# WillScot Holdings Corp (WSC) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from WillScot Holdings Corp's 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1647088/000164708824000030/wsc-20231231.htm
Accession: 0001647088-24-000030
Filing date: 2024-02-20
Report date: 2023-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/WSC/
All MD&A years: /company/WSC/mda/
Previous year: /company/WSC/mda/fy2022/ (FY 2022)
Next year: /company/WSC/mda/fy2024/ (FY 2024)

ITEM 7.    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 WillScot Mobile Mini Holdings Corp. ("WillScot Mobile Mini") operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes thereto, contained in Part II, Item 8 of this report. The discussion of results of operations in this MD&A is presented on a historical basis, as of or for the year ended December 31, 2023 or prior periods. In connection with the closing of the merger of WillScot Corporation ("WillScot") and Mobile Mini, Inc. ("Mobile Mini") on July 1, 2020 (the "Merger"), Mobile Mini became a wholly-owned subsidiary of WillScot and the Company changed its name to WillScot Mobile Mini Holdings Corp. WillScot Mobile Mini is the holding company for the Williams Scotsman and Mobile Mini families of companies.

On September 30, 2022, the Company completed the sale of its former Tank and Pump Solutions ("Tank and Pump") segment. On January 31, 2023, the Company completed the sale of its UK Storage Solutions segment. This MD&A presents the historical financial results of the former Tank and Pump segment and the former UK Storage Solutions segment as discontinued operations for all periods presented. The divestitures of the UK Storage Solutions segment and the former Tank and Pump segment completed the Company's transition of its portfolio to core turnkey temporary space solutions in North America. Following the completion of these transactions, the Company operates in two reportable segments as follows: Modular Solutions ("Modular") and Storage Solutions ("Storage").

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

We are a leading business services provider specializing in innovative and flexible turnkey temporary space solutions. We service diverse end markets across all sectors of the economy throughout the United States ("US"), Canada, and Mexico. As of December 31, 2023, our branch network included approximately 250 branch locations and additional drop lots to service our over 85,000 customers. We offer our customers an extensive selection of “Ready to Work” temporary space solutions with over 156,000 modular space units and over 212,000 portable storage units in our fleet.

We primarily lease, rather than sell, our modular and portable storage units to customers, which results in a highly diversified and predictable recurring revenue stream. Over 90% of new lease orders are on our standard lease agreement, pre-negotiated master lease or national account agreements. The initial lease periods vary, and our leases are customarily renewable on a month-to-month basis after their initial term. Our lease revenue is highly predictable due to its recurring nature and the underlying stability and diversification of our lease portfolio. Furthermore, given that our customers value flexibility, they consistently extend their leases or renew on a month-to-month basis such that the average effective duration of our lease portfolio, excluding seasonal portable storage units, is approximately 37 months. We complement our core leasing business by selling both new and used units, allowing us to leverage scale, achieve purchasing benefits and redeploy capital employed in our lease fleet.

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

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

•Total revenues increased $222.1 million, or 10.4%, attributable to organic revenue growth levers in the business and due to the impact of acquisitions. Leasing revenue increased $212.2 million, or 13.1%, delivery and installation revenue increased $8.0 million, or 1.9%, and new unit sales revenue increased $7.8 million, or 19.3%. These increases were partially offset by a reduction in rental unit sales revenue, which decreased $5.9 million, or 11.5%. We estimate that recent acquisitions completed in 2023 contributed approximately $59.0 million to total revenues for the year ended December 31, 2023.

Key leasing revenue drivers included:

–Average modular space monthly rental rate increased $153, or 16.9%, to $1,058 driven by strong pricing performance across both segments. Average modular space monthly rental rates increased by $145, or 15.0%, in the Modular segment and by $144, or 21.1%, in the Storage segment.

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

–Average utilization for portable storage units decreased to 73.2%, from 86.8% in 2022, driven by decreased demand in 2023 as compared to very strong demand in 2022. Average utilization for modular space units decreased 380 basis points ("bps") to 64.7% in 2023.

–Average modular space units on rent decreased 3,986 units, or 3.8%, and average portable storage units on rent decreased 15,179 units, or 9.0%. The decreases were mainly driven by lower construction start activity in 2023 versus record demand in 2022, and for portable storage products, also by fewer retail remodels and lower seasonal retail demand versus the prior year.

•Modular segment revenue represented 63.2% of consolidated revenue for the year ended December 31, 2023, and increased $153.6 million, or 11.4%, to $1,495.7 million. The increase was driven by increased leasing revenue, which increased $145.4 million, or 14.6%, due to continued growth of pricing and VAPS, and increased delivery and installation revenues, which increased $10.7 million, or 3.9%. These increases were partially offset by a decrease in sales revenue of $2.4 million, or 3.1%, driven by lower rental unit sales. Modular revenue drivers for the year ended December 31, 2023 included:

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

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

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

•Storage segment revenue, which represented 36.8% of consolidated revenue for the year ended December 31, 2023, increased $68.5 million, or 8.6%, to $869.1 million. The increase was driven by increased leasing revenue, which grew $66.9 million, or 10.6%, due to increased pricing and contributions from the recently acquired climate-controlled containers and refrigerated storage units, partially offset by lower overall units on rent. Delivery and installation revenues decreased $2.7 million, or 1.7%, driven by decreased activity. Rental unit sales increased $4.3 million, or 50.7% given greater fleet availability in the current year. Storage segment revenue drivers for the year ended December 31, 2023 included:

–Portable storage average monthly rental rate of $238 increased 24.0% year over year as a result of our price management tools and processes and early benefits from increased VAPS penetration opportunities, as well as due to higher rates on the acquired climate-controlled containers and refrigerated storage units. Excluding the impacts of the acquired climate-controlled containers and refrigerated storage units, portable storage average monthly rental rates increased $37, or 19.3%. Modular space average monthly rental rate of $826 increased $144, or 21.1%, year over year as a result of price optimization and increased VAPS penetration.

–Average portable storage units on rent decreased 15,159, or 9.0%, year over year driven by lower demand during 2023 versus the high growth achieved in 2022 including the impact of fewer retail remodels and lower seasonal demand versus the prior year. Average modular space units on rent decreased 3,339, or 15.0%, year over year due to lower demand.

–Average portable storage monthly utilization decreased 13.6% to 73.3% for the year ended December 31, 2023, as compared to the year ended December 31, 2022. Average modular space monthly utilization decreased 11.3% to 61.1% for the year ended December 31, 2023, as compared to the year ended December 31, 2022.

•Generated income from continuing operations of $341.8 million for the year ended December 31, 2023, representing an increase of $65.5 million versus the year ended December 31, 2022. Net Income including income from discontinued operations was $476.5 million for the year ended December 31, 2023, representing an increase of $136.9 million versus the year ended December 31, 2022.

•Generated Adjusted EBITDA from continuing operations of $1,061.5 million for the year ended December 31, 2023, representing an increase of $177.6 million, or 20.1%, as compared to 2022. This increase was driven by continued expansion of most product and service line margins. Most significantly, leasing margins increased 15.3% versus prior year and delivery and installation margins increased 12.7% versus prior year, both driven primarily by increased pricing. SG&A expenses included in Adjusted EBITDA decreased as a percentage of revenue by 120 bps versus 2022.

•Net cash provided by operating activities increased $16.6 million to $761.2 million for the year ended December 31, 2023. This increase was limited by the divestitures of the former Tank and Pump and UK Storage Solutions segments which both contributed to operating cash flows for the year ended December 31, 2022. Net cash used in investing activities, excluding cash used as part of acquisitions and proceeds from the sale of discontinued operations, decreased $229.7 million to $184.7 million as a result of reduced refurbishment spending and decreased purchases

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

•Generated Free Cash Flow of $576.6 million for the year ended December 31, 2023, representing an increase of $246.3 million, or 74.5%, as compared to 2022. This Free Cash Flow, along with the proceeds from the sale of our former UK Storage Solutions segment and additional net borrowings under the asset-based credit agreement (the "ABL Facility") were deployed to:

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

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

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

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

In addition to using GAAP financial measurements, we use Adjusted EBITDA and Free Cash Flow, which are non-GAAP financial measures, to evaluate our operating results. As such, we include in this Annual Report on Form 10-K 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."

Significant Developments

Entry into an Agreement to Acquire McGrath RentCorp

On January 28, 2024, the Company, along with its newly formed subsidiaries, Brunello Merger Sub I, Inc. (“Merger Sub I”) and Brunello Merger Sub II, LLC (“Merger Sub II”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with McGrath RentCorp ("McGrath"). Merger Sub I will merge with and into McGrath (the “First-Step Merger”), with McGrath surviving the First-Step Merger and, immediately thereafter, McGrath will merge with and into Merger Sub II (the “Second-Step Merger” and together with the First-Step Merger, the “McGrath Acquisition”), with Merger Sub II surviving the Second-Step Merger as a wholly owned subsidiary of the Company. At the effective time of the First-Step Merger, and subject to the terms and subject to the conditions set forth in the Merger Agreement, each outstanding share of the common stock of McGrath shall be converted into the right to receive either (i) $123.00 in cash or (ii) 2.8211 shares of validly issued, fully paid and nonassessable shares of the Company’s common stock. Under the terms of the Merger Agreement, we expect McGrath’s shareholders would own approximately 12.6% of the Company following the McGrath Acquisition.

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

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

Divestiture

On January 31, 2023, we completed the sale of our former UK Storage Solutions segment for total cash consideration of $418.1 million. Proceeds from the sale were used to support ongoing reinvestment in our Modular and Storage operating segments in North America and other capital allocation priorities.

Reportable Segments

Following the divestitures of the UK Storage Solutions and Tank and Pump segments, we operate in two reportable segments: Modular Solutions ("Modular") and Storage Solutions ("Storage"). The reportable segments are aligned with how we operate and analyze our business results. During the first quarter of 2023, the ground level office business within the Modular segment was transferred to the Storage segment, and associated revenues, expenses, and operating metrics were transferred to the Storage segment. All periods presented have been retrospectively revised to reflect this adjustment within the Modular and Storage segments. For the year ended December 31, 2022, this resulted in approximately $49.8 million of revenue and $28.5 million of gross profit being transferred from the Modular segment to the Storage segment.

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In January 2024, the Company launched a unified go-to market approach to achieve local product unification within each metropolitan statistical area. In connection with this change in operating model, the Company realigned the composition of its segments to reflect how its Chief Operating Decision Maker reviews information to make operating decisions and assess performance. As a result, the Company concluded that its divisions represent its operating segments, which are aggregated into one reportable segment as the divisions have similar economic characteristics, offer similar products to similar customers, use similar methods to distribute products and are subject to similar competitive risks. This change in reportable segments will be reflected in our financial statements beginning in 2024.

Customer Relationship Management ("CRM") System

On February 6, 2023, we successfully completed the harmonization of our separate Modular and Storage CRM systems onto a single unified system. With this enhanced platform, we have a combined view of our customers and projects across the entire sales team. Going forward, we will focus on productivity management and building a more targeted and predictive approach to anticipate and service customer demand, with continued improvement in engagement and outreach underpinned by our data warehouse.

Business Combinations

During 2023, we acquired a U.S. national provider of cold storage solutions, which consisted primarily of approximately 2,200 climate-controlled containers and refrigerated storage trailers, a regional modular space manufacturing and leasing business, which consisted primarily of approximately 1,300 modular leasing units, and a U.S. national provider of premium large clearspan structures for total cash consideration of $411.6 million, net of cash acquired.

Asset Acquisitions

During 2023, we also acquired certain assets and liabilities of five regional and local storage and modular companies, which consisted primarily of approximately 1,800 storage units and 700 modular units, for $150.0 million in cash, net of cash acquired. As of the acquisition dates, the fair value of rental equipment acquired was $147.6 million.

Financing Activities

On September 25, 2023, Williams Scotsman, Inc. (“WSI”), a subsidiary of the Company, completed a private offering of $500.0 million in aggregate principal amount of 7.375% senior secured notes due 2031 (the "2031 Secured Notes") to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended. Proceeds were used to repay approximately $494.0 million of outstanding indebtedness under the ABL Facility and certain fees and expenses.

Interest Rate Swap Agreements

In January 2023, the Company entered into two interest rate swap agreements with financial counterparties relating to $750.0 million in aggregate notional amount of variable-rate debt under the ABL Facility. Under the terms of the agreements, the Company receives a floating rate equal to one-month term SOFR and will make payments based on a weighted average effective fixed interest rate of 3.44% on the notional amount. The swap agreements were designated and qualified as hedges of the Company’s exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility. The swap agreements terminate on June 30, 2027.

In January 2024, the Company entered into two interest rate swap agreements with financial counterparties relating to $500.0 million in aggregate notional amount of variable-rate debt under the Company's ABL Facility. Under the terms of the agreements, the Company receives a floating rate equal to one-month term SOFR and will make payments based on a weighted average fixed interest rate of 3.70% on the notional amount. 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.

Share Repurchases

In May 2023, our Board of Directors approved a reset of our share repurchase program authorizing us to repurchase up to $1.0 billion of our outstanding shares of Common Stock and equivalents. During the year ended December 31, 2023, we repurchased 18,533,819 shares of Common Stock for $810.8 million. As of December 31, 2023, $498.2 million of the approved share repurchase pool remained available.

Inflation

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.

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Business Environment and Outlook

Our customers operate in a diversified set of end markets, including construction, commercial and industrial, retail and wholesale trade, energy and natural resources, education, government and institutions and healthcare. 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 85% of our revenues in the year ended December 31, 2023.

Core to our operating model is the ability to redeploy standardized assets across end markets, as we did over the last few years to service emerging demand in the healthcare and government sectors related to COVID-19. We remain focused on our core priorities of growing leasing revenues by increasing units on rent, both organically and through mergers and acquisitions, delivering "Ready to Work" solutions to our customers with VAPS, and continually improving the overall customer experience.

Even in an uncertain macro-economic environment, market catalysts such as increased infrastructure spending and onshoring and reshoring, and idiosyncratic growth levers such as continued penetration of our customer base with our VAPS offering, long-term pricing tailwinds, cross-selling between our Modular and Storage segment customers, and other commercial best practice sharing between our segments provide us confidence in our continued organic growth outlook.

Components of Our Consolidated Historical Results of Operations

Revenue

Our revenue consists mainly of leasing, services and sales revenue. We derive our leasing and services revenue primarily from the leasing of modular space and portable storage units. Included in leasing revenue are VAPS, such as furniture, steps, ramps, basic appliances, internet connectivity devices, integral tool racking, heavy duty capacity shelving, workstations, electrical and lighting products, and other items our customers use in connection with our products. Delivery and installation revenue includes fees that we charge for the delivery, site work, installation, disassembly, unhooking and removal, and other services to our customers for an additional fee as part of our leasing and sales operations.

The key drivers of changes in our leasing revenue are:

•the average number of units on rent;

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

The average number of units on rent during a period represents the number of units in use from the time they are leased to a customer until the time they are returned to us. Our average monthly rental rate per unit for a period is equal to the ratio of (i) our rental income for that period including VAPS but excluding delivery and installation services and other leasing-related revenues, to (ii) the average number of lease units rented to our customers during that period. We also measure the average utilization rate of our lease units, which is the ratio of (i) the average number of units on rent to (ii) the average total number of units available for lease in our fleet during a period.

In addition to leasing revenue, we also generate revenue from sales of new and used modular space and portable storage units to our customers, as well as delivery, installation, maintenance, removal services and other incidental items related to accommodation services for our customers. Included in our sales revenue are charges for modifying or customizing sales equipment to customers’ specifications.

Gross Profit

We define gross profit as the difference between total revenues and cost of revenues. Cost of revenues associated with our leasing business includes payroll and payroll-related costs for branch operations personnel, material and other costs related to the repair, maintenance, storage and transportation of rental equipment. Cost of revenues also includes depreciation expense associated with our rental equipment. Cost of revenues associated with our new unit sales business includes the cost to purchase, assemble, transport and customize units that are sold. Cost of revenues for our rental unit sales consist primarily of the net book value of the unit at date of sale.

Selling, General and Administrative Expense

Our selling, general and administrative (“SG&A”) expense includes all costs associated with our selling efforts, including marketing costs, marketing salaries and benefits, as well as the salary and commissions of sales personnel. It also includes the leasing of facilities we occupy, professional fees and information systems, our overhead costs, such as salaries and other employee costs of management, administrative and corporate personnel, and integration costs associated with acquisitions and business combinations.

Other Depreciation and Amortization

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

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Currency Losses, Net

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

Other (Income) Expense, Net

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

Interest Expense

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

Fair Value Loss on Common Stock Warrant Liabilities

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

Loss on Extinguishment of Debt

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

Income Tax Expense

After the sale of the UK Storage Solutions segment, we are subject to income taxes in the US, Canada, and Mexico. Our overall effective tax rate is affected by a number of factors, such as the relative amounts of income we earn in differing tax jurisdictions, tax law changes, and certain non-deductible expenses such as compensation disallowance. The rate is also affected by discrete items that may occur in any given year, such as legislative enactments. These discrete items may not be consistent from year to year. Income tax expense (benefit), deferred tax assets and liabilities and liabilities for unrecognized tax benefits reflect our best estimate of current and future taxes to be paid.

Income from Discontinued Operations

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

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Consolidated Results of Operations

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

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(a) WillScot Mobile Mini presents Adjusted EBITDA, Free Cash Flow, Adjusted Gross Profit and Net CAPEX, which are measurements not calculated in accordance with GAAP and are defined below in the section "Reconciliation of non-GAAP Financial Measures," because they are key metrics used by management to assess financial performance. Our business is capital intensive, and these additional metrics allow management to further evaluate its operating performance. See below for reconciliations of non-GAAP financial measures.

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(in thousands, except for units on rent and monthly rental rate)","2023","","2022","","2021"],["Modular space units on rent (average during the period)","100,822","","","104,808","","","101,304"],["Average modular space utilization rate","64.7","%","","68.5","%","","69.2","%"],["Average modular space monthly rental rate","$","1,058","","","$","905","","","$","765"],["Portable storage units on rent (average during the period)","154,386","","","169,565","","","135,775"],["Average portable storage utilization rate","73.2","%","","86.8","%","","80.1","%"],["Average portable storage monthly rental rate","$","238","","","$","192","","","$","155"],["Earnings per share - basic","$","2.40","","","$","1.57","","","$","0.71"],["Earnings per share - diluted","$","2.36","","","$","1.53","","","$","0.69"],["Weighted average shares - basic","198,554,885","","216,808,577","","226,518,931"],["Weighted average shares - diluted","201,849,836","","221,399,162","","232,793,902"]]
[[/GREPCENT_TABLE]]

Comparison of Years Ended December 31, 2023 and 2022

Revenue: Total revenue increased $222.1 million, or 10.4%, to $2,364.8 million for the year ended December 31, 2023 from $2,142.6 million for the year ended December 31, 2022. Leasing revenue increased $212.2 million, or 13.1%, as compared to 2022 driven by improved pricing and value-added products penetration, partially offset by a decrease of 19,165, or 7.0%, in total average modular space and portable storage units on rent. Delivery and installation revenues increased $8.0 million, or 1.9%, due to increased pricing across both segments. New unit sales increased $7.8 million, or 19.3%, and rental unit sales decreased $5.9 million, or 11.5%.

Total average units on rent for the years ended December 31, 2023 and 2022 were 255,208 and 274,373, respectively. Modular space average units on rent decreased 3,986 units, or 3.8%, and portable storage average units on rent decreased by 15,179 units, or 9.0%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022. The average modular space unit utilization rate during the year ended December 31, 2023 was 64.7%, as compared to

45

68.5% during 2022. The average portable storage unit utilization rate during the year ended December 31, 2023 was 73.2%, as compared to 86.8% during 2022.

Modular space average monthly rental rates increased 16.9% to $1,058 for the year ended December 31, 2023. Average portable storage monthly rental rates of $238 represented an increase of $46, or 24.0%, compared to the year ended December 31, 2022. Increases were driven by a continuation of the long-term price optimization and VAPS penetration opportunities across our Modular segment as well as by application of these same price management tools and processes across the Storage segment and from early benefits from increased VAPS penetration opportunities on our basic VAPS offerings in the Storage segment, which began in the second quarter of 2022.

Gross Profit: Gross profit increased $198.4 million, or 17.5%, to $1,333.9 million for the year ended December 31, 2023 from $1,135.5 million for the year ended December 31, 2022. The increase in gross profit is a result of a $190.6 million increase in leasing gross profit, a $13.5 million increase in delivery and installation gross profit, and a $3.2 million increase of new and rental unit sale margins. Increases were primarily a result of increased revenues due to favorable average monthly rental rates and delivery and installation pricing across both portable storage and modular space units, which offset lower unit on rent volumes. Cost of leasing and services increased by $16.1 million, or 2.3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, driven by a $23.9 million, or 10.3%, increase in labor costs, a $4.8 million, or 5.1%, increase in vehicle, equipment and other costs, and a $3.2 million, or 3.2%, increase in materials costs, partially offset by a $15.9 million, or 5.8%, decrease in subcontractor costs.

Sales Revenue increased by $1.9 million, or 2.0%, to $93.7 million for the year ended December 31, 2023, while cost of sales decreased by $1.3 million, or 2.6%, resulting in improved sales gross profit margins. The year over year change was mainly driven by increased new unit sales margin.

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

Our gross profit percentage was 56.4% and 53.0% for the years ended December 31, 2023 and 2022, respectively. Our gross profit percentage, excluding the effects of depreciation ("adjusted gross profit percentage"), was 67.6% and 65.0% for the years ended December 31, 2023 and 2022, respectively. These increases were driven primarily by continued price optimization within leasing and execution of VAPS penetration opportunities that have outpaced increases in cost of leasing and services.

SG&A Expense: SG&A expense increased $28.7 million, or 5.1%, to $596.1 million for the year ended December 31, 2023, compared to $567.4 million for the year ended December 31, 2022. Real estate and occupancy costs increased $10.9 million, or 14.6%, travel expenses increased $4.6 million, or 25.1%, due to increased travel and training, service agreements and professional fees increased $3.9 million, or 5.1%, and non-income business taxes increased $3.5 million, or 47.4%. Our provision for credit losses increased $12.2 million, or 108.7%. Stock compensation expense increased $4.9 million to $34.5 million for the year ended December 31, 2023, compared to $29.6 million for the year ended December 31, 2022. Partially offsetting these increases, integration expenses decreased $5.1 million, or 33.1%, to $10.4 million for the year ended December 31, 2023, compared to $15.5 million for the year ended December 31, 2022. Employee SG&A excluding stock compensation decreased $10.8 million, or 4.0%.

Other Depreciation and Amortization: Other depreciation and amortization increased $10.5 million, or 16.9%, to $72.9 million for the year ended December 31, 2023, compared to $62.4 million for the year ended December 31, 2022. The increase was a result of our recent investments in our CRM system and other infrastructure improvements across our branch networks.

Currency Losses, net: Currency losses, net increased by $5.9 million to $6.8 million for the year ended December 31, 2023 compared to $0.9 million for the year ended December 31, 2022. The increase in currency losses, net, was primarily attributable to a loss on the settlement of the contingent foreign currency forward contract relating to the sale of the former UK Storage Solutions segment.

Other (Income) Expense, Net: Other income, net was $15.4 million for the year ended December 31, 2023 compared to $6.7 million for the year ended December 31, 2022. The increase in other income, net was related to the gain on sale of fixed assets related to a real estate sale transaction during the year ended December 31, 2023.

Interest Expense: Interest expense increased $58.8 million, or 40.2%, to $205.0 million for the year ended December 31, 2023 from $146.3 million for the year ended December 31, 2022. The increase in interest expense was a result of higher overall weighted average interest rates as a result of increased benchmark rates and higher outstanding debt balances. See Note 10 to the consolidated financial statements for further discussion of our debt.

Income Tax Expense: Income tax expense increased $37.7 million to $126.6 million for the year ended December 31, 2023 compared to $88.9 million for the year ended December 31, 2022. The increase in income tax expense was driven by an increase in income from continuing operations before income tax for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

46

Income from Discontinued Operations: Income from discontinued operations increased $71.4 million to $134.6 million for the year ended December 31, 2023 compared to $63.2 million for the year ended December 31, 2022. The increase in income from discontinued operations was driven by the increase in gain on sale of discontinued operations of $140.6 million to a total of $176.1 million for the year ended December 31, 2023 compared to $35.5 million for the year ended December 31, 2022, partially offset by having no contribution from the former Tank and Pump segment and only one month of activity for the former UK Storage Solutions segment in 2023 and an increase in income tax expense from discontinued operations.

Comparison of Years Ended December 31, 2022 and 2021

Revenue: Total revenue increased $469.6 million, or 28.1%, to $2,142.6 million for the year ended December 31, 2022 from $1,673.0 million for the year ended December 31, 2021. Leasing revenue increased $369.2 million, or 29.5%, as compared to 2021 driven by an increase of 37,294, or 15.7%, total average modular space and portable storage units on rent and improved pricing and value-added products. Delivery and installation revenues increased $108.0 million, or 33.6%, due to increased overall activity and higher pricing. New unit sales decreased $6.7 million, or 14.2%, and rental unit sales decreased $0.9 million, or 1.8%.

Total average modular space and portable storage units on rent for the years ended December 31, 2022 and 2021 were 274,373 and 237,079, respectively. The increase was primarily driven by strong customer demand within the storage segment and due to acquisitions. In total, modular space average units on rent increased 3,504 units, or 3.5%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021. Modular space average monthly rental rates increased 18.3% to $905 for the year ended December 31, 2022. Improved pricing was driven by a continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio. Portable storage average units on rent increased by 33,790 units, or 24.9%, for the year ended December 31, 2022. Average portable storage monthly rental rates of $192 represented an increase of $37, or 23.9%, compared to the year ended December 31, 2021. This increase was driven by the accretive impact of higher rates from the Mobile Mini portable storage fleet. The average modular space unit utilization rate during the year ended December 31, 2022 was 68.5%, as compared to 69.2% during 2021. The average portable storage unit utilization rate during the year ended December 31, 2022 was 86.8%, as compared to 80.1% during 2021.

Gross Profit: Gross profit increased $290.8 million, or 34.4%, to $1,135.5 million for the year ended December 31, 2022 from $844.7 million for the year ended December 31, 2021. The increase in gross profit is a result of a $274.9 million increase in leasing gross profit, increased delivery and installation gross profit of $52.9 million, and increased new and rental unit sale margins of $0.9 million. 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 $149.4 million, or 27.2%, to $699.5 million for the year ended December 31, 2022 from $550.1 million the year ended December 31, 2021, driven by a $59.3 million, or 34.9%, increase in labor costs, a $56.1 million, or 26.1%, increase in subcontractor costs, a $23.8 million, or 33.7%, increase in vehicle, equipment and other costs, and a $10.2 million, or 10.8%, increase in material costs. Cost of sales decreased by $8.5 million, or 14.3%, which is in line with decreased sales revenues of 7.6% for the year ended December 31, 2022, resulting in improved sales gross profit margins. The year over year changes in each of these cost components was consistent with historical trends and management's expectations given the change in sales volume and inflationary pressures impacting our business.

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

Our gross profit percentage was 53.0% and 50.5% for the years ended December 31, 2022 and 2021, respectively. Our gross profit percentage, excluding the effects of depreciation ("adjusted gross profit percentage"), was 65.0% and 63.6% for the years ended December 31, 2022 and 2021, respectively.

SG&A Expense: SG&A expense increased $87.0 million, or 18.1%, to $567.4 million for the year ended December 31, 2022, compared to $480.4 million for the year ended December 31, 2021. For 2022, SG&A expense for Modular and Storage totaled $304.9 million and $215.7 million respectively. Employee costs excluding stock compensation increased $57.6 million, or 27.3%, driven by a 12% increase in SG&A headcount to support both organic and inorganic growth. Legal and professional fees increased $23.8 million, or 45.5%. Stock compensation expense increased $10.6 million to $29.6 million for the year ended December 31, 2022, compared to $19.0 million for the year ended December 31, 2021. Integration costs decreased $12.9 million to $15.5 million for the year ended December 31, 2022, compared to $28.4 million for the year ended December 31, 2021. The remaining increases were primarily driven by increased economic activity and inflationary increases, including increased occupancy and office costs, insurance, travel expenses, and marketing cost increases. .

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

Currency Losses, net: Currency losses, net increased by $0.5 million to a $0.9 million loss for the year ended December 31, 2022 compared to $0.4 million for the year ended December 31, 2021. The increase in currency losses, net, was primarily attributable to the impact of foreign currency exchange rate changes on intercompany receivables and payables denominated in a currency other than the subsidiaries’ functional currency.

Other (Income) Expense, Net: Other (income) expense, net was $6.7 million of income for the year ended December 31, 2022 and $1.7 million of expense for the year ended year ended December 31, 2021. The increase in other

47

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

Interest Expense: Interest expense increased $29.9 million, or 25.7%, to $146.3 million for the year ended December 31, 2022 from $116.4 million for the year ended December 31, 2021. The increase was driven by increased average borrowings to support our capital allocation priorities, as well as an increase in interest rates during 2022.

Fair Value Loss on Common Stock Warrant Liabilities: For the year ended year ended December 31, 2021, the fair value loss on common stock warrant liabilities of $26.6 million was primarily attributable to the change in estimated fair value of common stock warrant liabilities.

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

Income Tax Expense: Income tax expense increased $52.3 million to $88.9 million for the year ended December 31, 2022 compared to a $36.5 million for the year ended December 31, 2021. The increase in income tax expense was a result of higher pre-tax income partially offset with a reduction of the valuation allowance for deferred tax assets.

Business Segments

The Company operates in two reportable segments as follows: Modular and Storage. Modular represents the activities of the North America modular business, excluding ground level offices, which were transferred to the Storage segment during the first quarter of 2023. Storage represents the activities of the North America portable storage and ground level office business. As part of the transfer of the ground level offices to Storage, we also adjusted the average modular space monthly rental rate in the Storage segment to only include VAPS specifically applicable to ground level offices, which has also been reflected in the total average modular space monthly rental rate.

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

Business Segment Results

Years Ended December 31, 2023, 2022 and 2021

[[GREPCENT_TABLE]]
[["","Year Ended December 31, 2023"],["(in thousands, except for units on rent and rates)","Modular","","Storage","","Total"],["Revenue","$","1,495,666","","","$","869,101","","","$","2,364,767"],["Gross profit","$","700,226","","","$","633,644","","","$","1,333,870"],["Adjusted EBITDA","$","598,354","","","$","463,111","","","$","1,061,465"],["Capex for rental equipment","$","184,993","","","$","41,612","","","$","226,605"],["Average modular space units on rent","81,870","","","18,952","","","100,822"],["Average modular space utilization rate","65.6","%","","61.1","%","","64.7","%"],["Average modular space monthly rental rate","$","1,111","","","$","826","","","$","1,058"],["Average portable storage units on rent","496","","","153,890","","","154,386"],["Average portable storage utilization rate","62.5","%","","73.3","%","","73.2","%"],["Average portable storage monthly rental rate","$","251","","","$","238","","","$","238"]]
[[/GREPCENT_TABLE]]

48

[[GREPCENT_TABLE]]
[["","Year Ended December 31, 2022"],["(in thousands, except for units on rent and rates)","Modular","","Storage","","Total"],["Revenue","$","1,342,033","","","$","800,590","","","$","2,142,623"],["Gross profit","$","583,837","","","$","551,645","","","$","1,135,482"],["Adjusted EBITDA","$","508,343","","","$","375,531","","","$","883,874"],["Capex for rental equipment","$","279,079","","","$","118,297","","","$","397,376"],["Average modular space units on rent","82,517","","","22,291","","","104,808"],["Average modular space utilization rate","67.5","%","","72.4","%","","68.5","%"],["Average modular space monthly rental rate","$","966","","","$","682","","","$","905"],["Average portable storage units on rent","516","","","169,049","","","169,565"],["Average portable storage utilization rate","58.7","%","","86.9","%","","86.8","%"],["Average portable storage monthly rental rate","$","208","","","$","192","","","$","192"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","Year Ended December 31, 2021"],["(in thousands, except for units on rent and rates)","Modular","","Storage","","Total"],["Revenue","$","1,120,483","","","$","552,497","","","$","1,672,980"],["Gross profit","$","471,656","","","$","373,047","","","$","844,703"],["Adjusted EBITDA","$","404,577","","","$","245,027","","","$","649,604"],["Capex for rental equipment","$","187,495","","","$","45,426","","","$","232,921"],["Average modular space units on rent","79,879","","","21,425","","","101,304"],["Average modular space utilization rate","67.1","%","","78.2","%","","69.2","%"],["Average modular space monthly rental rate","$","820","","","$","561","","","$","765"],["Average portable storage units on rent","7,312","","","128,463","","","135,775"],["Average portable storage utilization rate","68.8","%","","80.9","%","","80.1","%"],["Average portable storage monthly rental rate","$","131","","","$","156","","","$","155"]]
[[/GREPCENT_TABLE]]

Modular Segment

Comparison of Years Ended December 31, 2023 and 2022

Revenue: Total revenue increased $153.6 million, or 11.4%, to $1,495.7 million for the year ended December 31, 2023 from $1,342.0 million for the year ended December 31, 2022. The increase was primarily the result of increased leasing revenue of $145.4 million, or 14.6%, compared to 2022, and increased delivery and installation revenue of $10.7 million, or 3.9%, compared to 2022. Average modular space monthly rental rates increased 15.0% for the year ended December 31, 2023 to $1,111 driven primarily by increased pricing on new deliveries. Average modular space units on rent decreased by 647 units, or 0.8%. Average portable storage monthly rental rates increased 20.7% for the year ended December 31, 2023 to $251 driven by our price management tools, processes and early benefits from increased VAPS penetration opportunities on our basic VAPS offerings, which began in the second quarter of 2022.

Gross Profit: Gross profit increased $116.4 million, or 19.9%, to $700.2 million for the year ended December 31, 2023 from $583.8 million for the year ended December 31, 2022. The increase in gross profit was driven higher leasing gross profit, which increased $107.1 million, or 14.9%, driven by improved pricing and by a $7.8 million increase in delivery and installation gross profit. These increases in gross profit for the year ended December 31, 2023 were further complemented by a $4.7 million increase in new unit sales gross profit, offset by a $4.7 million decrease in rental unit sales gross profit. Cost of leasing and services increased by $41.2 million, or 8.3%, for the year ended December 31, 2023 versus the year ended December 31, 2022, driven by a $10.2 million, or 13.5%, increase in material costs, a $21.4 million, or 13.5%, increase in labor costs, a $4.6 million, or 2.2%, increase in subcontractor costs, and a $5.0 million, or 9.5%, increase in vehicle, equipment and other costs.

Cost of sales decreased by $2.3 million, or 5.6%, which is in line with decreased sales revenues of 3.1% for the year ended December 31, 2023. The year over year changes in each of these cost components was consistent with historical trends and management's expectations given the respective changes in sales volume.

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

Adjusted EBITDA: Adjusted EBITDA increased $90.0 million, or 17.7%, to $598.4 million for the year ended December 31, 2023 from $508.3 million for the year ended December 31, 2022. The increase was driven by higher leasing

49

gross profit discussed above. SG&A, excluding discrete costs, increased $14.5 million, or 4.6%, for the year ended December 31, 2023 compared to the year ended December 31, 2022 driven primarily by a $2.4 million, or 5.7%, increase in service agreements and professional fees, a $5.2 million, or 9.8%, increase in real estate costs, a $4.2 million, or 32.7%, increase in travel costs, a $2.2 million, or 43.6%, increase in advertising costs, a $2.1 million, or 30.8%, increase in taxes and fees, a $7.1 million, or 81.9%, increase to the provision for credit losses, a $3.0 million, or 66.3%, increase in employee insurance costs, and a $5.9 million increase in salaries. These increases were partially offset by a $10.6 million decrease in variable compensation.

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

Comparison of Years Ended December 31, 2022 and 2021

Revenue: Total revenue increased $221.6 million, or 19.8%, to $1,342.0 million for the year ended December 31, 2022 from $1,120.5 million for the year ended December 31, 2021. The increase was primarily driven by increased leasing revenue of $164.6 million, or 19.9%, compared to 2021, increased delivery and installation revenue of $58.9 million, or 27.6% compared to 2021 and partially offset by decreased sales revenue of $2.0 million, or 2.6%, compared to 2021. Average modular space monthly rental rates increased 17.8% for the year ended December 31, 2022 to $966 driven by continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio. Improved pricing was aided by higher volumes as average modular space units on rent increased by 2,638 units, or 3.3%, year over year driven by acquisitions.

Gross Profit: Gross profit increased $112.2 million, or 23.8%, to $583.8 million for the year ended December 31, 2022 from $471.7 million for the year ended December 31, 2021. The increase in gross profit was driven by higher leasing gross profit, which increased $110.9 million or 18.2%, driven by improved volume, pricing and VAPS. The increase in gross profit from leasing for the year ended December 31, 2022 was further complemented by a $28.2 million increase in delivery and installation gross profit primarily driven by increased pricing, a $3.2 million increase in rental unit sales gross profit, and a $0.6 million increase in new unit sales gross profit. In addition, cost of leasing and services increased by $84.5 million, or 20.6%, for the year ended December 31, 2022 versus the year ended December 31, 2021, driven by a $3.5 million, or 1.7%, increase in subcontractor costs, and a $19.6 million, or 14.1%, increase in labor costs, partially offset by a $9.9 million, or 11.6%, decrease in material cost and a $1.3 million, or 2.4%, decrease in vehicle, equipment and other costs.

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

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

Adjusted EBITDA: Adjusted EBITDA increased $103.8 million, or 25.6%, to $508.3 million for the year ended December 31, 2022 from $404.6 million for the year ended December 31, 2021. The increase was driven by higher leasing gross profits discussed above, partially offset by increases in SG&A, excluding discrete and other items of $48.8 million. SG&A increases were primarily related to increases in salaries and variable compensation of $12.1 million and $8.9 million, respectively, service agreement and professional fee increases of $13.9 million, real estate and occupancy costs increases of $7.0 million, and increased travel expenses of $6.1 million.

Capex for rental equipment: Capex for rental equipment increased $91.6 million, or 48.8%, to $279.1 million for the year ended December 31, 2022 from $187.5 million for the year ended December 31, 2021. The increase was mainly driven by increased spending on refurbishments and fleet and VAPS purchases.

Storage Segment

Comparison of Years Ended December 31, 2023 and 2022

Revenue: Total revenue increased $68.5 million, or 8.6%, to $869.1 million for the year ended December 31, 2023 from $800.6 million for the year ended December 31, 2022. The increase was primarily driven by increased leasing revenue of $66.9 million, or 10.6%, compared to 2022, partially offset by decreased delivery and installation revenue of $2.7 million, or 1.7%, compared to 2022. Average portable storage monthly rental rates increased 24.0% for the year ended December 31, 2023 to $238 as a result of our price management tools. Average portable storage units on rent decreased by 15,159 units, or 9.0%, year over year mainly driven by lower demand. Average modular space monthly rental rates increased 21.1% for the year ended December 31, 2023 to $826 driven by the continuation of our long-term price optimization initiative and VAPS penetration opportunities across our portfolio. Average modular space units on rent decreased by 3,339 units, or 15.0%.

Gross Profit: Gross profit increased $82.0 million, or 14.9%, to $633.6 million for the year ended December 31, 2023 from $551.6 million for the year ended December 31, 2022. The increase in gross profit was driven by an $83.5 million increase in leasing gross profit and an increase of $5.7 million in delivery and installation gross profit. The increase in gross profit from leasing and delivery and installation revenues was partially offset by a $10.6 million increase in depreciation of

50

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

Cost of leasing and services decreased by $25.1 million, or 12.3%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022, driven by a $7.0 million, or 27.7%, decrease in material costs, a $20.4 million, or 32.9%, decrease in subcontractor costs, partially offset by a $2.6 million, or 3.4%, increase in labor costs. Cost of sales increased by $1.0 million, or 11.0%, as sales revenues increased $4.3 million, or 29.0%, driving improved sales gross profit margins for the year ended December 31, 2023. The year over year changes in each of these cost components was consistent with historical trends and management's expectations given the respective changes in sales volume and inflationary pressures impacting our business.

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

Adjusted EBITDA: Adjusted EBITDA increased $87.6 million, or 23.3%, to $463.1 million for the year ended December 31, 2023 from $375.5 million for the year ended December 31, 2022. The increase was driven by higher leasing gross profits discussed above, partially offset by an increase in SG&A costs, excluding discrete and other items of $15.3 million. The SG&A increase was driven by an increase of $5.8 million in real estate and occupancy costs, an increase of $3.9 million in salaries and wages, and an increase of $1.5 million in service agreements and professional fees.

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

Comparison of Years Ended December 31, 2022 and 2021

Revenue: Total revenue increased $248.1 million, or 44.9%, to $800.6 million for the year ended December 31, 2022 from $552.5 million for the year ended December 31, 2021. The increase was primarily driven by increased leasing revenue of $204.6 million, or 48.2%, compared to 2021, and increased delivery and installation revenue of $49.1 million, or 45.7%, compared to 2021. Average portable storage monthly rental rates increased 23.1% for the year ended December 31, 2022 to $192 as a result of our price management tools and processes, further supported by high utilization, and by an acceleration earlier into the third quarter of our seasonal retail business. Average portable storage units on rent increased by 40,586 units, or 31.6%, year over year driven by increases in organic activity of approximately 15%, or 19,500 units on rent, including an acceleration earlier into the third quarter of our seasonal retail business. The remaining increase was driven by approximately 15,000 units on rent added in recent acquisitions and approximately 6,000 units of the increase was due to the transfer of approximately 12,000 portable storage units on rent from the Modular segment, which occurred in the third quarter of 2021. Average modular space monthly rental rates increased 21.6% for the year ended December 31, 2022 to $682 driven by the continuation of our long-term price optimization initiative and VAPS penetration opportunities across our portfolio. Average modular space units on rent increased by 866 units, or 4.0%, year over year, of which approximately 1,100 was acquisition driven.

Gross Profit: Gross profit increased $178.6 million, or 47.9%, to $551.6 million for the year ended December 31, 2022 from $373.0 million for the year ended December 31, 2021. The increase in gross profit was driven by a $164.0 million increase in leasing gross profit driven by improved volume, pricing and VAPS. The increase in gross profit from leasing for the year ended December 31, 2022 was further complemented by an increase of $24.8 million in delivery and installation gross profit primarily driven by increased pricing, and a $0.1 million increase in new unit sales gross profit. The increase in gross profit from leasing for the year ended December 31, 2022 was partially offset by a $3.0 million decrease in rental unit sales gross profit. In addition, cost of leasing and services increased by $64.9 million, or 46.4%, for the year ended December 31, 2022 versus the year ended December 31, 2021, driven by a $21.9 million, or 54.7%, increase in subcontractor costs, a $9.7 million, or 61.4%, increase in material costs, a $19.8 million, or 35.8%, increase in labor costs, and a $12.3 million, or 41.3%, increase in vehicle, equipment and other costs.

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

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

Adjusted EBITDA: Adjusted EBITDA increased $130.5 million, or 53.3%, to $375.5 million for the year ended December 31, 2022 from $245.0 million for the year ended December 31, 2021. The increase was driven by higher leasing gross profits discussed above, partially offset by increases in SG&A, excluding discrete and other items of $55.4 million. SG&A increases were primarily related to increases in salaries and variable compensation of $20.1 million and $14.7 million, respectively, service agreement and professional fee increases of $9.9 million, real estate and occupancy costs increases of $1.9 million, and increased travel expenses of $2.6 million.

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

51

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

Reconciliation of Non-GAAP Financial Measures

In addition to using GAAP financial measurements, we use certain non-GAAP financial measures to evaluate our operating results. As such, we include in this Annual Report on Form 10-K reconciliations to their most directly comparable GAAP financial measures. Set forth below are definitions and reconciliations to the nearest comparable GAAP measure of certain non-GAAP financial measures used in this Annual Report on Form 10-K along with descriptions of why we believe these measures provide useful information to investors as well as a description of the limitations of these measures. 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 (loss) plus 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. Substantially all such currency gains (losses) are unrealized and attributable to financings due to and from affiliated companies.

•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.

•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.

•Transaction costs including legal and professional fees and other transaction specific related costs.

•Costs to integrate acquired companies, including outside professional fees, non-capitalized costs associated with system integrations, non-lease branch and fleet relocation expenses, employee training costs, and other costs required to realize cost or revenue synergies.

•Non-cash charges for stock compensation plans.

•Gains and losses resulting from changes in fair value and extinguishment of common stock warrant liabilities.

•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.

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 US GAAP. Some of these limitations are:

•Adjusted EBITDA does not reflect changes in, or cash requirements for our working capital needs;

•Adjusted EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;

•Adjusted EBITDA does not reflect our tax expense or the cash requirements to pay our taxes;

•Adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;

•Adjusted EBITDA does not reflect the impact on earnings or changes resulting from matters that we consider not to be indicative of our future operations;

•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements; and

•other companies in our industry may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.

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.

52

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

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(in thousands)","2023","","2022","","2021"],["Income from continuing operations","$","341,844","","","$","276,341","","","$","114,895"],["Income tax expense from continuing operations","126,575","","","88,863","","","36,528"],["Income from continuing operations before income tax","468,419","","","365,204","","","151,423"],["Loss on extinguishment of debt","\u2014","","","\u2014","","","5,999"],["Interest expense","205,040","","","146,278","","","116,358"],["Fair value loss on common stock warrant liabilities","\u2014","","","\u2014","","","26,597"],["Depreciation and amortization","338,654","","","319,099","","","280,567"],["Currency losses, net","6,754","","","886","","","427"],["Restructuring costs, lease impairment expense and other related charges","22","","","168","","","14,754"],["Transaction costs","2,259","","","25","","","1,375"],["Integration costs","10,366","","","15,484","","","28,410"],["Stock compensation expense","34,486","","","29,613","","","18,728"],["Other","(4,535)","","","7,117","","","4,966"],["Adjusted EBITDA from continuing operations","1,061,465","","","883,874","","","649,604"],["Adjusted EBITDA from discontinued operations","4,124","","","85,750","","","90,789"],["Adjusted EBITDA from continuing and discontinued operations","$","1,065,589","","","$","969,624","","","$","740,393"]]
[[/GREPCENT_TABLE]]

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

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(in thousands)","2023","","2022","","2021"],["Income from discontinued operations","$","134,243","","","$","63,199","","","$","45,249"],["Gain on sale of discontinued operations","175,708","","","35,456","","","\u2014"],["Income tax expense from discontinued operations","45,468","","","35,725","","","13,018"],["Income from discontinued operations before income tax and gain on sale","4,003","","","63,468","","","58,267"],["Interest expense","56","","","1,301","","","1,629"],["Depreciation and amortization","\u2014","","","24,408","","","35,000"],["Currency losses, net","\u2014","","","138","","","121"],["Restructuring costs, lease impairment expense and other related charges","\u2014","","","\u2014","","","2"],["Integration costs","\u2014","","","\u2014","","","14"],["Stock compensation expense","(196)","","","215","","","261"],["Other","261","","","(3,780)","","","(4,505)"],["Adjusted EBITDA from discontinued operations","$","4,124","","","$","85,750","","","$","90,789"]]
[[/GREPCENT_TABLE]]

53

Adjusted EBITDA Margin

We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. Management believes that the presentation of Adjusted EBITDA Margin provides useful information to investors regarding the performance of our business.

The following table provides unaudited reconciliations of Adjusted EBITDA Margin:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(in thousands)","2023","","2022","","2021"],["Adjusted EBITDA from continuing operations (A)","$","1,061,465","","","$","883,874","","","$","649,604"],["Revenue (B)","$","2,364,767","","","$","2,142,623","","","$","1,672,980"],["Adjusted EBITDA Margin from Continuing Operations (A/B)","44.9","%","","41.3","%","","38.8","%"],["Income from continuing operations (C)","$","341,844","","","$","276,341","","","$","114,895"],["Income from Continuing Operations Margin (C/B)","14.5","%","","12.9","%","","6.9","%"]]
[[/GREPCENT_TABLE]]

Adjusted Gross Profit and Adjusted Gross Profit Percentage

We define Adjusted Gross Profit as gross profit plus depreciation on rental equipment. Adjusted Gross Profit Percentage is defined as Adjusted Gross Profit divided by revenue. Adjusted Gross Profit and Adjusted Gross Profit Percentage are not measurements of our financial performance under GAAP and should not be considered as alternatives to gross profit, gross profit percentage, or other performance measures derived in accordance with GAAP. In addition, our measurement of Adjusted Gross Profit and Adjusted Gross Profit Percentage may not be comparable to similarly titled measures of other companies. Management believes that the presentation of Adjusted Gross Profit and Adjusted Gross Profit Percentage provides useful information regarding our results of operations and assists in analyzing the underlying performance of our business.

The following table provides an unaudited reconciliation of gross profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(in thousands)","2023","","2022","","2021"],["Revenue (A)","$","2,364,767","","","$","2,142,623","","","$","1,672,980"],["Gross profit (B)","$","1,333,870","","","$","1,135,482","","","$","844,703"],["Depreciation of rental equipment","265,733","","","256,719","","","218,790"],["Adjusted Gross Profit (C)","$","1,599,603","","","$","1,392,201","","","$","1,063,493"],["Gross Profit Percentage (B/A)","56.4","%","","53.0","%","","50.5","%"],["Adjusted Gross Profit Percentage (C/A)","67.6","%","","65.0","%","","63.6","%"]]
[[/GREPCENT_TABLE]]

Net CAPEX

We define Net CAPEX as purchases of rental equipment and refurbishments and purchases of property, plant and equipment (collectively, "Total Capital Expenditures"), less proceeds from the sale of rental equipment and proceeds from the sale of property, plant and equipment (collectively, "Total Proceeds"), which are all included in cash flows from investing activities. Management believes that the presentation of Net CAPEX provides useful information regarding the net capital invested in our rental fleet and property, plant and equipment each year to assist in analyzing the performance of our business. As presented below, Net CAPEX includes amounts for the former Tank and Pump segment through September 30, 2022 and the UK Storage Solutions segment through January 31, 2023.

The following table provides unaudited reconciliations of Net CAPEX:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(in thousands)","2023","","2022","","2021"],["Total Capital Expenditures","$","249,213","","","$","486,802","","","$","308,996"],["Total Proceeds","64,562","","","72,478","","","72,121"],["Net CAPEX","$","184,651","","","$","414,324","","","$","236,875"]]
[[/GREPCENT_TABLE]]

54

Free Cash Flow

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. Management believes that the presentation of Free Cash Flow provides useful additional information concerning cash flow available to fund our capital allocation alternatives. As presented below, Free Cash Flow includes amounts for the former Tank and Pump segment through September 30, 2022 and the UK Storage Solutions segment through January 31, 2023.

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

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(in thousands)","2023","","2022","","2021"],["Net cash provided by operating activities","$","761,240","","","$","744,658","","","$","539,902"],["Purchase of rental equipment and refurbishments","(226,976)","","","(443,138)","","","(278,498)"],["Proceeds from sale of rental equipment","51,290","","","70,703","","","55,210"],["Purchase of property, plant and equipment","(22,237)","","","(43,664)","","","(30,498)"],["Proceeds from the sale of property, plant and equipment","13,272","","","1,775","","","16,911"],["Free Cash Flow","$","576,589","","","$","330,334","","","$","303,027"]]
[[/GREPCENT_TABLE]]

Liquidity and Capital Resources

Overview

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.

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 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. In addition, we will 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.

Our revolving credit facility provides an aggregate principal amount of up to $3.7 billion, consisting of: (i) a senior secured asset-based US dollar revolving credit facility in the aggregate principal amount of $3.3 billion (the “US Facility”) and (ii) a $400.0 million senior secured asset-based multicurrency revolving credit facility (the "Multicurrency Facility," and together with the US Facility, the “ABL Facility”). Borrowing availability under the ABL Facility is equal to the lesser of $3.7 billion and the applicable borrowing bases. The borrowing bases are a function of, among other things, the value of the assets in the relevant collateral pool of which our rental equipment represents the largest component. At December 31, 2023, we had $1.2 billion of available borrowing capacity under the ABL Facility.

55

Cash Flows

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 UK Storage Solutions segment through January 31, 2023. See Note 3 to the financial statements for disclosure of significant operating and investing items related to the former Tank and Pump segment and the UK Storage Solutions segment. The following summarizes our change in cash and cash equivalents for the periods presented:

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["(in thousands)","2023","","2022","","2021"],["Net cash from operating activities","$","761,240","","","$","744,658","","","$","539,902"],["Net cash from investing activities","(350,003)","","","(309,333)","","","(384,047)"],["Net cash from financing activities","(418,935)","","","(429,368)","","","(167,887)"],["Effect of exchange rate changes on cash and cash equivalents","882","","","(882)","","","(206)"],["Net change in cash and cash equivalents","$","(6,816)","","","$","5,075","","","$","(12,238)"]]
[[/GREPCENT_TABLE]]

Comparison of the Years Ended December 31, 2023 and 2022 and December 31, 2022 and 2021

Cash Flows from operating activities

Cash provided by operating activities for the year ended December 31, 2023 was $761.2 million as compared to $744.7 million for the year ended December 31, 2022, an increase of $16.6 million, or 2%. The increase in cash provided by operating activities was driven by an increase of $54.5 million of net income, adjusted for non-cash items, and a decrease of $37.9 million in the net movements of the operating assets and liabilities.

Cash provided by operating activities for the year ended December 31, 2022 was $744.7 million as compared to $539.9 million for the year ended December 31, 2021, an increase of $204.8 million, or 38%. The increase in cash provided by operating activities was driven by an increase of $198.6 million of net income, adjusted for non-cash items, and an increase of $6.2 million in the net movements of the operating assets and liabilities.

Cash flows from investing activities

Cash used in investing activities for the year ended December 31, 2023 was $350.0 million as compared to $309.3 million for the year ended December 31, 2022, an increase of $40.7 million. The increase in cash used in investing activities was driven by a $341.0 million increase in cash used in acquisitions, net of cash acquired, a $19.4 million decrease in proceeds from the sale of rental equipment, and a $7.7 million increase in payments for the settlement of foreign currency forward contract. The increase was partially offset by a $216.2 million decrease in cash used for the purchase of rental equipment and refurbishments, a $78.4 million increase in proceeds from the sale of discontinued operations, a $21.4 million decrease in cash used for the purchase of property, plant, and equipment, and an $11.5 million increase in proceeds from sale of property, plant and equipment.

Cash used in investing activities for the year ended December 31, 2022 was $309.3 million as compared to $384.0 million for the year ended December 31, 2021, a decrease of $74.7 million. The decrease in cash used in investing activities was driven by the proceeds of $325.6 million from the sale of discontinued operations and a $15.5 million increase in proceeds from the sale of rental equipment. Proceeds from sale of rental equipment increased compared to the prior year due to higher sales demand. The decrease was partially offset by a $73.4 million increase in cash used in acquisitions, net of cash acquired, a $164.6 million increase in cash used for the purchase of rental equipment and refurbishments to support growing demand for new project deliveries across all segments, a $15.1 million decrease in proceeds from sale of property, plant and equipment and a $13.2 million increase in cash used for the purchase of property, plant, and equipment.

Cash flows from financing activities

Cash used in financing activities for the year ended December 31, 2023 was $418.9 million as compared to $429.4 million for the year ended December 31, 2022, a decrease of $10.4 million. The decrease in cash used in financing activities was driven by a $60.5 million increase in net borrowings, a $25.6 million decrease in principal payments on finance lease obligations, and a $1.7 million decrease in payments of financing costs. The decrease was partially offset by an increase of $66.4 million in repurchases of common stock and a $10.7 million decrease in receipts from the issuance of common stock.

Cash used in financing activities for the year ended December 31, 2022 was $429.4 million as compared to $167.9 million for the year ended December 31, 2021, an increase of $261.5 million. The increase in cash used in financing activities was driven by an increase of $388.2 million in repurchases of common stock and warrants as well as an increase of $76.6 million in repayment of borrowings, partially offset by a $235.6 million increase in receipts from borrowings.

56

Material cash requirements

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

Debt

The Company has outstanding debt related to its ABL Facility, 2025 Secured Notes, 2028 Secured Notes, 2031 Secured Notes and finance leases, including interest, totaling $3.6 billion as of December 31, 2023, $18.8 million of which is obligated to be repaid within the next twelve months. Refer to Note 10 for further information regarding outstanding debt.

