WillScot Holdings Corp 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the operations and present business environment of WillScot Holdings Corporation (“WillScot”) and its subsidiaries (collectively with WillScot, the “Company,” “we,” “us” or “our”). MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes thereto, contained in Part I, Item 1. Financial Statements of this Quarterly Report on Form 10-Q. All references to "Notes" in this MD&A are to the notes to our condensed consolidated financial statements. The discussion of results of operations in this MD&A is presented on a historical basis, as of or for the three and six months ended June 30, 2026 or prior periods. The financial statements were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). We use certain non-GAAP financial measures to supplement the GAAP reported results to highlight key 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 of MD&A. Executive Summary We are a leading business services provider specializing in innovative and flexible turnkey space solutions. We offer our customers an extensive selection of space solutions with over 130,000 modular space units and over 174,000 portable storage units in our fleet. Our diverse product offering includes: • Modular Space Solutions : modular office complexes, mobile offices, classrooms, ground level offices, blast-resistant modules, clearspan structures, and sanitation solutions. • Portable Storage Solutions : portable storage containers and climate-controlled containers and trailers. • Value-Added Products ("VAPS") : a thoughtfully curated selection of solutions that supports our "Right from the Start" value proposition, including workstations, furniture, appliances, media packages, power and solar solutions, telematics, connectivity and data solutions, security and protection products, entrance packages, electrical and lighting products, organization and space optimization assets, perimeter solutions, and other items that improve the customer experience. We operate a hybrid in-house and outsourced logistics and service infrastructure that provides delivery, sitework, installation, disassembly, removal and other services to our customers for an additional fee as part of our leasing and sales operations. We also provide other services to our customers, including technical expertise and oversight regarding building design and permitting, site preparation, and project management, including expansion or contraction of installed space based on changes in project requirements. We serve diverse end markets across all sectors of the economy throughout the United States ("US"), Canada, and Mexico. As of June 30, 2026, our branch network included approximately 240 branch locations and additional drop lots to service our over 85,000 customers. We primarily lease, rather than sell, our space solutions to customers, which results in a diversified and predictable recurring revenue stream. Over 90% of new lease orders are on our standard lease agreement, pre-negotiated master lease, or enterprise account agreements. Rental contracts with customers are generally based on a 28-day or monthly rate and billing cycle. The initial lease periods vary, and our leases are customarily renewable on a month-to-month basis after their initial term and continue until cancelled by the customer or us. As 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 consolidated lease portfolio, excluding seasonal portable storage units, was approximately 41 months as of June 30, 2026. We believe our lease revenue is 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. Our customers operate in diversified end markets, including construction and infrastructure, commercial and industrial, energy and natural resources, and government and institutions. Core to our operating model is the ability to redeploy standardized assets across end markets. We track several leading market indicators to predict demand, including Gross Domestic Product in North America, the Architecture Billings Index, and non-residential construction square foot starts. These indicators, among others, support our demand forecast for our two largest end markets, the commercial and industrial sector and the construction and infrastructure market, which collectively accounted for approximately 86% of our revenues for the six months ended June 30, 2026. Significant Developments Network Optimization Plan In December 2025, we finalized our multi-year Network Optimization Plan, identifying real estate locations for exit, which was approved by the Board of Directors. We believe these actions will reduce expected annual real estate cost increases, leave adequate idle fleet to meet future projected demand, and maintain market coverage and customer service capabilities. Exiting those locations necessitates the disposal of certain rental equipment. The Network Optimization Plan 23 encompasses exiting approximately 665 acres of real estate over four years, representing 108 branch and drop lot locations and approximately 25% of our leased acreage. To enable these exits, we identified rental fleet units with a net book value of $312.1 million to be abandoned, representing approximately 53,000 units (approximately 31,000 portable storage units and 22,000 modular space units), concentrated on long idle, nonstandard, or higher repair cost units. As of June 30, 2026, the Company has disposed of approximately 23,000 portable storage units and 11,000 modular space units related to the Network Optimization Plan. Portable storage units were generally recycled, for which we received proceeds to partially offset the cash paid for the disposal of modular units. For the six months ended June 30, 2026, we recorded restructuring and other related costs for the Network Optimization Plan of $17.8 million, consisting primarily of asset disposal costs. Total cash paid to implement the Network Optimization plan was $14.9 million for the six months ended June 30, 2026, and was partially offset by total cash proceeds of $6.8 million from portable storage unit recycling. As of June 30, 2026, we expect the initiative to result in total future costs of approximately $43 million, consisting of rental equipment disposal costs of approximately $27 million and rental equipment relocation costs of approximately $16 million. Dividends In February and May 2026 , our Board of Directors declared quarterly dividends of $0.07 per share. Dividends paid were $25.4 million for the six months ended June 30, 2026. We intend to continue our quarterly dividend program, subject to Board approval, the requirements of our debt instruments, and based on available cash flow, capital allocation priorities, and market conditions. Share Repurchases During the six months ended June 30, 2026, we repurchased 352,900 shares of Common Stock for $7.3 million, excluding excise tax. As of June 30, 2026, $717.1 million of the authorization for future repurchases of the Common Stock remained available. We executed share repurchases as part of our capital allocation strategy to enhance shareholder value and optimize capital deployment in light of current market valuations. Refer to Part II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds included in this Quarterly Report on Form 10-Q for more information on our share repurchase program. Second Quarter Summary For the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, results and key drivers of our financial performance included the following: • Total revenues increased $23.1 million, or 3.9%, to $612.2 million. The increase in revenue was driven by a $27.4 million increase in delivery and installation revenue related to increased sitework for large complex projects and improved activation activity and a $6.8 million increase in leasing revenue. The increases were partially due to $12.6 million of total revenue, including both leasing and delivery and installation, associated with a significant event project in the three months ended June 30, 2026. The increase in total revenue was partially offset by a $7.0 million decline in new sales and a $4.1 million decline in rental unit sales. • Leasing revenue increased $6.8 million, or 1.5%, primarily driven by a $5.5 million, or 2.2%, increase in modular space leasing revenue, a $3.4 million, or 3.4%, increase in VAPS and third-party leasing revenue, and a decrease of $4.7 million of write-offs of aged receivables recorded as a reduction to revenue. The increase was partially offset by a $4.6 million, or 5.8%, decrease in portable storage leasing revenue. • Delivery and installation revenue increased $27.4 million, or 25.3%, driven by an increase in large complex projects and higher overall activity. • Sales revenue: new unit sales revenue decreased $7.0 million, or 32.5%, and rental unit sales revenue decreased $4.1 million, or 25.2%. • Generated net income of $47.0 million for the three months ended June 30, 2026, representing a decrease of $1.0 million, or 2.0%, as compared to the same period in 2025. Discrete costs during the period included $6.2 million of charges related to the Network Optimization Plan. • Generated Adjusted EBITDA of $227.9 million for the three months ended June 30, 2026, representing a decrease of $21.0 million, or 8.4%, as compared to the same period in 2025. • Net cash provided by operating activities decreased $43.0 million to $162.3 million for the three months ended June 30, 2026. The decrease in net cash provided by operating activities included $6.1 million of cash outflows related to the execution of our Network Optimization Plan. • Net cash used in investing activities decreased $95.1 million to $113.0 million. The three months ended June 30, 2025 included $133.8 million in cash used for acquisitions. Capital expenditures for rental equipment increased $36.8 million for the three months ended June 30, 2026. The increase in capital expenditures was driven by increased investments in differentiated fleet to support activations for large complex projects. Net capital expenditures ("Net CAPEX") increased $38.8 million for the three months ended June 30, 2026. • Generated Adjusted Free Cash Flow of $55.1 million for the three months ended June 30, 2026 as compared to $130.3 million for the three months ended June 30, 2025. During the three months ended June 30, 2026, we deployed Adjusted Free Cash Flow to: 24 • Reduce outstanding borrowings under the senior secured asset-based revolving credit facility (the “ABL Facility”) by $25.6 million. • Pay a $0.07 per share dividend, returning $12.7 million to our shareholders. We believe that the predictability of our Adjusted Free Cash Flow allows us to pursue multiple capital allocation priorities opportunistically, including investing in organic opportunities that we see in the market, maintaining appropriate leverage, executing accretive acquisitions, and returning capital to shareholders via share repurchases and dividend distributions. We also believe our strong operating cash flow generation, countercyclical Net CAPEX profile, and $1.5 billion of available borrowing capacity under our ABL Facility, provide ample liquidity to execute our strategy. In addition to using GAAP financial measures to evaluate our operating results, we use Adjusted EBITDA, Net CAPEX, and Adjusted Free Cash Flow, which are non-GAAP financial measures. As such, we include in this Form 10-Q reconciliations of these non-GAAP financial measures 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." Consolidated Results of Operations Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025 Certain consolidated results of operations for the three months ended June 30, 2026 and 2025 are presented below. Three Months Ended June 30, 2026 vs. 2025 $ Change (in thousands) 2026 2025 Revenues: Leasing and services revenue: Leasing $ 449,684 $ 442,916 $ 6,768 Delivery and installation 135,844 108,452 27,392 Sales revenue: New units 14,587 21,620 (7,033) Rental units 12,036 16,095 (4,059) Total revenues 612,151 589,083 23,068 Costs: Costs of leasing and services: Leasing 108,113 95,338 12,775 Delivery and installation 110,320 88,154 22,166 Costs of sales: New units 9,049 13,552 (4,503) Rental units 6,165 7,525 (1,360) Depreciation of rental equipment 72,240 88,444 (16,204) Gross profit 306,264 296,070 10,194 Other operating expenses: Selling, general and administrative 160,258 145,013 15,245 Other depreciation and amortization 23,019 24,188 (1,169) Restructuring costs 5,448 10 5,438 Other expense (income), net 45 (41) 86 Operating income 117,494 126,900 (9,406) Interest expense, net 53,479 58,977 (5,498) Income before income tax 64,015 67,923 (3,908) Income tax expense 17,042 19,984 (2,942) Net income $ 46,973 $ 47,939 $ (966) 25 Three Months Ended June 30, 2026 vs. 2025 Change (in thousands, except units on rent and monthly rental rate) 2026 2025 Adjusted EBITDA $ 227,884 $ 248,913 $ (21,029) Capital expenditures for rental equipment $ 122,034 $ 85,269 $ 36,765 Net CAPEX $ 113,747 $ 74,984 $ 38,763 Average modular space units on rent 89,835 90,285 (450) Average modular space utilization rate 69.2 % 59.6 % 960 bps Average modular space monthly rental rate $ 1,272 $ 1,237 $ 35 Average portable storage units on rent 100,270 107,514 (7,244) Average portable storage utilization rate 57.3 % 50.8 % 650 bps Average portable storage monthly rental rate $ 287 $ 282 $ 5 Comparison of Three Months Ended June 30, 2026 and 2025 Revenue: Total revenue increased $23.1 million, or 3.9%, to $612.2 million for the three months ended June 30, 2026 from $589.1 million for the three months ended June 30, 2025. The increase in revenue was primarily driven by a $27.4 million increase in delivery and installation revenue related to improved activation activity in the quarter, increased sitework for large complex projects, and a $6.8 million increase in leasing revenue. The increases were partially due to $12.6 million of total revenue, including both leasing and delivery and installation, associated with a significant event project in the three months ended June 30, 2026. The increase in total revenue was partially offset by a $7.0 million decline in new sales compared to the same period in 2025. Leasing revenue increased $6.8 million, or 1.5%, as compared to the same period in 2025, primarily driven by a $5.5 million, or 2.2%, increase in modular space leasing revenue, a $3.4 million, or 3.4%, increase in VAPS and third-party leasing revenue, and a decrease of $4.7 million of write-offs of aged receivables recorded as a reduction to revenue. The increase was partially offset by a $4.6 million, or 5.8%, decrease in portable storage leasing revenue. Delivery and installation revenue increased $27.4 million, or 25.3%, primarily driven by an increase in activations and sitework for large complex projects. New unit sales decreased $7.0 million, or 32.5% and rental unit sales decreased $4.1 million, or 25.2%. Total average units on rent for the three months ended June 30, 2026 and 2025 were 190,105 and 197,799, respectively, representing a decrease of 7,694 units, or 3.9%. Lower demand was driven by reduced non-residential construction project starts due to higher interest rates and increased economic uncertainty, partially offset by increased demand for large complex projects like data centers and a significant event project in the three months ended June 30, 2026. Modular space average units on rent decreased 450 units, or 0.5%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The average modular space utilization rate during the three months ended June 30, 2026 was 69.2% as compared to 59.6% during the same period in 2025 due to a decrease in the number of modular space units in our fleet as a result of our Network Optimization Plan. The decline in modular space units on rent was primarily driven by weaker non-residential construction starts, partially offset by increased demand for large complex projects. Portable storage average units on rent decreased by 7,244 units, or 6.7%, for the three months ended June 30, 2026 driven by lower demand. The average portable storage unit utilization rate during the three months ended June 30, 2026 was 57.3% as compared to 50.8% during the same period in 2025 due to a decrease in the number of portable storage units in our fleet as a result of our Network Optimization Plan. Modular space average monthly rental rates increased 2.8% year over year to $1,272 for the three months ended June 30, 2026, driven by our long-term price optimization strategies and VAPS penetration opportunities. Average portable storage monthly rental rates increased 1.8% year over year to $287 for the three months ended June 30, 2026 as a result of the mix effects from higher rates on climate-controlled containers and trailers. Total VAPS revenues, which are included in leasing revenue, increased to $103.4 million for the three months ended June 30, 2026 from $100.0 million for the three months ended June 30, 2025. Gross profit: Gross profit increased $10.2 million, or 3.4%, to $306.3 million for the three months ended June 30, 2026 from $296.1 million for the three months ended June 30, 2025. The increase in gross profit was a result of a $16.2 million decrease in depreciation of rental equipment resulting from our Network Optimization Plan and increased delivery and installation gross profit of $5.2 million. The increase in gross profit was partially offset by a $6.0 million decrease in leasing gross profit and a $5.2 million decrease in new and rental unit sales gross profit. The decrease in leasing gross profit was primarily driven by a decline in units on rent over the course of 2025, partially offset by a sequential increase in units on rent. The decrease was also driven by an $12.8 million increase in cost of leasing as further described below during the three months ended June 30, 2026. Cost of leasing and services increased by $34.9 million, or 19.0%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 to support increased activations, including additional large complex project demand, driven primarily by an increase in subcontractor costs of $23.7 million, or 37.4%, and an increase in labor 26 costs of $7.3 million, or 10.5%. These increased costs drove a $15.2 million increase to installation expense and a $12.8 million increase to cost of leasing. Cost of sales decreased by $5.9 million, or 27.8%, primarily driven by lower sales volume. Our resulting gross profit percentage was 50.0% and 50.3% for the three months ended June 30, 2026 and 2025, respectively. Selling, general and administrative expense ("SG&A"): SG&A increased $15.2 million, or 10.5%, to $160.3 million for the three months ended June 30, 2026, as compared to $145.0 million for the three months ended June 30, 2025. The increase was driven by a a $16.4 million increase in the provision for credit losses and a $5.2 million increase in employee SG&A, excluding stock compensation, which was primarily related to variable compensation. These increased costs were partially offset by a $2.3 million decrease in service agreements and professional fees and a $1.4 million decrease in travel and entertainment expense. The $16.4 million increase in the provision for credit losses was partially offset by a decrease in accounts receivable write-offs recorded as a reduction to revenue for a net decrease to income before income tax of $10.5 million for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Adjusted EBITDA: Adjusted EBITDA decreased $21.0 million, or 8.4%, to $227.9 million for the three months ended June 30, 2026 from $248.9 million for the three months ended June 30, 2025. The decrease was driven by a $6.0 million decrease in leasing gross profit, a $5.2 million decrease in new and rental unit sales gross profit, and a $15.2 million increase in SG&A. This decrease was partially offset by increased delivery and installation gross profit of $5.2 million. Other depreciation and amortization: Other depreciation and amortization decreased $1.2 million to $23.0 million for the three months ended June 30, 2026 as compared to $24.2 million for the three months ended June 30, 2025. Restructuring costs: Restructuring costs of $5.4 million for the three months ended June 30, 2026 were primarily due to asset disposal costs as part of the Network Optimization Plan implemented in December 2025. Interest expense, net: Interest expense, net decreased $5.5 million, or 9.3%, to $53.5 million for the three months ended June 30, 2026 from $59.0 million for the three months ended June 30, 2025. The decrease in net interest expense was driven by a decrease in outstanding debt and our overall weighted average interest rate. Income tax expense: Income tax expense decreased $2.9 million to $17.0 million for the three months ended June 30, 2026 compared to $20.0 million for the three months ended June 30, 2025. The decrease in expense was primarily driven by a decrease in income before income tax for the three months ended June 30, 2026. Capital expenditures for rental equipment: Capital expenditures for rental equipment increased $36.8 million, to $122.0 million for the three months ended June 30, 2026 from $85.3 million for the three months ended June 30, 2025 as a result of new fleet investments in FLEX and complex units and increased investments in refurbishments to provide capacity to deliver on large project demand. Net CAPEX increased $38.8 million, or 43.1%, to $113.7 million for the three months ended June 30, 2026 from $75.0 million for the three months ended June 30, 2025, primarily driven by the increase in capital expenditures for rental equipment. 27 Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025 Certain consolidated results of operations for the six months ended June 30, 2026 and 2025 are presented below. Six Months Ended June 30, 2026 vs. 2025 $ Change (in thousands) 2026 2025 Revenues: Leasing and services revenue: Leasing $ 875,206 $ 877,306 $ (2,100) Delivery and installation 235,366 197,113 38,253 Sales revenue: New units 23,581 44,057 (20,476) Rental units 26,626 30,158 (3,532) Total revenues 1,160,779 1,148,634 12,145 Costs: Costs of leasing and services: Leasing 204,140 183,408 20,732 Delivery and installation 193,563 161,950 31,613 Costs of sales: New units 15,267 28,750 (13,483) Rental units 14,868 15,694 (826) Depreciation of rental equipment 141,002 162,396 (21,394) Gross profit 591,939 596,436 (4,497) Other operating expenses: Selling, general and administrative 314,266 301,784 12,482 Other depreciation and amortization 46,688 47,328 (640) Restructuring costs 16,698 385 16,313 Other expense, net 130 605 (475) Operating income 214,157 246,334 (32,177) Interest expense, net 107,086 117,446 (10,360) Income before income tax 107,071 128,888 (21,817) Income tax expense 31,975 37,894 (5,919) Net income $ 75,096 $ 90,994 $ (15,898) Six Months Ended June 30, 2026 vs. 2025 Change (in thousands, except units on rent and monthly rental rate) 2026 2025 Adjusted EBITDA $ 438,898 $ 477,698 $ (38,800) Capital expenditures for rental equipment $ 223,974 $ 157,821 $ 66,153 Net CAPEX $ 203,093 $ 136,816 $ 66,277 Average modular space units on rent 88,784 90,398 (1,614) Average modular space utilization rate 68.6 % 59.5 % 910 bps Average modular space monthly rental rate $ 1,256 $ 1,222 $ 34 Average portable storage units on rent 99,318 109,079 (9,761) Average portable storage utilization rate 56.6 % 53.4 % 320 bps Average portable storage monthly rental rate $ 285 $ 274 $ 11 28 Comparison of Six Months Ended June 30, 2026 and 2025 Revenue: Total revenue increased $12.1 million, or 1.1%, to $1,160.8 million for the six months ended June 30, 2026 from $1,148.6 million for the six months ended June 30, 2025. The increase in revenue was driven by a $38.3 million increase in delivery and installation revenue related to improved activation activity and increased sitework for large complex projects. These increases were partially due to $14.0 million of total revenue, including both leasing and delivery and installation, associated with a significant event project in the six months ended June 30, 2026. Leasing revenue decreased $2.1 million, or 0.2%, as compared to the same period in 2025, primarily driven by a $9.1 million, or 5.8%, decrease in portable storage leasing revenue. The decrease was partially offset by a $4.2 million, or 2.1%, increase in VAPS and third-party leasing revenue and a $3.4 million, or 0.7%, increase in modular space leasing revenue. New unit sales decreased $20.5 million, or 46.5%, and rental unit sales decreased $3.5 million, or 11.7%, due to lower sales volume. Total average units on rent for the six months ended June 30, 2026 and 2025 were 188,102 and 199,477, respectively. Lower demand was driven by reduced non-residential construction project starts due to higher interest rates and increased economic uncertainty, partially offset by increased demand for large complex projects like data centers. Modular space average units on rent decreased 1,614 units, or 1.8%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The decline in modular space units on rent was primarily driven by weaker non-residential construction starts, partially offset by increased demand for large complex projects. The average modular space utilization rate during the six months ended June 30, 2026 was 68.6% as compared to 59.5% during the same period in 2025 due to a decrease in the number of modular space units in our fleet as a result of our Network Optimization Plan. Portable storage average units on rent decreased by 9,761 units, or 8.9%, for the six months ended June 30, 2026 driven by lower demand in 2026. The average portable storage utilization rate during the six months ended June 30, 2026 was 56.6% as compared to 53.4% during the same period in 2025 due to a decrease in the number of portable storage space units in our fleet as a result of our Network Optimization Plan. Modular space average monthly rental rates increased 2.8% to $1,256 for the six months ended June 30, 2026, driven by our long-term price optimization strategies and VAPS penetration opportunities. Average portable storage monthly rental rates increased 4.0% to $285 for the six months ended June 30, 2026 as a result of the mix effects from higher rates on climate-controlled containers and trailers. Total VAPS revenues, which are included in leasing revenues, increased to $200.5 million for the six months ended June 30, 2026 from $196.4 million for the six months ended June 30, 2025. Gross profit: Gross profit decreased $4.5 million, or 0.8%, to $591.9 million for the six months ended June 30, 2026 from $596.4 million for the six months ended June 30, 2025. The decrease in gross profit was primarily a result of a $22.8 million decrease in leasing gross profit and a $9.7 million decrease in new and rental unit sales gross profit. The decrease was partially offset by a $21.4 million decrease in depreciation of rental equipment from our Network Optimization Plan and increased delivery and installation gross profit of $6.6 million. The decrease in leasing gross profit was due to the decline in units on rent, as well as an increase in variable costs to support increased activations during the quarter. Cost of leasing and services increased by $52.3 million, or 15.2%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 to support increased activations, including additional large complex project demand, driven primarily by an increase in subcontractor costs of $33.4 million, or 29.0%, and an increase in labor cost of $10.1 million, or 7.5%. These increased costs drove a $24.2 million increase to installation expense and an $20.7 million increase to cost of leasing. Cost of sales decreased by $14.3 million, or 32.2%, primarily driven by lower sales volume. Our resulting gross profit percentage was 51.0% and 51.9% for the six months ended June 30, 2026 and 2025, respectively. Selling, general and administrative expense: SG&A increased $12.5 million, or 4.1%, to $314.3 million for the six months ended June 30, 2026, as compared to $301.8 million for the six months ended June 30, 2025. The increase was primarily driven by a $19.1 million, or 198.3%, increase in the provision for credit losses and a $8.7 million increase in employee SG&A, excluding stock compensation, which was primarily related to variable compensation. These increased costs were partially offset by a $6.7 million, or 38.8%, decrease in travel and entertainment expense and a $5.6 million, or 13.7%, decrease in service agreements and professional fees. The $19.1 million increase in the provision for credit losses was partially offset by a decrease in accounts receivable write-offs recorded as a reduction to revenue for a net decrease to income before income tax of $16.5 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. Adjusted EBITDA: Adjusted EBITDA decreased $38.8 million, or 8.1%, to $438.9 million for the six months ended June 30, 2026 from $477.7 million for the six months ended June 30, 2025. The decrease was driven by increased cost of leasing of $20.7 million, increased SG&A of $12.5 million, and decreased new and rental unit sales gross profit of $9.7 million. The decrease was partially offset by increased delivery and installation gross profit of $6.6 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. Other depreciation and amortization: Other depreciation and amortization decreased $0.6 million to $46.7 million for the six months ended June 30, 2026 as compared to $47.3 million for the six months ended June 30, 2025. 29 Interest expense, net: Interest expense decreased $10.4 million to $107.1 million for the six months ended June 30, 2026 from $117.4 million for the six months ended June 30, 2025. The decrease in net interest expense was driven by a decrease in outstanding debt and our overall weighted average interest rate. Income tax expense: Income tax expense decreased $5.9 million to $32.0 million for the six months ended June 30, 2026 from $37.9 million for the six months ended June 30, 2025. The decrease in expense was driven by a decrease in income before income tax for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. Capital expenditures for rental equipment: Capital expenditures for rental equipment increased $66.2 million, or 41.9%, to $224.0 million for the six months ended June 30, 2026 from $157.8 million for the six months ended June 30, 2025 as a result of new fleet investments in FLEX and complex units and increased investments in refurbishments to provide capacity to deliver on large project demand. Net CAPEX increased $66.3 million, or 48.4%, to $203.1 million for the six months ended June 30, 2026 from $136.8 million for the six months ended June 30, 2025, primarily driven by the increase in capital expenditures for rental equipment. 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. Set forth below are definitions of the non-GAAP financial measures used in this Quarterly Report on Form 10-Q, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, and the reasons why we believe these measures provide useful information to investors. Each of these non-GAAP financial measures has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for analysis of, results reported under GAAP. Our measurements of these metrics may not be comparable to similarly titled measures of other companies. Adjusted EBITDA We define EBITDA as net income plus net interest (income) expense, income tax expense (benefit), depreciation and amortization. Our adjusted EBITDA ("Adjusted EBITDA") reflects the following further adjustments to EBITDA to exclude certain non-cash items and the effect of what we consider transactions or events not related to our core business operations: • Currency (gains) losses, net on monetary assets and liabilities denominated in foreign currencies other than the subsidiaries’ functional currency. • Restructuring costs, lease impairment expense, and other related charges associated with restructuring plans designed to streamline operations and reduce costs including employee and lease termination costs. • Goodwill and other impairment charges related to non-cash costs associated with impairment charges to goodwill, other intangibles, rental fleet and property, plant and equipment. • Costs to integrate acquired companies, including outside professional fees, non-capitalized costs associated with system integrations, non-lease branch and fleet relocation expenses, employee relocation and training costs, and other costs required to realize cost or revenue synergies. • Transaction costs including legal and professional fees and other transaction specific related costs. • 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, gains and losses on disposals of property, plant, and equipment, unrealized gains and losses on investments, costs to implement the Company's real estate exits prior to the approval of the Network Optimization Plan, and non-equity executive transition costs. Our Chief Operating Decision Maker ("CODM") evaluates business performance utilizing Adjusted EBITDA as shown in the reconciliation of the Company’s consolidated net income to Adjusted EBITDA below. We believe that evaluating performance excluding such items noted above 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. We believe that Adjusted EBITDA is useful to investors because it (i) allows investors to compare performance over various reporting periods on a consistent basis by removing from operating results the impact of items that do not reflect core operating performance; (ii) is used by our board of directors and management to assess our performance; (iii) may, subject to certain limitations, enable investors to compare the performance of the Company to its competitors; (iv) provides additional tools for investors to use in evaluating ongoing operating results and trends; and (v) aligns with definitions in our ABL Facility. 30 The following table provides reconciliations of net income to Adjusted EBITDA: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2026 2025 2026 2025 Net income $ 46,973 $ 47,939 $ 75,096 $ 90,994 Income tax expense 17,042 19,984 31,975 37,894 Interest expense, net 53,479 58,977 107,086 117,446 Depreciation and amortization 95,259 112,632 187,690 209,724 Currency losses (gains), net 246 (79) 417 144 Restructuring costs, lease impairment expense and other related charges 5,482 205 16,755 907 Integration and transaction costs 13 1,511 79 1,772 Stock compensation expense 7,895 8,373 15,002 16,714 Other (a) 1,495 (629) 4,798 2,103 Adjusted EBITDA $ 227,884 $ 248,913 $ 438,898 $ 477,698 (a) For the six months ended June 30, 2026, other included $1.8 million in non-equity executive transition costs. Net CAPEX We define N et CAPEX as purchases of rental equipment and refurbishments and purchases of property, plant and equipment, less proceeds from the sale of rental equipment ( excluding proceeds from the implementation of the Network Optimization Plan and real estate exits prior to the approval of the Network Optimization Plan) and proceeds from the sale of property, plant and equipment, which are all included in cash flows from investing activities. Management believes that the presentation of Net CAPEX provides useful information regarding the net capital invested in our rental fleet and property, plant and equipment each year to assist in analyzing the performance of our business. The following table provides reconciliations of Net CAPEX: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2026 2025 2026 2025 Purchase of rental equipment and refurbishments $ (122,034) $ (85,269) $ (223,974) $ (157,821) Proceeds from sale of rental equipment 14,155 16,269 33,433 30,332 Less: Proceeds from sale of rental equipment for Network Optimization Plan (2,338) — (6,805) — Less: Proceeds from sale of rental equipment for real estate exits prior to approval of the Network Optimization Plan (89) — (302) — Net CAPEX for Rental Equipment (110,306) (69,000) (197,648) (127,489) Purchase of property, plant and equipment (4,740) (6,286) (8,369) (10,920) Proceeds from the sale of property, plant and equipment 1,299 302 2,924 1,593 Net CAPEX $ (113,747) $ (74,984) $ (203,093) $ (136,816) 31 Adjusted Free Cash Flow We define Adjusted Free Cash Flow as net cash provided by operating activities; less purchases of rental equipment and property, plant and equipment and plus proceeds from sale of rental equipment and property, plant and equipment, which are all included in cash flows from investing activitie s; and excluding payments for and proceeds from the implementation of the Network Optimization Plan and real estate exits prior to the approval of the Network Optimization Plan and payments for executive transition costs. Man agement believes that the presentation of Adjusted Free Cash Flow provides useful additional information concerning cash flow available to fund our capital allocation alternatives and allows investors to compare cash generation performance over various reporting periods and against peers. The following table provides reconciliations of net cash provided by operating activities to Adjusted Free Cash Flow. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2026 2025 2026 2025 Net cash provided by operating activities $ 162,264 $ 205,311 $ 353,322 $ 411,938 Purchase of rental equipment and refurbishments (122,034) (85,269) (223,974) (157,821) Proceeds from sale of rental equipment 14,155 16,269 33,433 30,332 Purchase of property, plant and equipment (4,740) (6,286) (8,369) (10,920) Proceeds from sale of property, plant and equipment 1,299 302 2,924 1,593 Cash paid to implement Network Optimization Plan 6,057 — 14,852 — Proceeds from sale of rental equipment for Network Optimization Plan (2,338) — (6,805) — Cash paid to implement real estate exits prior to approval of the Network Optimization Plan 140 — 919 — Proceeds from sale of rental equipment for real estate exits prior to approval of the Network Optimization Plan (89) — (302) — Cash paid for executive transition costs 372 — 4,642 — Adjusted Free Cash Flow $ 55,086 $ 130,327 $ 170,642 $ 275,122 Liquidity and Capital Resources Overview Our principal sources of liquidity include cash flows generated from operating activities, borrowings under our ABL Facility, and sales of debt 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 Adjusted Free Cash Flow, which together support both organic operations and other capital allocation priorities. 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 regularly 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. In addition, we continue to evaluate alternatives to optimize our capital structure, which could include the issuance or repurchase of additional unsecured and secured debt, equity securities and/or equity-linked securities. There can be no assurance as to the timing of any such issuance or repurchase. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. Availability of financing and the associated terms are inherently dependent on the debt and equity capital markets and subject to change. From time to time, we may also seek to streamline our capital structure and improve our financial position through refinancing or restructuring our existing debt or retiring certain of our securities for cash or other consideration. Borrowing availability under our ABL Facility is equal to the lesser of $3.0 billion and the applicable borrowing bases. The borrowing bases are a function of, among other considerations, the value of the assets in the relevant collateral pool, of which our rental equipment represents the largest component. At June 30, 2026, we had $1.5 billion of available borrowing capacity under the ABL Facility. 32 Cash Flows The following summarizes our change in cash and cash equivalents for the periods presented: Six Months Ended June 30, (in thousands) 2026 2025 Net cash provided by operating activities $ 353,322 $ 411,938 Net cash used in investing activities (197,532) (273,099) Net cash used in financing activities (151,269) (135,942) Effect of exchange rate changes on cash and cash equivalents (941) 952 Net change in cash and cash equivalents $ 3,580 $ 3,849 Comparison of the Six Months Ended June 30, 2026 and 2025 Cash flows from operating activities Net cash provided by operating activities for the six months ended June 30, 2026 was $353.3 million as compared to $411.9 million for the six months ended June 30, 2025, a decrease of $58.6 million. The decrease in net cash provided by operating activities resulted from a $65.7 million decrease in the net movements of the operating assets and liabilities. The decrease in net cash provided by operating activities included $19.5 million of cash outflows related to the execution of our Network Optimization Plan and executive transition costs. Cash flows from investing activities Net cash used in investing activities for the six months ended June 30, 2026 was $197.5 million as compared to $273.1 million for the six months ended June 30, 2025, a $75.6 million decrease in net cash used in investing activities. The decrease in net cash used in investing activities resulted from a $135.3 million decrease in cash used in acquisitions, net of cash acquired. The decrease was partially offset by a $66.2 million increase in the purchase of rental equipment and refurbishments during the six months ended June 30, 2026 as a result of increased investments in refurbishments and new fleet investments in FLEX and complex units to provide capacity to deliver on large project demand. Cash flows from financing activities Net cash used in financing activities for the six months ended June 30, 2026 was $151.3 million as compared to $135.9 million for the six months ended June 30, 2025, an increase of $15.3 million. The increase was primarily due to a $81.9 million increase in repayments of borrowings, net of receipts from borrowings. The increase was partially offset by a $66.0 million decrease in cash used for the repurchase and cancellation of Common Stock during the six months ended June 30, 2026. Material cash requirements The Company’s material cash requirements include the following contractual and other obligations: Debt The Company has outstanding debt related to the ABL Facility, 2028 Secured Notes, 2029 Secured Notes, 2030 Secured Notes, 2031 Secured Notes, and finance leases totaling $3.5 billion as of June 30, 2026, $33.5 million of which is obligated to be repaid within the next twelve months. The Company has no maturities of debt until 2028 other than for finance leases. Refer to Note 6 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 real estate. As of June 30, 2026, the Company had lease obligations of $356.4 million, with $75.2 million payable within the next twelve months. Other In addition to the cash requirements described above, the Company has a dividend program subject to quarterly declaration by the Board of Directors as well as 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. As of June 30, 2026, $717.1 million of the authorization for future repurchases of our Common Stock remained available. These programs do not obligate the Company to issue dividends or repurchase shares. 33 Critical Accounting Estimates The Company's discussion and analysis of its financial condition, results of operations, liquidity and capital resources is based on its condensed consolidated financial statements, which have been prepared in accordance with GAAP. GAAP requires that management makes estimates and judgments that affect the reported amount of assets, liabilities, revenue, expenses, and the related disclosure of contingent assets and liabilities. The Company's management bases these estimates on historical experience and on various other assumptions that they consider reasonable under the circumstances and reevaluate their estimates and judgments as appropriate. The actual results may differ materially and adversely from its estimates. For a complete discussion of the Company's significant critical accounting estimates, see the “Critical Accounting Estimates” section in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report on Form 10-K"). There were no significant changes to the Company's critical accounting estimates during the six months ended June 30, 2026. Recently Issued Accounting Standards Refer to Part I, Item 1, Note 1 of the notes to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for our assessment of recently issued accounting standards. Cautionary Note Regarding Forward-Looking Statements 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. 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 or implied by the forward-looking statements. Although we believe that these forward-looking statements are based on reasonable assumptions, we can give no assurance that any such forward-looking statement will materialize. Important factors that may affect actual results or outcomes include, among others: • economic conditions and changes therein, including financial market conditions and levels of end market demand, as a result of macroeconomic and geopolitical conditions, including international armed conflicts; • our ability to effectively compete in the modular space and portable storage industries; • our ability to effectively manage our credit risk, collect on our accounts receivable, or recover our rental equipment from customers; • our ability to implement our Network Optimization Plan; • laws and regulations governing antitrust, climate related disclosures, cybersecurity and information technology, privacy, government contracts, anti-corruption, and the environment; • the actions of activist shareholders; • our ability to successfully acquire and integrate new operations; • risks associated with cybersecurity threats and failure of our management information systems; • trade policies and changes in trade policies, including the imposition of or increases in tariffs, their enforcement, trade restrictions, and broader economic measures and their consequences; • fluctuations in interest rates and commodity prices; • risks associated with labor relations, labor costs and labor disruptions; • changes in the competitive environment of our customers as a result of the economic climate in which they operate and/or economic or financial disruptions to their industry; • our ability to adequately protect our intellectual property and other proprietary rights that are material to our business; • natural disasters and other business disruptions such as pandemics; • our ability to establish and maintain the appropriate physical presence in our markets; • property, casualty or other losses not covered by our insurance; • our ability to close our unit sales transactions; • our ability to achieve sustainability goals; • operational, economic, political, and regulatory risks; • effective management of our rental equipment; • the effect of changes in state building codes on our ability to remarket our buildings; • significant increases in the costs and restrictions on the availability of raw materials and labor; • fluctuations in fuel costs or a reduction in fuel supplies; • our reliance on third-party manufacturers and suppliers; 34 • impairment of our goodwill and intangible assets; • our ability to use our net operating loss carryforwards and other tax attributes; • our ability to recognize deferred tax assets, such as those related to tax loss carryforwards, and utilize future tax savings; • unanticipated changes in tax obligations, adoption of new tax legislation, or exposure to additional income tax liabilities; • our ability to access the capital and credit markets or the ability of key counterparties to perform their obligations to us; • our ability to service our debt and operate our business; • our ability to incur significant additional amounts of debt and avoid risks associated with substantial indebtedness; • covenants that limit our operating and financial flexibility; and • such other risks and uncertainties described in the periodic reports we file with the SEC from time to time (including our 2025 Annual Report on Form 10-K), which are available through the SEC’s EDGAR system at www.sec.gov and on our website. Any forward-looking statement speaks only at the date which it is made, and we undertake no obligation, and disclaims any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.