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Item 2. Management’s Discussion and Analysis

2024-05-02 compared with 2023-11-02 · 179 added, 420 removed, 213 unchanged (74% of the section changed)

1 unchanged sentence

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

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

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

MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes thereto, contained in Part I, Item 1 of this report.

The discussion of results of operations in this MD&A is presented on a historical basis, as of or for the three and nine months ended September 30, 2023 or prior periods.

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

The discussion of results of operations in this MD&A is presented on a historical basis, as of or for the three months ended March 31, 2024 or prior periods.

On January 31, 2023, the Company completed the sale of its former United Kingdom ("UK") Storage Solutions segment.

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

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

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

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

We use certain non-GAAP financial metrics to supplement the GAAP reported results to highlight key operational metrics that are used by management to evaluate Company performance.

Reconciliations of GAAP financial information to the disclosed non-GAAP measures are provided in the Reconciliation of Non-GAAP Financial Measures section.

Executive Summary and Outlook

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

Reconciliations of GAAP financial information to the disclosed non-GAAP measures are provided in the Reconciliation of Non-GAAP Financial Measures section of MD&A.

Executive Summary

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

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

As of September 30, 2023, our branch network included approximately 240 branch locations and additional drop lots to service our over 85,000 customers.

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

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

As of March 31, 2024, our branch network included approximately 260 branch locations and additional drop lots to service our over 85,000 customers.

We offer our customers an extensive selection of “Ready to Work” temporary space solutions with over 153,000 modular space units and over 210,000 portable storage units in our fleet.

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

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

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

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

Furthermore, given that our customers value flexibility, they consistently extend their leases or renew on a month-to-month basis such that the average effective duration of our lease portfolio, excluding seasonal portable storage units, is approximately 35 months.

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

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

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Core to our operating model is the ability to redeploy standardized assets across end markets.

We track several market leading indicators to predict demand, including those related to our two largest end markets, the commercial and industrial sector and the construction sector, which collectively accounted for approximately 86% of our revenues in the nine months ended September 30, 2023.

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

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

Significant Developments

Customer Relationship Management ("CRM") System

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

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

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

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

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

Entry into an Agreement to Acquire McGrath RentCorp

On January 28, 2024, the Company entered into an agreement and plan of merger (the “Merger Agreement”) with McGrath RentCorp ("McGrath").

Upon consummation of the merger, each outstanding share of McGrath common stock shall be converted into the right to receive either (i) $123.00 in cash or (ii) 2.8211 shares of the Company’s common stock.

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

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

The McGrath acquisition is subject to the satisfaction or waiver of certain customary closing conditions, including receipt of regulatory approval and approval by McGrath’s shareholders, and is expected to close in 2024.

In connection with the Merger Agreement, the Company entered into a commitment letter dated January 28, 2024, which was amended and restated on February 12, 2024 and modified by a Notice of Reduction of Bridge Commitments on February 27, 2024 (the "Commitment Letter"), pursuant to which certain financial institutions have committed to make available, in accordance with the terms of the Commitment Letter, (i) a $500 million eight-year senior secured bridge credit facility, (ii) a $500 million five-year senior secured bridge credit facility and (iii) an upsize to William Scotsman, Inc.'s existing $3.7 billion ABL Facility (as defined below) by $750 million to $4.5 billion to repay McGrath's existing unsecured revolving lines of credit 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.

Reportable Segments

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

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

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

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

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

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

Business Combinations

During the three months ended September 30, 2023, we acquired a national provider of cold storage solutions and a regional modular space manufacturing and leasing business, which consisted primarily of approximately 2,200 climate-controlled containers and refrigerated storage trailers and 1,300 modular leasing units, respectively, for $332.8 million in cash, net of cash acquired.

In January 2024, we completed the unification of our go-to market structure by integrating our modular and storage divisions under a single leadership team organized by geography, achieving local product unification within each metropolitan statistical area and the ability to consistently deliver our portfolio of solutions to our entire customer base.

In connection with this change in operating model, the Company realigned the composition of our operating and reportable segments.

As a result, the Company concluded that its two operating segments (US and Other North America) are aggregated into one reportable segment as the operating segments have similar economic and qualitative characteristics.

Asset Acquisitions

During the nine months ended September 30, 2023, we also acquired certain assets and liabilities of five regional and local storage and modular companies, which consisted primarily of approximately 1,800 storage units and 700 modular units, for $149.4 million in cash, net of cash acquired.

The accompanying consolidated financial statements include $147.9 million of rental equipment as a result of these acquisitions.

Financing Activities

On September 25, 2023, Williams Scotsman, Inc.

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

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

Share Repurchases

During the nine months ended September 30, 2023 , we repurchased 15,037,843 shares of Common Stock for $674.8 million.

As of September 30, 2023, $634.2 million of the approved share repurchase pool remained available.

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

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

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

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

Third Quarter Highlights

For the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, unless otherwise noted, key drivers of our financial performance included:

During the three months ended March 31, 2024, we acquired certain assets and liabilities of one local storage and modular company, which consisted primarily of approximately 60 storage units and 800 modular units, for $43.4 million.

As of the acquisition date, the fair value of rental equipment acquired was $39.7 million.

Interest Rate Swap Agreements

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 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 3.70% 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.

First Quarter Highlights

Three Months Ended March 31, 2024 vs.

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

Revenue $ 587,181 $ 565,468 $ 21,713

Income from continuing operations $ 56,240 $ 76,271 $ (20,031)

Adjusted EBITDA from continuing operations $ 248,009 $ 246,842 $ 1,167

Net CAPEX $ 64,776 $ 45,825 $ 18,951

Average modular space units on rent 95,817 99,826 (4,009)

Average modular space utilization rate 62.5 % 65.7 % (320) bps

Average modular space monthly rental rate $ 1,149 $ 1,031 $ 118

Average portable storage units on rent 131,014 167,403 (36,389)

Average portable storage utilization rate 62.1 % 78.7 % (1,660) bps

Average portable storage monthly rental rate $ 262 $ 214 $ 48

1 Effective for the three months ended March 31, 2024, we reclassified approximately 2,000 units that were previously reported as modular space units on rent to portable storage units on rent as these units are generally used in a dry storage application.

Additionally, based on our segment realignment, we have conformed our VAPS presentation to include all VAPS not specific to portable storage orders as modular space VAPS and recalculated average monthly rental rates.

This treatment is consistent with prior treatment in our previous Modular Segment.

All historical product operating KPIs have been recast to be presented on a comparable basis for all periods.

For the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, unless otherwise noted, results and key drivers of our financial performance included:

• Total revenues increased $21.7 million, or 3.8%.

Leasing revenue increased $39.0 million, or 9.1%, and new unit sales revenue increased $0.5 million, or 5.7%.

These increases were partially offset by a delivery and installation revenue decrease of $11.4 million, or 9.0%, and rental unit sales, which decreased $1.2 million, or 9.1%.

Key leasing revenue drivers included:

• Average modular space monthly rental rate increased $149, or 15.9%, to $1,089 driven by strong pricing performance across both segments.

Average modular space monthly rental rates increased by $143, or 14.3%, in the Modular segment and by $135, or 18.8%, in the Storage segment.

• Average portable storage monthly rental rate increased $49, or 24.9%, to $246 driven by increased pricing as a result of our price management tools and processes as well as due to higher rates on the acquired climate-controlled containers and refrigerated storage units.

• Average portable storage units on rent decreased 28,328 units, or 16.0%, and average modular space units on rent decreased 5,140 units, or 4.9%.

• Average utilization for portable storage units decreased to 70.0% from 88.7% for the same period in 2022 driven by decreased demand in 2023 as compared to the same period in 2022.

Average utilization for modular space units decreased 450 basis points ("bps") to 64.2%.

• Modular segment revenue, which represented 64.1% of consolidated revenue for the three months ended September 30, 2023, increased $25.7 million, or 7.1%, to $387.8 million.

