WillScot Holdings Corp 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of WillScot Mobile Mini Holdings Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of WillScot Mobile Mini Holdings Corp. (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income , changes in equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 22, 2023 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 62 Allowance for Credit Losses Description of the Matter As described in Note 1 to the consolidated financial statements, the Company maintains an allowance for credit losses on trade receivables. At December 31, 2022 the allowance for credit losses was $57.0 million, or 12.2% of gross trade receivables. The allowance for credit losses is estimated based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. Auditing the Company's estimation of the allowance for credit losses was judgmental due to the subjectivity in assessing the appropriateness of the assumptions made by management. The assumptions include an expectation that the Company’s collection of receivables will be consistent with historical write-off experience and the consideration of current or forecasted conditions that may affect the Company’s customers’ ability to pay outstanding trade receivables. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company's controls over its estimation of the allowance for credit losses, including internal controls over the Company’s process to develop the assumptions used to estimate credit losses. To test the allowance for credit losses, we performed audit procedures that included, among others, testing management's process for developing the allowance for credit losses, testing the completeness, accuracy, and relevance of the data used; and evaluating significant assumptions used by management, including assessing the Company’s expectation that the collection of receivables will be consistent with historical write-off experience. For example, we compared the days sales outstanding, customer concentration, and days past due as of December 31, 2022, to the Company’s historical experience to evaluate the relevancy of the historical data utilized to estimate the allowance for credit losses. We also performed sensitivity analyses of the significant assumptions to evaluate the change in the allowance that would result from changes in assumptions. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2017 Baltimore, Maryland February 22, 2023 63 WillScot Mobile Mini Holdings Corp. Consolidated Balance Sheets (in thousands, except share data) December 31, 2022 2021 Assets Cash and cash equivalents $ 7,390 $ 6,393 Trade receivables, net of allowance for credit losses at December 31, 2022 and December 31, 2021 of $ 57,048 and $ 45,773 , respectively 409,766 351,285 Inventories 41,030 29,795 Prepaid expenses and other current assets 31,635 34,935 Assets held for sale - current 31,220 60,632 Total current assets 521,041 483,040 Rental equipment, net 3,077,287 2,777,800 Property, plant and equipment, net 304,659 258,176 Operating lease assets 219,405 218,752 Goodwill 1,011,429 1,013,601 Intangible assets, net 419,125 442,875 Other non-current assets 6,683 8,138 Assets held for sale - non-current 268,022 571,217 Total long-term assets 5,306,610 5,290,559 Total assets $ 5,827,651 $ 5,773,599 Liabilities and equity Accounts payable $ 108,071 $ 102,563 Accrued expenses 110,820 107,188 Accrued employee benefits 56,340 49,832 Deferred revenue and customer deposits 203,793 152,343 Operating lease liabilities - current 50,499 48,399 Current portion of long-term debt 13,324 11,968 Liabilities held for sale - current 19,095 45,352 Total current liabilities 561,942 517,645 Long-term debt 3,063,042 2,671,831 Deferred tax liabilities 401,453 305,674 Operating lease liabilities - non-current 169,618 169,729 Other non-current liabilities 18,537 15,737 Liabilities held for sale - non-current 47,759 96,220 Long-term liabilities 3,700,409 3,259,191 Total liabilities 4,262,351 3,776,836 Preferred Stock: $ 0.0001 par, 1,000,000 shares authorized and zero shares issued and outstanding at December 31, 2022 and 2021 — — Common Stock: $ 0.0001 par, 500,000,000 shares authorized and 207,951,682 and 223,939,527 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively 21 22 Additional paid-in-capital 2,886,951 3,616,902 Accumulated other comprehensive loss ( 70,122 ) ( 29,071 ) Accumulated deficit ( 1,251,550 ) ( 1,591,090 ) Total shareholders' equity 1,565,300 1,996,763 Total liabilities and shareholders' equity $ 5,827,651 $ 5,773,599 See the accompanying notes which are an integral part of these consolidated financial statements. 64 WillScot Mobile Mini Holdings Corp. Consolidated Statements of Operations (in thousands, except share and per share data) Years Ended December 31, 2022 2021 2020 Revenues: Leasing and services revenue: Leasing $ 1,621,690 $ 1,252,490 $ 936,458 Delivery and installation 429,152 321,129 250,734 Sales revenue: New units 40,338 46,993 48,834 Rental units 51,443 52,368 36,965 Total revenues 2,142,623 1,672,980 1,272,991 Costs: Costs of leasing and services: Leasing 376,868 282,576 214,367 Delivery and installation 322,636 267,533 202,734 Costs of sales: New units 24,011 31,348 31,799 Rental units 26,907 28,030 23,474 Depreciation of rental equipment 256,719 218,790 192,190 Gross profit 1,135,482 844,703 608,427 Expenses: Selling, general and administrative 567,214 464,278 338,395 Transaction costs 25 1,375 64,053 Other depreciation and amortization 62,380 61,777 35,181 Lease impairment expense and other related charges 254 2,888 4,876 Restructuring costs ( 86 ) 11,866 6,109 Currency losses (gains), net 886 427 ( 257 ) Other (income) expense, net ( 6,673 ) 1,715 ( 1,722 ) Operating income 511,482 300,377 161,792 Interest expense 146,278 116,358 119,319 Fair value loss (gain) on common stock warrant liabilities — 26,597 ( 3,461 ) Loss on extinguishment of debt — 5,999 42,401 Income from continuing operations before income tax 365,204 151,423 3,533 Income tax expense (benefit) from continuing operations 88,863 36,528 ( 56,040 ) Income from continuing operations 276,341 114,895 59,573 Income from continuing operations attributable to non-controlling interest, net of tax — — 1,213 Income from continuing operations attributable to WillScot Mobile Mini common shareholders 276,341 114,895 58,360 Discontinued operations: Income from discontinued operations before income tax 63,468 58,267 20,356 Income tax expense from discontinued operations 35,725 13,018 4,589 Gain on sale of discontinued operations 35,456 — — Income from discontinued operations 63,199 45,249 15,767 Net income $ 339,540 $ 160,144 $ 74,127 Earnings per share from continuing operations attributable to WillScot Mobile Mini common shareholders: Basic $ 1.27 $ 0.51 $ 0.35 Diluted $ 1.25 $ 0.49 $ 0.16 Earnings per share from discontinued operations attributable to WillScot Mobile Mini common shareholders: Basic $ 0.30 $ 0.20 $ 0.09 Diluted $ 0.28 $ 0.20 $ 0.09 Earnings per share attributable to WillScot Mobile Mini common shareholders: Basic $ 1.57 $ 0.71 $ 0.44 Diluted $ 1.53 $ 0.69 $ 0.25 Weighted average shares: Basic 216,808,577 226,518,931 169,230,177 Diluted 221,399,162 232,793,902 177,268,383 See the accompanying notes which are an integral part of these consolidated financial statements. 65 WillScot Mobile Mini Holdings Corp. Consolidated Statements of Comprehensive Income (in thousands) Years Ended December 31, 2022 2021 2020 Net income $ 339,540 $ 160,144 $ 75,340 Other comprehensive income: Foreign currency translation adjustment, net of income tax (benefit) of $ — , $( 60 ) and $( 685 ) for the years ended December 31, 2022, 2021 and 2020, respectively ( 44,548 ) ( 880 ) 28,404 Net gain (loss) on derivatives, net of income tax expense (benefit) of $ 1,171 , $ 2,661 and $( 539 ) for the years ended December 31, 2022, 2021 and 2020, respectively 3,497 9,016 ( 1,749 ) Total other comprehensive income ( 41,051 ) 8,136 26,655 Comprehensive income (loss) 298,489 168,280 101,995 Comprehensive loss attributable to non-controlling interest — — ( 672 ) Total comprehensive income attributable to WillScot Mobile Mini $ 298,489 $ 168,280 $ 102,667 See the accompanying notes which are an integral part of these consolidated financial statements. 66 WillScot Mobile Mini Holdings Corp. Consolidated Statements of Changes in Equity (in thousands) Common Stock(1) Class B Common Stock Shares Amount Shares Amount Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Shareholders' Equity Non-Controlling Interest Total Equity Balance at December 31, 2019 108,819 $ 11 8,024 $ 1 $ 2,378,733 $ ( 62,775 ) $ ( 1,825,361 ) $ 490,609 $ 64,590 $ 555,199 Net income — — — — — — 74,127 74,127 1,213 75,340 Other comprehensive income — — — — — 28,540 — 28,540 ( 1,885 ) 26,655 Mobile Mini Merger 106,427 11 — — 1,348,619 — — 1,348,630 — 1,348,630 Sapphire Exchange - See Note 11 10,641 1 ( 8,024 ) ( 1 ) 66,890 ( 2,972 ) — 63,918 ( 63,918 ) — Stock-based compensation and issuance of Common Stock from vesting 315 — — — 9,879 — — 9,879 — 9,879 Repurchase and cancellation of options and warrants — — — — ( 300 ) — — ( 300 ) — ( 300 ) Issuance of Common Stock from the exercise of options and warrants 2,836 — — — 35,727 — — 35,727 — 35,727 Withholding taxes on net share settlement of stock-based compensation and option exercises — — — — ( 13,473 ) — — ( 13,473 ) — ( 13,473 ) Reclassification of 2018 Warrants 26,216 26,216 26,216 Balance at December 31, 2020 229,038 23 — — 3,852,291 ( 37,207 ) ( 1,751,234 ) 2,063,873 — 2,063,873 Net income — — — — — — 160,144 160,144 — 160,144 Other comprehensive income — — — — — 8,136 — 8,136 — 8,136 Stock-based compensation and issuance of Common Stock from vesting 485 — — — 26,184 — — 26,184 — 26,184 Repurchase and cancellation of Common Stock and warrants ( 11,851 ) ( 1 ) — — ( 340,375 ) — — ( 340,376 ) — ( 340,376 ) Issuance of Common Stock from the exercise of options and warrants 6,268 — — — 85,979 — — 85,979 — 85,979 Withholding taxes on net share settlement of stock-based compensation and option exercises — — — — ( 7,177 ) — — ( 7,177 ) — ( 7,177 ) Balance at December 31, 2021 223,940 22 — — 3,616,902 ( 29,071 ) ( 1,591,090 ) 1,996,763 — 1,996,763 Net income — — — — — — 339,540 339,540 — 339,540 Other comprehensive loss — — — — — ( 41,051 ) — ( 41,051 ) — ( 41,051 ) Stock-based compensation and issuance of Common Stock from vesting 594 — — — 29,613 — — 29,613 — 29,613 Repurchase and cancellation of Common Stock and warrants ( 19,836 ) ( 2 ) — — ( 756,906 ) — — ( 756,908 ) — ( 756,908 ) Issuance of Common Stock from the exercise of options and warrants 3,254 1 — — 11,230 — — 11,231 — 11,231 Withholding taxes on net share settlement of stock-based compensation and option exercises — — — — ( 13,888 ) — — ( 13,888 ) — ( 13,888 ) Balance at December 31, 2022 207,952 $ 21 — $ — $ 2,886,951 $ ( 70,122 ) $ ( 1,251,550 ) $ 1,565,300 $ — $ 1,565,300 (1) See Note 1 for information regarding the Company's conversion of Class A Common Stock to Common Stock on July 1, 2020 concurrent with the Merger . See the accompanying notes which are an integral part of these consolidated financial statements. 67 WillScot Mobile Mini Holdings Corp. Consolidated Statements of Cash Flows (in thousands) Years Ended December 31, 2022 2021 2020 Operating activities: Net income $ 339,540 $ 160,144 $ 75,340 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 343,507 318,202 246,948 Provision for credit losses 34,835 38,191 32,593 Gain on sale of discontinued operations ( 35,456 ) — — Impairment losses on right of use assets — — 57 Gain on sale of rental equipment and other property, plant and equipment ( 31,196 ) ( 26,175 ) ( 14,124 ) Amortization of debt discounts and debt issuance costs 12,064 14,033 13,085 Fair value loss (gain) on common stock warrant liabilities — 26,597 ( 3,461 ) Loss on extinguishment of debt — 5,999 42,401 Stock-based compensation expense 29,613 26,184 9,879 Deferred income tax expense (benefit) 100,849 36,563 ( 55,155 ) Unrealized currency losses, net 753 295 424 Other 4,081 — — Changes in operating assets and liabilities, net of effect of businesses acquired: Trade receivables ( 94,463 ) ( 105,053 ) ( 26,723 ) Inventories ( 12,345 ) ( 9,083 ) 2,775 Prepaid expenses and other assets 149 3,324 ( 4,547 ) Operating lease assets and liabilities 856 473 789 Accounts payable and other accrued expenses 9,443 27,525 ( 27,923 ) Deferred revenue and customer deposits 42,428 22,683 12,454 Net cash provided by operating activities 744,658 539,902 304,812 Investing activities: Proceeds from sale of discontinued operations 325,611 — — Acquisitions, net of cash acquired ( 220,620 ) ( 147,172 ) 17,173 Proceeds from sale of rental equipment 70,703 55,210 38,949 Purchase of rental equipment and refurbishments ( 443,138 ) ( 278,498 ) ( 172,383 ) Proceeds from the sale of property, plant and equipment 1,775 16,911 7,355 Purchase of property, plant and equipment ( 43,664 ) ( 30,498 ) ( 16,454 ) Net cash used in investing activities ( 309,333 ) ( 384,047 ) ( 125,360 ) Financing activities: Repurchase and cancellation of Common Stock and warrants ( 751,795 ) ( 363,586 ) ( 21,777 ) Receipts from issuance of Common Stock from the exercise of options 11,230 7,484 10,616 Taxes paid on employee stock awards ( 13,888 ) ( 7,177 ) ( 13,473 ) Payment of Common Stock issuance costs — — ( 4,222 ) Receipts from borrowings 964,308 728,677 2,786,793 68 Repayment of borrowings ( 588,808 ) ( 512,181 ) ( 2,808,370 ) Payment of financing costs ( 8,187 ) — ( 65,475 ) Principal payments on finance lease obligations ( 42,228 ) ( 17,399 ) ( 8,440 ) Payment of debt extinguishment premium costs — ( 3,705 ) ( 34,610 ) Net cash used in financing activities ( 429,368 ) ( 167,887 ) ( 158,958 ) Effect of exchange rate changes on cash and cash equivalents ( 882 ) ( 206 ) 1,398 Net change in cash and cash equivalents 5,075 ( 12,238 ) 21,892 Cash and cash equivalents at the beginning of the period 12,699 24,937 3,045 Cash and cash equivalents at the end of the period $ 17,774 $ 12,699 $ 24,937 Supplemental cash flow information: Interest paid $ 130,463 $ 103,795 $ 118,519 Income taxes paid, net $ 25,092 $ 9,855 $ 4,234 Capital expenditures accrued or payable $ 21,052 $ 27,667 $ 23,553 Reconciliation of cash and cash equivalents to the consolidated balance sheet: Cash and cash equivalents of continuing operations $ 7,390 $ 6,393 $ 5,635 Cash and cash equivalents included in assets held for sale 10,384 6,306 19,302 Total cash and cash equivalents shown in the consolidated statement of cash flows $ 17,774 $ 12,699 $ 24,937 See the accompanying notes which are an integral part of these consolidated financial statements. 69 WillScot Mobile Mini Holdings Corp. Notes to the Consolidated Financial Statements NOTE 1 - Summary of Significant Accounting Policies Organization and Nature of Operations WillScot Mobile Mini Holdings Corp. (“WillScot Mobile Mini” and, together with its subsidiaries, the “Company”) is a leading business services provider specializing in innovative flexible work space and portable storage solutions in the United States (“US”), Canada and Mexico. The Company leases, sells, delivers and installs mobile solutions and storage products through an integrated network of branch locations that spans North America. On July 1, 2020, a wholly-owned subsidiary of WillScot Corporation, a Delaware corporation, merged with and into Mobile Mini, Inc. (the “Merger”). At the effective time of the Merger, Mobile Mini, Inc. ("Mobile Mini") continued its existence as the surviving corporation in the Merger and a wholly-owned subsidiary of WillScot Corporation (“WillScot”). Immediately following the Merger, WillScot changed its name to “WillScot Mobile Mini Holdings Corp.” and filed an amended and restated certificate of incorporation (the “A&R Charter”), which reclassified all outstanding shares of WillScot Class A Common Stock and converted such shares into shares of Common Stock, par value $ 0.0001 per share, of WillScot Mobile Mini (“WillScot Mobile Mini Common Stock”). The WillScot Class A Common Stock was listed on the Nasdaq Capital Market (Nasdaq: WSC) up until the Merger, and the WillScot Mobile Mini Common Stock has been listed on the Nasdaq Capital Market (Nasdaq: WSC) since the Merger. As used herein, the term “Common Stock” or “the Company’s Common Stock” refers to WillScot Class A Common Stock prior to filing of the A&R Charter on July 1, 2020 and to WillScot Mobile Mini Common Stock as of and following the filing of the A&R Charter on July 1, 2020. Unless the context otherwise requires, the terms “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, when referring to periods on or after July 1, 2020 (after the Merger). 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 Storage Solutions ("UK Storage Solutions") segment. The Company completed the sale of the UK Storage Solutions segment on January 31, 2023. The consolidated financial statements present the historical financial results of the former Tank and Pump segment and the UK Storage Solutions segment as income from discontinued operations for all periods presented and the carrying values of the former Tank and Pump segment and the UK Storage Solutions segment assets and liabilities within assets and liabilities held for sale for reporting periods prior to the segments' disposals. See Note 3 for further discussion. Basis of Presentation and Principles of Consolidation The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the US (“GAAP”). The consolidated financial statements comprise the financial statements of WillScot Mobile Mini and its subsidiaries that it controls due to ownership of a majority voting interest. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as WillScot Mobile Mini. All intercompany balances and transactions are eliminated. Reclassifications Certain reclassifications have been made to prior year financial statements to conform to the current year presentation. Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents. Trade Receivables and Allowance for Credit Losses The Company is exposed to credit losses from trade receivables. The Company assesses each customer’s ability to pay for the products it leases or sells by conducting a credit review. The credit review considers expected billing exposure and timing for payment and the customer’s established credit rating. The Company performs its credit review of new customers at inception of the customer relationship and for existing customers when the customer transacts after a defined period of dormancy. The Company also considers contract terms and conditions, country risk and business strategy in the evaluation. 70 The Company monitors ongoing credit exposure through an active review of customer balances against contract terms and due dates. The Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. The allowance for credit losses reflects the estimate of the amount of receivables that the Company will be unable to collect based on historical 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. 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. Activity in the allowance for credit losses for the years ended December 31 was as follows: (in thousands) 2022 2021 2020 Balance at beginning of period $ 45,773 $ 28,105 $ 15,828 Provision for credit losses, net of recoveries (a) 34,881 37,469 30,544 Write-offs ( 23,705 ) ( 19,777 ) ( 18,296 ) Foreign currency translation and other 99 ( 24 ) 29 Balance at end of period $ 57,048 $ 45,773 $ 28,105 (a) For the years ended December 31, 2022, 2021 and 2020, the provision for credit losses included $ 23.7 million, $ 19.8 million and $ 18.3 million, respectively, recorded as a reduction to revenue for the provision of specific receivables whose collection was not considered probable. The Company’s trade accounts receivable subject the Company to potential concentrations of credit risk. The Company performs on-going credit evaluations of its customers. Receivables related to sales are generally secured by the product sold to the customer. The Company generally has the right to repossess its rental units in the event of non-payment of receivables relating to the Company’s leasing operations. Inventories Inventories consist of raw materials, supplies, and finished units for sale. Inventories are measured at the lower of cost or net realizable value based on the weighted-average cost. The cost includes expenditures incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. Rental Equipment 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. Cost includes expenditures that are directly attributable to the acquisition of the asset. 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 into consideration the residual value of the asset. Maintenance and repair costs are expensed as incurred. Depreciation is computed using the straight-line method over estimated useful lives, as follows: Estimated Useful Life Residual Value Modular space units 10 - 30 years 20 - 55 % Portable storage units 30 years 55 % VAPS and other related rental equipment 1 - 8 years — % Property, Plant and Equipment Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses. The Company capitalizes external costs and directly attributable internal costs to acquire or create internal use software incurred subsequent to the completion of the preliminary project stage. Costs associated with post-implementation activities are expensed as incurred. The Company evaluates implementation costs incurred in a cloud computing arrangement that is a service contract as described in Cloud Computing Arrangements below. Land is not depreciated. Leasehold improvements are amortized over the lease term. Assets leased under capital leases are depreciated over the shorter of the lease term or their useful life, unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Maintenance and repair costs are expensed as incurred. 71 Depreciation is computed using the straight-line method over estimated useful lives as follows: Estimated Useful Life Buildings and leasehold improvements 10 - 40 years Vehicles, machinery, and equipment 3 - 30 years Furniture and fixtures 3 - 10 years Software 3 - 10 years Impairment of Long-Lived Assets When circumstances indicate the carrying amount of long-lived assets in a held-for-use asset group may not be recoverable, the Company evaluates the assets for potential impairment using internal projections of undiscounted cash flows resulting from the use and eventual disposal of the assets. Events or changes in circumstances that may necessitate a recoverability evaluation include, but are not limited to, adverse changes in the regulatory environment or an expectation it is more likely than not that the asset will be disposed of before the end of its previously estimated useful life. If the carrying amount of the assets exceeds the undiscounted cash flows, an impairment expense is recognized for the amount by which the carrying amount of the asset group exceeds its fair value (subject to the carrying amount not being reduced below fair value for any individual long-lived asset that is determinable without undue cost and effort). Consistent with the provisions of ASC 842, the Company assesses whether any operating lease as set impairment exists in accordance with the measurement guidance in Accounting Standard Codification ("ASC") 360, Property Plant and Equipment . Cloud Computing Arrangements In accordance with ASU 2018-15, Goodwill and Other – Internal-Use Software (Subtopic 350-40) (“ASC 350-40"), t he Company evaluates implementation costs incurred in a cloud computing arrangement that is a service contract under the internal-use software framework. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Costs incurred in the development stage are generally capitalized as other assets. Amortization expense is calculated on a straight-line basis over the contractual term of the cloud computing arrangement and recorded as selling, general and administrative expense. Purchase Accounting The Company accounts for acquisitions of businesses under the acquisition method. Under the acquisition method of accounting, the Company records assets acquired and liabilities assumed at their respective estimated fair values on the date of acquisition. Goodwill is measured as the excess of the fair value of the consideration transferred over the fair value of the identifiable net assets and is assigned to the Company's reporting units that are expected to benefit from the acquisition. When appropriate, our estimates of the fair values of assets and liabilities acquired include assistance from independent third-party valuation firms. Valuations are finalized as soon as practicable, but not later than one year from the acquisition date. Any subsequent changes to purchase price allocations result in a corresponding adjustment to goodwill. Transaction costs are expensed in the acquisition of a business. Long-lived assets (principally rental equipment), goodwill and other intangible assets generally represent the largest components of our acquisitions. Rental equipment is valued utilizing a replacement cost approach. Intangible assets are recognized at their estimated fair values as of the date of acquisition and generally consist of customer relationships and trade names. Determination of the estimated fair value of intangible assets requires judgment. The estimated fair value of customer relationships is determined based on estimates and judgments regarding discounted future after-tax earnings and cash flows arising from lease renewals and new lease arrangements expected from customer relationships. The fair value of trade name intangible assets is determined utilizing the relief from royalty method. Under this form of the income approach, a royalty rate based on observed market royalties is applied to projected revenue supporting the trade name and discounted to present value. Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions. An asset acquisition is accounted for by allocating the cost of the acquisition to the individual assets acquired and liabilities assumed on a relative fair value basis. Goodwill is not recognized in an asset acquisition. Any consideration in excess of net assets acquired is allocated to qualifying acquired assets on a relative fair value basis. The Company measures the fair value of assets acquired utilizing observable market transaction data for comparable assets or recent purchase prices. Transaction costs are considered a component of the cost of an asset acquisition. 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. The Company performs its assessment of goodwill utilizing either a qualitative or quantitative impairment test. The qualitative 72 impairment test assesses company-specific, industry, market and general economic factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or elects not to use the qualitative impairment test, a quantitative impairment test is performed. The quantitative impairment test involves a comparison of the estimated fair value of a reporting unit to its carrying amount. The Company uses an independent valuation specialist for its quantitative impairment tests to assist in the valuation. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, value of net operating losses, future economic and market conditions and determination of appropriate market comparables. Management bases fair value estimates on assumptions it believes to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from these estimates. If the carrying amount of the reporting unit exceeds the calculated fair value of the reporting unit, an impairment charge would be recognized for the excess, not to exceed the amount of goodwill allocated to that reporting unit. Intangible Assets Other than Goodwill Intangible assets that are acquired by the Company and determined to have an indefinite useful life are not amortized but are tested for impairment at least annually. The Company’s indefinite-lived intangible assets consist of the Williams Scotsman and Mobile Mini trade names. The Company performs its assessment of indefinite-lived intangible assets utilizing either a qualitative or quantitative impairment test. When utilizing a quantitative impairment test, the Company calculates fair value using a relief-from-royalty method. This method is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment charge would be recorded to the extent the recorded indefinite-lived intangible asset exceeds the fair value. Other intangible assets that have finite useful lives are measured at cost less accumulated amortization and impairment losses, if any. Amortization is recognized in profit or loss over the estimated useful lives of the intangible asset. Retirement Benefit Obligation The Company provides benefits to certain of its employees under defined contribution benefit plans. The Company’s contributions to these plans are generally based on a percentage of employee compensation or employee contributions. These plans are funded on a current basis. For its US and Canada employees, the Company sponsors defined contribution benefit plans that have discretionary matching contribution and profit-sharing features. Fo r the years ended December 31, 2022, 2021 and 2020, the Company made matc hing contributions of $ 13.8 million, $ 10.9 million and $ 7.1 million to these plans, respectively. Stock-Based Compensation Prior to the Merger, stock awards were granted under the WillScot Corporation 2017 Incentive Award Plan (the "2017 Incentive Plan"), which included Restricted Stock Awards ("RSAs") and Restricted Stock Units. On June 24, 2020, WillScot's stockholders approved the WillScot Mobile Mini 2020 Incentive Award Plan ("2020 Incentive Plan") to take effect pending completion of the Merger and, as a result, all future incentive awards are granted under the 2020 Incentive Plan. The 2020 Incentive Plan is administered by the Compensation Committee. Under the 2020 Incentive Plan, the Compensation Committee may grant an aggreg ate of 6,488,988 shares of Common Stock in the form of non-qualified stock options, incentive stock options, stock appreciation rights, RSAs, RSUs, performance compensation awards and stock bonus awards. Stock-based payments, including the grant of stock options, RSAs and RSUs, are subject to service-based vesting requirements, and expense is recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur. Stock-based compensation expense includes grants of stock options, time-based RSUs ("Time-Based RSUs") and performance-based RSUs ("Performance-Based RSUs", together with Time-Based RSUs, the "RSUs"). RSUs are recognized in the financial statements based on their fair value. In addition, stock-based payments to non-executive directors include grants of RSAs. Time-Based RSUs and RSAs are valued based on the intrinsic value of the difference between the exercise price, if any, of the award and the fair market value of WillScot Mobile Mini's Common Stock on the grant date. Performance-Based RSUs are valued based on a Monte Carlo simulation model to reflect the impact of the Performance-Based RSUs market condition. The probability of satisfying a market condition is considered in the estimation of the grant-date fair value for Performance-Based RSUs and the compensation cost is not reversed if the market condition is not achieved, provided the requisite service has been provided. RSAs cliff vest in a one year period. Time-Based RSUs vest ratably over a period of four years . Certain Performance-Based RSUs cliff vest based on achievement of the relative total stockholder return ("TSR") of the Company's Common Stock as compared to the TSR of the constituents in an Index at the grant date over the performance period of three years . For certain 2022 and 2021 grants, the TSR of the Company's Common Stock is compared to the TSR of the constituents in the S&P 400 index. The target number of RSUs may be adjusted from 0 % to 200 % based on the TSR attainment levels defined by the Compensation Committee. The 100 % target payout is tied to performance at the 50 % percentile, with a payout curve ranging from 0 % (for performance less than the 25 % percentile) to 200 % (for performance at or above the 85 % percentile). For grants in 2020 and prior, the TSR of the Company's Common Stock is compared to the TSR of constituents in the Russell 3000 index. The target number of RSUs may be adjusted from 0 % to 150 % based on the TSR attainment levels defined by the Compensation Committee. The 100 % target payout is tied to performance at the 50 % percentile, with a payout curve ranging 73 from 0 % (for performance less than the 25 % percentile) to 150 % (for performance at or above the 75 % percentile). Vesting is also subject to continued service requirements through the vesting date. For 555,790 Performance-Based RSUs granted in 2021, the awards cliff vest based on achievement of specified share prices of the Company's Common Stock at annual measurement dates over performance periods of 4.5 years to 4.8 years. The target number of RSUs may be adjusted from 0 to 1,333,334 based on the stock price attainment levels defined by the Company's Compensation Committee. The 555,790 RSU target payout is tied to a stock price of $ 47.50 , with a payout ranging from 0 RSUs (for a stock price less than $ 42.50 ) to 1,333,334 RSUs (for a stock price of $ 60.00 or greater). Stock options vest in tranches over a period of four years and expire ten years from the grant date. The fair value of each stock option award on the grant date is estimated using the Black-Scholes option-pricing model with the following assumptions: expected dividend yield, expected stock price volatility, weighted-average risk-free interest rate and weighted-average expected term of the options. The volatility assumption used in the Black-Scholes option-pricing model was based on a blend of peer group volatility and Company trading history as the Company did not have a sufficient trading history as a stand-alone public company to rely exclusively on its own trading history. Future calculations may use the Company trading history. Additionally, due to an insufficient history with respect to stock option activity and post-vesting cancellations, the expected term assumption was based on the simplified method under GAAP, which is based on the vesting period and contractual term for each tranche of awards. The mid-point between the weighted-average vesting term and the expiration date is used as the expected term under this method. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. WillScot Mobile Mini has never declared or paid a cash dividend on common shares. Foreign Currency Translation and Transactions The Company’s reporting currency is the US Dollar (“USD”). Exchange rate adjustments resulting from foreign currency transactions are recognized in profit or loss, whereas effects resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive loss, which is a component of shareholders’ equity. The assets and liabilities of subsidiaries whose functional currency is different from the USD are translated into USD at exchange rates at the reporting date and income and expenses are translated using average exchange rates for the respective period. Exchange rate adjustments resulting from transactions in foreign currencies (currencies other than the Company entities’ functional currencies) are remeasured to the respective functional currencies using exchange rates at the dates of the transactions and are recognized in currency (gains) losses on the consolidated statements of operations. Foreign exchange gains and losses arising from a receivable or payable to a consolidated Company entity, the settlement of which is neither planned nor anticipated in the foreseeable future, are considered to form part of a net investment in the Company entity and are included within accumulated other comprehensive loss. Derivative Instruments and Hedging Activities The Company utilizes derivative financial instruments to manage its exposure to fluctuations in interest rates on variable rate debt and currency exchange rates. The Company does not use derivatives for trading or speculative purposes. The Company records derivatives on the balance sheet at fair value within prepaid expenses and other current assets and other non-current assets (if in an unrealized gain position) or within accrued liabilities and other non-current liabilities (if in an unrealized loss position). If a derivative is designated as a cash flow hedge and meets the highly effective threshold, the changes in the fair value of derivatives are recorded in accumulated other comprehensive income (loss). Amounts reported in accumulated other comprehensive income (loss) related to the cash flow hedges are reclassified to earnings when the hedged item impacts earnings. For any derivative instruments not designated as hedging instruments, changes in fair value would be recognized in earnings in the period that the change occurs. The Company assesses, both at the inception of the hedge and on an ongoing quarterly basis, whether the derivatives designated as cash flow hedges are highly effective in offsetting the changes in cash flows of the hedged items. In the consolidated statements of cash flows, cash inflows and outflows related to derivative instruments are presented based on the underlying nature of the hedged items. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company enters into derivative financial ins truments only with counterparties with high credit ratings and with major financial institutions. The Company does not anticipate that any of the counterparties will fail to meet their obligations. Revenue Recognition A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Leasing and Services Revenue The majority of revenue is generated by rental income subject to the guidance in 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 No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606"). 74 Leasing Revenue Income from operating leases is recognized on a straight-line basis over the lease term. 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 and portable storage units and VAPS. Examples of non-lease components include, but are not limited to, the delivery, install ation, maintenance, and removal services commonly provided in a bundled transaction with the lease components. Arrangement consideration is allocated between lease deliverables and non-lease components based on the relative estimated selling (leasing) price of each deliverable. Estimated selling (leasing) price of the lease deliverables is based upon the estimated stand-alone selling price of the related performance obligations using an adjusted market approach. When leases and services are billed in advance, recognition of revenue is deferred until services are rendered. If equipment is returned prior to the contractually obligated period, the excess, if any, between the amount the customer is contractually required to pay over the cumulative amount of revenue recognized to date is recognized as incremental revenue upon return. Rental equipment is leased primarily under operating leases. Operating lease minimum contractual terms within the Modular segment, as defined in Note 18, 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. The Company records changes in estimated collectability directly against leasing revenue. The Company may use third parties to satisfy its performance obligations, including both the provision of VAPS and other services. 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. 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. 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. Services Revenue The Company generally has three non-lease service-related performance obligations in its contracts with customers: • Delivery and installation of the modular or portable storage unit; • Maintenance and other ad hoc services performed during the lease term; and • Removal services that occur at the end of the lease term. Consideration is allocated to each of these performance obligations within the contract based upon their estimated relative standalone selling prices using the estimated cost plus a margin approach. Revenue from these activities is recognized as the services are performed. Sales Revenue Sales revenue is generated by the sale of new and rental units. Revenue from the sale of new and rental units is generally recognized at a point in time upon the transfer of control to the customer, which occurs when the unit is delivered and installed in accordance with the contract. Sales transactions constitute a single performance obligation. Other Matters The Company's non-lease revenues do not include material amounts of variable consideration, other than the variability noted for services arrangements expected to be performed beyond a twelve-month period. The Company's payment terms vary by the type and location of its customer and the product or services offered. The time between invoicing and when payment is due is not significant. While the Company may bill certain customers in advance, its contracts do not contain a significant financing component based on the short length of time between upfront billings and the performance of contracted services. For certain products, services, or customer types, the Company requires payment before the products or services are delivered to the customer. At December 31, 2022, current deferred revenue and customer deposits included deferred revenue of $ 195.8 million and customer deposits of $ 8.0 million, respectively. At December 31, 2021, current deferred revenue and customer deposits included deferred revenue of $ 150.1 million and customer deposits of $ 2.2 million, respectively. Revenue is recognized net of sales tax billed to customers, which is subsequently remitted to governmental authorities. 75 Leases as Lessee The Company leases real estate for certain of its branch offices, administrative offices, rental equipment storage properties, vehicles and equipment, and administrative operations. The Company determines if an arrangement is or contains a lease at inception. Leases are classified as either finance or operating at inception of the lease, with classification affecting the pattern of expense recognition in the income statement. Short-term leases, defined as leases with an initial term of 12 months or less, are not recorded on the balance sheet. Lease expense for short-term leases is recognized on a straight-line basis over the lease term. The Company has leases that contain both lease and non-lease components and has elected, as an accounting policy, to not separate lease components and non-lease components. Right of use ("ROU") assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The lease liability is calculated as the present value of the remaining minimum rental payments for existing leases using either the rate implicit in the lease or, if none exists, the Company's incremental borrowing rate, as the discount rate. The Company uses its incremental borrowing rate at commencement date in determining the present value of lease payments for those leases where the implicit rate is not known. The Company's incremental borrowing rate is a hypothetical rate based on its understanding of what would be the Company's secured credit rating. Variable lease payments are expensed in the period in which the obligation for those payments is incurred. Variable lease payments include payments for common area maintenance, real estate taxes, management fees and insurance. Many of the Company’s real estate lease agreements include one or more options to extend the lease, which are not included in the minimum lease terms unless the Company is reasonably certain it will exercise the option. Additionally, the Comp any’s leases do not generally include options to terminate the lease prior to the end of the lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Advertising and Promotion Advertising and promotion costs, which are expensed as incurred, were $ 8.5 million , $ 7.6 million and $ 7.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. Shipping Costs The Company includes third-party costs to deliver rental equipment to customers in costs of leasing and services, and cost of sales. Income Taxes 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. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. 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. 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 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. Conversely, to the extent circumstances indicate that a valuation allowance is no longer necessary, that portion of the valuation allowance is reversed, which generally reduces the Company’s income tax expense. Deferred tax liabilities are recognized for the income taxes on the undistributed earnings of wholly-owned foreign subsidiaries unless such earnings are indefinitely reinvested, or will only be repatriated when possible to do so at minimal additional tax cost. Current income tax relating to items recognized directly in equity is recognized in equity and not in profit (loss) for the year. In accordance with applicable authoritative guidance, the Company accounts for uncertain income tax positions using a benefit recognition model with a two-step approach; a more-likely-than-not recognition criterion; and a measurement approach that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. If it is not more-likely-than-not that the benefit of the tax position will be sustained on its technical merits, no benefit is recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company classifies interest on tax deficiencies and income tax penalties within income tax expense. The Company accounts for any impacts of the Global Intangible Low-Taxed Income ("GILTI") in the period in which they are incurred. 76 Fair Value Measurements The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair va lue measurement. The inputs are prioritized into three levels that may be used to measure fair value. See further discussion of the levels in Note 15. Warrants The Company accounts for warrants in accordance with applicable accounting guidance provided in ASC 815-40, Contracts in Entity's Own Equity , as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreements. 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. Recently Issued Accounting Standards ASU 2021-08. Business Combinations (Topic 815): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers In October 2021, the FASB issued ASU No. 2021-08, B usiness Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). ASU 2021-08 requires that an acquirer recognize and measure contract assets and liabilities acquired in a business combination in accordance with ASC 606. This standard is effective for annual periods beginning after December 15, 2022, including interim periods therein, with early adoption permitted. The guidance will be applied prospectively to acquisitions occurring on or after the effective date. The Company will continue to evaluate the impact of this guidance, which will depend on the contract assets and liabilities acquired in future business combinations. NOTE 2 - Acquisitions Asset 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 $ 220.6 million in cash. The accompanying consolidated financial statements include $ 214.8 million of rental equipment as a result of these acquisitions. Integration Costs The Company records integration costs related to asset acquisitions and the Merger within selling, general and administrative ("SG&A") expense. The Company incurred $ 15.5 million, $ 28.4 million and $ 16.6 million in integration costs for asset acquisitions and the Merger for the years ended December 31, 2022, 2021 and 2020, respectively. NOTE 3 - Discontinued Operations Tank and Pump Divestiture On September 30, 2022, the Company sold its former Tank and Pump segment for $ 321.9 million. Exiting the former Tank and Pump segment represented the Company’s strategic shift to concentrate its operations on its core modular and storage businesses. In accordance with ASC 360, Property, Plant, and Equipment , the Company ceased recording depreciation and amortization for the former Tank and Pump segment rental fleet, property, plant and equipment, and operating lease assets during the third quarter of 2022 when the former Tank and Pump segment initially qualified as held for sale. In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations , the criteria for discontinued operations presentation were met during the third quarter of 2022 and results for the former Tank and Pump segment were reported in income from discontinued operations within the consolidated statements of operations for all periods presented. The carrying values of the divested business' assets and liabilities were presented within assets and liabilities held for sale on the consolidated balance sheet as of December 31, 2021. As part of the divestiture, the Company entered into a customary transition services agreement with the buyer to assist them in the transition of certain functions, including, but not limited to, information technology, accounting and human resources, for a period of six months with an option for the buyer to extend the agreement for a period of up to twelve months. There was no significant continuing involvement with the former Tank and Pump segment after its disposal. UK Storage Solutions Divestiture On December 12, 2022, the Company entered into a stock purchase agreement to sell its UK Storage Solutions segment for cash consideration of £ 335.0 million, subject to certain adjustments. The sale transaction was completed on January 31, 2023. Total cash consideration for the transaction was $ 418.1 million. The Company will record a gain on the sale of the UK Storage Solutions segment in the first quarter of 2023. Exiting the UK Storage Solutions segment represented the Company’s strategic shift to concentrate its operations on its core modular and storage businesses in North America. The Company ceased recording depreciation and amortization for the UK Storage Solutions segment rental fleet, property, plant 77 and equipment, and operating lease assets during the fourth quarter of 2022 when the UK Storage Solutions segment initially qualified as held for sale. The criteria for discontinued operations presentation were met and results for the UK Storage Solutions segment were reported in income from discontinued operations within the consolidated statements of operations for all periods presented. The carrying value of the UK Storage Solutions segment's assets and liabilities were presented within assets and liabilities held for sale on the consolidated balance sheets as of December 31, 2022 and 2021. As part of the divestiture, the Company entered into a customary transition services agreement with the buyer to assist them in the transition of certain functions, including, but not limited to, information technology, accounting and human resources, for a period of six months with an option for the buyer to extend the agreement for a period of up to twelve months. There will be no significant continuing involvement with the UK Storage Solutions segment after its disposal. The following tables present the results of the former Tank and Pump segment and the UK Storage Solutions segment as reported in income from discontinued operations within the consolidated statements of operations, and the carrying value of the segments' assets and liabilities as presented within assets and liabilities held for sale on the consolidated balance sheets. The 2022 results for the former Tank and Pump segment represent results for the nine months ended September 30, 2022 as the Company sold the former Tank and Pump segment on September 30, 2022. The 2020 results for the former Tank and Pump segment and the UK Storage Solutions segment represent results subsequent to July 1, 2020, the date the Company acquired the segments. Year Ended December 31, 2022 (in thousands) Tank and Pump UK Storage Solutions Total Revenues: Leasing and services revenue: Leasing $ 65,572 $ 79,772 $ 145,344 Delivery and installation 27,665 22,876 50,541 Sales revenue: New units 2,202 1,106 3,308 Rental units 917 1,455 2,372 Total revenues 96,356 105,209 201,565 Costs: Costs of leasing and services: Leasing 13,828 16,737 30,565 Delivery and installation 23,285 14,867 38,152 Costs of sales: New units 1,636 738 2,374 Rental units 310 1,012 1,322 Depreciation of rental equipment 8,145 4,254 12,399 Gross profit 49,152 67,601 116,753 Expenses: Selling, general and administrative 18,045 21,795 39,840 Other depreciation and amortization 6,103 5,906 12,009 Currency losses, net — 138 138 Other expense (income), net 4 ( 7 ) ( 3 ) Operating income 25,000 39,769 64,769 Interest expense 512 789 1,301 Income from discontinued operations before income tax 24,488 38,980 63,468 Income tax expense from discontinued operations 843 34,882 35,725 Gain on sale of discontinued operations 35,456 — 35,456 Income from discontinued operations $ 59,101 $ 4,098 $ 63,199 Other selected data: Adjusted EBITDA from discontinued operations $ 37,016 $ 48,734 $ 85,750 78 Year Ended December 31, 2021 (in thousands) Tank and Pump UK Storage Solutions Total Revenues: Leasing and services revenue: Leasing $ 77,527 $ 82,106 $ 159,633 Delivery and installation 29,530 24,023 53,553 Sales revenue: New units 2,355 3,534 5,889 Rental units 1,479 1,363 2,842 Total revenues 110,891 111,026 221,917 Costs: Costs of leasing and services: Leasing 17,045 17,440 34,485 Delivery and installation 25,057 14,271 39,328 Costs of sales: New units 1,672 2,357 4,029 Rental units 536 1,287 1,823 Depreciation of rental equipment 14,319 4,428 18,747 Gross profit 52,262 71,243 123,505 Expenses: Selling, general and administrative 22,194 24,974 47,168 Other depreciation and amortization 9,366 6,887 16,253 Restructuring costs 2 — 2 Currency losses, net — 121 121 Other expense, net 11 54 65 Operating income 20,689 39,207 59,896 Interest expense 779 850 1,629 Income from discontinued operations before income tax 19,910 38,357 58,267 Income tax expense from discontinued operations 5,277 7,741 13,018 Income from discontinued operations $ 14,633 $ 30,616 $ 45,249 Other selected data: Adjusted EBITDA from discontinued operations $ 41,750 $ 49,039 $ 90,789 79 Year Ended December 31, 2020 (in thousands) Tank and Pump UK Storage Solutions Total Revenues: Leasing and services revenue: Leasing $ 32,356 $ 32,633 $ 64,989 Delivery and installation 14,013 9,409 23,422 Sales revenue: New units 1,135 3,124 4,259 Rental units 789 1,195 1,984 Total revenues 48,293 46,361 94,654 Costs: Costs of leasing and services: Leasing 5,618 7,391 13,009 Delivery and installation 11,015 6,353 17,368 Costs of sales: New units 741 2,301 3,042 Rental units 272 1,026 1,298 Depreciation of rental equipment 6,743 1,648 8,391 Gross profit 23,904 27,642 51,546 Expenses: Selling, general and administrative 11,354 10,877 22,231 Other depreciation and amortization 5,348 2,720 8,068 Restructuring costs 54 364 418 Currency gains, net — ( 98 ) ( 98 ) Other expense, net 2 2 4 Operating income 7,146 13,777 20,923 Interest expense 200 367 567 Income from discontinued operations before income tax 6,946 13,410 20,356 Income tax expense from discontinued operations 1,783 2,806 4,589 Income from discontinued operations $ 5,163 $ 10,604 $ 15,767 Other selected data: Adjusted EBITDA from discontinued operations $ 17,843 $ 17,822 $ 35,665 80 December 31, 2022 (in thousands) UK Storage Solutions Assets Cash and cash equivalents $ 10,384 Trade receivables, net of allowances for doubtful accounts of $ 300 15,991 Inventories 3,058 Prepaid expenses and other current assets 1,787 Rental equipment, net 165,853 Property, plant and equipment, net 20,645 Operating lease assets 15,134 Goodwill 58,144 Intangible assets, net 6,414 Other non-current assets 1,832 Total assets held for sale $ 299,242 Liabilities Accounts payable $ 4,515 Accrued expenses 3,273 Accrued employee benefits 1,009 Deferred revenue and customer deposits 6,850 Deferred tax liabilities 29,737 Operating lease liabilities 15,192 Other non-current liabilities 6,278 Total liabilities held for sale $ 66,854 81 December 31, 2021 (in thousands) Tank and Pump UK Storage Solutions Total Assets Cash and cash equivalents $ — $ 6,306 $ 6,306 Trade receivables, net of allowance for credit losses of $ 1,469 related to Tank and Pump and $ 387 related to UK Storage Solutions 31,031 17,571 48,602 Inventories 647 2,297 2,944 Prepaid expenses and other current assets 222 1,604 1,826 Rental equipment, net 134,973 168,208 303,181 Property, plant and equipment, net 29,931 24,071 54,002 Operating lease assets 11,720 16,592 28,312 Goodwill 100,107 65,098 165,205 Intangible assets, net 8,750 9,053 17,803 Other non-current assets 55 2,659 2,714 Total assets held for sale $ 317,436 $ 313,459 $ 630,895 Liabilities Accounts payable $ 8,001 $ 7,707 $ 15,708 Accrued expenses 4,603 2,971 7,574 Accrued employee benefits 2,487 1,528 4,015 Deferred revenue and customer deposits 27 7,269 7,296 Deferred tax liabilities 17,095 32,110 49,205 Operating lease liabilities 11,959 17,174 29,133 Other non-current liabilities 23,487 5,154 28,641 Total liabilities held for sale $ 67,659 $ 73,913 $ 141,572 At December 31, 2021, assets held for sale of $ 1.0 million were not related to the former Tank and Pump segment or the UK Storage Solutions segment and were excluded from the table above. For the years ended December 31, 2022, 2021 and 2020 , significant operating and investing items related to the former Tank and Pump segment were as follows: Years Ended December 31, (in thousands) 2022 2021 2020 Operating activities of discontinued operations: Depreciation and amortization $ 14,248 $ 23,685 $ 12,091 Investing activities of discontinued operations: Proceeds from sale of rental equipment $ 918 $ 1,480 $ 789 Purchases of rental equipment and refurbishments $ ( 21,831 ) $ ( 17,747 ) $ ( 2,394 ) Proceeds from sale of property, plant and equipment $ — $ 388 $ 72 Purchases of property, plant and equipment $ ( 525 ) $ ( 1,743 ) $ ( 465 ) 82 The following table presents reconciliations of Income from discontinued operations before income tax to Adjusted EBITDA from discontinued operations for the former Tank and Pump segment for the years ended December 31, 2022, 2021 and 2020 , respectively. See Note 18 for further information regarding Adjusted EBITDA. Years Ended December 31, (in thousands) 2022 2021 2020 Income from discontinued operations $ 59,101 $ 14,633 $ 5,163 Gain on sale of discontinued operations 35,456 — — Income tax expense from discontinued operations 843 5,277 1,783 Income from discontinued operations before income tax and gain on sale 24,488 19,910 6,946 Interest expense 512 779 200 Depreciation and amortization 14,248 23,685 12,091 Restructuring costs, lease impairment expense and other related charges — 2 54 Integration costs — 14 — Stock compensation expense 18 222 — Other ( 2,250 ) ( 2,862 ) ( 1,448 ) Adjusted EBITDA from discontinued operations $ 37,016 $ 41,750 $ 17,843 For the years ended December 31, 2022, 2021 and 2020 , significant operating and investing items related to the UK Storage Solutions segment were as follows: Years Ended December 31, (in thousands) 2022 2021 2020 Operating activities of discontinued operations: Depreciation and amortization $ 10,160 $ 11,315 $ 4,368 Investing activities of discontinued operations: Proceeds from sale of rental equipment $ 1,455 $ 1,363 $ 1,195 Purchases of rental equipment and refurbishments $ ( 23,931 ) $ ( 27,830 ) $ ( 1,693 ) Proceeds from sale of property, plant and equipment $ 504 $ 387 $ — Purchases of property, plant and equipment $ ( 3,752 ) $ ( 1,680 ) $ ( 1,043 ) The following table presents reconciliations of Income from discontinued operations before income tax to Adjusted EBITDA from discontinued operations for the UK Storage Solutions segment for the years ended December 31, 2022, 2021 and 2020 , respectively. See Note 18 for further information regarding Adjusted EBITDA. Years Ended December 31, (in thousands) 2022 2021 2020 Income from discontinued operations $ 4,098 $ 30,616 $ 10,604 Income tax expense from discontinued operations 34,882 7,741 2,806 Income from discontinued operations before income tax and gain on sale 38,980 38,357 13,410 Interest expense 789 850 367 Depreciation and amortization 10,160 11,315 4,368 Currency losses, net 138 121 ( 98 ) Restructuring costs, lease impairment expense and other related charges — — 364 Stock compensation expense 197 39 — Other ( 1,530 ) ( 1,643 ) ( 589 ) Adjusted EBITDA from discontinued operations $ 48,734 $ 49,039 $ 17,822 83 NOTE 4 - Revenue Revenue Disaggregation Geographic Areas The Company had total revenue in the following geographic areas for the years ended December 31, as follows: Years Ended December 31, (in thousands) 2022 2021 2020 US $ 1,998,796 $ 1,542,076 $ 1,179,171 Canada 125,536 116,070 79,630 Mexico 18,291 14,834 14,190 Total revenues $ 2,142,623 $ 1,672,980 $ 1,272,991 Major Product and Service Lines Equipment leasing is the Company's core business and the primary driver of the Company's revenue and cash flows. This includes rental modular space and portable space units along with VAPS, which include furniture, steps, ramps, basic appliances, internet connectivity devices, and other items used by customers in connection with the Company's products. Leasing is complemented by new unit sales and sales of rental units. In connection with its leasing and sales activities, the Company provides services including delivery and installation, maintenance and ad hoc services and removal services at the end of lease transactions. The Company’s revenue by major product and service line for the years ended December 31, was as follows: Years Ended December 31, (in thousands) 2022 2021 2020 Modular space leasing revenue $ 840,926 $ 697,852 $ 581,452 Portable storage leasing revenue 361,197 233,868 114,952 VAPS and third party leasing revenues (a) 343,625 263,021 194,809 Other leasing-related revenue (b) 75,942 57,749 45,245 Leasing revenue 1,621,690 1,252,490 936,458 Delivery and installation revenue 429,152 321,129 250,734 Total leasing and services revenue 2,050,842 1,573,619 1,187,192 New unit sales revenue 40,338 46,993 48,834 Rental unit sales revenue 51,443 52,368 36,965 Total revenues $ 2,142,623 $ 1,672,980 $ 1,272,991 (a) Includes $ 25.3 million , $ 17.1 million, and $ 16.1 million of VAPS service revenue for the years ended December 31, 2022, 2021 and 2020, respectively. (b) Includes primarily damage billings, delinquent payment charges, and other processing fees. Leasing and Services Revenue The majority of revenu e ( 75 %, 74 %, and 72 % for the years ended December 31, 2022, 2021 and 2020, respectively) is generated by lease income subject to the guidance of 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 ASC 606. 84 At December 31, 2022 and for the years ended December 31, 2023 through 2027 and thereafter, f uture committed leasing revenues under non-cancelable operating leases with the Company’s customers, excluding revenue from delivery and installation and potential lease extensions, were as follows: (in thousands) Operating Leases 2023 $ 326,819 2024 111,650 2025 38,578 2026 16,074 2027 6,731 Thereafter 5,513 Total $ 505,365 Receivables The Company manages credit risk associated with its accounts receivables at the customer level. Because the same customers generate the revenues that are accounted for under both ASC 606 and ASC 842, the discussions below on credit risk and the Company's allowance for credit losses address the Company's total revenues. Concentration of credit risk with respect to the Company's receivables is limited because of a large number of geographically diverse customers who operate in a variety of end user markets. No single customer accounted for more than 1.7% and 1.6% of the Company’s receivables at December 31, 2022 and 2021 , respectively. The Company's top five customers with the largest open receivables balances represent ed 5.4 % and 5.6 % of the total receivables balance as of December 31, 2022 and 2021, respectively. The Company manages credit risk through credit approvals, credit limits, and other monitoring procedures. The Company's allowance for credit losses reflects its estimate of the amount of receivables that it will be unable to collect . The estimated losses are calculated using the loss rate method based upon a review of outstanding receivables, related aging, and historical collection experience. T he Company's estimates reflect changing circumstances, and the Company may be required to increase or decrease its allowance. During the years ended December 31, 2022, 2021 and 2020, the Company recognized bad debt expense to reflect changes in the allowance for credit losses of $ 10.4 million, $ 16.4 million , and $ 12.7 million , respectively, within SG&A expense in its consolidated statements of operations. For the years ended December 31, 2022, 2021 and 2020, the provision for credit losses included $ 23.7 million, $ 19.8 million and $ 18.3 million, respectively, recorded as a reduction to revenue for the provision of specific receivables whose collection was not considered probable. Contract Assets and Liabilities When customers are billed in advance for services, the Company defers recognition of revenue until the related services are performed, which generally occurs at the end of the contract. The balance sheet classification of deferred revenue is determined based on the contractual lease term. For contracts that continue beyond their initial contractual lease term, revenue continues to be deferred until the services are performed. During the years ended December 31, 2022, 2021 and 2020, $ 47.2 million, $ 38.8 million and $ 35.6 million, respectively, of deferred revenue relating to these services, was recognized as revenue. At December 31, 2022 and 2021 , the Company had approximately $ 102.2 million and $ 74.4 million, respectively, of deferred revenue related to these services. The Company does not have material contract assets, and it did not recognize any material impairments of any contract assets. The Company's uncompleted contracts with customers have unsatisfied (or partially satisfied) performance obligations. For the future services revenues that are expected to be recognized within twelve months, the Company has elected to utilize the optional disclosure exemption made available regarding transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations. The transaction price for performance obligations that will be completed in greater than twelve months is variable based on the costs ultimately incurred to provide those services and therefore the Company is applying the optional exemption to omit disclosure of such amounts. The primary costs to obtain contracts for new and rental unit sales with the Company's customers are commissions. The Company pays its sales force commissions on the sale of new and rental units. For new and rental unit sales, the period benefited by each commission is less than one year. As a result, the Company has applied the practical expedient for incremental costs of obtaining a sales contract and expenses commissions as incurred. 85 NOTE 5 - Leases As of December 31, 2022, the undiscounted future lease payments for operating and finance lease liabilities were as follows: (in thousands) Operating Leases Finance Leases 2023 $ 60,119 $ 15,580 2024 51,123 13,873 2025 42,828 13,547 2026 31,702 13,217 2027 20,846 9,988 Thereafter 51,895 16,331 Total lease payments 258,513 82,536 Less: interest ( 38,396 ) ( 8,166 ) Present value of lease liabilities $ 220,117 $ 74,370 Finance lease liabilities are included within long-term debt and current portion of long-term debt on the consolidated balance sheets. The Company’s lease activity during the years ended December 31, 2022, 2021, and 2020 was as follows: Years Ended December 31, Financial Statement Line (in thousands) 2022 2021 2020 Finance Lease Expense Amortization of finance lease assets $ 13,900 $ 12,602 $ 6,713 Interest on obligations under finance leases 1,899 1,406 719 Total finance lease expense $ 15,799 $ 14,008 $ 7,432 Operating Lease Expense Fixed lease expense Cost of leasing and services $ 2,797 $ 3,979 $ 5,723 Selling, general and administrative 59,804 53,977 40,616 Lease impairment expense and other related charges 213 2,028 2,800 Short-term lease expense Cost of leasing and services 32,947 22,335 25,576 Selling, general and administrative 1,792 794 1,937 Lease impairment expense and other related charges — — 471 Variable lease expense Cost of leasing and services 5,388 7,794 6,981 Selling, general and administrative 7,249 4,642 4,698 Lease impairment expense and other related charges 40 492 855 Total operating lease expense $ 110,230 $ 96,041 $ 89,657 The Company initiated certain restructuring plans associated with the Merger to capture operating synergies as a result of integrating these entities. The restructuring activities primarily included the termination of leases for duplicative branches, equipment, and other facilities. As part of these plans, certain of its leased locations were vacated and leases were terminated or impaired. During the year ended December 31, 2022 , the Company recorded $ 0.3 million in lease impairment expense and other related charges which is comprised of closed location rent expense. During the year ended December 31, 2021, the Company recorded $ 2.9 million in lea se i mpairment expense and other relat ed charges which is comprised of $ 0.3 million loss on lease exit and $ 2.6 million in closed location rent expense. During the year ended December 31, 2020, the Company recorded $ 4.9 million in lease impairment expense and other related charges which is comprised of $ 0.7 million loss on lease exit and $ 4.2 million in closed location rent expense. 86 Supplemental cash flow information related to leases for the years ended December 31, 2022, 2021, and 2020 were as follows: Years Ended December 31, Supplemental Cash Flow Information (in thousands) 2022 2021 2020 Cash paid for the amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 61,418 $ 58,931 $ 43,185 Operating cash outflows from finance leases $ 1,895 $ 1,432 $ 696 Financing cash outflows from finance leases $ 15,159 $ 12,476 $ 6,379 Right of use assets obtained in exchange for lease obligations $ 55,005 $ 66,887 $ 33,256 Assets obtained in exchange for finance leases $ 29,803 $ 19,435 $ 7,915 Weighted-average remaining operating lease terms and the weighted average discount rates as of December 31 were as follows: Lease Terms and Discount Rates 2022 2021 Weighted-average remaining lease term - operating leases 5.8 years 6.0 years Weighted-average discount rate - operating leases 5.4 % 5.1 % Weighted-average remaining lease term - finance leases 5.1 years 4.8 years Weighted-average discount rate - finance leases 3.4 % 2.7 % NOTE 6 - Inventories Inv entories at December 31, consisted of the following: (in thousands) 2022 2021 Raw materials $ 38,611 $ 26,059 Finished units 2,419 3,736 Inventories $ 41,030 $ 29,795 NOTE 7 - Rental Equipment, net Rental equipment, net at December 31 consisted of the following: (in thousands) 2022 2021 Modular space units $ 3,197,779 $ 3,005,195 Portable storage units 849,193 585,034 Value added products 203,444 167,694 Total rental equipment 4,250,416 3,757,923 Less: accumulated depreciation ( 1,173,129 ) ( 980,123 ) Rental equipment, net $ 3,077,287 $ 2,777,800 87 NOTE 8 – Property, Plant and Equipment, net Property, plant and equipment, net at December 31 consisted of the following: (in thousands) 2022 2021 Land, buildings, and leasehold improvements $ 174,322 $ 154,269 Vehicles and equipment 167,337 132,733 Office furniture, fixtures and software 106,747 79,659 Total property, plant and equipment 448,406 366,661 Less: accumulated depreciation ( 143,747 ) ( 108,485 ) Property, plant and equipment, net $ 304,659 $ 258,176 Depreciation expense related to property, plant and equipment was $ 38.6 million , $ 37.5 million, and $ 23.1 million for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022 and 2021, the gross cost of property, plant and equipment assets under finance leases was $ 84.7 million and $ 63.2 million, respectively , with related accumulated depreciation of $ 26.9 million and $ 17.6 million, respectively . The depreciation expense for these assets is presented in other depreciation and amortization in the consolidated statements of operations. NOTE 9 - Goodwill and Intangible Assets Goodwill Changes in the carrying amount of goodwill were as follows: (in thousands) Modular Storage Total Balance at December 31, 2020 $ 235,828 $ 726,529 $ 962,357 Changes to Mobile Mini purchase accounting 285,000 ( 233,666 ) 51,334 Effects of movements in foreign exchange rates 221 ( 311 ) ( 90 ) Balance at December 31, 2021 521,049 492,552 1,013,601 Effects of movements in foreign exchange rates ( 2,172 ) — ( 2,172 ) Balance at December 31, 2022 $ 518,877 $ 492,552 $ 1,011,429 The Company conducted its annual impairment test of goodwill as of October 1, 2022 and determined that there was no impairment of goodwill identified as a result of the annual impairment analysis. Accumulated historical goodwill impairment losses wer e $ 792.8 million and pertain to the Modular segment (as defined in Note 18) prior to Double Eagle Acquisition Corporation's ("DEAC") acquisition of Williams Scotsman International, Inc. ("WSII") in 2017. There were no goodwill impairments recorded for the years ended December 31, 2022, 2021 and 2020. Intangible Assets Intangible assets other than goodwill at December 31, consisted of the following: December 31, 2022 (in thousands) Weighted average remaining life (in years) Gross carrying amount Accumulated amortization Net book value Intangible assets subject to amortization: Mobile Mini customer relationships 5.5 $ 188,000 $ ( 58,750 ) $ 129,250 Technology 3.5 1,500 ( 625 ) 875 Indefinite-lived intangible assets: Trade name - Mobile Mini 164,000 — 164,000 Trade name - WillScot 125,000 — 125,000 Total intangible assets other than goodwill $ 478,500 $ ( 59,375 ) $ 419,125 88 December 31, 2021 (in thousands) Weighted average remaining life (in years) Gross carrying amount Accumulated amortization Net book value Intangible assets subject to amortization: Mobile Mini customer relationships 6.5 $ 188,000 $ ( 35,250 ) $ 152,750 Technology 4.5 1,500 ( 375 ) 1,125 Indefinite-lived intangible assets: Trade name - Mobile Mini 164,000 — 164,000 Trade name - WillScot 125,000 — 125,000 Total intangible assets other than goodwill $ 478,500 $ ( 35,625 ) $ 442,875 For the years ended December 31, 2022, 2021 and 2020, the aggregate amount recorded to depreciation and amortization expense for intangible assets subject to amortization was $ 23.8 million, $ 24.3 million and $ 12.1 million, respectively. As of December 31, 2022, the expected future amortization expense for intangible assets is as follows: (in thousands) Amortization Expense 2023 $ 23,750 2024 23,750 2025 23,750 2026 23,625 2027 23,500 Thereafter 11,750 Total $ 130,125 NOTE 10 - Debt The carrying value of debt outstanding at December 31 consisted of the following: (in thousands, except rates) Interest rate Year of maturity 2022 2021 2025 Secured Notes 6.125 % 2025 $ 520,350 $ 518,117 ABL Facility (a) Varies 2027 1,988,176 1,612,783 2028 Secured Notes 4.625 % 2028 493,470 492,490 Finance Leases Varies Varies 74,370 60,409 Total debt 3,076,366 2,683,799 Less: current portion of long-term debt 13,324 11,968 Total long-term debt $ 3,063,042 $ 2,671,831 (a) As of December 31, 2022 and 2021, the Company had no outstanding principal borrowings on the Multicurrency Facility (defined below) and $ 2.5 million and $ 6.2 million, respectively, of related debt issuance costs. No related debt issuance costs were recorded as a direct offset against the principal borrowings on the Multicurrency Facility, and the $ 2.5 million and $ 6.2 million i n excess of principal was included in other non-current assets on the consolidated balance sheets as of December 31, 2022 and 2021, respectively. Maturities of debt, including finance leases, during the years subsequent to December 31, 2022 are as follows: (in thousands) 2023 $ 15,580 2024 13,873 2025 540,047 2026 13,217 2027 2,029,988 Thereafter 516,331 Total $ 3,129,036 89 The Company has de bt issuance costs recorded as offsets against the carrying value of the related debt . These debt costs will be amortized and included as part of interest expense over the remaining contractual terms of those debt instruments for each of the next five years as follows: (in thousands) Debt issuance cost amortization 2023 $ 11,048 2024 $ 11,263 2025 $ 9,987 2026 $ 8,826 2027 $ 5,069 Thereafter $ 836 Asset Backed Lending Facility On July 1, 2020, in connection with the completion of the Merger, Williams Scotsman Holdings Corp ("Holdings"), WSII, and certain of its subsidiaries, entered into a new asset-based credit agreement that initially provided for revolving credit facilities in the aggregate principal amount of up to $ 2.4 billion, consisting of: (i) a senior secured asset-based US dollar revolving credit facility in the aggregate principal amount of $ 2.0 billion (the "US Facility"), available to WSII and certain of its subsidiaries (collectively, the "US Borrowers"), and (ii) a $ 400.0 million senior secured asset-based multicurrency revolving credit facility (the "Multicurrency Facility," together with the US Facility, the "ABL Facility"), available to be drawn in US Dollars, Canadian Dollars, British Pounds Sterling or Euros by the US Borrowers and certain of WSII's wholly-owned subsidiaries organized in Canada and in the UK. On July 1, 2020, in connection with the completion of the Merger, approximately $ 1.47 billion of proceeds from the ABL Facility were used to repay an asset-based credit agreement entered into by the Company in 2017 and an asset-backed lending facility assumed in the transaction with Mobile Mini, as well as, to pay fees and expenses related to the Merger and the related financing transactions. In connection with these repayments, the Company wrote off $ 4.4 million of deferred financing costs to loss on extinguishment of debt. The ABL Facility was initially scheduled to mature on July 1, 2025. Borrowings under the ABL Facility bear interest at a base rate plus an applicable margin determined quarterly by reference to the Company's excess availability for the most recently completed quarter. Borrowings under the ABL Facility initially bore interest at (i) in the case of US Dollars, at WSII's option, either an adjusted LIBOR rate plus 1.875 % or an alternative base rate plus 0.875 %, (ii) in the case of Canadian Dollars, at WSII's option, either a Canadian BA rate plus 1.875 % or Canadian prime rate plus 0.875 %, and (iii) in the case of Euros and British Pounds Sterling, an adjusted LIBOR rate plus 1.875 %. Effective January 7, 2022, borrowings were subject to the highest applicable margin and bore interest at (i) in the case of US Dollars, at the borrower's option, either an adjusted LIBOR rate plus 2.125 % or an alternative base rate plus 1.125 %, (ii) in the case of Canadian Dollars, at the borrower's option, either a Canadian BA rate plus 2.125 % or Canadian prime rate plus 1.125 %, (iii) in the case of Euros, the EURIBOR rate plus 2.125 %, and (iv) in the case of British Pounds Sterling, the SONIA rate plus 2.125 %. On December 13, 2021, due to the upcoming transition of LIBOR, the ABL Facility was amended to adjust the rate for borrowings denominated in Euros from a LIBOR-based rate to the EURIBOR (Euro Interbank Offered Rate) rate plus 1.875 % and to adjust the rate of borrowings denominated in British Pounds Sterling from a LIBOR-based rate to the SONIA (Sterling Overnight Index Average) rate plus 1.9076 %. On December 16, 2021, the ABL Facility was amended to permit (i) the merger of WSII with and into Williams Scotsman, Inc. ("WSI") and (ii) WSI to assume the duties and obligations of WSII, the administrative borrower of 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 (the “US Facility”) and (ii) a $ 400.0 million senior secured asset-based multicurrency revolving credit facility (the "Multicurrency Facility"), available to be drawn in US Dollars, Canadian Dollars, British Pounds Sterling or Euros. The amendment also converted the interest rate for borrowings denominated in US dollars from a LIBOR-based rate to a Term SOFR-based rate with an interest period of one month and adjusted the applicable margins. The applicable margin for Canadian BA rate, Term SOFR, British Pounds Sterling and Euros loans is 1.50 %. The 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 0.2 % annually. At December 31, 2022, the weighted average interest rate for borrowings under the ABL Facility was 5.91 %. Borrowing availability under the US Facility and the Multicurrency Facility is equal to the lesser of (i) the aggregate Revolver Commitments and (ii) the Borrowing Base ("Line Cap"). At December 31, 2022, the Line Cap was $ 3.0 billion and the Borrowers had approximately $ 1.0 billion of available borrowing capacity under the ABL Facility, including $ 705.0 million under the US Facility and $ 309.1 million under the Multicurrency Facility. Borrowing capacity under the ABL Facility is made available for up to $ 205.9 million of letters of credit and up to $ 220.0 million of swingline loans. At December 31, 2022, letters of credit 90 and bank guarantees carried fees of 1.625 %. The Company had issued $ 14.1 million of standby letters of credit under the ABL Facility at December 31, 2022. The Company had approximately $ 2.0 billion outstanding principal under the ABL Facility at December 31, 2022. Debt issuance costs of $ 31.8 million were included in the carrying value of the ABL Facility at December 31, 2022. The obligations of the US Borrowers are unconditionally guaranteed by Holdings and each existing and subsequently acquired or organized direct or indirect wholly-owned US organized restricted subsidiary of Holdings, other than excluded subsidiaries (together with Holdings, the "US Guarantors"). The obligations of the Multicurrency Borrowers are unconditionally guaranteed by the US Borrowers and the US Guarantors, and each existing and subsequently acquired or organized direct or indirect wholly-owned Canadian organized restricted subsidiary of Holdings other than certain excluded subsidiaries (together with the US Guarantors, the "ABL Guarantors"). 2025 Senior Secured Notes In anticipation of the Merger, on June 15, 2020, Picasso Finance Sub, Inc., a newly-formed indirect finance subsidiary (the "Finance Sub") of the Company completed a private offering of $ 650.0 million in aggregate principal amount of its 6.125 % senior secured notes due 2025 (the "2025 Secured Notes") to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended ("Rule 144A"). In connection with the completion of the Merger, on July 1, 2020, the proceeds were used to repay the 2022 Senior Secured Notes, repay Mobile Mini senior notes assumed in the acquisition and pay certain fees and expenses related to the Merger and the related financing transactions. In addition, Finance Sub was merged into WSII on July 1, 2020. The Company recorded $ 14.3 million in deferred financing fees related to the 2025 Secured Notes. 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. If the Company undergoes a change of control or sells certain of its assets, the Company may be required to offer to repurchase the 2025 Secured Notes. Unamortized deferred financing costs pertaining to the 2025 Secured Notes were $ 6.2 million as of December 31, 2022. In the first quarter of 2021, using cash on hand and borrowings on the ABL Facility, the Company redeemed 10 % of the outstanding principal, or $ 65.0 million, of its 2025 Secured Notes and recorded a loss on extinguishment of debt in the consolidated statement of operations of $ 3.2 million comprised of a redemption premium of $ 1.9 million and write off of unamortized deferred financing fees of $ 1.3 million. In the second quarter of 2021, using cash on hand and borrowings on the ABL Facility, the Company redeemed 10 % of the outstanding principal, or $ 58.5 million, of its 2025 Secured Notes and recorded a loss on extinguishment of debt in the consolidated statement of operations of $ 2.8 million comprised of a redemption premium of $ 1.8 million and write-off of unamortized deferred financing fees of $ 1.0 million. On and after June 15, 2022, the Company may redeem the 2025 Secured Notes, in whole or in part, at the redemption prices expressed as percentages of principal amount set forth below plus accrued and unpaid interest to but not including the applicable redemption date, subject to the holders' right to receive interest due on an interest payment date falling on or prior to the redemption date, if redeemed during the twelve-month period beginning on June 15 of each of the years set forth below. Year Redemption Price 2022 103.063 % 2023 101.531 % 2024 and thereafter 100.000 % On December 23, 2021, in connection with the merger of WSII with and into WSI, WSI entered into the 2025 Notes Supplemental Indenture, pursuant to which WSI assumed all of WSII's obligations and rights related to the 2025 Secured Notes. The 2025 Secured Notes are unconditionally guaranteed by each of WSII's direct and indirect domestic subsidiaries and WSII's parent, Holdings (collectively, "the Note Guarantors"). WillScot Mobile Mini is not a guarantor of the 2025 Secured Notes. The Note Guarantors, as well as certain of the Company’s non-US subsidiaries, are guarantors or borrowers under the ABL Facility. To the extent lenders under the ABL Facility release the guarantee of any Note Guarantor, such Note Guarantor will also be released from obligations under the 2025 Secured Notes. These guarantees are secured by a second priority security interest in substantially all of the assets of WSII and the Note Guarantors, subject to customary exclusions. The guarantees of the 2025 Secured Notes by WillScot Equipment II, LLC, a Delaware limited liability company which holds certain of WSII’s assets in the US, will be subordinated to its obligations under the ABL Facility. 2028 Senior Secured Notes On August 25, 2020, the Company completed a private offering of $ 500.0 million in aggregate principal amount of 4.625 % senior secured notes due 2028 (the "2028 Secur ed Notes") to qualified institutional buyers pursuant to Rule 144A . P roceeds were used to repay the 2023 Senior Secured Notes. T he 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 15, 2021. Unamortized deferred financing costs pertaining to the 2028 Secured Notes were $ 6.5 million as of December 31, 2022. 91 The Company may redeem the 2028 Secured Notes at any time before August 15, 2023 at a redemption price equal to 100 % of the principal amount thereof, plus a customary make whole premium for the 2028 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date. Before August 15, 2023, the Company may redeem up to 40 % of the aggregate principal amount of the 2028 Secured Notes at a price equal to 104.625 % of the principal amount of the 2028 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date with the net proceeds of certain equity offerings. At any time prior to August 15, 2023, the Company may also redeem up to 10 % of the aggregate principal amount at a redemption price equal to 103 % of the principal amount of the 2028 Secured Notes being redeemed during each twelve-month period commencing with the issue date, plus accrued and unpaid interest, if any, to but not including the redemption date. If the Company undergoes a change of control or sells certain of its assets, the Company may be required to offer to repurchase the 2028 Secured Notes. On and after August 15, 2023, the Company may redeem the 2028 Secured Notes, in whole or in part, at the redemption prices expressed as percentages of principal amount set forth below plus accrued and unpaid interest to but not including the applicable redemption date, subject to the holders' right to receive interest due on an interest payment date falling on or prior to the redemption date, if redeemed during the twelve-month period beginning on August 15 of each of the years set forth below. Year Redemption Price 2023 102.313 % 2024 101.156 % 2025 and thereafter 100.000 % On December 23, 2021, in connection with the merger of WSII with and into WSI, WSI entered into the 2028 Notes Supplemental Indenture, pursuant to which WSI assumed all of WSII's obligations and rights related to the 2028 Secured Notes. The 2028 Secured Notes are unconditionally guaranteed by the Note Guarantors. WillScot Mobile Mini is not a guarantor of the 2028 Secured Notes. The Note Guarantors, as well as certain of the Company’s non-US subsidiaries, are guarantors or borrowers under the ABL Facility. To the extent lenders under the ABL Facility release the guarantee of any Note Guarantor, such Note Guarantor will also be released from obligations under the 2028 Secured Notes. These guarantees are secured by a second priority security interest in substantially all of the assets of WSII and the Note Guarantors, subject to customary exclusions. The guarantees of the 2028 Secured Notes by WillScot Equipment II, LLC, a Delaware limited liability company which holds certain of WSII’s assets in the US, will be subordinated to its obligations under the ABL Facility. 2022 Senior Secured Notes In connection with the Merger and related financing transactions in the third quarter of 2020, using proceeds from the 2025 Secured Notes, the Company redeemed all of its 2022 Senior Secured Notes and recorded a loss on extinguishment of debt in the 2020 consolidated statement of operations of $ 15.2 million comprised of a redemption premium of $ 10.6 million and write off of unamortized deferred financing fees of $ 4.6 million. 2023 Senior Secured Notes In connection with the private offering of its 2028 Secured Notes, the Company used the offering proceeds to repay, along with expenses, the $ 441.0 million outstanding principal amount of its 2023 Senior Secured Notes at a redemption price of 103.438 % plus accrued interest and unpaid interest. The Company recorded a loss on extinguishment of debt in the 2020 consolidated statement of operations of $ 22.7 million comprised of a redemption premium of $ 16.6 million and a write off of unamortized deferred financing fees of $ 6.1 million. Finance Leases The Company maintains finance leases primarily related to transportation equipment. At December 31, 2022 and December 31, 2021, obligations under the finance leases for certain real property and transportation related equipment were $ 74.4 million and $ 60.4 million, respectively. The Company is in compliance with all debt covenants and restrictions for the aforementioned debt instruments for the year ended December 31, 2022. NOTE 11 - Equity Preferred Stock WillScot Mobile Mini's certificate of incorporation authorizes the issuance of 1,000,000 shares of Preferred Stock with a par value of $ 0.0001 per share. As of December 31, 2022, the Company has zero shares of Preferred Stock issued and outstanding. 92 Common Stock WillScot Mobile Mini's certificate of incorporation authorizes the issuance of 500,000,000 shares of Common Stock with a par value of $ 0.0001 per share. The Company has 207,951,682 shares of Common Stock issued and outstanding as of December 31, 2022. The outstanding shares of the Company's Common Stock are duly authorized, validly issued, fully paid and non-assessable. On June 30, 2020, as contemplated by the Merger, Sapphire Holdings exchanged each of its shares of common stock of Holdings for 1.3261 shares of newly issued WillScot Class A Common Stock (the "Sapphire Exchange"). As a result of the Sapphire Exchange, all issued and outstanding shares of WillScot's Class B Common Stock, par value $ 0.0001 per share, were automatically canceled for no consideration and the existing exchange agreement was automatically terminated. As a result of the Sapphire Exchange, Sapphire Holdings became a wholly-owned subsidiary of WillScot. Sapphire Holdings received 10,641,182 shares of Common Stock of WillScot in the Sapphire Exchange. Prior to the Sapphire Exchange, Sapphire Holdings' ownership of Holdings was recorded as a non-controlling interest in the consolidated financial statements. Subsequent to the Sapphire Exchange, the Company's subsidiaries are each wholly owned and there is no non-controlling interest. As a result of the Sapphire Exchange, non-controlling interest of $ 63.9 million was reclassified to $ 66.9 million of additional paid-in-capital and $ 3.0 million to accumulated other comprehensive loss, on the consolidated balance sheet. In connection with the Merger on July 1, 2020, the Company issued 106,426,722 shares of Class A Common Stock in exchange for Mobile Mini Common Stock outstanding and subsequently filed an amended and restated certificate of incorporation, which reclassified all outstanding shares of the Class A Common Stock and converted such shares into shares of Common Stock, par value of $ 0.0001 per share, of WillScot Mobile Mini. In connection with stock compensation vesting and stock option exercises described in Note 16, and the warrant exercises described below, the Company issued 3,847,905 , 6,752,647 and 3,151,400 shares of Common Stock during the years ended December 31, 2022, 2021 and 2020, respectively. Stock Repurchase Program On August 7, 2020, the Company's Board of Directors approved a stock repurchase program that authorized the Company to repurchase up to $ 250 million of its outstanding shares of Common Stock and equivalents. In April 2021, the Board of Directors approved an increase in repurchase authority up to $ 500 million. In October 2021, the Board of Directors replaced the existing share repurchase program with a new share repurchase program that authorized the Company to repurchase up to $ 1.0 billion of its outstanding shares of Common Stock and equivalents. In July 2022, the Board of Directors approved an increase to the share repurchase program authorizing the Company to repurchase up to $ 1.0 billion of its outstanding shares of Common Stock and equivalents. The stock repurchase program does not obligate the Company to purchase any particular number of shares, and the timing and exact amount of any repurchases will depend on various factors, including market pricing, business, legal, accounting, and other considerations. The Company may repurchase its shares in open market transactions or through privately negotiated transactions in accordance with federal securities laws, at the Company's discretion. The repurchase program, which has no expiration date, may be increased, suspended, or terminated at any time. The program is expected to be implemented over the course of several years and will be conducted subject to the covenants in the agreements governing indebtedness. During the year ended December 31, 2022, the Company repurchased 19,854,424 shares of Common Stock and stock equivalents for $ 756.9 million. During the year ended December 31, 2021, the Company repurchased 12,878,490 shares of Common Stock and stock equivalents for $ 365.9 million. As of December 31, 2022, $ 630.8 million of the approved repurchase pool remained available. 93 Accumulated Other Comprehen sive Loss The changes in accumulated other comprehensive loss ("AOCI"), net of tax, for the years ended December 31, 2022, 2021 and 2020, were as follows: (in thousands) Foreign Currency Translation Unrealized losses on hedging activities Total Balance at December 31, 2019 $ ( 52,982 ) $ ( 9,793 ) $ ( 62,775 ) Other comprehensive income (loss) before reclassifications 28,404 ( 11,874 ) 16,530 Reclassifications from AOCI to income (a) — 10,125 10,125 Less other comprehensive (loss) income attributable to non-controlling interest 1,183 702 1,885 Impact of elimination of non-controlling interest on accumulated other comprehensive income ( 1,299 ) ( 1,673 ) ( 2,972 ) Balance at December 31, 2020 ( 24,694 ) ( 12,513 ) ( 37,207 ) Other comprehensive income (loss) before reclassifications ( 880 ) ( 2,985 ) ( 3,865 ) Reclassifications from AOCI to income (a) — 12,001 12,001 Balance at December 31, 2021 ( 25,574 ) ( 3,497 ) ( 29,071 ) Other comprehensive loss before reclassifications ( 44,548 ) ( 1,033 ) ( 45,581 ) Reclassifications from AOCI to income (a) — 4,530 4,530 Balance at December 31, 2022 $ ( 70,122 ) $ — $ ( 70,122 ) (a) For the years ended December 31, 2022, 2021 and 2020, $ 4.5 million, $ 12.0 million and $ 10.1 million, respectively, was reclassified from AOCI into the consolidated statements of operations within interest expense related to the interest rate swaps discussed in Note 14. For the years ended December 31, 2022, 2021 and 2020, the Company recorded tax benefits of $ 1.1 million, $ 3.0 million and $ 2.4 million, respectively, associated with this reclassification. NOTE 12 - Warrants Warrants 2015 Public Warrants In 2015, as part of its initial public offering, the Company issued warrants (the “2015 Public Warrants”). Each 2015 Public Warrant entitled the holder to purchase one-half of one share of WillScot Class A Common Stock at a price of $ 5.75 per half share (or $ 11.50 per whole share), subject to adjustment. In the first quarter of 2020, the 2015 Public Warrants were exercised or redeemed as follows: (i) 796,610 warrants were exercised for cash proceeds of $ 4.6 million and the Company issued 398,305 shares of Class A Common Stock, (ii) 5,836,048 warrants were exercised on a cashless basis and the Company issued 1,097,162 shares of Class A Common Stock, and (iii) 38,509 remaining warrants were redeemed for $ 0.01 per warrant. Effective February 2020, no 2015 Public Warrants were outstanding. 2015 Private Warrants The Company also issued warrants to purchase its Common Stock in a private placement concurrently with its initial public offering (the “2015 Private Warrants”). The 2015 Private Warrants were purchased at a price of $ 0.50 per unit for an aggregate purchase price of $ 9.75 million. The 2015 Private Warrants were identical to the 2015 Public Warrants, except that, if held by certain original investors (or their permitted assignees), the 2015 Private Warrants could be exercised on a cashless basis and were not subject to redemption. During the year ended December 31, 2020, 4,781,700 of the 2015 Private Warrants were repurchased for $ 21.6 million and cancelled, and 70,000 of the 2015 Private Warrants were exercised, resulting in the Company receiving cash proceeds of $ 0.4 million and issuing 35,000 shares of Common Stock. During the year ended December 31, 2021, 3,055,000 of the 2015 Private Warrants were repurchased for $ 25.5 million and cancelled, and 9,655,000 warrants were exercised on a cashless basis, resulting in the issuance of 2,939,898 shares of Common Stock. As a result of these transactions, effective May 2021, no 2015 Private Warrants were outstanding. 2018 Warrants In connection with the acquisition of Modular Space Holdings, Inc. ("ModSpace") in 2018, the Company issued warrants to purchase approximately 10.0 million shares of WillScot Class A Common Stock (the "2018 Warrants") to former shareholders of ModSpace. Each 2018 Warrant entitled the holder to purchase one share of WillScot Class A Common Stock at an exercise price of $ 15.50 per share, subject to potential adjustment. The 2018 Warrants expired on November 29, 2022. 94 During the year ended December 31, 2020, 195,410 of the 2018 warrants were exercised, on a cashless basis, and 38,802 shares of the Company's Common Stock were issued. Also, during the year ended December 31, 2020, the Company repurchased and subsequently cancelled 51,865 of the 2018 warrants for approximately $ 0.3 million. During the year ended December 31, 2021, 254,373 of the 2018 Warrants were repurchased for $ 2.9 million and cancelled. In addition, during the year ended December 31, 2021, 5,397,695 of the 2018 Warrants were exercised on a cashless basis, resulting in the issuance of 2,835,968 shares of Common Stock. 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. The Company accounted for its warrants as follows: (i) the 2015 Public Warrants as liabilities through their final redemption in February 2020, (ii) the 2015 Private Warrants as liabilities through their final repurchase or exercise in May 2021, and (iii) the 2018 Warrants as liabilities until June 30, 2020, the date all issued and outstanding shares of the Company's Class B Common Stock were cancelled. Subsequent to June 30, 2020, the 2018 Warrants were equity classified through their expiration in November 2022. NOTE 13 – Income Taxes The components of income tax expense (benefit) from continuing operations for the years ended December 31, are comprised of the following: (in thousands) 2022 2021 2020 Current Federal $ — $ — $ — State 11,327 4,645 1,601 Foreign 6,204 1,795 77 Deferred Federal 63,585 23,707 ( 54,589 ) State 8,917 ( 2,671 ) ( 5,724 ) Foreign ( 1,170 ) 9,052 2,595 Total income tax expense (benefit) from continuing operations $ 88,863 $ 36,528 $ ( 56,040 ) 95 Income tax expense (benefit) from continuing operations differed from the amount computed by applying the US statutory income tax rate of 21% to the income (loss) from continuing operations before income taxes for the following reasons for the years ended December 31, : (in thousands) 2022 2021 2020 Income (loss) from continuing operations before income tax US $ 341,412 $ 137,922 $ ( 1,553 ) Foreign 23,792 13,501 5,086 Total income from continuing operations before income tax $ 365,204 $ 151,423 $ 3,533 US Federal statutory income tax expense $ 76,693 $ 31,798 $ 742 Effect of tax rates in foreign jurisdictions 1,085 743 372 State income tax expense, net of federal benefit 16,917 1,130 3,442 Valuation allowances ( 6,907 ) ( 2,595 ) ( 56,585 ) (Non-taxable) non-deductible items 1,147 ( 410 ) 198 Non-deductible executive compensation 1,258 2,309 1,449 Non-deductible transaction costs — 33 4,425 Non-deductible (non-taxable) remeasurement of common stock warrant liabilities — 5,585 ( 727 ) Uncertain tax positions ( 804 ) ( 11,748 ) ( 11,166 ) Tax law changes (excluding valuation allowance) (a) ( 94 ) 8,411 2,523 Other ( 432 ) 1,272 ( 713 ) Income tax expense (benefit) from continuing operations $ 88,863 $ 36,528 $ ( 56,040 ) Effective income tax rate 24.33 % 24.12 % ( 1,586.19 ) % (a) Tax law changes primarily represents changes in tax law in foreign jurisdictions. Deferred Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss and carryforwards. Significant components of the Company’s deferred tax assets and liabilities as of December 31, are as follows: (in thousands) 2022 2021 Deferred tax assets Deferred interest expense $ 133,223 $ 116,339 Employee benefit plans 6,233 4,167 Accrued liabilities 8,043 9,362 Deferred revenue 50,531 37,852 Operating lease liability 59,740 62,502 Other 21,270 18,315 Tax loss carryforwards 233,133 286,470 Deferred tax assets, gross 512,173 535,007 Valuation allowance ( 2,245 ) ( 10,323 ) Net deferred income tax asset $ 509,928 $ 524,684 Deferred tax liabilities Rental equipment and other property, plant and equipment $ ( 770,964 ) $ ( 710,372 ) Intangible assets ( 84,390 ) ( 107,033 ) ROU asset ( 59,258 ) ( 62,158 ) Deferred gain ( 26,691 ) — Deferred tax liability ( 941,303 ) ( 879,563 ) Net deferred income tax liability $ ( 431,375 ) $ ( 354,879 ) As of December 31, 2022, the net deferred income tax liability presented in the table above included net deferred tax liability of $ 29.7 million ($ 33.7 million of deferred tax liability, net of $ 4.0 million of deferred tax asset) related to the UK Storage Solutions segment and recorded in liabilities held for sale - non-current on the consolidated balance sheet. 96 As of December 31, 2021, the net deferred income tax liability presented in the table above included net deferred tax liability of $ 32.1 million ($ 36.8 million of deferred tax liability, net of $ 4.7 million of deferred tax asset) and $ 17.1 million ($ 37.2 million of deferred tax liability, net of $ 21.3 million of gross deferred tax asset, which was net of $ 1.2 million of valuation allowance) included in liabilities held for sale - non-current related to the UK Storage Solutions segment and the former Tank and Pump segment, respectively. See Note 3 for further information. In general, ASC Topic 740, Income Taxes (“ASC 740”) requires us to evaluate the realizability of our deferred tax assets and reduce the deferred tax assets by valuation allowances to the extent we determine some or all of our deferred tax assets are not more likely than not realizable. To determine the realizability, ASC 740 requires consideration of sources of available taxable income of the proper character and within the time period before which our deferred tax assets, if any, expire due to the pa ssage of time. The Company's valuation allowance decreased by $ 8.1 million from 2021, primarily related to a $ 7.1 million reduction to the valuation allowance on state NOL where the Company determined that it is more likely than not realizable due to sufficient current and future taxable income. Additionally, the valuation allowance decreased by $ 1.0 million from 2021 due to the sale of the former Tank and Pump segment. Tax loss carryforwards as of December 31, 2022 are outlined in the table below and include US Federal, US State and foreign (Canada and Mexico). The availability of these tax losses to offset future income varies by jurisdiction. Furthermore, the ability to utilize the tax losses may be subject to additional limitations upon the occurrence of certain events, such as a change in the ownership of the Company. Some of the Company’s tax attributes are subject to annual limitations due to historical changes in ownership from acquisitions, mergers or other related ownership shift events; however, the Company anticipates that our remaining available net operating losses will be consumed prior to their expiration. The Company’s tax loss carryforwards are as follows at December 31, 2022: (in thousands) Loss Carryforward Deferred Tax Expiration Jurisdiction: US - Federal $ 1,011,711 $ 209,119 2027 – 2037, Indefinite US - State 484,295 23,395 2023 –2037, Indefinite Foreign - Canada and Mexico 2,595 619 2032 – 2037 Total $ 1,498,601 $ 233,133 As of December 31, 2022, the total amount of the basis difference in investments outside the US, which are indefinitely reinvested and for which deferred taxes have not been provided, is approximately $ 139.5 million . The basis difference decreased in 2022 due to the basis difference in the UK no longer being deemed indefinitely reinvested following classification of the UK Storage Solution segment as held for sale. The tax, if any, associated with the recovery of the basis difference is dependent on the manner in which it is recovered and is not readily determinable. Unrecognized Tax Positions The Company is subject to taxation in US, Canada, Mexico, and state jurisdictions. The Company’s tax returns are subject to examination by the applicable tax authorities prior to the expiration of statute of limitations for assessing additional taxes, which generally ranges from two to five years after the end of the applicable tax year. As of December 31, 2022, generally, tax years for 2015 through 2021 remain subject to examination by the tax authorities. In addition, in certain taxing jurisdictions, in the case of carryover tax attributes to years open for assessment, such attributes may be subject to reduction by taxing authorities. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: (in thousands) 2022 2021 2020 Unrecognized tax benefits – January 1, $ 44,314 $ 54,494 $ 63,747 Increases based on tax positions related to current period — — 1,211 Increases based on tax positions related to prior period — 9 — Decrease from expiration of statute of limitations ( 687 ) ( 10,189 ) ( 10,464 ) Unrecognized tax benefits – December 31, $ 43,627 $ 44,314 $ 54,494 At December 31, 2022, 2021 and 2020, respectively, there were $ 42.3 million , $ 43.3 million and $ 53.2 million of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate. The Company classifies interest on tax deficiencies and income tax penalties within income tax expense. During the years ended December 31, 2022, 2021 and 2020, the Company recognized approximately $ 0.1 million, $ 1.0 million, and $ 0.9 million in interest, respectively. The Company accrued approximately $ 0.4 million and $ 0.6 million for the payment of interest at December 31, 2022 and 2021, respectively. Future tax settlements or statute of limitation expirations could result in a change to the Company’s uncertain tax positions. As of December 31, 2022, the Company believes that it is reasonably possible that approximately $ 0.6 million of 97 unrecognized tax benefits could decrease in the next twelve months as a result of the expiration of statutes of limitation, audit settlements or resolution of tax uncertainties. NOTE 14 - Derivatives Interest Rate Swap In 2018, the Company entered into an interest rate swap agreement (the “Swap Agreement”) with a financial counterparty that effectively converted $ 400.0 million in aggregate notional amount of variable-rate debt under the Company’s ABL Facility into fixed-rate debt. Under the terms of the Swap Agreement, the Company received a floating rate equal to one-month LIBOR and made payments based on a fixed rate of 3.06 % on the notional amount. The Swap Agreement was designated and qualified as a hedge of the Company’s exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility. The Swap Agreement terminated on May 29, 2022. The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of December 31, 2021 was as follows: (in thousands) Balance Sheet Location 2021 Cash Flow Hedges: Interest rate swap Accrued liabilities $ 5,259 The fair value of the interest rate swap was based on dealer quotes of market forward rates, a Level 2 input on the fair value hierarchy, and reflected the amount that the Company would receive or pay for contracts involving the same attributes and maturity dates. The following table discloses the impact of the interest rate swap, excluding the impact of income taxes, on other comprehensive income (“OCI”), AOCI and the Company’s statement of operations for the years ended December 31: (in thousands) 2022 2021 2020 Gain (loss) recognized in OCI $ 4,669 $ 11,677 $ ( 2,288 ) Location of loss recognized in income Interest expense, net Interest expense, net Interest expense, net Loss reclassified from AOCI into income (effective portion) $ ( 4,530 ) $ ( 12,001 ) $ ( 10,125 ) Foreign Currency Contract In December 2022, the Company executed a contingent forward contract to sell £ 330.0 million upon the closing of the sale of the UK Storage Solutions segment at a price ranging from 1.20550 to 1.20440 USD to British Pounds Sterling. The price was dependent upon the date of the closing of the sale. This contract, which was to expire on September 11, 2023, mitigated the foreign currency risk of the USD relative to the British Pound Sterling prior to the closing of the sale of the UK Storage Solutions segment. This contract did not qualify for hedge accounting and was revalued at fair value at the reporting period with unrealized gains and losses reflected in the Company's results of operations. Upon the closing of the sale of the UK Storage Solutions segment on January 31, 2023, the Company settled the contingent forward contract and received cash at an exchange rate of 1.205 USD to British Pounds Sterling. The location and the fair value of the foreign currency contract in the consolidated balance sheet as of December 31, 2022 was as follows: (in thousands) Balance Sheet Location 2022 Derivative Contracts: Foreign currency contract Accrued liabilities $ 930 The fair value of the foreign currency contract was based on dealer quotes of market forward rates, a Level 2 input on the fair value hierarchy, and reflected the amount that the Company would receive or pay for contracts involving the same attributes and maturity dates. The following table discloses the impact of the foreign currency contract, excluding the impact of income taxes, on the Company’s statement of operations for the year ended December 31, 2022: (in thousands) 2022 Loss recognized in income $ 930 Location of loss recognized in income Currency losses (gains), net 98 NOTE 15 - Fair Value Measures The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Company utilizes the suggested accounting guidance for the three levels of inputs that may be used to measure fair value: Level 1 - Observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2 - Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and Level 3 - Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions The Company has assessed that the fair value of cash and short-term deposits, trade receivables, trade payables, capital lease and other financing obligations, and other current liabilities approximate their carrying amounts. The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy: December 31, 2022 December 31, 2021 Carrying Amount Fair Value Carrying Amount Fair Value (in thousands) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 ABL Facility (a) $ 1,988,176 $ — $ 2,020,000 $ — $ 1,612,783 $ — $ 1,644,500 $ — 2025 Secured Notes (a) 520,350 — 526,800 — 518,117 — 551,835 — 2028 Secured Notes (a) 493,470 — 450,135 — 492,490 — 515,635 — Total $ 3,001,996 $ — $ 2,996,935 $ — $ 2,623,390 $ — $ 2,711,970 $ — (a) The carrying values of the ABL Facility, the 2025 Secured Notes, and the 2028 Secured Notes included $ 31.8 million, $ 6.2 million, and $ 6.5 million of unamortized debt issuance costs as of December 31, 2022, which were presented as a direct reduction of the corresponding liability. As of December 31, 2021, the carrying values of the ABL Facility, the 2025 Secured Notes, and the 2028 Secured Notes included $ 31.7 million, $ 8.4 million, and $ 7.5 million of unamortized debt issuance costs which were presented as a direct reduction of the corresponding liability. There were no transfers of financial instruments between the three levels of the fair value hierarchy during the years ended December 31, 2022 a nd 2021. The carrying value of the ABL Facility, excluding debt issuance costs, approximates fair value as the interest rates are variable and reflective of market rates. The fair values of the 2025 Secured Notes and the 2028 Secured Notes are based on their last trading price at the end of each period obtained from a third party. The loca tion and the fair value of derivative assets and liabilities in the consolidated balance sheet are disclosed in Note 14. As part of the Merger, on July 2, 2020, the Company converted Mobile Mini's outstanding fully vested stock options to 7,361,516 WillScot Mobile Mini stock options using a conversion ratio of 2.405 as set by the merger agreement. The fair value of these options was valued at $ 19.3 million and is part of the purchase consideration. The value of the Mobile Mini stock options converted to WillScot Mobile Mini stock options in connection with the Merger, was determined utilizing the Black-Scholes option-pricing model and is affected by several variables, the most significant of which are the expected life of the equity award, the exercise price of the stock option as compared to the fair market value of the Common Stock on the Merger date, and the estimated volatility of the Common Stock over the term of the equity award. The volatility assumption was based on a blend of peer group volatility and Company trading history as the Company did not have a sufficient trading history as a stand-alone public company to rely exclusively on its own trading history. The risk-free interest rate is based on the US Treasury yield curve in effect at the time of the Merger. The key inputs utilized to determine the fair value of the stock options converted included within the purchase price were expected volatility of 51.92 %, risk free rate of interest 0.17 %, dividend yield of zero and expected life of 2 years. Level 3 Disclosures When the 2015 Private Warrants and 2018 Warrants were classified as liabilities, the Company utilized a Black Scholes option-pricing model to value the warrants at each reporting period and transaction date, with changes in fair value recognized in the statements of operations. The estimated fair value of the common stock warrant liability was determined using Level 3 inputs. Inherent in the pricing model were assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The volatility assumption was based on a blend of peer group volatility and Company trading history that matched the expected remaining life of the warrants as the Company did not have a sufficient trading history as a stand-alone public company to rely exclusively on its own trading history. The risk-free interest rate was based on the US Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants was assumed to be equivalent to their remaining contractual term. The dividend rate was based on the historical rate, which the Company anticipated to remain at zero. The 2018 Warrants were reclassified to equity at June 30, 2020, the date all issued and outstanding shares of the Company's Class B Common Stock were cancelled. 99 The following table presents changes in Level 3 liabilities measured at fair value for the year ended December 31, 2021: (in thousands) 2015 Private Warrants Balance - beginning of year $ 77,404 Exercise or conversion ( 78,495 ) Measurement adjustment 25,486 Repurchases ( 24,395 ) Balance - end of year $ — NOTE 16 - Stock-Based Compensation Restricted Stock Awards The following table summarizes the Company's RSA activity during the years ended December 31, 2022, 2021 and 2020 : Number of Shares Weighted-Average Grant Date Fair Value Balance December 31, 2019 52,755 $ 14.69 Granted 65,959 $ 11.75 Vested ( 61,266 ) $ 14.28 Balance December 31, 2020 57,448 $ 11.75 Granted 44,708 $ 29.30 Forfeited ( 8,532 ) $ 29.30 Vested ( 57,448 ) $ 11.75 Balance December 31, 2021 36,176 $ 29.30 Granted 35,244 $ 37.17 Vested ( 36,176 ) $ 29.30 Balance December 31, 2022 35,244 $ 37.17 Compensation expense for RSAs recognized in SG&A expense in the consolidated statements of operations was $ 1.2 million, $ 0.8 million, and $ 0.9 million for the years ended December 31, 2022, 2021, and 2020, respectively. At December 31, 2022, unrecognized compensation cost related to RSAs totaled $ 0.6 million and was expected to be recognized over the remaining weighted average vesting period of 0.7 years. The total fair value of RSA's vested in 2022, 2021, and 2020 was $ 1.3 million , $ 1.6 million, and $ 0.9 million, respectively. 100 Time-Based RSUs The following table summarizes the Company's Time-Based RSU activity during the years ended December 31, 2022, 2021 and 2020 : Number of Shares Weighted-Average Grant Date Fair Value Balance December 31, 2019 1,065,305 $ 12.78 Granted 632,864 $ 14.37 Forfeited ( 33,558 ) $ 13.28 Vested ( 338,749 ) $ 13.02 Balance December 31, 2020 1,325,862 $ 13.46 Granted 415,737 $ 27.25 Forfeited ( 72,505 ) $ 17.80 Vested ( 671,643 ) $ 13.99 Balance December 31, 2021 997,451 $ 18.54 Granted 377,804 $ 35.40 Forfeited ( 106,570 ) $ 31.35 Vested ( 478,906 ) $ 16.42 Balance December 31, 2022 789,779 $ 26.16 Compensation expense for Time-Based RSUs recognized in SG&A expense in the consolidated statements of operati ons was $ 8.2 million, $ 9.0 million, and $ 5.6 million for the years ended December 31, 2022, 2021, and 2020, resp ectively. At December 31, 2022, unrecognized compensation cost related to Time-Based RSUs totaled $ 13.7 million and was expected to be recognized over the remaining weighted average vesting period of 2.4 years. The total fair value of RSU's vested in 2022, 2021, and 2020 was $ 18.0 million, $ 18.5 million , and $ 2.9 million , respectively. Included in restructuring costs for the year ended December 31, 2021 was expense of approximately $ 5.9 million recognized as a result of the modification of certain RSUs with the Transition, Separation and Release Agreement entered into on February 25, 2021, with the Company's former President and Chief Operating Officer. Performance-Based RSUs The following table summarizes the Company's Performance-Based RSU award activity during the years ended December 31, 2022 and 2021 and 2020: Number of Shares Weighted-Average Grant Date Fair Value Balance December 31, 2019 288,281 $ 13.22 Granted 325,256 $ 16.35 Forfeited ( 12,700 ) $ 14.70 Vested ( 7,449 ) $ 16.82 Balance December 31, 2020 593,388 $ 14.88 Granted 977,645 $ 33.21 Forfeited ( 23,753 ) $ 27.92 Vested ( 10,886 ) $ 14.70 Balance December 31, 2021 1,536,394 $ 26.34 Granted 745,079 $ 42.34 Forfeited ( 74,071 ) $ 41.66 Vested ( 313,152 ) $ 16.45 Balance December 31, 2022 1,894,250 $ 33.67 Compensation expense for Performance-Based RSUs recognized in SG&A expense in the consolidated statements of operations wa s $ 20.2 million, $ 8.3 million and $ 2.5 million for the years ended December 31, 2022, 2021, and 2020, respectively. At December 31, 2022, unrecognized compensation cost related to Performance-Based RSUs totaled $ 35.8 million and was expected to be recognized over the remaining vesting period of 2.3 years. The total fair value of Performance- 101 Based RSU's vested in 2022, 2021, and 2020 was $ 11.9 million, $ 0.3 million and $ 0.2 million , respectively. Refer to Note 1 for the details of conditions required for the performance-based RSUs to vest. Included in restructuring costs for the year ended December 31, 2021, was expense of approximately $ 1.3 million recognized as a result of the modification of certain Performance-Based RSUs with the Transition, Separation and Release Agreement entered into on February 25, 2021, with the Company's former President and Chief Operating Officer. Stock Options The following table summarizes the Company's stock option activity during the years ended December 31, 2022, 2021 and 2020 : WillScot Options Weighted-Average Exercise Price per Share Converted Mobile Mini Options Weighted-Average Exercise Price per Share Balance December 31, 2019 534,188 $ 13.60 — $ — Converted at Merger — $ — 7,361,516 $ 13.52 Exercised — $ — ( 428,653 ) $ 13.07 Cancelled in settlement, net of taxes — $ — ( 4,901,408 ) $ 13.04 Balance December 31, 2020 534,188 $ 13.60 2,031,455 $ 14.78 Forfeited — $ — ( 6,240 ) $ 12.19 Exercised — $ — ( 497,572 ) $ 15.21 Balance at December 31, 2021 534,188 $ 13.60 1,527,643 $ 14.66 Exercised — $ — ( 663,367 ) $ 16.93 Balance at December 31, 2022 534,188 $ 13.60 864,276 $ 12.91 Fully vested and exercisable options, December 31, 2022 534,188 $ 13.60 864,276 $ 12.91 Under our stock option plans, the Company may issue shares on a net basis at the request of the option holder. This occurs by netting the option costs in shares from the shares exercised. No options were granted in the years ended December 31, 2022, 2021, and 2020 . At December 31, 2022, the intrinsic value of both stock options outstanding and stock options fully vested and currently exercisable was $ 44.7 million. At December 31, 2022, the weighted-average remaining contractual term of options outstanding was 5.2 years for WillScot options and 4.1 years for converted Mobile Mini options. The total pre-tax intrinsic value of stock options exercised during the years ended December 31, 2022, 2021, and 2020 was $ 16.0 million, $ 6.2 million and $ 30.7 million , respectively. Com pensation expense for stock option awards, recognized in SG&A expense in the consolidated statements of operations was $ 0.2 million , $ 0.7 million, and $ 0.7 million for the years ended December 31, 2022 , 2021, and 2020, respective ly. At December 31, 2022, all compensation cost related to stock option awards had been recognized. NOTE 17 - Commitments and Contingencies The Company is involved in various lawsuits, claims and legal proceedings that arise in the ordinary course of business. The Company assesses these matters on a case-by-case basis as they arise and establishes reserves as required. As of December 31, 2022, with respect to these outstanding matters, the Company believes that the amount or range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on the consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties. NOTE 18 - Segment Reporting 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 operates in two reportable segments and renamed them as follows: Modular Solutions ("Modular") and Storage Solutions ("Storage"). 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 transferred to the Storage segment, representing a shift of approximately $ 5.0 million of revenue 102 and 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 the Company believes such adjustments to be immaterial. Total assets for each reportable segment are not available because the Company utilizes a centralized approach to working capital management. The Company defines EBITDA as net income (loss) plus interest (income) expense, income tax (benefit) expense, depreciation and amortization. The Company reflects the further adjustments to EBITDA (“Adjusted EBITDA”) to exclude certain non-cash items and the effect of what the Company considers transactions or events not related to its core and ongoing business operations. In addition, the Chief Operating Decision Maker ("CODM") evaluates business segment performance utilizing Adjusted EBITDA as shown in the reconciliation of the Company’s 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. The Company also regularly evaluates gross profit by segment to assist in the assessment of its operational performance. The Company considers Adjusted EBITDA to be the more important metric because it more fully captures the business performance of the segments, inclusive of indirect costs. Reportable Segments The following tables set forth certain information regarding each of the Company’s reportable segments fo r the years ended December 31, 2022, 2021, and 2020, respectively. Consistent with the financial statements, the segment results only include results from Mobile Mini's operations after July 1, 2020, the Merger date. Year Ended December 31, 2022 (in thousands) Modular Storage Unallocated Costs Total Revenues: Leasing and services revenue: Leasing $ 1,034,300 $ 587,390 $ 1,621,690 Delivery and installation 279,841 149,311 429,152 Sales revenue: New units 34,061 6,277 40,338 Rental units 43,611 7,832 51,443 Total revenues 1,391,813 750,810 2,142,623 Costs: Cost of leasing and services: Leasing 284,803 92,065 376,868 Delivery and installation 227,543 95,093 322,636 Cost of sales: New units 20,514 3,497 24,011 Rental units 21,584 5,323 26,907 Depreciation of rental equipment 225,058 31,661 256,719 Gross profit $ 612,311 $ 523,171 $ 1,135,482 Other selected data: Adjusted EBITDA from continuing operations $ 529,109 $ 354,765 $ — $ 883,874 Selling, general and administrative expense (a) $ 316,272 $ 204,397 $ 46,570 $ 567,239 Purchases of rental equipment and refurbishments $ 279,079 $ 118,297 $ — $ 397,376 (a) Includes both SG&A expense and Transaction costs from the consolidated statement of operations. 103 Year Ended December 31, 2021 (in thousands) Modular Storage Unallocated Costs Total Revenues: Leasing and services revenue: Leasing $ 864,923 $ 387,567 $ 1,252,490 Delivery and installation 219,385 101,744 321,129 Sales revenue: New units 40,366 6,627 46,993 Rental units 39,505 12,863 52,368 Total Revenues 1,164,179 508,801 1,672,980 Costs: Cost of leasing and services: Leasing 229,129 53,447 282,576 Delivery and installation 196,137 71,396 267,533 Cost of sales: New units 27,415 3,933 31,348 Rental units 20,592 7,438 28,030 Depreciation of rental equipment 194,461 24,329 218,790 Gross profit $ 496,445 $ 348,258 $ 844,703 Other selected data: Adjusted EBITDA from continuing operations $ 423,004 $ 226,600 $ — $ 649,604 Selling, general and administrative expense (a) $ 266,187 $ 150,281 $ 49,185 $ 465,653 Purchases of rental equipment and refurbishments $ 187,495 $ 45,426 $ — $ 232,921 (a) Includes both SG&A expense and Transaction costs from the consolidated statement of operations. 104 Year Ended December 31, 2020 (in thousands) Modular Storage Unallocated Costs Total Revenues: Leasing and services revenue: Leasing $ 770,330 $ 166,128 $ 936,458 Delivery and installation 208,079 42,655 250,734 Sales revenue: New units 41,858 6,976 48,834 Rental units 30,895 6,070 36,965 Total revenues 1,051,162 221,829 1,272,991 Costs: Cost of leasing and services: Leasing 194,442 19,925 214,367 Delivery and installation 175,705 27,029 202,734 Cost of sales: New units 27,555 4,244 31,799 Rental units 19,213 4,261 23,474 Depreciation of rental equipment 182,605 9,585 192,190 Gross profit $ 451,642 $ 156,785 $ 608,427 Other selected data: Adjusted EBITDA from continuing operations $ 394,805 $ 99,837 $ — $ 494,642 Selling, general and administrative expense (a) $ 242,010 $ 68,574 $ 91,864 $ 402,448 Purchase of rental equipment and refurbishments $ 153,327 $ 14,969 $ — $ 168,296 (a) Includes both SG&A expense and Transaction costs from the consolidated statement of operations. 105 The following tables present a reconciliation of the Company’s Income from continuing operations to Adjusted EBITDA for the years ended December 31, 2022, 2021, and 2020, respectively: Year Ended December 31, (in thousands) 2022 2021 2020 Income from continuing operations $ 276,341 $ 114,895 $ 58,360 Income from continuing operations attributable to non-controlling interest, net of tax — — 1,213 Income tax expense (benefit) from continuing operations 88,863 36,528 ( 56,040 ) Loss on extinguishment of debt — 5,999 42,401 Fair value loss (gain) on common stock warrant liabilities — 26,597 ( 3,461 ) Interest expense 146,278 116,358 119,319 Depreciation and amortization 319,099 280,567 227,371 Currency losses (gains), net 886 427 ( 257 ) Restructuring costs, lease impairment expense and other related charges 168 14,754 10,985 Transaction costs 25 1,375 64,053 Integration costs 15,484 28,410 18,337 Stock compensation expense 29,613 18,728 9,879 Other 7,117 4,966 2,482 Adjusted EBITDA from continuing operations $ 883,874 $ 649,604 $ 494,642 Included in restructuring costs for the year ended December 31, 2021 was expense of approximately $ 7.2 million recognized as a result of the modification of certain equity awards associated with the Transition, Separation and Release Agreement entered into on February 25, 2021 with the Company's former President and Chief Operating Officer. For the year ended December 31, 2021, stock-based compensation expense reported in the Statement of Cash Flows included these charges. Assets Assets related to the Company’s reportable segments include the following: (in thousands) Modular Storage Total As of December 31, 2022: Goodwill $ 518,877 $ 492,552 $ 1,011,429 Intangible assets, net $ 125,000 $ 294,125 $ 419,125 Rental equipment, net $ 2,004,055 $ 1,073,232 $ 3,077,287 As of December 31, 2021: Goodwill $ 521,049 $ 492,552 $ 1,013,601 Intangible assets, net $ 125,000 $ 317,875 $ 442,875 Rental equipment, net $ 1,877,978 $ 899,822 $ 2,777,800 NOTE 19 - Earnings Per Share Basic earnings per share (“EPS”) is calculated by dividing net income attributable to WillScot Mobile Mini common shareholders by the weighted average number of shares of Common Stock outstanding during the period. The shares of Common Stock issued as a result of the vesting of RSUs and RSAs as well as the exercise of stock options or redemption of warrants are included in EPS based on the weighted average number of days in which they were outstanding during the period. Prior to June 30, 2020, the Company had shares of Class B Common Stock which had no rights to dividends or distributions made by the Company and, in turn, were excluded from the EPS calculation. On June 30, 2020, all shares of Class B Common Stock were cancelled. Diluted EPS is computed similarly to basic EPS, except that it includes the potential dilution that could occur if dilutive securities were exercised. Effects of potentially dilutive securities are present ed only in periods in which they are dilutive. When liability-classified warrants are in the money and the impact of their inclusion on diluted EPS is dilutive, diluted EPS also 106 assumes share settlement of such instruments through an adjustment to net income available to common stockholders for the fair value (gain) loss on common stock warrant liabilities and inclusion of the number of dilutive shares in the denominator. The following table reconciles income from continuing operations attributable to WillScot Mobile Mini common shareholders to net income attributable to common shareholders for the dilutive EPS calculation and the weighted average shares outstanding for the basic calculation to the weighted average shares outstanding for the diluted calculation for the years ended December 31: (in thousands) 2022 2021 2020 Numerator: Income from continuing operations attributable to WillScot Mobile Mini common shareholders $ 276,341 $ 114,895 $ 58,360 Income from discontinued operations 63,199 45,249 15,767 Net income attributable to common shareholders - basic 339,540 160,144 74,127 Fair value gain on common stock warrant liabilities — — ( 30,524 ) Net income attributable to common shareholders - dilutive $ 339,540 $ 160,144 $ 43,603 Denominator: Weighted average Common Shares outstanding - basic 216,809 226,519 169,230 Dilutive effect of outstanding securities: Warrants 1,605 3,589 752 RSAs 18 24 39 Time-Based RSUs 401 594 778 Performance-Based and Market-Based RSUs 1,471 955 544 Stock Options 1,095 1,113 634 Class B common shares N/A N/A 5,291 Weighted average Common Shares outstanding - dilutive 221,399 232,794 177,268 The following potential common shares were excluded from the computation of dilutive EPS because their effect would have been anti-dilutive: (in thousands) 2022 2021 2020 Warrants — — 2,366 RSAs — — — Time-based RSUs — — — Performance-based RSUs 591 375 — Stock Options — — — Class B common shares N/A N/A — 107 NOTE 20 - Quarterly Financial Data (Unaudited) The following tables present certain unaudited consolidated quarterly financial information incorporating the impact of the discontinued operations described in Note 3. (in thousands, except share and per share data) Quarter Ended 2022 March 31 June 30 September 30 December 31 Total revenue $ 451,171 $ 522,890 $ 578,008 $ 590,554 Gross profit $ 234,061 $ 275,213 $ 297,885 $ 328,323 Income from continuing operations $ 39,048 $ 60,099 $ 78,176 $ 99,018 Net income $ 51,171 $ 73,376 $ 128,593 $ 86,400 Earnings per share from continuing operations: Basic $ 0.17 $ 0.27 $ 0.37 $ 0.46 Diluted $ 0.17 $ 0.26 $ 0.36 $ 0.46 Earnings per share attributable to WillScot Mobile Mini common shareholders: Basic $ 0.23 $ 0.33 $ 0.60 $ 0.41 Diluted $ 0.22 $ 0.32 $ 0.59 $ 0.40 Weighted average shares: Basic 223,490,912 223,376,276 213,636,876 209,373,239 Diluted 228,955,504 227,484,012 217,927,725 213,872,403 (in thousands, except share and per share data) Quarter Ended 2021 March 31 June 30 September 30 December 31 Total revenue $ 373,971 $ 405,177 $ 432,947 $ 460,885 Gross profit $ 185,619 $ 191,860 $ 220,349 $ 246,875 (Loss) income from continuing operations $ ( 6,147 ) $ 10,050 $ 48,580 $ 62,412 Net income $ 4,447 $ 20,371 $ 61,103 $ 74,223 (Loss) earnings per share from continuing operations attributable to WillScot Mobile Mini common shareholders: Basic $ ( 0.03 ) $ 0.04 $ 0.21 $ 0.28 Diluted $ ( 0.03 ) $ 0.04 $ 0.20 $ 0.27 Earnings per share attributable to WillScot Mobile Mini common shareholders: Basic $ 0.02 $ 0.09 $ 0.27 $ 0.33 Diluted $ 0.02 $ 0.09 $ 0.26 $ 0.32 Weighted average shares: Basic 228,293,197 228,406,812 225,998,202 223,436,603 Diluted 234,720,295 236,536,713 231,868,397 229,965,703 NOTE 21 - Subsequent Events 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 Company’s 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. 108 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.