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Item 7. Management’s Discussion and Analysis

2024-02-20 compared with 2023-02-22 · 306 added, 427 removed, 463 unchanged (61% of the section changed)

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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand WillScot Mobile Mini Holdings Corp.

("WillScot Mobile Mini"), formerly known as WillScot Corporation ("WillScot"), our operations and our present business environment.

("WillScot Mobile Mini") operations and our present business environment.

MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes thereto, contained in Part II, Item 8 of this report.

The discussion of results of operations in this MD&A is presented on a historical basis, as of or for the year ended December 31, 2023 or prior periods.

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

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

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

In connection with the closing of the merger of WillScot Corporation ("WillScot") and Mobile Mini, Inc.

("Mobile Mini") on July 1, 2020 (the "Merger"), Mobile Mini became a wholly-owned subsidiary of WillScot and the Company changed its name to WillScot Mobile Mini Holdings Corp.

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

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

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

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

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

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

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

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

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

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

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

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Executive Summary

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

We are a leading business services provider specializing in innovative and flexible turnkey temporary space solutions.

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

As of December 31, 2023, our branch network included approximately 250 branch locations and additional drop lots to service our over 85,000 customers.

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

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

We offer our customers an extensive selection of “Ready to Work” temporary space solutions with over 156,000 modular space units and over 212,000 portable storage units in our fleet.

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

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

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

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

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

Furthermore, given that our customers value flexibility, they consistently extend their leases or renew on a month-to-month basis such that the average effective duration of our lease portfolio, excluding seasonal portable storage units, is approximately 37 months.

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

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

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.

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

For the year ended December 31, 2023, key drivers of our financial performance included:

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

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

• Total revenues increased $222.1 million, or 10.4%, attributable to organic revenue growth levers in the business and due to the impact of acquisitions.

Leasing revenue increased $212.2 million, or 13.1%, delivery and installation revenue increased $8.0 million, or 1.9%, and new unit sales revenue increased $7.8 million, or 19.3%.

These increases were partially offset by a reduction in rental unit sales revenue, which decreased $5.9 million, or 11.5%.

We estimate that recent acquisitions completed in 2023 contributed approximately $59.0 million to total revenues for the year ended December 31, 2023.

Key leasing revenue drivers included:

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

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

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

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

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

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

– Average modular space monthly rental rate increa sed $153, or 16.9%, to $1,058 d riven by strong pricing performance across both segm ents.

Average modular space monthly rental rates increased by $145, or 15.0%, in the Modular segment and by $144, or 21.1%, in the Storage segment.

– Average portable storage mo nthly rental rate increased $46, or 24.0%, to $238 driven by increased pricing as a result of our price management tools and processes as well as due to higher rental rates on the acquired climate-controlled containers and refrigerated storage units, which drove approximately 5% of the 24.0% increase .

– Average utilization for p ortable storage units decreased to 73.2%, from 86.8% in 2022, driven by decreased demand in 2023 as compared to very strong demand in 2022.

Average utilization for modular space units decreased 380 basis points ("bps") to 64.7% in 2023.

– Average modular space units on rent decreased 3,986 units, or 3.8%, and average portable storage units on rent decreased 15,179 units, or 9.0%.

The decreases were mainly driven by lower construction start activity in 2023 versus record demand in 2022, and for portable storage products, also by fewer retail remodels and lower seasonal retail demand versus the prior year.

• Modular segment revenue represented 63.2% of consolidated revenue for the year ended December 31, 2023, and increased $153.6 million , or 11.4%, to $1,495.7 million .

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

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

Sales volumes decreased $2.2 million, or 2.8%.

The increase was driven by increased leasing revenue, which increased $145.4 million , or 14.6%, due to continued growth of pricing and VAPS, and increased delivery and installation revenues, which increased $10.7 million , or 3.9%.

These increases were partially offset by a decrease in sales revenue of $2.4 million , or 3.1%, driven by lower rental unit sales.

Modular revenue drivers for the year ended December 31, 2023 included:

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

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

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

– Modular space average monthly rental rate of $1,111 increased $145, or 15.0%, year over year representing a continuation of our long-term price optimization and VAPS penetration opportunities across our portfolio.

– Average modular space units on rent decreased 647 units, or 0.8% , year over year.

– Average modular space monthly utilization decreased 190 basis points to 65.6% for the year ended December 31, 2023, as compared to the year ended December 31, 2022.

• Storage segment revenue, which represented 36.8% of consolidated revenue for the year ended December 31, 2023, increased $68.5 million, or 8.6%, to $869.1 million.

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

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

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

The increase was driven by increased leasing revenue, which grew $66.9 million, or 10.6%, due to increased pricing and contributions from the recently acquired climate-controlled containers and refrigerated storage units, partially offset by lower overall units on rent.

Delivery and installation revenues decreased $2.7 million, or 1.7%, driven by decreased activity.

Rental unit sales increased $4.3 million, or 50.7% given greater fleet availability in the current year.

Storage segment revenue drivers for the year ended December 31, 2023 included:

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

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

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

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

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

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

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

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

– Portable storage average monthly rental rate of $238 increased 24.0% year over year as a result of our price management tools and processes and early benefits from increased VAPS penetration opportunities, as well as due to higher rates on the acquired climate-controlled containers and refrigerated storage units.

Excluding the impacts of the acquired climate-controlled containers and refrigerated storage units, portable storage average monthly rental rates increased $37, or 19.3%.

Modular space average monthly rental rate of $826 increased $144, or 21.1%, year over year as a result of price optimization and increased VAPS penetration.

– Average portable storage units on rent decreased 15,159, or 9.0%, year over year driven by lower demand during 2023 versus the high growth achieved in 2022 including the impact of fewer retail remodels and lower seasonal demand versus the prior year.

Average modular space units on rent decreased 3,339, or 15.0%, year over year due to lower demand.

– Average portable storage monthly utilization decreased 13.6% to 73.3% for the year ended December 31, 2023, as compared to the year ended December 31, 2022.

Average modular space monthly utilization decreased 11.3% to 61.1% for the year ended December 31, 2023, as compared to the year ended December 31, 2022.

• Generated income from continuing operations of $341.8 million for the year ended December 31, 2023, representing an increase of $65.5 million ver sus the year ended December 31, 2022.

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• Generated Adjusted EBITDA from continuing operations of $1,061.5 million for the year ended December 31, 2023, representing an increase of $177.6 million, or 20.1%, as compared to 2022.

This increase was driven primarily by increased leasing gross profit.

Including results from discontinued operations from the nine months ended September

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

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

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

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

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

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

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

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

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

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

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

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

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

This increase was driven by continued expansion of most product and service line margins.

Most significantly, leasing margins increased 15.3% versus prior year and delivery and installation margins increased 12.7% versus prior year, both driven primarily by increased pricing.

SG&A expenses included in Adjusted EBITDA decreased as a percentage of revenue by 120 bps versus 2022.

• Net cash provided by operating activities increased $16.6 million to $761.2 million for the year ended December 31, 2023.

This increase was limited by the divestitures of the former Tank and Pump and UK Storage Solutions segments which both contributed to operating cash flows for the year ended December 31, 2022.

Net cash used in investing activities, excluding cash used as part of acquisitions and proceeds from the sale of discontinued operations, decreased $229.7 million to $184.7 million as a result of reduced refurbishment spending and decreased purchases

of new fleet as a result of lower utilization and due to the divestitures of the former Tank and Pump and UK Storage Solutions segments.