The increase was driven by our core leasing revenue, which increased $33.5 million, or 12.9%, due to continued growth of pricing and VAPS, partially offset by decreased delivery and installation revenues, which decreased $5.1 million, or 6.2%, driven by decreased activity.

sales decreased $3.5 million, or 29.7%, and new unit sales increased $0.8 million, or 10.1%.

Modular revenue drivers for the three months ended September 30, 2023 included:

• Modular space average monthly rental rate of $1,142 increased 14.3% year over year representing a continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio.

Leasing revenue increased $20.7 million, or 4.7%, new unit sales revenue increased $2.8 million, or 26.7%, and rental unit sales increased $4.5 million, or 54.5%.

These increases were partially offset by a decrease in delivery and installation revenue of $6.3 million, or 5.9%.

• Modular product revenue, which represented 75.8% of consolidated revenue for the three months ended March 31, 2024, increased $33.8 million, or 8.2%, to $445.1 million.

The increase was driven by our core leasing revenue, which increased $24.1 million, or 7.4%, due to continued growth of pricing and VAPS, as well as increased delivery and installation revenue, which increased $3.4 million, or 4.7%.

Rental unit sales increased $3.0 million, or 43.7%, and new unit sales increased $3.4 million, or 37.3%.

Modular revenue drivers for the three months ended March 31, 2024 included:

• Modular space average monthly rental rate increased $118, or 11.4% year over year to $1,149 representing a continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio.

• Average modular space units on rent decreased 4,009, or 4.0%, year over year.

• Average modular space monthly utilization decreased 250 bps to 65.4% for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

• Storage segment revenue, which represented 35.9% of consolidated revenue for the three months ended September 30, 2023, increased $1.2 million, or 0.6%, to $217.1 million.

The increase was driven by our core leasing revenue, which grew $5.5 million, or 3.3%, due to increased pricing and contributions from the recently acquired climate-controlled containers and refrigerated storage units, offset by lower overall units on rent.

Delivery and installation revenues decreased $6.3 million, or 14.1%, driven by decreased activity.

• Average modular space monthly utilization decreased 320 basis points ("bps") to 62.5%.

• Storage product revenue, which represented 24.2% of consolidated revenue for the three months ended March 31, 2024, decreased $12.1 million, or 7.8%, to $142.1 million.

The decrease was driven by delivery and installation revenue, which decreased $9.6 million, or 27.2%, due to decreased activity, as well as a decrease in core leasing revenue of $3.4 million, or 3.0%, driven by reduced portable storage container volumes, partially offset by increased rates on portable storage containers and increased revenue from acquired climate-controlled containers and refrigerated storage units.

Rental unit sales increased $1.5 million, or 112.0%, and new unit sales decreased $0.5 million, or 30.7%.

Storage revenue drivers for the three months ended September 30, 2023 included:

• Portable storage average monthly rental rate of $246 increased 24.9% year over year as a result of our price management tools, processes and early benefits from increased VAPS penetration opportunities, as well as due to higher rates on the acquired climate-controlled containers and refrigerated storage units.

Approximately 5% of the 24.9% increase was driven by acquired climate-controlled containers and refrigerated storage units.

Modular space average monthly rental rate of $854 increased 18.8% year over year as a result of price optimization and increased VAPS penetration.

• Average portable storage units on rent decreased 28,252, or 16.1%, year over year driven by lower demand during 2023 versus the high growth achieved in 2022 including the impact of fewer retail remodels and timing of seasonal demand versus the prior year.

Average modular space units on rent decreased 3,706, or 16.8%, year over year due to lower demand.

• Average portable storage monthly utilization decreased 18.7% to 70.1% for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

Average modular space monthly utilization decreased 12.6% to 59.4% for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

• Generated income from continuing operations of $91.5 million for the three months ended September 30, 2023.

Discrete costs in the period included $1.6 million of integration and transaction costs.

• Generated Adjusted EBITDA from continuing operations of $265.5 million for the three months ended September 30, 2023, representing an increase of $26.2 million, or 10.9%, as compared to the same period in 2022.

This increase was driven primarily by increased leasing revenue.

• Adjusted EBITDA margin from continuing operations was 43.9% in the third quarter of 2023 and increased 250 bps versus prior year driven by continued expansion of most margin lines.

Most significantly, leasing margins increased 280 bps versus prior year and delivery and installation margins increased 120 bps versus prior year, both driven primarily by increased pricing.

Selling, general, and administrative expenses included in Adjusted EBITDA increased as a percentage of revenue by 110 bps versus 2022, partially offsetting the increased leasing and delivery and installation margins.

• Net cash provided by operating activities decreased $19.4 million to $191.0 million for the three months ended September 30, 2023 in part due to the divestitures of the Tank and Pump and UK Storage Segments.

Net cash used in investing activities, excluding cash used as part of acquisitions, decreased by $83.8 million as a result of reduced refurbishment spending and decreased purchases of new fleet as a result of lower utilization.

• Generated Free Cash Flow of $147.8 million for the three months ended September 30, 2023 representing an increase of $64.4 million as compared to the same period in 2022.

This Free Cash Flow along with additional net borrowings under the ABL Facility (defined as receipts from borrowings, less repayment of borrowings from the condensed consolidated statement of cash flows), were deployed to:

• Acquired national provider of cold storage solutions and a regional modular space manufacturing and leasing business, with portfolios of approximately 2,200 climate-controlled containers and refrigerated storage trailers and 1,300 modular leasing units for $332.8 million, net of cash acquired;

• Returned $219.9 million to shareholders through stock repurchases, reducing outstanding Common Stock by 5,042,524 shares.

Storage revenue drivers for the three months ended March 31, 2024 included:

• Portable storage average monthly rental rate increased $48, or 22.4% year over year to $262 as a result of our price management tools, processes and benefits from increased VAPS penetration opportunities, as well as higher rates on the climate-controlled containers and refrigerated storage units acquired in 2023.

• Average portable storage units on rent decreased 36,389, or 21.7%, year over year driven by lower demand for the three months ended March 31, 2024.

• Average portable storage monthly utilization decreased 16.6% to 62.1% for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

• Income from continuing operations of $56.2 million for the three months ended March 31, 2024 and gross profit margin of 54.0%.

Discrete costs in the period totaled $16.0 million, and included $12.4 million of legal and professional fees primarily related to the acquisition of McGrath, $2.9 million of integration costs, and $0.7 million of lease impairment expense and other related charges.

• Adjusted EBITDA from continuing operations of $248.0 million for the three months ended March 31, 2024, representing an increase of $1.2 million, or 0.5%, as compared to the same period in 2023.

• Adjusted EBITDA margin from continuing operations was 42.2% for the three months ended March 31, 2024 and decreased 150 bps versus prior year.

Leasing margins decreased 170 bps versus prior year and delivery and installation margins decreased 60 bps versus prior year.

• Net cash provided by operating activities increased $59.9 million to $208.7 million for the three months ended March 31, 2024.

Net cash used in investing activities, excluding cash used for acquisitions, proceeds from the sale of discontinued operations of the former UK Storage Solutions segment and the related payment for the settlement of the contingent foreign currency forward contract, increased by $21.7 million.

Capital expenditures for rental equipment increased $25.3 million for the three months ended March 31, 2024 as a result of increased refurbishment spending and increased new fleet purchases, including additional investment in climate-controlled containers and refrigerated storage units.

This increase in cash used in investing activities was partially offset by a $6.4 million increase in proceeds from the sale of rental equipment for the three months ended March 31, 2024.

Net CAPEX increased $19.0 million for the three months ended March 31, 2024.

• Free Cash Flow of $143.9 million for the three months ended March 31, 2024, representing an increase of $41.0 million as compared to the same period in 2023.

We deployed this Free Cash Flow to acquire a local provider of storage and modular space solutions with a portfolio of approximately 60 storage containers and 800 modular leasing units for $43.4 million.

We paused share repurchases in the fourth quarter of 2023 as acquisition discussions advanced with McGrath RentCorp and did not repurchase any shares of our Common Stock during the first quarter of 2024.

We began repurchasing shares of our Common Stock again during the second quarter of 2024.

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

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

As such, we include in this Form 10-Q reconciliations to their most directly comparable GAAP financial measures.

These reconciliations and descriptions of why we believe these measures provide useful information to investors as well as a description of the limitations of these measures are included in "Reconciliation of non-GAAP Financial Measures" and "Liquidity and Capital Resources".

Consolidated Results of Operations

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

Our condensed consolidated statements of operations for the three months ended September 30, 2023 and 2022 are presented below.

Three Months Ended September 30, 2023 vs.

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

Our condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023 are presented below.

Three Months Ended March 31, 2024 vs.

(in thousands)

14 unchanged sentences

Gross profit 316,888 323,128 (6,240)

Other operating expenses:

Selling, general and administrative 167,568 150,870 16,698

Other depreciation and amortization 17,920 17,173 747

Lease impairment expense and other related charges 746 22 724

Currency losses, net 77 6,775 (6,698)

Other income, net (8,336) (2,520) (5,816)

Other expense (income), net 631 (3,359) 3,990

Operating income 129,946 151,647 (21,701)

Interest expense 53,803 38,009 15,794

Interest expense, net 56,588 44,866 11,722

Income from continuing operations before income tax 73,358 106,781 (33,423)

7 unchanged sentences

Net income $ 56,240 $ 210,884 $ (154,644)

Comparison of Three Months Ended September 30, 2023 and 2022

Total revenue increased $26.8 million, or 4.6%, to $604.8 million for the three months ended September 30, 2023 from $578.0 million for the three months ended September 30, 2022.

Leasing revenue increased $39.0 million, or 9.1%, as compared to the same period in 2022 driven by improved pricing and value added products penetration, partially offset by a decrease of 33,468 average total units on rent.

Delivery and installation revenues decreased $11.4 million, or 9.0%, due to decreased deliveries and returns across both of our segments.

Rental unit sales decreased $1.2 million, or 9.1%, and new unit sales increased $0.5 million, or 5.7%.

Total average units on rent for the three months ended September 30, 2023 and 2022 were 248,450 and 281,918, respectively, representing a decrease of 33,468, or 11.9%.

Portable storage average units on rent decreased by 28,328 units, or 16.0%, for the three months ended September 30, 2023 driven by lower demand in 2023 including the impact of fewer retail remodels and timing of seasonal demand as compared to strong delivery and unit on rent growth in 2022.

The average portable storage unit utilization rate during the three months ended September 30, 2023 was 70.0% as compared to 88.7% during the same period in 2022.

Modular space average units on rent decreased 5,140 units, or 4.9%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

The average modular space unit utilization rate during the three months ended September 30, 2023 was 64.2% as compared to 68.7% during the same period in 2022.

Modular space average monthly rental rates increased 15.9% to $1,089 for the three months ended September 30, 2023.

Average modular space monthly rental rates increased by $143, or 14.3%, to $1,142 in the Modular segment and by $135, or 18.8%, in the Storage segment.

Average portable storage monthly rental rates increased 24.9% to $246 for the three months ended September 30, 2023 as a result of our price management tools, processes and early benefits from increased VAPS penetration opportunities, as well as due to higher rates on the acquired climate-controlled containers and refrigerated storage units.

Approximately 5% of the 24.9% increase was driven by acquired climate-controlled containers and refrigerated storage units.

Comparison of Three Months Ended March 31, 2024 and 2023

Total revenue increased $21.7 million, or 3.8%, to $587.2 million for the three months ended March 31, 2024 from $565.5 million for the three months ended March 31, 2023.

Leasing revenue increased $20.7 million, or 4.7%, as compared to the same period in 2023, driven by improved pricing and value added products penetration, partially offset by a decrease of 40,398 average total units on rent, which was primarily driven by portable storage containers.

Delivery and installation revenues decreased $6.3 million, or 5.9%, due to decreased deliveries and returns.

Rental unit sales increased $4.5 million, or 54.5%, and new unit sales increased $2.8 million, or 26.7%.

Total average units on rent for the three months ended March 31, 2024 and 2023 were 226,831 and 267,229, respectively, representing a decrease of 40,398 units, or 15.1%.

Portable storage average units on rent decreased by 36,389 units, or 21.7%, for the three months ended March 31, 2024 driven by lower demand in 2024.

The average portable storage unit utilization rate during the three months ended March 31, 2024 was 62.1% as compared to 78.7% during the same period in 2023.

Modular space average units on rent decreased 4,009 units, or 4.0%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

The average modular space unit utilization rate during the three months ended March 31, 2024 was 62.5% as compared to 65.7% during the same period in 2023.

Modular space average monthly rental rates increased 11.4% year over year to $1,149 for the three months ended March 31, 2024.

Increases were driven by a continuation of the long-term price optimization and VAPS penetration opportunities.

Average portable storage monthly rental rates increased 22.4% year over year to $262 for the three months ended March 31, 2024 as a result of our price management tools, processes and benefits from increased VAPS penetration opportunities, as well as higher rates on the climate-controlled containers and refrigerated storage units acquired in 2023.

Gross profit:

Gross profit increased $41.8 million, or 14.0%, to $339.7 million for the three months ended September 30, 2023 from $297.9 million for the three months ended September 30, 2022.

The increase in gross profit was a result of a $42.4 million increase in leasing gross profit and was partially offset by decreased delivery and installation gross profit of $1.8 million.

Increases in leasing gross profits were primarily a result of increased revenues due to favorable average monthly rental rates including VAPS across both portable storage and modular space units, which more than offset lower unit on rent volumes.

Cost of leasing and services decreased by $13.1 million, or 6.6%, for the three months ended September 30, 2023 versus the three months ended September 30, 2022, driven by a decrease in subcontractors costs of $14.0 million, or 17.4%, and materials of $4.1 million, or 12.6%.

These decreased costs were partially offset by a $4.8 million, or 7.9%, increase in labor costs.

Cost of sales decreased by $0.9 million, or 6.9%, which is in line with decreased sales revenues of 3.0% for the three months ended September 30, 2023, resulting in improved sales gross profit margins.

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

Increases in gross profit were also driven by decreased depreciation of $1.1 million, or 1.6%, as a result of lower capital investments made in refurbishments over the past twelve months in rental equipment, partially offset by increases driven by acquired fleet.

Our resulting gross profit percentage was 56.2% and 51.5% for the three months ended September 30, 2023 and 2022, respectively.

Our gross profit percentage, excluding the effects of depreciation, was 67.2% and 63.3% for the three months ended September 30, 2023 and 2022, respectively.

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

Selling, general and administrative expense ("SG&A") increased $11.9 million, or 8.5%, to $152.0 million for the three months ended September 30, 2023, compared to $140.1 million for the three months ended September 30, 2022.

Service agreements and professional fees increased $6.2 million, or 37.3%, driven by increased professional fees and licensing subscription costs, as well as due to higher legal costs.

Gross profit decreased $6.2 million, or 1.9%, to $316.9 million for the three months ended March 31, 2024 from $323.1 million for the three months ended March 31, 2023.

The decrease in gross profit was a result of decreased delivery and installation gross profit of $9.1 million and increased depreciation expense of $15.8 million, and was partially offset by a $15.8 million increase in leasing gross profit.

The increase in leasing gross profits was primarily a result of increased revenues due to favorable average monthly rental rates including VAPS across both portable storage and modular space units, which offset lower unit on rent volumes.

Cost of leasing and services increased by $7.7 million, or 4.5%, for the three months ended March 31, 2024 versus the three months ended March 31, 2023, driven by a $12.6 million, or 20.9%, increase in labor costs.

These increased costs were partially offset by a decrease in subcontractors costs of $6.2 million, or 10.0%, and a decrease in materials costs of $2.0 million, or 7.5%.

Cost of sales increased by $4.5 million, or 42.1%, which is directionally in line with increased sales revenues of 38.8% for the three months ended March 31, 2024.

Our resulting gross profit percentage was 54.0% and 57.1% for the three months ended March 31, 2024 and 2023, respectively.

Our adjusted gross profit percentage, excluding the effects of depreciation, was 66.7% and 67.6% for the three months ended March 31, 2024 and 2023, respectively.

The decreases, as referenced above, were mainly driven by lower utilization rates, specifically on portable storage products, and higher labor costs.

Selling, general and administrative expense ("SG&A") increased $16.7 million, or 11.1%, to $167.6 million for the three months ended March 31, 2024, compared to $150.9 million for the three months ended March 31, 2023.

Other discrete expense for certain one-time projects, primarily legal and professional fees related to the acquisition of McGrath, increased $12.4 million.

Real estate and occupancy costs increased $3.8 million, or 18.4%.

Employee SG&A excluding stock compensation increased $1.9 million, or 2.8%, primarily as a result of increased salaries and wages.

Stock based compensation increased $0.9 million, or 11.7%.

Our provision for credit losses increased $7.2 million, or 222.9%.

Employee SG&A excluding stock compensation decreased $5.7 million, or 8.3%, primarily as a result of reduced variable compensation, and integration expenses declined $3.1 million, or 80.0%, during the period, partially offsetting these increases.

Other Depreciation and Amortization:

Other depreciation and amortization increased $2.2 million to $17.9 million for the three months ended September 30, 2023 compared to $15.7 million for the three months ended September 30, 2022.

The increase was driven by increased depreciation as a result of our recent investments in our CRM system and other infrastructure improvements across our branch network.

Currency Losses, net:

Currency losses, net decreased by $0.1 million for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

Other Income, Net:

Other income, net was $8.3 million for the three months ended September 30, 2023 compared to $2.5 million for the three months ended September 30, 2022.

The increase in other income, net was related to an increase in the gain on sale of fixed assets related to a real estate sale transaction during the three months ended September 30, 2023.

Interest Expense:

Interest expense increased $15.8 million, or 41.6%, to $53.8 million for the three months ended September 30, 2023 from $38.0 million for the three months ended September 30, 2022.

The increase in interest expense was

a result of higher overall weighted average interest rates as a result of increased benchmark rates and higher outstanding debt balances.

See Note 9 to the condensed consolidated financial statements for further discussion of our debt.

Income Tax Expense:

Income tax expense increased $4.5 million to $32.8 million for the three months ended September 30, 2023 compared to $28.3 million for the three months ended September 30, 2022.

The increase in expense was driven by an increase in income from continuing operations before income tax for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

Income from Discontinued Operations:

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

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

Our condensed consolidated statements of operations for the nine months ended September 30, 2023 and 2022 are presented below.

Nine Months Ended September 30, 2023 vs.

2022 $ Change

(in thousands)

Leasing and services revenue:

Leasing $ 1,356,040 $ 1,165,787 $ 190,253

Delivery and installation 334,982 323,396 11,586

Sales revenue:

New units 29,816 25,322 4,494

Rental units 31,553 37,564 (6,011)

Total revenues 1,752,391 1,552,069 200,322

Costs of leasing and services:

Leasing 300,402 276,165 24,237

Delivery and installation 238,437 244,861 (6,424)

Costs of sales:

New units 16,099 14,875 1,224

Rental units 16,203 20,216 (4,013)

Depreciation of rental equipment 190,556 188,793 1,763

Gross profit 990,694 807,159 183,535

Selling, general and administrative 449,685 428,389 21,296

Other depreciation and amortization 52,371 45,969 6,402

Currency losses, net 6,885 124 6,761

Other income, net (14,533) (7,597) (6,936)

Operating income 496,286 340,274 156,012

Interest expense 145,915 101,732 44,183

Income from continuing operations before income tax 350,371 238,542 111,829

Income tax expense from continuing operations 94,855 61,219 33,636

Income from continuing operations 255,516 177,323 78,193

Discontinued operations:

Income from discontinued operations before income tax 4,003 53,212 (49,209)

Gain on sale of discontinued operations 176,078 34,049 142,029

Income tax expense from discontinued operations 45,468 11,444 34,024

Income from discontinued operations 134,613 75,817 58,796

Net income $ 390,129 $ 253,140 $ 136,989

Comparison of Nine Months Ended September 30, 2023 and 2022

Total revenue increased $200.3 million, or 12.9%, to $1,752.4 million for the nine months ended September 30, 2023 from $1,552.1 million for the nine months ended September 30, 2022.

Leasing revenue increased $190.3 million, or 16.3%, as compared to the same period in 2022 driven by improved pricing and value added products penetration, partially offset by a decrease of 12,141 average modular space and portable storage units on rent.

Delivery and installation revenues increased $11.6 million, or 3.6%, due to increased pricing across both of our segments.

Rental unit sales decreased $6.0 million, or 16.0%, and new unit sales increased $4.5 million, or 17.7%.

Total average units on rent for the nine months ended September 30, 2023 and 2022 were 256,745 and 268,886, respectively.

Modular space average units on rent decreased 3,366 units, or 3.2%, and portable storage average units on rent decreased by 8,775 units, or 5.3%, for the nine months ended September 30, 2023.

The average modular space unit utilization rate during the nine months ended September 30, 2023 was 65.1% as compared to 68.6% during the same period in 2022.

The average portable storage unit utilization rate during the nine months ended September 30, 2023 was 73.9%, as compared to 86.0% during the same period in 2022.

Modular space average monthly rental rates increased 18.1% to $1,043 for the nine months ended September 30, 2023.

Average portable storage monthly rental rates increased 25.8% to $229 for the nine months ended September 30, 2023.

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

Gross Profit:

Gross profit increased $183.5 million, or 22.7%, to $990.7 million for the nine months ended September 30, 2023 from $807.2 million for the nine months ended September 30, 2022.

The increase in gross profit is a result of a $166.0 million increase in leasing gross profit, increased delivery and installation gross profit of $18.0 million, and increased new and rental unit sale margins of $1.3 million.

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

Cost of leasing and services increased by $17.8 million, or 3.4%, for the nine months ended September 30, 2023 versus the nine months ended September 30, 2022, driven by a $19.8 million, or 11.6%, increase in labor costs, a $4.4 million, or 5.7%, increase in material costs, and a $3.6 million, or 5.1%, increase in vehicle, equipment and other costs partially offset by a $10.0 million, or 4.9%, decrease in subcontractor costs.

Cost of sales decreased by $2.8 million, or 7.9%, which is in line with decreased sales revenues of 2.4% for the nine months ended September 30, 2023, resulting in improved sales gross profit margins.

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

Increases in gross profit were offset partially by increased depreciation of $1.8 million, or 0.9%, as a result of capital investments made over the past twelve months in rental equipment including acquired fleet.

Our gross profit percentage was 56.5% and 52.0% for the nine months ended September 30, 2023 and 2022, respectively.

Our gross profit percentage, excluding the effects of depreciation, was 67.4% and 64.2% for the nine months ended September 30, 2023 and 2022, respectively.

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

Selling, general and administrative expense ("SG&A") increased $21.3 million, or 5.0%, to $449.7 million for the nine months ended September 30, 2023, compared to $428.4 million for the nine months ended September 30, 2022.

Real estate and occupancy costs increased $7.3 million, or 13.0%, travel expenses increased $4.2 million, or 29.9%, due to increased travel and training, service agreements and professional fees increased $3.5 million, or 6.3%, and non-income business taxes increased $3.0 million, or 50.5%.

Our provision for credit losses increased $10.3 million, or 106.0%.

Stock compensation expense increased $3.6 million to $26.1 million for the nine months ended September 30, 2023, compared to $22.5 million for the nine months ended September 30, 2022.

Partially offsetting these increases, integration expenses declined $6.3 million, or 47.7%, during the period and.employee SG&A excluding stock compensation decreased $8.6 million, or 4.2%, primarily as a result of reduced variable compensation.

Service agreements and professional fees increased $2.0 million, or 12.1%, driven by increased professional fees and licensing subscription costs.

These increased costs were partially offset by a $3.7 million decrease in travel and entertainment expenses.

