WillScot Holdings Corp 10-Q

ITEM 1. Financial Statements WillScot Mobile Mini Holdings Corp. Condensed Consolidated Balance Sheets (in thousands, except share data) June 30, 2022 (unaudited) December 31, 2021 Assets Cash and cash equivalents $ 11,706 $ 12,699 Trade receivables, net of allowances for credit losses at June 30, 2022 and December 31, 2021 of $ 53,544 and $ 47,629 , respectively 440,993 399,887 Inventories 41,824 32,739 Prepaid expenses and other current assets 44,245 36,761 Assets held for sale 1,518 954 Total current assets 540,286 483,040 Rental equipment, net 3,257,475 3,080,981 Property, plant and equipment, net 322,707 312,178 Operating lease assets 235,266 247,064 Goodwill 1,171,725 1,178,806 Intangible assets, net 446,578 460,678 Other non-current assets 4,771 10,852 Total long-term assets 5,438,522 5,290,559 Total assets $ 5,978,808 $ 5,773,599 Liabilities and equity Accounts payable $ 155,901 $ 118,271 Accrued expenses 115,124 100,195 Accrued employee benefits 63,331 68,414 Deferred revenue and customer deposits 189,333 159,639 Operating lease liabilities - current 52,495 53,005 Current portion of long-term debt 20,663 18,121 Total current liabilities 596,847 517,645 Long-term debt 3,017,678 2,694,319 Deferred tax liabilities 390,092 354,879 Operating lease liabilities - non-current 183,851 194,256 Other non-current liabilities 16,390 15,737 Long-term liabilities 3,608,011 3,259,191 Total liabilities 4,204,858 3,776,836 Commitments and contingencies (see Note 16) Preferred Stock: $ 0.0001 par, 1,000,000 shares authorized and zero shares issued and outstanding at June 30, 2022 and December 31, 2021 — — Common Stock: $ 0.0001 par, 500,000,000 shares authorized and 216,090,996 and 223,939,527 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively 22 22 Additional paid-in-capital 3,295,747 3,616,902 Accumulated other comprehensive loss ( 55,276 ) ( 29,071 ) Accumulated deficit ( 1,466,543 ) ( 1,591,090 ) Total shareholders' equity 1,773,950 1,996,763 Total liabilities and shareholders' equity $ 5,978,808 $ 5,773,599 See the accompanying notes which are an integral part of these condensed consolidated financial statements. 3 WillScot Mobile Mini Holdings Corp. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended June 30, Six Months Ended June 30, (in thousands, except share and per share data) 2022 2021 2022 2021 Revenues: Leasing and services revenue: Leasing $ 428,620 $ 343,179 $ 821,812 $ 658,841 Delivery and installation 125,403 91,680 225,734 175,184 Sales revenue: New units 11,094 11,008 17,691 21,963 Rental units 16,525 15,235 25,299 30,437 Total revenues 581,642 461,102 1,090,536 886,425 Costs: Costs of leasing and services: Leasing 96,912 83,032 185,790 152,927 Delivery and installation 93,587 77,153 175,102 147,289 Costs of sales: New units 6,139 7,052 10,465 14,161 Rental units 8,955 8,162 14,099 17,267 Depreciation of rental equipment 67,176 62,893 129,392 118,591 Gross profit 308,873 222,810 575,688 436,190 Expenses: Selling, general and administrative 162,164 122,387 312,374 239,716 Other depreciation and amortization 19,054 21,622 38,658 39,946 Lease impairment expense and other related charges ( 9 ) 474 254 1,727 Restructuring costs ( 86 ) 6,960 ( 86 ) 10,102 Currency (gains) losses, net ( 127 ) 33 11 69 Other (income) expense, net ( 3,784 ) 719 ( 5,093 ) ( 1,269 ) Operating income 131,661 70,615 229,570 145,899 Interest expense 33,574 29,212 64,564 59,176 Fair value (gain) loss on common stock warrant liabilities — ( 610 ) — 26,597 Loss on extinguishment of debt — 2,814 — 5,999 Income before income tax 98,087 39,199 165,006 54,127 Income tax expense 24,711 18,828 40,459 29,309 Net Income $ 73,376 $ 20,371 $ 124,547 $ 24,818 Earnings per share Basic $ 0.33 $ 0.09 $ 0.56 $ 0.11 Diluted $ 0.32 $ 0.08 $ 0.55 $ 0.11 Weighted average shares: Basic 223,376,276 228,406,812 222,196,986 228,350,318 Diluted 227,484,012 236,536,713 226,983,150 234,898,911 See the accompanying notes which are an integral part of these condensed consolidated financial statements. 4 WillScot Mobile Mini Holdings Corp. Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Net income $ 73,376 $ 20,371 $ 124,547 $ 24,818 Other comprehensive (loss) income: Foreign currency translation adjustment, net of income tax expense of $ 0 for both the three and six months ended June 30, 2022 and $ 60 and $ 0 for the three and six months ended June 30, 2021, respectively. ( 25,628 ) 3,093 ( 29,702 ) 8,127 Net change in derivatives, net of income tax expense of $ 394 and $ 656 for the three months ended June 30, 2022 and 2021, respectively, and $ 1,171 and $ 1,323 for the six months ended June 30, 2022 and 2021, respectively. 1,176 2,146 3,497 4,323 Total other comprehensive (loss) income ( 24,452 ) 5,239 ( 26,205 ) 12,450 Total comprehensive income $ 48,924 $ 25,610 $ 98,342 $ 37,268 See the accompanying notes which are an integral part of these condensed consolidated financial statements. 5 WillScot Mobile Mini Holdings Corp. Condensed Consolidated Statements of Changes in Equity (Unaudited) Six Months Ended June 30, 2022 Common Stock Additional Paid-in-Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Shareholders' Equity (in thousands) Shares Amount Balance at December 31, 2021 223,940 $ 22 $ 3,616,902 $ ( 29,071 ) $ ( 1,591,090 ) $ 1,996,763 Net income — — — — 51,171 51,171 Other comprehensive loss — — — ( 1,753 ) — ( 1,753 ) Stock-based compensation and issuance of Common Stock from vesting 498 — 6,395 — — 6,395 Repurchase and cancellation of Common Stock and warrants ( 2,064 ) — ( 77,409 ) — — ( 77,409 ) Issuance of Common Stock from the exercise of options and warrants 800 — 3,313 — — 3,313 Withholding taxes on net share settlement of stock-based compensation — — ( 12,295 ) — — ( 12,295 ) Balance at March 31, 2022 223,174 $ 22 $ 3,536,906 $ ( 30,824 ) $ ( 1,539,919 ) $ 1,966,185 Net income — — — — 73,376 73,376 Other comprehensive loss — — — ( 24,452 ) — ( 24,452 ) Stock-based compensation and issuance of Common Stock from vesting 70 — 9,292 — — 9,292 Repurchase and cancellation of Common Stock and warrants ( 7,222 ) — ( 249,515 ) — — ( 249,515 ) Issuance of Common Stock from the exercise of options and warrants 69 — 139 — — 139 Withholding taxes on net share settlement of stock-based compensation — — ( 1,075 ) — — ( 1,075 ) Balance at June 30, 2022 216,091 $ 22 $ 3,295,747 $ ( 55,276 ) $ ( 1,466,543 ) $ 1,773,950 6 Six Months Ended June 30, 2021 Common Stock Additional Paid-in-Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Shareholders' Equity (in thousands) Shares Amount Balance at December 31, 2020 229,038 $ 23 $ 3,852,291 $ ( 37,207 ) $ ( 1,751,234 ) $ 2,063,873 Net income — — — — 4,447 4,447 Other comprehensive income — — — 7,211 — 7,211 Stock-based compensation and issuance of Common Stock from vesting 229 — 4,951 — — 4,951 Repurchase and cancellation of Common Stock and warrants ( 2,793 ) — ( 76,788 ) — — ( 76,788 ) Issuance of Common Stock from the exercise of options and warrants 341 — 5,414 — — 5,414 Withholding taxes on net share settlement of stock-based compensation — — ( 3,219 ) — — ( 3,219 ) Balance at March 31, 2021 226,815 $ 23 $ 3,782,649 $ ( 29,996 ) $ ( 1,746,787 ) $ 2,005,889 Net income — — — — 20,371 20,371 Other comprehensive income — — — 5,239 — 5,239 Stock-based compensation and issuance of Common Stock from vesting 60 — 9,038 — — 9,038 Repurchase and cancellation of Common Stock and warrants ( 4,100 ) — ( 35,508 ) — — ( 35,508 ) Issuance of Common Stock from the exercise of warrants 4,058 — 384 — — 384 Balance at June 30, 2021 226,833 $ 23 $ 3,756,563 $ ( 24,757 ) $ ( 1,726,416 ) $ 2,005,413 See the accompanying notes which are an integral part of these condensed consolidated financial statements. 7 WillScot Mobile Mini Holdings Corp. Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, (in thousands) 2022 2021 Operating activities: Net income $ 124,547 $ 24,818 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 168,050 160,480 Provision for credit losses 18,865 16,910 Gain on sale of rental equipment and other property, plant and equipment ( 14,195 ) ( 14,793 ) Amortization of debt discounts and debt issuance costs 6,975 7,082 Fair value loss on common stock warrant liabilities — 26,597 Loss on extinguishment of debt — 5,999 Stock-based compensation expense 15,687 13,989 Deferred income tax expense 31,072 24,389 Unrealized currency gains, net ( 71 ) ( 184 ) Other 1,916 — Changes in operating assets and liabilities: Trade receivables ( 60,737 ) ( 50,324 ) Inventories ( 9,293 ) ( 8,535 ) Prepaid expenses and other assets ( 13,907 ) 10,004 Operating lease assets and liabilities 936 ( 537 ) Accounts payable and other accrued expenses 34,756 30,689 Deferred revenue and customer deposits 29,252 15,024 Net cash provided by operating activities 333,853 261,608 Investing activities: Acquisitions, net of cash acquired ( 103,927 ) — Proceeds from sale of rental equipment 35,080 30,437 Purchase of rental equipment and refurbishments ( 225,389 ) ( 117,817 ) Proceeds from sale of property, plant and equipment 751 16,438 Purchase of property, plant and equipment ( 20,253 ) ( 17,450 ) Net cash used in investing activities ( 313,738 ) ( 88,392 ) Financing activities: Receipts from issuance of Common Stock from the exercise of options 3,452 5,798 Repurchase and cancellation of Common Stock and warrants ( 319,225 ) ( 214,299 ) Receipts from borrowings 454,322 387,658 Payment of financing costs ( 8,021 ) — Repayment of borrowings ( 127,607 ) ( 347,225 ) Payment of debt extinguishment premium costs — ( 3,705 ) Principal payments on finance lease obligations ( 10,353 ) ( 7,921 ) Taxes paid on employee stock awards ( 13,370 ) ( 3,219 ) Net cash used in financing activities ( 20,802 ) ( 182,913 ) Effect of exchange rate changes on cash and cash equivalents ( 306 ) 162 Net change in cash and cash equivalents ( 993 ) ( 9,535 ) Cash and cash equivalents at the beginning of the period 12,699 24,937 Cash and cash equivalents at the end of the period $ 11,706 $ 15,402 Supplemental cash flow information: Interest paid 1 $ 59,980 $ 52,053 Income taxes paid, net $ 10,608 $ 4,383 Capital expenditures accrued or payable $ 39,949 $ 19,099 1 Includes $ 5,948 of payments related to the interest rate swap for the six months ended June 30, 2021. See the accompanying notes which are an integral part of these condensed consolidated financial statements. 8 WillScot Mobile Mini Holdings Corp. Notes to the Condensed Consolidated Financial Statements (Unaudited) NOTE 1 - Summary of Significant Accounting Policies Organization and Nature of Operations WillScot Mobile Mini Holdings Corp. (“WillScot Mobile Mini” and, together with its subsidiaries, the “Company”) is a leading business services provider specializing in innovative flexible work space and portable storage solutions in the United States (“US”), Canada, Mexico and the United Kingdom ("UK"). The Company also maintains a fleet of specialty containment products, including liquid and solid containment solutions. The Company leases, sells, delivers and installs mobile solutions and storage products through an integrated network of branch locations that spans North America and the UK. Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by US Generally Accepted Accounting Principles ("GAAP") for complete financial statements. The accompanying unaudited condensed consolidated financial statements comprise the financial statements of WillScot Mobile Mini and its subsidiaries that it controls due to ownership of a majority voting interest and contain all adjustments, which are of a normal and recurring nature, considered necessary by management to present fairly the financial position, results of operations and cash flows for the interim periods presented. Subsidiaries are fully consolidated from the dat e of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. All intercompany balances and transactions are eliminated. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. Reclassifications Certain reclassifications have been made to prior year financial statements to conform to the current year presentation. Recently Issued Accounting Standards In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). ASU 2021-08 requires that an acquirer recognize and measure contract assets and liabilities acquired in a business combination in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606"). ASU 2021-08 is effective for annual periods beginning after December 15, 2022, including interim periods therein, with early adoption permitted. The guidance will be applied prospectively to acquisitions occurring on or after the effective date. The Company will continue to evaluate the impact of this guidance, which will depend on the contract assets and liabilities acquired in future business combinations. NOTE 2 - Acquisitions On July 1, 2020, WillScot Corporation (“WillScot”), and Mobile Mini, Inc. (“Mobile Mini”) merged (the “Merger”). Immediately following the Merger, WillScot changed its name to “WillScot Mobile Mini Holdings Corp.” Asset Acquisitions During the second quarter of 2022, the Company acquired certain assets and liabilities of several smaller entities, which consisted primarily of approximately 4,100 storage units and 1,000 modular units for $ 47.1 million in cash. The accompanying consolidated financial statements include $ 47.1 million of rental equipment as a result of these acquisitions. D uring the first quarter of 2022, the Company acquired certain assets and liabilities, which consisted primarily of approximately 400 blast resistant modular units. Integration Costs The Company recorded $ 5.2 million and $ 7.6 million in integration costs related to acquisitions and the Merger within selling, general and administrative ("SG&A") expense during the three months ended June 30, 2022 and 2021, respectively, and $ 9.3 million and $ 15.0 million in integration costs related to acquisitions and the Merger during the six months ended June 30, 2022 and 2021, respectively. 9 NOTE 3 - Revenue Revenue Disaggregation Geographic Areas The Company had total revenue in the following geographic areas for the three and six months ended June 30, 2022 and 2021 as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 US $ 517,374 $ 399,280 $ 969,342 $ 770,549 Canada 32,901 29,543 58,174 53,127 Mexico 4,703 3,848 8,917 7,311 UK 26,664 28,431 54,103 55,438 Total revenues $ 581,642 $ 461,102 $ 1,090,536 $ 886,425 Major Product and Service Lines Equipment leasing is the Company's core business and the primary driver of the Company's revenue and cash flows. This includes modular space, portable storage and tank and pump units along with value-added products and services ("VAPS"), which include furniture, steps, ramps, basic appliances, internet connectivity devices, security products, shelving systems and other items used by customers in connection with the Company's products. Leasing is complemented by new unit sales and sales of rental units. In connection with its leasing and sales activities, the Company provides services including delivery and installation, maintenance and ad hoc services and removal services at the end of lease transactions. The Company’s revenue by major product and service line for the three and six months ended June 30, 2022 and 2021 was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Modular space leasing revenue $ 212,862 $ 181,376 $ 411,939 $ 351,328 Portable storage leasing revenue 88,548 58,848 166,532 113,461 Tank and pump leasing revenue 20,706 17,109 39,937 32,869 VAPS and third party leasing revenues (a) 87,498 70,880 168,424 133,306 Other leasing-related revenue (b) 19,006 14,966 34,980 27,877 Leasing revenue 428,620 343,179 821,812 658,841 Delivery and installation revenue 125,403 91,680 225,734 175,184 Total leasing and services revenue 554,023 434,859 1,047,546 834,025 New unit sales revenue 11,094 11,008 17,691 21,963 Rental unit sales revenue 16,525 15,235 25,299 30,437 Total revenues $ 581,642 $ 461,102 $ 1,090,536 $ 886,425 (a) Includes $ 6.8 million and $ 7.8 million of service revenue for the three months ended June 30, 2022 and 2021, respectively, and $ 14.3 million and $ 14.0 million of service revenue for the six months ended June 30, 2022 and 2021, respectively. (b) Includes primarily damage billings, delinquent payment charges, and other processing fees. Leasing and Services Revenue The majority of r evenue ( 73 % and 74 % for the three and six months ended June 30, 2022, respectively, and 73 % for both the three and six months ended June 30, 2021) was generated by rental income subject to the guidance of ASU 2018-11, Leases (Topic 842) ("ASC 842"). The remaining revenue was generated by performance obligations in contracts with customers for services or sale of units subject to the guidance in ASC 606. Receivables and Credit Losses The Company is exposed to credit losses from trade receivables and manages credit risk at the customer level. Because the same customers generate the revenues that are accounted for under both ASC 606 and ASC 842, the discussions below on credit risk and the Company's allowance for credit losses address the Company's total revenues. 10 Concentration of credit risk with respect to the Company's receivables is limited because of a large number of geographically diverse customers who operate in a variety of end user markets. The Company assesses each customer’s ability to pay for the products it leases or sells by conducting a credit review that considers expected billing exposure, timing for payment and the customer’s established credit rating. The Company performs its credit review of new customers at inception of the customer relationship and for existing customers when the customer transacts after a defined period of dormancy. The Company also considers contract terms and conditions, country risk and business strategy in the evaluation. The Company monitors ongoing credit exposure through an active review of customer balances against contract terms and due dates. The Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. The allowance for credit losses reflects the estimate of the amount of receivables that the Company will be unable to collect based on historical collection experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. The Company's estimate reflects changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, the Company may be required to increase or decrease its allowance. Activity in the allowance for credit losses was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Balance at beginning of period $ 49,258 $ 31,630 $ 47,629 $ 29,258 Provision for credit losses, net of recoveries 10,264 8,390 18,865 16,910 Write-offs ( 5,900 ) ( 4,058 ) ( 12,910 ) ( 9,872 ) Foreign currency translation and other ( 78 ) 823 ( 40 ) 489 Balance at end of period $ 53,544 $ 36,785 $ 53,544 $ 36,785 Contract Assets and Liabilities When customers are billed in advance for services, the Company defers recognition of revenue until the related services are performed, which generally occurs at the end of the contract. The balance sheet classification of deferred revenue is determined based on the contractual lease term. For contracts that continue beyond their initial contractual lease term, revenue continues to be deferred until the services are performed. During the three months ended June 30, 2022, deferred revenue relating to services billed in advance of $ 20.7 million was recognized as revenue. As of June 30, 2022 and December 31, 2021, the Company had approximately $ 95.7 million and $ 79.4 million, respectively, of deferred revenue related to these services. The Company does not have material contract assets and it did not recognize any material impairments of contract assets. The Company's uncompleted contracts with customers have unsatisfied (or partially satisfied) performance obligations. For the future services revenues that are expected to be recognized within twelve months, the Company has elected to utilize the optional disclosure exemption made available regarding transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations. The transaction price for performance obligations that will be completed in greater than twelve months is variable based on the costs ultimately incurred to provide those services and therefore the Company is applying the optional expedient to omit disclosure of such amounts. The primary costs to obtain contracts for new and rental unit sales with the Company's customers are commissions. The Company pays its sales force commissions on the sale of new and rental units. For new and rental unit sales, the period benefited by each commission is less than one year; therefore, the commissions are expensed as incurred. 11 NOTE 4 - Leases As of June 30, 2022, the undiscounted future lease payments for operating and finance lease liabilities were as follows: (in thousands) Operating Finance 2022 (remaining) $ 32,125 $ 11,992 2023 56,620 20,004 2024 47,858 17,092 2025 40,227 17,200 2026 29,457 15,202 Thereafter 69,628 21,304 Total lease payments 275,915 102,794 Less: interest ( 39,569 ) ( 7,651 ) Present value of lease liabilities $ 236,346 $ 95,143 Finance lease liabilities are included within long-term debt and current portion of long-term debt on the condensed consolidated balance sheets. The Company’s lease activity during the six months ended June 30, 2022 and 2021 was as follows: (in thousands) Six Months Ended June 30, Financial Statement Line 2022 2021 Finance Lease Expense Amortization of finance lease assets $ 10,546 $ 9,514 Interest on obligations under finance leases 1,299 1,098 Total finance lease expense $ 11,845 $ 10,612 Operating Lease Expense Fixed lease expense Cost of leasing and services $ 1,574 $ 2,131 Selling, general and administrative 32,430 29,359 Lease impairment expense and other related charges 213 1,107 Short-term lease expense Cost of leasing and services 17,056 11,575 Selling, general and administrative 1,071 723 Variable lease expense Cost of leasing and services 2,822 3,373 Selling, general and administrative 4,273 3,792 Lease impairment expense and other related charges 40 335 Total operating lease expense $ 59,479 $ 52,395 Lease impairment expense and other related charges relate to closed locations that are no longer used in operations as a result of consolidation activities within the Company . During the six months ended June 30, 2022, the Company recorded $ 0.3 million in lease impairment expense and other related charges which is comprised of closed location rent expense. During the six months ended June 30, 2021, the Company recorded $ 1.7 million in lease impairment expense and other related charges which is comprised of $ 1.5 million in closed location rent expense and $ 0.2 million loss on lease exit and impairment charges. 12 Supplemental cash flow information related to leases for the six months ended June 30, 2022 and 2021 was as follows: (in thousands) Six Months Ended June 30, Supplemental Cash Flow Information 2022 2021 Cash paid for the amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 33,850 $ 33,409 Operating cash outflows from finance leases $ 1,297 $ 1,095 Financing cash outflows from finance leases $ 10,371 $ 6,935 Right of use assets obtained in exchange for lease obligations $ 19,504 $ 28,288 Assets obtained in exchange for finance leases $ 17,065 $ 11,530 Weighted-average remaining operating lease terms and the weighted average discount rates as of June 30, 2022 and December 31, 2021 were as follows: Lease Terms and Discount Rates June 30, 2022 December 31, 2021 Weighted-average remaining lease term - operating leases 6.1 years 6.1 years Weighted-average discount rate - operating leases 4.9 % 5.0 % Weighted-average remaining lease term - finance leases 4.8 years 4.5 years Weighted-average discount rate - finance leases 3.2 % 2.9 % NOTE 5 - Inventories Inventories at the respective balance sheet dates consisted of the following: (in thousands) June 30, 2022 December 31, 2021 Raw materials $ 35,411 $ 26,854 Finished units 6,413 5,885 Inventories $ 41,824 $ 32,739 NOTE 6 - Rental Equipment, net Rental equipment, net at the respective balance sheet dates consisted of the following: (in thousands) June 30, 2022 December 31, 2021 Modular space units $ 3,185,153 $ 3,005,195 Portable storage units 821,582 758,619 Tank and pump products 167,854 156,112 Value added products 189,534 168,419 Total rental equipment 4,364,123 4,088,345 Less: accumulated depreciation ( 1,106,648 ) ( 1,007,364 ) Rental equipment, net $ 3,257,475 $ 3,080,981 13 NOTE 7 - Goodwill Changes in the carrying amount of goodwill were as follows: (in thousands) NA Modular NA Storage UK Storage Tank and Pump Total Balance at December 31, 2020 $ 235,828 $ 726,529 $ 65,600 $ 143,262 $ 1,171,219 Changes to Mobile Mini purchase accounting 285,000 ( 233,666 ) — ( 43,173 ) 8,161 Effects of movements in foreign exchange rates 221 ( 311 ) ( 502 ) 18 ( 574 ) Balance at December 31, 2021 521,049 492,552 65,098 100,107 1,178,806 Effects of movements in foreign exchange rates ( 354 ) ( 234 ) ( 6,493 ) — ( 7,081 ) Balance at June 30, 2022 $ 520,695 $ 492,318 $ 58,605 $ 100,107 $ 1,171,725 The Company had no goodwill impairment during the six months ended June 30, 2022 or the year ended December 31, 2021. NOTE 8 - Intangibles Intangible assets other than goodwill at the respective balance sheet dates consisted of the following: June 30, 2022 (in thousands) Weighted average remaining life (in years) Gross carrying amount Accumulated amortization Net book value Intangible assets subject to amortization: Mobile Mini customer relationships 6.1 $ 209,000 $ ( 52,422 ) $ 156,578 Technology 4.0 1,500 ( 500 ) 1,000 Indefinite-lived intangible assets: Trade name - Mobile Mini 164,000 — 164,000 Trade name - WillScot 125,000 — 125,000 Total intangible assets other than goodwill $ 499,500 $ ( 52,922 ) $ 446,578 December 31, 2021 (in thousands) Weighted average remaining life (in years) Gross carrying amount Accumulated amortization Net book value Intangible assets subject to amortization: Mobile Mini customer relationships 6.6 $ 209,000 $ ( 38,447 ) $ 170,553 Technology 4.5 1,500 ( 375 ) 1,125 Indefinite-lived intangible assets: Trade name - Mobile Mini 164,000 — 164,000 Trade name - WillScot 125,000 — 125,000 Total intangible assets other than goodwill $ 499,500 $ ( 38,822 ) $ 460,678 Amortization expense related to intangible assets was $ 6.6 million and $ 6.8 million for the three months ended June 30, 2022 and 2021, respectively, and $ 13.2 million and $ 13.8 million for the six months ended June 30, 2022 and 2021, respectively. 14 Based on the carrying value at June 30, 2022, future amortization of intangible assets is expected to be as follows for the years ended December 31: (in thousands) 2022 (remaining) $ 13,334 2023 26,416 2024 26,416 2025 26,416 2026 25,287 Thereafter 39,709 Total $ 157,578 NOTE 9 - Debt The carrying value of debt outstanding at the respective balance sheet dates consisted of the following: (in thousands, except rates) Interest rate Year of maturity June 30, 2022 December 31, 2021 2025 Secured Notes 6.125 % 2025 $ 519,215 $ 518,117 ABL Facility (a) Varies 2027 1,931,009 1,612,783 2028 Secured Notes 4.625 % 2028 492,974 492,490 Finance Leases Varies Varies 95,143 89,050 Total debt 3,038,341 2,712,440 Less: current portion of long-term debt 20,663 18,121 Total long-term debt $ 3,017,678 $ 2,694,319 (a) As of December 31, 2021, the Company h ad no outst anding principal borrowings on the multicurrency revolving credit facility and $ 6.2 million of related debt issuance costs. No related debt issuance costs were recorded as a direct offset against the principal borrowings on the Multicurrency Facility, and the $ 6.2 million in excess of principal was included in other non-current assets on the condensed consolidated balance sheet as of December 31, 2021. Asset Backed Lending Facility On July 1, 2020, certain subsidiaries of the Company entered into an asset-based credit agreement (the "ABL Facility") that initially provided for revolving credit facilities in the aggregate principal amount of up to $ 2.4 billion, consisting of: (i) a senior secured asset-based US dollar revolving credit facility in the aggregate principal amount of $ 2.0 billion and (ii) a $ 400.0 million senior secured asset-based multicurrency revolving credit facility available to be drawn in US Dollars, Canadian Dollars, British Pounds Sterling or Euros. The ABL Facility was initially scheduled to mature on July 1, 2025. Borrowings under ABL Facility bear interest at a base rate plus an applicable margin determined quarterly by reference to the Company's excess availability for the most recently completed quarter. Effective January 7, 2022, borrowings were subject to the highest applicable margin and bore interest at (i) in the case of US Dollars, at the borrower's option, either an adjusted LIBOR rate plus 2.125 % or an alternative base rate plus 1.125 %, (ii) in the case of Canadian Dollars, at the borrower's option, either a Canadian BA rate plus 2.125 % or Canadian prime rate plus 1.125 %, (iii) in the case of Euros, the EURIBOR rate plus 2.125 %, and (iv) in the case of British Pounds Sterling, the SONIA rate plus 2.125 %. On June 30, 2022, certain subsidiaries of the Company entered into an amendment to the ABL Facility to, among other things, extend the expiration date until June 30, 2027 and increase the aggregate principal amount of the revolving credit facilities to $ 3.7 billion, consisting of: (i) a senior secured asset-based US dollar revolving credit facility in the aggregate principal amount of $ 3.3 billion (the “US Facility”) and (ii) a $ 400.0 million senior secured asset-based multicurrency revolving credit facility (the "Multicurrency Facility"), available to be drawn in US Dollars, Canadian Dollars, British Pounds Sterling or Euros. The amendment also converted the interest rate for borrowings denominated in US dollars from a LIBOR-based rate to a Term SOFR-based rate with an interest period of one month and adjusted the applicable margins. The applicable margin for Canadian BA rate, Term SOFR, British Pounds Sterling and Euros loans is 1.50 %. The applicable margin for base rate and Canadian Prime Rate loans is 0.50 %. The applicable margins are subject to one step down of 0.25 % based on excess availability or one step up of 0.25 % based on the Company's leverage ratio. The ABL Facility requires the payment of an annual commitment fee on the unused available borrowings of 0.20 % annually. At June 30, 2022, the weighted average interest rate for borrowings under the ABL Facility was 3.13 %. 15 Borrowing availability under the US Facility and the Multicurrency Facility is equal to the lesser of (i) the aggregate Revolver Commitments and (ii) the Line Cap. At June 30, 2022, the Company had $ 2.0 billion outstanding principal under the ABL Facility, the Line Cap was $ 3.0 billion, and the Company had $ 1.0 billion of available borrowing capacity under the ABL Facility, including $ 724.6 million under the US Facility and $ 309.5 million under the Multicurrency Facility. At June 30, 2022, borrowing capacity under the ABL Facility allowed for up to $ 204.9 million of letters of credit and up to $ 220.0 million of swingline loans. The Company had issued $ 15.1 million of standby letters of credit under the ABL Facility at June 30, 2022. At June 30, 2022, letters of credit and bank guarantees carried fees of 1.625 % annually . Debt issuance costs of $ 40.2 million were included in the carrying value of the ABL Facility at June 30, 2022. Finance Leases The Company maintains finance leases primarily related to transportation equipment. At June 30, 2022 and December 31, 2021, obligations under finance leases for certain real property and transportation related equipment were $ 95.1 million and $ 89.1 million, respectively. Refer to Note 4 for further information. The Company is in compliance with all debt covenants and restrictions for the aforementioned debt instruments as of June 30, 2022. NOTE 10 – Equity Common Stock In connection with the stock compensation vesting events and stock option exercises described in Note 14, and the warrant exercises described in Note 11, the Company issued 1,437,420 shares of Common Stock during the six months ended June 30, 2022. Stock Repurchase Program A share repurchase program authorizes the Company to repurchase up to $ 1.0 billion of its outstanding shares of Common Stock and equivalents. The stock repurchase program does not obligate the Company to purchase any particular number of shares, and the timing and exact amount of any repurchases will depend on various factors, including market pricing and conditions, business, legal, accounting, and other considerations. During the six months ended June 30, 2022, the Company repurchased 9,304,626 shares of Common Stock and stock equivalents for $ 326.9 million. As of June 30, 2022, $ 629.8 million of the approved repurchase amount remained available. In July 2022, the Company's Board of Directors approved an increase to the share repurchase program that authorizes the Company to repurchase up to $ 1.0 billion of its outstanding shares of Common Stock and equivalents. Accumulated Other Comprehensive Loss The changes in accumulated other comprehensive income (loss) ("AOCI"), net of tax, for the six months ended June 30, 2022 and 2021 were as follows: Six Months Ended June 30, 2022 (in thousands) Foreign currency translation Unrealized losses on hedging activities Total Balance at December 31, 2021 $ ( 25,574 ) $ ( 3,497 ) $ ( 29,071 ) Other comprehensive loss before reclassifications ( 4,074 ) ( 569 ) ( 4,643 ) Reclassifications from AOCI to income — 2,890 2,890 Balance at March 31, 2022 ( 29,648 ) ( 1,176 ) ( 30,824 ) Other comprehensive loss before reclassifications ( 25,628 ) ( 464 ) ( 26,092 ) Reclassifications from AOCI to income — 1,640 1,640 Balance at June 30, 2022 $ ( 55,276 ) $ — $ ( 55,276 ) 16 Six Months Ended June 30, 2021 (in thousands) Foreign currency translation Unrealized losses on hedging activities Total Balance at December 31, 2020 $ ( 24,694 ) $ ( 12,513 ) $ ( 37,207 ) Other comprehensive income (loss) before reclassifications 5,034 ( 760 ) 4,274 Reclassifications from AOCI to income — 2,937 2,937 Balance at March 31, 2021 ( 19,660 ) ( 10,336 ) ( 29,996 ) Other comprehensive income (loss) before reclassifications 3,093 ( 848 ) 2,245 Reclassifications from AOCI to income — 2,994 2,994 Balance at June 30, 2021 $ ( 16,567 ) $ ( 8,190 ) $ ( 24,757 ) For the six months ended June 30, 2022 and 2021 , $ 4.5 million and $ 5.9 million , was reclassified from AOCI into interest expense in the condensed consolidated statements of operations related to the interest rate swap discussed in Note 15. Associated with these reclassifications, t he Company recorded tax expense of $ 0.4 million and $ 0.7 million for the three months ended June 30, 2022 and 2021, respectively, and $ 1.1 million and $ 1.3 million for the six months ended June 30, 2022 and 2021, respectively. NOTE 11 – Warrants 2015 Warrants WillScot was incorporated under the name Double Eagle Acquisition Corporation ("DEAC") on June 26, 2015. DEAC issued warrants to purchase its Common Stock in a private placement concurrently with its initial public offering (the “2015 Private Warrants”) each of which entitled the holder to purchase one-half of one share of Common Stock. During the six months ended June 30, 2021, 3,055,000 of the 2015 Private Warrants were repurchased for $ 25.5 million and cancelled. In addition, during the six months ended June 30, 2021, 9,655,000 warrants were exercised on a cashless basis, resulting in the issuance of 2,939,898 shares of Common Stock. As of June 30, 2021, no 2015 Private Warrants remained outstanding. 2018 Warrants In connection with the Modular Space Holdings ("ModSpace") acquisition in 2018, WillScot issued warrants to purchase approximately 10.0 million shares of Common Stock (the "2018 Warrants") to former shareholders of ModSpace. Each 2018 Warrant entitles the holder to purchase one share of Common Stock at an exercise price of $ 15.50 per share, subject to adjustment. The 2018 Warrants expire on November 29, 2022 . During the six months ended June 30, 2022, 33,965 of the 2018 Warrants were repurchased for $ 0.6 million and cancelled . In addition, during the six months ended June 30, 2022, 1,037,379 of the 2018 Warrants were exercised on a cashless basis, resulting in the issuance of 631,863 shares of common stock. At June 30, 2022, 3,006,829 of the 2018 Warrants were outstanding. The Company accounted for its warrants in the following ways: (i) the 2015 Private Warrants as liabilities through their final repurchase or exercise in May 2021, and (ii) the 2018 Warrants as liabilities until June 30, 2020 after which they are accounted for as equity instruments. Warrants classified as liabilities were subject to remeasurement at each balance sheet date and transaction date with changes in the estimated fair values of the common stock warrant liabilities and gains and losses on extinguishment of common stock warrant liabilities reported in the consolidated statements of operations. NOTE 12 – Income Taxes The Company recorded $ 24.7 million and $ 40.5 million of income tax expense for the three and six months ended June 30, 2022, respectively, and $ 18.8 million and $ 29.3 million of income tax expense for the three and six months ended June 30, 2021, respectively. The Company’s effective tax rate for the three and six months ended June 30, 2022 was 25.2 % and 24.5 %, respectively. The Company's effective tax rate for the three and six months ended June 30, 2021 was 48.0 % and 54.2 %, respectively. The effective tax rate for the three and six months ended June 30, 2022 differed from the US federal statutory rate of 21% primarily due to state and provincial taxes offset by a discrete tax benefit related to employee stock vesting. The effective tax rate for the three and six months ended June 30, 2021 differed from the US statutory rate of 21% primarily due to the permanent add-backs related to changes in the estimated fair values of the Company's common stock warrant liabilities and the impact of the UK statutory rate increase. 17 NOTE 13 - Fair Value Measures The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Company utilizes the suggested accounting guidance for the three levels of inputs that may be used to measure fair value: Level 1 - Observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2 - Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and Level 3 - Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions The Company has assessed that the fair value of cash and cash equivalents, trade receivables, trade payables, and other current liabilities approximate their carrying amounts. Based on the borrowing rates currently available for bank loans with similar terms and average maturities, the fair value of finance leases at June 30, 2022 approximate their respective book values. The following table shows the carrying amounts and fair values of financial liabilities which are disclosed, but not measured, at fair value, including their levels in the fair values hierarchy: June 30, 2022 December 31, 2021 Carrying Amount Fair Value Carrying Amount Fair Value (in thousands) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 ABL Facility $ 1,931,009 $ — $ 1,971,215 $ — $ 1,612,783 $ — $ 1,644,500 $ — 2025 Secured Notes 519,215 — 518,308 — 518,117 — 551,835 — 2028 Secured Notes 492,974 — 432,630 — 492,490 — 515,635 — Total $ 2,943,198 $ — $ 2,922,153 $ — $ 2,623,390 $ — $ 2,711,970 $ — As of June 30, 2022, the carrying values of the ABL Facility, the 2025 Secured Notes, and the 2028 Secured Notes include d $ 40.2 million, $ 7.3 million, and $ 7.0 million, respectively, of unamortized debt issuance costs, which were presented as a direct reduction of the corresponding liability. As of December 31, 2021, the carrying value of the ABL Facility, the 2025 Secured Notes, and the 2028 Secured Notes included $ 31.7 million, $ 8.4 million, and $ 7.5 million, respectively, of unamortized debt issuance costs, which were presented as a direct reduction of the corresponding liability. The carrying value of the ABL Facility, excluding debt issuance costs, approximates fair value as the interest rates are variable and reflective of current market rates. The fair value of the 2025 Secured Notes and the 2028 Secured Notes is based on their last trading price at the end of each period obtained from a third party. The classification and the fair value of derivative assets and liabilities designated as hedges in the condensed consolidated balance sheets are disclosed in Note 15. Level 3 Disclosures When the 2015 Private Warrants were classified as liabilities, the Company utilized a Black Scholes option-pricing model to value the warrants at each reporting period and transaction date, with changes in fair value recognized in the statements of operations. The estimated fair value of the common stock warrant liability was determined using Level 3 inputs. Inherent in the pricing model were assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The volatility assumption was based on a blend of peer group volatility and Company trading history that matched the expected remaining life of the warrants as the Company did not have a sufficient trading history as a stand-alone public company to rely exclusively on its own trading history. The risk-free interest rate was based on the US Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants was assumed to be equivalent to their remaining contractual term. The dividend rate was based on the historical rate, which the Company anticipated to remain at zero. The following table presents changes in Level 3 liabilities measured at fair value for the three months ended June 30, 2021: (in thousands) 2015 Private Warrants Balance - March 31, 2021 $ 99,781 Exercise or conversion ( 78,495 ) Measurement adjustment ( 1,571 ) Repurchases ( 19,715 ) Balance- June 30, 2021 $ — 18 The following table presents changes in Level 3 liabilities measured at fair value for the six months ended June 30, 2021: (in thousands) 2015 Private Warrants Balance - December 31, 2020 $ 77,404 Exercise or conversion ( 78,495 ) Measurement adjustment 25,486 Repurchases ( 24,395 ) Balance- June 30, 2021 $ — NOTE 14 - Stock-Based Compensation Stock-based compensation expense includes grants of stock options, time-based restricted stock units ("Time-Based RSUs") and performance-based restricted stock units ("Performance-Based RSUs," together with Time-Based RSUs, the "RSUs"). In addition, stock-based payments to non-executive directors include grants of restricted stock awards ("RSAs"). Time-Based RSUs and RSAs are valued based on the intrinsic value of the difference between the exercise price, if any, of the award and the fair market value of WillScot Mobile Mini's Common Stock on the grant date. Performance-Based RSUs are valued based on a Monte Carlo simulation model to reflect the impact of the Performance-Based RSUs market condition. The probability of satisfying a market condition is considered in the estimation of the grant-date fair value for Performance-Based RSUs and the compensation cost is not reversed if the market condition is not achieved, provided the requisite service has been provided. Restricted Stock Awards The following table summarizes the Company's RSA activity : 2022 2021 Number of Shares Weighted-Average Grant Date Fair Value Number of Shares Weighted-Average Grant Date Fair Value Balance December 31, 36,176 $ 29.30 57,448 $ 11.75 Granted 35,244 $ 37.17 44,708 $ 29.30 Forfeited — $ — ( 4,266 ) $ 29.30 Vested ( 36,176 ) $ 29.30 ( 57,448 ) $ 11.75 Balance June 30, 35,244 $ 37.17 40,442 $ 29.30 Compensation expense for RSAs recognized in SG&A expense on the condensed consolidated statements of operations was $ 0.3 million and $ 0.1 million for the three months ended June 30, 2022 and 2021, respectively. Compensation expense for RSAs recognized in SG&A expense on the condensed consolidated statements of operations was $ 0.6 million and $ 0.3 million for the six months ended June 30, 2022 and 2021, respectively. At June 30, 2022, there was $ 1.2 million of unrecognized compensation cost related to RSAs that is expected to be recognized over the remaining weighted average vesting period of 0.9 years. Time-Based RSUs The following table summarizes the Company's Time-Based RSU activity : 2022 2021 Number of Shares Weighted-Average Grant Date Fair Value Number of Shares Weighted-Average Grant Date Fair Value Balance December 31, 997,451 $ 18.54 1,325,862 $ 13.46 Granted 357,639 $ 35.53 405,505 $ 27.20 Forfeited ( 31,712 ) $ 30.45 ( 65,153 ) $ 16.74 Vested ( 437,571 ) $ 16.61 ( 347,688 ) $ 13.30 Balance June 30, 885,807 $ 25.93 1,318,526 $ 17.61 Compensation expense for Time-Based RSUs recognized in SG&A expense on the condensed consolidated statements of operations was $ 2.5 million and $ 2.4 million for the three months ended June 30, 2022 and 2021, respectively. 19 Compensation expense for RSUs recognized in SG&A expense on the condensed consolidated statements of operations was $ 4.7 million and $ 4.3 million for the six months ended June 30, 2022 and 2021, respectively. At June 30, 2022, unrecognized compensation cost related to Time-Based RSUs totaled $ 18.9 million and is expected to be recognized over the remaining weighted average vesting period of 2.7 years. Performance-Based RSUs The following table summarizes the Company's Performance-Based RSU award activity : 2022 2021 Number of Shares Weighted-Average Grant Date Fair Value Number of Shares Weighted-Average Grant Date Fair Value Balance December 31, 1,536,394 $ 26.34 593,388 $ 14.88 Granted 745,079 $ 42.34 397,981 $ 39.10 Forfeited ( 30,712 ) $ 41.81 ( 20,077 ) $ 25.87 Vested ( 313,152 ) $ 16.45 — $ — Balance June 30, 1,937,609 $ 33.84 971,292 $ 24.56 Compensation expense for Performance-Based RSUs recognized in SG&A expense on the condensed consolidated statements of operations was $ 6.5 million and $ 2.0 million for the three months ended June 30, 2022 and 2021, respectively. Compensation expense for Performance-Based RSUs recognized in SG&A expense on the condensed consolidated statements of operations was $ 10.3 million and $ 3.1 million for the six months ended June 30, 2022 and 2021, respectively . At June 30, 2022, unrecognized compensation cost related to Performance-Based RSUs totaled $ 47.5 million and is expected to be recognized over the remaining vesting period of 1.9 years. Certain Performance-Based RSUs cliff vest based on achievement of the relative total stockholder return ("TSR") of the Company's Common Stock as compared to the TSR of the constituents in an index at the grant date over the performance period of three years. For 2022 grants, the TSR of the Company's Common Stock is compared to the TSR of the constituents in the S&P MidCap 400 Index. The target number of RSUs may be adjusted from 0 % to 200 % based on the TSR attainment levels defined by the Company's Compensation Committee. The 100 % target payout is tied to performance at the 50 % percentile, with a payout curve ranging from 0 % (for performance less than the 25 % percentile) to 200 % (for performance above the 85 % percentile). Stock Options The following tables summarize the Company's stock option activity : WillScot Options Weighted-Average Exercise Price per Share Converted Mobile Mini Options Weighted-Average Exercise Price per Share Balance December 31, 2021 534,188 $ 13.60 1,527,643 $ 14.66 Exercised — $ — ( 237,819 ) $ 14.51 Balance June 30, 2022 534,188 $ 13.60 1,289,824 $ 14.68 Fully vested and exercisable options, June 30, 2022 534,188 $ 13.60 1,289,824 $ 14.68 WillScot Options Weighted-Average Exercise Price per Share Converted Mobile Mini Options Weighted-Average Exercise Price per Share Balance December 31, 2020 534,188 $ 13.60 2,031,455 $ 14.78 Forfeited — $ — ( 6,240 ) $ 12.19 Exercised — $ — ( 373,132 ) $ 15.77 Balance June 30, 2021 534,188 $ 13.60 1,652,083 $ 14.57 Fully vested and exercisable options, June 30, 2021 400,641 $ 13.60 1,652,083 $ 14.57 20 WillScot Options Compensation expense for stock option awards, recognized in SG&A expense on the condensed consolidated statements of operations, was $ 0.2 million for the three months ended June 30, 2021. Compensation expense for stock option awards, recognized in SG&A expense on the condensed consolidated statements of operations, was $ 0.2 million and $ 0.4 million for the six months ended June 30, 2022 and 2021. NOTE 15 - Derivatives On November 6, 2018, the Company entered into an interest rate swap agreement (the “Swap Agreement”) with a financial counterparty that effectively converted $ 400.0 million in aggregate notional amount of variable-rate debt under the Company’s ABL facility into fixed-rate debt. The Swap Agreement terminated on May 29, 2022. Under the terms of the Swap Agreement, the Company received a floating rate equal to one-month LIBOR and made payments based on a fixed rate of 3.06 % on the notional amount. The receive rate under the terms of the Swap Agreement was 0.11 % at December 31, 2021. The Swap Agreement was designated and qualified as a hedge of the Company’s exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL facility. The location and the fair value of derivative instruments designated as hedges, at the balance sheet date, was as follows: (in thousands) Balance Sheet Account December 31, 2021 Cash Flow Hedges: Interest rate swap Accrued expenses $ 5,259 The fair value of the interest rate swap was based on dealer quotes of market forward rates, a Level 2 input on the fair value hierarchy, and reflected the amount that the Company would receive or pay for contracts involving the same attributes and maturity dates. The following table discloses the impact of the interest rate swap, excluding the impact of income taxes, on other comprehensive income (“OCI”), AOCI and the Company’s combined consolidated statements of operations for the six months ended June 30,: (in thousands) 2022 2021 Gain recognized in OCI $ 4,669 $ 4,323 Location of gain recognized in income Interest expense, net Interest expense, net Loss reclassified from AOCI into income (effective portion) $ ( 4,530 ) $ ( 5,931 ) NOTE 16 - Commitments and Contingencies The Company is involved in various lawsuits, claims and legal proceedings that arise in the ordinary course of business. The Company assesses these matters on a case-by-case basis as they arise and establishes reserves as required. As of June 30, 2022, with respect to these outstanding matters, the Company believes that the amount or range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on the consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties. NOTE 17 - Segment Reporting The Company operates in four reportable segments as follows: North America Modular Solutions ("NA Modular"), North America Storage Solutions ("NA Storage"), United Kingdom Storage Solutions ("UK Storage") and Tank and Pump Solutions ("Tank and Pump"). Total assets for each reportable segment are not available because the Company utilizes a centralized approach to working capital management. Transactions between reportable segments are not significant. The Company defines EBITDA as net income (loss) plus interest (income) expense, income tax (benefit) expense, depreciation and amortization. The Company reflects the further adjustments to EBITDA (“Adjusted EBITDA”) to exclude certain non-cash items and the effect of what the Company considers transactions or events not related to its core and ongoing business operations. In addition, the Chief Operating Decision Maker ("CODM") evaluates business segment performance utilizing Adjusted EBITDA as shown in the reconciliation of the Company’s consolidated net income to Adjusted EBITDA below. Management believes that evaluating segment performance excluding such items is meaningful because it provides insight with respect to the intrinsic and ongoing operating results of the Company. The Company also regularly evaluates gross profit by segment to assist in the assessment of its operational performance. The Company considers Adjusted EBITDA to be the more important metric because it more fully captures the business performance of the segments, inclusive of indirect costs. 21 Reportable Segments The following tables set forth certain information regarding each of the Company’s reportable segments fo r the three and six months ended June 30, 2022 and 2021, respectively. Three Months Ended June 30, 2022 (in thousands) NA Modular NA Storage UK Storage Tank and Pump Unallocated Costs Total Revenues: Leasing and services revenue: Leasing $ 252,046 $ 134,339 $ 20,156 $ 22,079 $ 428,620 Delivery and installation 73,680 37,163 5,342 9,218 125,403 Sales revenue: New units 8,520 1,407 489 678 11,094 Rental units 13,424 2,311 679 111 16,525 Total revenues 347,670 175,220 26,666 32,086 581,642 Costs: Cost of leasing and services: Leasing 68,297 19,814 4,193 4,608 96,912 Delivery and installation 58,969 23,568 3,410 7,640 93,587 Cost of sales: New units 4,244 1,077 322 496 6,139 Rental units 6,947 1,531 500 ( 23 ) 8,955 Depreciation of rental equipment 55,405 7,826 1,152 2,793 67,176 Gross profit $ 153,808 $ 121,404 $ 17,089 $ 16,572 $ 308,873 Other selected data: Adjusted EBITDA $ 127,881 $ 80,762 $ 12,230 $ 12,462 $ — $ 233,335 Selling, general and administrative expense $ 85,416 $ 48,468 $ 6,010 $ 6,904 $ 15,366 $ 162,164 Purchases of rental equipment and refurbishments $ 82,482 $ 34,282 $ 7,604 $ 5,785 $ — $ 130,153 22 Three Months Ended June 30, 2021 (in thousands) NA Modular NA Storage UK Storage Tank and Pump Unallocated Costs Total Revenues: Leasing and services revenue: Leasing $ 217,635 $ 85,966 $ 21,014 $ 18,564 $ 343,179 Delivery and installation 54,851 23,519 5,839 7,471 91,680 Sales revenue: New units 6,871 1,864 1,295 978 11,008 Rental units 10,025 4,445 284 481 15,235 Total revenues 289,382 115,794 28,432 27,494 461,102 Costs: Cost of leasing and services: Leasing 61,773 12,174 4,729 4,356 83,032 Delivery and installation 51,154 16,743 3,309 5,947 77,153 Cost of sales: New units 4,376 1,122 845 709 7,052 Rental units 5,127 2,558 294 183 8,162 Depreciation of rental equipment 50,816 7,476 1,318 3,283 62,893 Gross profit $ 116,136 $ 75,721 $ 17,937 $ 13,016 $ 222,810 Other selected data: Adjusted EBITDA $ 103,545 $ 49,526 $ 12,328 $ 10,096 $ — $ 175,495 Selling, general and administrative expense $ 63,406 $ 33,672 $ 6,926 $ 6,203 $ 12,180 $ 122,387 Purchases of rental equipment and refurbishments $ 49,364 $ 8,773 $ 4,226 $ 2,919 $ — $ 65,282 23 Six Months Ended June 30, 2022 (in thousands) NA Modular NA Storage UK Storage Tank and Pump Unallocated Costs Total Revenues: Leasing and services revenue: Leasing $ 485,024 $ 252,920 $ 40,727 $ 43,141 $ 821,812 Delivery and installation 129,314 67,067 11,809 17,544 225,734 Sales revenue: New units 13,365 2,349 617 1,360 17,691 Rental units 19,653 4,368 953 325 25,299 Total revenues 647,356 326,704 54,106 62,370 1,090,536 Costs: Cost of leasing and services: Leasing 132,286 36,160 8,430 8,914 185,790 Delivery and installation 108,023 45,094 7,333 14,652 175,102 Cost of sales: New units 7,501 1,575 386 1,003 10,465 Rental units 10,485 2,884 657 73 14,099 Depreciation of rental equipment 106,322 14,457 2,290 6,323 129,392 Gross profit $ 282,739 $ 226,534 $ 35,010 $ 31,405 $ 575,688 Other selected data: Adjusted EBITDA $ 231,829 $ 144,587 $ 24,774 $ 23,968 $ — $ 425,158 Selling, general and administrative expense $ 162,936 $ 96,406 $ 12,524 $ 13,761 $ 26,747 $ 312,374 Purchases of rental equipment and refurbishments $ 140,059 $ 54,453 $ 17,219 $ 13,658 $ — $ 225,389 24 Six Months Ended June 30, 2021 (in thousands) NA Modular NA Storage UK Storage Tank and Pump Unallocated Costs Total Revenues: Leasing and services revenue: Leasing $ 417,243 $ 166,317 $ 39,735 $ 35,546 $ 658,841 Delivery and installation 103,531 44,884 12,589 14,180 175,184 Sales revenue: New units 14,331 4,048 2,166 1,418 21,963 Rental units 20,501 8,293 949 694 30,437 Total revenues 555,606 223,542 55,439 51,838 886,425 Costs: Cost of leasing and services: Leasing 112,848 22,907 9,025 8,147 152,927 Delivery and installation 95,859 32,483 7,400 11,547 147,289 Cost of sales: New units 9,250 2,463 1,434 1,014 14,161 Rental units 10,975 5,080 918 294 17,267 Depreciation of rental equipment 97,536 12,269 2,232 6,554 118,591 Gross profit $ 229,138 $ 148,340 $ 34,430 $ 24,282 $ 436,190 Other selected data: Adjusted EBITDA $ 200,916 $ 95,848 $ 23,392 $ 18,924 $ — $ 339,080 Selling, general and administrative expense $ 125,756 $ 64,761 $ 13,269 $ 11,913 $ 24,017 $ 239,716 Purchases of rental equipment and refurbishments $ 88,499 $ 12,245 $ 10,996 $ 6,077 $ — $ 117,817 25 The following table presents a reconciliation of the Company’s Net income to Adjusted EBITDA for the three and six months ended June 30, 2022 and 2021, respectively: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Net income $ 73,376 $ 20,371 $ 124,547 $ 24,818 Income tax expense 24,711 18,828 40,459 29,309 Loss on extinguishment of debt — 2,814 — 5,999 Fair value (gain) loss on common stock warrant liabilities — ( 610 ) — 26,597 Interest expense 33,574 29,212 64,564 59,176 Depreciation and amortization 86,230 84,515 168,050 158,537 Currency (gains) losses, net ( 127 ) 33 11 69 Restructuring costs, lease impairment expense and other related charges ( 95 ) 7,434 168 11,829 Transaction costs 22 — 41 844 Integration costs 5,203 7,622 9,291 14,964 Stock compensation expense 9,292 4,707 15,687 8,221 Other 1,149 569 2,340 ( 1,283 ) Adjusted EBITDA $ 233,335 $ 175,495 $ 425,158 $ 339,080 Included in restructuring costs for the three and six months ended June 30, 2021 was expense of approximately $ 4.3 million and $ 5.8 million, respectively, recognized as a result of the modification of certain equity awards associated with the Transition, Separation and Release Agreement entered into on February 25, 2021 with the Company's former President and Chief Operating Officer. NOTE 18 - Earnings Per Share The following table reconciles the weighted average shares outstanding for the basic calculation to the weighted average shares outstanding for the diluted calculation: Three Months Ended Six Months Ended June 30 June 30 (in thousands) 2022 2021 2022 2021 Numerator: Net income - basic $ 73,376 $ 20,371 $ 124,547 $ 24,818 Fair value gain on common stock warrant liabilities — ( 610 ) — — Net income - dilutive $ 73,376 $ 19,761 $ 124,547 $ 24,818 Denominator: Weighted average Common Shares outstanding - basic 223,376 228,407 222,197 228,350 Dilutive effect of shares outstanding Warrants 1,746 5,705 1,818 4,000 RSAs 18 20 22 36 Time-based RSUs 307 599 395 622 Performance-based RSUs 952 725 1,385 817 Stock Options 1,085 1,081 1,166 1,074 Weighted average Common Shares outstanding - dilutive 227,484 236,537 226,983 234,899 26 For the three and six months ended June 30, 2022, 1,252,968 and 904,379 shares of Performance-Based RSUs, respectively, were excluded from the computation of diluted EPS because their effect would have been anti-dilutive. For the three and six months ended June 30, 2021, no warrants, shares or options were excluded from the computation of diluted EPS. 27