete items included in SG&A expense decreased for the year ended December 31, 2019, compared to the year ended December 31, 2018, by $17.7 million as decreases in transaction and integration costs related to the ModSpace and Acton acquisitions and subsequent integrations of $20.1 million and $4.0 million, respectively, were partially offset by increases in stock compensation expense and other acquisition-related activities of $3.3 million and $3.1 million, respectively.

The remaining increases of $4.0 million are primarily related to increased professional fees, insurance, computer, travel, office and other expenses related to operating a larger business as a result of our recent acquisitions and our expanded employee base and branch network.

We estimate incremental cost synergies of approximately $36.0 million related to the ModSpace and Acton acquisitions were realized in 2019, which compares to approximately $6.4 million of synergies realized in 2018 related to the Acton and Onsite Space LLC (d/b/a Tyson Onsite (“Tyson”) acquisitions, bringing cumulative synergies related to the Acton, Tyson, and ModSpace acquisitions from the dates of the acquisitions to December 31, 2019 to approximately $42.4 million.

These cost synergies are consistent with our integration plans and we expect to achieve annual recurring cost savings of over $70.0 million once our integration plans are fully executed and in our annual results.

Transaction Costs:

Transaction costs decreased $20 million for the year ended December 31, 2019.

Transaction costs in 2018 were related to the ModSpace acquisition that closed on August 15, 2018.

Other Depreciation and Amortization:

Other depreciation and amortization decreased $0.9 million, or 6.8%, to $12.4 million for the year ended December 31, 2019, compared to $13.3 million for the year ended December 31, 2018.

The decrease in other depreciation and amortization was driven primarily by lower depreciation as a result of the decrease in property, plant and equipment.

Property, plant and equipment decreased as a result of the transfer of non-producing branches to assets held for sale which are no longer depreciated and the impact of the adoption of ASC 842 which resulted in the reversal of branch assets previously accounted for as failed sale-lease back locations which are compliant sales under ASC 842.

Impairment losses on Long-Lived Assets :

Impairment losses on long-lived assets were $2.8 million for the year ended December 31, 2019 as compared to $1.6 million for the year ended December 31, 2018 .

In 2019 and 2018, we reclassified certain branch facilities from property, plant and equipment to assets held for sale and recognized an impairment on these assets as the estimated fair value was less than the carrying value of the facilities.

Lease Impairment Expense and Other Related Charges :

Lease impairment expense and other related charges was $8.7 million for the year ended December 31, 2019.

Effective January 1,2019, in connection with the adoption of ASC 842, we recorded $4.2 million in ROU asset impairments, $2.6 million in rent on closed locations and $1.9 million in lease termination fees.

Restructuring Costs:

Restructuring costs were $3.8 million for the year ended December 31, 2019 as compared to $15.5 million for the year ended December 31, 2018.

The 2019 restructuring charges related primarily to employee termination costs as a result of the ModSpace acquisition and integration.

The 2018 restructuring charges are comprised of employee termination and lease breakage costs related to the Acton and ModSpace acquisitions and integrations.

Prior to the adoption of ASC 842 effective January 1.

2019, the costs associated with leases exited as a result of a restructuring plan were recorded in restructuring expense.

Currency (Gains) Losses, net:

Currency (gains) losses, net were a $0.7 million gain for the year ended December 31, 2019 compared to a $2.5 million loss for the year ended December 31, 2018.

The decrease in currency losses was primarily attributable to the impact of foreign currency exchange rate changes on loans and borrowings and intercompany receivables and payables denominated in a currency other than the subsidiaries’ functional currency.

Other Income, Net:

Other income, net was $2.2 million fo r the year ended December 31, 2019 and $4.6 million for the year ended December 31, 2018.

The decrease in other income was driven by the receipt of insurance proceeds related to assets damaged during Hurricane Harvey and other settlements which contributed $5.6 million to other expense, net for the year ended December 31, 2018, offset by the receipt of $2.4 million in insurance proceeds related to assets damaged during hurricanes and the receipt of a $0.9 million settlement during the year ended December 31, 2019.

Interest Expense:

Interest expense increased $24.1 million, or 24.5%, to $122.5 million for the year ended December 31, 2019 from $98.4 million for the year ended December 31, 2018 .

The increase in interest expense is attributable to the increased financing costs for the full year in 2019, as a result of the ModSpace acquisition which occurred in the third quarter of 2018, offset in part by the one-time bridge financing and upfront commitment fees expensed in 2018 and lower interest costs due to the redemption of our Unsecured Notes in June 2019.

In the third quarter of 2018, as part of financing the ModSpace acquisition, we upsized our 2017 ABL Facility to $1.425 billion, issued the 2023 Secured Notes, and issued the Unsecured Notes and incurred bridge financing fees and upfront commitment fees of $20.5 million which were recorded to interest expense.

Loss on Extinguishment of Debt:

$1.5 million related to the $30 million redemption on December 13, 2019 of the 2022 Secured Notes at a redemption price of 103% and $7.2 million related to the redemption on June 19, 2019 of the 2023 senior unsecured notes.

Refer to Part II, Item 8, Note 11 for further information.

Income Tax Benefit:

Income tax benefit decreased $36.4 million to $2.2 million for the year ended December 31, 2019 compared to $38.6 million for the year ended December 31, 2018.

The decrease in tax benefit was driven by the lower loss before income tax for the year ended December 31, 2019, approximately $17.0 million less tax benefit, and discrete tax benefits in 2018 related to a reduction in the valuation allowance, tax benefit of $11.9 million, and a tax benefit of $7.0 million related to a change in the Company asserting indefinite re-investment in certain of its foreign businesses.

Business Segments

As a result of the Merger, we evaluated our operating structure and, accordingly, our segment structure and determined we operate in four reportable segments as follows:

The Company operates in four reportable segments as follows:

NA Modular, NA Storage, UK Storage and Tank and Pump.

The NA Modular segment represents the activities of WillScot prior to the Merger.

The NA Storage, UK Storage and Tank and Pump segments align to the three segments reported by Mobile Mini prior to the Merger.

The NA Modular segment represents the activities of the North America modular business.

NA Storage represents the activities of the North America portable storage business.

The UK Storage business represents the results of all modular and portable storage operations in the UK.

The Tank and Pump segment represents the results of all operations for Tank and Pump services.

Prior to the third quarter of 2021, the NA Modular segment represented the activities of WillScot historical segments prior to the Merger and the NA Storage, UK Storage and Tank and Pump segments represented the segments reported by Mobile Mini prior to the Merger.

During the third quarter of 2021, the majority of the portable storage product business within the NA Modular segment was transitioned to the NA Storage segment, and associated revenues, expenses, and operating metrics beginning in the third quarter of 2021 were transferred to the NA Storage segment, representing a shift of approximately $5.0 million of revenue and gross margin per quarter from the NA Modular segment to the NA Storage segment.

This adjustment was not made to the historical segment results of prior periods, as we believe such adjustments to be immaterial.

The following tables and discussion summarize our reportable segment financial information for the years ended December 31, 2021, 2020 and 2019 .

Consistent with the presentation of our consolidated financial statements, the below segment results only include results from ModSpace and Mobile Mini for the periods subsequent to the respective acquisition and Merger and do not include any unrealized incremental cost savings, revenue growth or pro forma adjustments that management expects to result from the integration of the acquired and merged businesses.

A Summary Business Segment Supplemental Unaudited Pro Forma Financial Information section has been included in this MD&A in order to provide period over period comparable financial information for the NA Storage, UK Storage and Tank and Pump reporting segments, as these segments were not included in our 2019 reported results.

Consistent with the presentation of our consolidated financial statements, the below segment results only include results from Mobile Mini for the periods subsequent to the Merger and do not include any unrealized incremental cost savings, revenue growth or pro forma adjustments that management expects to result from the integration of the merged business.

A Summary Business Segment Supplemental Unaudited Pro Forma Financial Information section has been included in this MD&A in order to provide period over period comparable financial information for the NA Storage, UK Storage and Tank and Pump reporting segments as these segments were not included in our reported results for the first six months of 2020.

Business Segment Results

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Average portable storage monthly rental rate $ 131 $ 155 $ 88 $ — $ 144

Average tank and pump solutions rental fleet utilization based on original equipment cost — % — % — % 61.7 % 61.7 %

Average tank and pump solutions rental fleet utilization based on original equipment cost N/A N/A N/A 72.3 % 72.3 %

Year Ended December 31, 2020

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Average portable storage monthly rental rate $ 122 $ 147 $ 76 $ — $ 132

Average tank and pump solutions rental fleet utilization based on original equipment cost — % — % — % — % — %

Average tank and pump solutions rental fleet utilization based on original equipment cost N/A N/A N/A 61.7 % 61.7 %

Year Ended December 31, 2019

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Average portable storage monthly rental rate $ 120 $ — $ — $ — $ 120

Average tank and pump solutions rental fleet utilization based on original equipment cost — % — % — % — % — %

Average tank and pump solutions rental fleet utilization based on original equipment cost N/A N/A N/A — % — %

NA Modular Segment

Comparison of Years Ended December 31, 2021 and 2020

Total revenue increased $113.0 million, or 10.7%, to $1,164.2 million for the year ended December 31, 2021 from $1,051.2 million for the year ended December 31, 2020.

The increase was primarily driven by increased leasing revenue of $94.6 million, or 12.3%, compared to 2020, increased delivery and installation revenue of $11.3 million, or 5.4% compared to 2020 and increased sales revenue of $7.1 million, or 9.8% compared to 2020.

Average modular space monthly rental rates increased 18.1% for the year ended December 31, 2021 to $809 driven by continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio.

Improved pricing was partially offset by lower volumes as average modular space units on rent decreased by 2,350 units, or 2.7%, year over year.

The decrease was driven primarily by lower delivery volumes in the first half of the year.

Gross Profit:

Gross profit increased $44.8 million, or 9.9%, to $496.4 million for the year ended December 31, 2021 from $451.6 million for the year ended December 31, 2020.

The increase in gross profit was driven by a $59.9 million increase in leasing gross profit driven by improved pricing and VAPS.

The increase in gross profit from leasing revenues was partially offset by an $11.9 million increase in depreciation of rental equipment primarily as a result of capital investments made over the past twelve months in our existing rental equipment for the year ended December 31, 2021.

Adjusted EBITDA:

Adjusted EBITDA increased $28.2 million, or 7.1%, to $423.0 million for the year ended December 31, 2021 from $394.8 mil lion for the year ended December 31, 2020.

The increase was driven by higher leasing gross profits discussed above, partially offset by increases in SG&A, excluding discrete and other items of $24.2 million.

SG&A increases were primarily related to increases in variable compensation of $8.5 million, occupancy costs of $4.3 million and office costs of $4.0 million.

Capex for rental equipment:

Capex for rental equipment increased $34.2 million, or 22.3%, to $187.5 million for the year ended December 31, 2021 from $153.3 million for the year ended December 31, 2020.

Net CAPEX increased $21.1 million, or 17.4%, to $142.4 million.

The increase was mainly driven by fleet and VAPS purchases, as well as refurbishments.

Comparison of Years Ended December 31, 2020 and 2019

Total revenue decreased $12.5 million, or 1.2%, to $1,051.2 million for the year ended December 31, 2020 from $1,063.7 million for the year ended December 31, 2019.

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Adjusted EBITDA increased $38.3 million, or 10.7%, to $394.8 million for the year ended December 31, 2020 from $356.5 million for the year ended December 31, 2019.

The increase was driven by higher leasing

gross profits discussed above, partially offset by increases in SG&A, excluding discrete and other items, of $6.8 million.

The increase was driven by higher leasing gross profits discussed above, partially offset by increases in SG&A, excluding discrete and other items, of $6.8 million.

SG&A increases were primarily related to increases in occupancy and office costs, insurance costs, and increased bad debt expense, partially offset by decreased travel and entertainment costs due to the COVID-19 pandemic.

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Decrease to Net CAPEX was also partially driven by lower demand for sales of rental units.