Adjusted EBITDA:

Adjusted EBITDA increased $1.2 million, or 0.5%, to $248.0 million for the three months ended March 31, 2024 from $246.8 million for the three months ended March 31, 2023.

The increase was driven by a $15.8 million increase in leasing gross profit as discussed above, partially offset by decreased delivery and installation gross profit of $9.1 million and increased SG&A, excluding discrete costs, of $4.0 million, or 2.9%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Other depreciation and amortization:

Other depreciation and amortization increased $6.4 million to $52.4 million for the nine months ended September 30, 2023 compared to $46.0 million for the nine months ended September 30, 2022.

The increase was driven by increased depreciation as a result of our recent investments in our CRM system and other infrastructure improvements across our branch network.

Other depreciation and amortization increased $0.7 million to $17.9 million for the three months ended March 31, 2024 compared to $17.2 million for the three months ended March 31, 2023.

Lease impairment expense and other related charges:

Lease impairment expense and other related charges increased by $0.7 million to $0.7 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

These charges were related to the exit of an office property.

Currency losses, net:

Currency losses, net increased by $6.8 million to $6.9 million for the nine months ended September 30, 2023.

This change was primarily attributable to a loss on the settlement of the contingent foreign currency forward contract relating to the sale of the former UK Storage Solutions segment.

Other Income, Net:

Other income, net was $14.5 million for the nine months ended September 30, 2023 compared to $7.6 million for the nine months ended September 30, 2022.

The increase in other income, net was related to an increase in the gain on sale of fixed assets related to a real estate sale transaction during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

Interest Expense:

Interest expense increased $44.2 million to $145.9 million for the nine months ended September 30, 2023 from $101.7 million for the nine months ended September 30, 2022.

Currency losses, net decreased by $6.7 million to $0.1 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

This change was primarily attributable to a $7.7 million loss in the 2023 period on the settlement of the contingent foreign currency forward contract relating to the sale of the former UK Storage Solutions segment in January 2023.

Other expense (income), net:

Other expense, net was $0.6 million for the three months ended March 31, 2024 compared to other income, net of $3.4 million for the three months ended March 31, 2023.

This change was primarily attributable to insurance recoveries received in 2023 related to Hurricane Ian in the Gulf Coast area of the United States in 2022.

Interest expense, net:

Interest expense increased $11.7 million, or 26.1%, to $56.6 million for the three months ended March 31, 2024 from $44.9 million for the three months ended March 31, 2023.

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

1 unchanged sentence

Income tax expense:

Income tax expense increased $33.6 million to $94.9 million for the nine months ended September 30, 2023 compared to $61.2 million for the nine months ended September 30, 2022.

The increase in expense was driven by an increase in income from continuing operations before income tax for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

Income tax expense decreased $13.4 million to $17.1 million for the three months ended March 31, 2024 compared to $30.5 million for the three months ended March 31, 2023.

The decrease in expense was primarily driven by a decrease in income from continuing operations before income tax for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Income from discontinued operations:

Income from discontinued operations increased $58.8 million to $134.6 million for the nine months ended September 30, 2023 compared to $75.8 million for the nine months ended September 30, 2022.

The increase in income from discontinued operations was driven by the gain on sale of the former UK Storage Solutions segment of $176.1 million, partially offset by an increase in income tax expense from discontinued operations as well as having no contribution from the former Tank and Pump segment in 2023.

Business Segment Results

The Company operates in two reportable segments as follows:

Modular and Storage.

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

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

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

The following tables and discussion summarize our reportable segment financial information for the three and nine months ended September 30, 2023 and 2022.

Comparison of Three Months Ended September 30, 2023 and 2022

Three Months Ended September 30, 2023

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

Modular Storage Total

Revenue $ 387,806 $ 217,028 $ 604,834

Gross profit $ 181,179 $ 158,515 $ 339,694

Adjusted EBITDA from continuing operations $ 148,386 $ 117,094 $ 265,480

Capital expenditures for rental equipment $ 51,400 $ 11,988 $ 63,388

Average modular space units on rent 81,866 18,410 100,276

Average modular space utilization rate 65.4 % 59.4 % 64.2 %

Average modular space monthly rental rate $ 1,142 $ 854 $ 1,089

Average portable storage units on rent 480 147,694 148,174

Average portable storage utilization rate 61.1 % 70.1 % 70.0 %

Average portable storage monthly rental rate $ 258 $ 246 $ 246

Three Months Ended September 30, 2022

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

Revenue $ 362,072 $ 215,936 $ 578,008

Gross profit $ 149,521 $ 148,364 $ 297,885

Adjusted EBITDA from continuing operations $ 135,246 $ 104,122 $ 239,368

Capital expenditures for rental equipment $ 81,052 $ 41,246 $ 122,298

Average modular space units on rent 83,300 22,116 105,416

Average modular space utilization rate 67.9 % 72.0 % 68.7 %

Average modular space monthly rental rate $ 999 $ 719 $ 940

Average portable storage units on rent 556 175,946 176,502

Average portable storage utilization rate 63.1 % 88.8 % 88.7 %

Average portable storage monthly rental rate $ 227 $ 197 $ 197

Total revenue increased $25.7 million, or 7.1%, to $387.8 million for the three months ended September 30, 2023 from $362.1 million for the three months ended September 30, 2022.

The increase was primarily the result of a $33.5 million, or 12.9%, increase in leasing revenue, a $0.8 million, or 10.1%, increase in new unit sales.

These increases were partially offset by a $5.1 million, or 6.2%, decrease in delivery and installation revenue driven by reduced activity, and a decrease of $3.5 million, or 29.7%, in rental unit sales revenue.

Average modular space monthly rental rates increased 14.3% for the three months ended September 30, 2023 to $1,142 driven by the continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio.

Average modular space units on rent decreased by 1,434 units, or 1.7%, year over year.

Gross Profit:

Gross profit increased $31.7 million, or 21.2%, to $181.2 million for the three months ended September 30, 2023 from $149.5 million for the three months ended September 30, 2022.

The increase in gross profit was driven by higher leasing gross profit, which increased $28.0 million, or 15.4%, driven by improved pricing including VAPS.

The increase in gross profit from leasing for the three months ended September 30, 2023 was further complemented by a $0.7 million increase in delivery and installation gross profit driven by increased pricing, and a $1.1 million increase in new unit sales gross profit partially offset by a $2.2 million decrease in rental unit sales gross profit.

In addition, cost of leasing and services decreased by $0.3 million, or 0.2%, for the three months ended September 30, 2023 versus the three months ended September 30, 2022, driven by a $3.5 million, or 5.7%, decrease in subcontractor costs, and a $0.6 million, or 2.7%, decrease in material costs, partially offset by a $3.4 million, or 7.8%, increase in labor costs, and a $0.6 million, or 4.1%, increase in vehicle, equipment and other costs.

Cost of sales decreased by $1.5 million, or 14.7%, which is in line with the decreased sales revenues of 13.7% for three months ended September 30, 2023.

The increase in gross profit was also partially driven by decreased depreciation of $4.1 million, or 7.0%, as a result of lower capital investments made in refurbishments over the past twelve months in rental equipment, partially offset by increases driven by acquired fleet.

Adjusted EBITDA:

Adjusted EBITDA increased $13.2 million, or 9.8%, to $148.4 million for the three months ended September 30, 2023 from $135.2 million for the three months ended September 30, 2022.

The increase was primarily driven by higher gross profit discussed above.

SG&A, excluding discrete items, increased $11.3 million, or 14.8%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

Capital Expenditures for Rental Equipment:

Purchases of rental equipment and refurbishments decreased $29.7 million, or 36.6%, to $51.4 million for the three months ended September 30, 2023 from $81.1 million for the three months ended September 30, 2022 driven by successful efforts to reduce our refurbishment costs through better unit selection and work scope during 2023.

Total revenue increased $1.1 million, or 0.5%, to $217.0 million for the three months ended September 30, 2023 from $215.9 million for the three months ended September 30, 2022.

The increase was primarily the result of a $5.5 million, or 3.3%, increase in leasing revenue.

Sales revenues increased $1.9 million, or 57.1%.

These increases were partially offset by a $6.3 million, or 14.1%, decrease in delivery and installation revenue driven by lower volumes during the period.

Average portable storage monthly rental rates increased 24.9% for the three months ended September 30, 2023 to $246 as a result of our price management tools, processes and early benefits from increased VAPS penetration opportunities, as well as due to higher rates on the acquired climate-controlled containers and refrigerated storage units.

Approximately 5% of the 24.9% increase was driven by acquired climate-controlled containers and refrigerated storage units.

Average portable storage units on rent decreased by 28,252 units, or 16.1%, year over year driven by lower demand in 2023 including the impact of fewer retail remodels and timing of seasonal demand as compared to strong delivery and unit on rent growth in 2022.

Average modular space monthly rental rates increased 18.8% year-over-year driven primarily by increased pricing on new deliveries;

however, average units on rent decreased 16.8% driven by lower demand.

Gross Profit:

Gross profit increased by $10.2 million, or 6.8%, to $158.5 million for the three months ended September 30, 2023 compared to $148.4 million for the three months ended September 30, 2022.

Gross profit on leasing activity increased by $14.4 million year over year driven by increased pricing as described above.

Delivery and installation gross profit decreased $2.5 million, or 13.8%, due to lower activity levels.

Sales gross profit increased by $1.3 million to $2.6 million.

Cost of leasing and services decreased by $12.8 million, or 22.6%, for the three months ended September 30, 2023 versus the three months ended September 30, 2022, driven by a $10.5 million, or 56.1%, decrease in subcontractor costs, a $3.5 million, or 41.2%, decrease in material costs, and a $0.3 million, or 2.9%, decrease in vehicle, equipment and other costs, partially offset by a $1.5 million, or 8.0%, increase in labor costs.

Net reductions were largely driven by lower volumes during the period.

Cost of sales increased by $0.7 million, or 29.1%, driven by increased sales revenues of 57.1% for three months ended September 30, 2023.

The year over year changes in each of these cost components was consistent with historical

trends and management's expectations given the respective changes in sales volume and inflationary pressures impacting our business.

These increases were offset partially by increased depreciation of $3.1 million, or 35.5%, as a result of capital investments made over the past twelve months in rental equipment including acquired fleet.

Adjusted EBITDA:

Adjusted EBITDA increased $13.0 million, or 12.5%, to $117.1 million for the three months ended September 30, 2023 from $104.1 million for the three months ended September 30, 2022 and the margin expanded to 53.9% from 48.2% as a result of favorable pricing on units and increased VAPS penetration.

The increase in Adjusted EBITDA was driven primarily by increased leasing gross profit as described above, partially offset by increased SG&A.

SG&A, excluding discrete items, increased $0.3 million, or 0.5%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

Capital Expenditures for Rental Equipment:

Purchases of rental equipment and refurbishments of $12.0 million for the three months ended September 30, 2023 were $29.2 million lower than the prior-year quarter driven by a reduction in new container purchases during 2023 given current utilization and the significant investments made in 2022.

Comparison of the Nine Months Ended September 30, 2023 and 2022

Nine Months Ended September 30, 2023

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

Modular Storage Total

Revenue $ 1,108,151 $ 644,240 $ 1,752,391

Gross profit $ 519,254 $ 471,440 $ 990,694

Adjusted EBITDA from continuing operations $ 436,793 $ 336,870 $ 773,663

Capital expenditures for rental equipment $ 141,183 $ 24,543 $ 165,726

Average modular space units on rent 81,885 19,282 101,167

Average modular space utilization rate 65.8 % 62.3 % 65.1 %

Average modular space monthly rental rate $ 1,096 $ 815 $ 1,043

Average portable storage units on rent 479 155,099 155,578

Average portable storage utilization rate 60.4 % 74.0 % 73.9 %

Average portable storage monthly rental rate $ 232 $ 229 $ 229

Nine Months Ended September 30, 2022

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

Revenue $ 985,873 $ 566,196 $ 1,552,069

Gross profit $ 418,730 $ 388,429 $ 807,159

Adjusted EBITDA from continuing operations $ 357,656 $ 258,128 $ 615,784

Capital expenditures for rental equipment $ 221,111 $ 95,699 $ 316,810

Average modular space units on rent 82,122 22,411 104,533

Average modular space utilization rate 67.5 % 73.2 % 68.6 %

Average modular space monthly rental rate $ 945 $ 657 $ 883

Average portable storage units on rent 498 163,855 164,353

Average portable storage utilization rate 56.5 % 86.1 % 86.0 %

Average portable storage monthly rental rate $ 201 $ 182 $ 182

Total revenue increased $122.3 million, or 12.4%, to $1,108.2 million for the nine months ended September 30, 2023 from $985.9 million for the nine months ended September 30, 2022.

The increase was primarily the result of a $119.0 million, or 16.4%, increase in leasing revenue and a $8.6 million, or 4.1%, increase in delivery and installation revenue.

Average modular space monthly rental rates increased 16.0% year-over-year to $1,096 driven primarily by increased pricing on new deliveries.

Average modular space units on rent decreased 237 units, or 0.3%.

Average portable storage monthly rental rates increased 15.4% for the nine months ended September 30, 2023 to $232 driven by our price management tools, processes and early benefits from increased VAPS penetration opportunities on our basic VAPS offerings, which began in the second quarter of 2022.

Average portable storage units on rent decreased 19 units, or 3.8%

Gross Profit:

Gross profit increased $100.6 million, or 24.0%, to $519.3 million for the nine months ended September 30, 2023 from $418.7 million for the nine months ended September 30, 2022.

The increase in gross profit was driven by higher leasing gross profit, which increased $89.3 million, or 17.2%, driven by improved pricing including VAPS, and by a $9.9 million increase in delivery and installation gross profit.

These increases in gross profit from leasing for the nine months ended September 30, 2023 were further complemented by a $1.9 million increase in new unit sales gross profit, and slightly offset by a $3.9 million decrease in rental unit sales gross profit.

Cost of leasing and services increased by $28.4 million, or 7.6%, for the nine months ended September 30, 2023 versus the nine months ended September 30, 2022, driven by a $9.3 million, or 16.2%, increase in material costs, a $14.5 million, or 12.2%, increase in labor costs, a $2.1 million, or 1.3%, increase in subcontractor costs, and a $2.5 million, or 6.2%, increase in vehicle, equipment and other costs.

Cost of sales decreased by $3.3 million, or 11.6%, which is in line with decreased sales revenues of 10.1% for the nine months ended September 30, 2023, resulting in improved sales gross profit margins.

The increase in gross profit was also partially driven by a $3.4 million decrease in depreciation of rental equipment as a result of lower capital investments made in refurbishments of rental equipment over the past twelve months, partially offset by increases driven by acquired fleet.

Adjusted EBITDA:

Adjusted EBITDA increased $79.1 million, or 22.1%, to $436.8 million for the nine months ended September 30, 2023 from $357.7 million for the nine months ended September 30, 2022.

The increase was driven by higher leasing gross profit discussed above.

SG&A, excluding discrete items, increased $15.5 million, or 6.6%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022 driven primarily by a $3.8 million or 37.9% increase in travel costs, a $3.4 million or 8.8% increase in real estate costs, a $4.9 million or 8.0% increase in salaries, and a $4.9 million or 58.7% increase to the provision for credit losses, partially offset by a $5.6 million or 12.6% decrease in variable compensation.

Capital Expenditures for Rental Equipment:

Purchases of rental equipment and refurbishments decreased $79.9 million, or 36.1%, to $141.2 million for the nine months ended September 30, 2023 from $221.1 million for the nine months ended September 30, 2022 driven by successful efforts to reduce our refurbishment costs through better unit selection and work scope during 2023.

Total revenue increased $78.2 million, or 13.8%, to $644.3 million for the nine months ended September 30, 2023 from $566.1 million for the nine months ended September 30, 2022.