Operating leases

The Company has commitments for future minimum rental payments relating to operating leases, which are primarily for real estate. As of December 31, 2023, the Company had lease obligations of $288.7 million, with $69.4 million payable within the next twelve months.

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

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

Critical Accounting Estimates

The Company's discussion and analysis of its financial condition, results of operations, liquidity and capital resources is based on its consolidated financial statements, which have been prepared in accordance with GAAP. GAAP requires that management make estimates and judgments that affect the reported amount of assets, liabilities, revenue, expenses and the related disclosure of contingent assets and liabilities. The Company's management bases these estimates on historical experience and on various other assumptions that they consider reasonable under the circumstances and reevaluate their estimates and judgments as appropriate. The actual results experienced by the Company may differ materially and adversely from its estimates. The Company believes that the following critical accounting estimates involve a higher degree of judgment or complexity in the preparation of financial statements:

Revenue Recognition

Leasing Revenue

The Company's lease arrangements can include multiple lease and non-lease components. Examples of lease components include, but are not limited to, the lease of modular space and portable storage units and VAPS. Examples of non-lease components include, but are not limited to, the delivery, installation, maintenance, and removal services commonly provided in a bundled transaction with the lease components. Arrangement consideration is allocated between lease deliverables and non-lease components based on the relative estimated selling (leasing) price of each deliverable. Estimated selling (leasing) price of the lease deliverables is based upon the estimated stand-alone selling price of the related performance obligations using an adjusted market approach.

Services Revenue

The Company generally has three non-lease service-related performance obligations in its contracts with customers:

•Delivery and installation of the modular or portable storage unit;

•Maintenance and other ad hoc services performed during the lease term; and

•Removal services that occur at the end of the lease term.

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

Purchase Accounting

The Company accounts for acquisitions of businesses under the acquisition method. Under the acquisition method of accounting, the Company records assets acquired and liabilities assumed, including intangible assets, at their respective estimated fair values on the date of acquisition. Goodwill is measured as the excess of the fair value of the consideration transferred over the fair value of the identifiable net assets and is assigned to the Company's reporting units that are expected to benefit from the acquisition.

Judgment is exercised in the determination of the estimated fair value of intangible assets acquired and their estimated useful lives. The estimated fair value and useful lives of customer relationships is determined based on estimates and judgments regarding discounted future after-tax earnings and cash flows expected from customer relationships. The fair value of trade name intangible assets is determined utilizing the relief from royalty method. A royalty rate based on observed market royalties is applied to projected revenue supporting the trade name and discounted to present value.

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

57

adjustment to goodwill during the measurement period, not to exceed one year from the date of acquisition if new information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the consolidated statements of operations. Note 2 to the Consolidated Financial Statements included in Item 8 of Part II of this annual report provides further discussion regarding business combinations and any fair value adjustments to amounts previously reported.

Evaluation of Goodwill Impairment

The Company performs its assessment of goodwill utilizing either a qualitative or quantitative impairment test. The qualitative impairment test assesses company-specific, industry, market and general economic factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or elects not to use the qualitative impairment test, a quantitative impairment test is performed. The quantitative impairment test involves a comparison of the estimated fair value of a reporting unit to its carrying amount. The Company estimates the fair value of a reporting unit by using a discounted cash flow model that calculates fair value as the present value of expected cash flows of the reporting units.

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, value of net operating losses, future economic and market conditions and determination of appropriate market comparables. Management bases fair value estimates on assumptions it believes to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from these estimates and the estimate is inherently sensitive to any material changes to the inputs noted above; these changes could potentially impact the fair value of reporting units.

If the carrying amount of the reporting unit exceeds the calculated fair value of the reporting unit, an impairment charge would be recognized for the excess of carrying value over fair value, not to exceed the amount of goodwill allocated to that reporting unit.

The Company's 2023 impairment test indicated that the estimated fair values of the Company's reporting units were in excess of their carrying values. The Company believes that only significant changes in the cash flow assumptions would result in an impairment of goodwill.

Indefinite-lived Intangible Assets

Intangible assets that are acquired by the Company and determined to have an indefinite useful life are not amortized but are tested for impairment at least annually. The Company’s indefinite-lived intangible assets consist of the Williams Scotsman and Mobile Mini trade names. The Company performs its assessment of indefinite-lived intangible assets utilizing either a qualitative or quantitative impairment test. When utilizing a quantitative impairment test, the Company calculates fair value using a relief-from-royalty method. This method is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment charge would be recorded to the extent the recorded indefinite-lived intangible asset exceeds the fair value. The relief-from-royalty method requires the Company to make assumptions regarding future revenue and the appropriate selection of royalty and discount rates. Any material deviation in actual results could affect the calculated fair value of the intangible asset.

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

Rental Equipment

Rental equipment is comprised of modular space and portable storage units held for rent or on rent to customers and value-added products and services (“VAPS”) which are in use or available to be used by customers. Rental equipment is measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Costs of improvements and conversions of rental equipment are capitalized when such costs extend the useful life of the equipment or increase the rental value of the unit. Costs incurred for equipment to meet a particular customer specification are either capitalized and depreciated over the lease term taking into consideration the residual value of the asset or charged to the customer at the beginning of the lease and expensed as incurred. Maintenance and repair costs are expensed as incurred.

Depreciation is computed using the straight-line method over estimated useful lives, as follows:

[[GREPCENT_TABLE]]
[["","Estimated Useful Life","","Residual Value"],["Modular space units","10 - 30 years","","20 - 55%"],["Portable storage units","7 - 30 years","","20 - 55%"],["VAPS and other related rental equipment","1 - 10 years","","0%"]]
[[/GREPCENT_TABLE]]

58

Allowance for Credit Losses

The Company is exposed to credit losses from trade receivables. The Company assesses each customer’s ability to pay for the products it leases or sells by conducting a credit review. The credit review considers expected billing exposure and timing for payment and the customer’s established credit rating. The Company performs its credit review of new customers at inception of the customer relationship and for existing customers when the customer transacts after a defined period of dormancy. The Company also considers contract terms and conditions, country risk and business strategy in the evaluation.

The Company monitors ongoing credit exposure through an active review of customer balances against contract terms and due dates. The Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. The allowance for credit losses reflects the estimate of the amount of receivables that the Company will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. Judgment and uncertainties are present in determining the allowance for credit losses due to the sensitivity of changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, the Company may be required to increase or decrease its allowances.

Changes in estimates are reflected in the period they become known. If circumstances were to change that required a change in estimates, such as a change in financial condition of customers or unanticipated changes in the economy, additional allowances may be required. There were no changes in the Company's estimates or underlying assumptions relating to the determination of the allowance for credit losses for the year ended December 31, 2023 that would have materially impacted the allowance for credit losses. Refer to Note 1 to the Consolidated Financial Statements included in Item 8 of Part II of this annual report for a summary of activity in the allowance for credit losses.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records deferred tax assets to the extent it believes that it is more likely than not that these assets will be realized. In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent results of operations. Valuation allowances are recorded to reduce the deferred tax assets to an amount that will more likely than not be realized.

The Company assesses the likelihood that each of the deferred tax assets will be realized. To the extent management believes realization of any deferred tax assets is not likely, the Company establishes a valuation allowance. When a valuation allowance is established or there is an increase in an allowance in a reporting period, tax expense is generally recorded in the Company’s consolidated statement of operations. Conversely, to the extent circumstances indicate that a valuation allowance is no longer necessary, that portion of the valuation allowance is reversed, which generally reduces the Company’s income tax expense.

Deferred tax liabilities are recognized for the income taxes on the undistributed earnings of wholly-owned foreign subsidiaries unless such earnings are indefinitely reinvested, or will only be repatriated when possible to do so at minimal additional tax cost. Income tax relating to items recognized directly in equity is recognized in equity and not in profit (loss) for the year.

In accordance with applicable authoritative guidance, the Company accounts for uncertain income tax positions using a benefit recognition model with a two-step approach; a more-likely-than-not recognition criterion; and a measurement approach that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. If it is not more-likely-than-not that the benefit of the tax position will be sustained on its technical merits, no benefit is recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company classifies interest on tax deficiencies and income tax penalties within income tax expense. The evaluation of uncertain tax positions involves judgment in the application of GAAP and complex tax laws.

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

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