• Generated Free Cash Flow of $576.6 million for the year ended December 31, 2023, representing an increase of $246.3 million, or 74.5%, as compared to 2022.

This Free Cash Flow, along with the proceeds from the sale of our former UK Storage Solutions segment and additional net borrowings under the asset-based credit agreement (the "ABL Facility") were deployed to:

◦ Acquire five smaller storage and modular portfolios for $150.0 million in 2023;

◦ Acquire a national provider of cold storage solutions, a regional modular space manufacturing and leasing business, and a national provider of premium large clearspan structures for $411.6 million in 2023;

◦ Repurchase $810.8 million of our Common stock, reducing outstanding Common Stock by 18.5 million shares;

• We believe the predictability of our Free Cash Flow allows us to pursue multiple capital allocation priorities opportunistically, including investing in organic opportunities we see in the market, maintaining leverage in our stated range, opportunistically executing accretive acquisitions, and returning capital to shareholders.

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

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Significant Developments

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

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

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

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

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

Entry into an Agreement to Acquire McGrath RentCorp

On January 28, 2024, the Company, along with its newly formed subsidiaries, Brunello Merger Sub I, Inc.

(“Merger Sub I”) and Brunello Merger Sub II, LLC (“Merger Sub II”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with McGrath RentCorp ("McGrath").

Merger Sub I will merge with and into McGrath (the “First-Step Merger”), with McGrath surviving the First-Step Merger and, immediately thereafter, McGrath will merge with and into Merger Sub II (the “Second-Step Merger” and together with the First-Step Merger, the “McGrath Acquisition”), with Merger Sub II surviving the Second-Step Merger as a wholly owned subsidiary of the Company.

At the effective time of the First-Step Merger, and subject to the terms and subject to the conditions set forth in the Merger Agreement, each outstanding share of the common stock of McGrath shall be converted into the right to receive either (i) $123.00 in cash or (ii) 2.8211 shares of validly issued, fully paid and nonassessable shares of the Company’s common stock.

Under the terms of the Merger Agreement, we expect McGrath’s shareholders would own approximately 12.6% of the Company following the McGrath Acquisition.

The McGrath Acquisition has been approved by the Company and McGrath’s respective boards of directors.

The McGrath Acquisition is subject to customary closing conditions, including receipt of regulatory approval and approval by McGrath’s shareholders, and is expected to close in the second quarter of 2024.

In connection with the Merger Agreement, the Company entered into a commitment letter on January 28, 2024, which was further amended and restated on February 12, 2024 (the "Commitment Letter"), pursuant to which certain financial institutions have committed to make available to WSI, in accordance with the terms of the Commitment Letter, (i) an $875 million eight year senior secured bridge credit facility, (ii) an $875 million five year senior secured bridge credit facility and (iii) an upsize to WSI's existing $3.7 billion ABL Facility by $750 million to $4.45 billion to repay McGrath's existing credit facilities and notes, fund the cash portion of the consideration, and pay the fees, costs and expenses incurred in connection with the McGrath Acquisition and the related transactions, subject to customary conditions.

On January 31, 2023, we completed the sale of our former UK Storage Solutions segment for total cash consideration of $418.1 million.

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

Reportable Segments

Following the divestitures of the UK Storage Solutions and Tank and Pump segments, we operate in two reportable segments:

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

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

During the first quarter of 2023, the ground level office business within the Modular segment was transferred to the Storage segment, and associated revenues, expenses, and operating metrics were transferred to the Storage segment.

All periods presented have been retrospectively revised to reflect this adjustment within the Modular and Storage segments.

For the year ended December 31, 2022, this resulted in approximately $49.8 million of revenue and $28.5 million of gross profit being transferred from the Modular segment to the Storage segment.

In January 2024, the Company launched a unified go-to market approach to achieve local product unification within each metropolitan statistical area.

In connection with this change in operating model, the Company realigned the composition of its segments to reflect how its Chief Operating Decision Maker reviews information to make operating decisions and assess performance.

As a result, the Company concluded that its divisions represent its operating segments, which are aggregated into one reportable segment as the divisions have similar economic characteristics, offer similar products to similar customers, use similar methods to distribute products and are subject to similar competitive risks.

This change in reportable segments will be reflected in our financial statements beginning in 2024.

Customer Relationship Management ("CRM") System

On February 6, 2023, we successfully completed the harmonization of our separate Modular and Storage CRM systems onto a single unified system.

With this enhanced platform, we have a combined view of our customers and projects across the entire sales team.

Going forward, we will focus on productivity management and building a more targeted and predictive approach to anticipate and service customer demand, with continued improvement in engagement and outreach underpinned by our data warehouse.

Business Combinations

During 2023, we acquired a U.S.

national provider of cold storage solutions, which consisted primarily of approximately 2,200 climate-controlled containers and refrigerated storage trailers, a regional modular space manufacturing and leasing business, which consisted primarily of approximately 1,300 modular leasing units, and a U.S.

national provider of premium large clearspan structures for total cash consideration of $411.6 million, net of cash acquired.

Asset Acquisitions

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

Share and Warrant Repurchases

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

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

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

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

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

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

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

authorization remaining.

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

Amendment to the ABL Facility

Williams Scotsman, Inc.

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

On June 30, 2022, certain subsidiaries of the Company entered into an amendment to the ABL Facility to, among other things, extend the expiration date until June 30, 2027 and increase the aggregate principal amount of the revolving credit facilities to $3.7 billion, consisting of:

(i) a senior secured asset-based US dollar revolving credit facility in the aggregate principal amount of $3.3 billion and (ii) a $400.0 million senior secured asset-based multicurrency revolving credit facility, available to be drawn in US Dollars, Canadian Dollars, British Pounds Sterling or Euros.

The amendment also converted the interest rate for borrowings denominated in US dollars from a LIBOR-based rate to a Term SOFR-based rate with an interest period of one month and adjusted the applicable margins.

The applicable margin for Canadian BA rate, Term SOFR, British Pounds Sterling and Euro loans is 1.50%.

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

The applicable margin for base rate and Canadian Prime Rate loans is 0.50%.

The applicable margins are subject to one step down of 0.25% based on excess availability or one step up of 0.25% based on the Company's leverage ratio.

The ABL Facility requires the payment of an annual commitment fee on the unused available borrowings of 0.20% annually.

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

During 2023, we also acquired certain assets and liabilities of five regional and local storage and modular companies, which consisted primarily of approximately 1,800 storage units and 700 modular units, for $150.0 million in cash, net of cash acquired.

As of the acquisition dates, the fair value of rental equipment acquired was $147.6 million.

Financing Activities

On September 25, 2023, Williams Scotsman, Inc.

(“WSI”), a subsidiary of the Company, completed a private offering of $500.0 million in aggregate principal amount of 7.375% senior secured notes due 2031 (the "2031 Secur ed Notes") to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended .

P roceeds were used to repay approximately $494.0 million of outstanding indebtedness under the ABL Facility and certain fees and expenses.

Interest Rate Swap Agreements

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

Under the terms of the agreements, the Company receives a floating rate equal to one-month term SOFR and will make payments based on a weighted average effective 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.

In January 2024, the Company entered into two interest rate swap agreements with financial counterparties relating to $500.0 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 3.70% on the notional amount.

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The swap agreements terminate on June 30, 2027.

Inflation and Supply Chain Issues

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

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

Share Repurchases

In May 2023, our Board of Directors approved a reset of our share repurchase program authorizing us to repurchase up to $1.0 billion of our outstanding shares of Common Stock and equivalents.