The increase was primarily the result of a $71.3 million, or 16.2%, increase in leasing revenue and a $3.1 million, or 2.7%, increase in delivery and installation revenue.

Sales revenues increased $3.8 million, or 35.8%.

Average portable storage monthly rental rates increased 25.8% year-over-year for the nine months ended September 30, 2023 to $229 driven by our price management tools and processes and early benefits from increased VAPS penetration opportunities on our basic VAPS offerings, which began in the second quarter of 2022.

Average portable storage units on rent decreased by 8,756 units, or 5.3%, year over year driven by reduced activity in 2023 compared to 2022.

Average modular space monthly rental rates increased 24.0% year-over-year for the nine months ended September 30, 2023 to $815 driven primarily by increased pricing on new deliveries;

however, average units on rent decreased 14.0% driven by lower demand.

Gross Profit:

Gross profit increased by $83.0 million, or 21.4%, to $471.4 million for the nine months ended September 30, 2023 compared to $388.4 million for the nine months ended September 30, 2022.

Gross profit on leasing activity increased by $76.7 million year over year, or 20.8%, driven by increased pricing as described above.

Delivery and installation gross profit increased $8.3 million, or 20.6%, driven by increased pricing.

Sales gross profit increased by $3.3 million to $7.0 million.

Cost of leasing and services decreased by $10.6 million, or 7.3%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, driven by a $4.9 million, or 24.7%, decrease in material costs and a $12.2 million, or 28.0%, decrease in subcontractor costs, partially offset by a $5.3 million, or 10.1%, increase in labor costs and a $1.1 million, or 3.8%, increase in vehicle, equipment and other costs.

Cost of sales increased only moderately by $0.4 million, or 6.5%, as sales revenues increased $3.8 million, or 35.5%, driving improved sales gross profit margins for the nine months ended September 30, 2023.

These increases were partially offset by increased depreciation of $5.2 million, or 20.8%, as a result of capital investments made over the past twelve months in rental equipment including acquired fleet.

Adjusted EBITDA:

Adjusted EBITDA increased $78.8 million, or 30.5%, to $336.9 million for the nine months ended September 30, 2023 from $258.1 million for the nine months ended September 30, 2022.

The increase in Adjusted EBITDA was driven primarily by increased leasing gross profit as described above, partially offset by increased SG&A.

SG&A, excluding discrete items, increased $8.3 million, or 5.3%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022 driven primarily by a $3.8 million, or 22.9% increase in real estate costs, $3.1 million,

or 6.8%, increase in salaries, and a $5.4 million, or 397.5%, increase to the provision for credit losses, partially offset by a $11.7 million or 35.0% decrease in variable compensation.

Capital Expenditures for Rental Equipment:

Purchases of rental equipment and refurbishments of $24.5 million for the nine months ended September 30, 2023 were $71.2 million lower than the prior-year period driven by a reduction in new container purchases during 2023 given current utilization and the significant investments made in 2022.

Other Non-GAAP Financial Data and Reconciliations

Income from discontinued operations for the three months ended March 31, 2023 was related to the former UK Storage Solutions segment, which was sold January 2023.

Net CAPEX increased $19.0 million, or 41.4%, to $64.8 million for the three months ended March 31, 2024 from $45.8 million for the three months ended March 31, 2023 driven by a $25.3 million, or 53.7%, increase in refurbishment spending and new fleet purchases, including additional investment in climate-controlled containers and refrigerated storage units.

This increase was partially offset by a $6.4 million increase in proceeds from the sale of rental equipment for the three months ended March 31, 2024.

Reconciliation of Non-GAAP Financial Measures

In addition to using GAAP financial measurements, we use certain non-GAAP financial measures to evaluate our operating results.

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• Non-cash charges for stock compensation plans.

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

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

Management believes that evaluating segment performance excluding such items is meaningful because it provides insight with respect to the intrinsic and ongoing operating results of the Company and captures the business performance of the segments, inclusive of indirect costs.

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

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

Management believes that evaluating performance excluding such items is meaningful because it provides insight with respect to the intrinsic and ongoing operating results of the Company and captures the business performance inclusive of indirect costs.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider the measure in isolation or as a substitute for net income (loss), cash flow from operations or other methods of analyzing WillScot Mobile Mini’s results as reported under GAAP.

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

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023

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Restructuring costs, lease impairment expense and other related charges 746 22

Transaction costs 787 — 787 35

Integration costs 2,877 3,873

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Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023

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Adjusted EBITDA Margin from Continuing Operations (A/B) 42.2 % 43.7 %

Income from continuing operations (C) $ 91,516 $ 78,176 $ 255,516 $ 177,323

Income from Continuing Operations Margin (C/B) 15.1 % 13.5 % 14.6 % 11.4 %

Gross profit (C) $ 316,888 $ 323,128

Gross Profit Margin (C/B) 54.0 % 57.1 %

Adjusted Gross Profit and Adjusted Gross Profit Percentage

We define Adjusted Gross Profit as gross profit plus depreciation on rental equipment.

We define Adjusted Gross Profit as gross profit plus depreciation of rental equipment.

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

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Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023

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

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

The following tables provide unaudited reconciliations of Net CAPEX:

As presented below, Net CAPEX includes amounts for the former UK Storage Solutions segment through January 31, 2023.

The following table provides unaudited reconciliations of Net CAPEX:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023

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

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

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

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

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

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

We believe that our liquidity sources are sufficient to satisfy our anticipated operating, debt service and capital cash requirements over the next twelve months and thereafter for the foreseeable future.

We continue to review available acquisition opportunities with the awareness that any such acquisition may require us to incur additional debt to finance the acquisition and/or to issue shares of our Common Stock or other equity securities as acquisition consideration or as part of an overall financing plan.

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

At September 30, 2023, we had $1.3 billion of available borrowing capacity under the ABL Facility.

On September 25, 2023, Williams Scotsman, Inc.

(“WSI”), a subsidiary of the Company, completed a private offering of $500.0 million in aggregate principal amount of the 2031 Secured N otes .

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.

Cash Flow Comparison of the Nine Months Ended September 30, 2023 and 2022

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

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

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

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

At March 31, 2024, we had $1.3 billion of available borrowing capacity under the ABL Facility.

Cash Flow Comparison of the Three Months Ended March 31, 2024 and 2023

The consolidated statements of cash flows include amounts for the former UK Storage Solutions segment through January 31, 2023.

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

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

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

Net cash provided by operating activities $ 208,676 $ 148,765

Net cash used in investing activities (217,522) (225,930)

Net cash (used in) provided by investing activities (110,967) 271,949

Net cash used in financing activities (95,622) (423,087)

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Cash Flows from Operating Activities

Cash provided by operating activities for the nine months ended September 30, 2023 was $541.9 million as compared to $544.2 million for the nine months ended September 30, 2022, a decrease of $2.3 million.

The decrease was due to a change of $60.9 million in the net movements of the operating assets and liabilities, partially offset by an increase of $58.6 million of net income, adjusted for non-cash items.

Net cash provided by operating activities for the three months ended March 31, 2024 was $208.7 million as compared to $148.8 million for the three months ended March 31, 2023, an increase of $59.9 million.

The increase was due to a change of $81.7 million in the net movements of the operating assets and liabilities, partially offset by a decrease of $21.8 million of net income, adjusted for non-cash items.

Cash Flows from Investing Activities

Cash used in investing activities for the nine months ended September 30, 2023 was $217.5 million as compared to $225.9 million for the nine months ended September 30, 2022, a decrease of $8.4 million.

The decrease in cash used in investing activities was driven by an increase in proceeds from the sale of discontinued operations as cash received for the sale of the former UK Storage Solutions segment in January 2023 of $403.9 million was $84.4 million more than the cash received for the sale of the former Tank and Pump segment of $319.5 million in September 2022.

The decrease in cash used in investing activities also resulted from a $194.4 million decrease in cash used for the purchase of rental equipment and refurbishments, a $13.5 million decrease in cash used for the purchase of property, plant and equipment, and a $11.6 million increase in proceeds from the sale of property, plant, and equipment.

The decrease was partially offset by a $273.5 million increase in cash used in acquisitions, net of cash acquired, a $14.3 million decrease in proceeds from the sale of rental equipment, and a cash payment of $7.7 million for the settlement of a contingent foreign currency forward contract upon the closing of the sale of the former UK Storage Solutions segment.

Net cash used in investing activities for the three months ended March 31, 2024 was $111.0 million as compared to $271.9 million of net cash provided by investing activities for the three months ended March 31, 2023, a $382.9 million increase in net cash used in investing activities.

The increase in net cash used in investing activities resulted from $404.0 million in proceeds from the sale of the former UK Storage Solutions in the three months ended March 31, 2023 and a $25.3 million increase in refurbishment spending and new fleet purchases, including additional investment in climate-controlled containers and refrigerated storage units, during the three months ended March 31, 2024.

The increase was partially offset by a $35.1 million decrease in cash used in acquisitions, net of cash acquired, a $6.4 million increase in proceeds from the sale of rental equipment and a $7.7 million decrease in cash used for the settlement of a contingent foreign currency forward contract upon the closing of the sale of the former UK Storage Solutions segment in January 2023.

Cash Flows from Financing Activities

Cash used in financing activities for the nine months ended September 30, 2023 was $337.1 million as compared to $313.7 million for the nine months ended September 30, 2022, an increase of $23.4 million.

The increase was primarily due to a $162.5 million increase in the repurchase of common stock, partially offset by a $121.2 million increase in receipts from borrowings, net of repayment of borrowings.

Net cash used in financing activities for the three months ended March 31, 2024 was $95.6 million as compared to $423.1 million for the three months ended March 31, 2023, a decrease of $327.5 million.

The decrease was primarily due to a $215.1 million decrease in cash used for the repurchase of common stock in the three months ended March 31, 2024 and a $118.1 million decrease in repayments of borrowings, net of receipts from borrowings.

We paused share repurchases in 2023 as acquisition discussions advanced with McGrath RentCorp and did not repurchase shares of our Common Stock during the three months ended March 31, 2024.

We resumed repurchasing shares of our Common Stock in April 2024.

The decrease was partially offset by a $4.5 million increase in cash used for taxes paid on employee stock awards and a $1.3 million increase in cash used for principal payments on finance lease obligations.

Free Cash Flow

Free Cash Flow is a non-GAAP measure.

We define Free Cash Flow as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and equipment, which are all included in cash flows from investing activities.

We define Free Cash Flow as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and refurbishments and property, plant and equipment, which are all included in cash flows from investing activities.

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

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Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023

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Free Cash Flow $ 143,900 $ 102,940

Free Cash Flow for the nine months ended September 30, 2023 was $410.3 million as compared to $207.4 million for the nine months ended September 30, 2022, an increase of $202.9 million.

Free Cash Flow increased principally as a result of the $194.4 million decrease in cash used in the purchase of rental equipment and refurbishments and the $13.5 million decrease in cash used in the purchase of property, plant and equipment, partially offset by a $14.3 million decrease in proceeds from the sale of rental equipment.

The $541.9 million in cash provided by operating activities for the nine months ended September 30, 2023 was returned to shareholders through repurchases and cancellations of common stock of $678.2 million and reinvested into the business to support the purchase of rental equipment, including VAPS, and refurbishments.

Free Cash Flow for the three months ended March 31, 2024 was $143.9 million as compared to $102.9 million for the three months ended March 31, 2023, an increase of $41.0 million.

Free Cash Flow increased principally as a result of the $59.9 million increase in cash provided by operating activities and the $6.4 million increase in proceeds from the sale of rental equipment.

The increase was partially offset by the $25.3 million increase in cash used in the purchase of rental equipment and refurbishments.

The $208.7 million in cash provided by operating activities for the three months ended March 31, 2024 was reinvested into the business to support the purchase of rental equipment, including VAPS, and refurbishments, acquire a local provider of storage and modular space solutions for $43.4 million, and to fund repayment of borrowings under our ABL Facility.

Material cash requirements

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

The Company has outstanding debt related to its ABL Facility, 2025 Secured Notes, 2028 Secured Notes, 2031 Secured Notes and finance leases totaling $3.5 billion as of September 30, 2023, $16.0 million of which is obligated to be repaid within the next twelve months.

The Company has outstanding debt related to its ABL Facility, 2025 Secured Notes, 2028 Secured Notes, 2031 Secured Notes and finance leases totaling $3.5 billion as of March 31, 2024, $19.2 million of which is obligated to be repaid within the next twelve months.

Refer to Note 9 for further information regarding outstanding debt.

Operating leases

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

As of September 30, 2023, the Company had lease obligations of $295.7 million, with $66.7 million payable within the next twelve months.

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

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

As of March 31, 2024, the Company had lease obligations of $305.0 million, with $68.3 million payable within the next twelve months.

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

As of September 30, 2023, $634.2 million of the approved share repurchase pool remained available.

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

As of March 31, 2024, $498.2 million of the approved share repurchase amount remained available.

Critical Accounting Estimates

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

For a complete

discussion of our significant critical accounting estimates, see the “Critical Accounting Policies and Estimates” section in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 Annual Report on Form 10-K").

There were no significant changes to our critical accounting estimates during the nine months ended September 30, 2023.

For a complete discussion of our significant critical accounting estimates, see the “Critical Accounting Estimates” section in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Annual Report on Form 10-K").

There were no significant changes to our critical accounting estimates during the three months ended March 31, 2024.

Recently Issued Accounting Standards

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This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Act of 1934, as amended.

The words “estimates,” “expects,” “anticipates,” “believes,” “forecasts,” “plans,” “intends,” “may,” “will,” “should,” “shall,” “outlook,” “guidance” and variations of these words and similar expressions identify forward-looking statements, which are generally not historical in nature and relate to expectations for future financial performance or business strategies or objectives.

The words “estimates,” “expects,” “anticipates,” “believes,” “forecasts,” “plans,” “intends,” “may,” “will,” “should,” “shall,” “outlook,” “guidance” and

variations of these words and similar expressions identify forward-looking statements, which are generally not historical in nature and relate to expectations for future financial performance or business strategies or objectives.

Forward-looking statements are subject to a number of risks, uncertainties, assumptions and other important factors, many of which are outside our control, which could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.

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Important factors that may affect actual results or outcomes include, among others:

• various laws and regulations and recent pronouncements related to laws and regulations governing antitrust, climate related disclosures, cybersecurity, privacy, government contracts, anti-corruption and the environment;

• impacts of various laws and regulations and recent pronouncements related to laws and regulations governing antitrust, climate-related disclosures, privacy, government contracts, anti-corruption and the environment;

• our ability to successfully acquire and integrate new operations;

• the effect of global or local economic conditions in the industries and markets in which the Company operates and any changes therein, including financial market conditions and levels of end market demand;

• risks associated with cybersecurity and IT systems disruptions, including our ability to manage the business in the event a disaster shuts down our management information systems;

• risks associated with cybersecurity threats and IT systems disruptions, including our ability to manage the business in the event a cybersecurity incident or a disaster shuts down or materially impacts our management information systems;

• trade policies and changes in trade policies, including the imposition of tariffs, their enforcement and downstream consequences;

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• our ability to effectively manage our credit risk, collect on our accounts receivable, or recover our rental equipment;

• fluctuations in interest rates and commodity prices;

• inflationary pressures and fluctuations in interest rates and commodity prices;

• risks associated with labor relations, labor costs and labor disruptions;

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• our stock price volatility;

• risks associated with the completion of the McGrath Acquisition within the expected timeframe, the completion of the McGrath Acquisition, and the realization of anticipated synergies from the McGrath Acquisition;

• such other risks and uncertainties described in the periodic reports we file with the SEC from time to time (including our 2023 Annual Report on Form 10-K), which are available through the SEC’s EDGAR system at www.sec.gov and on our website.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis