WillScot Holdings Corp 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of WillScot Mobile Mini Holdings Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of WillScot Mobile Mini Holdings Corp. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income , changes in equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 20, 2024 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 61 Allowance for Credit Losses Description of the Matter As described in Note 1 to the consolidated financial statements, the Company maintains an allowance for credit losses on trade receivables. At December 31, 2023 the allowance for credit losses was $81.7 million, or 15.3% of gross trade receivables. The allowance for credit losses is estimated based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. Auditing the Company's estimation of the allowance for credit losses was judgmental due to the subjectivity in assessing the appropriateness of the assumptions made by management. The assumptions include an expectation that the Company’s collection of receivables will be consistent with historical write-off experience and the consideration of current or forecasted conditions that may affect the Company’s customers’ ability to pay outstanding trade receivables. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company's controls over its estimation of the allowance for credit losses, including internal controls over the Company’s process to develop the assumptions used to estimate credit losses. To test the allowance for credit losses, we performed audit procedures that included, among others, testing management's process for developing the allowance for credit losses, testing the completeness, accuracy, and relevance of the data used; and evaluating significant assumptions used by management, including assessing the Company’s expectation that the collection of receivables will be consistent with historical write-off experience. For example, we compared the days sales outstanding, customer concentration, and days past due as of December 31, 2023, to the Company’s historical experience to evaluate the relevancy of the historical data utilized to estimate the allowance for credit losses. We also performed sensitivity analyses of the significant assumptions to evaluate the change in the allowance that would result from changes in assumptions. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2017 Baltimore, Maryland February 20, 2024 62 WillScot Mobile Mini Holdings Corp. Consolidated Balance Sheets (in thousands, except share data) December 31, 2023 2022 Assets Cash and cash equivalents $ 10,958 $ 7,390 Trade receivables, net of allowance for credit losses at December 31, 2023 and December 31, 2022 of $ 81,656 and $ 57,048 , respectively 451,130 409,766 Inventories 47,406 41,030 Prepaid expenses and other current assets 57,492 31,635 Assets held for sale – current 2,110 31,220 Total current assets 569,096 521,041 Rental equipment, net 3,381,315 3,077,287 Property, plant and equipment, net 340,887 304,659 Operating lease assets 245,647 219,405 Goodwill 1,176,635 1,011,429 Intangible assets, net 419,709 419,125 Other non-current assets 4,626 6,683 Assets held for sale – non-current — 268,022 Total long-term assets 5,568,819 5,306,610 Total assets $ 6,137,915 $ 5,827,651 Liabilities and equity Accounts payable $ 86,123 $ 109,349 Accrued expenses 129,621 109,542 Accrued employee benefits 45,564 56,340 Deferred revenue and customer deposits 224,518 203,793 Operating lease liabilities - current 57,408 50,499 Current portion of long-term debt 18,786 13,324 Liabilities held for sale – current — 19,095 Total current liabilities 562,020 561,942 Long-term debt 3,538,516 3,063,042 Deferred tax liabilities 554,268 401,453 Operating lease liabilities – non-current 187,837 169,618 Other non-current liabilities 34,024 18,537 Liabilities held for sale – non-current — 47,759 Long-term liabilities 4,314,645 3,700,409 Total liabilities 4,876,665 4,262,351 Preferred Stock: $ 0.0001 par, 1,000,000 shares authorized and zero shares issued and outstanding at December 31, 2023 and 2022 — — Common Stock: $ 0.0001 par, 500,000,000 shares authorized and 189,967,135 and 207,951,682 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 20 21 Additional paid-in-capital 2,089,091 2,886,951 Accumulated other comprehensive loss ( 52,768 ) ( 70,122 ) Accumulated deficit ( 775,093 ) ( 1,251,550 ) Total shareholders' equity 1,261,250 1,565,300 Total liabilities and shareholders' equity $ 6,137,915 $ 5,827,651 See the accompanying notes which are an integral part of these consolidated financial statements. 63 WillScot Mobile Mini Holdings Corp. Consolidated Statements of Operations (in thousands, except share and per share data) Years Ended December 31, 2023 2022 2021 Revenues: Leasing and services revenue: Leasing $ 1,833,935 $ 1,621,690 $ 1,252,490 Delivery and installation 437,179 429,152 321,129 Sales revenue: New units 48,129 40,338 46,993 Rental units 45,524 51,443 52,368 Total revenues 2,364,767 2,142,623 1,672,980 Costs: Costs of leasing and services: Leasing 398,467 376,868 282,576 Delivery and installation 317,117 322,636 267,533 Costs of sales: New units 26,439 24,011 31,348 Rental units 23,141 26,907 28,030 Depreciation of rental equipment 265,733 256,719 218,790 Gross profit 1,333,870 1,135,482 844,703 Expenses: Selling, general and administrative 596,090 567,407 480,407 Other depreciation and amortization 72,921 62,380 61,777 Currency losses, net 6,754 886 427 Other (income) expense, net ( 15,354 ) ( 6,673 ) 1,715 Operating income 673,459 511,482 300,377 Interest expense 205,040 146,278 116,358 Fair value loss on common stock warrant liabilities — — 26,597 Loss on extinguishment of debt — — 5,999 Income from continuing operations before income tax 468,419 365,204 151,423 Income tax expense from continuing operations 126,575 88,863 36,528 Income from continuing operations 341,844 276,341 114,895 Discontinued operations: Income from discontinued operations before income tax 4,003 63,468 58,267 Gain on sale of discontinued operations 176,078 35,456 — Income tax expense from discontinued operations 45,468 35,725 13,018 Income from discontinued operations 134,613 63,199 45,249 Net income $ 476,457 $ 339,540 $ 160,144 Earnings per share from continuing operations attributable to WillScot Mobile Mini common shareholders: Basic $ 1.72 $ 1.27 $ 0.51 Diluted $ 1.69 $ 1.25 $ 0.49 Earnings per share from discontinued operations attributable to WillScot Mobile Mini common shareholders: Basic $ 0.68 $ 0.30 $ 0.20 Diluted $ 0.67 $ 0.28 $ 0.20 Earnings per share attributable to WillScot Mobile Mini common shareholders: Basic $ 2.40 $ 1.57 $ 0.71 Diluted $ 2.36 $ 1.53 $ 0.69 Weighted average shares: Basic 198,554,885 216,808,577 226,518,931 Diluted 201,849,836 221,399,162 232,793,902 See the accompanying notes which are an integral part of these consolidated financial statements. 64 WillScot Mobile Mini Holdings Corp. Consolidated Statements of Comprehensive Income (in thousands) Years Ended December 31, 2023 2022 2021 Net income $ 476,457 $ 339,540 $ 160,144 Other comprehensive income (loss): Foreign currency translation adjustment, net of income tax benefit of $ — , $ — and $ 60 for the years ended December 31, 2023, 2022 and 2021, respectively 14,091 ( 44,548 ) ( 880 ) Net gain on derivatives, net of income tax expense of $ 1,088 , $ 1,171 and $ 2,661 for the years ended December 31, 2023, 2022 and 2021, respectively 3,263 3,497 9,016 Total other comprehensive income (loss) 17,354 ( 41,051 ) 8,136 Total comprehensive income $ 493,811 $ 298,489 $ 168,280 See the accompanying notes which are an integral part of these consolidated financial statements. 65 WillScot Mobile Mini Holdings Corp. Consolidated Statements of Changes in Equity (in thousands) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Shareholders' Equity Shares Amount Balance at December 31, 2020 229,038 $ 23 $ 3,852,291 $ ( 37,207 ) $ ( 1,751,234 ) $ 2,063,873 Net income — — — — 160,144 160,144 Other comprehensive income — — — 8,136 — 8,136 Stock-based compensation and issuance of Common Stock from vesting 485 — 26,184 — — 26,184 Repurchase and cancellation of options and warrants ( 11,851 ) ( 1 ) ( 340,375 ) — — ( 340,376 ) Issuance of Common Stock from the exercise of options and warrants 6,268 — 85,979 — — 85,979 Withholding taxes on net share settlement of stock-based compensation and option exercises — — ( 7,177 ) — — ( 7,177 ) Balance at December 31, 2021 223,940 22 3,616,902 ( 29,071 ) ( 1,591,090 ) 1,996,763 Net income — — — — 339,540 339,540 Other comprehensive loss — — — ( 41,051 ) — ( 41,051 ) Stock-based compensation and issuance of Common Stock from vesting 594 — 29,613 — — 29,613 Repurchase and cancellation of Common Stock and warrants ( 19,836 ) ( 2 ) ( 756,906 ) — — ( 756,908 ) Issuance of Common Stock from the exercise of options and warrants 3,254 1 11,230 — — 11,231 Withholding taxes on net share settlement of stock-based compensation and option exercises — — ( 13,888 ) — — ( 13,888 ) Balance at December 31, 2022 207,952 21 2,886,951 ( 70,122 ) ( 1,251,550 ) 1,565,300 Net income — — — — 476,457 476,457 Other comprehensive income — — — 17,354 — 17,354 Stock-based compensation and issuance of Common Stock from vesting 514 — 34,486 — — 34,486 Repurchase and cancellation of Common Stock ( 18,534 ) ( 1 ) ( 818,673 ) — — ( 818,674 ) Issuance of Common Stock from the exercise of options 35 — 498 — — 498 Withholding taxes on net share settlement of stock-based compensation and option exercises — — ( 14,171 ) — — ( 14,171 ) Balance at December 31, 2023 189,967 $ 20 $ 2,089,091 $ ( 52,768 ) $ ( 775,093 ) $ 1,261,250 See the accompanying notes which are an integral part of these consolidated financial statements. 66 WillScot Mobile Mini Holdings Corp. Consolidated Statements of Cash Flows (in thousands) Years Ended December 31, 2023 2022 2021 Operating activities: Net income $ 476,457 $ 339,540 $ 160,144 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 338,654 343,507 318,202 Provision for credit losses 49,650 34,835 38,191 Gain on sale of discontinued operations ( 176,078 ) ( 35,456 ) — Gain on sale of rental equipment and other property, plant and equipment ( 32,724 ) ( 31,196 ) ( 26,175 ) Amortization of debt discounts and debt issuance costs 11,211 12,064 14,033 Fair value loss on common stock warrant liabilities — — 26,597 Loss on extinguishment of debt — — 5,999 Stock-based compensation expense 34,486 29,613 26,184 Deferred income tax expense 141,641 100,849 36,563 Loss on settlement of foreign currency forward contract 7,715 — — Unrealized currency (gains) losses, net ( 1,374 ) 753 295 Other 3,413 4,081 — Changes in operating assets and liabilities, net of effect of businesses acquired: Trade receivables ( 76,357 ) ( 94,463 ) ( 105,053 ) Inventories ( 3,276 ) ( 12,345 ) ( 9,083 ) Prepaid expenses and other assets ( 18,310 ) 149 3,324 Operating lease assets and liabilities 1,045 856 473 Accounts payable and other accrued expenses ( 14,836 ) 9,443 27,525 Deferred revenue and customer deposits 19,923 42,428 22,683 Net cash provided by operating activities 761,240 744,658 539,902 Investing activities: Proceeds from sale of discontinued operations 403,992 325,611 — Acquisitions, net of cash acquired ( 561,629 ) ( 220,620 ) ( 147,172 ) Proceeds from sale of rental equipment 51,290 70,703 55,210 Purchase of rental equipment and refurbishments ( 226,976 ) ( 443,138 ) ( 278,498 ) Payment for settlement of foreign currency forward contract ( 7,715 ) — — Proceeds from the sale of property, plant and equipment 13,272 1,775 16,911 Purchase of property, plant and equipment ( 22,237 ) ( 43,664 ) ( 30,498 ) Net cash used in investing activities ( 350,003 ) ( 309,333 ) ( 384,047 ) Financing activities: Repurchase and cancellation of Common Stock and warrants ( 818,182 ) ( 751,795 ) ( 363,586 ) Receipts from issuance of Common Stock from the exercise of options 498 11,230 7,484 Taxes paid on employee stock awards ( 14,171 ) ( 13,888 ) ( 7,177 ) Receipts from borrowings 1,911,230 964,308 728,677 Repayment of borrowings ( 1,475,219 ) ( 588,808 ) ( 512,181 ) Payment of financing costs ( 6,457 ) ( 8,187 ) — 67 Principal payments on finance lease obligations ( 16,634 ) ( 42,228 ) ( 17,399 ) Payment of debt extinguishment premium costs — — ( 3,705 ) Net cash used in financing activities ( 418,935 ) ( 429,368 ) ( 167,887 ) Effect of exchange rate changes on cash and cash equivalents 882 ( 882 ) ( 206 ) Net change in cash and cash equivalents ( 6,816 ) 5,075 ( 12,238 ) Cash and cash equivalents at the beginning of the period 17,774 12,699 24,937 Cash and cash equivalents at the end of the period $ 10,958 $ 17,774 $ 12,699 Supplemental cash flow information: Interest paid, net $ 184,863 $ 130,463 $ 103,795 Income taxes paid, net $ 32,949 $ 25,092 $ 9,855 Capital expenditures accrued or payable $ 19,557 $ 21,052 $ 27,667 Reconciliation of cash and cash equivalents to the consolidated balance sheet: Cash and cash equivalents of continuing operations $ 10,958 $ 7,390 $ 6,393 Cash and cash equivalents included in assets held for sale — 10,384 6,306 Total cash and cash equivalents shown in the consolidated statement of cash flows $ 10,958 $ 17,774 $ 12,699 See the accompanying notes which are an integral part of these consolidated financial statements. 68 WillScot Mobile Mini Holdings Corp. Notes to the Consolidated Financial Statements NOTE 1 - Summary of Significant Accounting Policies Organization and Nature of Operations WillScot Mobile Mini Holdings Corp. (“WillScot Mobile Mini” and, together with its subsidiaries, the “Company”) is a leading business services provider specializing in innovative and flexible turnkey temporary space solutions in the United States (“US”), Canada and Mexico. The Company leases, sells, delivers and installs modular space solutions and portable storage products through an integrated network of branch locations that spans North America. On July 1, 2020, a wholly-owned subsidiary of WillScot Corporation, a Delaware corporation, merged with and into Mobile Mini, Inc. (the “Merger”). At the effective time of the Merger, Mobile Mini, Inc. ("Mobile Mini") continued its existence as the surviving corporation in the Merger and a wholly-owned subsidiary of WillScot Corporation (“WillScot”). Immediately following the Merger, WillScot changed its name to “WillScot Mobile Mini Holdings Corp.” On September 30, 2022, the Company completed the sale of its former Tank and Pump Solutions ("Tank and Pump") segment. On January 31, 2023, the Company completed the sale of its former United Kingdom Storage Solutions ("UK Storage Solutions") segment. The consolidated financial statements present the historical financial results of the former Tank and Pump segment and the UK Storage Solutions segment as income from discontinued operations for all periods presented and the carrying values of the UK Storage Solutions segment assets and liabilities within assets and liabilities held for sale for reporting periods prior to the segments' disposals. See Note 3 for further discussion. Basis of Presentation and Principles of Consolidation The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the US (“GAAP”). The consolidated financial statements comprise the financial statements of WillScot Mobile Mini and its subsidiaries that it controls due to ownership of a majority voting interest. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as WillScot Mobile Mini. All intercompany balances and transactions are eliminated. Reclassifications Certain reclassifications have been made to prior year financial statements to conform to the current year presentation. Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents. Trade Receivables and Allowance for Credit Losses The Company is exposed to credit losses from trade receivables. The Company assesses each customer’s ability to pay for the products it leases or sells by conducting a credit review. The credit review considers expected billing exposure and timing for payment and the customer’s established credit rating. The Company performs its credit review of new customers at inception of the customer relationship and for existing customers when the customer transacts after a defined period of dormancy. The Company also considers contract terms and conditions, country risk and business strategy in the evaluation. The Company monitors ongoing credit exposure through an active review of customer balances against contract terms and due dates. The Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. The allowance for credit losses reflects the estimate of the amount of receivables that the Company will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. This estimate is sensitive to changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, the Company may be required to increase or decrease its allowances. Specifically identifiable lease revenue receivables and sales receivables not deemed probable of collection are recorded as a reduction of revenue. The remaining provision for credit losses is recorded as selling, general and administrative expenses. 69 Activity in the allowance for credit losses for the years ended December 31 was as follows: (in thousands) 2023 2022 2021 Balance at beginning of period $ 57,048 $ 45,773 $ 28,105 Provision for credit losses, net of recoveries (a) 49,650 34,881 37,469 Write-offs ( 25,182 ) ( 23,705 ) ( 19,777 ) Foreign currency translation and other 140 99 ( 24 ) Balance at end of period $ 81,656 $ 57,048 $ 45,773 (a) For the years ended December 31, 2023, 2022 and 2021, the provision for credit losses included $ 25.2 million, $ 23.7 million and $ 19.8 million, respectively, recorded as a reduction to revenue for the provision of specific receivables whose collection was not considered probable. The Company’s trade accounts receivable subject the Company to potential concentrations of credit risk. The Company performs on-going credit evaluations of its customers. Receivables related to sales are generally secured by the product sold to the customer. The Company generally has the right to repossess its rental units in the event of non-payment of receivables relating to the Company’s leasing operations. Inventories Inventories consist of raw materials, supplies, and finished units for sale. Inventories are measured at the lower of cost or net realizable value based on the weighted-average cost. The cost includes expenditures incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. Rental Equipment Rental equipment is comprised of modular space and portable storage units held for rent or on rent to customers and value-added products and services (“VAPS”) which are in use or available to be used by customers. Rental equipment is measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Costs of improvements and conversions of rental equipment are capitalized when such costs extend the useful life of the equipment or increase the rental value of the unit. Costs incurred for equipment to meet a particular customer specification are 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. Depreciation is computed using the straight-line method over estimated useful lives, as follows: Estimated Useful Life Residual Value Modular space units 10 - 30 years 20 - 55 % Portable storage units 7 - 30 years 20 - 55 % VAPS and other related rental equipment 1 - 10 years 0 % Property, Plant and Equipment Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses. The Company capitalizes external costs and directly attributable internal costs to acquire or create internal use software incurred subsequent to the completion of the preliminary project stage. Costs associated with post-implementation activities are expensed as incurred. The Company evaluates implementation costs incurred in a cloud computing arrangement that is a service contract as described in Cloud Computing Arrangements below. Land is not depreciated. Leasehold improvements are amortized over the lease term. Assets leased under finance leases are depreciated over the shorter of the lease term or their useful life, unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Maintenance and repair costs are expensed as incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows: Estimated Useful Life Buildings and leasehold improvements 10 - 40 years Vehicles, machinery, and equipment 3 - 30 years Furniture and fixtures 3 - 10 years Software 3 - 10 years Impairment of Long-Lived Assets When circumstances indicate the carrying amount of long-lived assets in a held-for-use asset group may not be recoverable, the Company evaluates the assets for potential impairment using internal projections of undiscounted cash flows 70 resulting from the use and eventual disposal of the assets. Events or changes in circumstances that may necessitate a recoverability evaluation include, but are not limited to, adverse changes in the regulatory environment or an expectation it is more likely than not that the asset will be disposed of before the end of its previously estimated useful life. If the carrying amount of the assets exceeds the undiscounted cash flows, an impairment expense is recognized for the amount by which the carrying amount of the asset group exceeds its fair value (subject to the carrying amount not being reduced below fair value for any individual long-lived asset that is determinable without undue cost and effort). Consistent with the provisions of Leases (Topic 842) ("ASC 842") , the Company assesses whether any operating lease as set impairment exists in accordance with the measurement guidance in Accounting Standard Codification ("ASC") 360, Property Plant and Equipment . Cloud Computing Arrangements In accordance with ASU 2018-15, Goodwill and Other – Internal-Use Software (Subtopic 350-40) (“ASC 350-40"), t he Company evaluates implementation costs incurred in a cloud computing arrangement that is a service contract under the internal-use software framework. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Costs incurred in the development stage are generally capitalized as other assets. Amortization expense is calculated on a straight-line basis over the contractual term of the cloud computing arrangement and recorded as selling, general and administrative expense. Purchase Accounting The Company accounts for acquisitions of businesses under the acquisition method. Under the acquisition method of accounting, the Company records assets acquired and liabilities assumed at their respective estimated fair values on the date of acquisition. Goodwill is measured as the excess of the fair value of the consideration transferred over the fair value of the identifiable net assets and is assigned to the Company's reporting units that are expected to benefit from the acquisition. When appropriate, our estimates of the fair values of assets and liabilities acquired include assistance from independent third-party valuation firms. Valuations are finalized as soon as practicable, but not later than one year from the acquisition date. Any subsequent changes to purchase price allocations result in a corresponding adjustment to goodwill. Transaction costs are expensed in the acquisition of a business. Long-lived assets (principally rental equipment), goodwill and other intangible assets generally represent the largest components of our acquisitions. Rental equipment is valued utilizing a market approach or a replacement cost approach. Intangible assets are recognized at their estimated fair values as of the date of acquisition and generally consist of customer relationships and trade names. Determination of the estimated fair value of intangible assets requires judgment. The estimated fair value of customer relationships is determined based on estimates and judgments regarding discounted future after-tax earnings and cash flows arising from lease renewals and new lease arrangements expected from customer relationships. The fair value of trade name intangible assets is determined utilizing the relief from royalty method. Under this form of the income approach, a royalty rate based on observed market royalties is applied to projected revenue supporting the trade name and discounted to present value. Acquisitions of assets and liabilities that do not meet the definition of a business are accounted for as asset acquisitions. An asset acquisition is accounted for by allocating the cost of the acquisition to the individual assets acquired and liabilities assumed on a relative fair value basis. Goodwill is not recognized in an asset acquisition. Any consideration in excess of net assets acquired is allocated to qualifying acquired assets on a relative fair value basis. The Company measures the fair value of assets acquired utilizing observable market transaction data for comparable assets or recent purchase prices. Transaction costs are considered a component of the cost of an asset acquisition. Evaluation of Goodwill Impairment 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 . The Company performs its assessment of goodwill utilizing either a qualitative or quantitative impairment test. The qualitative impairment test assesses company-specific, industry, market and general economic factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or elects not to use the qualitative impairment test, a quantitative impairment test is performed. The quantitative impairment test involves a comparison of the estimated fair value of a reporting unit to its carrying amount. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, value of net operating losses, future economic and market conditions and determination of appropriate market comparables. Management bases fair value estimates on assumptions it believes to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from these estimates. If the carrying amount of the reporting unit exceeds the calculated fair value of the reporting unit, an impairment charge would be recognized for the excess of carrying value over fair value, not to exceed the amount of goodwill allocated to that reporting unit. 71 Intangible Assets Other than Goodwill Intangible assets that are acquired by the Company and determined to have an indefinite useful life are not amortized but are tested for impairment at least annually. The Company’s indefinite-lived intangible assets consist of the Williams Scotsman and Mobile Mini trade names. The Company performs its assessment of indefinite-lived intangible assets utilizing either a qualitative or quantitative impairment test. When utilizing a quantitative impairment test, the Company calculates fair value using a relief-from-royalty method. This method is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment charge would be recorded to the extent the recorded indefinite-lived intangible asset exceeds the fair value. Other intangible assets that have finite useful lives are measured at cost less accumulated amortization and impairment losses, if any. Amortization is recognized in profit or loss over the estimated useful lives of the intangible asset. Retirement Benefit Obligation The Company provides benefits to certain of its employees under defined contribution benefit plans. The Company’s contributions to these plans are generally based on a percentage of employee compensation or employee contributions. These plans are funded on a current basis. For its US and Canada employees, the Company sponsors defined contribution benefit plans that have discretionary matching contribution and profit-sharing features. Fo r the years ended December 31, 2023, 2022 and 2021, the Company made matc hing contributions of $ 14.1 million, $ 13.8 million and $ 10.9 million to these plans, respectively. Stock-Based Compensation Prior to the Merger, stock awards were granted under the WillScot Corporation 2017 Incentive Award Plan (the "2017 Incentive Plan"), which included Restricted Stock Awards ("RSAs") and Restricted Stock Units. On June 24, 2020, WillScot's stockholders approved the WillScot Mobile Mini 2020 Incentive Award Plan ("2020 Incentive Plan") to take effect pending completion of the Merger and, as a result, all future incentive awards are granted under the 2020 Incentive Plan. The 2020 Incentive Plan is administered by the Compensation Committee. Under the 2020 Incentive Plan, the Compensation Committee may grant an aggreg ate of 6,488,988 shares of Common Stock in the form of non-qualified stock options, incentive stock options, stock appreciation rights, RSAs, RSUs, performance compensation awards and stock bonus awards. Stock-based payments, including the grant of stock options, RSAs and RSUs, are subject to service-based vesting requirements, and expense is recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur. Stock-based compensation expense includes grants of stock options, time-based RSUs ("Time-Based RSUs") and performance-based RSUs ("Performance-Based RSUs", together with Time-Based RSUs, the "RSUs"). RSUs are recognized in the financial statements based on their fair value. In addition, stock-based payments to non-executive directors include grants of RSAs. Time-Based RSUs and RSAs are valued based on the intrinsic value of the difference between the exercise price, if any, of the award and the fair market value of WillScot Mobile Mini's Common Stock on the grant date. Performance-Based RSUs are valued based on a Monte Carlo simulation model to reflect the impact of the Performance-Based RSUs market condition. The probability of satisfying a market condition is considered in the estimation of the grant-date fair value for Performance-Based RSUs and the compensation cost is not reversed if the market condition is not achieved, provided the requisite service has been provided. RSAs cliff vest in a one year period. Time-Based RSUs vest ratably over a period of four years . Certain Performance-Based RSUs cliff vest based on achievement of the relative total stockholder return ("TSR") of the Company's Common Stock as compared to the TSR of the constituents in an Index at the grant date over the performance period of three years . For certain 2023, 2022, and 2021 grants, the TSR of the Company's Common Stock is compared to the TSR of the constituents in the S&P 400 index. The target number of RSUs may be adjusted from 0 % to 200 % based on the TSR attainment levels defined by the Compensation Committee. The 100 % target payout is tied to performance at the 50 % percentile, with a payout curve ranging from 0 % (for performance less than the 25 % percentile) to 200 % (for performance at or above the 85 % percentile). For grants in 2020 and prior, the TSR of the Company's Common Stock is compared to the TSR of constituents in the Russell 3000 index. The target number of RSUs may be adjusted from 0 % to 150 % based on the TSR attainment levels defined by the Compensation Committee. The 100 % target payout is tied to performance at the 50 % percentile, with a payout curve ranging from 0 % (for performance less than the 25 % percentile) to 150 % (for performance at or above the 75 % percentile). Vesting is also subject to continued service requirements through the vesting date. For 555,790 Performance-Based RSUs granted in 2021, the awards cliff vest based on achievement of specified share prices of the Company's Common Stock at annual measurement dates over performance periods of 4.5 years to 4.8 years. The target number of RSUs may be adjusted from 0 to 1,333,334 based on the stock price attainment levels defined by the Company's Compensation Committee. The 555,790 RSU target payout is tied to a stock price of $ 47.50 , with a payout ranging from 0 RSUs (for a stock price less than $ 42.50 ) to 1,333,334 RSUs (for a stock price of $ 60.00 or greater). Stock options vest in tranches over a period of four years and expire ten years from the grant date. The fair value of each stock option award on the grant date is estimated using the Black-Scholes option-pricing model with the following assumptions: expected dividend yield, expected stock price volatility, weighted-average risk-free interest rate and weighted-average expected term of the options. The volatility assumption used in the Black-Scholes option-pricing model was based on a blend of peer group volatility and Company trading history as the Company did not have a sufficient trading history as a 72 stand-alone public company to rely exclusively on its own trading history. Future calculations may use the Company trading history. Additionally, due to an insufficient history with respect to stock option activity and post-vesting cancellations, the expected term assumption was based on the simplified method under GAAP, which is based on the vesting period and contractual term for each tranche of awards. The mid-point between the weighted-average vesting term and the expiration date is used as the expected term under this method. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. WillScot Mobile Mini has never declared or paid a cash dividend on common shares. Foreign Currency Translation and Transactions The Company’s reporting currency is the US Dollar (“USD”). Exchange rate adjustments resulting from foreign currency transactions are recognized in profit or loss, whereas effects resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive loss, which is a component of shareholders’ equity. The assets and liabilities of subsidiaries whose functional currency is different from the USD are translated into USD at exchange rates at the reporting date and income and expenses are translated using average exchange rates for the respective period. Exchange rate adjustments resulting from transactions in foreign currencies (currencies other than the Company entities’ functional currencies) are remeasured to the respective functional currencies using exchange rates at the dates of the transactions and are recognized in currency (gains) losses on the consolidated statements of operations. Foreign exchange gains and losses arising from a receivable or payable to a consolidated Company entity, the settlement of which is neither planned nor anticipated in the foreseeable future, are considered to form part of a net investment in the Company entity and are included within accumulated other comprehensive loss. Derivative Instruments and Hedging Activities The Company utilizes derivative financial instruments to manage its exposure to fluctuations in interest rates on variable rate debt and currency exchange rates. The Company does not use derivatives for trading or speculative purposes. The Company records derivatives on the balance sheet at fair value within prepaid expenses and other current assets and other non-current assets (if in an unrealized gain position) or within accrued liabilities and other non-current liabilities (if in an unrealized loss position). If a derivative is designated as a cash flow hedge and meets the highly effective threshold, the changes in the fair value of derivatives are recorded in accumulated other comprehensive loss. Amounts reported in accumulated other comprehensive loss related to the cash flow hedges are reclassified to earnings when the hedged item impacts earnings. For any derivative instruments not designated as hedging instruments, changes in fair value would be recognized in earnings in the period that the change occurs. The Company assesses, both at the inception of the hedge and on an ongoing quarterly basis, whether the derivatives designated as cash flow hedges are highly effective in offsetting the changes in cash flows of the hedged items. In the consolidated statements of cash flows, cash inflows and outflows related to derivative instruments are presented based on the underlying nature of the hedged items. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company enters into derivative financial ins truments only with counterparties with high credit ratings and with major financial institutions. The Company does not anticipate that any of the counterparties will fail to meet their obligations. Revenue Recognition A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Leasing and Services Revenue The majority of revenue is generated by rental income subject to the guidance in ASC 842. The remaining revenue is generated by performance obligations in contracts with customers for services or sale of units subject to the guidance in Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606"). Leasing Revenue Income from operating leases is recognized on a straight-line basis over the lease term. The Company's lease arrangements can include multiple lease and non-lease components. Examples of lease components include, but are not limited to, the lease of modular space and portable storage units and VAPS. Examples of non-lease components include, but are not limited to, the delivery, install ation, maintenance, and removal services commonly provided in a bundled transaction with the lease components. Arrangement consideration is allocated between lease deliverables and non-lease components based on the relative estimated selling (leasing) price of each deliverable. Estimated selling (leasing) price of the lease deliverables is based upon the estimated stand-alone selling price of the related performance obligations using an adjusted market approach. When leases and services are billed in advance, recognition of revenue is deferred until services are rendered. If equipment is returned prior to the contractually obligated period, the excess, if any, between the amount the customer is 73 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. Rental contracts with customers within our Modular segment, as defined in Note 18 , are generally based on a 28‑day or monthly rate and billing cycle. O perating lease minimum contractual terms generally range from 1 month to 60 months and our leases are customarily renewable on a month-to-month basis after their initial term. Operating lease minimum contractual terms averaged approximately 10 months across this segment's rental fleet for the year ended December 31, 2023 . Rental contracts with customers within the Storage segment, as defined in Note 18, are generally based on a 28 -day rate and billing cycle. The rental continues until cancelled by the Company or the customer. The Company records changes in estimated collectability directly against leasing revenue. The Company may use third parties to satisfy its performance obligations, including both the provision of VAPS and other services. To determine whether it is the principal or agent in the arrangement, the Company reviews each third-party relationship on a contract-by-contract basis. The Company is considered an agent when its role is to arrange for another entity to provide the VAPS and other services to the customer. In these instances, the Company does not control the rental unit or service before it is provided and the risk of performance is held by the third party. The Company is considered the principal when it controls the VAPS or other services prior to transferring control to the customer and retains the risk of performance. WillScot Mobile Mini may be a principal in the fulfillment of some leasing contracts and services elements and an agent for other elements within the same contract. Revenue is recognized on a gross basis when the Company is the principal in the arrangement and on a net basis when it is the agent. Services Revenue The Company generally has three non-lease service-related performance obligations in its contracts with customers: • Delivery and installation of the modular or portable storage unit; • Maintenance and other ad hoc services performed during the lease term; and • Removal services that occur at the end of the lease term. Consideration is allocated to each of these performance obligations within the contract based upon their estimated relative standalone selling prices using an adjusted market approach. Revenue from these activities is recognized as the services are performed. Sales Revenue Sales revenue is generated by the sale of new and rental units. Revenue from the sale of new and rental units is generally recognized at a point in time upon the transfer of control to the customer, which occurs when the unit is delivered and installed in accordance with the contract. Sales transactions constitute a single performance obligation. Other Matters The Company's non-lease revenues do not include material amounts of variable consideration, other than the variability noted for services arrangements expected to be performed beyond a twelve-month period. The Company's payment terms vary by the type and location of its customer and the product or services offered. The time between invoicing and when payment is due is not significant. While the Company may bill certain customers in advance, its contracts do not contain a significant financing component based on the short length of time between upfront billings and the performance of contracted services. For certain products, services, or customer types, the Company requires payment before the products or services are delivered to the customer. At December 31, 2023, current deferred revenue and customer deposits included deferred reven ue of $ 222.5 million and customer deposits of $ 2.0 million, respectively. At December 31, 2022, current deferred revenue and customer deposits included deferred revenue of $ 195.8 million and customer deposits of $ 8.0 million, respectively. Revenue is recognized net of sales tax billed to customers, which is subsequently remitted to governmental authorities. Leases as Lessee The Company leases real estate for certain of its branch offices, administrative offices, rental equipment storage properties, vehicles and equipment, and administrative operations. The Company determines if an arrangement is or contains a lease at inception. Leases are classified as either finance or operating at inception of the lease, with classification affecting the pattern of expense recognition in the income statement. Short-term leases, defined as leases with an initial term of 12 months or less, are not recorded on the balance sheet. Lease expense for short-term leases is recognized on a straight-line basis over the lease term. The Company has leases that contain both lease and non-lease components and has elected, as an accounting policy, to not separate lease components and non-lease components. Right of use ("ROU") assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The lease liability is calculated as the present value of the remaining minimum rental payments for existing leases using either the rate implicit in the lease or, if none exists, the Company's incremental borrowing rate, as the discount rate. The Company uses its incremental borrowing rate at commencement date in determining the present value of lease payments for those leases where the implicit rate is not known. The Company's incremental borrowing rate is a hypothetical rate based on its understanding of what would be the Company's secured credit rating. Variable lease payments are expensed in the period in which the 74 obligation for those payments is incurred. Variable lease payments include payments for common area maintenance, real estate taxes, management fees and insurance. Many of the Company’s real estate lease agreements include one or more options to extend the lease, which are not included in the minimum lease terms unless the Company is reasonably certain it will exercise the option. Additionally, the Comp any’s leases do not generally include options to terminate the lease prior to the end of the lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Advertising and Promotion Advertising and promotion costs, which are expensed as incurred, were $ 10.5 million , $ 8.5 million and $ 7.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. Shipping Costs The Company includes third-party costs to deliver rental equipment to customers in costs of leasing and services and cost of sales. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company records deferred tax assets to the extent it believes that it is more likely than not that these assets will be realized. In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent results of operations. Valuation allowances are recorded to reduce the deferred tax assets to an amount that will more likely than not be realized. The Company assesses the likelihood that each of the deferred tax assets will be realized. To the extent management believes realization of any deferred tax assets is not likely, the Company establishes a valuation allowance. When a valuation allowance is established or there is an increase in an allowance in a reporting period, tax expense is generally recorded in the Company’s consolidated statement of operations. Conversely, to the extent circumstances indicate that a valuation allowance is no longer necessary, that portion of the valuation allowance is reversed, which generally reduces the Company’s income tax expense. Deferred tax liabilities are recognized for the income taxes on the undistributed earnings of wholly-owned foreign subsidiaries unless such earnings are indefinitely reinvested, or will only be repatriated when possible to do so at minimal additional tax cost. Income tax relating to items recognized directly in equity is recognized in equity and not in profit (loss) for the year. In accordance with applicable authoritative guidance, the Company accounts for uncertain income tax positions using a benefit recognition model with a two-step approach; a more-likely-than-not recognition criterion; and a measurement approach that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. If it is not more-likely-than-not that the benefit of the tax position will be sustained on its technical merits, no benefit is recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company classifies interest on tax deficiencies and income tax penalties within income tax expense. The Company accounts for any impacts of the Global Intangible Low-Taxed Income ("GILTI") in the period in which they are incurred. Fair Value Measurements The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair va lue measurement. The inputs are prioritized into three levels that may be used to measure fair value. See further discussion of the levels in Note 15. Warrants The Company accounted 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 were subject to remeasurement at each balance sheet date and transaction date with changes in the estimated fair values of the common stock warrant liabilities and gains and losses on extinguishment of common stock warrant liabilities reported in the consolidated statements of operations. Effective November 29, 2022 , no warrants were outstanding. 75 Recently Issued and Adopted Accounting Standards Recently Issued Accounting Standards ASU 2023-07. Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 expands the breadth and frequency of segment disclosures, requiring disclosure of (i) significant segment expenses, (ii) other segment items, (iii) the chief operating decision maker's title and position, (iv) how the chief operating decision maker uses the reported measures of a segment's profit or loss and (v) interim disclosure of all segment profit, loss and asset disclosures currently required annually. ASU 2023-07 clarifies that a public entity may report one or more measures of segment profit or loss and requires that single reportable segment entities provide all required segment disclosures. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. ASU 2023-09. Income Taxes (Topic 740): Improvements to Income Tax Disclosures In December 2023, the FASB issued Accounting Standards Update No. 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires entities to disclose more detailed information in their reconciliation of their statutory tax rate to their effective tax rate. Public business entities (PBEs) are required to provide this incremental detail in a numerical, tabular format, while all other entities will do so through enhanced qualitative disclosures. The ASU also requires entities to disclose more detailed information about income taxes paid, including by jurisdiction; pretax income (or loss) from continuing operations; and income tax expense (or benefit). ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. Recently Adopted Accounting Standards ASU 2021-08. Business Combinations (Topic 815): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers In October 2021, the FASB issued Accounting Standards Update No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). ASU 2021-08 requires that an acquirer recognize and measure contract assets and liabilities acquired in a business combination in accordance with FASB Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606"). The Company adopted ASU 2021-08 on January 1, 2023 on a prospective basis. The adoption of ASU 2021-08 did not have a material impact on the Company's financial statements or related disclosures. NOTE 2 - Business Combinations and Acquisitions Business Combinations During the year ended December 31, 2023, the Company acquired a 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 national provider of premium large clearspan structures. 76 The aggregate purchase price paid for these acquisitions and the opening balance sheet were as follows: (in thousands) Purchase Price: Cash used in acquisitions, net of cash acquired of $ 3,245 $ 411,593 Allocated as follows: Trade receivables 8,452 (a) Inventories 2,017 Deferred tax assets 931 Rental equipment 214,936 (b) Property, plant, and equipment 3,376 Operating lease assets 5,028 Intangibles - customer relationships 26,408 (b) Other assets 3,669 Accounts payable ( 276 ) Deferred revenue ( 11,635 ) Operating lease liabilities ( 3,633 ) Other liabilities ( 2,182 ) Total identifiable net assets 247,091 Goodwill 164,502 Total net assets acquired $ 411,593 (a) As of the acquisition date, the fair value of accounts receivable was $ 8.5 million, and the gross contractual amount was $ 11.5 million. The Company analyzed information available at the time of acquisition in estimating uncollectible receivables and the fair value of acquired receivables. (b) The initial fair value assumptions used included preliminary estimates of the replacement cost of rental equipment, discount rates, royalty rates, and customer attrition rates which have been updated in preparing these valuations and the underlying assets have been adjusted from those previously recorded accordingly. Rental equipment and intangible assets were increased by approximately $ 12.9 million and $ 26.4 million from amounts previously reported, respectively. Goodwill recognized is attributable to expected operating synergies, assembled workforces, and the going concern value of the acquired businesses. Goodwill recorded for these acquisitions is deductible for tax purposes. Revenue and earnings from business combinations are not available, as the businesses are integrated into the Company's centralized financial and operational processes following acquisition. Asset Acquisitions During 2023, the Company acquired certain assets and liabilities of five smaller entities, which consisted primarily of approximately 1,800 storage units and 700 modular units for $ 150.0 million in cash. As of the acquisition dates, the fair value of rental equipment acquired was $ 147.6 million. Integration Costs The Company records integration costs related to business combinations, asset acquisitions and the Merger within selling, general and administrative ("SG&A") expense. The Company incurred $ 10.4 million, $ 15.5 million and $ 28.4 million in integration costs for business combinations, asset acquisitions and the Merger for the years ended December 31, 2023, 2022 and 2021, respectively. NOTE 3 - Discontinued Operations Tank and Pump Divestiture On September 30, 2022, the Company sold its former Tank and Pump segment for $ 321.9 million. Exiting the former Tank and Pump segment represented the Company’s strategic shift to concentrate its operations on its core modular and storage businesses. Results for the former Tank and Pump segment are reported in income from discontinued operations within the consolidated statements of operations for all periods presented. UK Storage Solutions Divestiture On January 31, 2023, the Company sold its former UK Storage Solutions segment for $ 418.1 million. Exiting the UK Storage Solutions segment represented the Company’s strategic shift to concentrate its operations on its core modular and storage businesses in North America. Results for the former UK Storage Solutions segment are reported in income from discontinued operations within the consolidated statements of operations for all periods presented. The carrying value of the UK Storage Solutions segment's assets and liabilities are presented within assets and liabilities held for sale on the consolidated balance sheet as of December 31, 2022. 77 The following tables present the results of the former Tank and Pump segment and the former UK Storage Solutions segment as reported in income from discontinued operations within the consolidated statements of operations, and the carrying value of the former UK Storage Solutions segment's assets and liabilities as presented within assets and liabilities held for sale on the consolidated balance sheet as of December 31, 2022. The 2022 results for the former Tank and Pump segment represent results for the nine months ended September 30, 2022 as the Company sold the former Tank and Pump segment on September 30, 2022. The 2023 results for the former UK Storage Solutions segment represent results for one month as the Company sold the former UK Storage Solutions segment on January 31, 2023. Year Ended December 31, 2023 (in thousands) UK Storage Solutions Revenues: Leasing and services revenue: Leasing $ 6,389 Delivery and installation 1,802 Sales revenue: New units 54 Rental units 449 Total revenues 8,694 Costs: Costs of leasing and services: Leasing 1,407 Delivery and installation 1,213 Costs of sales: New units 38 Rental units 492 Gross profit 5,544 Expenses: Selling, general and administrative 1,486 Other income, net ( 1 ) Operating income 4,059 Interest expense 56 Income from discontinued operations before income tax 4,003 Gain on sale of discontinued operations 175,708 Income tax expense from discontinued operations 45,468 Income from discontinued operations $ 134,243 Other selected data: Adjusted EBITDA from discontinued operations $ 4,124 In January 2023, a $ 0.4 million adjustment was made to the gain on sale of the former Tank and Pump segment due to the final contractual working capital adjustment. Including this adjustment, the total gain on sale of discontinued operations was $ 176.1 million for the year ended December 31, 2023 . 78 Year Ended December 31, 2022 (in thousands) Tank and Pump UK Storage Solutions Total Revenues: Leasing and services revenue: Leasing $ 65,572 $ 79,772 $ 145,344 Delivery and installation 27,665 22,876 50,541 Sales revenue: New units 2,202 1,106 3,308 Rental units 917 1,455 2,372 Total revenues 96,356 105,209 201,565 Costs: Costs of leasing and services: Leasing 13,828 16,737 30,565 Delivery and installation 23,285 14,867 38,152 Costs of sales: New units 1,636 738 2,374 Rental units 310 1,012 1,322 Depreciation of rental equipment 8,145 4,254 12,399 Gross profit 49,152 67,601 116,753 Expenses: Selling, general and administrative 18,045 21,795 39,840 Other depreciation and amortization 6,103 5,906 12,009 Currency losses, net — 138 138 Other expense, net 4 ( 7 ) ( 3 ) Operating income 25,000 39,769 64,769 Interest expense 512 789 1,301 Income from discontinued operations before income tax 24,488 38,980 63,468 Income tax expense from discontinued operations 843 34,882 35,725 Gain on sale of discontinued operations 35,456 — $ 35,456 Income from discontinued operations $ 59,101 $ 4,098 $ 63,199 Other selected data: Adjusted EBITDA from discontinued operations $ 37,016 $ 48,734 $ 85,750 79 Year Ended December 31, 2021 (in thousands) Tank and Pump UK Storage Solutions Total Revenues: Leasing and services revenue: Leasing $ 77,527 $ 82,106 $ 159,633 Delivery and installation 29,530 24,023 53,553 Sales revenue: New units 2,355 3,534 5,889 Rental units 1,479 1,363 2,842 Total revenues 110,891 111,026 221,917 Costs: Costs of leasing and services: Leasing 17,045 17,440 34,485 Delivery and installation 25,057 14,271 39,328 Costs of sales: New units 1,672 2,357 4,029 Rental units 536 1,287 1,823 Depreciation of rental equipment 14,319 4,428 18,747 Gross profit 52,262 71,243 123,505 Expenses: Selling, general and administrative 22,194 24,974 47,168 Other depreciation and amortization 9,366 6,887 16,253 Restructuring costs 2 — 2 Currency gains, net — 121 121 Other expense, net 11 54 65 Operating income 20,689 39,207 59,896 Interest expense 779 850 1,629 Income from discontinued operations before income tax 19,910 38,357 58,267 Income tax expense from discontinued operations 5,277 7,741 13,018 Income from discontinued operations $ 14,633 $ 30,616 $ 45,249 Other selected data: Adjusted EBITDA from discontinued operations $ 41,750 $ 49,039 $ 90,789 80 December 31, 2022 (in thousands) UK Storage Solutions Assets Cash and cash equivalents $ 10,384 Trade receivables, net of allowances for doubtful accounts of $ 300 15,991 Inventories 3,058 Prepaid expenses and other current assets 1,787 Rental equipment, net 165,853 Property, plant and equipment, net 20,645 Operating lease assets 15,134 Goodwill 58,144 Intangible assets, net 6,414 Other non-current assets 1,832 Total assets held for sale $ 299,242 Liabilities Accounts payable $ 4,515 Accrued expenses 3,273 Accrued employee benefits 1,009 Deferred revenue and customer deposits 6,850 Deferred tax liabilities 29,737 Operating lease liabilities 15,192 Other non-current liabilities 6,278 Total liabilities held for sale $ 66,854 For the years ended December 31, 2022 and 2021 , significant operating and investing items related to the former Tank and Pump segment were as follows: Years Ended December 31, (in thousands) 2022 2021 Operating activities of discontinued operations: Depreciation and amortization $ 14,248 $ 23,685 Investing activities of discontinued operations: Proceeds from sale of rental equipment $ 918 $ 1,480 Purchases of rental equipment and refurbishments $ ( 21,831 ) $ ( 17,747 ) Proceeds from sale of property, plant and equipment $ — $ 388 Purchases of property, plant and equipment $ ( 525 ) $ ( 1,743 ) 81 The following table presents reconciliations of Income from discontinued operations before income tax to Adjusted EBITDA from discontinued operations for the former Tank and Pump segment for the years ended December 31, 2022 and 2021 , respectively. See Note 18 for further information regarding Adjusted EBITDA. Years Ended December 31, (in thousands) 2022 2021 Income from discontinued operations $ 59,101 $ 14,633 Gain on sale of discontinued operations 35,456 — Income tax expense from discontinued operations 843 5,277 Income from discontinued operations before income tax and gain on sale 24,488 19,910 Interest expense 512 779 Depreciation and amortization 14,248 23,685 Restructuring costs, lease impairment expense and other related charges — 2 Integration costs — 14 Stock compensation expense 18 222 Other ( 2,250 ) ( 2,862 ) Adjusted EBITDA from discontinued operations $ 37,016 $ 41,750 For the years ended December 31, 2023, 2022 and 2021 , significant operating and investing items related to the UK Storage Solutions segment were as follows: Years Ended December 31, (in thousands) 2023 2022 2021 Operating activities of discontinued operations: Depreciation and amortization $ — $ 10,160 $ 11,315 Investing activities of discontinued operations: Proceeds from sale of rental equipment $ 514 $ 1,455 $ 1,363 Purchases of rental equipment and refurbishments $ ( 371 ) $ ( 23,931 ) $ ( 27,830 ) Proceeds from sale of property, plant and equipment $ 8 $ 504 $ 387 Purchases of property, plant and equipment $ ( 64 ) $ ( 3,752 ) $ ( 1,680 ) The following table presents reconciliations of Income from discontinued operations before income tax to Adjusted EBITDA from discontinued operations for the UK Storage Solutions segment for the years ended December 31, 2023, 2022 and 2021 , respectively. See Note 18 for further information regarding Adjusted EBITDA. Years Ended December 31, (in thousands) 2023 2022 2021 Income from discontinued operations $ 134,243 $ 4,098 $ 30,616 Gain on sale of discontinued operations 175,708 — — Income tax expense from discontinued operations 45,468 34,882 7,741 Income from discontinued operations before income tax and gain on sale 4,003 38,980 38,357 Interest expense 56 789 850 Depreciation and amortization — 10,160 11,315 Currency losses, net — 138 121 Stock compensation expense ( 196 ) 197 39 Other 261 ( 1,530 ) ( 1,643 ) Adjusted EBITDA from discontinued operations $ 4,124 $ 48,734 $ 49,039 82 NOTE 4 - Revenue Revenue Disaggregation Geographic Areas The Company had total revenue in the following geographic areas for the years ended December 31, as follows: Years Ended December 31, (in thousands) 2023 2022 2021 US $ 2,219,561 $ 1,998,796 $ 1,542,076 Canada 120,123 125,536 116,070 Mexico 25,083 18,291 14,834 Total revenues $ 2,364,767 $ 2,142,623 $ 1,672,980 Major Product and Service Lines Equipment leasing is the Company's core business and the primary driver of the Company's revenue and cash flows. This includes turnkey temporary modular space and portable storage units along with VAPS, which include furniture, steps, ramps, basic appliances, internet connectivity devices, integral tool racking, heavy duty capacity shelving, workstations, electrical and lighting products and other items used by customers in connection with the Company's products. The Company also offers its lease customers a damage waiver program that protects them in case the leased unit is damaged. Leasing is complemented by new unit sales and sales of rental units. In connection with its leasing and sales activities, the Company provides services including delivery and installation, maintenance and ad hoc services and removal services at the end of lease transactions. The Company’s revenue by major product and service line for the years ended December 31, was as follows: Years Ended December 31, (in thousands) 2023 2022 2021 Modular space leasing revenue $ 953,822 $ 840,926 $ 697,852 Portable storage leasing revenue 396,781 361,197 233,868 VAPS and third party leasing revenues (a) 391,948 343,625 263,021 Other leasing-related revenue (b) 91,384 75,942 57,749 Leasing revenue 1,833,935 1,621,690 1,252,490 Delivery and installation revenue 437,179 429,152 321,129 Total leasing and services revenue 2,271,114 2,050,842 1,573,619 New unit sales revenue 48,129 40,338 46,993 Rental unit sales revenue 45,524 51,443 52,368 Total revenues $ 2,364,767 $ 2,142,623 $ 1,672,980 (a) Incl udes $ 23.9 million, $ 25.3 million, and $ 17.1 million of VAPS service revenue for the years ended December 31, 2023, 2022 and 2021, respectively. (b) Includes primarily damage billings, delinquent payment charges, and other processing fees. Leasing and Services Revenue The majority of revenue ( 77 %, 75 % , and 74 % for the years ended December 31, 2023, 2022 and 2021, respectively) is generated by lease income subject to the guidance of ASC 842. The remaining revenue is generated by performance obligations in contracts with customers for services or sale of units subject to the guidance in ASC 606. 83 At December 31, 2023 and for the years ended December 31, 2024 through 2028 and thereafter, future committed leasing revenues under non-cancelable operating leases with the Company’s customers, excluding revenue from delivery and installation and potential lease extensions, were as follows: (in thousands) Operating Leases 2024 $ 367,965 2025 129,048 2026 42,698 2027 17,988 2028 7,887 Thereafter 5,399 Total $ 570,985 Receivables The Company manages credit risk associated with its accounts receivables at the customer level. Because the same customers generate the revenues that are accounted for under both ASC 606 and ASC 842, the discussions below on credit risk and the Company's allowance for credit losses address the Company's total revenues. Concentration of credit risk with respect to the Company's receivables is limited because of a large number of geographically diverse customers who operate in a variety of end user markets. No single customer accounted for more than 1.0 % and 1.7 % of the Company’s receivables at December 31, 2023 and 2022, respectively. The Company's top five customers with the largest open receivables balances represented 4.3 % and 5.4 % of the total receivables balance as of December 31, 2023 and 2022, respectively. The Company manages credit risk through credit approvals, credit limits, and other monitoring procedures. The Company's allowance for credit losses reflects its estimate of the amount of receivables that it will be unable to collect . The estimated losses are calculated using the loss rate method based upon a review of outstanding receivables, related aging, and historical collection experience. T he Company's estimates reflect changing circumstances, and the Company may be required to increase or decrease its allowance. During the years ended December 31, 2023, 2022 and 2021, the Company recognized bad debt expense to reflect changes in the allowance for credit losses of $ 23.4 million, $ 10.4 million, and $ 16.4 million, respectively, within SG&A expense in its consolidated statements of operations. For the years ended December 31, 2023, 2022 and 2021, the provision for credit losses included $ 25.2 million, $ 23.7 million and $ 19.8 million, respectively, recorded as a reduction to revenue for the provision of specific receivables whose collection was not considered probable. Contract Assets and Liabilities When customers are billed in advance for services, the Company defers recognition of revenue until the related services are performed, which generally occurs at the end of the contract. The balance sheet classification of deferred revenue is determined based on the contractual lease term. For contracts that continue beyond their initial contractual lease term, revenue continues to be deferred until the services are performed. As of December 31, 2023 and 2022, the Company had approximately $ 124.1 million and $ 102.2 million, respectively, of deferred revenue related to services billed in advance. During the years ended December 31, 2023, 2022 and 2021, $ 67.6 million, $ 47.2 million and $ 38.8 million, respectively, of deferred revenue billed in advance was recognized as revenue . The Company does not have material contract assets, and it did not recognize any material impairments of any contract assets. The Company's uncompleted contracts with customers have unsatisfied (or partially satisfied) performance obligations. For the future services revenues that are expected to be recognized within twelve months, the Company has elected to utilize the optional disclosure exemption made available regarding transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations. The transaction price for performance obligations that will be completed in greater than twelve months is variable based on the market rate in place at the time those services are provided, and therefore, the Company is applying the optional exemption to omit disclosure of such amounts. The primary costs to obtain contracts for new and rental unit sales with the Company's customers are commissions. The Company pays its sales force commissions on the sale of new and rental units. For new and rental unit sales, the period benefited by each commission is less than one year. As a result, the Company has applied the practical expedient for incremental costs of obtaining a sales contract and expenses commissions as incurred. 84 NOTE 5 - Leases As of December 31, 2023, the undiscounted future lease payments for operating and finance lease liabilities were as follows: (in thousands) Operating Leases Finance Leases 2024 $ 69,429 $ 23,927 2025 60,490 23,550 2026 47,465 23,234 2027 36,903 19,982 2028 26,212 22,473 Thereafter 48,153 22,138 Total lease payments 288,652 135,304 Less: interest ( 43,407 ) ( 18,205 ) Present value of lease liabilities $ 245,245 $ 117,099 Finance lease liabilities are included within long-term debt and current portion of long-term debt on the consolidated balance sheets. The Company’s lease activity during the years ended December 31, 2023, 2022, and 2021 was as follows: Years Ended December 31, Financial Statement Line (in thousands) 2023 2022 2021 Finance Lease Expense Amortization of finance lease assets $ 16,945 $ 13,900 $ 12,602 Interest on obligations under finance leases 3,777 1,899 1,406 Total finance lease expense $ 20,722 $ 15,799 $ 14,008 Operating Lease Expense Fixed lease expense Cost of leasing and services $ 1,396 $ 2,797 $ 3,979 Selling, general and administrative 67,374 60,017 56,005 Short-term lease expense Cost of leasing and services 26,010 32,947 22,335 Selling, general and administrative 1,789 1,792 794 Variable lease expense Cost of leasing and services 2,109 5,388 7,794 Selling, general and administrative 8,380 7,289 5,134 Total operating lease expense $ 107,058 $ 110,230 $ 96,041 Supplemental cash flow information related to leases for the years ended December 31, 2023, 2022, and 2021 were as follows: Years Ended December 31, Supplemental Cash Flow Information (in thousands) 2023 2022 2021 Cash paid for the amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 68,889 $ 61,418 $ 58,931 Operating cash outflows from finance leases $ 3,715 $ 1,895 $ 1,432 Financing cash outflows from finance leases $ 16,510 $ 15,159 $ 12,476 Right of use assets obtained in exchange for lease obligations $ 95,897 $ 55,005 $ 66,887 Assets obtained in exchange for finance leases $ 58,737 $ 29,803 $ 19,435 85 Weighted-average remaining operating lease terms and the weighted average discount rates as of December 31 were as follows: Lease Terms and Discount Rates 2023 2022 Weighted-average remaining lease term - operating leases 5.4 years 5.8 years Weighted-average discount rate - operating leases 5.9 % 5.4 % Weighted-average remaining lease term - finance leases 5.0 years 5.1 years Weighted-average discount rate - finance leases 4.8 % 3.4 % NOTE 6 - Inventories Inv entories at December 31, consisted of the following: (in thousands) 2023 2022 Raw materials $ 43,071 $ 38,611 Finished units 4,335 2,419 Inventories $ 47,406 $ 41,030 NOTE 7 - Rental Equipment, net Rental equipment, net at December 31 consisted of the following: (in thousands) 2023 2022 Modular space units $ 3,541,451 $ 3,197,779 Portable storage units 1,009,059 849,193 Value added products 204,933 203,444 Total rental equipment 4,755,443 4,250,416 Less: accumulated depreciation ( 1,374,128 ) ( 1,173,129 ) Rental equipment, net $ 3,381,315 $ 3,077,287 NOTE 8 – Property, Plant and Equipment, net Property, plant and equipment, net at December 31 consisted of the following: (in thousands) 2023 2022 Land, buildings, and leasehold improvements $ 178,117 $ 174,322 Vehicles and equipment 233,793 167,337 Office furniture, fixtures and software 109,460 106,747 Total property, plant and equipment 521,370 448,406 Less: accumulated depreciation ( 180,483 ) ( 143,747 ) Property, plant and equipment, net $ 340,887 $ 304,659 Depreciation expense related to property, plant and equipment w as $ 47.1 million, $ 38.6 million, and $ 37.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. The depreciation expense for these assets was presented in other depreciation and amortization in the consolidated statements of operations. As of December 31, 2023 and 2022, the gross cost of property, plant and equipment assets under finance leases was $ 133.3 million and $ 84.7 million, respectively, with related accumulated depreciation of $ 40.8 million and $ 26.9 million, respectively. 86 NOTE 9 - Goodwill and Intangible Assets Goodwill Changes in the carrying amount of goodwill were as follows: (in thousands) Modular Storage Total Balance at December 31, 2021 $ 521,049 $ 492,552 $ 1,013,601 Effects of movements in foreign exchange rates ( 2,172 ) — ( 2,172 ) Balance at December 31, 2022 518,877 492,552 1,011,429 Additions from acquisitions 61,111 103,391 164,502 Effects of movements in foreign exchange rates 704 — 704 Balance at December 31, 2023 $ 580,692 $ 595,943 $ 1,176,635 The Company conducted its annual impairment test of goodwill as of October 1, 2023 and determined that there was no impairment of goodwill identified. Accumulated historical goodwill impairment losses wer e $ 792.8 million and pertain to the Modular segment (as defined in Note 18) prior to Double Eagle Acquisition Corporation's acquisition of Williams Scotsman International, Inc. in 2017. There were no goodwill impairments recorded for the years ended December 31, 2023, 2022 and 2021. Intangible Assets Intangible assets other than goodwill at December 31, consisted of the following: December 31, 2023 (in thousands) Weighted average remaining life (in years) Gross carrying amount Accumulated amortization Net book value Intangible assets subject to amortization: Customer Relationships 4.5 $ 214,408 $ ( 84,324 ) $ 130,084 Technology 2.5 1,500 ( 875 ) 625 Indefinite-lived intangible assets: Trade name – Mobile Mini 164,000 — 164,000 Trade name – WillScot 125,000 — 125,000 Total intangible assets other than goodwill $ 504,908 $ ( 85,199 ) $ 419,709 December 31, 2022 (in thousands) Weighted average remaining life (in years) Gross carrying amount Accumulated amortization Net book value Intangible assets subject to amortization: Customer Relationships 5.5 $ 188,000 $ ( 58,750 ) $ 129,250 Technology 3.5 1,500 ( 625 ) 875 Indefinite-lived intangible assets: Trade name - Mobile Mini 164,000 — 164,000 Trade name - WillScot 125,000 — 125,000 Total intangible assets other than goodwill $ 478,500 $ ( 59,375 ) $ 419,125 For the years ended December 31, 2023, 2022 and 2021, the aggregate amount recorded to depreciation and amortization expense for intangible assets subject to amortization was $ 25.8 million, $ 23.8 million and $ 24.3 million, respectively. 87 As of December 31, 2023, the expected future amortization expense for intangible assets is as follows: (in thousands) Amortization Expense 2024 $ 29,122 2025 29,122 2026 28,997 2027 28,684 2028 14,784 Total $ 130,709 NOTE 10 - Debt The carrying value of debt outstanding at December 31 consisted of the following: (in thousands, except rates) Interest rate Year of maturity 2023 2022 2025 Secured Notes 6.125 % 2025 $ 522,735 $ 520,350 ABL Facility Varies 2027 1,929,259 1,988,176 2028 Secured Notes 4.625 % 2028 494,500 493,470 2031 Secured Notes 7.375 % 2031 493,709 — Finance Leases Varies Varies 117,099 74,370 Total debt 3,557,302 3,076,366 Less: current portion of long-term debt 18,786 13,324 Total long-term debt $ 3,538,516 $ 3,063,042 Maturities of debt, including finance leases, during the years subsequent to December 31, 2023 are as follows: (in thousands) 2024 $ 23,927 2025 550,050 2026 23,234 2027 1,975,992 2028 522,473 Thereafter 522,138 Total $ 3,617,814 The Company records de bt issuance costs as offsets against the carrying value of the related debt . These debt costs are amortized and included as part of interest expense over the remaining contractual terms of those debt instruments for each of the next five years as follows: (in thousands) Debt issuance cost amortization 2024 $ 11,891 2025 $ 10,664 2026 $ 9,555 2027 $ 5,852 2028 $ 1,677 Thereafter $ 2,667 Asset Backed Lending Facility On July 1, 2020, certain subsidiaries of the Company entered into an asset-based credit agreement (the "ABL Facility") that initially provided for revolving credit facilities in the aggregate principal amount of up to $ 2.4 billion, consisting of: (i) a senior secured asset-based US dollar revolving credit facility in the aggregate principal amount of $ 2.0 billion and (ii) a $ 400.0 million senior secured asset-based multicurrency revolving credit facility available to be drawn in US Dollars, Canadian Dollars, British Pounds Sterling or Euros. The ABL Facility was initially scheduled to mature on July 1, 2025. 88 On June 30, 2022, certain subsidiaries of the Company entered into an amendment to the ABL Facility to, among other things, extend the expiration date until June 30, 2027 and increase the aggregate principal amount of the revolving credit facilities to $ 3.7 billion, consisting of: (i) a senior secured asset-based US dollar revolving credit facility in the aggregate principal amount of $ 3.3 billion (the “US Facility”), (ii) a $ 400.0 million senior secured asset-based multicurrency revolving credit facility (the "Multicurrency Facility"), available to be drawn in US Dollars, Canadian Dollars, British Pounds Sterling or Euros, and (iii) an accordion feature that permits the Company to increase the lenders' commitments in an aggregate amount not to exceed the greater of $ 750.0 million and the amount of suppressed availability as defined in the ABL Facility, subject to the satisfaction of customary conditions including lender approval, plus any voluntary prepayments that are accompanied by permanent commitment reductions under the ABL facility. The amendment also converted the interest rate for borrowings denominated in US Dollars from a LIBOR-based rate to a Term SOFR-based rate with an interest period of one month and adjusted the applicable margins. The applicable margin for Canadian BA rate, Term SOFR, British Pounds Sterling and Euros loans is 1.50 %. The facility includes a credit spread adjustment of 0.10 % in addition to the applicable margin. The applicable margin for base rate and Canadian Prime Rate loans is 0.50 %. The applicable margins are subject to one step down of 0.25 % based on excess availability or one step up of 0.25 % based on the Company's leverage ratio. The ABL Facility requires the payment of a commitment fee on the unused available borrowings of 0.20 % annually. At December 31, 2023, the weighted average interest rate for borrowings under the ABL Facility, as adjusted for the effects of the 2023 interest rate swap agreements, was 6.24 %. Refer to Note 14 for a more detailed discussion on interest rate management. Borrowing availability under the US Facility and the Multicurrency Facility is equal to the lesser of (i) the aggregate Revolver Commitments and (ii) the Borrowing Base ("Line Cap"). At December 31, 2023, the Line Cap was $ 3.2 billion and the Borrowers had approximately $ 1.2 billion of available borrowing capacity under the ABL Facility, including $ 1.0 billion under the US Facility and $ 189.4 million under the Multicurrency Facility. Borrowing capacity under the ABL Facility is made available for up to $ 220.0 million letters of credit and $ 220.0 million of swingline loans. At December 31, 2023, the available capacity was $ 191.5 million of letters of credit and $ 216.2 million of swingline loans. At December 31, 2023, letters of credit and bank guarantees carried fees of 1.625 %. The Company had issued $ 28.5 million of standby letters of credit under the ABL Facility at December 31, 2023. The Company had approximately $ 2.0 billion outstanding principal under the ABL Facility at December 31, 2023. Debt issuance costs of $ 26.8 million and $ 31.8 million were included in the carrying value of the ABL Facility at December 31, 2023 and December 31, 2022 . As of December 31, 2022, the Company had no outstanding principal borrowings on the Multicurrency Facility and $ 2.5 million of related debt issuance costs, which were recorded in other non-current assets on the consolidated balance sheets. The obligations of the US Borrowers are unconditionally guaranteed by Holdings and each existing and subsequently acquired or organized direct or indirect wholly-owned US organized restricted subsidiary of Holdings, other than excluded subsidiaries (together with Holdings, the "US Guarantors"). The obligations of the Multicurrency Borrowers are unconditionally guaranteed by the US Borrowers and the US Guarantors, and each existing and subsequently acquired or organized direct or indirect wholly-owned Canadian organized restricted subsidiary of Holdings other than certain excluded subsidiaries (together with the US Guarantors, the "ABL Guarantors"). Senior Secured Notes On June 15, 2020, the Company completed a private offering of $ 650.0 million in aggregate principal amount of its 6.125 % senior secured notes due 2025 (the "2025 Secured Notes") to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended ("Rule 144A"). The 2025 Secured Notes mature on June 15, 2025 and bear interest at a rate of 6.125 % per annum. Interest is payable semi-annually on June 15 and December 15 of each year. In 2021, using cash on hand and borrowings on the ABL Facility, the Company redeemed $ 123.5 million of its 2025 Secured Notes and recorded a loss on extinguishment of debt in the consolidated statement of operations of $ 6.0 million comprised of a redemption premium of $ 3.7 million and write off of unamortized deferred financing fees of $ 2.3 million. As of December 31, 2023 the aggregate principal amount outstanding for the 2025 Secured Notes was $ 526.5 million. Unamortized deferred financing costs pertaining to the 2025 Secured Notes were $ 3.8 million as of December 31, 2023. On August 25, 2020, the Company completed a private offering of $ 500.0 million in aggregate principal amount of 4.625 % senior secured notes due 2028 (the "2028 Secur ed Notes") to qualified institutional buyers pursuant to Rule 144A . T he 2028 Secured Notes mature on August 15, 2028 and bear interest at a rate of 4.625 % per annum. Interest is payable semi-annually on August 15 and February 15 of each year. Unamortized deferred financing costs pertaining to the 2028 Secured Notes were $ 5.5 million as of December 31, 2023. On September 25, 2023, 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 . P roceeds were used to repay approximately $ 494.0 million of outstanding indebtedness under the ABL Facility and certain fees and expenses. T he 2031 Secured N otes mature on October 1, 2031 and bear interest at a rate of 7.375 % per annum. Interest is payable semi-annually on April 1 and October 1 of each year, beginning April 1, 2024. Unamortized deferred financing costs pertaining to the 2031 Secured Notes were $ 6.3 million as of December 31, 2023. The tables below depict the redemption prices (expressed as percentages of the principal amount) of the notes if redeemed during the twelve-month period commencing on the dates below, plus accrued and unpaid interest, if any, to but not including the date of redemption. 89 2025 Secured Notes Year Redemption Price June 15, 2023 101.531 % June 15, 2024 and thereafter 100.000 % 2028 Secured Notes Year Redemption Price August 15, 2023 102.313 % August 15, 2024 101.156 % August 15, 2025 and thereafter 100.000 % 2031 Secured Notes The Company may redeem the 2031 Secured Notes at any time before October 1, 2026 at a redemption price equal to 100 % of the principal amount thereof, plus a customary make whole premium for the 2031 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date. Before October 1, 2026, the Company may redeem up to 40 % of the aggregate principal amount of the 2031 Secured Notes at a price equal to 107.375 % of the principal amount of the 2031 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date with the net proceeds of certain equity offerings. At any time prior to October 1, 2026, the Company may also redeem up to 10 % of the aggregate principal amount at a redemption price equal to 103 % of the principal amount of the 2031 Secured Notes being redeemed during each twelve-month period commencing with the issue date, plus accrued and unpaid interest, if any, to but not including the redemption date. Year Redemption Price October 1, 2026 103.688 % October 1, 2027 101.844 % October 1, 2028 and thereafter 100.000 % The 2025 Secured Notes, the 2028 Secured Notes, and the 2031 Secured Notes (collectively, “the Secured Notes”) are unconditionally guaranteed by certain subsidiaries of the Company (collectively, “the Note Guarantors”). WillScot Mobile Mini is not a guarantor of the Secured Notes. The Note Guarantors are guarantors or borrowers under the ABL Facility. To the extent lenders under the ABL Facility release the guarantee of any Note Guarantor, such Note Guarantor will also be released from obligations under the Secured Notes. The Secured Notes and related guarantees are secured by a second priority security interest in substantially the same assets of Williams Scotsman, Inc., a wholly owned indirect subsidiary of the Company (“WSI”), and the Note Guarantors securing the ABL Facility. Upon the repayment of the 2025 Secured Notes and the 2028 Secured Notes, if the lien associated with the ABL Facility represents the only lien outstanding on the collateral under the 2031 Secured Notes (other than certain permitted), the collateral securing the 2031 Secured Notes will be released and the 2031 Secured Notes will become unsecured subject to satisfaction of customary conditions. Finance Leases The Company maintains finance leases primarily related to transportation related equipment. At December 31, 2023 and December 31, 2022, obligations under the finance leases were $ 117.1 million and $ 74.4 million, respectively. The Company is in compliance with all debt covenants and restrictions for the aforementioned debt instruments for the year ended December 31, 2023. NOTE 11 - Equity Preferred Stock WillScot Mobile Mini's certificate of incorporation authorizes the issuance of 1,000,000 shares of Preferred Stock with a par value of $ 0.0001 per share. As of December 31, 2023 and 2022, the Company had zero shares of Preferred Stock issued and outstanding. Common Stock WillScot Mobile Mini's certificate of incorporation authorizes the issuance of 500,000,000 shares of Common Stock with a par value of $ 0.0001 per share. The Company had 189,967,135 shares of Common Stock issued and outstanding as of December 31, 2023. The outstanding shares of the Company's Common Stock are duly authorized, validly issued, fully paid and non-assessable. In connection with stock compensation vesting and stock option exercises described in Note 16, and the warrant exercises described in Note 12 , the Company issued 549,272 , 3,847,905 and 6,752,647 shares of Common Stock during the years ended December 31, 2023, 2022 and 2021, respectively. 90 Stock Repurchase Program In May 2023, the Board of Directors approved a reset of the share repurchase program authorizing the Company to repurchase up to $ 1.0 billion of its outstanding shares of Common Stock and equivalents. The stock repurchase program does not obligate the Company to purchase any particular number of shares, and the timing and exact amount of any repurchases will depend on various factors, including market pricing, business, legal, accounting, and other considerations. The Company may repurchase its shares in open market transactions or through privately negotiated transactions in accordance with federal securities laws, at the Company's discretion. The repurchase program, which has no expiration date, may be increased, suspended, or terminated at any time. The program is expected to be implemented over the course of several years and will be conducted subject to the covenants in the agreements governing indebtedness. In August 2022, the Inflation Reduction Act of 2022 was enacted into law and imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. The Company reflected the applicable excise tax in equity as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in accrued expenses on the consolidated balance sheet. During the year ended December 31, 2023, the Company repurchased 18,533,819 shares of Common Stock for $ 810.8 million. During the year ended December 31, 2022, the Company repurchased 19,854,424 shares of Common Stock and stock equivalents for $ 756.9 million. As of December 31, 2023, $ 498.2 million of the authorization for future repurchases of our common stock remained available. Accumulated Other Comprehen sive Loss The changes in accumulated other comprehensive loss ("AOCI"), net of tax, for the years ended December 31, 2023, 2022 and 2021, were as follows: (in thousands) Foreign Currency Translation Unrealized (gains) losses on hedging activities Total Balance at December 31, 2020 $ ( 24,694 ) $ ( 12,513 ) $ ( 37,207 ) Other comprehensive loss before reclassifications ( 880 ) ( 2,985 ) ( 3,865 ) Reclassifications from AOCI to income (a) — 12,001 12,001 Balance at December 31, 2021 ( 25,574 ) ( 3,497 ) ( 29,071 ) Other comprehensive loss before reclassifications ( 44,548 ) ( 1,033 ) ( 45,581 ) Reclassifications from AOCI to income (a) — 4,530 4,530 Balance at December 31, 2022 ( 70,122 ) — ( 70,122 ) Other comprehensive income before reclassifications 14,091 14,813 28,904 Reclassifications from AOCI to income (a) — ( 11,550 ) ( 11,550 ) Balance at December 31, 2023 $ ( 56,031 ) $ 3,263 $ ( 52,768 ) (a) For the years ended December 31, 2023, 2022 and 2021, $( 11.6 ) million, $ 4.5 million and $ 12.0 million, respectively, was reclassified from AOCI into the consolidated statements of operations within interest expense related to the interest rate swaps discussed in Note 14. For the years ended December 31, 2023, 2022 and 2021, the Company recorded tax benefits of $ 2.9 million, $ 1.1 million and $ 3.0 million, respectively, associated with this reclassification. NOTE 12 - Warrants Warrants 2015 Private Warrants The Company issued warrants to purchase its Common Stock in a private placement concurrently with its initial public offering (the “2015 Private Warrants”). The 2015 Private Warrants were purchased at a price of $ 0.50 per unit for an aggregate purchase price of $ 9.75 million. If held by certain original investors (or their permitted assignees), the 2015 Private Warrants could be exercised on a cashless basis and were not subject to redemption. During the year ended December 31, 2021, 3,055,000 of the 2015 Private Warrants were repurchased for $ 25.5 million and cancelled, and 9,655,000 warrants were exercised on a cashless basis, resulting in the issuance of 2,939,898 shares of Common Stock. As a result of these transactions, effective May 2021, no 2015 Private Warrants were outstanding. 2018 Warrants In connection with the acquisition of Modular Space Holdings, Inc. ("ModSpace") in 2018, the Company issued warrants to purchase approximately 10.0 million shares of its Common Stock (the "2018 Warrants") to former shareholders of ModSpace. Each 2018 Warrant entitled the holder to purchase one share of Common Stock at an exercise price of $ 15.50 per share, subject to potential adjustment. The 2018 Warrants expired on November 29, 2022. 91 During the year ended December 31, 2021, 254,373 of the 2018 Warrants were repurchased for $ 2.9 million and cancelled. In addition, during the year ended December 31, 2021, 5,397,695 of the 2018 Warrants were exercised on a cashless basis, resulting in the issuance of 2,835,968 shares of Common Stock. During the year ended December 31, 2022, 33,965 of the 2018 Warrants were repurchased for $ 0.6 million and cancelled. In addition, during the year ended December 31, 2022, 4,011,665 of the 2018 Warrants were exercised on a cashless basis, resulting in the issuance of 2,590,940 shares of Common Stock. The remaining 32,543 of 2018 Warrants expired on November 29, 2022 . Effective November 29, 2022, no 2018 Warrants were outstanding. The Company accounted for its warrants as follows: (i) the 2015 Private Warrants as liabilities through their final repurchase or exercise in May 2021 and (ii) subsequent to June 30, 2020, the 2018 Warrants were equity classified through their expiration in November 2022. NOTE 13 – Income Taxes The components of income tax expense from continuing operations for the years ended December 31, are comprised of the following: (in thousands) 2023 2022 2021 Current Federal $ — $ — $ — State 12,250 11,327 4,645 Foreign 7,382 6,204 1,795 Deferred Federal 80,698 63,585 23,707 State 27,276 8,917 ( 2,671 ) Foreign ( 1,031 ) ( 1,170 ) 9,052 Total income tax expense from continuing operations $ 126,575 $ 88,863 $ 36,528 Income tax expense from continuing operations differed from the amount computed by applying the US statutory income tax rate of 21% to the income from continuing operations before income taxes for the following reasons for the years ended December 31, : (in thousands) 2023 2022 2021 Income from continuing operations before income tax US $ 444,557 $ 341,412 $ 137,922 Foreign 23,862 23,792 13,501 Total income from continuing operations before income tax $ 468,419 $ 365,204 $ 151,423 US Federal statutory income tax expense $ 98,368 $ 76,693 $ 31,798 Effect of tax rates in foreign jurisdictions 1,434 1,085 743 State income tax expense, net of federal benefit 25,016 16,917 1,130 Valuation allowances ( 815 ) ( 6,907 ) ( 2,595 ) Non-deductible (non-taxable) items 775 1,147 ( 410 ) Non-deductible executive compensation 2,014 1,258 2,309 Non-deductible remeasurement of common stock warrant liabilities — — 5,585 Uncertain tax positions ( 523 ) ( 804 ) ( 11,748 ) Tax law changes (excluding valuation allowance) (a) ( 50 ) ( 94 ) 8,411 Other 356 ( 432 ) 1,305 Income tax expense from continuing operations $ 126,575 $ 88,863 $ 36,528 Effective income tax rate 27.02 % 24.33 % 24.12 % (a) Tax law changes primarily represent changes in tax law in foreign jurisdictions. 92 Deferred Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss and carryforwards. Significa nt components of the Company’s deferred tax assets and liabilities as of December 31, are as follows: (in thousands) 2023 2022 Deferred tax assets Deferred interest expense $ 116,982 $ 133,223 Employee benefit plans 9,079 6,233 Accrued liabilities 5,996 8,043 Allowance for credit losses 21,964 15,143 Deferred revenue 57,494 50,531 Operating lease liability 61,849 59,740 Other 5,006 6,127 Tax loss carryforwards 99,676 233,133 Deferred tax assets, gross 378,046 512,173 Valuation allowance ( 1,430 ) ( 2,245 ) Net deferred income tax asset $ 376,616 $ 509,928 Deferred tax liabilities Rental equipment and other property, plant and equipment $ ( 808,873 ) $ ( 770,964 ) Intangible assets ( 60,358 ) ( 84,390 ) Right of use asset ( 61,653 ) ( 59,258 ) Deferred gain — ( 26,691 ) Deferred tax liability ( 930,884 ) ( 941,303 ) Net deferred income tax liability $ ( 554,268 ) $ ( 431,375 ) As of December 31, 2022, the net deferred income tax liability presented in the table above included net deferred tax liability of $ 29.7 million ($ 33.7 million of deferred tax liability, net of $ 4.0 million of deferred tax asset) related to the UK Storage Solutions segment and recorded in liabilities held for sale - non-current on the consolidated balance sheet. The Company's valuation allowance decreased by $ 0.8 million from 2022, related to a reduction to the valuation allowance on state NOL where the Company determined that it is more likely than not realizable due to sufficient current and future taxable income. Tax loss carryforwards as of December 31, 2023 are outlined in the table below and include US Federal, US State and foreign (Canada and Mexico). The availability of these tax losses to offset future income varies by jurisdiction. Furthermore, the ability to utilize the tax losses may be subject to additional limitations upon the occurrence of certain events, such as a change in the ownership of the Company. Some of the Company’s tax attributes are subject to annual limitations due to historical changes in ownership from acquisitions, mergers or other related ownership shift events; however, the Company anticipates that our remaining available net operating losses will be consumed prior to their expiration. The Company’s tax loss carryforwards are as follows at December 31, 2023: (in thousands) Loss Carryforward Deferred Tax Expiration Jurisdiction: US - Federal $ 465,179 $ 88,887 2037, Indefinite US - State 240,335 10,789 2025 – 2042, Indefinite Total $ 705,514 $ 99,676 As of December 31, 2023, the total amount of the basis difference in investments outside the US, which are indefinitely reinvested and for which deferred taxes have not been provided, is approximately $ 174.2 million . The tax, if any, associated with the recovery of the basis difference is dependent on the manner in which it is recovered and is not readily determinable. 93 Unrecognized Tax Positions The Company is subject to taxation in US, Canada, Mexico, and state jurisdictions. The Company’s tax returns are subject to examination by the applicable tax authorities prior to the expiration of statute of limitations for assessing additional taxes, which generally ranges from two to five years after the end of the applicable tax year. As of December 31, 2023, generally, tax years for 2016 through 2022 remain subject to examination by the tax authorities. In addition, in certain taxing jurisdictions, in the case of carryover tax attributes to years open for assessment, such attributes may be subject to reduction by taxing authorities. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: (in thousands) 2023 2022 2021 Unrecognized tax benefits – January 1, $ 43,627 $ 44,314 $ 54,494 Increases based on tax positions related to prior period — — 9 Decrease from expiration of statute of limitations ( 493 ) ( 687 ) ( 10,189 ) Unrecognized tax benefits – December 31, $ 43,134 $ 43,627 $ 44,314 At December 31, 2023, 2022 and 2021, respective ly, there were $ 41.8 million, $ 42.3 million and $ 43.3 million of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate. The Company classifies interest on tax deficiencies and income tax penalties within income tax expense. During the years ended December 31, 2022 and 2021, the Company recognized approximately $ 0.1 million, and $ 1.0 million in interest, respectively. The Company accrued approximately $ 0.4 million for the payment of interest at both December 31, 2023 and 2022. Future tax settlements or statute of limitation expirations could result in a change to the Company’s uncertain tax positions. As of December 31, 2023, the Company believes that it is reasonably possible that approximately $ 0.7 million of unrecognized tax benefits could decrease in the next twelve months as a result of the expiration of statutes of limitation, audit settlements or resolution of tax uncertainties. NOTE 14 - Derivatives Interest Rate Swaps In 2018, the Company entered into an interest rate swap agreement (the “Swap Agreement”) with a financial counterparty that effectively converted $ 400.0 million in aggregate notional amount of variable-rate debt under the Company’s ABL Facility into fixed-rate debt. Under the terms of the Swap Agreement, the Company received a floating rate equal to one-month LIBOR and made payments based on a fixed rate of 3.06 % on the notional amount. The Swap Agreement was designated and qualified as a hedge of the Company’s exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility. The Swap Agreement terminated on May 29, 2022. In January 2023, the Company entered into two interest rate swap agreements with financial counterparties relating to $ 750.0 million in aggregate notional amount of variable-rate debt under the Company’s ABL Facility. Under the terms of the agreements, the Company receives a floating rate equal to one-month term SOFR and makes payments based on a weighted average fixed interest rate of 3.44 % on the notional amount. The swap agreements were designated and qualified as hedges of the Company’s exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility. The swap agreements terminate on June 30, 2027. The floating rate that the Company receives under the terms of these swap agreements was 5.36 % at December 31, 2023. The location and the fair value of derivative instruments designated as hedges were as follows: (in thousands) Balance Sheet Location 2023 Cash Flow Hedges: Interest rate swap Prepaid expenses and other current assets $ 9,145 Interest rate swap Other non-current liabilities $ ( 4,595 ) Over the next twelve months, the Company expects to reclassify $ 9.1 million, net of tax, from accumulated other comprehensive loss into the consolidated statements of operations within interest expense related to the interest rate swaps. The fair value of the interest rate swaps was based on dealer quotes of market forward rates, a Level 2 input on the fair value hierarchy, and reflected the amount that the Company would receive or pay for contracts involving the same attributes and maturity dates. 94 The following table discloses the impact of the interest rate swaps, excluding the impact of income taxes, on other comprehensive income (“OCI”), AOCI and the Company’s statement of operations for the years ended December 31: (in thousands) 2023 2022 2021 Gain recognized in OCI $ 15,901 $ 4,669 $ 11,677 Location of gain (loss) recognized in income Interest expense, net Interest expense, net Interest expense, net (Gain) loss reclassified from AOCI into income $ ( 11,550 ) $ 4,530 $ 12,001 Foreign Currency Contract In December 2022, the Company executed a contingent forward contract to sell £ 330.0 million upon the closing of the sale of the former UK Storage Solutions segment at a price ranging from 1.20550 to 1.20440 USD to British Pounds Sterling. The price was dependent upon the date of the closing of the sale. This contract, which was to expire on September 11, 2023, mitigated the foreign currency risk of the USD relative to the British Pound Sterling prior to the closing of the sale of the former UK Storage Solutions segment. This contract did not qualify for hedge accounting and was revalued at fair value at the reporting date with unrealized gains and losses reflected in the Company's results of operations. Upon the closing of the sale of the UK Storage Solutions segment on January 31, 2023, the Company settled the contingent forward contract and received cash at an exchange rate of 1.205 USD to British Pounds Sterling. The location and the fair value of the foreign currency contract in the consolidated balance sheet as of December 31, 2022 was as follows: (in thousands) Balance Sheet Location 2022 Derivative Contracts: Foreign currency contract Accrued liabilities $ 930 The fair value of the foreign currency contract was based on dealer quotes of market forward rates, a Level 2 input on the fair value hierarchy, and reflected the amount that the Company would receive or pay for contracts involving the same attributes and maturity dates. The following table discloses the impact of the foreign currency contract, excluding the impact of income taxes, on the Company’s statement of operations for the years ended December 31: (in thousands) 2023 2022 Loss recognized in income $ 7,715 $ 930 Location of loss recognized in income Currency losses, net Currency losses, net NOTE 15 - Fair Value Measures The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Company utilizes the suggested accounting guidance for the three levels of inputs that may be used to measure fair value: Level 1 - Observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2 - Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and Level 3 - Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions The Company has assessed that the fair value of cash and short-term deposits, trade receivables, trade payables, capital lease and other financing obligations, and other current liabilities approximate their carrying amounts. 95 The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy: December 31, 2023 December 31, 2022 Carrying Amount Fair Value Carrying Amount Fair Value (in thousands) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 ABL Facility $ 1,929,259 $ — $ 1,956,011 $ — $ 1,988,176 $ — $ 2,020,000 $ — 2025 Secured Notes 522,735 — 527,021 — 520,350 — 526,800 — 2028 Secured Notes 494,500 — 474,285 — 493,470 — 450,135 — 2031 Secured Notes 493,709 — 528,075 — — — — — Total $ 3,440,203 $ — $ 3,485,392 $ — $ 3,001,996 $ — $ 2,996,935 $ — As of December 31, 2023, the carrying values of the ABL Facility, the 2025 Secured Notes, the 2028 Secured Notes, and the 2031 Secured Notes included $ 26.8 million, $ 3.8 million, $ 5.5 million, and $ 6.3 million, respectively, of unamortized debt issuance costs, which were presented as a direct reduction of the corresponding liability. As of December 31, 2022, the carrying values of the ABL Facility, the 2025 Secured Notes, and the 2028 Secured Notes included $ 31.8 million, $ 6.2 million, and $ 6.5 million, respectively, of unamortized debt issuance costs which were presented as a direct reduction of the corresponding liability. There were no transfers of financial instruments between the three levels of the fair value hierarchy during the years ended December 31, 2023 a nd 2022. The carrying value of the ABL Facility, excluding debt issuance costs, approximates fair value as the interest rates are variable and reflective of market rates. The fair values of the 2025 Secured Notes, the 2028 Secured Notes, and the 2031 Secured Notes are based on their last trading price at the end of each period obtained from a third party. The loca tion and the fair value of derivative assets and liabilities in the consolidated balance sheet are disclosed in Note 14. NOTE 16 - Stock-Based Compensation Restricted Stock Awards The following table summarizes the Company's RSA activity during the years ended December 31, 2023, 2022 and 2021 : Number of Shares Weighted-Average Grant Date Fair Value Balance December 31, 2020 57,448 $ 11.75 Granted 44,708 $ 29.30 Forfeited ( 8,532 ) $ 29.30 Vested ( 57,448 ) $ 11.75 Balance December 31, 2021 36,176 $ 29.30 Granted 35,244 $ 37.17 Vested ( 36,176 ) $ 29.30 Balance December 31, 2022 35,244 $ 37.17 Granted 28,946 $ 44.44 Vested ( 35,244 ) $ 37.17 Balance December 31, 2023 28,946 $ 44.44 Compensation expense for RSAs recognized in SG&A expense in the consolidated statements of operations was $ 1.3 million, $ 1.2 million, and $ 0.8 million for the years ended December 31, 2023, 2022, and 2021, respectively. At December 31, 2023, unrecognized compensation cost related to RSAs totaled $ 0.6 million and was expected to be recognized over the remaining weighted average vesting period of 0.4 years. The total fair value of RSA's vested in 2023, 2022, and 2021 was $ 1.6 million, $ 1.3 million, and $ 1.6 million, respectively. 96 Time-Based RSUs The following table summarizes the Company's Time-Based RSU activity during the years ended December 31, 2023, 2022 and 2021 : Number of Shares Weighted-Average Grant Date Fair Value Balance December 31, 2020 1,325,862 $ 13.46 Granted 415,737 $ 27.25 Forfeited ( 72,505 ) $ 17.80 Vested ( 671,643 ) $ 13.99 Balance December 31, 2021 997,451 $ 18.54 Granted 377,804 $ 35.40 Forfeited ( 106,570 ) $ 31.35 Vested ( 478,906 ) $ 16.42 Balance December 31, 2022 789,779 $ 26.16 Granted 213,388 $ 50.74 Forfeited ( 61,848 ) $ 36.75 Vested ( 322,483 ) $ 21.38 Balance December 31, 2023 618,836 $ 36.07 Compensation expense for Time-Based RSUs recognized in SG&A expense in the consolidated statements of operations was $ 8.1 million, $ 8.2 million, and $ 9.0 million for the years ended December 31, 2023, 2022, and 2021, respectively. At December 31, 2023, unrecognized compensation cost related to Time-Based RSUs totaled $ 14.2 million and was expected to be recognized over the remaining weighted average vesting period of 2.0 years. The total fair value of Time-Based RSU's vested in 2023, 2022, and 2021 was $ 16.2 million, $ 18.0 million, and $ 18.5 million, respectively. Included in restructuring costs for the year ended December 31, 2021 was expense of approximately $ 5.9 million recognized as a result of the modification of certain RSUs with the Transition, Separation and Release Agreement entered into on February 25, 2021, with the Company's former President and Chief Operating Officer. Performance-Based RSUs The following table summarizes the Company's Performance-Based RSU award activity during the years ended December 31, 2023 and 2022 and 2021: Number of Shares Weighted-Average Grant Date Fair Value Balance December 31, 2020 593,388 $ 14.88 Granted 977,645 $ 33.21 Forfeited ( 23,753 ) $ 27.92 Vested ( 10,886 ) $ 14.70 Balance December 31, 2021 1,536,394 $ 26.34 Granted 745,079 $ 42.34 Forfeited ( 74,071 ) $ 41.66 Vested ( 313,152 ) $ 16.45 Balance December 31, 2022 1,894,250 $ 33.67 Granted 376,826 $ 69.52 Forfeited ( 37,451 ) $ 47.52 Vested ( 293,934 ) $ 16.34 Balance December 31, 2023 1,939,691 $ 42.95 Compensation expense for Performance-Based RSUs recognized in SG&A expense in the consolidated statements of operations was $ 24.9 million, $ 20.2 million and $ 8.3 million for the years ended December 31, 2023, 2022, and 2021, respectively. At December 31, 2023, unrecognized compensation cost related to Performance-Based RSUs totaled $ 35.2 million and was expected to be recognized over the remaining vesting period of 1.5 years. The total fair value of Performance- 97 Based RSU's vested in 2023, 2022, and 2021 was $ 15.0 million, $ 11.9 million and $ 0.3 million, respectively. Refer to Note 1 for the details of conditions required for the performance-based RSUs to vest. Included in restructuring costs for the year ended December 31, 2021 , was expense of approximately $ 1.3 million recognized as a result of the modification of certain Performance-Based RSUs with the Transition, Separation and Release Agreement entered into on February 25, 2021, with the Company's former President and Chief Operating Officer. Stock Options The following table summarizes the Company's stock option activity during the years ended December 31, 2023, 2022 and 2021 : WillScot Options Weighted-Average Exercise Price per Share Converted Mobile Mini Options Weighted-Average Exercise Price per Share Balance December 31, 2020 534,188 $ 13.60 2,031,455 $ 14.78 Forfeited — $ — ( 6,240 ) $ 12.19 Exercised — $ — ( 497,572 ) $ 15.21 Balance at December 31, 2021 534,188 $ 13.60 1,527,643 $ 14.66 Exercised — $ — ( 663,367 ) $ 16.93 Balance at December 31, 2022 534,188 $ 13.60 864,276 $ 12.91 Exercised — $ — ( 35,030 ) $ 14.21 Balance at December 31, 2023 534,188 $ 13.60 829,246 $ 12.86 Fully vested and exercisable options, December 31, 2023 534,188 $ 13.60 829,246 $ 12.86 Under our stock option plans, the Company may issue shares on a net basis at the request of the option holder. This occurs by netting the option costs in shares from the shares exercised. No options were granted in the years ended December 31, 2023, 2022, and 2021 . At December 31, 2023, the intrinsic value of both stock options outstanding and stock options fully vested and currently exercisable was $ 42.7 million. At December 31, 2023, the weighted-average remaining contractual term of options outstanding was 4.2 years for WillScot options and 3.1 years for converted Mobile Mini options. The total pre-tax intrinsic value of stock options exercised during the years ended December 31, 2023, 2022, and 2021 was $ 1.1 million, $ 16.0 million and $ 6.2 million , respectively. Com pensation expense for stock option awards, recognized in SG&A expense in the consolidated statements of operations was $ 0.2 million and $ 0.7 million for the years ended December 31, 2022 and 2021, respective ly. At December 31, 2023, all compensation cost related to stock option awards had been recognized. NOTE 17 - Commitments and Contingencies The Company is involved in various lawsuits, claims and legal proceedings that arise in the ordinary course of business. The Company assesses these matters on a case-by-case basis as they arise and establishes reserves as required. As of December 31, 2023, with respect to these outstanding matters, the Company believes that the amount or range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on the consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties. NOTE 18 - Segment Reporting The Company operates in two reportable segments as follows: Modular Solutions ("Modular") and Storage Solutions ("Storage"). Prior to the third quarter of 2021, the Modular segment represented the activities of WillScot historical segments prior to the Merger. During the third quarter of 2021, the majority of the portable storage product business within the Modular segment was transitioned to the Storage segment, and associated revenues, expenses, and operating metrics beginning in the third quarter of 2021 were transferred to the Storage segment, representing a shift of approximately $ 5.0 million of revenue and gross margin per quarter from the Modular segment to the Storage segment. This adjustment was not made to the historical segment results of prior periods, as the Company believes such adjustments to be immaterial. 98 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 change between the Modular and Storage segments. For the year ended December 31, 2022, $ 49.8 million of revenue and $ 28.5 million of gross profit were reclassified 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. Total assets for each reportable segment are not available because the Company utilizes a centralized approach to working capital management. The Company defines EBITDA as net income (loss) plus interest (income) expense, income tax (benefit) expense, depreciation and amortization. The Company reflects the further adjustments to EBITDA (“Adjusted EBITDA”) to exclude certain non-cash items and the effect of what the Company considers transactions or events not related to its core and ongoing business operations. In addition, the Chief Operating Decision Maker ("CODM") evaluates business segment performance utilizing Adjusted EBITDA as shown in the reconciliation of the Company’s income from continuing operations to Adjusted EBITDA below. Management believes that evaluating segment performance excluding such items is meaningful because it provides insight with respect to the intrinsic and ongoing operating results of the Company. The Company considers Adjusted EBITDA to be an important metric because it reflects the business performance of the segments, inclusive of indirect costs. The Company also regularly evaluates gross profit by segment to assist in the assessment of its operational performance. Reportable Segments The following tables set forth certain information regarding each of the Company’s reportable segments fo r the years ended December 31, 2023, 2022, and 2021, respectively. Year Ended December 31, 2023 (in thousands) Modular Storage Unallocated Costs Total Revenues: Leasing and services revenue: Leasing $ 1,137,685 $ 696,250 $ 1,833,935 Delivery and installation 283,433 153,746 437,179 Sales revenue: New units 41,777 6,352 48,129 Rental units 32,771 12,753 45,524 Total revenues 1,495,666 869,101 2,364,767 Costs: Cost of leasing and services: Leasing 311,501 86,966 398,467 Delivery and installation 224,671 92,446 317,117 Cost of sales: New units 23,599 2,840 26,439 Rental units 15,800 7,341 23,141 Depreciation of rental equipment 219,869 45,864 265,733 Gross profit $ 700,226 $ 633,644 $ 1,333,870 Other selected data: Adjusted EBITDA from continuing operations $ 598,354 $ 463,111 $ 1,061,465 Selling, general and administrative expense $ 329,068 $ 217,604 $ 49,418 $ 596,090 Purchases of rental equipment and refurbishments $ 184,993 $ 41,612 $ 226,605 99 Year Ended December 31, 2022 (in thousands) Modular Storage Unallocated Costs Total Revenues: Leasing and services revenue: Leasing $ 992,316 $ 629,374 $ 1,621,690 Delivery and installation 272,749 156,403 429,152 Sales revenue: New units 33,985 6,353 40,338 Rental units 42,983 8,460 51,443 Total Revenues 1,342,033 800,590 2,142,623 Costs: Cost of leasing and services: Leasing 273,233 103,635 376,868 Delivery and installation 221,784 100,852 322,636 Cost of sales: New units 20,475 3,536 24,011 Rental units 21,271 5,636 26,907 Depreciation of rental equipment 221,433 35,286 256,719 Gross profit $ 583,837 $ 551,645 $ 1,135,482 Other selected data: Adjusted EBITDA from continuing operations $ 508,343 $ 375,531 $ — $ 883,874 Selling, general and administrative expense $ 304,937 $ 215,732 $ 46,738 $ 567,407 Purchases of rental equipment and refurbishments $ 279,079 $ 118,297 $ — $ 397,376 100 Year Ended December 31, 2021 (in thousands) Modular Storage Unallocated Costs Total Revenues: Leasing and services revenue: Leasing $ 827,677 $ 424,813 $ 1,252,490 Delivery and installation 213,818 107,311 321,129 Sales revenue: New units 40,322 6,671 46,993 Rental units 38,666 13,702 52,368 Total revenues 1,120,483 552,497 1,672,980 Costs: Cost of leasing and services: Leasing 219,462 63,114 282,576 Delivery and installation 191,011 76,522 267,533 Cost of sales: New units 27,386 3,962 31,348 Rental units 20,163 7,867 28,030 Depreciation of rental equipment 190,805 27,985 218,790 Gross profit $ 471,656 $ 373,047 $ 844,703 Other selected data: Adjusted EBITDA from continuing operations $ 404,577 $ 245,027 $ — $ 649,604 Selling, general and administrative expense $ 256,168 $ 160,300 $ 63,939 $ 480,407 Purchase of rental equipment and refurbishments $ 187,495 $ 45,426 $ — $ 232,921 The following tables present a reconciliation of the Company’s Income from continuing operations to Adjusted EBITDA for the years ended December 31, 2023, 2022, and 2021, respectively: Year Ended December 31, (in thousands) 2023 2022 2021 Income from continuing operations $ 341,844 $ 276,341 $ 114,895 Income tax expense from continuing operations 126,575 88,863 36,528 Loss on extinguishment of debt — — 5,999 Fair value loss on common stock warrant liabilities — — 26,597 Interest expense 205,040 146,278 116,358 Depreciation and amortization 338,654 319,099 280,567 Currency losses, net 6,754 886 427 Restructuring costs, lease impairment expense and other related charges 22 168 14,754 Transaction costs 2,259 25 1,375 Integration costs 10,366 15,484 28,410 Stock compensation expense 34,486 29,613 18,728 Other ( 4,535 ) 7,117 4,966 Adjusted EBITDA from continuing operations $ 1,061,465 $ 883,874 $ 649,604 Included in restructuring costs for the year ended December 31, 2021 was expense of approximately $ 7.2 million recognized as a result of the modification of certain equity awards associated with the Transition, Separation and Release Agreement entered into on February 25, 2021 with the Company's former President and Chief Operating Officer. For the year ended December 31, 2021, stock-based compensation expense reported in the Statement of Cash Flows included these charges. 101 Assets Assets related to the Company’s reportable segments include the following: (in thousands) Modular Storage Total As of December 31, 2023: Goodwill $ 580,692 $ 595,943 $ 1,176,635 Intangible assets, net $ 126,620 $ 293,089 $ 419,709 Rental equipment, net $ 2,141,848 $ 1,239,467 $ 3,381,315 As of December 31, 2022: Goodwill $ 518,877 $ 492,552 $ 1,011,429 Intangible assets, net $ 125,000 $ 294,125 $ 419,125 Rental equipment, net $ 2,004,055 $ 1,073,232 $ 3,077,287 NOTE 19 - Earnings Per Share Basic earnings per share (“EPS”) is calculated by dividing net income attributable to WillScot Mobile Mini common shareholders by the weighted average number of shares of Common Stock outstanding during the period. The shares of Common Stock issued as a result of the vesting of RSUs and RSAs as well as the exercise of stock options or redemption of warrants are included in EPS based on the weighted average number of days in which they were outstanding during the period. Diluted EPS is computed similarly to basic EPS, except that it includes the potential dilution that could occur if dilutive securities were exercised. Effects of potentially dilutive securities are present ed only in periods in which they are dilutive. The following table reconciles income from continuing operations attributable to WillScot Mobile Mini common shareholders to net income attributable to common shareholders for the dilutive EPS calculation and the weighted average shares outstanding for the basic calculation to the weighted average shares outstanding for the diluted calculation for the years ended December 31: (in thousands) 2023 2022 2021 Numerator: Income from continuing operations $ 341,844 $ 276,341 $ 114,895 Income from discontinued operations 134,613 63,199 45,249 Net income $ 476,457 $ 339,540 $ 160,144 Denominator: Weighted average Common Shares outstanding - basic 198,555 216,809 226,519 Dilutive effect of outstanding securities: Warrants — 1,605 3,589 RSAs 15 18 24 Time-Based RSUs 274 401 594 Performance-Based RSUs 2,040 1,471 955 Stock Options 966 1,095 1,113 Weighted average Common Shares outstanding - dilutive 201,850 221,399 232,794 The following potential common shares were excluded from the computation of dilutive EPS because their effect would have been anti-dilutive: (in thousands) 2023 2022 2021 Time-based RSUs 106 — — Performance-based RSUs 277 591 375 102 NOTE 20 - Subsequent Events Interest Rate Swaps 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. 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. 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. 103 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.