During the year ended December 31, 2023, we repurchased 18,533,819 shares of Common Stock for $810.8 million.

As of December 31, 2023, $498.2 million of the approved share repurchase pool remained available.

Similar to many other organizations, we have faced inflationary pressures over the past several years across most of our input costs such as building materials, labor, transportation and fuel.

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

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

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

Business Environment and Outlook

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We derive our leasing and services revenue primarily from the leasing of modular space and portable storage units.

Included in leasing revenue are VAPS, such as furniture, steps, ramps, basic appliances, internet connectivity devices, and other items our customers use in connection with our products.

Included in leasing revenue are VAPS, such as furniture, steps, ramps, basic appliances, internet connectivity devices, integral tool racking, heavy duty capacity shelving, workstations, electrical and lighting products, and other items our customers use in connection with our products.

Delivery and installation revenue includes fees that we charge for the delivery, site work, installation, disassembly, unhooking and removal, and other services to our customers for an additional fee as part of our leasing and sales operations.

The key drivers of changes in our leasing revenue are:

• the number of units in our lease fleet;

• the average utilization rate of our lease units;

• the average number of units on rent;

• the average monthly rental rate per unit, including VAPS.

The average utilization rate of our lease units is the ratio of (i) the average number of units in use during a period (which includes units from the time they are leased to a customer until the time they are returned to us) to (ii) the average total number of units available for lease in our fleet during a period.

The average number of units on rent during a period represents the number of units in use from the time they are leased to a customer until the time they are returned to us.

Our average monthly rental rate per unit for a period is equal to the ratio of (i) our rental income for that period including VAPS but excluding delivery and installation services and other leasing-related revenues, to (ii) the average number of lease units rented to our customers during that period.

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

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

Year Ended December 31,

(in thousands, except unit numbers and rates) 2022 2021 2020

Modular space units on rent (average during the period) 104,808 101,304 95,206

Average modular space utilization rate 68.5 % 69.2 % 69.5 %

Average modular space monthly rental rate $ 913 $ 772 $ 671

Portable storage units on rent (average during the period) 169,565 135,775 72,238

Average portable storage utilization rate 86.8 % 80.1 % 74.2 %

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

We also measure the average utilization rate of our lease units, which is the ratio of (i) the average number of units on rent to (ii) the average total number of units available for lease in our fleet during a period.

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

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Cost of revenues associated with our leasing business includes payroll and payroll-related costs for branch operations personnel, material and other costs related to the repair, maintenance, storage and transportation of rental equipment.

Cost of revenue also includes depreciation expense associated with our rental equipment.

Cost of revenues also includes depreciation expense associated with our rental equipment.

Cost of revenues associated with our new unit sales business includes the cost to purchase , assemble, transport and customize units that are sold.

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

Transaction Costs

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

Other Depreciation and Amortization

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

Lease Impairment Expense and Other Related Charges

Lease impairment expense and other related charges include impairment of right-of-use ("ROU") assets, gain or loss on the exit of a leased property generally associated with lease termination payments and rent expense for locations which have been closed but have not been abandoned or impaired.

Restructuring Costs

Restructuring costs include charges associated with exit or disposal activities that meet the definition of restructuring under Financial Accounting Standards Board ("FASB") ASC Topic 420, Exit or Disposal Cost Obligations (“ASC 420”).

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

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

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

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

Currency (Gains) Losses, Net

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

Currency Losses, Net

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

Other (Income) Expense, Net

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

Interest Expense

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

Fair Value (Gain) Loss on Common Stock Warrant Liabilities

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

Interest expense consists of the costs of external debt including the Company’s ABL credit facility, 2025 Secured Notes, 2028 Secured Notes, 2031 Secured Notes and interest on obligations under finance leases.

Fair Value Loss on Common Stock Warrant Liabilities

In 2021, fair value loss on common stock warrant liabilities consists of non-cash gains and losses recorded related to changes in the fair value of common stock warrant liabilities as the common stock warrant liabilities are marked-to-market liabilities.

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

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

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

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

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

Income Tax Expense (Benefit)

Income Tax Expense

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

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Income tax expense (benefit), deferred tax assets and liabilities and liabilities for unrecognized tax benefits reflect our best estimate of current and future taxes to be paid.

Income from Discontinued Operations

Income from discontinued operations was related to the former Tank and Pump and UK Storage Solutions segments which were sold in 2022 and 2023, respectively.

Consolidated Results of Operations

Certain consolidated results of operations for th e years ended December 31, 2023, 2022, and 2021 are presented below.

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

Years Ended December 31, 2023 vs.

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Selling, general and administrative 596,090 567,407 480,407 28,683 87,000

Transaction costs 25 1,375 64,053 (1,350) (62,678)

Other depreciation and amortization 72,921 62,380 61,777 10,541 603

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

Restructuring costs (86) 11,866 6,109 (11,952) 5,757

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

Currency losses, net 6,754 886 427 5,868 459

Other (income) expense, net (15,354) (6,673) 1,715 (8,681) (8,388)

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Interest expense 205,040 146,278 116,358 58,762 29,920

Fair value loss (gain) on common stock warrant liabilities — 26,597 (3,461) (26,597) 30,058

Fair value loss on common stock warrant liabilities — — 26,597 — (26,597)

Loss on extinguishment of debt — — 5,999 — (5,999)

Income from continuing operations before income tax 468,419 365,204 151,423 103,215 213,781

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

Income tax expense from continuing operations 126,575 88,863 36,528 37,712 52,335

Income from continuing operations 341,844 276,341 114,895 65,503 161,446

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

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

Discontinued operations:

Income from discontinued operations before income tax 4,003 63,468 58,267 (59,465) 5,201

Income tax expense from discontinued operations 45,468 35,725 13,018 9,743 22,707

Gain on sale of discontinued operations 176,078 35,456 — 140,622 35,456

Income from discontinued operations 134,613 63,199 45,249 71,414 17,950

Net income $ 476,457 $ 339,540 $ 160,144 $ 136,917 $ 179,396

Cash Flow Data:

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Total assets $ 6,137,915 $ 5,827,651 $ 5,773,599 $ 310,264 $ 54,052

Total debt, excluding current portion $ 3,063,042 $ 2,671,831 $ 2,435,199 $ 391,211 $ 236,632

Long-term debt $ 3,538,516 $ 3,063,042 $ 2,671,831 $ 475,474 $ 391,211

Total shareholders’ equity $ 1,261,250 $ 1,565,300 $ 1,996,763 $ (304,050) $ (431,463)

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See below for reconciliations of non-GAAP financial measures.

