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Item 7. Management’s Discussion and Analysis

2023-02-22 compared with 2022-02-25 · 351 added, 535 removed, 539 unchanged (62% 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, 2022 or prior periods.

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.

On July 1, 2020, in connection with the closing of the merger by which WillScot and Mobile Mini, Inc.

("Mobile Mini") were combined (the "Merger"), Mobile Mini became a wholly-owned subsidiary of WillScot and the Company changed its 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).

WillScot Mobile Mini is the holding company for the Williams Scotsman and Mobile Mini families of companies.

On September 30, 2022, the Company completed the sale of its former Tank and Pump Solutions ("Tank and Pump") segment.

On December 12, 2022, the Company entered into a Stock Purchase Agreement to sell its United Kingdom ("UK") Storage Solutions ("UK Storage Solutions") segment.

On January 31, 2023, the Company completed the sale of its UK Storage Solutions segment.

This MD&A presents the historical financial results of the former Tank and Pump segment and the UK Storage Solutions segment as discontinued operations for all periods presented.

The divestitures of the UK Storage Solutions segment and the former Tank and Pump segment completed the Company's transition of its portfolio to its core modular space and storage solutions businesses in North America.

Following the completion of these transactions, the Company now operates in two reportable segments and renamed them as follows:

Modular Solutions ("Modular") and Storage Solutions ("Storage").

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

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.

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.

We use certain non-GAAP financial metrics to supplement the GAAP reported results 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.

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We are a leading business services provider specializing in innovative flexible work space and portable storage solutions.

We service diverse end markets across all sectors of the economy throughout the United States ("US"), Canada, Mexico, and the United Kingdom ("UK").

We are also a leading provider of specialty containment solutions in the US with over 13,000 tank and pump units in our fleet.

We service diverse end markets across all sectors of the economy throughout the United States ("US"), Canada, and Mexico.

As of December 31, 2022, our branch network included approximately 240 branch locations and additional drop lots to service our over 85,000 customers.

We offer our customers an extensive selection of “Ready to Work” modular space and portable storage solutions with over 154,000 modular space units and over 210,000 portable storage units in our fleet.

We primarily lease, rather than sell, our modular and portable storage units to customers, which results in a highly diversified and predictable recurring revenue stream.

We primarily lease, rather than sell, our modular and portable storage units to customers, which results in a highly diversified and predictable reoccurring revenue stream.

Over 90% of new lease orders are on our standard lease agreement, pre-negotiated master lease or national account agreements.

The initial lease periods vary, and our leases are customarily renewable on a month-to-month basis after their initial term.

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

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.

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

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.

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.

During 2022, the Company acquired certain assets and liabilities of 13 smaller entities, which consisted primarily of approximately 14,100 storage units and 4,400 modular units.

For the year ended December 31, 2022, key drivers of our financial performance included:

• 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%.

• Total revenues from continuing operations increased by $469.6 million, or 28.1%, attributable to organic revenue growth levers in the business and due to the impact of acquisitions.

Leasing revenue increased $369.2 million, or 29.5%, delivery and installation revenue increased $108.0 million, or 33.6%, rental unit sales decreased $0.9 million, or 1.8%, and new unit sales revenue decreased $6.7 million, or 14.2%.

We estimate that recent acquisitions completed in 2022 contributed approximately $38.0 million to total revenues for the year ended December 31, 2022.

Key leasing revenue drivers included:

– Average modular space units on rent increased 3,504 units, or 3.5%, and average portable storage units on rent increased 33,790 units, or 24.9%.

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 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 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 $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, $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.

Ap proximately 55% of the increase in total average units on rent was driven by units on rent added through approximately 20 acquisitions in the past six quarters and the other 45% was driven organically.

– Average modular space monthly rental rate increased $141, or 18.3%, to $913 driven by strong pricing performance across all segments.

– Average portable storage monthly rental rate increased $38, or 24.7%, to $192 driven by increased pricing as a result of our price management tools and processes, further supported by high utilization, and by an acceleration earlier into the third quarter of our seasonal retail business.

– Average utilization for portable storage units increased to 86.8%, from 80.1% in 2021, driven by higher demand for this product category driven by increased economic activity throughout 2022, including a longer seasonal retail season in 2022.

Average utilization for modular space units decreased 70 basis points ("bps") to 68.5%, driven in part by lower utilized fleets obtained via acquisition.

• Modular segment revenue represented 65.0% of consolidated revenue for the year ended December 31, 2022, and increased $227.6 million, or 19.5%, to $1,391.8 million.

The increase was driven by increased leasing revenue, which grew $169.4 million, or 19.6%, due to continued growth of pricing and value added products.

Delivery and installation revenues increased $60.4 million, or 27.5%, driven by increased pricing on new deliveries and returns as compared to 2021.

Sales volumes decreased $2.2 million, or 2.8%.

Modular revenue drivers for the year ended December 31, 2022 included:

– Modular space average monthly rental rate of $957 for the year increased $148, or 18.3%, representing a continuation of our long-term price optimization initiative and VAPS penetration opportunities across our portfolio.

– Average modular space units on rent for the year increased 2,096 units to 86,620 driven by units on rent added through recent acquisitions.

– Average modular space monthly utilization decreased 20 basis points to 67.4% for the year ended December 31, 2022.

• Storage segment revenue, which represented 35.0% of consolidated revenue for the year ended December 31, 2022, increased $242.0 million, or 47.6%, to $750.8 million.

The increase was driven by increased leasing revenue, which grew $199.8 million, or 51.5%, due to increased units on rent driven by significant increases in delivery activity during 2021 and 2022 as economic activity rebounded versus 2020, recent acquisition activity, and increased pricing and value added products.

Delivery and installation revenues increased $47.6 million, or 46.8%, driven by increased demand for new project deliveries, and by increased pricing on new deliveries and returns as compared to 2021.

Rental unit sales decreased $5.1 million, or 39.5%, and new unit sales decreased $0.3 million, or 4.5%.

Storage segment revenue drivers for the year ended December 31, 2022 included:

– Portable storage average monthly rental rate of $192 increased 23.9% year over year as a result of our price management tools and processes, further supported by high utilization, and by an acceleration earlier into the third quarter of our seasonal retail business.

Modular space average monthly rental rate of $705 increased $123 , or 21.1%, year over year as a result of price optimization and early benefits from increased VAPS penetration opportunities.

– Average portable storage units on rent increased 40,586, or 31.6%, year over year.

Increases in organic activity drove an increase in average portable storage units on rent of approximately 15%, or 19,500 units on rent, including an acceleration earlier into the third quarter of our seasonal retail business.

The remaining increase was driven by approximately 15,000 units on rent added in recent acquisitions and approximately 6,000 units of the increase was due to the transfer of approximately 12,000 portable storage units on rent from the Modular segment, which occurred in the third quarter of 2021.

Average modular space units on rent increased 1,408, or 8.4%, year over year driven primarily by approximately 1,100 acquired units on rent.

– Average portable storage monthly utilization increased 600 bps to 86.9% for the year ended December 31, 2022, as compared to the year ended December 31, 2021.

Average modular space monthly utilization decreased 450 bps to 74.0% for the year ended December 31, 2022, as compared to the year ended December 31, 2021.

• Generated income from continuing operations of $276.3 million for the year ended December 31, 2022, representing an increase of $161.4 million ver sus the year ended December 31, 2021.

Net Income including income from discontinued operations was $339.5 million for the year ended December 31, 2022, representing an increase of $179.4 million versus the year ended December 31, 2021 .

• Generated Adjusted EBITDA from continuing operations of $883.9 million for the year ended December 31, 2022, representing an increase of $234.3 million, or 36.1%, as compared to 2021.

This increase was driven primarily by increased leasing gross profit.

Including results from discontinued operations from the nine months ended September

30, 2022 from the divested Tank and Pump segment and the results from the year ended December 31, 2022 from the UK Storage Solutions segment, Adjusted EBITDA was $969.6 million, representing an increase of $229.2 million, or 31.0%, versus the year ended December 31, 2021 .

– Adjusted EBITDA in our Modular segment of $529.1 million increased $106.1 million, or 25.1%, primarily driven by increases in leasing gross profit driven by increased pricing, including VAPS, compared to 2021.

– Adjusted EBITDA in our Storage segment of $354.8 million increased $128.2 million, or 56.6%, primarily driven by increases in leasing gross profit driven by increased pricing, including VAPS, and increased volumes compared to 2021.

– Consolidated Adjusted EBITDA Margin from continuing operations was 41.3% and increased 250 bps versus prior year driven by increased leasing and delivery and installation margins as a result of increased volumes and pricing, partially offset by increased selling, general and administrative expense.

• Net cash provided by operating activities increased $204.8 million to $744.7 million.

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.

Net cash used in investing activities, excluding cash used as part of acquisitions and proceeds from the sale of discontinued operations, increased $177.4 million to $414.3 million as a result of increased capital spending to support increased demand.

• Generated Free Cash Flow of $330.3 million for the year ended December 31, 2022, representing an increase of $27.3 million, or 9.0%, as compared to 2021 while funding substantial growth investments in rental equipment.

This Free Cash Flow along with additional net borrowings under the ABL Facility (as defined below in "Significant Developments") were deployed to:

◦ Acquire 13 smaller storage and modular portfolios for $220.6 million in 2022;

◦ Repurchase $756.9 million of our common stock and stock equivalents, including repurchased warrants, reducing outstanding Common Stock and equivalents by 19,854,424 million shares;

◦ Reduce our Net Debt to Adjusted EBITDA ratio, including results from discontinued operations from the UK Storage Solutions segment, to 3.3x as of December 31, 2022.

On January 31, 2023, we received $404.3 million related to the sale of the UK Storage Solutions segment, net of the settlement of the contingent forward currency contract.

• We believe the predictability of our free cash flow allows us to pursue multiple capital allocation priorities opportunistically, including investing in organic opportunities we see in the market, continuing our deleveraging trajectory, opportunistically executing accretive acquisitions, and returning capital to shareholders.

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.

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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.

On September 30, 2022, we completed the sale of our former Tank and Pump segment for $322 million.

On December 12, 2022, we entered into a Stock Purchase Agreement to sell our UK Storage Solutions segment for a total enterprise value of approximately £335 million, subject to certain adjustments.

The sale of the UK Storage Solutions segment closed on January 31, 2023, and we will record a gain on the sale of the UK Storage Solutions segment in the first quarter of 2023.

Proceeds from these sales were used to support ongoing reinvestment in our North America Modular and Storage operating segments and other capital allocation priorities.

The consolidated financial statements present the historical financial results of the former Tank and Pump segment and the UK Storage Solutions segment as discontinued operations for all periods presented.

Asset Acquisitions

During 2022, we acquired certain assets and liabilities of several smaller entities, which consisted primarily of approximately 14,100 storage units and 4,400 modular units for $220.6 million in cash.

Share and Warrant Repurchases

During the year ended December 31, 2022, 33,965 of the 2018 Warrants were repurchased for $0.6 million and cancelled.

In addition, during the year ended December 31, 2022, 4,011,665 of the 2018 Warrants were exercised on a cashless basis, resulting in the issuance of 2,590,940 shares of common stock.

The remaining 32,543 of 2018 Warrants expired on November 29, 2022 .

As a result of these transactions, at December 31, 2022, no 2018 Warrants were outstanding.

In July 2022, our Board of Directors approved an increase to our share repurchase program that authorized us to repurchase up to $1.0 billion of our outstanding shares of Common Stock and equivalents.

During the year ended December 31, 2022, we repurchased and cancelled 19,854,424 shares of Common Stock and stock equivalents for $756.9 million, including all repurchased warrants.

As of December 31, 2022, we had $630.8 million of the $1.0 billion share repurchase

authorization remaining.

Given the predictability of our free cash flow, we believe that repurchases will be a reoccurring capital allocation priority.

Amendment to the ABL Facility

Williams Scotsman, Inc.

(“WSI”) and certain other subsidiaries of the Company are parties to an ABL Credit Agreement, dated as of July 1, 2020 (as amended through a fourth amendment, dated June 30, 2022, the “ABL Facility”).

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 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 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 Euro loans is 1.50%.

The facility includes a credit spread adjustment of 0.10% in addition to the applicable margin.

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 December 31, 2022, the weighted average interest rate for borrowings under the ABL Facility was 5.91%, prior to the effect of our recent interest rate swap agreements.

Interest Rate Swap Agreements

In January 2023, the Company entered into two interest rate swap agreements with financial counterparties relating to $750.0 million in aggregate notional amount of variable-rate debt under the ABL Facility.

Under the terms of the agreements, the Company receives a floating rate equal to one-month term SOFR and will make payments based on a weighted average fixed interest rate of 3.44% on the notional amount.

The swap agreements were designated and qualified as hedges of the Company’s exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility.

The swap agreements terminate on June 30, 2027.

Inflation and Supply Chain Issues

Similar to many other organizations, we face inflationary pressures across most of our input costs such as building materials, labor, transportation and fuel.

Inflation has contributed to increased capital costs for both new units as well as for refurbishment of our existing units.

However, given our scale and our strong rate performance, we believe we have been able to navigate the inflationary environment well and have consistently driven margin improvements during this period of rising costs.

Additionally, because we derive the majority of our revenue from leasing our existing lease fleet units to customers and our material purchases to maintain these units consist primarily of general building materials, we have not experienced significant supply chain issues to date.

Business Environment and Outlook

Our customers operate in a diversified set of end markets, including construction, commercial and industrial, retail and wholesale trade, education, energy and natural resources, government and healthcare.

We track several market leading indicators in order to predict demand, including those related to our two largest end markets, the commercial and industrial sector and the construction sector, which collectively accounted for approximately 85% of our revenues in the year ended December 31, 2021.

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.

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 customers operate in a diversified set of end markets, including construction, commercial and industrial, retail and wholesale trade, energy and natural resources, education, government and institutions and healthcare.

We track several market leading indicators to predict demand, including those related to our two largest end markets, the commercial and industrial sector and the construction sector, which collectively accounted for approximately 88% of our revenues in the year ended December 31, 2022.

Core to our operating model is the ability to redeploy standardized assets across end markets, as we did over the last few years to service emerging demand in the healthcare and government sectors related to COVID-19.

We remain focused on our core priorities of growing leasing revenues by increasing units on rent, both organically and through mergers and acquisitions, delivering "Ready to Work" solutions to our customers with VAPS, and continually improving the overall customer experience.

Even in an uncertain macro-economic environment, market catalysts such as increased infrastructure spending and onshoring and reshoring, 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.

Components of Our Consolidated Historical Results of Operations

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The table below sets forth the average number of units on rent in our lease fleet, the average utilization of our lease units, and the average monthly rental rate per unit, including VAPS.

The below results include results from Mobile Mini for periods subsequent to the Merger.

Year Ended December 31,

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Average portable storage monthly rental rate $ 192 $ 154 $ 142

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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Our selling, general and administrative (“SG&A”) expense includes all costs associated with our selling efforts, including marketing costs, marketing salaries and benefits, as well as the salary and commissions of sales personnel.

It also includes the leasing of facilities we occupy, professional fees and information systems, our overhead costs, such as salaries of management, administrative and corporate personnel, and integration costs associated with acquisitions and business combinations.

It also includes the leasing of facilities we occupy, professional fees and information systems, our overhead costs, such as salaries and other employee costs of management, administrative and corporate personnel, and integration costs associated with acquisitions and business combinations.

Transaction Costs

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Other depreciation and amortization includes depreciation of our property, plant and equipment, as well as the amortization of our intangible assets.

Impairment Losses on Long-Lived Assets

We recognize property, plant, and equipment impairment charges when an indicator of impairment is present and the carrying value of assets exceeds the estimated undiscounted cash flows and fair value of the assets.

Lease Impairment Expense and Other Related Charges

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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.

The restructuring costs incurred in 2021 and 2020 primarily 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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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.

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

Interest expense consists of the costs of external debt including the Company’s ABL credit facility, 2025 Secured Notes, 2028 Secured Notes, and interest on obligations under finance leases.

Fair Value (Gain) Loss on Common Stock Warrant Liabilities

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Loss on Extinguishment of Debt

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 2021, using cash on hand and borrowings on the ABL Facility, we redeemed $123.5 million of our 2025 Secured Notes and recorded a 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.

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Income Tax Expense (Benefit)

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

After the sale of the UK Storage Solutions segment, we are subject to income taxes in the US, Canada, and Mexico.

Our overall effective tax rate is affected by a number of factors, such as the relative amounts of income we earn in differing tax jurisdictions, tax law changes, and certain non-deductible expenses such as compensation disallowance.

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Consolidated Results of Operations

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 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.

Certain consolidated results of operations for th e years ended December 31, 2022, 2021, and 2020 are presented below.

The below results include results from Mobile Mini for periods subsequent to the Merger.

Years Ended December 31, 2022 vs.

2020 Change 2020 vs 2019 Change

2021 vs 2020 Change

2022 2021 2020

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Other depreciation and amortization 62,380 61,777 35,181 603 26,596

Impairment losses on long-lived assets — — 2,848 — (2,848)

Lease impairment expense and other related charges 254 2,888 4,876 (2,634) (1,988)

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Currency losses (gains), net 886 427 (257) 459 684

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

Other (income) expense, net (6,673) 1,715 (1,722) (8,388) 3,437

Operating income 511,482 300,377 161,792 211,105 138,585

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Loss on extinguishment of debt — 5,999 42,401 (5,999) (36,402)

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 common shareholders $ 160,144 $ 74,127 $ (120,744) $ 86,017 $ 194,871

Income from continuing operations before income tax 365,204 151,423 3,533 213,781 147,890

Income tax expense (benefit) from continuing operations 88,863 36,528 (56,040) 52,335 92,568

Income from continuing operations 276,341 114,895 59,573 161,446 55,322

Income from continuing operations attributable to non-controlling interest, net of tax — — 1,213 — (1,213)

Income from continuing operations attributable to WillScot Mobile Mini common shareholders $ 276,341 $ 114,895 $ 58,360 $ 161,446 $ 56,535

Cash Flow Data:

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Other Financial Data:

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

Adjusted EBITDA from continuing operations (a)

$ 883,874 $ 649,604 $ 494,642 $ 234,270 $ 154,962

Adjusted EBITDA from discontinued operations (a)

85,750 90,789 35,665 (5,039) 55,124

Adjusted EBITDA from continuing and discontinued operations (a)

$ 969,624 $ 740,393 $ 530,307 $ 229,231 $ 210,086

Free Cash Flow (a)

$ 330,334 $ 303,027 $ 162,279 $ 27,307 $ 140,748

Adjusted Gross Profit (a)

$ 1,392,201 $ 1,063,493 $ 800,617 $ 328,708 $ 262,876

Net CAPEX (a)

$ 414,324 $ 236,875 $ 142,533 $ 177,449 $ 94,342

Balance Sheet Data (end of year):

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Total shareholders’ equity $ 1,565,300 $ 1,996,763 $ 2,063,873 $ (431,463) $ (67,110)

(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.

(a) WillScot Mobile Mini presen ts Adjusted EBITDA, F ree 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.

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Quarterly Consolidated Results for the Year Ende d December 31, 2022

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

(in thousands, except for units on rent and monthly rental rate) Q1 Q2 Q3 1

Revenue $ 451,171 $ 522,890 $ 578,008 $ 590,554 $ 2,142,623

Gross profit $ 234,061 $ 275,213 $ 297,885 $ 328,323 $ 1,135,482

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

Adjusted EBITDA from continuing operations $ 167,773 $ 208,643 $ 239,368 $ 268,090 $ 883,874

Net income $ 51,171 $ 73,376 $ 128,593 $ 86,400 $ 339,540

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Average portable storage monthly rental rate $ 166 $ 178 $ 197 $ 220 $ 192

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 $ 0.23 $ 0.33 $ 0.60 $ 0.41 $ 1.57

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Weighted average shares - diluted 228,955,504 227,484,012 217,927,725 213,872,403 221,399,162

1 Q3 2022 Net income and Earnings per share included a gain on sale of discontinued operations of $34.0 million related to the sale of the former Tank and Pump segment in September 2022.

Quarterly Consolidated Results for the Year Ended December 31, 2021

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Gross profit $ 185,619 $ 191,860 $ 220,349 $ 246,875 $ 844,703

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

Adjusted EBITDA from continuing operations $ 143,693 $ 153,071 $ 165,948 $ 186,892 $ 649,604

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

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

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

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Average portable storage monthly rental rate $ 145 $ 149 $ 155 $ 164 $ 154

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 $ 0.02 $ 0.09 $ 0.27 $ 0.33 $ 0.71

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Gross profit $ 106,190 $ 109,964 $ 185,500 $ 206,773 $ 608,427

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)

Adjusted EBITDA from continuing operations $ 89,544 $ 97,520 $ 146,746 $ 160,832 $ 494,642

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

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Total revenue increased $469.6 million, or 28.1%, to $2,142.6 million for the year ended December 31, 2022 from $1,673.0 million for the year ended December 31, 2021.

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%.

Leasing revenue increased $369.2 million, or 29.5%, as compared to 2021 driven by an increase of 37,294, or 15.7%, in total average modular space and portable storage units on rent and improved pricing and value-added products.

Delivery and installation revenues increased $108.0 million, or 33.6%, due to increased overall activity and higher pricing.

New unit sales decreased $6.7 million, or 14.2%, and rental unit sales decreased $0.9 million, or 1.8%.

Total average modular space and portable storage units on rent for the years ended December 31, 2022 and 2021 were 274,373 and 237,079, respectively.

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

The increase was primarily driven by strong customer demand within the storage segment and due to acquisitions.

In total, modular space average units on rent increased 3,504 units, or 3.5%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021.

Modular space average monthly rental rates increased 18.3% to $913 for the year ended December 31, 2022.

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.

Improved pricing was driven by a continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio.

Portable storage average units on rent increased by 33,790 units, or 24.9%, for the year ended December 31, 2022.

Average portable storage monthly rental rates of $192 represented an increase of $38, or 24.7%, compared to the year ended December 31, 2021.

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.

The average modular space unit utilization rate during the year ended December 31, 2022 was 68.5%, as compared to 69.2% during 2021.

The average portable storage unit utilization rate during the year ended December 31, 2022 was 86.8%, as compared to 80.1% during 2021.

Gross Profit:

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The increase in gross profit is a result of a $274.9 million increase in leasing gross profit, increased delivery and installation gross profit of $52.9 million, and increased new and rental unit sale margins of $0.9 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 $37.9 million as a result of acquired fleet and capital investments made over the past twelve months in our existing rental equipment.

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SG&A expense increased $102.9 million, or 22.2%, to $567.2 million for the year ended December 31, 2022, compared to $464.3 million for the year ended December 31, 2021.

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.

For 2022, SG&A expense for Modular and Storage totaled $316.3 million and $204.4 million, respectively.

Employee costs excluding stock compensation increased $57.6 million, or 27.3%, driven by a 13% increase in SG&A headcount to support both organic and inorganic growth, wage increases, and increased variable compensation as a result of the growth achieved.

Legal and professional fees increased $23.8 million, or 45.5%.

Stock compensation expense increased $10.6 million to $29.6 million for the year ended December 31, 2022, compared to $19.0 million for the year ended December 31, 2021.

Integration costs decreased $12.9 million to $15.5 million for the year ended December 31, 2022, compared to $28.4 million for the year ended December 31, 2021.

The remaining increases were primarily driven by increased economic activity and inflationary increases, including increased occupancy and office costs, insurance, travel expenses, and marketing cost increases.

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.

For the year ended December 31, 2021, transaction costs of $1.4 million were primarily related to the Merger.

Other Depreciation and Amortization:

Other depreciation and amortization increased $0.6 million, or 1.0%, to $62.4 million for the year ended December 31, 2022, compared to $61.8 million for the year ended December 31, 2021.

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:

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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.

Restructuring costs of $11.9 million for the year ended December 31, 2021 were primarily due to employee termination costs as a result of the elimination of positions due to the Merger.

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.

Currency losses, net increased by $0.5 million to $0.9 million for the year ended December 31, 2022 compared to $0.4 million for the year ended December 31, 2021.

The increase in currency losses, net, was primarily attributable to the impact of foreign currency exchange rate changes on 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.

Other (income) expense, net was $6.7 million of income for the year ended December 31, 2022 and $1.7 million of expense for the year ended December 31, 2021, The increase in other (income) expense, net is primarily related to insurance recoveries received in 2022 related to Hurricane Ida in the Gulf Coast area of the United States in 2021.

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.

Interest expense increased $29.9 million, or 25.7%, to $146.3 million for the year ended December 31, 2022 from $116.4 million for the year ended December 31, 2021.

The increase was driven by increased average borrowings to support our capital allocation priorities, as well as an increase in interest rates during 2022.

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.

For the year ended December 31, 2021, the fair value loss on common stock warrant liabilities of $26.6 million 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.

For the year ended December 31, 2021, we recorded a loss on extinguishment of debt of $6.0 million 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.

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.

Income tax expense increased $52.3 million to $88.9 million for the year ended December 31, 2022 compared to $36.5 million for the year ended December 31, 2021.

The increase in income tax expense was a result of higher pre-tax income partially offset with a reduction of the valuation allowance for deferred tax assets.

Comparison of Years Ended December 31, 2021 and 2020

Total revenue increased $400.0 million, or 31.4%, to $1,673.0 million for the year ended December 31, 2021 from $1,273.0 million for the year ended December 31, 2020.

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.

Leasing revenue increased $257.2 million, or 34.6%, as compared to the same period in 2019 driven by an increase of 75,114 average modular space and portable storage units on rent as a result of the Merger, and improved pricing and value-added products in our NA Modular segment.

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.

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.

Leasing revenue increased $316.0 million, or 33.7%, as compared to 2020 driven by an increase of 69,635, or 41.6%, total average modular space and portable storage units on rent and improved pricing and value-added products in our Modular segment.

Delivery and installation revenues increased $70.4 million, or 28.1%, due to increased overall activity.

New unit sales decreased $1.8 million, or 3.7%, and rental unit sales increased $15.4 million, or 41.6%.

Total average modular space and portable storage units on rent for the years ended December 31, 2021 and 2020 were 237,079 and 167,444, respectively.

The increase was due primarily to the units acquired as part of the Merger, partially offset by lower delivery volumes in the NA Modular segment, including reduced demand for new projects as a result of the COVID-19 global pandemic disruption on social and business activities.

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 6,098 units, or 6.4%, for the year ended December 31, 2021 as compared to the year ended December 31, 2020.

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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, 2020 was 70.2%, as compared to 72.0% during the same period in 2019.

This decrease was driven by lower demand as a result of the COVID-19 pandemic, partially offset by higher utilization on units acquired as part of the Merger.

The average portable storage unit utilization rate during the year ended December 31, 2020 was 75.9%, as compared to 65.8% during the same period in 2019.

The average modular space unit utilization rate during the year ended December 31, 2021 was 69.2%, as compared to 69.5% during 2020.

The average portable storage unit utilization rate during the year ended December 31, 2021 was 80.1%, as compared to 74.2% during 2020.

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

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The increase in gross profit is a result of a $247.8 million increase in leasing gross profit, increased delivery and installation gross profit of $5.6 million, and increased new and rental unit sale margins of $9.5 million.

These increases were primarily a result of increased revenues due to the Merger and to favorable average monthly rental rates in the NA Modular segment on modular space units, as well as modular leasing cost savings due to lower delivery volumes that were achieved as a result of actions we took to scale back variable labor and material costs in response to lower demand for new project deliveries.

These increases were offset partially by lower delivery and installation activity volumes in the NA Modular segment in the second and third quarters of 2020 due to reduced delivery demand and by increased depreciation of $25.9 million as a result of fleet acquired in the Merger and capital investments made over the past twelve months in our existing rental equipment.

These increases were primarily a result of increased average monthly rental rates as well as recent acquisitions.

These increases were partially offset by increased depreciation of $26.6 million as a result of acquired fleet and capital investments made in our existing rental equipment.

SG&A Expense:

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The primary driver of the increase is related to additional SG&A expense 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 $90.8 million for the year ended December 31, 2020.

SG&A expense for the Storage segment totaled $150.3 million for the year ended December 31, 2021.

Transaction Costs:

Transaction costs increased $64.1 million for the year ended December 31, 2020.

Transaction costs were related to the Merger.

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 $26.6 million, or 75.6%, to $61.8 million for the year ended December 31, 2021, compared to $35.2 million for the year ended December 31, 2020.

$18.2 million of the increase was driven by increased Other depreciation as a result of the inclusion of Mobile Mini beginning in the third quarter of 2020 and $13.4 million was driven by the amortization of the customer relationship intangible asset acquired in the Merger.

Impairment losses on Long-Lived Assets:

Impairment losses on long-lived assets were $2.8 million for the year ended December 31, 2019 related to the valuation of properties classified as assets held for sale as a result of the ModSpace acquisition.

No similar impairments occurred during the year ended December 31, 2020.

The increase was driven by a $14.4 million increase in other depreciation and a $12.2 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 $3.8 million in 2020 is a result of fewer remaining closed locations in 2020 due to successful lease exits related to the ModSpace acquisition.

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 $6.1 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, 2019 related primarily to employee termination costs related to the ModSpace and Acton acquisitions and integrations.

Currency (Gains) Losses, net:

Currency (gains) losses, net decreased by $0.3 million to a $0.4 million gain for the year ended December 31, 2020 compared to a $0.7 million gain for the year ended December 31, 2019.

Currency (gains) losses, net decreased by $0.7 million to a $0.4 million loss for the year ended December 31, 2021 compared to a $0.3 million gain for the year ended December 31, 2020.

Other Income, Net:

Other income, net was $1.7 million and $2.2 million for the year ended December 31, 2020 and 2019, respectively.

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

Other income, net of $2.2 million for the year ended December 31, 2019 was driven primarily by the receipt of $3.2 million of insurance proceeds related to assets damaged during Hurricane Harvey.

Other (Income) Expense, Net:

Other (income) expense, net was $1.7 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 $2.9 million, or 2.4%, to $116.4 million for the year ended December 31, 2021 from $119.3 million for the year ended December 31, 2020.

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.

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 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.

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:

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

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.

For the year ended December 31, 2019, we recorded $8.8 million of losses on extinguishment of debt consisting of $1.5 million related to the $30 million redemption of the 2022 Secured Notes at a redemption price of 103% and $7.2 million related to the redemption of the 2023 senior unsecured notes at a redemption price of 102.0%, plus a make-whole premium of 1.1%, for total premiums of 3.1%.

Income Tax Benefit:

Income tax benefit increased $49.3 million to a $51.5 million benefit for the year ended December 31, 2020 compared to a $2.2 million benefit for the year ended December 31, 2019.

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.

(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 an asset-based credit agreement entered into by the Company in 2017.

Income Tax Expense:

Income tax expense increased $92.5 million to a $36.5 million expense for the year ended December 31, 2021 compared to a $56.0 million benefit for the year ended December 31, 2020.

The increase in income tax benefit was due to the reversal of our valuation allowance of $56.6 million based on our assessment of deferred tax assets and 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.

Business Segments

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 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.

The Company operates in two reportable segments as follows:

Modular and Storage.

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

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

Prior to the third quarter of 2021, the Modular segment represented the activities of WillScot historical segments prior to the Merger.

During the third quarter of 2021, the majority of the portable storage product business within the Modular segment was transitioned to the Storage segment, and associated revenues, expenses, and operating metrics beginning in the third quarter of 2021 were also transferred to the Storage segment, representing a shift of approximately $5.0 million of revenue and associated gross margin per quarter from the Modular segment to the 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, 2022, 2021 and 2020 .

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.

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.

Business Segment Results

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(in thousands, except for units on rent and rates)

NA Modular NA Storage UK Storage Tank and Pump Total

Modular Storage Total

Revenue $ 1,391,813 $ 750,810 $ 2,142,623

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Average portable storage monthly rental rate $ 208 $ 192 $ 192

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, 2021

(in thousands, except for units on rent and rates) NA Modular NA Storage UK Storage Tank and Pump Total

(in thousands, except for units on rent and rates) Modular Storage Total

Revenue $ 1,164,179 $ 508,801 $ 1,672,980

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Average portable storage monthly rental rate $ 131 $ 155 $ 154

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, 2020

(in thousands, except for units on rent and rates) NA Modular NA Storage UK Storage Tank and Pump Total

(in thousands, except for units on rent and rates) Modular Storage Total

Revenue $ 1,051,162 $ 221,829 $ 1,272,991

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Average portable storage monthly rental rate $ 122 $ 147 $ 142

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

NA Modular Segment

Modular Segment

Comparison of Years Ended December 31, 2022 and 2021

Total revenue increased $227.6 million, or 19.5%, to $1,391.8 million for the year ended December 31, 2022 from $1,164.2 million for the year ended December 31, 2021.

The increase was primarily driven by increased leasing revenue of $169.4 million, or 19.6%, compared to 2021, increased delivery and installation revenue of $60.4 million, or 27.5%, compared to 2021.

Average modular space monthly rental rates increased 18.3% for the year ended December 31, 2022 to

$957 driven by continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio.

Improved pricing was aided by higher volumes as average modular space units on rent increased by 2,096 units, or 2.5%, year over year driven by acquisitions.

Gross Profit:

Gross profit increased $115.9 million, or 23.3%, to $612.3 million for the year ended December 31, 2022 from $496.4 million for the year ended December 31, 2021.

The increase in gross profit was driven by a $113.7 million increase in leasing gross profit driven by improved volume, pricing and VAPS and by a $29.0 million increase in delivery and installation gross profit primarily driven by increased pricing.

The increase in gross profit from leasing and delivery and installation revenues was partially offset by a $30.6 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, 2022.

Adjusted EBITDA:

Adjusted EBITDA increased $106.1 million, or 25.1%, to $529.1 million for the year ended December 31, 2022 from $423.0 million for the year ended December 31, 2021.

The increase was driven by higher leasing gross profits discussed above, partially offset by increases in SG&A, excluding discrete and other items of $50.1 million.

SG&A increases were primarily related to increases in salaries and variable compensation of $12.1 million and $8.9 million, respectively, service agreement and professional fee increases of $13.9 million, real estate and occupancy costs increases of $7.0 million, and increased travel expenses of $6.1 million.

Capex for rental equipment:

Capex for rental equipment increased $91.6 million, or 48.9%, to $279.1 million for the year ended December 31, 2022 from $187.5 million for the year ended December 31, 2021.

The increase was mainly driven by increased spending on refurbishments and fleet and VAPS purchases.

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.

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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.

The decrease was driven primarily by lower delivery volumes.

Gross Profit:

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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.

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

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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.

Storage Segment

Comparison of Years Ended December 31, 2022 and 2021

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.

The decrease was primarily driven by declines in new unit sales revenue, which decreased $17.2 million, or 29.1%, compared to 2019, and by declines in rental unit sales revenue, which decreased $9.4 million, or 23.3%.

Additionally, delivery and installation revenues declined $12.0 million, or 5.5%, driven by lower delivery volumes related to the impact of new project cancellations and delays as a result of COVID-19 global pandemic disruption on social and business activities.

These declines were partially offset by an increase in leasing revenue of $26.1 million, or 3.5%.

Average modular space monthly rental rates increased 11.6% for the year ended December 31, 2020 to $685 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 4,808 units, or 5.2% year over year.

The decrease was driven primarily by lower delivery volumes, including reduced demand for new projects since mid- March of 2020 as a result of COVID-19.

Total revenue increased $242.0 million, or 47.6%, to $750.8 million for the year ended December 31, 2022 from $508.8 million for the year ended December 31, 2021.

The increase was primarily driven by increased leasing revenue of $199.8 million, or 51.5%, compared to 2021, and increased delivery and installation revenue of $47.6 million, or 46.8%, compared to 2021.

Average portable storage monthly rental rates increased 23.9% for the year ended December 31, 2022 to $192 as a result of our price management tools and processes, further supported by high utilization, and by an acceleration earlier into the third quarter of our seasonal retail business.

Average portable storage units on rent increased by 40,586 units, or 31.6%, year over year driven by increases in organic activity of approximately 15%, or 19,500 units on rent, including an acceleration earlier into the third quarter of our seasonal retail business.

Average modular space monthly rental rates increased 21.1% for the year ended December 31, 2022 to $705 driven by the continuation of our long-term price optimization initiative and VAPS penetration opportunities across our portfolio.

Average modular space units on rent increased by 1,408 units, or 8.4%, year over year, of which approximately 1,100 was acquisition driven.

Gross Profit:

Gross profit increased $174.9 million, or 50.2%, to $523.2 million for the year ended December 31, 2022 from $348.3 million for the year ended December 31, 2021.

The increase in gross profit was driven by a $44.9 million increase in leasing gross profit driven by improved pricing and VAPS, as well as by lower modular leasing cost due to lower delivery demand in the second and third quarter of 2020 and reduced variable costs.

The increase in gross profit from leasing revenues was partially offset by a $7.9 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, 2020.

The increase in gross profit was driven by a $161.1 million increase in leasing gross profit and an increase of $23.9 million in delivery and installation gross profit.

The increase in gross profit from leasing and delivery and installation revenues was partially offset by a $7.3 million increase in depreciation of rental equipment primarily as a result of capital investments made over the past twelve months of additional rental equipment for the year ended December 31, 2022.

Adjusted EBITDA:

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The increase was driven by higher leasing gross profits discussed above, partially offset by increases in SG&A, excluding discrete and other items of $54.1 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.

SG&A increases were primarily related to increases in salaries and variable compensation of $20.1 million and $14.7 million, respectively, service agreement and professional fee increases of $9.9 million, real estate and occupancy costs increases of $1.9 million, and increased travel expenses of $2.6 million.

Capex for rental equipment:

Capex for rental equipment decreased $51.8 million, or 25.3%, to $153.3 million for the year ended December 31, 2020 from $205.1 million for the year ended December 31, 2019.

Net CAPEX also decreased $31.3 million, or 20.5%, to $121.3 million.

The decreases for both were driven by decreased spend for refurbishments and VAPS due to less constrained fleet and reduced demand as a result of the COVID-19 pandemic, and cost improvements experienced over the prior year related to better unit selection and scoping on refurbishments.

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

Capex for rental equipment increased $72.9 million, or 160.6%, to $118.3 million for the year ended December 31, 2022 from $45.4 million for the year ended December 31, 2021 driven by a significant increase in container purchases during the year given high utilization and strong demand, as well as due to expansion of our VAPS offering in Storage.

Reconciliation of non-GAAP Financial Measures

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Our adjusted EBITDA ("Adjusted EBITDA") reflects the following further adjustments to EBITDA to exclude certain non-cash items and the effect of what we consider transactions or events not related to our core business operations:

• Currency (gains) losses, net:

on monetary assets and liabilities denominated in foreign currencies other than the subsidiaries’ functional currency.

• Currency (gains) losses, net on monetary assets and liabilities denominated in foreign currencies other than the subsidiaries’ functional currency.

Substantially all such currency gains (losses) are unrealized and attributable to financings due to and from affiliated companies.

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• Other expense, including consulting expenses related to certain one-time projects, financing costs not classified as interest expense, and gains and losses on disposals of property, plant, and equipment.

Our Chief Operating Decision Maker ("CODM") evaluates business segment performance utilizing Adjusted EBITDA as shown in the reconciliation of the Company’s consolidated net income (loss) to Adjusted EBITDA below.

Our Chief Operating Decision Maker ("CODM") evaluates business segment performance utilizing Adjusted EBITDA as shown in the reconciliation of the Company’s consolidated income from continuing operations 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 and captures the business performance of the segments, inclusive of indirect costs.

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• other companies in our industry may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.

Because of these limitations, Adjusted EBITDA should not be considered as discretionary cash available to reinvest in the growth of our business or as measures of cash that will be available to meet our obligations.

The following tables provide an unaudited reconciliation of Net income (loss) to Adjusted EBITDA:

Because of these limitations, Adjusted EBITDA should not be considered as discretionary cash available to reinvest in the growth of our business or as a measure of cash that will be available to meet our obligations.

The following tables provide unaudited reconciliations of Income from continuing operations to Adjusted EBITDA:

(in thousands) Q1 Q2 Q3 Q4 Full Year

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

Income tax expense 10,481 18,828 6,644 13,593 49,546

Income before income tax 14,928 39,199 67,747 87,816 209,690

Loss on extinguishment of debt 3,185 2,814 — — 5,999

Income from continuing operations $ 39,048 $ 60,099 $ 78,176 $ 99,018 $ 276,341

Income tax expense from continuing operations 12,083 20,848 28,288 27,644 88,863

Income from continuing operations before income tax 51,131 80,947 106,464 126,662 365,204

Interest expense 30,570 33,153 38,009 44,546 146,278

Fair value loss (gain) on common stock warrant liabilities 27,207 (610) — — 26,597

Depreciation and amortization 72,910 78,181 83,671 84,337 319,099

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Other 2,389 2,287 51 2,390 7,117

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

Adjusted EBITDA from continuing operations 167,773 208,643 239,368 268,090 883,874

Adjusted EBITDA from discontinued operations 24,050 24,693 25,045 11,989 85,750

Adjusted EBITDA from continuing and discontinued operations $ 191,823 $ 233,336 $ 264,413 $ 280,079 $ 969,624

(in thousands) Q1 Q2 Q3 Q4 Full Year

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

Income tax expense (benefit) 790 (285) (66,675) 14,719 (51,451)

Income (loss) before income tax 92,445 (14,415) (72,726) 18,585 23,889

(Loss) income from continuing operations $ (6,147) $ 10,050 $ 48,580 $ 62,412 $ 114,895

Income tax expense from continuing operations 7,302 15,803 3,130 10,293 36,528

(Loss) income from continuing operations before income tax 1,155 25,853 51,710 72,705 151,423

Loss on extinguishment of debt 3,185 2,814 — — 5,999

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Other (694) 1,801 1,517 2,342 4,966

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

Adjusted EBITDA from continuing operations 143,693 153,071 165,948 186,892 649,604

Adjusted EBITDA from discontinued operations 19,892 22,424 24,201 24,272 90,789

Adjusted EBITDA from continuing and discontinued operations $ 163,585 $ 175,495 $ 190,149 $ 211,164 $ 740,393

The following tables provide unaudited reconciliations of Income (loss) from discontinued operations to Adjusted EBITDA:

(in thousands) Q1 Q2 Q3 Q4 Full Year

Income (loss) from discontinued operations $ 12,123 $ 13,277 $ 50,417 $ (12,618) $ 63,199

Gain on sale of discontinued operations — — 34,049 1,407 35,456

Income tax expense from discontinued operations 3,664 3,863 3,917 24,281 35,725

Income from discontinued operations before income tax and gain on sale 15,787 17,140 20,285 10,256 63,468

Interest expense 422 422 299 158 1,301

Depreciation and amortization 7,771 9,188 5,650 1,799 24,408

Currency losses, net 1 46 76 15 138

Stock compensation expense 122 164 (151) 80 215

Other (53) (2,267) (1,114) (319) (3,780)

Adjusted EBITDA from discontinued operations $ 24,050 $ 24,693 $ 25,045 $ 11,989 $ 85,750

(in thousands) Q1 Q2 Q3 Q4 Full Year

Income from discontinued operations $ 10,594 $ 10,321 $ 12,523 $ 11,811 $ 45,249

Income tax expense from discontinued operations 3,179 3,025 3,514 3,300 13,018

Income from discontinued operations before income tax and gain on sale 13,773 13,346 16,037 15,111 58,267

Interest expense 397 410 403 419 1,629

Depreciation and amortization 6,859 9,842 8,501 9,798 35,000

Currency losses, net (1) (8) 119 11 121

Restructuring costs, lease impairment expense and other related charges 2 — — — 2

Integration costs — — 5 9 14

Stock compensation expense 20 66 121 54 261

Other (1,158) (1,232) (985) (1,130) (4,505)

Adjusted EBITDA from discontinued operations $ 19,892 $ 22,424 $ 24,201 $ 24,272 $ 90,789

Adjusted EBITDA Margin

We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.

Management believes that the presentation of Adjusted EBITDA Margin provides useful information to investors regarding the performance of our business.

The following table provides unaudited reconciliations of Adjusted EBITDA Margin:

Year Ended December 31,

(in thousands) 2022 2021

Adjusted EBITDA from continuing operations (A) $ 883,874 $ 649,604

Revenue (B) $ 2,142,623 $ 1,672,980

Adjusted EBITDA Margin from Continuing Operations (A/B) 41.3 % 38.8 %

Income from continuing operations (C) $ 276,341 $ 114,895

Income from Continuing Operations Margin (C/B) 12.9 % 6.9 %

Net Debt to Adjusted EBITDA ratio, including results from discontinued operations from the UK Storage Solutions segment

Net Debt to Adjusted EBITDA ratio, including results from discontinued operations from the UK Storage Solutions segment is defined as Net Debt divided by Adjusted EBITDA including discontinued operations for the UK Storage Solutions segment.

We define Net Debt as total debt from continuing operations and total debt from discontinued operations included in liabilities held for sale net of total cash and cash equivalents from continuing operations and total cash and cash equivalents from discontinued operations included in assets held for sale.

Management believes that the presentation of Net Debt to Adjusted EBITDA ratio, including results from discontinued operations from the UK Storage Solutions segment provides useful information to investors regarding the performance of our business.

The following table provides an unaudited reconciliation of Net Debt to Adjusted EBITDA ratio, including results from discontinued operations from the UK Storage Solutions segment:

Year Ended December 31,

(in thousands) 2022

Long-term debt $ 3,063,042

Current portion of long-term debt 13,324

Long-term debt from discontinued operations included in liabilities held for sale 6,278

Total debt $ 3,082,644

Cash and cash equivalents 7,390

Cash and cash equivalents from discontinued operations included in assets held for sale 10,384

Net debt (A) $ 3,064,870

Adjusted EBITDA from continuing operations $ 883,874

Adjusted EBITDA from discontinued operations for the UK Storage Solutions segment 48,734

Adjusted EBITDA including discontinued operations for the UK Storage Solutions segment (B) $ 932,608

Net Debt to Adjusted EBITDA ratio, including results from discontinued operations from the UK Storage Solutions segment (A/B)

Adjusted Gross Profit and Adjusted Gross Profit Percentage

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Adjusted Gross Profit Percentage is defined as Adjusted Gross Profit divided by revenue.

Adjusted Gross Profit and Adjusted Gross Profit Percentage are not measurements of our financial performance under GAAP and should not be considered as an alternative to gross profit, gross profit percentage, or other performance measures derived in accordance with GAAP.

Adjusted Gross Profit and Adjusted Gross Profit Percentage are not measurements of our financial performance under GAAP and should not be considered as alternatives to gross profit, gross profit percentage, or other performance measures derived in accordance with GAAP.

In addition, our measurement of Adjusted Gross Profit and Adjusted Gross Profit Percentage may not be comparable to similarly titled measures of other companies.

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Adjusted Gross Profit Percentage (C/A) 65.0 % 63.6 %

Net Income Excluding Gain/Loss from Warrants

We define Net Income Excluding Gain/Loss from Warran ts as net income plus or minus the impact of the change in the fair value of the common stock warrant liability.

Income from Continuing Operations Excluding Gain/Loss from Warrants

We define Income from Continuing Operations Excluding Gain/Loss from Warran ts as income from continuing operations plus or minus the impact of the change in the fair value of the common stock warrant liability.

Management believes that the presentation of our financial statements excluding the impact of the mark-to-market adjustment provides useful information regarding our results of operations and assists in the review of our actual operating performance.

The following tables provide an unaudited reconciliation of Net income (loss) to Net Income (Loss) Excluding Gain Loss from Warrants:

The following tables provide unaudited reconciliations of Income from Continuing Operations to Income from Continuing Operations Excluding Gain/Loss from Warrants for the year ended December 31, 2021.

There was no Gain/Loss from Warrants for the year ended December 31, 2022.

(in thousands) Q1 Q2 Q3 Q4 Full Year

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

(Loss) Income from Continuing Operations $ (6,147) $ 10,050 $ 48,580 $ 62,412 $ 114,895

Fair value loss (gain) on common stock warrant liabilities 27,207 (610) — — 26,597

Net Income Excluding Gain/Loss from Warrants $ 31,654 $ 19,761 $ 61,103 $ 74,223 $ 186,741

(in thousands) Q1 Q2 Q3 Q4 Full Year

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

Fair value (gain) loss on common stock warrant liabilities (95,329) 26,963 22,303 42,602 (3,461)

Net (Loss) Income Excluding Gain/Loss from Warrants $ (3,674) $ 12,833 $ 16,252 $ 46,468 $ 71,879

Income from Continuing Operations Excluding Gain/Loss from Warrants $ 21,060 $ 9,440 $ 48,580 $ 62,412 $ 141,492

We define N et CAPEX as purchases of rental equipment and refurbishments and purchases of property, plant and equipment (collectively, "Total Capital Expenditures"), less proceeds from the sale of rental equipment and proceeds from the sale of property, plant and equipment (collectively, "Total Proceeds"), which are all included in cash flows from investing activities.

Management believes that the presentation of Net CAPEX provides useful information regarding the net capital invested into our rental fleet and property, plant and equipment each year to assist in analyzing the performance of our business.

Management believes that the presentation of Net CAPEX provides useful information regarding the net capital invested in our rental fleet and property, plant and equipment each year to assist in analyzing the performance of our business.

As presented below, Net CAPEX includes amounts for the former Tank and Pump segment through September 30, 2022 and the UK Storage Solutions segment through December 31, 2022.

The following tables provide unaudited reconciliations of Net CAPEX on a historical quarterly basis:

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Management believes that the presentation of Free Cash Flow provides useful additional information concerning cash flow available to fund our capital allocation alternatives.

As presented below, Free Cash Flow includes amounts for the former Tank and Pump segment through September 30, 2022 and the UK Storage Solutions segment through December 31, 2022.

The following tables provide a reconciliation of net cash provided by operating activities to Free Cash Flow:

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Free Cash Flow $ 91,160 $ 82,056 $ 78,493 $ 51,318 $ 303,027

Supplemental Pro Forma Information

The following pro forma financial information has been prepared for WillScot Mobile Mini, for the year ended December 31, 2020.

This pro forma statement of operations presents the historical consolidated statement of operations of WillScot Mobile Mini, giving effect to the following items as if they had occurred on January 1, 2019:

(i) the Merger with Mobile Mini;

(ii) borrowings under the Company’s 2025 Secured Notes and the 2020 ABL Facility;

(iii) extinguishment of the Mobile Mini line of credit and senior notes assumed in the Merger and subsequently repaid;

(iv) repayment of the 2017 ABL Facility and the 2022 Secured Notes repaid contemporaneously with the Merger;

(v) the transaction costs incurred in connection with the Merger;

(vi) elimination of non-controlling interest in connection with the Sapphire Exchange as contemplated by the Merger.

The adjustments presented on the pro forma financial statement have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company following the transactions and events described above.

We believe this pro forma financial statement is important for purposes of comparison to the prior period due to the addition of a significant acquisition during the reported financial reporting periods.

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

information is also useful to investors in order for them to better understand the combined historical financial results of the legacy businesses for comparative purposes and for the purposes of development of future projections and earnings growth prospects.

The pro forma financial information set forth below is based upon available information and assumptions that we believe are reasonable and is for illustrative purposes only.

The financial results may have been different if the transactions described above had been completed sooner.

You should not rely on the pro forma financial information as being indicative of the historical results that would have been achieved if these transactions and events had been completed as of January 1, 2019.

The pro forma combined financial information below should be read in conjunction with the consolidated financial statements and related notes of the Company included elsewhere in this Annual Report on Form 10-K.

All pro forma adjustments and their underlying assumptions are described more fully in the notes below.

Accounting Policies

During the preparation of this pro forma combined financial statement, we assessed whether there were any material differences between the Company’s accounting policies and Mobile Mini’s accounting policies.

The assessment performed did not identify any material differences and, as such, this pro forma combined financial statement does not adjust for or assume any differences in accounting policies between WillScot and Mobile Mini.

Pro forma Presentation

The following pro forma combined financial information and associated notes are based on the historical financial statement of WillScot and Mobile Mini as described below.

In preparing the pro forma combined statement of operations for the year ended December 31, 2020, certain historical financial information for Mobile Mini was reclassified to align to the reporting classifications of WillScot.

The pro forma combined statement of operations for the year ended December 31, 2020 is based on, derived from, and should be read in conjunction with, WillScot’s historical financial statement.

The aforementioned pro forma financial statement is also based on, derived from, and should be read in conjunction with Mobile Mini's historical financial statement.

Year Ended December 31, 2020

(in thousands)

WillScot Mobile Mini Holdings Corp.

Historical Mobile Mini (as reclassified) Pro Forma Adjustments Pro Forma Combined

Leasing and services revenue:

Leasing $ 1,001,447 $ 208,374 $ — $ 1,209,821

Delivery and installation 274,156 59,999 — 334,155

Sales revenue:

New units 53,093 8,402 — 61,495

Rental units 38,949 7,465 — 46,414

Total revenues 1,367,645 284,240 — 1,651,885

Costs of leasing and services:

Leasing 227,376 28,584 — 255,960

Delivery and installation 220,102 42,476 — 262,578

Costs of sales:

New units 34,841 5,457 — 40,298

Rental units 24,772 4,625 — 29,397

Depreciation of rental equipment (b) 200,581 15,360 2,334 218,275

Gross profit 659,973 187,738 (2,334) 845,377

Selling, general and administrative 360,626 96,170 456,796

Transaction costs (a) 64,053 16,799 (80,852) —

Other depreciation and amortization (c) 43,249 19,695 11,397 74,341

Lease impairment expense and other related charges 4,876 — — 4,876

Restructuring costs 6,527 — — 6,527

Currency (gains) losses, net (355) 39 — (316)

Other (income) expense, net (1,718) 186 — (1,532)

Operating income 182,715 54,849 67,121 304,685

Interest expense (d) 119,886 16,974 (9,808) 127,052

Fair value gain on common stock warrant liabilities (3,461) — — (3,461)

Loss on extinguishment of debt (e) 42,401 — (19,682) 22,719

Income before income tax 23,889 37,875 96,611 158,375

Income tax (benefit) expense (f) (51,451) 12,330 73,670 34,549

Net income 75,340 25,545 22,941 123,826

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

Net income attributable to WillScot Mobile Mini $ 74,127 $ 25,545 $ 24,154 $ 123,826

Notes to Pro Forma Statement

(a) Represents the elimination of non-recurring transaction costs incurred as a result of the Merger.

(b) Represents the adjustment for depreciation of rental fleet relating to the increase in fair value purchase accounting adjustments as a result of the Merger.

(c) Represents the differential in other depreciation and amortization expense related to the fair value purchase accounting adjustments as a result of the Merger.

(d) Reflects the adjustment for interest expense related to our debt structure after the Merger as though the following had occurred on January 1, 2019 (i) borrowings under the 2020 ABL Facility, (ii) borrowings under the 2025 Secured Notes, (iii) repayment of the 2017 ABL Facility, (iv) repayment of the 2022 Secured Notes and repayment of the Mobile Mini debt assumed at the Merger.

(e) Represents the elimination of the one-time loss on extinguishment of debt in connection with the repayment of the 2022 Secured Notes and the 2017 ABL Facility.

(f) Reflects the adjustment to recognize the income tax impacts of the unaudited pro forma adjustments for which a tax expense is recognized using a US federal and state statutory tax rate of 25.5%.

This rate may vary from the effective tax rates of the historical and combined businesses.

In addition, the year ended December 31, 2020 included an adjustment of $56.8 million to eliminate the reversal of valuation allowance as a result of reassessment of the realizability of deferred tax assets as a result of the Merger.

(g) Reflects the adjustment for the extinguishment of non-controlling interest as a result of the Sapphire Exchange on June 30, 2020.

The pro forma adjustment to interest expense consists of the following:

Year Ended December 31,

(in thousands) 2020

ABL Facility interest $ (2,561)

2022 Secured Notes interest (10,631)

2025 Secured Notes interest 18,247

Mobile Mini debt interest (15,921)

Deferred financing fee amortization 1,058

Net pro forma adjustment $ (9,808)

Reconciliation of Pro Forma Adjusted EBITDA

The following unaudited table provides a reconciliation of proforma Net income to pro forma unaudited Adjusted EBITDA:

Year Ended December 31,

(in thousands) 2020

Net income $ 123,826

Income tax expense 34,549

Loss on extinguishment of debt 22,719

Fair value gain on common stock warrant liabilities (3,461)

Interest expense 127,052

Depreciation and amortization 292,616

Currency gains, net (316)

Restructuring costs, lease impairment expense, other related charges 11,403

Integration costs 18,338

Stock compensation expense 15,280

Adjusted EBITDA $ 646,465

Summary Business Segment Supplemental Pro Forma Financial Information

As a result of the Merger and the significant related financing transactions, we believe presenting supplemental pro forma financial information is beneficial to the readers of the financial statements as we believe this is a better representation of the go-forward operations of the combined company, and we believe this information is useful to investors in order for them to better understand the combined historical financial results of the legacy businesses for comparative purposes.

The following table sets forth key metrics used by management to run the business on a pro forma basis as if the Merger and related financing transactions had occurred on January 1, 2019.

Refer to the Supplemental Pro Forma Financial Information section above for the full reconciliation of the statement of operations.

Following the Merger, we modified our management structure and expanded from two reporting segments to four segments:

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

Prior to the Merger, WillScot had two reportable segments, US Modular and Other North America Modular.

These two segments were combined to create the NA Modular segment, which represented the legacy WillScot operations prior to the third quarter of 2021.

Prior to the third quarter of 2021, the other segments, NA Storage, UK Storage, and Tank and Pump aligned to the legacy operations and segments reported by Mobile Mini.

The reporting segments are aligned with how we operate and analyze our business results.

Pro Forma Comparison of Years ended December 31, 2021 and 2020:

Pro Forma Combined Year Ended December 31, 2021 vs.

(in thousands) 2021 2020 $ Change % Change

Revenue $ 1,894,897 $ 1,651,885 $ 243,012 14.7 %

Selling, general and administrative expenses $ 511,446 $ 456,796 $ 54,650 12.0 %

Net income $ 160,144 $ 123,826 $ 36,318 29.3 %

Adjusted EBITDA $ 740,393 $ 646,465 $ 93,928 14.5 %

Other Financial Data:

Adjusted EBITDA - NA Modular $ 423,004 $ 394,805 $ 28,199 7.1 %

Adjusted EBITDA - NA Storage 226,600 184,601 41,999 22.8 %

Adjusted EBITDA - UK Storage 49,039 31,080 17,959 57.8 %

Adjusted EBITDA - Tank and Pump 41,750 35,979 5,771 16.0 %

Combined Adjusted EBITDA

$ 740,393 $ 646,465 $ 93,928 14.5 %

NA Modular - Quarterly Results

Pro Forma Quarterly Results for the year ended December 31, 2021:

(in thousands, except for units on rent and

monthly rental rate) Q1 Q2 Q3 Q4 Total

Revenue $ 266,224 $ 289,382 $ 299,051 $ 309,522 $ 1,164,179

Gross profit $ 113,002 $ 116,136 $ 127,854 $ 139,453 $ 496,445

Adjusted EBITDA $ 97,371 $ 103,545 $ 106,825 $ 115,263 $ 423,004

Capex for rental equipment $ 39,135 $ 49,364 $ 31,789 $ 67,207 $ 187,495

Average modular space units on rent 84,795 84,754 84,218 84,328 84,524

Average modular space utilization rate 67.6 % 67.7 % 67.6 % 67.5 % 67.6 %

Average modular space monthly rental rate $ 737 $ 801 $ 834 $ 866 $ 809

Average portable storage units on rent 14,903 13,301 493 552 7,312

Average portable storage utilization rate 60.3 % 69.8 % 48.0 % 62.7 % 68.8 %

Average portable storage monthly rental rate $ 124 $ 133 $ 179 $ 228 $ 131

Pro Forma Quarterly Results for the year ended December 31, 2020:

(in thousands, except for units on rent and

monthly rental rate) Q1 Q2 Q3 Q4 Total

Revenue $ 255,821 $ 256,862 $ 267,867 $ 270,612 $ 1,051,162

Gross profit $ 106,190 $ 109,964 $ 112,079 $ 123,409 $ 451,642

Adjusted EBITDA $ 89,544 $ 97,520 $ 100,281 $ 107,460 $ 394,805

Capex for rental equipment $ 39,648 $ 40,034 $ 34,249 $ 39,396 $ 153,327

Average modular space units on rent 87,988 87,096 86,400 86,011 86,874

Average modular space utilization rate 69.2 % 68.5 % 68.3 % 68.2 % 68.9 %

Average modular space monthly rental rate $ 653 $ 669 $ 693 $ 724 $ 685

Average portable storage units on rent 16,346 15,869 15,473 15,603 15,823

Average portable storage utilization rate 64.1 % 62.5 % 61.3 % 62.6 % 63.5 %

Average portable storage monthly rental rate $ 119 $ 120 $ 124 $ 124 $ 122

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

As a result, there are no differences between pro forma results and actual results on a reported basis.

Please see comparison of results for the years ended December 31, 2021 and 2020 within "Business Segment Results" above.

NA Storage - Quarterly Results

Pro Forma Quarterly Results for the year ended December 31, 2021

(in thousands, except for units on rent and

monthly rental rate) Q1 Q2 Q3 Q4 Total

Revenue $ 107,748 $ 115,794 $ 133,897 $ 151,363 $ 508,802

Gross profit $ 72,619 $ 75,721 $ 92,496 $ 107,423 $ 348,259

Adjusted EBITDA $ 46,322 $ 49,526 $ 59,123 $ 71,629 $ 226,600

Capex for rental equipment $ 3,472 $ 8,773 $ 11,920 $ 21,261 $ 45,426

Average modular space units on rent 16,439 16,360 16,316 18,006 16,780

Average modular space utilization rate 79.4 % 78.4 % 77.6 % 78.8 % 78.5 %

Average modular space monthly rental rate $ 535 $ 573 $ 602 $ 617 $ 582

Average portable storage units on rent 105,810 112,862 137,123 158,055 128,463

Average portable storage utilization rate 73.9 % 76.1 % 83.2 % 88.1 % 80.9 %

Average portable storage monthly rental rate $ 148 $ 151 $ 155 $ 163 $ 155

Pro Forma Quarterly Results for the Year ended December 31, 2020:

(in thousands, except for units on rent and

monthly rental rate) Q1 Q2 Q3 Q4 Total

Revenue $ 103,495 $ 92,826 $ 104,493 $ 117,336 $ 418,150

Gross profit $ 71,400 $ 66,639 $ 73,384 $ 83,401 $ 294,824

Adjusted EBITDA $ 43,994 $ 40,770 $ 46,465 $ 53,372 $ 184,601

Capex for rental equipment $ 5,200 $ 7,272 $ 7,234 $ 7,735 $ 27,441

Average modular space units on rent 15,509 15,757 16,383 16,948 16,152

Average modular space utilization rate 77.8 % 78.6 % 80.4 % 80.9 % 79.4 %

Average modular space monthly rental rate $ 497 $ 463 $ 505 $ 547 $ 504

Average portable storage units on rent 105,441 101,463 105,221 120,439 108,167

Average portable storage utilization rate 73.1 % 70.6 % 73.4 % 83.0 % 75.1 %

Average portable storage monthly rental rate $ 146 $ 143 $ 145 $ 150 $ 146

Pro Forma Comparison of Years ended December 31, 2021 and 2020

Total revenu e increased $90.6 million, or 21.7%, to $508.8 million for the year ended December 31, 2021 from $418.2 million for the year ended December 31, 2020.

Leasing revenues for the year ended December 31, increased year-over-year by $73.7 million, or 23.5% to $387.6 million.

The average number of portable storage units on rent increased 20,296 units, or 18.8% to 128,463 compared to 108,167 units in 2020.

The increase is associated with year over year growth in the broader construction segment and continuous pricing optimization, as well as due to the impact of acquisitions closed in the third and fourth quarter of 2021.

Gross Profit:

Gross profit increased $53.5 million, or 18.1%, for the year ended December 31, 2021 to $348.3 million from $294.8 million for the year ended December 31, 2020.

This gross profit increase was driven primarily by a $56.7 million, or 20.4%, year-over-year increase within leasing and an increase in delivery and installation gross profit of $2.3 million partially offset by a decrease of $0.3 million in sales.

Adjusted EBITDA:

Adjusted EBITDA increased $42.0 million, or 22.8%, to $226.6 million for the year ended December 31, 2021 from $184.6 million for the year ended December 31, 2020 and the margin expanded to 44.5% from 44.1%.

Excluding integration and stock-based compensation, SG&A expense increased due to increased costs for personnel of approximately $6.9 million and $1.0 million due to increased travel.

Capex for Rental Equipment:

Purchases of rental equipment and refurbishments of $45.4 million for the year ended December 31, 2021 were $18.0 million higher than for the year ended December 31, 2020.

Rental fleet expenditures were reduced significantly during the year ended December 31, 2020 in response to COVID-19, especially after the first quarter of 2020, and were primarily to meet demand for specific products, largely ground level offices.

UK Storage - Quarterly Results

Pro Forma Quarterly Results for the year ended December 31, 2021:

(in thousands, except for units on rent and

monthly rental rate) Q1 Q2 Q3 Q4 Total

Revenue $ 27,007 $ 28,432 $ 28,099 $ 27,487 $ 111,025

Gross profit $ 16,493 $ 17,937 $ 18,876 $ 17,936 $ 71,242

Adjusted EBITDA $ 11,064 $ 12,328 $ 13,255 $ 12,392 $ 49,039

Capex for rental equipment $ 6,770 $ 4,226 $ 11,649 $ 5,185 $ 27,830

Average modular space units on rent 9,115 9,354 9,298 8,627 9,098

Average modular space utilization rate 83.8 % 84.3 % 83.4 % 76.7 % 82.0 %

Average modular space monthly rental rate $ 404 $ 438 $ 454 $ 439 $ 434

Average portable storage units on rent 24,647 25,573 25,632 26,911 25,691

Average portable storage utilization rate 89.2 % 91.8 % 89.1 % 90.6 % 90.2 %

Average portable storage monthly rental rate $ 82 $ 88 $ 90 $ 91 $ 88

Pro Forma Quarterly Results for the year ended December 31, 2020:

(in thousands, except for units on rent and

monthly rental rate) Q1 Q2 Q3 Q4 Total

Revenue $ 20,197 $ 17,154 $ 21,653 $ 24,708 $ 83,712

Gross profit $ 11,372 $ 10,991 $ 12,671 $ 14,971 $ 50,005

Adjusted EBITDA $ 6,405 $ 6,853 $ 8,306 $ 9,516 $ 31,080

Capex for rental equipment $ 337 $ 522 $ 677 $ 1,016 $ 2,552

Average modular space units on rent 7,850 7,912 8,444 8,834 8,262

Average modular space utilization rate 74.2 % 74.6 % 79.1 % 82.4 % 77.6 %

Average modular space monthly rental rate $ 326 $ 313 $ 356 $ 377 $ 344

Average portable storage units on rent 23,328 22,870 23,146 24,496 23,462

Average portable storage utilization rate 83.7 % 82.2 % 83.2 % 88.6 % 84.4 %

Average portable storage monthly rental rate $ 73 $ 70 $ 75 $ 78 $ 74

Pro Forma Comparison of Years ended December 31, 2021 and 2020

Total revenue increased $27.3 million, or 32.6%, to $111.0 million for the year ended December 31, 2021 from $83.7 million for the year ended December 31, 2020.

Total Revenue in GBP increased $15.7 million, or 24.1% to $80.7 million for the year ended December 31, 2021 from $65.0 million for the year ended December 31, 2020 .

Leasing revenues increased 37.5% and delivery and installation revenues increased 44.6%, while sales revenue decreased 33.8%.

Within leasing activity, average monthly rental rates for modular space units and portable storage units increased 26.2% and 18.9% year-over-year, respectively.

These increases were supplemented by a 10.1% increase in modular space average units on rent and a 9.5% increase in average portable storage units on rent.

Gross Profit:

Gross profit increased $21.2 million, or 42.4%, to $71.2 million for the year ended December 31, 2021 from $50 million for the year ended December 31, 2020.

Gross profit on leasing increased 39.4% year-over-year.

Depreciation on rental equipment also increased by $3.5 million.

Adjusted EBITDA:

Adjusted EBITDA increased $17.9 million, or 57.7%, to $49.0 million for the year ended December 31, 2021 from $31.1 million for the year ended December 31, 2020.

a nd the margin increased to 44.2% from 37.1% .

The increase resulted primarily from the favorable gross profit discussed above.

Capex for Rental Equipment:

Purchases of rental equipment and refurbishments of $27.8 million for the year ended December 31, 2021 were $25.2 million higher than for the year ended December 31, 2020.

Rental fleet expenditures were reduced in 2020 in response to COVID-19.

Tank and Pump - Quarterly Results

Pro Forma Quarterly Results for the year ended December 31, 2021:

(in thousands, except for units on rent and

monthly rental rate) Q1 Q2 Q3 Q4 Total

Revenue $ 24,344 $ 27,494 $ 29,505 $ 29,548 $ 110,891

Gross profit $ 11,266 $ 13,016 $ 14,323 $ 13,657 $ 52,262

Adjusted EBITDA $ 8,828 $ 10,096 $ 10,946 $ 11,880 $ 41,750

Capex for rental equipment $ 3,158 $ 2,919 $ 5,016 $ 6,654 $ 17,747

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

Pro Forma Quarterly Results for the year ended December 31, 2020:

(in thousands, except for units on rent and

monthly rental rate) Q1 Q2 Q3 Q4 Total

Revenue $ 26,884 $ 23,684 $ 23,302 $ 24,991 $ 98,861

Gross profit $ 13,279 $ 11,723 $ 11,430 $ 12,474 $ 48,906

Adjusted EBITDA $ 9,477 $ 8,659 $ 8,507 $ 9,336 $ 35,979

Capex for rental equipment $ 4,514 $ 941 $ 431 $ 1,963 $ 7,849

Average tank and pump solutions rental fleet utilization based on original equipment cost 66.4 % 60.5 % 58.2 % 65.2 % 62.6 %

Pro Forma Comparison of Years ended December 31, 2021 and 2020:

Tank and Pump

Total revenue increased $12.0 million, or 12.2%, to $110.9 milli on for the year ended December 31, 2021 fro m $98.9 million for the year ended December 31, 2020.

Utilization based on OEC increased from 62.6% for the year ended December 31, 2020 to 72.3% for year ended December 31, 2021 and experienced an increase in average rental rates compared to the prior-year period.

In addition, utilization levels grew sequentially in each quarter, finishing the fourth quarter of 2021 at an average OEC utilization rate of 75.5%.

Year-over-year leasing revenue increased $11.7 million, or 17.9%, while delivery and installation revenue increased $1.0 million, or 3.5%.

Sales revenues decreased $0.7 million compared to the prior-year period.

Gross Profit:

Gross profit increased $3.4 million, or 6.9%, for the year ended December 31, 2021 to $52.3 million from $48.9 million for the year ended December 31, 2020.

Gross profit for leasing activity increased $ 6.4 million driven by the increased revenue as discussed above offset by increased costs of $ 5.3 million, including increased repairs and maintenance of $8.1 million .

Gross profit for delivery and installation activity decreased $1.7 million reflecting higher revenues offset by a $2.8 million increase in expense, including $0.7 million higher expense for fuel.

Depreciation of rental equipment decreased $1.2 million.

Adjusted EBITDA:

Adjusted EBITDA increased $5.8 million, or 16.0%, to $41.8 million for the year ended December 31, 2021 from $36.0 million for the year ended December 31, 2020 and the margin expanded to 37.6% from 36.4%.

The increase in Adjusted EBITDA was driven by the higher gross profit discussed above, offset by a $1.6 million reduction SG&A expense including $1.7 million in decreased employee costs.

Capex for rental equipment:

Purchases of rental equipment and refurbishments were reduced significantly during 2020 due to the unfavorable environment for this segment.

For the year ended December 31, 2021, expenditures of $17.7 million were $9.9 million higher than for the year ended December 31, 2020.

Liquidity and Capital Resources

WillScot Mobile Mini is a holding company that derives its operating cash flow from its operating subsidiaries.

Our principal sources of liquidity include cash generated by operating activities from our subsidiaries, borrowings under the 2020 ABL Facility, and sales of equity and debt securities.

Our principal sources of liquidity include cash generated by operating activities from our subsidiaries, borrowings under our ABL Facility, and sales of equity and debt securities.

We believe that our liquidity sources and operating cash flows are sufficient to address our operating, debt service and capital requirements over the next twelve months.

We have consistently accessed the debt and equity capital markets both opportunistically and as necessary to support the growth of our business, desired leverage levels, and other capital allocation priorities.

Subsequent to the Merger,

We believe we have ample liquidity in the ABL Facility and are generating substantial free cash flow, which together support both organic operations and other capital allocation priorities as they arise.

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In addition, we will continue to evaluate alternatives to optimize our capital structure, which could include the issuance or repurchase of additional unsecured and secured debt, equity securities and/or equity-linked securities.

There can be no assurance as to the timing of any such issuance.

There can be no assurance as to the timing of any such issuance or repurchase.

If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted.

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From time to time, we may also seek to streamline our capital structure and improve our financial position through refinancing or restructuring our existing debt or retiring certain of our securities for cash or other consideration.

In anticipation of the Merger, on June 15, 2020, we completed a private offering of $650.0 million in aggregate principal amount of the 2025 Secured Notes.

The proceeds from the 2025 Secured Notes of $650.0 million were used to consummate the Merger and the related financing transactions, which included repayment of the 2022 Secured Notes, repayment of the Mobile Mini senior notes, and payment of certain fees and expenses related to the Merger and the related financing transactions.

The 2025 Secured Notes mature on June 15, 2025 and bear interest at a rate of 6.125% per annum.

Interest is payable semi-annually on June 15 and December 15 of each year, beginning December 15, 2020.

During 2021, we redeemed $123.5 million of the 2025 Secured Notes.

This repayment was funded by internally generated cash flow and lower cost borrowings under the 2020 ABL facility.

On July 1, 2020, in connection with the completion of the Merger, we entered into the 2020 ABL Facility, which provides for revolving credit facilities in the aggregate principal amount of up to $2.4 billion, consisting of:

Our revolving credit facility provides an aggregate principal amount of up 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," and together with the US Facility, the “ABL Facility”).

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The borrowing bases are a function of, among other things, the value of the assets in the relevant collateral pool of which our rental equipment represents the largest component.

On July 1, 2020, in connection with the completion of the Merger, approximately $1.47 billion of proceeds from the 2020 ABL Facility were used to repay the 2017 ABL Facility, repay Mobile Mini's asset-backed lending facility, and pay fees and expenses related to the Merger and the related financing transactions.

On August 11, 2020, we redeemed $49.0 million of our 2023 Secured Notes at a redemption price of 103.0% plus accrued and unpaid interest using proceeds from the 2020 ABL Facility.

At December 31, 2022, we had $1.0 billion of available borrowing capacity under the ABL Facility.

On August 25, 2020, we completed a private offering of $500.0 million in aggregate principal amount of the 2028 Secured Notes.

Proceeds from the 2028 Secured notes were used to repay the $441.0 million remaining outstanding principal of the 2023 Secured Notes at a redemption price of 103.438% plus accrued and unpaid interest.

The 2028 Secured Notes mature on August 15, 2028 and bear interest at a rate of 4.625% per annum.

Interest is payable semi-annually on August 15 and February 15 of each year, beginning February 25, 2021.

Significant factors driving our liquidity include cash flows generated from operating activities and capital expenditures.

Our ability to fund our capital needs will be affected by our ongoing ability to generate cash from operations and access to capital markets.

The consolidated statements of cash flows include amounts for the former Tank and Pump segment through September 30, 2022 and the UK Storage Solutions segment through December 31, 2022.

See Note 3 to the financial statements for disclosure of significant operating and investing items related to the former Tank and Pump segment and the UK Storage Solutions segment.

The following summarizes our change in cash and cash equivalents for the periods presented:

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Net change in cash and cash equivalents $ 5,075 $ (12,238) $ 21,892

Co mparison of the Years Ended December 31, 2021 and 2020 and December 31, 2020 and 2019

Comparison of the Years Ended December 31, 2022 and 2021 and December 31, 2021 and 2020

Cash Flows from operating activities

Cash provided by operating activities for the year ended December 31, 2021 was $539.9 million as compared to $304.8 million for the year ended December 31, 2020, an increase of $235.1 million.

The increase in cash provided by operating activities was driven by an increase of $252.1 million of net income, adjusted for non-cash items.

This was partially offset by a decrease of $17.2 million in the net movements of the operating assets and liabilities, which was primarily attributable to an increase in cash used from accounts receivable of $78.4 million compared to the same period in 2020, an increase in accounts payable and other accrued liabilities of $43.3 million, an increase in accrued interest of $12.1 million, and an increase of $10.2 million in deferred revenue compared to the same period in 2020.

Cash provided by operating activities for the year ended December 31, 2020 was $304.8 million as compared to $172.6 million for the year ended December 31, 2019, an increase of $132.2 million.

The increase in cash provided by operating activities was driven by an increase of $136.7 million of net income, adjusted for non-cash items, primarily due to the impact of the Merger on revenues and gross profit.

This was partially offset by a decrease of $4.4 million in the net movements of the operating assets and liabilities which was primarily attributable to a decrease in accounts payable and other accrued liabilities of $20.9 million, an increase in prepaid and other assets of $12.7 million, and a decrease in accrued interest of $7.7 million, compared to the same period in 2019.

This was partially offset by a decrease in cash used from accounts receivable of $36.9 million compared to the same period in 2019.

Cash provided by operating activities for the year ended December 31, 2022 was $744.7 million as compared to $539.9 million for the year ended December 31, 2021, an increase of $204.8 million, or 38%.

The increase in cash provided by operating activities was driven by an increase of $198.7 million of net income, adjusted for non-cash items, and an increase of $6.2 million in the net movements of the operating assets and liabilities, which was primarily attributable to a decrease in cash used from accounts receivable of $10.6 million compared to 2021 and an increase of $19.7 million in deferred revenue compared to 2021, partially offset by a decrease in accounts payable and other accrued liabilities of $18.1 million.

Cash provided by operating activities for the year ended December 31, 2021 was $539.9 million as compared to $304.8 million for the year ended December 31, 2020 , an increase of $235.1 million, or 77% .

The increase in cash provided by operating activities was driven by an increase of $252.0 millio n of net income, adjusted for non-cash items.

This was partially offset by a decrease of $17.2 million in the net movements of the operating assets and liabilities, which was primarily attributable to an increase in cash used from accounts receivable of $78.3 million compared to 2020, partially offset by an increase in accounts payable and other accrued liabilities of $55.5 million and an increase of $10.2 million in deferred revenue compared to 2020.

Cash flows from investing activities

Cash used in investing activities for the year ended December 31, 2022 was $309.3 million as compared to $384.0 million for the year ended December 31, 2021, a decrease of $74.7 million.

The decrease in cash used in investing activities was driven by the proceeds of $325.6 million from the sale of discontinued operations and a $15.5 million increase in proceeds from the sale of rental equipment.

Proceeds from sale of rental equipment increased compared to the prior year due to higher sales demand.

The decrease was partially offset by a $73.4 million increase in cash used in acquisitions, net of cash acquired, a $164.6 million increase in cash used for the purchase of rental equipment and refurbishments to support growing demand for new project deliveries across all segments, a $15.1 million decrease in proceeds from sale of property, plant and equipment and a $13.2 million increase in cash used for the purchase of property, plant, and equipment.

Cash used in investing activities for the year ended December 31, 2021 was $384.0 million as compared to $125.4 million for the year ended December 31, 2020, an increase of $258.6 million.

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Proceeds from sale of rental equipment increased compared to the prior year due to higher sales demand.

Cash used in investing activities for the year ended December 31, 2020 was $125.4 million as compared to $152.6 million for the year ended December 31, 2019, a decrease of $27.2 million.

The decrease in cash used in investing activities was driven by a $32.7 million decrease in cash used for purchase of rental equipment and refurbishments.

Cash used for purchase of rental equipment and refurbishments decreased compared to 2019 as fleet was less constrained due to reduced utilization and reduced demand for new project deliveries as a result of the COVID-19 pandemic and the current period impact of prior year spend.

Additionally, $17.2 million of cash was acquired as part of the Merger.

This increase was partially offset by an $11.4 million decrease in proceeds from sale of property, plant and equipment, an increase of $8.2 million on purchases of property, plant and equipment and a $3.2 million decrease in proceeds from the sale of rental equipment.

Proceeds from sale of rental equipment decreased compared to the prior year due to lower sales demand.

Cash flows from financing activities

Cash used in financing activities for the year ended December 31, 2021 was $167.9 million as compared to $159.0 million for the year ended December 31, 2020, an increase of $8.9 million cash used.

The increase in cash used in financing activities was driven by an increase of $341.8 million in repurchases of common stock and warrants as well as a $2,058.1 million decrease in receipts from borrowings.

Cash used in financing activities for the year ended December 31, 2022 was $429.4 million as compared to $167.9 million for the year ended December 31, 2021, an increase of $261.5 million.

The increase in cash used in financing activities was driven by an increase of $388.2 million in repurchases of common stock and warrants as well as an increase of $76.6 million in repayment of borrowings, partially offset by a $235.6 million increase in receipts from borrowings.

Cash used in financing activities for the year ended December 31, 2021 was $167.9 million as compared to $159.0 million for the year ended December 31, 2020, an increase of $8.9 million.

The increase in cash used in financing activities

was driven by an increase of $341.8 million in repurchases of common stock and warrants as well as a $2,058.1 million decrease in receipts from borrowings.

This was partially offset by a decrease of $2,296.2 million in repayment of borrowings, a decrease of $65.5 million in payment of financing costs, and a decrease of $30.9 million in payment of debt extinguishment premium costs.

Cash used in financing activities for the year ended December 31, 2020 was $159.0 million as compared to $26.1 million cash provided by financing activities for the year ended December 31, 2019, an increase of $132.9 million cash used.

The increase in cash used in financing activities was driven by an increase of $62.9 million for payment of financing costs, an increase of $27.4 million for payment of debt extinguishment costs, payment of $21.8 million for the repurchase and cancellation of warrants, payment of $4.2 million for Common Stock issuance costs, an increase of $12.8 million of taxes paid on employee stock awards, and an increase of $8.4 million of principal payments on finance lease obligations.

Additionally, there was a net increase of $5.1 million of payments on borrowings, comprised of an increase in repayments of borrowings of $2,239.7 million that was partially offset by an increase receipts from borrowings of $2,234.6 million.

The cash used in financing activities was partially offset by an increase in receipts from the issuance of Common Stock from the exercise of options and warrants of $9.7 million.

Material cash requirements

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As of December 31, 2022, the Company had lease obligations of $258.5 million, with $60.1 million payable within the next twelve months.

In addition to the aforementioned cash requirements, the Company has a Share Repurchase program authorized by the Board of Directors in October 2021 which allows the Company to repurchase up to $1.0 billion of outstanding shares of Common Stock and equivalents.

In addition to the cash requirements described above, the Company has a Share Repurchase program authorized by the Board of Directors, which allows the Company to repurchase up to $1.0 billion of outstanding shares of Common Stock and equivalents.

This program does not obligate the Company to repurchase any specific amount of shares.

The company believes its cash, cash flows generated from ongoing operations, and continued access to its revolving credit facility as well access to debt markets are sufficient to satisfy its currently anticipated cash requirements for the foreseeable future.

The Company believes its cash, cash flows generated from ongoing operations, and continued access to its revolving credit facility as well as access to debt markets are sufficient to satisfy its currently anticipated cash requirements over the next twelve months.

Critical Accounting Policies and Estimates

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Leasing and Services Revenue

The majority of revenue is generated by rental income subject to the guidance of Accounting Standard Update ("ASU") 2016-2, Leases (Topic 842) ("ASC 842").

The remaining revenue is generated by performance obligations in contracts with customers for services or sale of units subject to the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606").

The majority of revenue is generated by rental income subject to the guidance in Leases (Topic 842) ("ASC 842").

The remaining revenue is generated by performance obligations in contracts with customers for services or sale of units subject to the guidance in Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606").

Leasing Revenue

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The Company's lease arrangements can include multiple lease and non-lease components.

Examples of lease components include, but are not limited to, the lease of modular space, portable storage units and VAPS.

Examples of lease components include, but are not limited to, the lease of modular space and portable storage units and VAPS.

Examples of non-lease components include, but are not limited to, the delivery, installation, maintenance, and removal services commonly provided in a bundled transaction with the lease components.

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Rental equipment is leased primarily under operating leases.

Operating lease minimum contractual terms within the NA Modular segment generally range from 1 month to 60 months and averaged approximately 10 months across this segment's rental fleet for the year ended December 31, 2021.Rental contracts with customers within the NA Storage, UK Storage, and Tank & Pump segments are generally based on a 28-day rate and billing cycle.

Operating lease minimum contractual terms within the Modular segment generally range from 1 month to 60 months and averaged approximately 10 months across this segment's rental fleet for the year ended December 31, 2022.

Rental contracts with customers within the Storage segment, as defined in Note 18, are generally based on a 28-day rate and billing cycle.

The rental continues until cancelled by the Company or the customer.

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To determine whether it is the principal or agent in the arrangement, the Company reviews each third-party relationship on a contract-by-contract basis.

The Company is considered an agent when its role is to arrange for another entity to provide the VAPS and other services to the customer.

The Company is considered an agent when its role is to arrange for another entity

to provide the VAPS and other services to the customer.

In these instances, the Company does not control the rental unit or service before it is provided and the risk of performance is held by the third party.

The Company is considered the principal when it controls the VAPS or other services prior to transferring control to the customer and retains the risk of performance.

WillScot Mobile Mini may be a principal in the fulfillment of some leasing contracts and services elements and an agent for

other elements within the same contract.

WillScot Mobile Mini may be a principal in the fulfillment of some leasing contracts and services elements and an agent for other elements within the same contract.

Revenue is recognized on a gross basis when the Company is the principal in the arrangement and on a net basis when it is the agent.

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Revenue is recognized net of sales tax billed to customers, which is subsequently remitted to governmental authorities.

Goodwill and Annual Goodwill Impairment Test

For acquired businesses, the Company records assets acquired and liabilities assumed at their estimated fair values on the respective acquisition dates.

Based on these values, the excess purchase price over the fair value of the net assets acquired is recorded as goodwill.

Evaluation of Goodwill Impairment

For acquired businesses, the Company records assets acquired and liabilities assumed at their respective estimated fair values on the date of acquisition.

The Company performs its annual impairment test of goodwill at the reporting unit level as of October 1, as well as during any reporting period in which events or changes in circumstances occur that, in management’s judgment, may constitute triggering events under ASC 350-20, Intangibles – Goodwill and Other, Testing Goodwill for Impairment .

Generally, reporting units are at the operating segment level or one level below the operating segment (the component level), if discrete financial information is prepared and regularly reviewed by segment management.

Goodwill acquired in a business combination is assigned to each of the Company’s reporting units that are expected to benefit from the combination.

The Company performs its annual impairment test of goodwill as of October 1 at the reporting unit level, as well as during any reporting period in which events or changes in circumstances occur that, in management’s judgment, may constitute triggering events under ASC 350-20, Intangibles – Goodwill and Other, Testing Goodwill for Impairment .

The Company performs its assessment of goodwill utilizing either a qualitative or quantitative impairment test.

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Rental Equipment

Rental equipment is comprised of modular space and portable storage units held for rent or on rent to customers, tank and pump solutions products, which consist primarily of liquid and solid containment units, pumps and filtration equipment, and value-added products and services (“VAPS”) which are in use or available to be used by customers.

Rental equipment is comprised of modular space and portable storage units held for rent or on rent to customers and value-added products and services (“VAPS”) which are in use or available to be used by customers.

Rental equipment is measured at cost less accumulated depreciation and impairment losses.

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Costs of improvements and conversions of rental equipment are capitalized when such costs extend the useful life of the equipment or increase the rental value of the unit.

Costs incurred for equipment to meet a particular customer specification are capitalized and depreciated over the lease term taking in consideration the residual value of the asset.

Costs incurred for equipment to meet a particular customer specification are capitalized and depreciated over the lease term taking into consideration the residual value of the asset.

Maintenance and repair costs are expensed as incurred.

Depreciation is generally computed using the straight-line method over estimated useful lives, as follows:

Depreciation is computed using the straight-line method over estimated useful lives, as follows:

Estimated Useful Life Residual Value

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Portable storage units 30 years

Tank and pump equipment 7 - 25 years

VAPS and other related rental equipment 1 - 8 years

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The Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

The allowances for credit losses reflect the estimate of the amount of receivables that the Company will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability.

The allowance for credit losses reflects the estimate of the amount of receivables that the Company will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability.

This estimate is sensitive to 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 allowances.

In accordance with the adoption of ASC 842, effective January 1, 2019, and the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) ("ASC 326"), effective January 1, 2020, specifically identifiable lease revenue receivables and sales receivables not deemed probable of collection are recorded as a reduction of revenue.

Specifically identifiable lease revenue receivables and sales receivables not deemed probable of collection are recorded as a reduction of revenue.

The remaining provision for credit losses is recorded as selling, general and administrative expenses.

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In periods subsequent to issuance, warrants classified as liabilities are 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.

At December 31, 2022, no warrants remain outstanding.

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

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The Company records deferred tax assets to the extent it believes that it is more likely than not that these assets will be realized.

In making such determination, the Company considers all available positive and negative evidence, including

scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent results of operations.

In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent results of operations.

Valuation allowances are recorded to reduce the deferred tax assets to an amount that will more likely than not be realized.

The Company assesses the likelihood that each of the deferred tax assets will be realized.

To the extent management concludes the realization of any deferred tax assets is not more likely than not, the Company establishes a valuation allowance.

To the extent management believes realization of any deferred tax assets is not likely, the Company establishes a valuation allowance.

When a valuation allowance is established or there is an increase in an allowance in a reporting period, tax expense is generally recorded in the Company’s consolidated statement of operations.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis