What changed in this filing

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Item 1A. Risk Factors

2024-02-20 compared with 2023-02-22 · 53 added, 42 removed, 390 unchanged (20% of the section changed)

Risks Relating to Our Business

We are subject to various laws and regulations, including recent pronouncements related to laws and regulations governing antitrust, climate related disclosures, cybersecurity, privacy, government contracts, anti-corruption and the environment.

We are subject to various laws and regulations, including recent pronouncements related to laws and regulations governing antitrust, climate related disclosures, privacy, government contracts, anti-corruption and the environment.

Obligations and liabilities under these laws and regulations may materially harm our business.

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Recent Pronouncements

Recent pronouncements by the SEC, Federal Trade Commission, Department of Justice, and from the state of California, among others, related to antitrust, climate related disclosures, cybersecurity and privacy could have the impact of increasing Company compliance costs, increasing potential liability to the Company as a result of frivolous lawsuits, or place the Company in a position of not knowing when or if the laws are settled in a particular area in order for the Company to effectively comply.

Recent pronouncements by the SEC, Federal Trade Commission, Department of Justice, and the state of California, among others, related to antitrust, climate related disclosures, and privacy could have the impact of increasing Company compliance costs, increasing potential liability to the Company as a result of frivolous lawsuits, or place the Company in a position of not knowing when or if the laws are settled in a particular area for the Company to effectively comply.

US Government Contract Laws and Regulations

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These types of contracts customarily contain provisions that give the US government substantial rights and remedies, many of which are not typically found in commercial contracts and which are unfavorable to contractors, including provisions that allow the government to unilaterally terminate or modify our federal government contracts, in whole or in part, at the government’s convenience.

Under general principles of US government contracting law, if the government terminates a contract for convenience, the terminated company may generally recover only its incurred or committed costs and settlement expenses and profit on work completed prior to the termination.

Under general principles of US government contracting law, if the government terminates a contract for convenience, the terminated company may generally recover only its incurred or committed costs, settlement expenses and profit on work completed prior to the termination.

If the government terminates a contract for default, the defaulting company may be liable for any extra costs incurred by the government in procuring undelivered items from another source.

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These requirements include, for example:

(a) specialized disclosure and accounting requirements unique to US government contracts;

(a) specialized disclosure and accounting requirements unique to US government

(b) financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the US government;

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The False Claims Act’s “whistleblower” provisions allow private individuals, including present and former employees, to sue on behalf of the US government.

The False Claims Act statute provides for treble damages and other penalties, and if our operations are found to be in violation of the False Claims Act, we could face other adverse action, including suspension or prohibition from doing business with the US government.

The False Claims Act statute provides for treble damages and other penalties, and if our operations are found to be in violation of the False Claims Act, we could face other adverse actions, including suspension or prohibition from doing business with the US government.

Any penalties, damages, fines, suspension or damages could adversely affect our ability to operate our business and our financial results.

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Our safety record could be ranked poorly compared to peer firms.

A poor safety ranking may result in the loss of customers or

difficulty attracting and retaining qualified drivers which could affect our results of operations.

A poor safety ranking may result in the loss of customers or difficulty attracting and retaining qualified drivers which could affect our results of operations.

Should additional rules be enacted in the future, compliance with such rules could result in additional costs.

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Additionally, we cannot predict if or when acquisitions will be completed, and we may face significant competition for acquisition targets.

Acquisitions involve numerous risks, including (a) difficulties in integrating the operations, technologies,

management information systems, products and personnel of the acquired companies;

Acquisitions involve numerous risks, including (a) difficulties in integrating the operations, technologies, management information systems, products and personnel of the acquired companies;

(b) diversion of management’s attention from normal daily operations of the business;

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If we do not manage new markets effectively, some of our new branches and acquisitions may lose money or fail, and we may have to close unprofitable branches.

We must continue to take actions to realize the combined cost synergies that we forecast for the acquisition.

We may incur more costs than we anticipated to achieve the forecast synergies (thus reducing the net benefit of the cost synergies), realize synergies later than we expected or fail altogether to achieve a portion of the cost savings we anticipated.

We must continue to take actions to realize the combined cost synergies and commercial synergies that we forecast for our acquisitions.

Any of these events could cause reductions in our earnings per share, impact our ability to borrow funds under our credit facility, decrease or delay the accretive effect of the acquisitions that we anticipated and negatively impact our stock price.

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however, like other companies, our information technology systems may be vulnerable to a variety of interruptions due to our own error or events beyond our control.

The measures that we employ to protect our systems may not detect or prevent cybersecurity breaches, natural disasters, terrorist attacks, telecommunication failures, computer viruses, hackers, phishing attacks, and other security issues.

We have previously been the target of an attempted cyber attack and have from time to time experienced threats to our data and systems, computer virus attacks and phishing attempts, and we may be subject to breaches of the information systems that we use.

We have not experienced a material cybersecurity breach.

The measures that we employ to protect our systems may not detect or prevent cybersecurity threats or incidents, natural disasters, terrorist attacks, telecommunication failures, computer viruses, hackers, phishing attacks, and other security issues.

We have previously been the target of attempted cyber-attacks and have, from time to time, experienced threats to our data and information systems, computer virus attacks and phishing attempts, and we may be subject to breaches of the information systems that we use.

We have not experienced a material cybersecurity incident.

We have programs in place that are intended to detect, contain and respond to data security incidents and that provide employee awareness training regarding phishing, malware, and other cyber risks to protect against cyber risks and security breaches.

However, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventative measures.

addition, because our systems contain information about individuals and other businesses, the failure to maintain the security of the data we hold, whether the result of our own error or the malfeasance or errors of others, could harm our reputation or give rise to legal liabilities leading to lower revenue, increased costs, regulatory sanctions and other potential material adverse effects on our business, results of operations and financial condition.

In addition, because our systems contain information about individuals and other businesses, the failure to maintain the security of the data we hold, whether the result of our own error or the malfeasance or errors of others, could harm our reputation or give rise to legal liabilities leading to lower revenue, increased costs, regulatory sanctions and other potential material adverse effects on our business, results of operations and financial condition.

Trade policies and changes in trade policies, including the imposition of tariffs, their enforcement and downstream consequences, may materially adversely affect our business, results of operations, and outlook.

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Although our competition varies significantly by market, the modular space and portable storage industries are highly competitive and highly fragmented.

We compete on the basis of a number of factors, including customer relationships, product quality and availability, delivery speed, VAPS and service capabilities, pricing, and overall ease of doing business.

We compete based on of a number of factors, including customer relationships, product quality and availability, delivery speed, VAPS and service capabilities, pricing, and overall ease of doing business.

We may experience pricing pressures in our operations as some of our competitors seek to obtain market share by reducing prices, and we may face reduced demand for our products and services if our competitors are able to provide new or innovative products or services that better appeal to customers.

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Failure to manage our credit risk and receive timely payments on our customer accounts receivable may result in the write-off of customer receivables and loss of units if we are unable to recover our rental equipment from our customers’ sites.

If we are not able to manage credit risk, or if a large number of customers should have financial difficulties at the same time, our credit and rental equipment losses would increase above historical levels.

If we are not able to manage credit risk, or if a large number of our customers should have financial difficulties at the same time, our credit and rental equipment losses would increase above historical levels.

If this should occur, our business, financial condition, results of operations and cash flows may be materially adversely affected.

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We may incur increased legal costs and indirect labor costs as a result of contractual disputes, negotiations or other labor-related disruptions.

We have collective bargaining agreements with employees in portions of our Mexico-based operations, which accounted for approximately 1% of our total employees as of December 31, 2022.

These operations may be more highly affected by labor force activities than others, and all collective bargaining agreements must be renegotiated

We have collective bargaining agreements with employees in portions of our Mexico-based operations, which accounted for less than 1% of our total employees as of December 31, 2023.

These operations may be more highly affected by labor force activities than others, and all collective bargaining agreements must be renegotiated annually.

Other locations may also face organizing activities or effects.

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We may incur property, casualty or other losses not covered by our insurance.

We are partly self-insured for a number of different risk categories, such as property, general liability (including product liability), workers' compensation, automobile claims, crime, and cyber liability, with insurance coverage for certain catastrophic risks.

We are partly self-insured for a number of different risk categories, such as general liability (including product liability), workers' compensation, automobile claims, crime, and cyber liability, with insurance coverage for certain catastrophic risks.

The types and amounts of insurance may vary from time to time based on our decisions with respect to risk retention and regulatory requirements.

Effective August 1, 2023, we are self-insured for property risks.

The occurrence of significant claims, a substantial rise in costs to maintain our insurance, or the failure to maintain adequate insurance coverage could have an adverse impact on our financial condition and results of operations.

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Sales of new and used modular space and portable storage units to customers represented approximately 4% of WillScot Mobile Mini's revenue during the year ended December 31, 2023.

Sale transactions are subject to certain factors that are beyond our control, including permit requirements, the timely completion of prerequisite work by others and weather conditions.

Sale transactions are subject to certain factors that

are beyond our control, including permit requirements, the timely completion of prerequisite work by others and weather conditions.

Accordingly, the actual timing of the completion of these transactions may take longer than we expect.

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For the year ended December 31, 2023, approximately 94%, 5%, and 1% of our revenue was generated in the US, Canada, and Mexico, respectively.

For the year ended December 31, 2022, approximately 65.0% and 35.0%, of our revenue was derived from our Modular Solutions business and Storage Solutions business, respectively.

Our operations in any of these countries could be affected by foreign and domestic economic, political and regulatory risks, including (a) regulatory requirements that are subject to change and that could restrict our ability to assemble, lease or sell products;

(b) inflation, recession, and fluctuations in foreign currency exchange and interest rates;

(b) economic downturns, inflationary and recessionary markets, including in capital and equity markets, fluctuations in foreign currency exchange and interest rates;

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(e) different local product preferences and product requirements;

(f) pressures on management time and attention due to the complexities of overseeing multi-national operations;

(f) pressures on management time and attention due to the complexities

of overseeing multi-national operations;

(g) challenges in maintaining staffing;

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Our consolidated financial results are denominated in US Dollars, and therefore, during times of a strengthening US Dollar, our reported revenue in non-US Dollar jurisdictions will be reduced because the local currency will translate into fewer US Dollars.

Revenue and expenses are translated into US Dollars at the average exchange rate for the period.

Revenue and expenses are translated into US Dollars at the

average exchange rate for the period.

In addition, the assets and liabilities of our non-US Dollar subsidiaries are translated into US Dollars at the exchange rates in effect on the balance sheet date.

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Generally, increases in labor and raw material costs will increase the acquisition costs of new units and also increase the repair and maintenance costs of our fleet.

We also maintain or replace a truck fleet to deliver units to and return units from our customers, the cost of which is sensitive to maintenance and fuel costs and rental rates on leased equipment.

We also maintain a truck fleet to deliver units to and return units from our customers, the cost of which is sensitive to maintenance, replacement, fuel costs, and rental rates on leased equipment.

During periods of rising prices for labor or raw materials, and in particular, when the prices increase rapidly or to levels significantly higher than normal, we may incur significant increases in our acquisition costs for new units and higher operating costs that we may not be able to recoup from customers through changes in pricing, which could materially adversely affect our business, results of operations and financial condition.

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If this happens, our results of operations and financial condition could decline.

In addition, the availability of raw materials components fluctuates from time to time due to factors outside of our control, including trade laws and tariffs, natural disasters, global pandemics, supply chain constraints and disruptions, and may

impact our ability to meet the production demands of our customers.

If the costs of raw materials increase or the availability thereof is restricted, it could adversely affect our financial condition, operating results and cash flows.

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In connection with our business, to better serve our customers and optimize our capital expenditures, we often move our fleet from branch to branch.

In addition, the majority of our customers arrange for delivery and pickup of our units through us.

In addition, most of our customers arrange for delivery and pickup of our units through us.

Accordingly, we could be materially adversely affected by significant increases in fuel prices that result in higher costs to us for transporting equipment.

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Fair value determinations require considerable judgment and are sensitive to inherent uncertainties and changes in estimates and assumptions regarding revenue growth rates, EBIT margins, capital expenditures, working capital requirements, tax rates, terminal growth rates, discount rates, exchange rates, royalty rates, benefits associated with a taxable transaction and synergistic benefits available to market participants.

Impairment may result from, among other things, deterioration in the performance of the business, adverse market conditions, stock price and adverse changes in applicable laws and regulations, including changes that restrict our activities.

Impairment may result from, among other things, deterioration in the

performance of the business, adverse market conditions, stock price and adverse changes in applicable laws and regulations, including changes that restrict our activities.

Declines in market conditions, a trend of weaker than anticipated financial performance for our reporting units or declines in projected revenue, a decline in our share price for a sustained period of time, an increase in the market-based weighted average cost of capital or a decrease in royalty rates, among other factors, are indicators that the carrying value of our goodwill or indefinite-life intangible assets may not be recoverable.

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Our ability to use our net operating los s carryforwards and other tax attributes may be limited.

A s of December 31, 2022, excluding amounts in held for sale or attributable to disposable businesses (see Note 3), we had US net operating loss (“NOL”) carryforwards of approximately $1,011.7 million and $484.3 million for US federal income tax and state tax purposes, respectively, available to offset future taxable income, prior to consideration of annual limitations that Section 382 of the Internal Revenue Code of 1986 may impose.

The US NOL carryforwards begin to expire in 2023 for state and federal if not utilized.

In addition, we had foreign NOLs of $2.6 million as a result of operations in Canada.

Our Canada NOL carryforwards begin to expire in 2032 if not utilized.

A s of December 31, 2023, we had US net operating loss (“NOL”) carryforwards of approximately $465.2 million and $240.3 million for US federal income tax and state tax purposes, respectively, available to offset future taxable income, prior to consideration of annual limitations that Section 382 of the Internal Revenue Code of 1986 may impose.

The US NOL carryforwards begin to expire in 2025 for state and 2037 for federal if not utilized.

Our US NOL and tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities.

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Similar provisions apply with respect to certain state and non-US jurisdictions which could limit our ability to offset taxable income.

In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could

accelerate or permanently increase state taxes owed.

In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

We have tax attributes subject to the foregoing provisions primarily from the Merger.

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However, there can be no assurance that we will accurately predict the outcomes of these potential examinations, and the amounts that we ultimately pay upon resolution of examinations could be materially different from the amounts we previously included in our income tax provision and, therefore, could have a material impact on our results of operations and cash flows.

In addition, our future effective tax rate could be adversely affected by changes to our operating structure, changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation allowance of deferred tax assets, changes in tax laws and the discovery of new information in the course of our tax return preparation process.

Changes in tax laws or regulations, including changes in the US related to the treatment of accelerated depreciation expense, carry-forwards of net operating losses, and taxation of foreign income and expenses may increase tax uncertainty and adversely affect our results of operations.

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Our leverage may make it difficult for us to service our debt and operate our business.

As of December 31, 2022, we had $3,120.9 million of total indebtedness, excluding deferred financing fees, consisting of $2,020.0 million of borrowings under our ABL Facility, $526.5 million of our 2025 Secured Notes, $500.0 million of our 2028 Secured Notes and $74.4 million of finance leases.

As of December 31, 2023, we had $3.6 billion of total indebtedness, excluding deferred financing fees, consisting of $2.0 billion of borrowings under our ABL Facility, $526.5 million of our 2025 Secured Notes, $500.0 million of our 2028 Secured Notes, $500.0 million of our 2031 Secured Notes, and $117.1 million of finance leases.

Our leverage could have important consequences, including (a) making it more difficult to satisfy our obligations with respect to our various debt and liabilities;

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In addition, the credit agreement that governs our credit facility and the indentures do not prevent us from incurring other obligations that do not constitute indebtedness under those agreements.

If we add debt to our and our subsidiaries’ existing debt levels, the risks associated with our substantial indebtedness described above, including our possible inability to service our debt, will increase.

If we add debt to

our and our subsidiaries’ existing debt levels, the risks associated with our substantial indebtedness described above, including our possible inability to service our debt, will increase.

We are subject to and may, in the future become subject to, covenants that limit our operating and financial flexibility and, if we default under our debt covenants, we may not be able to meet our payment obligations.

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Although these limitations are subject to significant exceptions and qualifications, these covenants could limit our ability to finance future operations and capital needs and our ability to pursue acquisitions and other business activities that may be in our interest.

Our subsidiaries’ ability to comply with these covenants and restrictions may be affected by events

beyond our control.

Our subsidiaries’ ability to comply with these covenants and restrictions may be affected by events beyond our control.

These include prevailing economic, financial and industry conditions.

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and (s) other unspecified circumstances that may be company specific circumstances or overall industry and market driven.

Unresolved Staff Comments

Risks Related to the McGrath Acquisition

The McGrath Acquisition may not be completed within the expected timeframe, if at all, and the failure to complete the McGrath Acquisition, or the failure to realize the anticipated synergies from the McGrath Acquisition, may negatively affect the price of our common stock and could adversely affect our financial results.

The McGrath Acquisition is subject to risks and uncertainties, including:

(i) the risk that it may not be completed, or completed within the expected timeframe, including as a result of the possibility that a governmental entity may prohibit, delay or refuse an approval required to complete the acquisition;

or (ii) costs relating to the acquisition, including the financing thereof, may be greater than expected.

If the McGrath Acquisition is not completed, or there are significant delays in completing the McGrath Acquisition, the trading price of our common stock could be negatively impacted and our business and financial results may be adversely affected.

The failure to consummate the McGrath Acquisition could also result in a negative reaction from the financial markets, particularly if the current market prices reflect market assumptions that the McGrath Acquisition will be completed, which could cause the value of our common stock to decline.

Additionally, the anticipated benefits of the McGrath Acquisition, including anticipated cost savings, will depend on our ability to realize anticipated synergies.

Our success in realizing these cost synergies, and the timing thereof, will depend our ability to integrate McGrath successfully.

Even if we integrate McGrath successfully, we may not realize the full benefits of the anticipated cost synergies, and we cannot guarantee that these benefits will be achieved within anticipated timeframes or at all.

For example, we may not be able to eliminate duplicative costs.

Moreover, we may incur unanticipated expenses in connection with the integration.

While it is anticipated that certain expenses will be incurred to achieve cost synergies, such expenses are difficult to estimate accurately and may exceed current estimates.

Accordingly, the benefits from the McGrath Acquisition may be offset by costs incurred to, or delays in, integrating the businesses.

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

What changed 10-K

Item 1A. Risk Factors