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

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

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

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

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

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

Net CAPEX $ 90,903 $ 118,908 $ 126,999 $ 77,514 $ 414,324

Year Ended December 31,

(in thousands, except for units on rent and monthly rental rate) 2023 2022 2021

Modular space units on rent (average during the period) 100,822 104,808 101,304

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Weighted average shares - diluted 201,849,836 221,399,162 232,793,902

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

Quarterly Consolidated Results for the Year Ended December 31, 2021

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

Revenue $ 373,971 $ 405,177 $ 432,947 $ 460,885 $ 1,672,980

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

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

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

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

Modular space units on rent (average during the period) 101,234 101,114 100,534 102,334 101,304

Average modular space utilization rate 69.2 % 69.2 % 69.0 % 69.3 % 69.2 %

Average modular space monthly rental rate $ 704 $ 764 $ 797 $ 822 $ 772

Portable storage units on rent (average during the period) 120,713 126,163 137,616 158,607 135,775

Average portable storage utilization rate 71.9 % 76.8 % 83.0 % 88.0 % 80.1 %

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

Earnings (loss) per share - basic $ 0.02 $ 0.09 $ 0.27 $ 0.33 $ 0.71

Earnings (loss) per share - diluted $ 0.02 $ 0.09 $ 0.26 $ 0.32 $ 0.69

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

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

Quarterly Consolidated Results for the Year Ended December 31, 2020

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

Revenue $ 255,821 $ 256,862 $ 372,360 $ 387,948 $ 1,272,991

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

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

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

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

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

Modular space units on rent (average during the period) 87,989 87,096 102,783 102,959 95,206

Average modular space utilization rate 69.2 % 68.5 % 70.0 % 70.0 % 69.5 %

Average modular space monthly rental rate $ 653 $ 669 $ 663 $ 695 $ 671

Portable storage units on rent (average during the period) 16,346 15,869 120,694 136,042 72,238

Average portable storage utilization rate 64.1 % 62.5 % 71.6 % 80.0 % 74.2 %

Average portable storage monthly rental rate $ 119 $ 120 $ 142 $ 147 $ 142

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

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

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

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

Comparison of Years Ended December 31, 2023 and 2022

Total revenue increased $222.1 million, or 10.4%, to $2,364.8 million for the year ended December 31, 2023 from $2,142.6 million for the year ended December 31, 2022.

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

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

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

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

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

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

Leasing revenue increased $212.2 million, or 13.1%, as compared to 2022 driven by improved pricing and value-added products penetration, partially offset by a decrease of 19,165, or 7.0%, in total average modular space and portable storage units on rent.

Delivery and installation revenues increased $8.0 million, or 1.9%, due to increased pricing across both segments.

New unit sales increased $7.8 million, or 19.3%, and rental unit sales decreased $5.9 million, or 11.5%.

Total average units on rent for the years ended December 31, 2023 and 2022 were 255,208 and 274,373, respectively.

Modular space average units on rent decreased 3,986 units, or 3.8%, and portable storage average units on rent decreased by 15,179 units, or 9.0%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

The average modular space unit utilization rate during the year ended December 31, 2023 was 64.7%, as compared to

68.5% during 2022.

The average portable storage unit utilization rate during the year ended December 31, 2023 was 73.2%, as compared to 86.8% during 2022.

Modular space average monthly rental rates increased 16.9% to $1,058 for the year ended December 31, 2023.

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

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

Average portable storage monthly rental rates of $238 represented an increase of $46, or 24.0%, compared to the year ended December 31, 2022.

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

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

Increases were driven by a continuation of the long-term price optimization and VAPS penetration opportunities across our Modular segment as well as by application of these same price management tools and processes across the Storage segment and from early benefits from increased VAPS penetration opportunities on our basic VAPS offerings in the Storage segment, which began in the second quarter of 2022.

Gross Profit:

Gross profit increased $198.4 million, or 17.5%, to $1,333.9 million for the year ended December 31, 2023 from $1,135.5 million for the year ended December 31, 2022.

The increase in gross profit is a result of a $190.6 million increase in leasing gross profit, a $13.5 million increase in delivery and installation gross profit, and a $3.2 million increase of new and rental unit sale margins.

Increases were primarily a result of increased revenues due to favorable average monthly rental rates and delivery and installation pricing across both portable storage and modular space units, which offset lower unit on rent volumes.

Cost of leasing and services increased by $16.1 million, or 2.3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, driven by a $23.9 million, or 10.3%, increase in labor costs, a $4.8 million, or 5.1%, increase in vehicle, equipment and other costs, and a $3.2 million, or 3.2%, increase in materials costs, partially offset by a $15.9 million, or 5.8%, decrease in subcontractor costs.

Sales Revenue increased by $1.9 million, or 2.0%, to $93.7 million for the year ended December 31, 2023, while cost of sales decreased by $1.3 million, or 2.6%, resulting in improved sales gross profit margins.

The year over year change was mainly driven by increased new unit sales margin.

Increases in gross profit were partially offset by increased depreciation of $9.0 million, or 3.5%, as a result of capital investments made over the past twelve months.

Our gross profit percentage was 56.4% and 53.0% for the years ended December 31, 2023 and 2022, respectively.

Our gross profit percentage, excluding the effects of depreciation ("adjusted gross profit percentage"), was 67.6% and 65.0% for the years ended December 31, 2023 and 2022, respectively.

Gross profit increased $290.8 million, or 34.4%, to $1,135.5 million for the year ended December 31, 2022 from $844.7 million for the year ended December 31, 2021.

The increase in gross profit is a result of a $274.9 million increase in leasing gross profit, increased delivery and installation gross profit of $52.9 million, and increased new and rental unit sale margins of $0.9 million.

These increases were offset partially by increased depreciation of $37.9 million as a result of acquired fleet and capital investments made over the past twelve months in our existing rental equipment.

These increases were driven primarily by continued price optimization within leasing and execution of VAPS penetration opportunities that have outpaced increases in cost of leasing and services.

SG&A Expense:

SG&A expense increased $28.7 million, or 5.1%, to $596.1 million for the year ended December 31, 2023, compared to $567.4 million for the year ended December 31, 2022.

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

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

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

Real estate and occupancy costs increased $10.9 million, or 14.6%, travel expenses increased $4.6 million, or 25.1%, due to increased travel and training, service agreements and professional fees increased $3.9 million, or 5.1%, and non-income business taxes increased $3.5 million, or 47.4%.

Our provision for credit losses increased $12.2 million, or 108.7%.

Stock compensation expense increased $4.9 million to $34.5 million for the year ended December 31, 2023, compared to $29.6 million for the year ended December 31, 2022.

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

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

Transaction Costs:

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

Partially offsetting these increases, integration expenses decreased $5.1 million, or 33.1%, to $10.4 million for the year ended December 31, 2023, compared to $15.5 million for the year ended December 31, 2022.

Employee SG&A excluding stock compensation decreased $10.8 million, or 4.0%.

Other Depreciation and Amortization:

Other depreciation and amortization increased $10.5 million, or 16.9%, to $72.9 million for the year ended December 31, 2023, compared to $62.4 million for the year ended December 31, 2022.

Lease Impairment Expense and Other Related Charges:

Lease impairment expense and other related charges were $0.3 million for the year ended December 31, 2022 as compared to $2.9 million for the year ended December 31, 2021.

The decrease in lease impairment expense and other related charges of $2.6 million is a result of fewer closed locations in 2022 as compared to 2021.

Restructuring Costs:

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

Currency (Gains) Losses, net:

The increase was a result of our recent investments in our CRM system and other infrastructure improvements across our branch networks.

Currency Losses, net:

Currency losses, net increased by $5.9 million to $6.8 million for the year ended December 31, 2023 compared to $0.9 million for the year ended December 31, 2022.

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

The increase in currency losses, net, was primarily attributable to a loss on the settlement of the contingent foreign currency forward contract relating to the sale of the former UK Storage Solutions segment.

Other (Income) Expense, Net:

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

Other income, net was $15.4 million for the year ended December 31, 2023 compared to $6.7 million for the year ended December 31, 2022.

The increase in other income, net was related to the gain on sale of fixed assets related to a real estate sale transaction during the year ended December 31, 2023.

Interest Expense:

Interest expense increased $58.8 million, or 40.2%, to $205.0 million for the year ended December 31, 2023 from $146.3 million for the year ended December 31, 2022.

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

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

For the year ended December 31, 2021, the fair value loss on common stock warrant liabilities of $26.6 million was primarily attributable to the change in estimated fair value of common stock warrant liabilities.

Loss on Extinguishment of Debt:

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

The increase in interest expense was a result of higher overall weighted average interest rates as a result of increased benchmark rates and higher outstanding debt balances.

See Note 10 to the consolidated financial statements for further discussion of our debt.

Income Tax Expense:

Income tax expense increased $37.7 million to $126.6 million for the year ended December 31, 2023 compared to $88.9 million for the year ended December 31, 2022.

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

The increase in income tax expense was driven by an increase in income from continuing operations before income tax for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

Income from Discontinued Operations:

Income from discontinued operations increased $71.4 million to $134.6 million for the year ended December 31, 2023 compared to $63.2 million for the year ended December 31, 2022.

The increase in income from discontinued operations was driven by the increase in gain on sale of discontinued operations of $140.6 million to a total of $176.1 million for the year ended December 31, 2023 compared to $35.5 million for the year ended December 31, 2022, partially offset by having no contribution from the former Tank and Pump segment and only one month of activity for the former UK Storage Solutions segment in 2023 and an increase in income tax expense from discontinued operations.

Comparison of Years Ended December 31, 2022 and 2021

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

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

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

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

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

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

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

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

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

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

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

Modular space average monthly rental rates increased 18.3% to $905 for the year ended December 31, 2022.

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

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

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

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

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

Gross Profit:

Our gross profit percentage was 50.5% and 47.8% for the years ended December 31, 2021 and 2020, respectively.

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

Gross profit increased $290.8 million, or 34.4%, to $1,135.5 million for the year ended December 31, 2022 from $844.7 million for the year ended December 31, 2021.

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

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

Cost of leasing and services increased by $149.4 million, or 27.2%, to $699.5 million for the year ended December 31, 2022 from $550.1 million the year ended December 31, 2021, driven by a $59.3 million, or 34.9%, increase in labor costs, a $56.1 million, or 26.1%, increase in subcontractor costs, a $23.8 million, or 33.7%, increase in vehicle, equipment and other costs, and a $10.2 million, or 10.8%, increase in material costs.

Cost of sales decreased by $8.5 million, or 14.3%, which is in line with decreased sales revenues of 7.6% for the year ended December 31, 2022, resulting in improved sales gross profit margins.

The year over year changes in each of these cost components was consistent with historical trends and management's expectations given the change in sales volume and inflationary pressures impacting our business.

These increases were partially offset by increased depreciation of $37.9 million as a result of acquired fleet and capital investments made over the past twelve months in our existing rental equipment.

Our gross profit percentage was 53.0% and 50.5% for the years ended December 31, 2022 and 2021, respectively.

Our gross profit percentage, excluding the effects of depreciation ("adjusted gross profit percentage"), was 65.0% and 63.6% for the years ended December 31, 2022 and 2021, respectively.

SG&A Expense:

SG&A expense increased $87.0 million, or 18.1%, to $567.4 million for the year ended December 31, 2022, compared to $480.4 million for the year ended December 31, 2021.

The primary driver of the increase is related to additional SG&A expense as a result of operating a larger business due to the Merger.

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

Transaction Costs:

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

Transaction costs were primarily related to the Merger.

For 2022, SG&A expense for Modular and Storage totaled $304.9 million and $215.7 million respectively.

Employee costs excluding stock compensation increased $57.6 million, or 27.3%, driven by a 12% increase in SG&A headcount to support both organic and inorganic growth.

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

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

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

Other Depreciation and Amortization:

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

The increase was driven by a $14.4 million increase in other depreciation and a $12.2 million increase in amortization of intangible assets primarily as a result of Mobile Mini being included in the 2021 results for a full year as compared to two quarters in 2020.

Lease Impairment Expense and Other Related Charges:

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

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

Restructuring Costs:

Restructuring costs were $11.9 million for the year ended December 31, 2021 as compared to $6.1 million for the year ended December 31, 2020.

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

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

Currency (Gains) Losses, net:

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

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

Currency Losses, net:

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

Other (Income) Expense, Net:

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

Other (income) expense, net was $6.7 million of income for the year ended December 31, 2022 and $1.7 million of expense for the year ended year ended December 31, 2021.

The increase in other

(income) expense, net is primarily related to insurance recoveries received in 2022 related to Hurricane Ida in the Gulf Coast ares of the United States in 2021.

Interest Expense:

Interest expense decreased $2.9 million, or 2.4%, to $116.4 million for the year ended December 31, 2021 from $119.3 million for the year ended December 31, 2020.

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

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

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

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

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

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

Fair Value Loss on Common Stock Warrant Liabilities:

For the year ended year ended December 31, 2021, the fair value loss on common stock warrant liabilities of $26.6 million was primarily attributable to the change in estimated fair value of common stock warrant liabilities.

Loss on Extinguishment of Debt:

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

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

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

(i) $15.2 million due to the redemption of the 2022 Secured Notes, (ii) $22.7 million due to the redemption of the 2023 Secured Notes, and (iii) $4.4 million associated with an asset-based credit agreement entered into by the Company in 2017.

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

Income Tax Expense:

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

The increase in income tax benefit was due to the reversal of our valuation allowance of $56.6 million based on our assessment of deferred tax assets and a reduction of reserves for uncertain tax positions of $11.2 million, partially offset by tax expense from pre-tax income and non-deductible expense in the year ended December 31, 2020.

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

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

Business Segments

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Modular and Storage.

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

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

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

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

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

Modular represents the activities of the North America modular business, excluding ground level offices, which were transferred to the Storage segment during the first quarter of 2023.

Storage represents the activities of the North America portable storage and ground level office business.

As part of the transfer of the ground level offices to Storage, we also adjusted the average modular space monthly rental rate in the Storage segment to only include VAPS specifically applicable to ground level offices, which has also been reflected in the total average modular space monthly rental rate.

The following tables and discussion summarize our reportable segment financial information for the years ended December 31, 2023, 2022 and 2021 .

Consistent with the presentation of our consolidated financial statements, the below segment results only include results from Mobile Mini for the periods subsequent to the Merger.

Business Segment Results

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Total revenue increased $153.6 million, or 11.4%, to $1,495.7 million for the year ended December 31, 2023 from $1,342.0 million for the year ended December 31, 2022.

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

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

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

The increase was primarily the result of increased leasing revenue of $145.4 million, or 14.6%, compared to 2022, and increased delivery and installation revenue of $10.7 million, or 3.9%, compared to 2022.

Average modular space monthly rental rates increased 15.0% for the year ended December 31, 2023 to $1,111 driven primarily by increased pricing on new deliveries.

Average modular space units on rent decreased by 647 units, or 0.8%.

Average portable storage monthly rental rates increased 20.7% for the year ended December 31, 2023 to $251 driven by our price management tools, processes and early benefits from increased VAPS penetration opportunities on our basic VAPS offerings, which began in the second quarter of 2022.

Gross Profit:

Gross profit increased $116.4 million, or 19.9%, to $700.2 million for the year ended December 31, 2023 from $583.8 million for the year ended December 31, 2022.

The increase in gross profit was driven higher leasing gross profit, which increased $107.1 million, or 14.9%, driven by improved pricing and by a $7.8 million increase in delivery and installation gross profit.

These increases in gross profit for the year ended December 31, 2023 were further complemented by a $4.7 million increase in new unit sales gross profit, offset by a $4.7 million decrease in rental unit sales gross profit.

Cost of leasing and services increased by $41.2 million, or 8.3%, for the year ended December 31, 2023 versus the year ended December 31, 2022, driven by a $10.2 million, or 13.5%, increase in material costs, a $21.4 million, or 13.5%, increase in labor costs, a $4.6 million, or 2.2%, increase in subcontractor costs, and a $5.0 million, or 9.5%, increase in vehicle, equipment and other costs.

Cost of sales decreased by $2.3 million, or 5.6%, which is in line with decreased sales revenues of 3.1% for the year ended December 31, 2023.

The year over year changes in each of these cost components was consistent with historical trends and management's expectations given the respective changes in sales volume.

The increase in gross profit was also partially driven by a $1.6 million decrease in depreciation of rental equipment as a result of lower capital investments made in refurbishments of rental equipment over the past twelve months

Adjusted EBITDA:

Adjusted EBITDA increased $90.0 million, or 17.7%, to $598.4 million for the year ended December 31, 2023 from $508.3 million for the year ended December 31, 2022.

The increase was driven by higher leasing

gross profit discussed above.

SG&A, excluding discrete costs, increased $14.5 million, or 4.6%, for the year ended December 31, 2023 compared to the year ended December 31, 2022 driven primarily by a $2.4 million, or 5.7%, increase in service agreements and professional fees, a $5.2 million, or 9.8%, increase in real estate costs, a $4.2 million, or 32.7%, increase in travel costs, a $2.2 million, or 43.6%, increase in advertising costs, a $2.1 million, or 30.8%, increase in taxes and fees, a $7.1 million, or 81.9%, increase to the provision for credit losses, a $3.0 million, or 66.3%, increase in employee insurance costs, and a $5.9 million increase in salaries.

These increases were partially offset by a $10.6 million decrease in variable compensation.

Capex for rental equipment:

purchases of rental equipment decreased $94.1 million, or 33.7%, to $185.0 million for the year ended December 31, 2023 from $279.1 million for the year ended December 31, 2022 driven by reduction in fleet purchases and successful efforts to reduce our refurbishment costs through better unit selection and work scope during 2023.

Comparison of Years Ended December 31, 2022 and 2021

Total revenue increased $221.6 million, or 19.8%, to $1,342.0 million for the year ended December 31, 2022 from $1,120.5 million for the year ended December 31, 2021.

The increase was primarily driven by increased leasing revenue of $164.6 million, or 19.9%, compared to 2021, increased delivery and installation revenue of $58.9 million, or 27.6% compared to 2021 and partially offset by decreased sales revenue of $2.0 million, or 2.6%, compared to 2021.

Average modular space monthly rental rates increased 17.8% for the year ended December 31, 2022 to $966 driven by continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio.

Improved pricing was aided by higher volumes as average modular space units on rent increased by 2,638 units, or 3.3%, year over year driven by acquisitions.

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Gross profit increased $112.2 million, or 23.8%, to $583.8 million for the year ended December 31, 2022 from $471.7 million for the year ended December 31, 2021.

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

The increase in gross profit from leasing and delivery and installation revenues was partially offset by a $30.6 million increase in depreciation of rental equipment primarily as a result of capital investments made over the past twelve months in our existing rental equipment for the year ended December 31, 2022.

The increase in gross profit was driven by higher leasing gross profit, which increased $110.9 million or 18.2%, driven by improved volume, pricing and VAPS.

The increase in gross profit from leasing for the year ended December 31, 2022 was further complemented by a $28.2 million increase in delivery and installation gross profit primarily driven by increased pricing, a $3.2 million increase in rental unit sales gross profit, and a $0.6 million increase in new unit sales gross profit.

In addition, cost of leasing and services increased by $84.5 million, or 20.6%, for the year ended December 31, 2022 versus the year ended December 31, 2021, driven by a $3.5 million, or 1.7%, increase in subcontractor costs, and a $19.6 million, or 14.1%, increase in labor costs, partially offset by a $9.9 million, or 11.6%, decrease in material cost and a $1.3 million, or 2.4%, decrease in vehicle, equipment and other costs.

Cost of sales decreased by $5.8 million, or 12.2%, which is in line with the decreased sales revenues of 2.6% for year ended December 31, 2022.

The increase in gross profit from leasing revenues was partially offset by a $30.6 million increase in depreciation of rental equipment primarily as a result of capital investments made over the past twelve months in our existing rental equipment for the year ended December 31, 2022.

Adjusted EBITDA:

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

Storage Segment

Comparison of Years Ended December 31, 2023 and 2022

Total revenue increased $68.5 million, or 8.6%, to $869.1 million for the year ended December 31, 2023 from $800.6 million for the year ended December 31, 2022.

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

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

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

The decrease was driven primarily by lower delivery volumes.

The increase was primarily driven by increased leasing revenue of $66.9 million, or 10.6%, compared to 2022, partially offset by decreased delivery and installation revenue of $2.7 million, or 1.7%, compared to 2022.

Average portable storage monthly rental rates increased 24.0% for the year ended December 31, 2023 to $238 as a result of our price management tools.

Average portable storage units on rent decreased by 15,159 units, or 9.0%, year over year mainly driven by lower demand.

Average modular space monthly rental rates increased 21.1% for the year ended December 31, 2023 to $826 driven by the continuation of our long-term price optimization initiative and VAPS penetration opportunities across our portfolio.

Average modular space units on rent decreased by 3,339 units, or 15.0%.

Gross Profit:

Gross profit increased $82.0 million, or 14.9%, to $633.6 million for the year ended December 31, 2023 from $551.6 million for the year ended December 31, 2022.

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

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

The increase in gross profit was driven by an $83.5 million increase in leasing gross profit and an increase of $5.7 million in delivery and installation gross profit.

The increase in gross profit from leasing and delivery and installation revenues was partially offset by a $10.6 million increase in depreciation of

rental equipment primarily as a result of capital investments made over the past twelve months of additional rental equipment for the year ended December 31, 2023.

Cost of leasing and services decreased by $25.1 million, or 12.3%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022, driven by a $7.0 million, or 27.7%, decrease in material costs, a $20.4 million, or 32.9%, decrease in subcontractor costs, partially offset by a $2.6 million, or 3.4%, increase in labor costs.

Cost of sales increased by $1.0 million, or 11.0%, as sales revenues increased $4.3 million, or 29.0%, driving improved sales gross profit margins for the year ended December 31, 2023.

The year over year changes in each of these cost components was consistent with historical trends and management's expectations given the respective changes in sales volume and inflationary pressures impacting our business.

These increases were partially offset by increased depreciation of $10.6 million, or 30.0%, as a result of capital investments made over the past twelve months in rental equipment including acquired fleet.

Adjusted EBITDA:

Adjusted EBITDA increased $87.6 million, or 23.3%, to $463.1 million for the year ended December 31, 2023 from $375.5 million for the year ended December 31, 2022.

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

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

The increase was driven by higher leasing gross profits discussed above, partially offset by an increase in SG&A costs, excluding discrete and other items of $15.3 million.

The SG&A increase was driven by an increase of $5.8 million in real estate and occupancy costs, an increase of $3.9 million in salaries and wages, and an increase of $1.5 million in service agreements and professional fees.

Capex for rental equipment:

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

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

Storage Segment

Capex for rental equipment decreased $76.7 million, or 64.8%, to $41.6 million for the year ended December 31, 2023 from $118.3 million for the year ended December 31, 2022 driven by a reduction in container purchases during the year given lower utilization and demand.

Comparison of Years Ended December 31, 2022 and 2021

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Gross profit increased $178.6 million, or 47.9%, to $551.6 million for the year ended December 31, 2022 from $373.0 million for the year ended December 31, 2021.

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

The increase in gross profit was driven by a $164.0 million increase in leasing gross profit driven by improved volume, pricing and VAPS.

The increase in gross profit from leasing for the year ended December 31, 2022 was further complemented by an increase of $24.8 million in delivery and installation gross profit primarily driven by increased pricing, and a $0.1 million increase in new unit sales gross profit.

The increase in gross profit from leasing for the year ended December 31, 2022 was partially offset by a $3.0 million decrease in rental unit sales gross profit.

In addition, cost of leasing and services increased by $64.9 million, or 46.4%, for the year ended December 31, 2022 versus the year ended December 31, 2021, driven by a $21.9 million, or 54.7%, increase in subcontractor costs, a $9.7 million, or 61.4%, increase in material costs, a $19.8 million, or 35.8%, increase in labor costs, and a $12.3 million, or 41.3%, increase in vehicle, equipment and other costs.

Cost of sales decreased by $2.7 million, or 22.5%, which is in line with the decreased sales revenues of 27.3% for year ended December 31, 2022.

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

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Capex for rental equipment:

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

Capex for rental equipment increased $72.9 million, or 160.4%, to $118.3 million for the year ended December 31, 2022 from $45.4 million for the year ended December 31, 2021 driven by a significant increase

in container purchases during the year given high utilization and strong demand, as well as due to expansion of our VAPS offering in Storage.

Reconciliation of Non-GAAP Financial Measures

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

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

(in thousands) Q1 Q2 Q3 Q4 Full Year

The following table provides unaudited reconciliations of Income from continuing operations to Adjusted EBITDA:

Year Ended December 31,

(in thousands) 2023 2022 2021

Income from continuing operations $ 341,844 $ 276,341 $ 114,895

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Income from continuing operations before income tax 468,419 365,204 151,423

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

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

Currency losses, net 137 (173) 160 762 886

Restructuring costs, lease impairment expense and other related charges 263 (95) — — 168

Transaction costs 13 22 — (10) 25

Integration costs 4,087 5,193 3,902 2,302 15,484

Stock compensation expense 6,273 9,128 7,111 7,101 29,613

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

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

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

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

(in thousands) Q1 Q2 Q3 Q4 Full Year

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

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

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

Loss on extinguishment of debt — — 5,999

Interest expense 205,040 146,278 116,358

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

Fair value loss on common stock warrant liabilities — — 26,597

Depreciation and amortization 338,654 319,099 280,567

Currency losses (gains), net 37 41 8 341 427

Currency losses, net 6,754 886 427

Restructuring costs, lease impairment expense and other related charges 22 168 14,754

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Adjusted EBITDA from continuing and discontinued operations $ 1,065,589 $ 969,624 $ 740,393

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

(in thousands) Q1 Q2 Q3 Q4 Full Year

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

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

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

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

Interest expense 422 422 299 158 1,301

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

Currency losses, net 1 46 76 15 138

Stock compensation expense 122 164 (151) 80 215

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

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

(in thousands) Q1 Q2 Q3 Q4 Full Year

The following table provides unaudited reconciliations of Income from discontinued operations to Adjusted EBITDA:

Year Ended December 31,

(in thousands) 2023 2022 2021

Income from discontinued operations $ 134,243 $ 63,199 $ 45,249

Gain on sale of discontinued operations 175,708 35,456 —

Income tax expense from discontinued operations 45,468 35,725 13,018

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Income from Continuing Operations Margin (C/B) 14.5 % 12.9 % 6.9 %

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

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

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

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

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

Year Ended December 31,

(in thousands) 2022

Long-term debt $ 3,063,042

Current portion of long-term debt 13,324

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

Total debt $ 3,082,644

Cash and cash equivalents 7,390

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

Net debt (A) $ 3,064,870

Adjusted EBITDA from continuing operations $ 883,874

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

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

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

Adjusted Gross Profit and Adjusted Gross Profit Percentage

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Adjusted Gross Profit Percentage (C/A) 67.6 % 65.0 % 63.6 %

Income from Continuing Operations Excluding Gain/Loss from Warrants

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

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

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

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

(in thousands) Q1 Q2 Q3 Q4 Full Year

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

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

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

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

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

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

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

Quarterly Consolidated Results for the Year Ended December 31, 2022

(in thousands) Q1 Q2 Q3 Q4 Full Year

Total Capital Expenditures $ 105,717 $ 139,925 $ 145,076 $ 96,084 $ 486,802

Total Proceeds 14,814 21,017 18,077 18,570 72,478

Net CAPEX $ 90,903 $ 118,908 $ 126,999 $ 77,514 $ 414,324

Quarterly Consolidated Results for the Year Ended December 31, 2021

(in thousands) Q1 Q2 Q3 Q4 Full Year

As presented below, Net CAPEX includes amounts for the former Tank and Pump segment through September 30, 2022 and the UK Storage Solutions segment through January 31, 2023.

The following table provides unaudited reconciliations of Net CAPEX:

Year Ended December 31,

(in thousands) 2023 2022 2021

Total Capital Expenditures $ 249,213 $ 486,802 $ 308,996

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

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

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

Quarterly Consolidated Results for the Year Ended December 31, 2022

(in thousands) Q1 Q2 Q3 Q4 Full Year

Net cash provided by operating activities $ 145,527 $ 188,326 $ 210,385 $ 200,420 $ 744,658

Purchase of rental equipment and refurbishments (95,236) (130,153) (135,076) (82,673) (443,138)

Proceeds from sale of rental equipment 14,554 20,526 17,183 18,440 70,703

Purchase of property, plant and equipment (10,481) (9,772) (10,000) (13,411) (43,664)

Proceeds from the sale of property, plant and equipment 260 491 894 130 1,775

Free Cash Flow $ 54,624 $ 69,418 $ 83,386 $ 122,906 $ 330,334

Quarterly Consolidated Results for the Year Ended December 31, 2021

(in thousands) Q1 Q2 Q3 Q4 Full Year

As presented below, Free Cash Flow includes amounts for the former Tank and Pump segment through September 30, 2022 and the UK Storage Solutions segment through January 31, 2023.

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

Year Ended December 31,

(in thousands) 2023 2022 2021

Net cash provided by operating activities $ 761,240 $ 744,658 $ 539,902

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Borrowing availability under the ABL Facility is equal to the lesser of $3.7 billion and the applicable borrowing bases.

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

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

At December 31, 2023, we had $1.2 billion of available borrowing capacity under the ABL Facility.

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

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

The consolidated statements of cash flows include amounts for the former Tank and Pump segment through September 30, 2022 and the UK Storage Solutions segment through January 31, 2023.

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

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Cash provided by operating activities for the year ended December 31, 2023 was $761.2 million as compared to $744.7 million for the year ended December 31, 2022, an increase of $16.6 million, or 2%.

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

The increase in cash provided by operating activities was driven by an increase of $54.5 million of net income, adjusted for non-cash items, and a decrease of $37.9 million in the net movements of the operating assets and liabilities.

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

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

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

The increase in cash provided by operating activities was driven by an increase of $198.6 million of net income, adjusted for non-cash items, and an increase of $6.2 million in the net movements of the operating assets and liabilities.

Cash flows from investing activities

Cash used in investing activities for the year ended December 31, 2023 was $350.0 million as compared to $309.3 million for the year ended December 31, 2022, an increase of $40.7 million.

The increase in cash used in investing activities was driven by a $341.0 million increase in cash used in acquisitions, net of cash acquired, a $19.4 million decrease in proceeds from the sale of rental equipment, and a $7.7 million increase in payments for the settlement of foreign currency forward contract.

The increase was partially offset by a $216.2 million decrease in cash used for the purchase of rental equipment and refurbishments, a $78.4 million increase in proceeds from the sale of discontinued operations, a $21.4 million decrease in cash used for the purchase of property, plant, and equipment, and an $11.5 million increase in proceeds from sale of property, plant and equipment.

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

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

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

The increase in cash used in investing activities was driven by a $164.3 million increase in cash used in acquisitions, net of cash acquired.

During 2021, the Company acquired certain assets and liabilities of several smaller entities for $147.2 million in cash.

During 2020, $17.2 million of cash was acquired as part of the Merger.

The increase in cash used in investing activities was also driven by a $106.1 million increase in cash used for the purchase of rental equipment and refurbishments to support growing demand for new project deliveries across all segments and a $14.0 million increase in cash used for the purchase of property, plant, and equipment.

These increases were partially offset by a $9.5 million increase in proceeds from sale of property, plant and equipment and a $16.3 million increase in proceeds from the sale of rental equipment.

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

Cash flows from financing activities

Cash used in financing activities for the year ended December 31, 2023 was $418.9 million as compared to $429.4 million for the year ended December 31, 2022, a decrease of $10.4 million.

The decrease in cash used in financing activities was driven by a $60.5 million increase in net borrowings, a $25.6 million decrease in principal payments on finance lease obligations, and a $1.7 million decrease in payments of financing costs.

The decrease was partially offset by an increase of $66.4 million in repurchases of common stock and a $10.7 million decrease in receipts from the issuance of common stock.

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

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

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

The increase in cash used in financing activities

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

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

Material cash requirements

The Company’s material cash requirements include the following contractual and other obligations:

The Company has outstanding debt related to its ABL Facility, 2025 Secured Notes, 2028 Secured Notes and finance leases, including interest, totaling $3.1 billion as of December 31, 2022, $15.6 million of which is obligated to be repaid within the next twelve months.

The Company has outstanding debt related to its ABL Facility, 2025 Secured Notes, 2028 Secured Notes, 2031 Secured Notes and finance leases, including interest, totaling $3.6 billion as of December 31, 2023, $18.8 million of which is obligated to be repaid within the next twelve months.

Refer to Note 10 for further information regarding outstanding debt.

Operating leases

The Company has commitments for future minimum rental payments relating to operating leases, which are primarily for equipment and office space.

The Company has commitments for future minimum rental payments relating to operating leases, which are primarily for real estate.

As of December 31, 2023, the Company had lease obligations of $288.7 million, with $69.4 million payable within the next twelve months.

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

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

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources is based on our consolidated financial statements, which have been prepared in accordance with GAAP.

GAAP requires that we make estimates and judgments that affect the reported amount of assets, liabilities, revenue, expenses and the related disclosure of contingent assets and liabilities.

We base these estimates on historical experience and on various other assumptions that we consider reasonable under the circumstances and reevaluate our estimates and judgments as appropriate.

The actual results exp erienced by us may differ materially and adversely from our estimates.

We believe that the following critical accounting policies involve a higher degree of judgment or complexity in the preparation of financial statements:

Critical Accounting Estimates

The Company's discussion and analysis of its financial condition, results of operations, liquidity and capital resources is based on its consolidated financial statements, which have been prepared in accordance with GAAP.

GAAP requires that management make estimates and judgments that affect the reported amount of assets, liabilities, revenue, expenses and the related disclosure of contingent assets and liabilities.

The Company's management bases these estimates on historical experience and on various other assumptions that they consider reasonable under the circumstances and reevaluate their estimates and judgments as appropriate.

The actual results exp erienced by the Company may differ materially and adversely from its estimates.

The Company believes that the following critical accounting estimates involve a higher degree of judgment or complexity in the preparation of financial statements:

Revenue Recognition

Leasing and Services Revenue

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

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

Leasing Revenue

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.

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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 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

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• 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.

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

Consideration is allocated to each of these performance obligations within the contract based upon their estimated relative standalone selling prices using an adjusted market approach.

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, including intangible assets, 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.

Judgment is exercised in the determination of the estimated fair value of intangible assets acquired and their estimated useful lives.

The estimated fair value and useful lives of customer relationships is determined based on estimates and judgments regarding discounted future after-tax earnings and cash flows expected from customer relationships.

The fair value of trade name intangible assets is determined utilizing the relief from royalty method.

A royalty rate based on observed market royalties is applied to projected revenue supporting the trade name and discounted to present value.

Actual results may vary from these estimates which may result in adjustments to the fair value of assets acquired and liabilities assumed, including intangibles.

The Company may record adjustments to the fair values and corresponding

adjustment to goodwill during the measurement period, not to exceed one year from the date of acquisition if new information is obtained related to facts and circumstances that existed as of the acquisition date.

After the measurement period, any subsequent adjustments are reflected in the consolidated statements of operations.

Note 2 to the Consolidated Financial Statements included in Item 8 of Part II of this annual report provides further discussion regarding business combinations and any fair value adjustments to amounts previously reported.

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.

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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.

The Company estimates the fair value of a reporting unit by using a discounted cash flow model that calculates fair value as the present value of expected cash flows of the reporting units.

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions.

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these changes could potentially impact the fair value of reporting units.

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

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 of carrying value over fair value, not to exceed the amount of goodwill allocated to that reporting unit.

The Company's 2023 impairment test indicated that the estimated fair values of the Company's reporting units were in excess of their carrying values.

The Company believes that only significant changes in the cash flow assumptions would result in an impairment of goodwill.

Indefinite-lived Intangible Assets

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.

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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.

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.

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Any material deviation in actual results could affect the calculated fair value of the intangible asset.

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.

The Company's 2023 impairment test indicated that the estimated fair values of the Company's indefinite lived intangible assets were in excess of their carrying values.

Rental Equipment

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

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

Costs incurred for equipment to meet a particular customer specification are either capitalized and depreciated over the lease term taking into consideration the residual value of the asset or charged to the customer at the beginning of the lease and expensed as incurred.

Maintenance and repair costs are expensed as incurred.

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VAPS and other related rental equipment 1 - 10 years

Trade Receivables and Allowance for Credit Losses

Allowance for Credit Losses

The Company is exposed to credit losses from trade receivables.

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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.

Judgment and uncertainties are present in determining the allowance for credit losses due to the sensitivity of 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.

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.

Changes in estimates are reflected in the period they become known.

If circumstances were to change that required a change in estimates, such as a change in financial condition of customers or unanticipated changes in the economy, additional allowances may be required.

There were no changes in the Company's estimates or underlying assumptions relating to the determination of the allowance for credit losses for the year ended December 31, 2023 that would have materially impacted the allowance for credit losses.

Refer to Note 1 to the Consolidated Financial Statements included in Item 8 of Part II of this annual report for a summary of activity in the allowance for credit losses.

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

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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.

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;

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The evaluation of uncertain tax positions involves judgment in the application of GAAP and complex tax laws.

None of the critical accounting policies and estimates noted above have changed materially since the prior year.

None of the critical accounting estimates or assumptions noted above have changed materially since the prior year.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis