WillScot Mobile Mini Annual Report 2019

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-KPURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934(Mark One)☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2019OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ___ to ___Commission File Number: 001-37552WILLSCOT CORPORATION(Exact name of registrant as specified in its charter)Delaware82-3430194(State or other jurisdiction of incorporation)(I.R.S. Employer Identification No.)901 S. Bond Street, #600Baltimore, Maryland 21231(Address of principal executive offices)(410) 931-6000(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which RegisteredClass A common stock, par value $0.0001 per shareWSCThe Nasdaq Capital MarketWarrants to purchase Class A common stock(1)WSCWWOTC Markets Group Inc.Warrants to purchase Class A common stock(2)WSCTWOTC Markets Group Inc.Securities registered pursuant to Section 12(g) of the Act: None.Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for thepast 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationsS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐1Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerginggrowth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of theExchange Act.Large accelerated filer ☒Accelerated filer ☐Non-accelerated filer ☐Smaller reporting company ☐Emerging growth company ☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒The aggregate market value of the common shares held by non-affiliates of the registrant, computed as of June 30, 2019 (the last business day of the registrant’smost recently completed second quarter), was approximately $848,851,148.Shares of Class A common stock, par value $0.0001 per share, outstanding: 110,316,368 shares at February 27, 2020.Shares of Class B common stock, par value $0.0001 per share, outstanding: 8,024,419 shares at February 27, 2020.Documents Incorporated by ReferenceThe information required by Part III of this Report, to the extent not set forth herein, is incorporated herein by reference from the registrant's definitive proxystatement relating to the Annual Meeting of Shareholders to be held in 2020, which definitive proxy statement will be filed with the Securities and ExchangeCommission within 120 days after the end of the fiscal year to which this Report relates.2WILLSCOT CORPORATIONAnnual Report on Form 10-KTable of ContentsPART IItem 1BusinessItem 1ARisk FactorsItem 1BUnresolved Staff CommentsItem 2PropertiesItem 3Legal ProceedingsItem 4Mine Safety DisclosuresPART IIItem 5Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesItem 6Selected Financial DataItem 7Management’s Discussion and Analysis of Financial Condition and Results of OperationsItem 7AQuantitative and Qualitative Disclosures About Market RiskItem 8Financial Statements and Supplementary DataItem 9Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9AControls and ProceduresItem 9BOther InformationPART IIIItem 10Directors, Executive Officers and Corporate GovernanceItem 11Executive CompensationItem 12Security Ownership of Certain Beneficial Owners and Management Related Stockholder MattersItem 13Certain Relationships and Related Transactions, and Director IndependenceItem 14Principal Accountant Fees and ServicesPART IVItem 15Exhibits and Financial Statement SchedulesSIGNATURES3PART IITEM 1. BusinessUnless the context otherwise requires, “we,” “us,” “our” and the “Company” refers to WillScot Corporation ("WillScot") and itssubsidiaries.Our CompanyHeadquartered in Baltimore, Maryland, we are a market leader in the North America specialty rental services industry. We provideinnovative modular space and portable storage solutions to diverse end markets utilizing a branch network of approximately 120 locationsthroughout the United States (“US”), Canada and Mexico.With roots dating back more than 60 years, we lease modular space and portable storage units (our “lease fleet”) to customers in thecommercial and industrial, construction, education, energy and natural resources, government and other end markets. We deliver “Ready toWork” solutions through our growing offering of value-added products and services (“VAPS”), such as the rental of steps, ramps, and furniturepackages, damage waivers and other amenities. These turnkey solutions offer customers flexible, low-cost and timely solutions to meet theirspace needs on an outsourced basis. We complement our core leasing business by selling both new and used units, allowing us to leverageour scale, achieve purchasing benefits and redeploy capital employed in our lease fleet.WillScot is the holding company for the Williams Scotsman family of companies. All of our assets and operations are owned throughWilliams Scotsman Holdings Corp. (“WS Holdings”). We operate and own 91.0% of WS Holdings, and Sapphire Holding S.a r.l (“Sapphire”), anaffiliate of TDR Capital LLP ("TDR Capital"), owns the remaining 9.0%.Products and ServicesOur modular space and portable storage units are used to meet a broad range of customer needs. Our units are made of wood, steel,or aluminum frames mounted on a steel chassis, and typically range in size from 8 to 14 feet in width and 16 to 70 feet in length. Most units areequipped with air conditioning and heating, electrical and Ethernet cable outlets and, if necessary, plumbing facilities. Our units are transportedby truck, either towed (if fitted with axles and hitches) or mounted on flat-bed trailers. Additionally, we offer VAPS along with our lease fleet(collectively, “rental equipment”) in order to deliver “Ready to Work” solutions to our customers.Modular Space SolutionsPanelized and Stackable Offices. Our FlexTM panelized and stackable offices are the next generation of modular space technology andoffer maximum flexibility and design configurations. These units provide a modern, innovative design, smaller footprint, ground level access andinterchangeable panels, including all glass panels that allow customers to configure the space to their precise requirements. These units havethe ability to expand upwards (up to three stories) and outwards.Single-Wide Modular Space Units. Single-wide modular space units include mobile offices and sales offices. These units offermaximum ease of installation and removal and are deployed across the broadest range of applications in our fleet. These units typically have“open interiors” which can be modified using movable partitions, and include tile floors, air conditioning and heating units, partitions and, ifrequested, toilet facilities.Section Modulars and Redi-Plex. Section modulars are two or more units combined into one structure. Redi-Plex complexes offeradvanced versatility for large, open floor plans or custom layouts with private offices. Redi-Plex is built with clearspan construction, whicheliminates interference from support columns and allows for up to sixty feet of open building width and building lengths that increase in twelvefoot increments, based on the number of units coupled together. Our proprietary design meets a wide range of national and state building,electrical, mechanical and plumbing codes, which creates versatility in fleet management.Classrooms. Classroom units are generally double-wide units adapted specifically for use by school systems or universities.Classroom units usually feature teaching aids, air conditioning/heating units, windows and, if requested, toilet facilities.Container Offices. Container offices are International Organization for Standardization (“ISO”) certified shipping containers that weconvert for office use. They provide safe, secure, ground-level access with fully welded weather-resistant steel corrugated exteriors and exteriorwindow guards made of welded steel and tamper-proof screws. Container offices are available in 20 and 40 foot lengths and in a combinationof office and storage floor plans, or all-office floor plans.Other Modular Space. We offer a range of other specialty products that vary across regions and provide flexibility to serve demands forlocal markets. Examples include toilet facilities to complement office and classroom units, guard houses, dormitories, and dining facilities.4Portable Storage SolutionsStorage units are typically ISO shipping containers with swing doors that are repurposed for commercial storage applications. Theseunits are primarily ground-level entry, windowless storage containers made of heavy exterior metals for secure storage and water tightness.VAPSWe offer a thoughtfully curated portfolio of VAPS that make modular space and portable storage units more productive, comfortable,secure and “Ready to Work” for our customers. We lease furniture, steps, ramps, basic appliances, internet connectivity devices and other itemsto our customers for use in connection with our products. We also offer our lease customers a damage waiver program that protects them incase the leased unit is damaged. For customers who do not select the damage waiver program, we bill them for the cost of repairs above andbeyond normal wear and tear.Delivery, Installation and RemovalWe provide delivery, site-work, installation, disassembly, unhooking and removal, and other services to our customers for an additionalfee as part of our leasing and sales operations. Typically, units are placed on temporary foundations constructed by our in-house servicetechnicians or subcontractors. These in-house service technicians or subcontractors also generally install any ancillary products and VAPS.Product LeasesRental equipment leasing is our core business. Over 90% of new lease orders are on our standard lease agreement, pre-negotiatedmaster lease or national account agreements. The initial lease periods vary, and our leases are customarily renewable on a month-to-monthbasis after their initial term. While the initial lease term is often relatively short, the average actual lease duration of our lease portfolio (includingmonth-to-month renewals) is significantly longer. Our average minimum lease terms at delivery for modular space units and portable storageunits are 14 months and 7 months, respectively, while the average duration of our lease portfolio is 34 months.Customers are responsible for the costs of delivery and set-up, dismantling and pick-up, customer-specified modifications, costs toreturn custom modifications back to standard configuration at end of lease and any loss or damage beyond normal wear and tear. Our leasesgenerally require customers to maintain liability and property insurance covering the units during the lease term and to indemnify us fromlosses caused by the negligence of the customer.As of December 31, 2019, we had over 125,000 modular space units, of which 88,495, or 69%, were on rent, as well as over 25,000portable storage units, of which 16,892, or 66%, were on rent.Product SalesWe complement our core leasing business with product sales of new units that we purchase from a broad network of third-partymanufacturers. We typically do not purchase new units for resale until we have obtained firm purchase orders (which normally are non-cancelable and include up-front deposits) for such units. Buying units directly for resale adds scale to our purchasing, which is beneficial to ouroverall supplier relationships and purchasing terms. New unit sales are a natural extension of our leasing operations in situations wherecustomers have long-lived or permanent projects, making it more cost-effective to purchase rather than to lease a standard unit.In the normal course of managing our business, we also sell idle used rental units at fair market value and units that are already onrent if the customer expresses interest in owning rather than continuing to rent the unit. The sale of units from our rental equipment hashistorically been both a profitable and cost-effective method to finance the replenishment and upgrade of the lease fleet as well as to generatefree cash flow during periods of lower rental demand and utilization. Our sales business may include modifying or customizing units to meetcustomer requirements. We also offer delivery, installation and removal-related services for an additional fee as part of our sales operations.CustomersIn 2019, we served over 50,000 customers. We believe that our customers prefer our modular space products over fixed, on-site builtspace because modular space products are a quick, flexible, and cost-effective solution for temporary or permanent expansion.For the years ended December 31, 2019, 2018 and 2017, no one customer accounted for more than 3% of our total consolidatedrevenues. For the year ended December 31, 2019, no one customer accounted for more than 1% of revenue, our top 10 customers accountedfor 4% of revenue, and our top 50 customers accounted for less than 11% of revenue, reflecting the low customer concentration and projectdiversification within our portfolio. Our strategy involves operating standardized rental equipment and "Ready to Work" solutions that can beredeployed across our diversified customer base and branch network in 15 discrete end markets. Key customer end markets include:5Construction and InfrastructureWe provide office and storage space to a broad array of contractors associated with non-residential buildings and non-buildinginfrastructure. Our client portfolio includes many of the largest general contractors and engineering, architecture, procurement, and constructioncompanies in North America, as well as home builders, developers, and subcontractors. Examples include highway, street, bridge and tunnelcontractors; water, sewer, communication and power line contractors; and special construction trades, including glass, glazing and demolition.Our construction and infrastructure customer base is characterized by a wide variety of contractors that are associated with original constructionas well as capital improvements in the private, institutional and municipal arenas.Commercial and IndustrialOur customers use our products as their primary office or retail space, to expand their existing commercial workspace, to increase theirstorage capabilities, and as temporary space for festivals, sporting, and other events. Customers in this category span a variety of industriesranging from agriculture, forestry & fishing; arts, media, hotels & entertainment; chemicals and other manufacturing; professional services; andretail & wholesale trade, including fast food and retail, as well as commercial offices, warehousing and other industrial end markets.Energy and Natural ResourcesOur products are leased to companies involved in electricity generation and transmission, utilities, up-mid-and down-stream oil andgas, mining exploration and extraction, and other related sectors.EducationRapid shifts in populations within regions often necessitate quick and cost effective expansion of education facilities, particularly inelementary and secondary schools and universities and colleges. Regional and local governmental budgetary pressures, classroom sizereduction legislation, refurbishment of existing facilities and the expansion of charter schools have made modular classrooms a convenient andeconomically advantageous alternative to expand capacity in education settings. In addition, our products are used as classrooms whenschools are undergoing large scale modernization, which allows continuous operation of a school while modernization progresses.GovernmentGovernment customers consist of national, state, provincial and local public sector organizations. Modular space and portable storagesolutions are particularly attractive to focused niches such as small municipal buildings, prisons and jails, courthouses, military installations,national security buildings and offices during building modernization, as well as disaster relief.Competitive StrengthsWe believe that the following competitive strengths have been instrumental to our success and position us for future growth:North American Market Leader with Significant Scale AdvantagesWe have developed our market position by leveraging our extensive branch network, diverse fleet, technical expertise, operationalcapabilities and strong brand awareness among our customers. Our extensive scale allows us to attract and retain talent and implementindustry leading technology tools and process. This results in significant operational benefits, such as optimization of fleet yield and utilization,efficient capital allocation, superior service capabilities and the ability to offer consistent "Ready to Work" solutions across all of our branchlocations.Customer, End Market and Geographic DiversityWe have established strong relationships with a diverse customer base, ranging from large national accounts to small localbusinesses. Our customers operate in multiple end markets, including commercial and industrial, construction, education, energy and naturalresources and government, among others. We believe that the diversity of our customer end markets reduces our exposure to changes relatedto a given customer, shifts within an industry or geographic region, and end market industry seasonality, while also providing significantopportunities to grow the business. When combined with our 34 month average lease duration, the diversification and flexibility in our portfolioresults in predictable lease revenue streams.Since geographic proximity to customers is a competitive advantage in the industry, we maintain a network of approximately 120branches and additional drop lots to better service our customers. Our branches typically have a sales staff dedicated to the local market, withtransportation personnel responsible for delivery and pick-up of our units and yard personnel responsible for loading and unloading units andperforming repairs and maintenance. Customers benefit from improved service and response times, reduced time to occupancy, better accessto sales representatives with local market knowledge, as well as lower freight costs, which are typically paid by the customer. We benefitbecause we are able to leverage investments in shared services, technology, and marketing costs over a larger lease base, redeploy unitswithin our branch network to optimize utilization, enhance our competitive position by providing ample local supply and offer profitable short-termleases which either would not be profitable or would be cost prohibitive to the customer without a local market presence. We believe that thegeographic diversity of our branch network reduces our exposure to changes related to a given6region, while presenting us with significant growth opportunities.The following chart illustrates the breakdown of our customers and revenue by end markets as of December 31, 2019. In order tooptimize the use of fleet asset across our branch network, we centrally manage fleet rebalancing across our end markets. This allows us toserve 15 distinct end markets in which no customer accounted for more than 1% of consolidated revenue for the year ended December 31,2019.REVENUE MIX BY END MARKETCUSTOMER CONCENTRATIONLong-Life Fleet and Effective Fleet ManagementAs of December 31, 2019, our modular space and portable storage lease fleet consists of 76.8 million square feet of relocatablespace, comprising approximately 153,000 units with a gross book value of approximately $2.6 billion. Modular space units have attractiveeconomic characteristics and our ability to lease and maintain our assets profitability over economic lives that often exceed 20 years, is a uniquecapability and competitive advantage for WillScot. We utilize standard fleet maintenance procedures across the branch network, monitor fleetcondition and allocate capital expenditures centrally, and ensure all units meet consistent quality and condition requirements, regardless of unitage, prior to delivery to a customer.Our standardized lease fleet meets multi-state industrial building codes, which allows us to leverage our branch network and rapidlyredeploy units to areas of higher customer demand in the surrounding geographic markets, as well as easily modify our structures to meetspecific customer needs. Additionally, we have the flexibility to refurbish existing units in order to re-lease them when we have sufficientcustomer demand or we can choose to sell used units to customers.The relative simplicity and favorable condition and quality of the lease fleet, as well as our sourcing strategy where we source our unitswith no significant dependence on any one particular supplier and have no long-term purchase contracts with manufacturers, providespurchasing flexibility and allows us to adjust such expenditures based on our business needs and prevailing economic conditions.The nature of our modular space product line and diverse customer end uses support our growing offering of VAPS, which typicallyhave useful lives between 2 and 8 years and offer an incremental return on investment.We supplement our fleet and VAPS investments with acquisitions, and adjust our investments in fleet and acquisitionsopportunistically.7The following chart illustrates the breakdown of the net book value of our rental equipment between the various modular space producttypes, portable storage and VAPS as of December 31, 2019.Our IndustryOur business primarily operates within the modular space and portable storage markets however, our services span across a variety ofrelated sectors, including furniture rental, transportation and logistics, facilities management and rental services, and commercial real estate.Modular Space MarketThe modular space market is fragmented. Modular space units are non-residential structures designed to meet federal, provincial,state and local building codes and, in most cases, are designed to be relocatable. Modular space units are constructed offsite, utilizingmanufacturing techniques to prefabricate single or multi-story whole building solutions in deliverable modular sections. Units are typicallyconstructed of steel, wood and conventional building materials.The modular space market has evolved in recent years as businesses and other potential customers increasingly recognize the valueof modular space. The key growth drivers in this market are:Growing need and demand for space - driven by general economic activity, including gross domestic product growth, industrial production, miningand natural resources activity, non-residential construction, urbanization, public and education spending, and the scale and frequency of specialevents.Increasing shift from traditional fixed, on-site built space to modular space solutions - driven by several advantages as compared with fixed, on-site built space, including:Quick to install - the pre-fabrication of modular space units allows them to be put in place rapidly, providing potential long-term solutions to needsthat may have materialized quickly.Flexibility - flexible assembly design allows modular space units to be built to suit a customer’s needs while offering customers the ability toadjust their space as their needs change.Cost effectiveness - modular space units provide a cost effective solution for temporary and permanent space requirements and allow customersto improve returns on capital in their core business.Quality - the pre-fabrication of modular space units is based on a repeatable process in a controlled environment, resulting in more consistentquality.Mobility - modular space units can easily be disassembled, transported to a new location and re-assembled.Environmentally friendly - relocatable buildings promote the reuse of facilities, on an as-needed basis by the occupants.Portable Storage MarketThe portable storage market is highly fragmented and remains primarily local in nature. Portable storage provides customers with aflexible and low-cost storage alternative to permanent warehouse space and fixed-site self-storage. In addition, portable storage addresses theneed for security while providing for convenience and immediate accessibility to customers.8Other Related MarketsIn the normal course of providing our “Ready to Work” solutions, we perform services that are characteristic of activities in otherindustries. For example, we coordinate a broad network of third-party and in-house transportation and service resources to support the timelymovement of our products, as well as maintenance on, customer sites. Additionally, we design, source, lease and maintain a broad offering ofancillary products, including furniture, that render our modular structures immediately functional in support of our customers’ needs. We alsoprovide technical expertise and oversight for customers regarding building design and permitting, site preparation and expansion or contractionof installed space based on changes in project requirements. Further, we have the capability to compete in adjacent markets, such ascommercial and institutional housing, that have received less focus historically in the modular space market. We believe that this broad servicecapability differentiates us from other rental and business services providers and clearly differentiates us in the marketplace.CompetitionAlthough our competition varies significantly by local market, the modular space and portable storage industry is highly competitive andfragmented as a whole. Based on customer feedback, we believe that participants in our industry compete on the basis of customerrelationships, product quality and availability, delivery speed, VAPS and service capabilities, pricing, and overall ease of doing business. Wetypically compete with one or more local providers in all of our markets, as well as with a limited number of national and regional companies.Some of our competitors may have greater market share in certain geographic regions. Significant modular space and portable storagecompetitors include Mobile Mini, Mobile Modular, Pac-Van, ATCO Structures & Logistics and BOXX Modular. Numerous other regional and localcompanies compete in individual markets.Strategic AcquisitionsWe believe the scalability of our branch network, corporate and shared services infrastructure, technology, and processes allows us tointegrate acquisitions efficiently, realize cost savings, cross-sell VAPS, and improve the yield on acquired assets. As such, we manage an activeacquisition pipeline and consider acquisitions to be an important component of our growth strategy.EmployeesAs of December 31, 2019, we had over 2,500 employees. We have collective bargaining agreements in portions of our Mexico-basedoperations representing approximately 1% of our employees. Approximately 89% of our employees are in the field, while 11% serve in corporatefunctions. We have not experienced a strike or significant work stoppage, and we consider our relations with employees to be good.Intellectual PropertyWe own a number of trademarks, none of which are individually material to our business. Our trademarks are registered or pendingapplications for registrations in the US Patent and Trademark Office and various non-US jurisdictions. We operate primarily under the WillScotbrand.Regulatory and Environmental ComplianceWe are subject to certain environmental, transportation, anti-corruption, import controls, health and safety and other laws andregulations in countries, states or provinces, and localities in which we operate. We incur significant costs in our business to comply with theselaws and regulations. However, from time to time we may be subject to additional costs and penalties as a result of non-compliance. Thediscovery of currently unknown matters or conditions, new laws and regulations or different enforcement or interpretation of existing laws andregulations could materially harm our business or operations in the future.We are subject to laws and regulations that govern and impose liability for activities that may have adverse environmental effects,including discharges into air and water, and handling and disposal of hazardous substances and waste. As of the date of this filing, noenvironmental matter has been material to our operations. Based on our management’s assessment, we believe that any environmentalmatters relating to us of which we are currently aware will not be material to our overall business or financial condition.The jurisdictions in which we operate are also subject to anti-bribery laws and regulations, such as the US Foreign Corrupt PracticesAct of 1977, as amended (the “FCPA”). These regulations prevent companies and their officers, employees and agents from making paymentsto officials and public entities of foreign countries to facilitate obtaining new contracts. Violations of these laws and regulations may result incriminal sanctions and significant monetary penalties.A portion of our units are subject to regulation in certain states under motor vehicle and similar registrations and certificate of titlestatutes. Management believes that we have complied, in all material respects, with all motor vehicle9registration and similar certificate of title statutes in states where such statutes clearly apply to modular space units. We have not taken actionsunder such statutes in states where we have determined that such statutes do not apply to modular space units. However, in certain states, theapplicability of such statutes to modular space units is not clear beyond doubt. If additional registration and related requirements are deemed tobe necessary in such states or if the laws in such states or other states were to change to require us to comply with such requirements, wecould be subject to additional costs, fees and taxes as well as administrative burdens in order to comply with such statutes and requirements.Management does not believe that the effect of such compliance will be material to our business and financial condition.Recent DevelopmentsWarrant RedemptionOn January 24, 2020, the Company delivered a notice (the “Redemption Notice”) for the redemption of all of its outstanding PublicWarrants (as defined in Item 5, 2015 Warrants, of this Annual Report on Form 10-K) to purchase shares of the Company’s Class A commonstock, par value $0.0001 per share, that were issued under the Warrant Agreement, dated September 10, 2015, by and between the Company’slegal predecessor company Double Eagle Acquisition Corp. (“Double Eagle”) and Continental Stock Transfer & Trust Company, as warrantagent (the “Warrant Agreement”), as part of the units sold in Double Eagle's initial public offering (the “IPO”) that remain unexercised at 5:00 p.m.New York City time on February 24, 2020. As further described in the Redemption Notice and permitted under the Warrant Agreement, holders ofthe Public Warrants who exercised such Public Warrants following the date of the Redemption Notice were required to do so on a “cashlessbasis.”From January 1, 2020 through January 24, 2020, 796,610 Public Warrants were exercised for cash, resulting in the Company receivingcash proceeds of $4.6 million in the aggregate. An aggregate of 398,305 shares of the Company's Class A common stock were issued inconnection with these exercises.After January 24, 2020 through February 24, 2020, 5,836,040 Public Warrants were exercised on a cashless basis. An aggregate of1,097,162 shares of the Company's Class A common stock were issued in connection with these exercises. Thereafter, the Companycompleted the redemption of 38,509 remaining Public Warrants for $0.01 per warrant.Following the redemption of the Public Warrants, (i) 17,561,700 Private Warrants (as defined in Item 5, 2015 Warrants, of this AnnualReport on Form 10-K), each exercisable for one-half of one share of Common Stock at an exercise price of $5.75 per half-share, issued underthe Warrant Agreement in a private placement simultaneously with the IPO and still held by the initial holders thereof or their permittedtransferees remain outstanding and (ii) 9,966,070, each exercisable for one share of the Company's Class A common stock at an exercise priceof $15.50 per share, issued in connection with the Company’s acquisition of Modular Space Holdings, Inc. ("ModSpace") under a warrantagreement dated August 15, 2018, between Continental Stock Transfer & Trust Company, as warrant agent. As of February 28, 2020,110,316,368 shares of the Company's Class A common stock were issued and outstanding.MergerOn March 1, 2020, the Company, along with its newly formed subsidiary, Picasso Merger Sub, Inc. (“Merger Sub”), entered into anAgreement and Plan of Merger (the “Merger Agreement”) with Mobile Mini, Inc. (“Mobile Mini”). The Merger Agreement provides for the merger ofMobile Mini with and into Merger Sub (the “Merger”), with Mobile Mini surviving as a wholly-owned subsidiary of the Company. At the effective timeof the Merger, and subject to the terms and subject to the conditions set forth in the Merger Agreement, each outstanding share of the commonstock of Mobile Mini shall be converted into the right to receive 2.4050 shares of WillScot Class A common stock. Under the terms of the MergerAgreement, we expect our and Mobile Mini’s stockholders would own 54% and 46% of the combined company, respectively.The Merger has been unanimously approved by the Company and Mobile Mini’s boards of directors. The Merger is subject tocustomary closing conditions, including receipt of regulatory and stockholder approvals by the Company and Mobile Mini’s stockholders, and isexpected to close in third quarter of 2020. Additionally, the transaction also has the support of TDR Capital, the Company's largest shareholder,which has entered into a customary voting agreement in support of the Merger.In connection with the Merger, the Company entered into a commitment letter (the “Commitment Letter”), dated March 1, 2020, with thelenders party thereto (the “Lenders”). Pursuant to the Commitment Letter, the Lenders have agreed to provide debt financing to refinance theCompany’s existing ABL Facility (as defined below), Mobile Mini’s existing ABL credit facility and Mobile Mini’s outstanding senior notes due2024 on the terms and conditions set forth in the Commitment Letter.Available InformationOur website address is www.willscot.com. We make available, free of charge through our website, our Annual Report on Form 10-K,Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) as soon as reasonably practicable after such documents are electronicallyfiled with, or furnished to, the United States Securities and Exchange Commission (the “SEC”). The SEC maintains an internet website atwww.sec.gov that contains reports, proxy and information statements and other information regarding WillScot.10ITEM 1A. Risk FactorsRisks Relating to Our BusinessWe face significant competition in the modular space and portable storage unit industry. If we are unable to competesuccessfully, we could lose customers and our revenue and profitability could decline.Although our competition varies significantly by market, the modular space and portable storage unit industry is highly competitive ingeneral. We compete on the basis of a number of factors, including customer relationships, product quality and availability, delivery speed, VAPSand service capabilities, pricing, and overall ease of doing business. We may experience pricing pressures in our operations as some of ourcompetitors seek to obtain market share by reducing prices, and we may face reduced demand for our products and services if our competitorsare able to provide new or innovative products or services that better appeal to customers. In most of our end markets, we face competition fromnational, regional and local companies who have an established market position in the specific service area, and we expect to encountersimilar competition in any new markets that we may enter. In certain markets, some of our competitors may have greater market share, lessdebt, greater pricing flexibility, more attractive product or service offerings, or superior marketing and financial resources. Increased competitioncould result in lower profit margins, substantial pricing pressure and reduced market share. Price competition, together with other forms ofcompetition, may materially adversely affect our business, results of operations and financial condition.Our operations are exposed to operational, economic, political and regulatory risks.We operate in the US, Canada and Mexico. For the year ended December 31, 2019, approximately 90.9%, 7.6%, and 1.5% of ourrevenue was generated in the US, Canada and Mexico, respectively. Our operations in these countries could be affected by foreign and domesticeconomic, political and regulatory risks, including the following:• regulatory requirements that are subject to change and that could restrict our ability to assemble, lease or sellproducts;• inflation, recession, and fluctuations in foreign currency exchange and interest rates;• trade protection measures, including increased duties and taxes and import or export licensing requirements;• compliance with applicable antitrust and other regulatory rules and regulations relating to potential acquisitions;• different local product preferences and product requirements;• pressures on management time and attention due to the complexities of overseeing multi-national operations;• challenges in maintaining staffing;• different labor regulations and the potential impact of collective bargaining;• potentially adverse consequences from changes in, or interpretations of, tax laws;• political and economic instability;• enforcement of remedies in various jurisdictions;• the risk that the business partners upon whom we depend for technical assistance will not perform as expected;• compliance with applicable export control laws and economic sanctions laws and regulations;• price controls and ownership regulations;• obstacles to the repatriation of earnings and cash;• differences in business practices that may result in violation of company policies, including, but not limited to, briberyand collusive practices; and• reduced protection for intellectual property in some countries.These and other risks may materially adversely affect our business, results of operations and financial condition.Global or local economic movements could have a material adverse effect on our business.We operate our business in the US, Canada and Mexico. Our business may be negatively impacted by economic movements ordownturns in the local markets in which we operate or global markets generally. These adverse economic conditions may reduce commercialactivity, cause disruption and extreme volatility in global financial markets and increase rates of default and bankruptcy. Reduced commercialactivity has historically resulted in reduced demand for our products and services. For example, reduced commercial activity in the construction,energy and natural resources sectors in certain markets in which we operate, particularly the US and Canada, has negatively impacted ourbusiness in the past. Disruptions in financial markets could negatively impact the ability of our customers to pay their obligations to us in atimely manner and increase our counterparty risk. If economic conditions worsen, we may face reduced demand and an increase, relative tohistorical levels, in the time it takes to receive customer payments. If we are not able to adjust our business in a timely and11effective manner to changing economic conditions, our business, results of operations and financial condition may be materially adverselyaffected.Moreover, the level of demand for our products and services is sensitive to the level of demand within various sectors, particularly thecommercial and industrial, construction, education, energy and natural resources, and government end markets. Each of these sectors isinfluenced not only by the state of the general global economy, but also by a number of more specific factors as well. For example, a decline inglobal or local energy prices may materially adversely affect demand for modular buildings within the energy and resources sector. The levels ofactivity in these sectors and geographic regions may also be cyclical, and we may not be able to predict the timing, extent or duration of theactivity cycles in the markets in which we or our key customers operate. A decline or slowed growth in any of these sectors or geographicregions could result in reduced demand for our products and services, which may materially adversely affect our business, results of operationsand financial condition.Effective management of our fleet is vital to our business, and our failure to properly safeguard, design, manufacture,repair and maintain our fleet could harm our business and reduce our operating results and cash flows.Our modular space and portable storage units have long economic lives and managing our fleet is a critical element to our leasingbusiness. Rental equipment asset management requires designing and building long-lived products that anticipate customer needs andchanges in legislation, regulations, building codes and local permitting in the various markets in which we operate. In addition, we must cost-effectively maintain and repair our fleet to maximize the economic life of the products and the proceeds we receive from product sales. As theneeds of our customers change, we may incur costs to relocate or retrofit our assets to better meet shifts in demand. If the distribution of ourassets is not aligned with regional demand, we may be unable to take advantage of sales and leasing opportunities in certain regions, despiteexcess inventory in other regions. If we are not able to successfully manage our lease assets, our business, results of operations and financialcondition may be materially adversely affected.If we do not appropriately manage the design, manufacture, repair and maintenance of our product fleet, or if we delay or defer suchrepair or maintenance or suffer unexpected losses of rental equipment due to theft or obsolescence, we may be required to incur impairmentcharges for equipment that is beyond economic repair or incur significant capital expenditures to acquire new rental equipment to servedemand. These failures may also result in personal injury or property damage claims, including claims based on poor indoor air quality andtermination of leases or contracts by customers. Costs of contract performance, potential litigation and profits lost from termination couldmaterially adversely affect our future operating results and cash flows.Trade policies and changes in trade policies, including the imposition of tariffs, their enforcement and downstreamconsequences, may materially adversely affect our business, results of operations, and outlook.Tariffs and/or other developments with respect to trade policies, trade agreements and government regulations may materially,adversely affect our business, financial condition and results of operations. For example, the US government has imposed tariffs on steel,aluminum and lumber imports from certain countries, which could result in increased costs to us for these materials. Without limitation, (i) tariffscurrently in place and (ii) the imposition by the federal government of new tariffs on imports to the US could materially increase (a) the cost of ourproducts that we are offering for sale or lease, (b) the cost of certain products that we source from foreign manufacturers, and (c) the cost ofcertain raw materials or products that we utilize. We may not be able to pass such increased costs on to our customers, and we may not be ableto secure sources of certain products and materials that are not subject to tariffs on a timely basis. Although we actively monitor ourprocurement policies and practices to avoid undue reliance on foreign-sourced goods subject to tariffs, when practicable, such developmentsmay materially adversely affect our business, financial condition and results of operations.We may be unable to acquire and integrate new operations, which could cause our business to suffer.We may be unable to complete strategic acquisitions or integrate acquired businesses or assets into our operations for variousreasons. We completed the Modular Space Holdings, Inc., or ModSpace, and Acton Mobile Holdings LLC, or Acton, acquisitions in 2018 and2017. While the ModSpace and Acton integrations are substantially complete, we may explore acquisitions in the future that meet our strategicgrowth plans. We cannot predict if or when acquisitions will be completed, and we may face significant competition for acquisition targets.Acquisitions involve numerous risks, including the following:difficulties in integrating the operations, technologies, products and personnel of the acquired companies;diversion of management’s attention from normal daily operations of the business;loss of key employees;difficulties in entering markets in which we have no or limited prior experience and where our competitors in such markets have stronger marketpositions;difficulties in complying with regulations, such as environmental regulations, and managing risks related to an acquired business;12an inability to timely obtain financing, including any amendments required to existing financing agreements;an inability to implement uniform standards, controls, procedures and policies;undiscovered and unknown problems, defects, liabilities or other issues related to any acquisition that become known to us only after theacquisition, particularly relating to rental equipment on lease that are unavailable for inspection during the diligence process; andloss of key customers, suppliers or employees.In connection with acquisitions, we may assume liabilities or acquire damaged assets, some of which may be unknown to us at thetime of such acquisitions.We assess the condition and regulatory certification of an acquired fleet as part of our acquisition due diligence. In some cases, fleetcondition or regulatory certification may be difficult to determine due to the fleet being on lease at the time of acquisition and/or inadequatecertification records. Fleet acquisitions may therefore result in a rectification cost that we may not have factored into the acquisition price,impacting deployability and ultimate profitability of the fleet we acquired.In particular, we have made two major acquisitions (Acton and ModSpace) since November 29, 2017. Although we have substantiallyintegrated the acquired businesses and assets into our organization and platforms, we must continue to take actions in 2020 to realize thecombined cost synergies that we forecast for those acquisitions. We may incur more costs than we anticipated to achieve the forecast synergies(thus reducing the net benefit of the cost synergies), realize synergies later than we expected or fail altogether to achieve a portion of the costsavings we anticipated. Any of these events could cause reductions in our earnings per share, impact our ability to borrow funds under our creditfacility, decrease or delay the accretive effect of the acquisitions that we anticipated and negatively impact our stock price.Acquisitions are inherently risky, and we cannot provide assurance that any future acquisitions will be successful or will not materiallyadversely affect our business, results of operations and financial condition. If we do not manage new markets effectively, some of our newbranches and acquisitions may lose money or fail, and we may have to close unprofitable branches. Closing a branch in such circumstanceswould likely result in additional expenses that would cause our operating results to suffer. To manage growth successfully, we will need tocontinue to identify additional qualified managers and employees to integrate acquisitions within our established operating, financial and otherinternal procedures and controls. We will also need to effectively motivate, train and manage our employees. Failure to successfully integraterecent and future acquisitions and new branches into existing operations could materially adversely affect our results of operations and financialcondition.If we do not manage our credit risk effectively, collect on our accounts receivable, or recover our rental equipment fromour customers, it could materially adversely affect our business, financial condition and results of operations.We perform credit evaluation procedures on our customers on each transaction and require security deposits or other forms of securityfrom our customers when we identify a significant credit risk. Failure to manage our credit risk and receive timely payments on our customeraccounts receivable may result in the write-off of customer receivables and loss of units if we are unable to recover our rental equipment fromour customers’ sites. If we are not able to manage credit risk, or if a large number of customers should have financial difficulties at the sametime, our credit and rental equipment losses would increase above historical levels. If this should occur, our business, financial condition,results of operations and cash flows may be materially adversely affected.Our ability to use our net operating loss carryforwards and other tax attributes may be limited.As of December 31, 2019, we had US net operating loss (“NOL”) carryforwards of approximately $899.5 million and $619.9 million forUS federal income tax and state tax purposes, respectively, available to offset future taxable income, prior to consideration of annual limitationsthat Section 382 of the Internal Revenue Code of 1986 may impose. The US NOL carryforwards begin to expire in 2019 for state and 2022 forfederal if not utilized. In addition, we had foreign NOLs of $20.7 million as a result of our operations in Canada and Mexico. Our Mexico andCanadian NOL carryforwards begin to expire in 2021 and 2038, respectively, if not utilized.Our US NOL and tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities. Under Section382 of the Internal Revenue Code and corresponding provisions of US state law, if a corporation undergoes an “ownership change,” generallydefined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its US NOLs andother applicable tax attributes before the ownership change, such as research and development tax credits, to offset its income after theownership change may be limited. We have completed Section 382 analyses for applicable transactions, and performed utilization analysisunder US GAAP. As a result, if we earn net taxable income, our ability to use our pre-ModSpace US NOL carryforwards to offset US federaltaxable income may be subject to limitations, which could potentially result in increased future tax liability to us. In addition, at the state level,there may be periods during which the use of US NOLs is suspended or otherwise limited, which could accelerate or permanently increasestate taxes owed.Lastly, we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which maybe outside of our control. If we determine that an ownership change has occurred and our ability to use our13historical NOL and tax credit carryforwards is materially limited, it may result in increased future tax obligations and income tax expense.We may be unable to recognize deferred tax assets such as those related to our tax loss carryforwards and, as a result, losefuture tax savings, which could have a negative impact on our liquidity and financial position.We recognize deferred tax assets primarily related to deductible temporary differences based on our assessment that the item will beutilized against future taxable income and the benefit will be sustained upon ultimate settlement with the applicable taxing authority. Suchdeductible temporary differences primarily relate to tax loss carryforwards and business interest expense limitations. Tax loss carryforwardsarising in a given tax jurisdiction may be carried forward to offset taxable income in future years from such tax jurisdiction and reduce oreliminate income taxes otherwise payable on such taxable income, subject to certain limitations. Deferred interest expense exists primarilywithin our US operating companies, where interest expense was not previously deductible as incurred but may become deductible in the futuresubject to certain limitations. We may have to write down, through income tax expense, the carrying amount of certain deferred tax assets to theextent we determine it is not probable we will realize such deferred tax assets.Some of the tax loss carryforwards expire and if we do not have sufficient taxable income in future years to use the tax benefits beforethey expire, the benefit may be permanently lost. In addition, the taxing authorities could challenge our calculation of the amount of our taxattributes, which could reduce certain of our recognized tax benefits. Further, tax laws in certain jurisdictions may limit the ability to usecarryforwards upon a change in control.Unanticipated changes in our tax obligations, the adoption of a new tax legislation, or exposure to additional income taxliabilities could affect profitability.We are subject to income taxes in the US, Canada and Mexico. Our tax liabilities are affected by the amounts we charged for inventory,services, funding and other transactions on an intercompany basis. We are subject to potential tax examinations in these jurisdictions. Taxauthorities may disagree with our intercompany charges, cross-jurisdictional transfer pricing or other tax positions and assess additional taxes.We regularly assess the likely outcomes of these examinations to determine the appropriateness of our tax provision. However, there can be noassurance that we will accurately predict the outcomes of these potential examinations, and the amounts that we ultimately pay upon resolutionof examinations could be materially different from the amounts we previously included in our income tax provision and, therefore, could have amaterial impact on our results of operations and cash flows. In addition, our future effective tax rate could be adversely affected by changes toour operating structure, changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation allowance ofdeferred tax assets, changes in tax laws and the discovery of new information in the course of our tax return preparation process. Changes in taxlaws or regulations may increase tax uncertainty and adversely affect our results of operations.Changes in state building codes could adversely impact our ability to remarket our buildings, which could have a materialadverse impact on our business, financial condition and results of operations.Building codes are generally reviewed, debated and, in certain cases, modified on a national level every three years as an ongoingeffort to keep the regulations current and improve the life, safety and welfare of the building’s occupants. All aspects of a given code are subjectto change, including, but not limited to, such items as structural specifications for earthquake safety, energy efficiency and environmentalstandards, fire and life safety, transportation, lighting and noise limits. On occasion, state agencies have undertaken studies of indoor air qualityand noise levels with a focus on permanent and modular classrooms. This process leads to a systematic change that requires engagement inthe process and recognition that past methods will not always be accepted. New modular construction is very similar to conventionalconstruction where newer codes and regulations generally increase cost. New governmental regulations may increase our costs to acquirenew rental equipment, as well as increase our costs to refurbish existing equipment.Compliance with building codes and regulations entails risk as state and local government authorities do not necessarily interpretbuilding codes and regulations in a consistent manner, particularly where applicable regulations may be unclear and subject to interpretation.These regulations often provide broad discretion to governmental authorities that oversee these matters, which can result in unanticipateddelays or increases in the cost of compliance in particular markets. The construction and modular industries have developed many “bestpractices” which are constantly evolving. Some of our peers and competitors may adopt practices that are more or less stringent than ours.When, and if, regulators clarify regulatory standards, the effect of the clarification may be to impose rules on our business and practicesretroactively, at which time we may not be in compliance with such regulations and we may be required to incur costly remediation. If we areunable to pass these increased costs on to our customers, our business, financial condition, operating cash flows and results of operationscould be negatively impacted.Our operations face foreign currency exchange rate exposure, which may materially adversely affect our business, resultsof operations and financial condition.We hold assets, incur liabilities, earn revenue and pay expenses in certain currencies other than the US dollar, primarily the Canadiandollar and the Mexican peso. Our consolidated financial results are denominated in US dollars, and14therefore, during times of a strengthening US dollar, our reported revenue in non-US dollar jurisdictions will be reduced because the localcurrency will translate into fewer US dollars. Revenue and expenses are translated into US dollars at the average exchange rate for the period.In addition, the assets and liabilities of our non-US dollar subsidiaries are translated into US dollars at the exchange rates in effect on thebalance sheet date. Foreign currency exchange adjustments arising from certain intercompany obligations with and between our domesticcompanies and our foreign subsidiaries are marked-to-market and recorded as a non-cash loss or gain in each of our financial periods in ourconsolidated statements of operations. Accordingly, changes in currency exchange rates will cause our foreign currency translation adjustmentin the consolidated statements of comprehensive loss to fluctuate. In addition, fluctuations in foreign currency exchange rates will impact theamount of US dollars we receive when we repatriate funds from our non-US dollar operations.Fluctuations in interest rates and commodity prices may also materially adversely affect our revenues, results of operationsand cash flows.Although we have converted a portion of our senior secured revolving credit facility borrowings into fixed-rate debt through interest rateswaps, a significant portion of our borrowings under the facility remain variable rate debt. Fluctuations in interest rates may negatively impact theamount of interest payments, as well as our ability to refinance portions of our existing debt in the future at attractive interest rates. In addition,certain of our end markets, as well as portions of our cost structure, such as transportation costs, are sensitive to changes in commodity prices,which can impact both demand for and profitability of our services. These changes could impact our future earnings and cash flows, assumingother factors are held constant.Significant increases in raw material and labor costs could increase our operating costs significantly and harm ourprofitability.We incur labor costs and purchase raw materials, including steel, lumber, siding and roofing, fuel and other products to performperiodic repairs, modifications and refurbishments to maintain physical conditions of our units and in connection with get-ready, delivery andinstallation of our units. The volume, timing and mix of such work may vary quarter-to-quarter and year-to-year. Generally, increases in labor andraw material costs will increase the acquisition costs of new units and also increase the repair and maintenance costs of our fleet. We alsomaintain a truck fleet to deliver units to and return units from our customers, the cost of which is sensitive to maintenance and fuel costs andrental rates on leased equipment. During periods of rising prices for labor or raw materials, and in particular, when the prices increase rapidly orto levels significantly higher than normal, we may incur significant increases in our acquisition costs for new units and higher operating coststhat we may not be able to recoup from customers through changes in pricing, which could materially adversely affect our business, results ofoperations and financial condition.Third parties may fail to manufacture or provide necessary components for our products properly or in a timely manner.We are often dependent on third parties to manufacture or supply components for our products. We typically do not enter into long-termcontracts with third-party suppliers. We may experience supply problems as a result of financial or operating difficulties or the failure orconsolidation of our suppliers. We may also experience supply problems as a result of shortages and discontinuations resulting from productobsolescence or other shortages or allocations by suppliers. Unfavorable economic conditions may also adversely affect our suppliers or theterms on which we purchase products. In the future, we may not be able to negotiate arrangements with third parties to secure products that werequire in sufficient quantities or on reasonable terms. If we cannot negotiate arrangements with third parties to produce our products or if thethird parties fail to produce our products to our specifications or in a timely manner, our business, results of operations and financial conditionmay be materially adversely affected.We are subject to risks associated with labor relations, labor costs and labor disruptions.We are subject to the costs and risks generally associated with labor disputes and organizing activities related to unionized labor. Fromtime to time, strikes, public demonstrations or other coordinated actions and publicity may disrupt our operations. We may incur increased legalcosts and indirect labor costs as a result of contractual disputes, negotiations or other labor-related disruptions. We have collective bargainingagreements with employees in portions of our Mexico-based operations, which accounted for approximately 1.0% of our total employees as ofDecember 31, 2019. These operations may be more highly affected by labor force activities than others, and all collective bargainingagreements must be renegotiated annually. Other locations may also face organizing activities or effects. Labor organizing activities could resultin additional employees becoming unionized. Furthermore, collective bargaining agreements may limit our ability to reduce the size of workforces during an economic downturn, which could put us at a competitive disadvantage.Failure to retain key personnel could impede our ability to execute our business plan and growth strategy.Our ability to profitably execute our business plan depends on our ability to attract, develop and retain qualified personnel. Certain of ourkey executives, managers and employees have knowledge and an understanding of our business and our industry, and/or have developedmeaningful customer relationships, that cannot be duplicated readily. Our ability to attract and retain qualified personnel is dependent on,among other things, the availability of qualified personnel and our ability to provide a competitive compensation package. Failure to retainqualified key personnel may materially adversely affect our business, results of operations and financial condition.15Moreover, labor shortages, the inability to hire or retain qualified employees and increased labor costs could have a material adverseeffect on our ability to control expenses and efficiently conduct our operations. We may not be able to continue to hire and retain the sufficientlyskilled labor force necessary to operate efficiently and to support our operating strategies. Labor expenses could also increase as a result ofcontinuing shortages in the supply of personnel.If we determine that our goodwill, intangible assets, and indefinite-life intangible assets have become impaired, we mayincur impairment charges, which may adversely impact our operating results.We have a substantial amount of goodwill and indefinite-life intangible assets (trade names), which represents the excess of the totalpurchase price of our acquisitions over the fair value of the assets acquired, and other intangible assets. As of December 31, 2019, we hadapproximately $235.2 million and $126.6 million of goodwill and intangible assets, net, respectively, in our consolidated balance sheets, whichwould represent approximately 8.1% and 4.5% of total assets, respectively.We test goodwill and indefinite-lived intangible assets for impairment on an annual basis and when events occur or circumstanceschange that indicate that the fair value of the reporting unit or intangible asset may be below its carrying amount. Fair value determinationsrequire considerable judgment and are sensitive to inherent uncertainties and changes in estimates and assumptions regarding revenuegrowth rates, EBIT margins, capital expenditures, working capital requirements, tax rates, terminal growth rates, discount rates, exchange rates,royalty rates, benefits associated with a taxable transaction and synergistic benefits available to market participants. Declines in marketconditions, a trend of weaker than anticipated financial performance for our reporting units or declines in projected revenue, a decline in ourshare price for a sustained period of time, an increase in the market-based weighted average cost of capital or a decrease in royalty rates,among other factors, are indicators that the carrying value of our goodwill or indefinite-life intangible assets may not be recoverable. In the eventimpairment is identified, a charge to earnings would be recorded which may materially adversely affect our financial condition and results ofoperations.We are subject to various laws and regulations, including those governing government contracts, corruption and theenvironment. Obligations and liabilities under these laws and regulations may materially harm our business.Government Contract Laws and RegulationsWe lease and sell our products to government entities, and this subjects us to statutes and regulations applicable to companies doingbusiness with the government. The laws governing government contracts can differ from the laws governing private contracts. For example,many government contracts contain favorable pricing terms and conditions that are not typically included in private contracts, such as clausesthat make certain obligations of government entities subject to budget appropriations. Many government contracts can be terminated ormodified, in whole or in part, at any time, without penalty, by the government. In addition, our failure to comply with these laws and regulationsmight result in administrative penalties or the suspension of our government contracts or debarment and, as a result, the loss of the relatedrevenue which would harm our business, results of operations and financial condition. We are not aware of any action contemplated by anyregulatory authority related to any possible non-compliance by or in connection with our operations.Our operations are subject to an array of governmental regulations in each of the jurisdictions in which we operate. For example, ouractivities in the US are subject to regulation by several federal and state government agencies, including the Occupational Safety and HealthAdministration, and by federal and state laws. Our operations and activities in other jurisdictions are subject to similar governmentalregulations. Similar to conventionally constructed buildings, the modular business industry is also subject to regulations by multiplegovernmental agencies in each jurisdiction relating to, among others, environmental, zoning and building standards, and health, safety andtransportation matters. Noncompliance with applicable regulations, implementation of new regulations or modifications to existing regulationsmay increase costs of compliance, require a termination of certain activities or otherwise materially adversely affect our business, results ofoperations and financial condition.US Government Contract Laws and RegulationsOur government customers include the US government, which means we are subject to various statutes and regulations applicable todoing business with the US government. These types of contracts customarily contain provisions that give the US government substantial rightsand remedies, many of which are not typically found in commercial contracts and which are unfavorable to contractors, including provisions thatallow the government to unilaterally terminate or modify our federal government contracts, in whole or in part, at the government’s convenience.Under general principles of US government contracting law, if the government terminates a contract for convenience, the terminated companymay generally recover only its incurred or committed costs and settlement expenses and profit on work completed prior to the termination. If thegovernment terminates a contract for default, the defaulting company may be liable for any extra costs incurred by the government in procuringundelivered items from another source.In addition, US government contracts and grants normally contain additional requirements that may increase our costs of doingbusiness, reduce our profits, and expose us to liability for failure to comply with these terms and conditions. These requirements include, forexample:16• specialized disclosure and accounting requirements unique to US government contracts;financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds havebeen spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the USgovernment;• public disclosures of certain contract and company information; andmandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs andenvironmental compliance requirements.If we fail to comply with these requirements, our contracts may be subject to termination, and we may be subject to financial and/orother liability under our contracts or under the Federal Civil False Claims Act. The False Claims Act’s “whistleblower” provisions allow privateindividuals, including present and former employees, to sue on behalf of the US government. The False Claims Act statute provides for trebledamages and other penalties, and if our operations are found to be in violation of the False Claims Act, we could face other adverse action,including suspension or prohibition from doing business with the US government. Any penalties, damages, fines, suspension or damagescould adversely affect our ability to operate our business and our financial results.Anti-Corruption Laws and RegulationsWe are subject to various anti-corruption laws that prohibit improper payments or offers of payments to foreign governments and theirofficials by a US person for the purpose of obtaining or retaining business. We operate in countries that may present a more corruptiblebusiness environment than the US. Such activities create the risk of unauthorized payments or offers of payments by one of our employees oragents that could be in violation of various laws, including the FCPA. We have implemented safeguards and policies to discourage thesepractices by our employees and agents. However, existing safeguards and any future improvements may prove to be ineffective and employeesor agents may engage in conduct for which we might be held responsible.If employees violate our policies or we fail to maintain adequate record-keeping and internal accounting practices to accurately recordour transactions, we may be subject to regulatory sanctions. Violations of the FCPA or other anti-corruption laws may result in severe criminal orcivil sanctions and penalties, including suspension or debarment from US government contracting, and we may be subject to other liabilitieswhich could materially adversely affect our business, results of operations and financial condition. We are also subject to similar anti-corruptionlaws in other jurisdictions.Environmental Laws and RegulationsWe are subject to a variety of national, state, regional and local environmental laws and regulations. Among other things, these lawsand regulations impose limitations and prohibitions on the discharge and emission of, and establish standards for the use, disposal andmanagement of, regulated materials and waste and impose liabilities for the costs of investigating and cleaning up, and damages resultingfrom, present and past spills, disposals or other releases of hazardous substances or materials. In the ordinary course of business, we useand generate substances that are regulated or may be hazardous under environmental laws. We have an inherent risk of liability underenvironmental laws and regulations, both with respect to ongoing operations and with respect to contamination that may have occurred in thepast on our properties or as a result of our operations. From time to time, our operations or conditions on properties that we have acquired haveresulted in liabilities under these environmental laws. We may in the future incur material costs to comply with environmental laws or sustainmaterial liabilities from claims concerning noncompliance or contamination. We have no reserves for any such liabilities.We cannot predict what environmental legislation or regulations will be enacted in the future, how existing or future laws or regulationswill be administered or interpreted, or what environmental conditions may be found to exist at our facilities or at third party sites for which we maybe liable. Enactment of stricter laws or regulations, stricter interpretations of existing laws and regulations or the requirement to undertake theinvestigation or remediation of currently unknown environmental contamination at sites we own or third party sites may require us to makeadditional expenditures, some of which could be material.Any failure of our management information systems could disrupt our business operations both in the field and back office,which could result in decreased lease or sale revenue and increase overhead costs.The failure of our management information systems to perform as anticipated could damage our reputation with our customers, disruptour business or result in, among other things, decreased lease and sales revenue and increased overhead costs. Any such failure could harmour business, results of operations and financial condition. In addition, the delay or failure to implement information system upgrades and newsystems effectively could disrupt our business, distract management’s focus and attention from business operations and growth initiatives andincrease our implementation and operating costs, any of which could materially adversely affect our operations and operating results.We have previously been the target of an attempted cyber-attack and may be subject to breaches of the information systems that weuse. We have not experienced a material cybersecurity breach. We have programs in place that are intended to detect, contain and respond todata security incidents and that provide employee awareness training regarding phishing, malware, and other cyber risks to protect againstcyber risks and security breaches. However, because the techniques used to17obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods oftime, we may be unable to anticipate these techniques or implement adequate preventative measures. In addition, because our systemscontain information about individuals and other businesses, the failure to maintain the security of the data we hold, whether the result of our ownerror or the malfeasance or errors of others, could harm our reputation or give rise to legal liabilities leading to lower revenue, increased costs,regulatory sanctions and other potential material adverse effects on our business, results of operations and financial condition.Our operations could be subject to natural disasters and other business disruptions, which could materially adversely affectour future revenue, financial condition, cash flows and increase our costs and expenses.Our operations could be subject to natural disasters and other business disruptions such as fires, floods, hurricanes, earthquakesand terrorism, which could adversely affect our future revenue, financial condition, and cash flows and increase our costs and expenses. Inaddition, the occurrence and threat of terrorist attacks may directly or indirectly affect economic conditions, which could adversely affect demandfor our products and services. In the event of a major natural or man-made disaster, we could experience loss of life of our employees,destruction of facilities or business interruptions, any of which may materially adversely affect our business. If any of our facilities or a significantamount of our rental equipment were to experience a catastrophic loss, it could disrupt our operations, delay orders, shipments and revenuerecognition and result in expenses to repair or replace the damaged rental equipment and facility not covered by asset, liability, businesscontinuity or other insurance contracts. Also, we could face significant increases in premiums or losses of coverage due to the loss experiencedduring and associated with these and potential future natural or man-made disasters that may materially adversely affect our business. Inaddition, attacks or armed conflicts that directly impact one or more of our properties could significantly affect our ability to operate thoseproperties and thereby impair our results of operations.In general, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in theglobal economy and worldwide financial markets. Any such occurrence could materially adversely affect our business, results of operations andfinancial condition.We may incur property, casualty or other losses not covered by our insurance.We are predominantly self-insured for a number of different risk categories, such as property, general liability (including productliability), workers' compensation, automobile claims, crime, and cyber liability, with insurance coverage for certain catastrophic risks. The typesand amounts of insurance may vary from time to time based on our decisions with respect to risk retention and regulatory requirements. Theoccurrence of significant claims, a substantial rise in costs to maintain our insurance, or the failure to maintain adequate insurance coveragecould have an adverse impact on our financial condition and results of operations.We may not be able to redeploy our units effectively should a significant number of our leased units be returned during ashort period of time, which could adversely affect our financial performance.While our typical lease terms include contractual provisions requiring customers to retain units on lease for a specified period, ourcustomers generally rent their units for periods longer than the contractual lease terms. As of December 31, 2019, the average lease duration ofour current lease portfolio is approximately 34 months. If a significant number of leased units are returned in a short period of time, a largesupply of units would need to be remarketed. Our failure to effectively remarket a large influx of units returning from leases could materiallyadversely affect our financial performance.Failure to close our unit sales transactions as we project could cause our actual revenue or cash flow for a particular fiscalperiod to differ from expectations.Sales of new and used modular space and portable storage units to customers represented approximately 9.3% of our revenue duringthe year ended December 31, 2019. Sale transactions are subject to certain factors that are beyond our control, including permit requirements,the timely completion of prerequisite work by others, and weather conditions. Accordingly, the actual timing of the completion of thesetransactions may take longer than we expect. As a result, our actual revenue and cash flow in a particular fiscal period may not consistentlycorrelate to our internal operational plans and budgets. If we are unable to accurately predict the timing of these sales, we may fail to takeadvantage of business and growth opportunities otherwise available and our business, results of operations and financial condition and cashflows may be materially adversely affected.If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results,which could lead to a loss of investor confidence in our financial statements and have an adverse effect on our stock price.Effective internal controls are necessary for us to provide reliable and accurate financial statements and to effectively prevent fraud. Wedevote significant resources and time to comply with the internal control over financial reporting requirements of the Sarbanes-Oxley Act. Thereis no assurance that material weaknesses or significant deficiencies will not occur or that we will be successful in adequately remediating anysuch material weaknesses and significant deficiencies. We may in the future discover areas of our internal controls that need improvement. Wecannot be certain that we will be successful in maintaining adequate internal control over our financial reporting and financial processes.Furthermore, as we18grow our business, including through acquisition, our internal controls will become more complex, and we will require significantly moreresources to ensure our internal controls remain effective. Additionally, the existence of any material weakness or significant deficiency wouldrequire management to devote significant time and incur significant expense to remediate any such material weaknesses or significantdeficiencies, and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner. Theexistence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements thatcould require us to restate our financial statements, cause us to fail to meet our reporting obligations, subject us to investigations fromregulatory authorities or cause stockholders to lose confidence in our reported financial information, all of which could materially and adverselyaffect us.We incur significantly increased costs as a result of operating as a public company, and our management is required todevote substantial time to compliance efforts. Public company requirements may strain our resources and divertmanagement’s attention, which could adversely impact our ability to execute our strategy and harm operating results.We incur significant legal, accounting, insurance and other expenses as a result of being a public company. The Dodd-Frank WallStreet Reform and Consumer Protection Act of 2010, as amended (the “Dodd-Frank Act”), and the Sarbanes-Oxley Act, as well as related rulesimplemented by the SEC, have required changes in corporate governance practices of public companies. In addition, rules that the SEC isimplementing or is required to implement pursuant to the Dodd-Frank Act are expected to require additional change. We expect that ongoingcompliance with these and other similar laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act, willsubstantially increase our expenses, including legal and accounting costs, and make some activities more time-consuming and costly. It ispossible that these expenses will exceed the increases that management projects. These laws, rules and regulations may also make it moreexpensive to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incursubstantially higher costs to obtain the same or similar coverage, which may make it more difficult for us to attract and retain qualified personsto serve on its board of directors or as officers.We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 as amended (the “Sarbanes-OxleyAct”), the listing requirements of Nasdaq and other applicable securities rules and regulations. Compliance with these rules and regulationsincreases our legal and financial compliance costs, makes some activities more difficult, time-consuming or costly and increases the demandson our systems and resources.Certain executives have more experience in managing a public company than other members of our management team. Our internalinfrastructure may not be adequate to support increased reporting obligations, and we may be unable to hire, train or retain necessary staff andmay be reliant on engaging outside consultants or professionals to overcome lack of experience or employees. Our management may fail tocomply with public company requirements, or may fail to do so effectively and efficiently, either of which would materially and adversely harm ourability to execute our strategy and, consequently, our operating results.Risks Relating to Our Capital StructureGlobal capital and credit market conditions could materially and adversely affect our ability to access the capital and creditmarkets or the ability of key counterparties to perform their obligations to us.Although we believe the banks participating in our credit facility have adequate capital and resources, we can provide no assurance thatall of those banks will continue to operate as a going concern in the future. If any of the banks in our lending group were to fail, it is possible thatthe borrowing capacity under our facility would be reduced. Practical, legal and tax limitations may also limit our ability to access and service theworking capital needs of our businesses. In the event that the availability under our credit facility were reduced significantly, we could be requiredto obtain capital from alternate sources to finance our capital needs. The options for addressing such capital constraints would include, amongothers, obtaining commitments from the remaining banks in the lending group or from new banks to fund increased amounts under the termsof our credit facility, and seeking to access the public capital markets. In addition, we may delay certain capital expenditures to ensure that wemaintain appropriate levels of liquidity. If it became necessary to access additional capital, any such alternatives could have terms less favorablethan those terms under our credit facility, which could have a material adverse effect on our business, results of operations, financial conditionand cash flows.In addition, in the future we may need to raise additional funds to, among other things, refinance existing indebtedness, fund existingoperations, improve or expand its operations, respond to competitive pressures or make acquisitions. If adequate funds are not available onacceptable terms, we may be unable to achieve our business or strategic objectives or compete effectively. Our ability to pursue certain futureopportunities may depend in part on our ongoing access to debt and equity capital markets. We cannot assure you that any such financing willbe available on terms satisfactory to us or at all. If we are unable to obtain financing on acceptable terms, we may have to curtail our growth by,among other things, curtailing the expansion of our fleet of units or our acquisition strategy.Economic disruptions affecting key counterparties could also materially adversely affect our business. We monitor the financialstrength of our larger customers, derivative counterparties, lenders, vendors, service providers and insurance carriers on a periodic basis usingpublicly-available information to evaluate our exposure to those who have or who we believe may19likely experience significant threats to their ability to adequately perform their obligations to us. The information available will differ fromcounterparty to counterparty and may be insufficient for us to adequately interpret or evaluate our exposure and/or determine appropriate ortimely responses.Our leverage may make it difficult for us to service our debt and operate our business.As of December 31, 2019, we had $1,663.0 of total indebtedness, excluding deferred financing fees, consisting of $903.0 million ofborrowings under our credit facility, $270.0 million of 7.875% senior secured notes due December 15, 2022, and $490.0 million of 6.875%senior secured notes due August 15, 2023. Our leverage could have important consequences, including:• making it more difficult to satisfy our obligations with respect to our various debt and liabilities;• requiring us to dedicate a substantial portion of our cash flow from operations to debt payments, thus reducing theavailability of cash flow to fund internal growth through working capital and capital expenditures on our existing fleetor a new fleet and for other general corporate purposes;• increasing our vulnerability to a downturn in our business or adverse economic or industry conditions;• placing us at a competitive disadvantage compared to our competitors that have less debt in relation to cash flowand that, therefore, may be able to take advantage of opportunities that our leverage would prevent us from pursuing;• limiting our flexibility in planning for or reacting to changes in our business and industry;• restricting us from pursuing strategic acquisitions or exploiting certain business opportunities or causing us to makenon-strategic divestitures; and• limiting our ability to borrow additional funds or raise equity capital in the future and increasing the costs of suchadditional financings.Our ability to meet our debt service obligations or to refinance our debt depends on our future operating and financial performance,which will be affected by our ability to successfully implement our business strategy as well as general economic, financial, competitive,regulatory and other factors beyond our control. If our business does not generate sufficient cash flow from operations, or if future borrowingsare not available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs, we may need torefinance all or a portion of our indebtedness on or before its maturity, sell assets, reduce or delay capital investments or seek to raiseadditional capital, any of which could have a material adverse effect on our operations. In addition, we may not be able to affect any of theseactions, if necessary, on commercially reasonable terms or at all. Any refinancing of our debt could be at higher interest rates and may requireus to comply with more onerous covenants, which could further restrict our business operations. The terms of our existing or future debtinstruments may limit or prevent us from taking any of these actions. If we default on the payments required under the terms of certain of ourindebtedness, that indebtedness, together with debt incurred pursuant to other debt agreements or instruments that contain cross-default orcross-acceleration provisions, may become payable on demand, and we may not have sufficient funds to repay all of our debts. As a result, ourinability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure our obligations on commerciallyreasonable terms or at all, would have an adverse effect, which could be material, on our business, financial condition and results ofoperations, as well as on our ability to satisfy our debt obligations.Despite our current level of indebtedness, we and our subsidiaries will still be able to incur significant additional amountsof debt, which could further exacerbate the risks associated with our substantial indebtedness.We and our subsidiaries may be able to incur substantial additional debt in the future. Although the indentures that governs ouroutstanding secured notes and the credit agreement that governs our credit facility contain restrictions on the incurrence of additional debt,these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances, the amount of debt thatwe could incur in compliance with these restrictions could be substantial. In addition, the indentures and the credit agreement do not prevent usfrom incurring other obligations that do not constitute indebtedness under those agreements. If we add debt to our and our subsidiaries’existing debt levels, the risks associated with our substantial indebtedness described above, including our possible inability to service our debt,will increase.20We are subject to and may, in the future become subject to, covenants that limit our operating and financial flexibility and,if we default under our debt covenants, we may not be able to meet our payment obligations.The credit agreement that governs our credit facility and the indentures that govern our outstanding notes, as well as any instrumentsthat govern any future debt obligations, contain covenants that impose significant restrictions on the way our subsidiaries can operate, includingrestrictions on the ability to:• incur or guarantee additional debt and issue certain types of stock;• create or incur certain liens;• make certain payments, including dividends or other distributions, with respect to our equity securities;• prepay or redeem junior debt;• make certain investments or acquisitions, including participating in joint ventures;• engage in certain transactions with affiliates;• create unrestricted subsidiaries;• create encumbrances or restrictions on the payment of dividends or other distributions, loans or advances to, and onthe transfer of, assets to the issuer or any restricted subsidiary;• sell assets, consolidate or merge with or into other companies;• sell or transfer all or substantially all our assets or those of our subsidiaries on a consolidated basis; and• issue or sell share capital of certain subsidiaries.Although these limitations are subject to significant exceptions and qualifications, these covenants could limit our ability to financefuture operations and capital needs and our ability to pursue acquisitions and other business activities that may be in our interest. Oursubsidiaries’ ability to comply with these covenants and restrictions may be affected by events beyond our control. These include prevailingeconomic, financial and industry conditions. If any of our subsidiaries default on their obligations under our credit facility or our secured notes,then the relevant lenders or holders could elect to declare the debt, together with accrued and unpaid interest and other fees, if any, immediatelydue and payable and proceed against any collateral securing that debt. If the debt under our credit facility, the indentures or any other materialfinancing arrangement that we enter into were to be accelerated, our assets may be insufficient to repay in full the credit facility, the securednotes and our other debt.The credit agreement that governs our credit facility also requires our subsidiaries to satisfy specified financial maintenance tests inthe event that we do not satisfy certain excess liquidity requirements. Deterioration in our operating results, as well as events beyond our control,including increases in raw materials prices and unfavorable economic conditions, could affect the ability to meet these tests, and we cannotassure that we will meet these tests. If an event of default occurs under our credit facility, the lenders could terminate their commitments anddeclare all amounts borrowed, together with accrued and unpaid interest and other fees, to be immediately due and payable. Borrowings underother debt instruments that contain cross-acceleration or cross-default provisions also may be accelerated or become payable on demand. Inthese circumstances, our assets may not be sufficient to repay in full that indebtedness and our other indebtedness then outstanding.The amount of borrowings permitted at any time under our credit facility is subject to compliance with limits based on a periodicborrowing base valuation of the collateral thereunder. As a result, our access to credit under the credit facility is subject to significant fluctuationsdepending on the value of the borrowing base of eligible assets as of any measurement date, as well as certain discretionary rights of the agentin respect of the calculation of such borrowing base value. As a result of any change in valuation, the availability under the credit facility may bereduced, or we may be required to make a repayment of the credit facility, which may be significant. The inability to borrow under the credit facilityor the use of available cash to repay the credit facility as a result of a valuation change may adversely affect our liquidity, results of operationsand financial position.The uncertainty regarding the potential phase-out of LIBOR may negatively impact our operating results.LIBOR, the interest rate benchmark used as a reference rate on our variable rate debt, including our asset backed credit facility andinterest rate swaps is expected to be phased out after 2021, when private-sector banks are no longer required to report the information used toset the rate. Without this data, LIBOR may no longer be published, or the lack of quality and quantity of data may cause the rate to no longer berepresentative of the market. At this time, no consensus exists as to what rate or rates will become accepted alternatives to LIBOR, although theU.S. Federal Reserve, in connection with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financialinstitutions, is considering replacing U.S. dollar LIBOR with the Secured Overnight Financing Rate. Secured Overnight Financing Rate is a moregeneric measure than LIBOR and considers the cost of borrowing cash overnight, collateralized by U.S. Treasury securities. Given the inherentdifferences between LIBOR and Secured Overnight Financing Rate or any other alternative benchmark rate that may be established, there aremany uncertainties regarding a transition from LIBOR, including but not limited to the need to amend21all contracts with LIBOR as the referenced rate and how this will impact the Company’s cost of variable rate debt and derivative financialinstruments. The Company will also need to consider new contracts and if they should reference an alternative benchmark rate or includesuggested fallback language, as published by the Alternative Reference Rates Committee. The consequences of these developments withrespect to LIBOR cannot be entirely predicted and span multiple future periods but could result in an increase in the cost of our variable ratedebt or derivative financial instruments which may be detrimental to our financial position or operating results.If our warrants are exercised, the number of shares of our Class A common stock eligible for future resale in the publicmarket would increase and result in dilution to our stockholders.At December 31, 2019, we had issued and outstanding 24,232,867 warrants exercisable for 12,116,433 shares of WillScot Class Acommon stock at an exercise price of $11.50 per whole share and 9,977,516 warrants exercisable for 9,977,516 shares of WillScot Class Acommon stock at an exercise price of $15.50 per share. To the extent warrants are exercised, additional Class A shares will be issued, whichwill result in dilution to the holders of our Class A common stock and increase the number of shares eligible for resale in the public market. Wewould also receive a cash capital contribution equal to the number of warrants exercised multiplied times the exercise price of the warrant, to theextent the warrants are not exercised on a cashless basis. In addition, sales of substantial numbers of such shares in the public market couldadversely affect the market price of our Class A common stock. Refer to the Recent Developments section in Part I, Item 1, Business, herein forfurther information about our recent Warrant Redemption.Our principal stockholder controls a significant amount of our common stock and has substantial control over our business,and it may take actions or have interests that are adverse to or conflict with those of our other stockholders.As of December 31, 2019, Sapphire, which TDR Capital controls, beneficially owned approximately 45.1% of our Class A CommonStock and 100% of our outstanding Class B common stock. Sapphire also owns warrants giving it the right to buy 2,425,000 additional sharesof our Class A common stock, and also has the right to receive additional new shares of our Class A common stock in exchange for its stock ofWS Holdings, pursuant to an exchange agreement with us, which we described in Note 13 of the consolidated financial statements in Item 8 tothis Annual Report on Form 10-K.Two directors nominated by TDR Capital currently serve on our board of directors. As a result of its control of a significant percentage ofour outstanding common stock, TDR Capital may have substantial control over matters requiring approval by our stockholders, including theelection and removal of directors, amendments to our certificate of incorporation and bylaws, any proposed merger, consolidation or sale of allor substantially all of our assets and other corporate transactions. TDR Capital may have interests that are different from those of otherstockholders.Sapphire's ownership of our common stock may adversely affect the trading price for our Class A shares to the extent investorsperceive disadvantages in owning shares of a company with a significant stockholder or in the event Sapphire takes any action with its sharesthat could result in an adverse impact on the price of our Class A shares, including a sale of a substantial portion of our common shares.In August 2018, Sapphire pledged all of the Class A shares that it owns as security for a margin loan under which Sapphire borrowed$125.0 million. An event of default under the margin loan could result in the foreclosure on the pledged securities and a subsequent sale of asignificant number of shares of our common stock by the lender, which could cause the market price of our Class A shares to decline. Moreover,the occurrence of a foreclosure, and a subsequent sale of all, or substantially all, of the pledged shares could result in a change of control underthe credit agreement governing our credit facility and the indentures governing our secured notes, even when such change may not be in thebest interest of our stockholders. Such sale of Sapphire’s pledged shares may also result in another stockholder beneficially owning asignificant amount of our common stock and being able to exert a significant degree of influence or actual control over our management andaffairs. Such stockholder's interests may be different from or conflict with those of TDR Capital or our other stockholders.Risks Related to the MergerIn order to complete the Merger, we must obtain certain governmental authorizations, and if such authorizations are notgranted or are granted with conditions that become applicable to the parties, completion of the Merger may be jeopardizedor prevented or the anticipated benefits of the Merger could be reduced.Completion of the Merger is conditioned upon the expiration or early termination of the waiting period relating to the Merger under theHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and certain other applicable laws or regulations and the requiredgovernmental authorizations having been obtained and being in full force and effect. Although we have agreed in the Merger Agreement to useour reasonable best efforts, subject to certain limitations, to make certain governmental filings or obtain the governmental authorizationsrequired to complete the Merger, as the case may be, there can be no assurance that the relevant waiting periods will expire or authorizationswill be obtained and no assurance that the Merger will be completed.22In addition, the governmental authorities from which these authorizations are required have broad discretion in administering thegoverning laws and regulations, and may take into account various facts and circumstances in their consideration of the Merger, including otherpotential transactions in the specialty rental services industry, the portal storage industry or other industries. These governmental authoritiesmay initiate proceedings seeking to prevent, or otherwise seek to prevent, the Merger. As a condition to authorization of the Merger or relatedtransactions, these governmental authorities also may impose requirements, limitations or costs, require divestitures or place restrictions onthe conduct of our business after completion of the Merger.Under the terms of the Merger Agreement, we are not required to agree to or commit to any actions that individually or in the aggregatewould, or could reasonably be expected to have, a material adverse effect on the condition (financial or otherwise), assets, liabilities, businessor results of operations of the combined company. However, notwithstanding the provisions of the Merger Agreement, we could become subjectto terms or conditions in connection with such waiting periods, laws or other authorizations (whether because such term or condition does notrise to the specified level of materiality or we otherwise consent to its imposition) the imposition of which could adversely affect our ability tointegrate Mobile Mini’s operations with our operations, reduce the anticipated benefits of the Merger or otherwise materially and adversely affectour business and results of operations after completion of the Merger.In addition to receipt of certain governmental authorizations, completion of the Merger is subject to a number of otherconditions, and if these conditions are not satisfied or waived, the Merger will not be completed.Our obligations to complete the Merger are subject to satisfaction or waiver of a number of conditions in addition to receipt of certaingovernmental authorizations, including, among other conditions: (i) approval of the Merger by Mobile Mini’s stockholders at a Mobile Mini specialmeeting, (ii) approval of the stock issuance by us to Mobile Mini’s stockholders and our amended and restated certificate of incorporation by ourstockholders at a WillScot special meeting, (iii) absence of any applicable law or order that prohibits completion of the Merger, (iv) accuracy ofthe representations and warranties made in the Merger Agreement by Mobile Mini, subject to certain materiality qualifications, (v) performance inall material respects by Mobile Mini of the material obligations required to be performed by it at or prior to completion of the transaction, and (vi)the absence of a material adverse effect on Mobile Mini. There can be no assurance that the conditions to completion of the Merger will besatisfied or waived or that the Merger will be completed.After completion of the Merger, we may fail to realize the anticipated benefits and cost savings of the Merger, which couldadversely affect the value of shares of our common stock.The success of the Merger will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining ourand Mobile Mini’s businesses. Our ability to realize these anticipated benefits and cost savings is subject to certain risks, including:our ability to successfully combine our and Mobile Mini’s businesses and the costs relating thereto;whether the combined business will perform as expected;the possibility that we paid more for Mobile Mini than the value we will derive from the acquisition;the incurrence of additional indebtedness in connection with the Merger; andthe assumption of known and unknown liabilities of Mobile Mini.If we are not able to successfully combine our and Mobile Mini’s businesses within the anticipated time frame, or at all, or the costs ofsuch combination exceed our current expectation, the anticipated cost savings and other benefits of the Merger may not be realized fully or maytake longer to realize than expected, the combined business may not perform as expected and the value of the shares of our common stock maybe adversely affected.We and Mobile Mini have operated and, until completion of the Merger will continue to operate, independently, and there can be noassurances that our respective businesses can be integrated successfully. It is possible that the integration process could result in the loss ofour key employees, the disruption of our ongoing businesses or in unexpected integration issues, higher than expected integration costs andan overall post-completion integration process that takes longer than originally anticipated. Specifically, issues that must be addressed inintegrating our and Mobile Mini’s operations in order to realize the anticipated benefits of the Merger so the combined business performs asexpected include, among other things:combining the companies’ separate operational, commercial, financial, reporting and corporate functions;integrating the companies’ products and services;identifying and eliminating redundant operations and assets;harmonizing the companies’ operating practices, employee development, compensation and benefit programs, internal controls and otherpolicies, procedures and processes;addressing possible differences in business backgrounds, corporate cultures and management philosophies;23consolidating the companies’ corporate, administrative and information technology infrastructure;coordinating sales, distribution and marketing efforts;managing the movement of certain businesses and positions to different locations;maintaining existing agreements with customers and suppliers and avoiding delays in entering into new agreements with prospective customersand suppliers; andeffecting potential actions that may be required in connection with obtaining regulatory approvals.In addition, at times, the attention of certain members of our management and resources may be focused on completion of the Mergerand the integration of the businesses of the two companies and diverted from day-to-day business operations, which may disrupt our ongoingbusiness and the business of the combined company.Failure to complete the Merger could negatively impact our stock price and our future business and financial results.If the Merger is not completed for any reason, including as a result of Mobile Mini’s stockholders failing to approve the Merger or ourstockholders failing to approve the stock issuance by us to Mobile Mini’s stockholders and our amended and restated certificate ofincorporation, our ongoing business may be materially and adversely affected and, without realizing any of the benefits of having completed theMerger, we would be subject to a number of risks, including the following:we may experience negative reactions from the financial markets, including negative impacts on the trading price of our common stock and othersecurities, and from our customers, suppliers and employees;we may be required to pay Mobile Mini a termination fee of $66.6 million if the Merger Agreement is terminated under certain circumstances;we will be required to pay certain transaction expenses and other costs incurred in connection with the Merger, whether or not the Merger iscompleted;the Merger Agreement places certain restrictions on the conduct of our businesses prior to completion of the Merger, and such restrictions, thewaiver of which is subject to the consent of Mobile Mini, may prevent us from making certain acquisitions, taking certain other specified actionsor otherwise pursuing business opportunities during the pendency of the Merger that we would have made, taken or pursued if theserestrictions were not in place; andmatters relating to the Merger (including arranging permanent financing and integration planning) will require substantial commitments of timeand resources by our management and the expenditure of significant funds in the form of fees and expenses, which would otherwise havebeen devoted to day-to-day operations and other opportunities that may have been beneficial to us as an independent company.There can be no assurance that the risks described above will not materialize. If any of those risks materialize, they may materially andadversely affect our businesses, financial condition, financial results, ratings, stock prices and/or bond prices.We may be targets of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent theMerger from being completed.Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into mergeragreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management timeand resources. An adverse judgment could result in monetary damages, which could have a negative impact on our liquidity and financialcondition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, then that injunction may delay orprevent the Merger from being completed, which may adversely affect our business, financial position and results of operation.ITEM 1B. Unresolved Staff CommentsNone.ITEM 2. PropertiesOur corporate headquarters are located in Baltimore, Maryland. Our executive, financial, accounting, legal, administrative, managementinformation systems and human resources functions operate from this single, leased office.We operate approximately 120 branch locations across the US, Canada and Mexico. Collectively, we lease approximately 75% of ourbranch properties and own the remaining balance.Our management believes that none of our properties, on an individual basis, is material to our operations, and we also believe thatsatisfactory alternative properties could be found in all of our markets, if ever necessary.24Subject to certain exceptions, substantially all of our owned real and personal property in the US and Canada is encumbered under ourcredit facility and our secured notes. We do not believe that the encumbrances will materially detract from the value of our properties, ormaterially interfere with their use in the operation of our business.ITEM 3. Legal ProceedingsWe are involved in various lawsuits, claims and legal proceedings that arise in the ordinary course of business. These matters involve,among other things, disputes with vendors or customers, personnel and employment matters, and personal injury. We assess these matterson a case-by-case basis as they arise and establish reserves as required.As of December 31, 2019, there were no material pending legal proceedings in which we or any of our subsidiaries are a party or towhich any of our property is subject.ITEM 4. Mine Safety DisclosuresNot applicable.PART IIITEM 5. Market for Registrant’s Common Equity, RelatedStockholder Matters and Issuer Purchases of EquitySecuritiesOur Class A common stock is listed on the Nasdaq Capital Market under the symbol “WSC.” Through November 29, 2017, our commonstock, warrants, and units were quoted under the symbols “EAGL,” “EAGLW” and “EAGLU,” respectively. Upon consummation of the BusinessCombination (as defined in Item 6 of this Annual Report on Form 10-K), (i) our public units automatically separated into their componentsecurities and, as a result, no longer trade as a separate security and were delisted; (ii) our Class A common shares (into which DoubleEagle’s (as defined in Item 6 on this Annual Report on Form 10-K) ordinary shares were converted) continued to trade on Nasdaq under theticker symbol “WSC”; and (iii) the 2015 Warrants continued to trade on Nasdaq under the ticker symbol “WSCWW,” although the warrants weresubsequently suspended for trading on July 12, 2018 and delisted on October 8, 2018.HoldersAs of December 31, 2019, there were 28 holders of record of our Class A common stock, one holder of record of our Class B commonstock, four holders of record of our 2015 Warrants, and 51 holders of record of our 2018 Warrants. The number of holders of record does notinclude a substantially greater number of “street name” holders or beneficial holders whose Class A common stock or warrants are held ofrecord by banks, brokers and other financial institutions.Securities Authorized for Issuance under Equity Compensation PlansOn February 5, 2018, we filed a registration statement on Form S-8, registering 4,000,000 shares of Class A common stock, relating toawards to be undertaken in the future, with such vesting conditions, as applicable, to be determined in accordance with the WillScot Corporation2017 Incentive Award Plan (the “Plan”). The following types of awards can be issued under the Plan: stock options, stock appreciation rights,restricted stock, restricted stock units, performance compensation awards and other stock-based awards.2015 WarrantsDouble Eagle issued warrants to purchase its common stock as components of units sold in its initial public offering (the “PublicWarrants”). Double Eagle also issued warrants to purchase its common stock in a private placement concurrently with its initial public offering(the “Private Warrants,” and together with the Public Warrants, the "2015 Warrants"). The Private Warrants are identical to the Public Warrants,except that, if held by Double Eagle’s sponsor or founders (or their permitted assignees), the Private Warrants may be exercised on a cashlessbasis and are not subject to redemption.25As of December 31, 2019, there were 24,232,867 2015 Warrants outstanding. Each 2015 Warrant entitles its holder to purchase onehalf of one share of our Class A common stock in accordance with its terms. The 2015 Warrants became exercisable on December 29, 2017and expire five years after that date. We may redeem the Public Warrants at a price of $0.01 per warrant, if the last sale price of our Class Acommon stock is at least $18.00 per share on each of the 20 trading days within a 30 trading day period ending on the third business day priorto the date on which notice of the redemption is given. See Note 13 of the financial statements in Part 8 herein for additional information. Refer tothe Recent Developments section in Part I, Item 1, Business, herein for further information about our recent Warrant Redemption.2018 WarrantsOn August 15, 2018, WillScot issued warrants to the former ModSpace shareholders as part of the ModSpace acquisition (the "2018Warrants"). Each 2018 Warrant entitles the holder thereof to purchase one share of WillScot Class A common stock at an exercise price of$15.50 per share, subject to potential adjustment. The 2018 Warrants were not exercisable or transferable until February 11, 2019, and expire onNovember 29, 2022. As of December 31, 2019, 9,977,516 2018 Warrants were outstanding. See Note 13 in Part II, Item 8 herein for additionalinformation.Warrant ExchangeOn November 8, 2018, WillScot commenced an offer to exchange the 2015 Warrants for shares of its Class A common stock in acashless transaction (the “Warrant Exchange”). Pursuant to the terms of the Warrant Exchange, WillScot issued 8,205,841 shares of Class Acommon stock on December 11, 2018. See Note 13 in Part II, Item 8 herein for additional information.As the fair value of the warrants exchanged in the Warrant Exchange offer was less than the fair value of the common stock issued, theCompany recorded a non-cash deemed dividend of $2.1 million in 2018 for the incremental fair value provided to the holders of the warrants.Performance GraphThe following stock price performance graph should not be deemed incorporated by reference by any general statement incorporatingby reference this Annual Report on Form 10-K into any filing under the Exchange Act or the Securities Act of 1933, as amended (the "SecuritiesAct"), except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such acts.The graph below compares the cumulative total return of our Class A common stock from November 5, 2015, through December 31,2019, with the comparable cumulative return of two indices, the Russell 2000, and the Nasdaq US Benchmark TR Index. The graph plots thegrowth in value of an initial investment in each of our Class A ordinary shares, the Russell 2000 Index, and the Nasdaq US Benchmark Indexover the indicated time periods, and assumes reinvestment of all dividends, if any, paid on the securities. We have not paid any cash dividendsand, therefore, the cumulative total return calculation for us is based solely upon share price appreciation and not upon reinvestment of cashdividends. The share price performance shown on the graph is not necessarily indicative of future price performance.Repurchases26The Company repurchased and terminated 22,063 of the 2018 Warrants in 2019.Total Number of 2018Warrants PurchasedAverage price paid perwarrantTotal number of warrantspurchased as part of apublicly announced planMaximum number ofwarrants that may yet bepurchased under the planDecember 1, 2019 -December 31, 201922,063$2.22$-$-Overview of Securities OutstandingThe table below is intended to help investors better understand (i) how the number of Class A shares outstanding under accountingprinciples generally accepted in the US (“GAAP”) may differ from the actual number of Class A shares issued and outstanding at specific pointsin time, and (ii) the potential impact, dilutive or otherwise, of certain events or transactions on our shareholders. Due to the fact that ourpredecessor was a special purpose acquisition company and to illustrate the impact of certain of the arrangements implemented in connectionwith our Business Combination, management believes that the information below will help investors better understand our capital structure andthe risks associated with investing in our securities. This information is provided solely for illustrative purposes, and speaks only as of thedate(s) indicated. We can provide no assurances if or when any future events or transactions may occur that would result in a change in thenumber of shares of our Class A common stock outstanding.Outstanding as ofDecember 31, 2019Total Class A common shares108,818,854Total Class B common shares(a)8,024,419Class A common shares underlying 2015 Warrants12,116,434Class A common shares underlying 2018 Warrants9,977,516Total shares underlying warrants22,093,950Total stock options vested and exercisable133,546Weighted average shares - Class A - basic and diluted share counts108,683,820(a) TDR Capital owns common shares of WS Holdings that are exchangeable into new WillScot Class A shares, pursuant to the terms of an exchange agreement.The Class B common shares will be redeemed automatically upon TDR Capital's exercise of its exchange right. Please see Note 13 for additional detail.ITEM 6. Selected Financial DataWillScot was incorporated under the name Double Eagle Acquisition Corporation ("Double Eagle"), on June 26, 2015. Prior toNovember 29, 2017, Double Eagle was a Nasdaq-listed special purpose acquisition company formed for the purpose of effecting a merger,share exchange, asset acquisition, share purchase, reorganization or similar business combination. On November 29, 2017, Double Eagleindirectly acquired Williams Scotsman International, Inc. (“WSII”) from Algeco Scotsman Global S.à r.l., (together with its subsidiaries, the“Algeco Group”), which is majority owned by an investment fund managed by TDR Capital. As part of the transaction (the “BusinessCombination”), Double Eagle domesticated to Delaware and changed its name to WillScot CorporationThe Business Combination was accounted for as a reverse acquisition in which WSII was the accounting acquirer. Except as otherwiseprovided herein, our financial statement presentation includes (i) the results of WSII and its subsidiaries as our accounting predecessor forperiods prior to the completion of the Business Combination, and (ii) the results of WillScot (including the consolidation of WSII and itssubsidiaries) for periods after the completion of the Business Combination. The operating statistics and data contained herein represents theoperating information of WSII’s business.On December 20, 2017, WSII acquired 100% of the issued and outstanding ownership interests of Acton Mobile Holdings LLC("Acton"). Results of operations from Acton subsequent to the acquisition are included in our consolidated operating results.On August 15, 2018, WSII acquired ModSpace. Results of operations from ModSpace subsequent to the acquisition are included in ourconsolidated operating results.The Company's modular leasing and sales business is comprised of two operating segments: US and Other North America. The USmodular operating segment (“Modular - US”) consists of the contiguous 48 states and Hawaii. The Other North America operating segment(“Modular - Other North America”) consists of Alaska, Canada and Mexico. Corporate and27other includes eliminations of costs and revenue between segments and Algeco Group corporate costs not directly attributable to the underlyingsegments. Following the Business Combination, no additional Algeco Group corporate costs were incurred and the Company's ongoingcorporate costs are included within the Modular - US segment. Transactions between reportable segments are not significant.The following selected historical financial information should be read together with the consolidated financial statements andaccompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The selected historicalfinancial information in this section is not intended to replace WillScot’s consolidated financial statements and the related notes.Consolidated ResultsAs of and for the Year Ended December 31,(in thousands)20192018201720162015Revenues:Leasing and services revenue:Modular leasing$744,185$518,235$297,821$283,550$300,212Modular delivery and installation220,057154,55789,85081,89283,103Sales revenue:New units59,08553,60336,37139,22854,359Rental units40,33825,01721,90021,94215,661Total revenues1,063,665751,412445,942426,612453,335Costs:Costs of leasing and services:Modular leasing213,151143,12083,58875,51680,081Modular delivery and installation194,107143,95085,47775,35977,960Costs of sales:New units42,16036,86326,02527,66943,626Rental units26,25516,65912,64310,89410,255Depreciation of rental equipment174,679121,43672,63968,98178,473Gross profit413,313289,384165,570168,193162,940Expenses:Selling, general and administrative271,004254,871162,351139,093139,355Other depreciation and amortization12,39513,3048,6539,01922,675Impairment losses on goodwill--60,7435,532-Impairment losses on long-lived assets2,8481,600---Lease impairment expense and otherrelated charges8,674----Restructuring costs3,75515,4682,1962,8109,185Currency (gains) losses, net(688)2,454(12,878)13,09811,308Other (income) expense, net(2,200)(4,574)2,8271,8311,189Operating income (loss)117,5256,261(58,322)(3,190)(20,772)Interest expense122,50498,433119,30894,67192,028Interest income--(12,232)(10,228)(9,778)Loss on extinguishment of debt8,755----Loss from continuing operations beforeincome tax(13,734)(92,172)(165,398)(87,633)(103,022)Income tax benefit(2,191)(38,600)(936)(24,502)(34,069)Loss from continuing operations$(11,543)$(53,572)$(164,462)$(63,131)$(68,953)28Net loss per share attributable toWillScot - basic and diluted - continuingoperations$(0.10)$(0.59)$(8.21)$(4.34)$(4.74)Cash Flow Data:Net cash from operating activities$172,566$37,149$(1,362)$58,731$119,865Net cash from investing activities$(152,582)$(1,217,202)$(392,650)$(30,236)$(193,159)Net cash from financing activities$(26,063)$1,180,037$396,833$(31,394)$76,758Other Financial Data:Adjusted EBITDA - Modular - US(a)$325,068$196,410$110,822$103,798$85,448Adjusted EBITDA - Modular - Other NorthAmerica(a)$31,480$19,123$13,099$24,360$45,495Adjusted EBITDA - Corporate andother(a)(b)$-$-$(15,112)$(21,644)$(22,419)Consolidated Adjusted EBITDA(a)$356,548$215,533$108,809$106,514$108,524Free Cash Flow(c)$19,984$(96,907)N/AN/AN/AAdjusted Gross Profit(a)$587,992$410,820$238,209$237,174$241,413Net CAPEX(a)(c)$152,582$134,056N/AN/AN/ABalance Sheet Data:Cash and cash equivalents$3,045$8,958$9,185$2,352$5,142Rental equipment, net$1,944,436$1,929,290$1,040,146$814,898$832,586Total assets$2,897,649$2,752,485$1,410,742$1,699,450$1,785,713Total debt, including current portion$1,632,589$1,676,499$626,746$657,583$696,055Total shareholders’ equity644,365$638,215$435,619$23,131$55,350(a) WillScot presents Adjusted EBITDA, Free Cash Flow, Adjusted Gross Profit and Net CAPEX, which are measurements not calculated in accordance with GAAPand are defined below in the section "Reconciliation of non-GAAP Financial Measures," because they are key metrics used by management to assess financialperformance. Our business is capital-intensive and these additional metrics allow management to further evaluate its operating performance. See below forreconciliations of non-GAAP financial measures.(b) Included in Corporate and other are selling, general and administrative costs related to the Algeco Group's corporate costs incurred prior to or as part of theBusiness Combination which are not anticipated to be part of the ongoing costs of WillScot.(c) We do not present Free Cash Flow or Net CAPEX for the years ended December 31, 2017, 2016 or 2015, as the cash flows for those periods contain thefinancial results from discontinued operations. Therefore, Free Cash Flow and Net CAPEX for periods prior to 2018 would not be comparable to the currentperiods.Quarterly Consolidated Results for the Year Ended December 31, 201929(in thousands, except for units on rent andmonthly rental rate)Q1Q2Q3Q4Full YearRevenue(a)$253,685$263,713$268,222$278,045$1,063,665Gross profit(a)$103,331$101,484$99,307$109,191$413,313Adjusted EBITDA(a)$83,354$87,555$87,422$98,217$356,548Net CAPEX$41,814$43,199$37,761$29,808$152,582Modular space units on rent (averageduring the period)93,30992,30091,23390,01391,682Average modular space utilization rate72.4%71.9%71.2%70.7%72.0%Average modular space monthly rentalrate$575$611$630$641$614Portable storage units on rent (averageduring the period)17,41916,54416,41616,94416,878Average portable storage utilization rate66.1%63.3%63.0%66.1%65.8%Average portable storage monthly rentalrate$119$121$123$118$120(a) The quarterly amounts in this table were adjusted for the adoption of Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) ("ASC 842"),effective retroactively to January 1, 2019, of and therefore do not agree to the Quarterly Reports filed on Form 10-Q for the respective periods of 2019. Refer toNote 22 in Part II, Item 8 herein for further information.Quarterly Consolidated Results for the Year Ended December 31, 2018(in thousands, except for units on rent andmonthly rental rate)Q1Q2Q3Q4Full YearRevenue$134,751$140,333$218,924$257,404$751,412Gross profit$50,921$54,640$80,946$102,877$289,384Adjusted EBITDA$35,492$41,916$64,618$73,507$215,533Net CAPEX$24,433$29,232$38,657$41,734$134,056Modular space units on rent (averageduring the period)54,11254,52175,41395,54970,257Average modular space utilization rate69.9%70.3%71.8%73.0%71.6%Average modular space monthly rentalrate$534$551$561$562$552Portable storage units on rent (averageduring the period)13,98613,49615,78118,29715,480Average portable storage utilization rate70.3%68.1%68.0%68.9%68.9%Average portable storage monthly rentalrate$118$119$120$119$11930Modular - US Quarterly ResultsQuarterly Results for the Year Ended December 31, 2019(in thousands, except for units on rent andmonthly rental rate)Q1Q2Q3Q4Full YearRevenue(a)$230,175$236,501$243,708$251,299$961,683Gross profit(a)$93,948$92,468$90,265$98,178$374,859Adjusted EBITDA(a)$75,946$80,548$79,774$88,800$325,068Net CAPEX$42,191$45,599$34,785$29,899$152,474Modular space units on rent (averageduring the period)84,46283,27382,05381,06082,709Average modular space utilization rate74.8%74.1%73.2%72.8%74.2%Average modular space monthly rentalrate$577$612$632$648$617Portable storage units on rent (averageduring the period)17,01016,14615,99316,51316,462Average portable storage utilization rate66.6%63.6%63.3%66.4%66.2%Average portable storage monthly rentalrate$120$121$123$118$120(a) The quarterly amounts in this table were adjusted for the adoption of ASC 842, effective retroactively to January 1, 2019, of and therefore do not agree to theQuarterly Reports filed on Form 10-Q for the respective periods of 2019.Quarterly Results for the Year Ended December 31, 2018(in thousands, except for units on rent andmonthly rental rate)Q1Q2Q3Q4Full YearRevenue$122,087$124,813$197,625$233,065$677,590Gross profit$46,808$49,741$73,007$94,764$264,320Adjusted EBITDA$32,612$38,104$58,454$67,240$196,410Net CAPEX$23,315$27,501$35,825$41,440$128,081Modular space units on rent (averageduring the period)48,65748,99767,97886,36963,336Average modular space utilization rate71.8%72.2%73.8%75.3%73.7%Average modular space monthly rentalrate$533$549$559$563$551Portable storage units on rent (averageduring the period)13,62513,12715,37317,86815,089Average portable storage utilization rate70.8%68.5%68.3%69.4%69.4%Average portable storage monthly rentalrate$118$120$120$119$11931Modular - Other North America Quarterly ResultsQuarterly Results for the Year Ended December 31, 2019(in thousands, except for units on rent andmonthly rental rate)Q1Q2Q3Q4Full YearRevenue(a)$23,510$27,212$24,514$26,746$101,982Gross profit(a)$9,383$9,016$9,042$11,013$38,454Adjusted EBITDA(a)$7,408$7,007$7,648$9,417$31,480Net CAPEX$(377)$(2,400)$2,976$(91)$108Modular space units on rent (averageduring the period)8,8479,0279,1808,9538,973Average modular space utilization rate55.1%56.3%57.2%55.9%56.1%Average modular space monthly rental rate$552$603$618$577$590Portable storage units on rent (averageduring the period)409398423431416Average portable storage utilization rate52.0%50.8%54.3%55.7%53.7%Average portable storage monthly rentalrate$109$121$106$109$111(a) The quarterly amounts in this table were adjusted for the adoption of ASC 842, effective retroactively to January 1, 2019, of and therefore do not agree to theQuarterly Reports filed on Form 10-Q for the respective periods of 2019.Quarterly Results for the Year Ended December 31, 2018(in thousands, except for units on rent andmonthly rental rate)Q1Q2Q3Q4Full YearRevenue$12,664$15,520$21,299$24,339$73,822Gross profit$4,113$4,899$7,939$8,113$25,064Adjusted EBITDA$2,880$3,812$6,164$6,267$19,123Net CAPEX$1,118$1,731$2,832$294$5,975Modular space units on rent (averageduring the period)5,4555,5247,4359,1806,921Average modular space utilization rate56.6%57.1%57.3%56.6%56.8%Average modular space monthly rental rate$541$573$587$546$559Portable storage units on rent (averageduring the period)362369408429391Average portable storage utilization rate55.8%57.4%56.4%54.0%55.6%Average portable storage monthly rentalrate$116$116$101$101$108Reconciliation of non-GAAP Financial MeasuresThe following presents definitions and reconciliations to the nearest comparable GAAP measure of certain WillScot and its operatingsegments’ non-GAAP financial measures used in this Annual Report on Form 10-K.Adjusted EBITDAWe 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 effectof 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 fleetand property, plant and equipment.Restructuring costs, lease impairment expense, and other related charges associated with restructuring plans designed to streamline operationsand reduce costs including employee and lease termination costs.Transaction costs including legal and professional fees and other transaction specific related costs.32Costs to integrate acquired companies, including outside professional fees, fleet relocation expenses, employee training costs, and other costs.Non-cash charges for stock compensation plans.Other expense includes consulting expenses related to certain one-time projects, financing costs not classified as interest expense, and gainsand losses on disposals of property, plant, and equipment.Adjusted EBITDA has limitations as an analytical tool, and you should not consider the measure in isolation or as a substitute for netincome (loss), cash flow from operations or other methods of analyzing WillScot’s results as reported under US GAAP. Some of theselimitations 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 ourindebtedness;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 futureoperations;although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in thefuture and Adjusted EBITDA does not reflect any cash requirements for such replacements; andother 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 ourbusiness or as measures of cash that will be available to meet our obligations. The following tables provide an unaudited reconciliation of Netloss to Adjusted EBITDA:Year Ended December 31,(in thousands)201920182017Net loss$(11,543)$(53,572)$(149,812)Income from discontinued operations, net of tax--14,650Loss from continuing operations(11,543)(53,572)(164,462)Income tax benefit(2,191)(38,600)(936)Loss from continuing operations before income tax(13,734)(92,172)(165,398)Loss on extinguishment of debt8,755--Interest expense, net(a)122,50498,433107,076Depreciation and amortization187,074134,74081,292Currency (gains) losses, net(688)2,454(12,878)Restructuring costs, lease impairment expense and other related charges12,42915,4682,196Goodwill and other impairments2,8481,60060,743Transaction costs-20,05123,881Integration costs26,60730,006-Stock compensation expense6,6863,4399,382Other expense(b)4,0671,5142,515Adjusted EBITDA$356,548$215,533$108,809(a) In connection with the ModSpace acquisition, the Company incurred bridge financing fees and upfront commitment fees of $20.5 million, included within interestexpense, during the year ended December 31, 2018. In 2017 interest expense included expenses related to our prior parent holding company prior to ourrecapitalization on November 29, 2017.(b) Other expense represents primarily acquisition-related costs such as advisory, legal, valuation and other professional fees in connection with actual orpotential business combinations, which are expensed as incurred, but do not reflect ongoing costs of the business.Adjusted Gross Profit and Adjusted Gross Profit PercentageWe define Adjusted Gross Profit as gross profit plus depreciation on rental equipment. Adjusted Gross Profit Percentage is defined asAdjusted Gross Profit divided by revenue. Adjusted Gross Profit and Percentage are not measurements of our financial performance underGAAP and should not be considered as an alternative to gross profit, gross profit percentage, or other performance measures derived inaccordance with GAAP. In addition, our measurement of Adjusted Gross Profit and Adjusted Gross Profit Percentage may not be comparable tosimilarly titled measures of other companies. Our management believes that the presentation of Adjusted Gross Profit and Adjusted GrossProfit Percentage provides useful33information to investors regarding our results of operations because it assists in analyzing the performance of our business.The following table provides an unaudited reconciliation of gross profit to Adjusted Gross Profit and Adjusted Gross Profit Percentageon a historical basis:Year Ended December 31,(in thousands)201920182017Revenue (A)$1,063,665$751,412$445,942Gross profit (B)$413,313$289,384$165,570Depreciation of rental equipment174,679121,43672,639Adjusted Gross Profit (C)$587,992$410,820$238,209Gross Profit Percentage (B/A)38.9%38.5%37.1%Adjusted Gross Profit Percentage (C/A)55.3%54.7%53.4%Net CAPEXWe define Net CAPEX as purchases of rental equipment and refurbishments and purchases of property, plant and equipment(collectively, "Total Capital Expenditures"), less proceeds from sale of rental equipment and proceeds from the sale of property, plant andequipment (collectively, "Total Proceeds"), which are all included in cash flows from investing activities. Our management believes that thepresentation of Net CAPEX provides useful information to investors regarding the net capital invested into our rental fleet and plant, property andequipment each year to assist in analyzing the performance of our business.The following tables provide unaudited reconciliations of Net CAPEX on a historical quarterly basis:Quarterly Consolidated Results for the Year Ended December 31, 2019(in thousands)Q1Q2Q3Q4Full YearTotal Capital Expenditures$53,502$63,485$50,490$45,969$213,446Total Proceeds11,68820,28612,72916,16160,864Net CAPEX$41,814$43,199$37,761$29,808$152,582Quarterly Consolidated Results for the Year Ended December 31, 2018(in thousands)Q1Q2Q3Q4Full YearTotal Capital Expenditures$33,084$33,295$48,217$50,909$165,505Total Proceeds8,6514,0639,5609,17531,449Net CAPEX$24,433$29,232$38,657$41,734$134,056Modular - US Net CAPEXQuarterly Results for the Year Ended December 31, 2019Q1Q2Q3Q4Full YearQ1Q2Q3Q4Full YearTotal Capital Expenditures$50,633$60,343$47,390$42,480$200,846Total Proceeds8,44214,74412,60512,58148,372Net CAPEX$42,191$45,599$34,785$29,899$152,474Quarterly Results for the Year Ended December 31, 2018Q1Q2Q3Q4Full YearTotal Capital Expenditures$31,509$31,438$44,413$48,276$155,636Total Proceeds8,1943,9378,5886,83627,555Net CAPEX$23,315$27,501$35,825$41,440$128,08134Modular - Other North America Net CAPEXQuarterly Results for the Year Ended December 31, 2019Q1Q2Q3Q4Full YearTotal Capital Expenditures$2,869$3,142$3,100$3,489$12,600Total Proceeds3,2465,5421243,58012,492Net CAPEX$(377)$(2,400)$2,976$(91)$108Quarterly Results for the Year Ended December 31, 2018Q1Q2Q3Q4Full YearTotal Capital Expenditures$1,575$1,857$3,804$2,633$9,869Total Proceeds4571269722,3393,894Net CAPEX$1,118$1,731$2,832$294$5,975Free Cash FlowWe define Free Cash Flow as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment andproperty, plant and equipment, which are all included in cash flows from investing activities. Management believes that the presentation of FreeCash Flow provides useful information to investors regarding our results of operations because it provides useful additional informationconcerning cash flow available to meet future debt service obligations and working capital requirements.Free Cash Flow for the three months ended June 30, 2019 and 2018, is derived by subtracting the cash flows from operating activitiesand the relevant line items within financing activities for the three months ended March 31, 2019 and 2018, from corresponding items for the sixmonths ended September 30, 2019 and 2018, respectively. Free Cash Flow for the three months ended September 30, 2019 and 2018, isderived by subtracting the cash flows from operating activities and the relevant line items within financing activities for the six months endedJune 30, 2019 and 2018, from corresponding items for the nine months ended September 30, 2019 and 2018, respectively. Free Cash Flow forthe three months ended December 31, 2019 and 2018, is derived by subtracting the cash flows from operating activities and the relevant lineitems within financing activities for the nine months ended September 30, 2019 and 2018, from corresponding items for the years endedDecember 31, 2019 and 2018, respectively.We do not present Free Cash Flow for the quarters within, or for the years ended December 31, 2017, 2016 or 2015, as the cash flowsfor those periods contain the financial results from discontinued operations. Therefore, Free Cash Flow for periods prior to 2018 would not becomparable to the current periods.The following tables provide a reconciliation of net cash provided by operating activities to Free Cash Flow.Quarterly Consolidated Results for the Year Ended December 31, 2019(in thousands)Q1Q2Q3Q4Full YearNet cash provided by operating activities$15,256$44,798$39,022$73,490$172,566Purchase of rental equipment andrefurbishments(51,873)(61,215)(47,789)(44,229)(205,106)Proceeds from sale of rental equipment11,60111,4828,42110,59742,101Purchase of property, plant and equipment(1,629)(2,270)(2,701)(1,740)(8,340)Proceeds from the sale of property, plant andequipment878,8044,3085,56418,763Free Cash Flow$(26,558)$1,599$1,261$43,682$19,98435Quarterly Consolidated Results for the Year Ended December 31, 2018(in thousands)Q1Q2Q3Q4Full YearNet cash provided by operating activities$4,782$14,018$(3,220)$21,569$37,149Purchase of rental equipment andrefurbishments(32,084)(32,679)(46,742)(49,378)(160,883)Proceeds from sale of rental equipment8,1283,9059,5609,16830,761Purchase of property, plant and equipment(1,000)(616)(1,475)(1,531)(4,622)Proceeds from the sale of property, plant andequipment523158-7688Free Cash Flow$(19,651)$(15,214)$(41,877)$(20,165)$(96,907)Cautionary Note Regarding Forward Looking StatementsThis Annual Report on Form 10-K includes forward-looking statements within the meaning of the US Private Securities LitigationReform Act of 1995 and Section 21E of the Securities Act of 1934, as amended. The words "estimates," “expects,” “anticipates,” “believes,”“forecasts,” “plans,” “intends,” “may,” “will,” “should,” “shall,” “outlook,” “guidance” and variations of these words and similar expressions identifyforward-looking statements, which are generally not historical in nature and relate to expectations for future financial performance or businessstrategies or objectives.Forward-looking statements are subject to a number of risks, uncertainties, assumptions and other important factors, many of whichare outside our control, which could cause actual results or outcomes to differ materially from those discussed in the forward-lookingstatements. Although we believe that these forward-looking statements are based on reasonable assumptions, it can give no assurance thatany such forward-looking statement will materialize.Important factors that may affect actual results or outcomes include, among others:our ability to effectively compete in the modular space and portable storage industry;changes in demand within a number of key industry end markets and geographic regions;our ability to manage growth and execute our business plan;rising costs adversely affecting our profitability (including cost increases resulting from tariffs);effective management of our rental equipment;our ability to acquire and successfully integrate new operations and achieve desired synergies;the effect of changes in state building codes on our ability to remarket our buildings;our ability to effectively manage our credit risk, collect on our accounts receivable, or recover our rental equipment;foreign currency exchange rate exposure;our reliance on third party manufacturers and suppliers;risks associated with labor relations, labor costs and labor disruptions;failure to retain key personnel; andother factors detailed under the section entitled “Risk Factors.”Any forward-looking statement speaks only at the date which it is made, and we undertake no obligation, and disclaim any obligation, toupdate or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be requiredby law.36ITEM 7. Management’s Discussion and Analysis of FinancialCondition and Results of OperationsThe following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to helpthe reader understand WillScot, our operations and our present business environment. MD&A is provided as a supplement to, and should beread in conjunction with, our financial statements and the accompanying notes thereto, contained in Item 8 of this report. As a result of theBusiness Combination, (i) WillScot’s consolidated financial results for periods prior to November 29, 2017 reflect the financial results of WSIIand its consolidated subsidiaries, as the accounting predecessor to WillScot, and (ii) for periods from and after this date, WillScot’s financialresults reflect those of WillScot and its consolidated subsidiaries (including WSII and its subsidiaries) as the successor following the BusinessCombination. We use certain non-GAAP financial information that we believe is important for purposes of comparison to prior periods anddevelopment of future projections and earnings growth prospects. This information is also used by management to measure the profitability ofour ongoing operations and analyze our business performance and trends. Reconciliations of non-GAAP measures are provided wherepresented.Executive SummaryWe are a leading provider of modular space and portable storage solutions in the US, Canada and Mexico. As of December 31, 2019,our branch network included approximately 120 locations and additional drop lots to better service our more than 50,000 customers across theUS, Canada, and Mexico. We offer our customers an extensive selection of “ready to work” modular space and portable storage solutions withover 125,000 modular space units and over 25,000 portable storage units in our fleet. We remain focused on our core priorities of growingmodular leasing revenues by increasing modular space units on rent, both organically and through our consolidation strategy, delivering “Readyto Work” solutions to our customers with VAPS and on continually improving the overall customer experience.2019 was a transformational year for WillScot as we completed our integration of ModSpace and realized significant cost synergiesfrom both the ModSpace and Acton strategic transactions. Over the past two years, we have consolidated over 200 combined operatinglocations into approximately 120 operating locations. We will continue the last remaining integration efforts around real estate consolidation andfleet relocation over the first half of 2020. These acquisitions coupled with WillScot's innovative "Ready to Work" solutions and commitment tocustomer service have solidified WillScot's position as the industry market leader in the modular space and portable storage solutions markets.For the year ended December 31, 2019, key drivers of financial performance included:Total revenues increased by $312.3 million, or 41.6% as compared to the same period in 2018, driven by a 43.3% increase in our core leasing andservices revenues from both organic pricing growth, and the impact of an additional 8.5 months of contribution from the ModSpace acquisitionduring 2019 (discussed in Note 2 of our consolidated financial statements). New and rental unit sales increased 10.3% and 61.2%,respectively, also driven by acquisitions.Consolidated modular space average monthly rental rate increased to $614 representing an 11.2% increase year over year.Consolidated average modular space units on rent increased 21,425, or 30.5%, year over year, driven by an additional 8.5 months of contributionfrom the ModSpace acquisition, and average modular space utilization increased 40 basis points (“bps”) year over year to 72.0%.On a pro forma basis, including results of WillScot and ModSpace for all periods presented:Modular leasing revenues increased $53.4 million, or 7.7%, driven by a 13.7% year over year increase in modular space average monthly rentalrates as a result of our price optimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increasedVAPS penetration across our customer base.Sales revenue declined $46.9 million, or 32.1%, driven primarily by one large new sale recognized in 2018 from ModSpace related to hurricanerelief in the amount of $29.0 million in our Modular - US segment.Total revenues decreased $0.4 million, as the impact of non-recurring sales in the prior year were nearly offset by continued strong organic growthin our core leasing revenues.Modular space units on rent decreased 4.3% year over year, and utilization increased 30 bps.37Modular - US segment revenues, which represented 90.4% of revenues in 2019, increased by $284.1 million, or 41.9%, as compared to 2018,through:Modular space average monthly rental rate of $617 increased 12.0% year over year including the dilutive impacts of acquisitions. Improved pricingwas driven by a combination of our price optimization tools and processes, as well as by continued growth in our "Ready to Work" solutions andincreased VAPS penetration across our customer base.Average modular space units on rent increased by 19,373 units, or 30.6%, due to the impact of an additional 8.5 months of contribution from theModSpace acquisition.Average modular space monthly utilization increased 50 basis points (“bps”) to 74.2% in 2019 as compared to the same period in 2018. Thisincrease was driven primarily by de-fleeting activities associated with our integration efforts during year.On a pro forma basis, including results of WillScot and ModSpace for all periods presented, average modular space monthly rental rate increased14.9% organically, with average modular space units on rent down 4.5% and average modular space monthly utilization up by 40 basis points(“bps”) during the year to 74.2%.Modular - Other North America segment which represents 9.6% of revenues in 2019, increased by $28.1 million, or 38.1% as compared to thesame period in 2018. Increases were driven primarily by:Average modular space monthly rental rate increased 5.5% to $590.Average modular space units on rent increased by 2,052 units, or 29.6%, as compared to the same period in 2018 driven primarily by acquiredunits from the ModSpace transaction.Average modular space monthly utilization decreased by 70 bps to 56.1% in 2019 as compared to the same period in 2018.On a pro forma basis, including results of WillScot and ModSpace for all periods presented, Modular - Other North America segment modularspace monthly rental rate increased 4.4%, with modular space units on rent down 2.5%, and average modular space monthly utilization downby 30 bps during the year to 56.1%.Generated consolidated net loss of $11.5 million, which included an $8.8 million loss on extinguishment of debt and $46.0 million of discretecosts expensed in the period related to the ModSpace integration and other acquisition-related activities, including $26.6 million of integrationcosts, $11.5 million of impairment of long-lived assets and lease impairment expense and other related charges, $3.8 million of restructuringcost, and $4.1 of other expense. The consolidated net loss of $11.5 million represented an improvement of $42.1 million as compared to thesame period in 2018.Generated Adjusted EBITDA of $356.5 million in 2019, representing an increase of $141.0 million or 65.4% as compared to the same period in2018, which includes the impact of an additional 8.5 months of contribution from the ModSpace acquisition in 2019, as well as continuedrealization of commercial and cost synergies associated with the ModSpace and Acton acquisitions. Adjusted EBITDA for the Modular - USsegment and the Modular - Other North America segment, respectively, was $325.0 million and $31.5 million in 2019.On a pro forma basis, including the results of WillScot and ModSpace for all periods presented, Adjusted EBITDA in 2019 of $356.5 millionrepresents an increase of $72.0 million, or 25.3% organically from $284.5 million in 2018. These pro forma results include realized costsavings from the ModSpace and Acton acquisitions, and incremental revenue growth from increased penetration of "Ready to Work" solutionsacross the combined portfolio, but do not include any additional cost savings that management expects to realize in future years.Generated Free Cash Flow of $20.0 million in 2019, as net cash provided by operating activities of $172.6 million after funding $26.6 million ofintegration costs was reinvested primarily in value added products and fleet refurbishments to support growth of modular leasing revenues (netcash used in investing activities of $152.6 million) and to pay down debt $16.5 million.In addition to focusing on GAAP measurements, we focus on Adjusted EBITDA and Free Cash Flow to measure our operating results.As such, we include in this Annual Report on Form 10-K reconciliations to their most directly comparable GAAP financial measures. Thesereconciliations and descriptions of why we believe these measures provide useful information to investors as well as a description of thelimitations of these measures are included in “Item 6. Selected Financial Data.”38Recent DevelopmentsRefer to the Recent Developments section in Part I, Item 1, Business, herein for further information about our recent warrantredemption and merger agreement.Business Environment and OutlookOur customers operate in a diversified set of end markets, including commercial and industrial, construction, education, energy andnatural resources, government and other end markets. We track several market leading indicators including those related to our two largest endmarkets, the commercial and industrial segment and the construction segment, which collectively accounted for approximately 80% of ourrevenues in the year ended December 31, 2019. Market fundamentals underlying these markets are currently stable, and we expect continuedmodest market growth in the next several years. Current conditions, and potential growth drivers such as a robust U.S. economy, increasedinfrastructure spending, and continued penetration of our customer base with our VAPS offering provide us confidence in continued demand forour products.For the year ended December 31, 2019, 9.6% of our revenues were from the Modular - Other North America segment, markets inCanada, including Alaska, and Mexico. Revenues from this segment had declined since 2014 as a result of exposure to upstream oil and gasend markets in Alberta, Canada and Alaska. While average modular space units on rent and rental rates have stabilized, competitive pressuresin these markets may continue to impact performance until utilization across the industry improves.Our Business and Growth StrategiesWe intend to maintain a leading market position and increase our revenue and profitability by pursuing the following strategies:Expanding our “Ready to Work” Value Proposition.We combine product quality and availability, the largest service network in North America, an industry-leading offering of VAPS and acommitment to customer service to provide increased value to our customers. This attracts new customers, increases customer retention andincreases our margins. We intend to grow the business by continuing to improve the quality, delivery and service of our products and bycontinuing to introduce new and innovative products and services that complement our core offering to the most attractive industry andgeographic end markets.Increasing the Utilization and Yield of our Rental Equipment.We are continuously working to increase the utilization and yield of our lease fleet by improving the efficiency and performance of oursales force, expanding penetration of VAPS and enhancing our management information systems. Effective use of real-time information allowsus to monitor and optimize the utilization of our fleet, allocate our fleet to the highest demand markets, optimize pricing and determine the bestallocation of our capital to invest in fleet and branches as well as to identify opportunities where underutilized lease fleet can be sold to generatecash.Optimizing Cash Flow through Strategic Deployment of Capital.We maintain a disciplined focus on our return on capital. As part of this discipline, we diligently consider the potential returns andopportunity costs associated with each investment we make. We continually assess both our existing lease fleet and customer demand foropportunities to deploy capital more efficiently. We manage our maintenance capital expenditures as well as growth capital expenditures to bestfit the economic conditions at the time. Within our existing lease fleet, we examine the potential cash and earnings generation of an asset saleversus continuing to lease the asset. In addition, we examine the relative benefits of organic expansion opportunities versus expansion throughacquisition to obtain a favorable return on capital.Generating Additional Cash Flow Through Operational Efficiencies and Cost Reductions.We have implemented a number of management initiatives designed to improve operations and increase profitability, efficiency andoperating leverage. We continually assess our branch operating footprint, our vendor base, and our operating structure to maximize revenuegeneration while minimizing costs. The acquisitions of Acton and ModSpace provided us with increased scale that allowed us to reduce fromover 200 combined operating locations to approximately 120 operating locations by the end of 2019. With this post-acquisition scale, we expectto extract over $60.0 million of redundant costs from the combined businesses. As of December 31, 2019, we estimate that we have realizedover $40 million of cumulative savings related to the Acton and ModSpace acquisitions and subsequent integrations. We have a proven trackrecord of efficiently integrating acquisitions and quickly eliminating operational redundancies, while maintaining acquired customerrelationships.Leveraging Scale via Acquisitions.The US market for modular space and portable storage solutions is fragmented, with approximately 60% of the modular space marketsupplied by regional and local competitors. We have a broad network of operating branches in North39America, as well as a highly scalable corporate center and management information systems, which we believe positions us well to continue toacquire and integrate other companies. We may pursue acquisitions that will provide further scale efficiencies to our platform, allowing us toimprove returns generated by the acquired assets.Components of Our Consolidated Historical Results of OperationsRevenueOur revenue consists mainly of leasing, services and sales revenue. We derive our leasing and services revenue primarily from theleasing of modular space and portable storage units. Included in modular leasing revenue are VAPS, such as rentals of steps, ramps, furniture,air conditioners, wireless internet access points, damage waivers and service plans. Modular delivery and installation revenue includes feesthat we charge for the delivery, setup, knockdown and pick-up of leasing equipment to and from customers’ premises and repositioning leasingequipment.The key drivers of changes in our leasing revenue are:•the number of units in our modular lease fleet;•the average utilization rate of our modular lease units; and•the average monthly rental rate per unit, including VAPS.The average utilization rate of our modular lease units is the ratio of (i) the average number of units in use during a period (whichincludes units from the time they are leased to a customer until the time they are returned to us) to (ii) the average total number of units availablefor lease in our modular fleet during a period. Our average monthly rental rate per unit for a period is equal to the ratio of (i) our rental income forthat period including VAPS but excluding delivery and installation services, to (ii) the average number of modular lease units rented to ourcustomers during that period.The table below sets forth the average number of units on rent in our modular lease fleet, the average utilization of our modular leaseunits, and the average monthly rental rate per unit, including VAPS:Year Ended December 31,(in thousands, except unit numbers and rates)201920182017Modular space units on rent (average during the period)91,68270,25741,263Average modular space utilization rate72.0%71.6%70.3%Average modular space monthly rental rate$614$552$538Portable storage units on rent (average during the period)16,87815,48012,599Average portable storage utilization rate65.8%68.9%71.4%Average portable storage monthly rental rate$120$119$116In addition to leasing revenue, we also generate revenue from sales of new and used modular space and portable storage units to ourcustomers, as well as delivery, installation, maintenance, removal services and other incidental items related to accommodations services forour customers. Included in our sales revenue are charges for modifying or customizing sales equipment to customers’ specifications.Gross ProfitWe define gross profit as the difference between total revenue and cost of revenue. Cost of revenues associated with our leasingbusiness includes payroll and payroll-related costs for branch personnel, material and other costs related to the repair, maintenance, storageand transportation of rental equipment. Cost of revenue also includes depreciation expense associated with our rental equipment. Cost ofrevenues 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 ExpenseOur selling, general and administrative (“SG&A”) expense includes all costs associated with our selling efforts, including marketingcosts, marketing salaries and benefits, as well as commissions of sales personnel. It also includes integration and transaction costsassociated with acquisitions and business combinations, our overhead costs, such as salaries of administrative and corporate personnel andthe leasing of facilities we occupy. General and administrative costs in our historical results for Corporate and other relate to the Algeco Group’scorporate costs incurred prior to or in connection with the Business Combination which are not anticipated to be recurring costs.Other Depreciation and AmortizationOther depreciation and amortization includes depreciation of our property, plant and equipment, as well as the amortization of ourintangible assets.40Impairment Losses on GoodwillWe recognize goodwill impairment charges associated with our reporting units when the carrying value exceeds the estimated fairvalue of the reporting unit.Impairment Losses on Long-Lived AssetsWe recognize property, plant, and equipment impairment charges when the carrying value of assets exceeds the estimated fair value ofthe assets.Lease Impairment Expense and Other Related ChargesLease impairment expense and other related charges include impairment of right-of-use ("ROU") assets under ASC 842, gain or loss on theexit of a leased property generally associated with lease termination payments and rent expense for locations which have been closed but havenot been abandoned or impaired.Restructuring CostsRestructuring costs include charges associated with exit or disposal activities that meet the definition of restructuring under FinancialAccounting Standards Board ("FASB") ASC Topic 420, Exit or Disposal Cost Obligations (“ASC 420”). Our restructuring plans are generallycountry or region specific and are typically completed within a one year period. Prior to the adoption of ASC 842 effective January 1, 2019,restructuring costs incurred under these plans included (i) one-time termination benefits related to employee separations, (ii) contracttermination costs and, (iii) other related costs associated with exit or disposal activities including, but not limited to, costs for consolidating orclosing facilities. After the adoption of ASC 842, restructuring costs include one-time termination benefits related to employee separation costs.The restructuring costs incurred in 2019 and 2018 primarily relate to the integration of our acquisitions. Costs related to the integration ofacquired businesses that do not meet the definition of restructuring under ASC 420, such as employee training costs, duplicate facility costs,and professional services expenses, are included within SG&A expenses.Currency (Gains) Losses, NetCurrency (gains) losses, net include unrealized and realized gains and losses on monetary assets and liabilities denominated inforeign currencies other than our functional currency at the reporting date.Other (Income) Expense, NetOther (income) expense, net primarily consists of the non-recurring gain (loss) on disposal of non-operational property, plant andequipment, other financing related costs and other non-recurring charges.Interest ExpenseInterest expense consists of the costs of external debt including the Company’s ABL credit agreement (the "ABL Facility"), the seniorsecured notes due December 15, 2022 (the "2022 Secured Notes) and the senior secured notes due August 15, 2023 (the "2023 SecuredNotes, together with the 2022 Secured Notes, the "Senior Secured Notes"), the senior unsecured notes due November 15, 2023 (the"Unsecured Notes"), and prior to the Business Combination, interest due on amounts owed to affiliates and interest on the revolving creditfacility associated with the Algeco Group.Interest IncomeInterest income consists of interest on notes due from affiliates which were settled in 2017.Income Tax BenefitWe are subject to income taxes in the US, Canada and Mexico. Our overall effective tax rate is affected by a number of factors, such asthe relative amounts of income we earn in differing tax jurisdictions, state and jurisdictional law changes, and certain non-deductible expensessuch as compensation disallowance. The rate is also affected by discrete items that may occur in any given year, such as state legislationenactments. These discrete items may not be consistent from year to year. Income tax expense (benefit), deferred tax assets and liabilities andliabilities for unrecognized tax benefits reflect our best estimate of current and future taxes to be paid.41Consolidated Results of OperationsOur consolidated statements of net loss for the years ended December 31, 2019, 2018, and 2017 are presented below. The belowresults only include results from ModSpace and Acton for the periods subsequent to their acquisition dates and does not include anyincremental unrealized cost savings, revenue growth, or pro forma adjustments that management expects to result from the integration of theacquired business.Years Ended December 31,2019 vs. 2018Change2018 vs 2017Change201920182017Revenues:Leasing and services revenue:Modular leasing$744,185$518,235$297,821$225,950$220,414Modular delivery and installation220,057154,55789,85065,50064,707Sales revenue:New units59,08553,60336,3715,48217,232Rental units40,33825,01721,90015,3213,117Total revenues1,063,665751,412445,942312,253305,470Costs:Costs of leasing and services:Modular leasing213,151143,12083,58870,03159,532Modular delivery and installation194,107143,95085,47750,15758,473Costs of sales:New units42,16036,86326,0255,29710,838Rental units26,25516,65912,6439,5964,016Depreciation of rental equipment174,679121,43672,63953,24348,797Gross profit413,313289,384165,570123,929123,814Expenses:Selling, general and administrative271,004254,871162,35116,13392,520Other depreciation and amortization12,39513,3048,653(909)4,651Impairment losses on goodwill--60,743-(60,743)Impairment losses on long-lived assets2,8481,600-1,2481,600Lease impairment expense and other relatedcharges8,674--8,674-Restructuring costs3,75515,4682,196(11,713)13,272Currency (gains) losses, net(688)2,454(12,878)(3,142)15,332Other (income) expense, net(2,200)(4,574)2,8272,374(7,401)Operating income (loss)117,5256,261(58,322)111,26464,583Interest expense122,50498,433119,30824,071(20,875)Interest income--(12,232)-12,232Loss on extinguishment of debt8,755--8,755-Loss from continuing operations beforeincome tax(13,734)(92,172)(165,398)78,43873,226Income tax benefit(2,191)(38,600)(936)36,409(37,664)Loss from continuing operations(11,543)(53,572)(164,462)42,029110,890Income from discontinued operations, net of tax--14,650-(14,650)Net loss(11,543)(53,572)(149,812)42,02996,240Net loss attributable to non-controlling interest,net of tax(421)(4,532)(2,110)4,111(2,422)Net loss attributable to WillScot(11,122)(49,040)(147,702)37,91898,662Non-cash deemed dividend related to warrantexchange-(2,135)-2,135(2,135)Net loss attributable to WillScot commonshareholders$(11,122)$(51,175)$(147,702)$40,053$96,52742Comparison of Years Ended December 31, 2019 and 2018Revenue: Total revenue increased $312.3 million, or 41.6%, to $1,063.7 million for the year ended December 31, 2019 from $751.4million for the year ended December 31, 2018. The increase was primarily the result of a 43.3% increase in leasing and services revenue drivenby increased volumes from acquisitions and improved pricing. Improved volumes were driven by units acquired as part of the ModSpaceacquisition, as well as, increased modular delivery and installation revenues on the combined rental fleet of 42.4% due to increased transactionvolumes and higher revenues per transaction. Average modular space monthly rental rates increased 11.2% for the year ended December 31,2019, and average modular space units on rent increased 21,425 units, or 30.5%, due to the impact of an additional 8.5 months of contributionfrom the ModSpace acquisition. Improved pricing was driven by a combination of our price optimization tools and processes, as well as, bycontinued growth in our “Ready to Work” solutions and increased VAPS penetration across our customer base, offset partially by the averagemodular space monthly rental rates on acquired units for ModSpace. The increase in leasing and services revenues was further complementedby an increase of $5.5 million, or 10.3%, in new unit sales as compared to 2018. This increase was primarily driven by increased sales as aresult of the ModSpace acquisition. Rental unit sales increased $15.3 million, or 61.2%, as compared to 2018.On a pro forma basis, including results of WillScot and ModSpace for all periods presented, total revenues decreased $0.4 million, or0.0%, year-over-year for the year ended December 31, 2019. This decline was driven by reduced new sales, which declined $41.6 million, or41.3%, as a result of one large sale recognized in 2018 in the amount of $29.0 million in our Modular - US segment, and decreased rental unitsales, which declined $5.3 million, or 11.7%. The declines in sales volumes were nearly offset by an increase in our core modular leasingrevenues, which increased $53.4 million, or 7.7%, as a result of a 13.7% increase in average modular space monthly rental rates.Total average units on rent for the year ended December 31, 2019 and 2018 were 108,560 and 85,737, respectively. The increase wasdue to units acquired as part of the ModSpace acquisition, with modular space average units on rent increased by 21,425 units, or 30.5%, for theyear ended December 31, 2019. Modular space average monthly rental rates increased 11.2% for the year ended December 31, 2019. Portablestorage average units on rent increased by 1,398 units, or 9.0%, for the year ended December 31, 2019. Average portable storage monthly rentalrates increased 0.8% for the year ended December 31, 2019. The average modular space unit utilization rate for the year ended December 31,2019 was 72.0%, as compared to 71.6% in 2018. The increase in average modular space utilization rate was driven by a reduction in thecombined modular space unit fleet size across the combined WillScot and ModSpace fleet in 2019. The average portable storage unit utilizationrate during the year ended December 31, 2019 was 65.8%, as compared to 68.9% in 2018. The decrease in average portable storage utilizationrate was driven by organic declines in the number of portable storage average units on rent in the Modular - US segment.Gross Profit: Our gross profit percentage was 38.9% and 38.5% for the years ended December 31, 2019 and 2018, respectively. Ourgross profit percentage, excluding the effects of depreciation ("adjusted gross profit percentage"), was 55.3% and 54.7% for the years endedDecember 31, 2019 and 2018, respectively.Gross profit increased $123.9 million, or 42.8%, to $413.3 million for the year ended December 31, 2019 from $289.4 million for theyear ended December 31, 2018. The increase in gross profit is a result of a $291.5 million increase in modular leasing and services revenueand increased new unit sales gross profit of $0.2 million, offset by increases of $120.2 million in modular leasing and services costs. Increasesin modular leasing and services revenues and costs were primarily as a result of increased revenues due to additional units on rent as a resultof recent acquisitions as well as increased margins due to favorable average monthly rental rates on modular space units and increaseddelivery and installation margins driven primarily by higher pricing per transaction. These increases were partially offset by increaseddepreciation of $53.3 million as a result of additional rental equipment acquired as part of the ModSpace acquisition, as well as continuedcapital investment in our existing rental equipment.SG&A Expense: SG&A expense increased $16.1 million, or 6.3%, to $271.0 million for the year ended December 31, 2019, comparedto $254.9 million for the year ended December 31, 2018. Employee costs increased $19.5 million driven by the increased size of the workforce,offset partially by employee savings achieved as a result of restructuring activities; and occupancy costs increased $10.3 million largely due tothe expansion of our branch network and storage lots, including a portion of the expected cost savings as we have now exited approximately85% of redundant real estate locations.Discrete items included in SG&A decreased for the year ended December 31, 2019, compared to the year ended December 31, 2018,by $17.7 million as decreases in transaction and integration costs related to the ModSpace and Acton acquisitions and subsequent integrationsof $20.1 million and $4.0 million, respectively, were partially offset by increases in stock compensation expense and other acquisition-relatedactivities of $3.3 million and $3.1 million, respectively.The remaining increases of $4.0 million are primarily related to increased professional fees, insurance, computer, travel, office andother expenses related to operating a larger business as a result of our recent acquisitions and our expanded employee base and branchnetwork.We estimate incremental cost synergies of approximately $36.0 million related to the ModSpace and Acton acquisitions were realizedin 2019, which compares to approximately $6.4 million of synergies realized in 2018 related to the Acton and Onsite Space LLC (d/b/a TysonOnsite (“Tyson”) acquisitions, bringing cumulative synergies related to the Acton, Tyson, and ModSpace acquisitions from the dates of theacquisitions to December 31, 2019 to approximately $42.4 million.43These cost synergies are consistent with our integration plans and we expect to achieve annual recurring cost savings of over $70.0 milliononce our integration plans are fully executed and in our annual results.Other Depreciation and Amortization: Other depreciation and amortization decreased $0.9 million, or 6.8%, to $12.4 million for theyear ended December 31, 2019, compared to $13.3 million for the year ended December 31, 2018. The decrease in other depreciation andamortization was driven primarily by lower depreciation as a result of the decrease in property, plant and equipment. Property, plant andequipment decreased as a result of the transfer of non-producing branches to assets held for sale which are no longer depreciated and theimpact of the adoption of ASC 842 which resulted in the reversal of branch assets previously accounted for as failed sale-lease back locationswhich are compliant sales under ASC 842.Impairment losses on Goodwill: There were no impairment losses on goodwill for the years ended December 31, 2019 and 2018.Impairment losses on Long-Lived Assets: Impairment losses on long-lived assets were $2.8 million for the year ended December31, 2019 as compared to $1.6 million for the year ended December 31, 2018. In 2019 and 2018, we reclassified certain branch facilities fromproperty, plant and equipment to assets held for sale and recognized an impairment on these assets as the estimated fair value was less thanthe carrying value of the facilities.Lease Impairment Expense and Other Related Charges: Lease impairment expense and other related charges was $8.7 million forthe year ended December 31, 2019. Effective January 1,2019, in connection with the adoption of ASC 842, we recorded $4.2 million in ROUasset impairments, $2.6 million in rent on closed locations and $1.9 million in lease termination fees.Restructuring Costs: Restructuring costs were $3.8 million for the year ended December 31, 2019 as compared to $15.5 million forthe year ended December 31, 2018. The 2019 restructuring charges related primarily to employee termination costs as a result of theModSpace acquisition and integration. The 2018 restructuring charges are comprised of employee termination and lease breakage costsrelated to the Acton and ModSpace acquisitions and integrations. Prior to the adoption of ASC 842 effective January 1. 2019, the costsassociated with leases exited as a result of a restructuring plan were recorded in restructuring expense.Currency (Gains) Losses, net: Currency (gains) losses, net were a $0.7 million gain for the year ended December 31, 2019 comparedto a $2.5 million loss for the year ended December 31, 2018. The decrease in currency losses was primarily attributable to the impact of foreigncurrency exchange rate changes on loans and borrowings and intercompany receivables and payables denominated in a currency other thanthe subsidiaries’ functional currency.Other Income, Net: Other income, net was $2.2 million for the year ended December 31, 2019 and $4.6 million for the year endedDecember 31, 2018. The decrease in other income was driven by the receipt of insurance proceeds related to assets damaged duringHurricane Harvey and other settlements which contributed $5.6 million to other expense, net for the year ended December 31, 2018, offset by thereceipt of $2.4 million in insurance proceeds related to assets damaged during hurricanes and the receipt of a $0.9 million settlement duringthe year ended December 31, 2019.Interest Expense: Interest expense increased $24.1 million, or 24.5%, to $122.5 million for the year ended December 31, 2019 from$98.4 million for the year ended December 31, 2018. The increase in interest expense is attributable to the increased financing costs for the fullyear in 2019, as a result of the ModSpace acquisition which occurred in the third quarter of 2018, offset in part by the one-time bridge financingand upfront commitment fees expensed in 2018 and lower interest costs due to the redemption of our Unsecured Notes in June 2019. In thethird quarter of 2018, as part of financing the ModSpace acquisition, we upsized our ABL Facility to $1.425 billion, issued the 2023 SecuredNotes, and issued the Unsecured Notes and incurred bridge financing fees and upfront commitment fees of $20.5 million which were recordedto interest expense.Income Tax Benefit: Income tax benefit decreased $36.4 million to $2.2 million for the year ended December 31, 2019 compared to$38.6 million for the year ended December 31, 2018. The decrease in tax benefit was driven by the lower loss before income tax for the yearended December 31, 2019, approximately $17.0 million less tax benefit, and discrete tax benefits in 2018 related to a reduction in the valuationallowance, tax benefit of $11.9 million, and a tax benefit of $7.0 million related to a change in the Company asserting indefinite re-investment incertain of its foreign businesses.Comparison of Years Ended December 31, 2018 and 2017Revenue: Total revenue increased $305.5 million, or 68.5%, to $751.4 million for the year ended December 31, 2018 from $445.9million for the year ended December 31, 2017. The increase was primarily the result of a 73.5% increase in leasing and services revenue drivenby increased volumes from acquisitions and improved pricing. Improved volumes were driven by units acquired as part of the Acton, Tyson, andModSpace acquisitions and organic unit on rent growth, as well as increased modular delivery and installation revenues on the combined rentalfleet of 72.0% due to increased transaction volumes. Average modular space monthly rental rates increased 2.6% for the year ended December31, 2018, and average modular space units on rent increased 28,994 units, or 70.3%. Improved pricing was driven by a combination of our priceoptimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increased VAPS penetration across ourcustomer base, offset partially by the average modular space monthly rental rates on acquired units for Acton, Tyson, and ModSpace. Theincrease in leasing and services revenues was further complemented by an increase of44$17.2 million, or 47.3% in new unit sales as compared to 2017 primarily driven by increased sales as a result of the ModSpace acquisition,which historically had higher new sales than WillScot, including a single large sale project serviced by the Modular - US segment that accountedfor nearly half of the revenue variance. Rental unit sales increased $3.1 million, or 14.2% as compared to 2017.Total average units on rent for the year ended December 31, 2018 and 2017 were 85,737 and 53,862, respectively. The increase wasdue to units acquired as part of the Acton, Tyson, and ModSpace acquisitions and organic improvements in modular space average units onrent, with modular space average units on rent increased by 28,994 units, or 70.3% for the year ended December 31, 2018. Modular spaceaverage monthly rental rates increased 2.6% for the year ended December 31, 2018. Portable storage average units on rent increased by 2,881units, or 22.9% for the year ended December 31, 2018. Average portable storage monthly rental rates increased 2.6% for the year endedDecember 31, 2018. The average modular space unit utilization rate for the year ended December 31, 2018 was 71.6%, as compared to 70.3%during the same period in 2017. The increase in average modular space utilization rate was driven by a reduction in the combined modularspace unit fleet size during the period across the WillScot, ModSpace, Acton and Tyson fleet. The average portable storage unit utilization rateduring the year ended December 31, 2018 was 68.9%, as compared to 71.4% during the same period in 2017. The decrease in averageportable storage utilization rate was driven by organic declines in the number of portable storage average units on rent in the Modular - USsegment.Gross Profit: Our gross profit percentage was 38.5% and 37.1% for the years ended December 31, 2018 and 2017, respectively. Ourgross profit percentage, excluding the effects of depreciation ("adjusted gross profit percentage"), was 54.7% and 53.4% for the years endedDecember 31, 2018 and 2017, respectively.Gross profit increased $123.8 million, or 74.8%, to $289.4 million for the year ended December 31, 2018 from $165.6 million for theyear ended December 31, 2017. The increase in gross profit is a result of a $285.1 million increase in modular leasing and services revenueand increased new unit sales gross profit of $6.3 million, offset by increases of $118.0 million in modular leasing and services costs. Increasesin modular leasing and services revenues and costs were primarily as a result of increased revenues due to additional units on rent as a resultof recent acquisitions as well as increased margins due to favorable average monthly rental rates on modular space units. These increaseswere partially offset by increased depreciation of $48.8 million as a result of additional rental equipment acquired as part of the Acton, Tyson,and ModSpace acquisitions, as well as continued capital investment in our existing rental equipment.SG&A Expense: SG&A expense increased $92.5 million, or 57.0%, to $254.9 million for the year ended December 31, 2018, comparedto $162.4 million for the year ended December 31, 2017. The majority of the increases in the Modular- US and Modular - Other North Americasegments were driven by the acquisitions of Acton and ModSpace during the year, as well as by $50.1 million of integration and transactioncosts incurred during 2018 related to these acquisitions. These increases were partially offset by a $45.1 million reduction of costs in Corporateand other related to Algeco Group costs no longer included in our operations.SG&A expenses in the Modular- US and Modular - Other North America segments increased $137.7 million for the year endedDecember 31, 2018 as compared to 2017. Integration costs incurred in 2018 were $30.0 million, as compared to no costs in 2017, whichinclude discrete training costs, fleet relocation costs, branch exit costs, and professional service expenses related to the Acton and ModSpaceintegrations. Employee costs increased $43.4 million driven by the increased size of the workforce before realization of all expected employeesavings to be achieved as a result of restructuring activities. Occupancy costs increased $13.8 million largely due to the expansion of our branchnetwork and storage lots before expected savings are realized as we exit redundant locations. Transaction costs, excluding those in Corporateand other, increased $18.3 million primarily related to costs incurred related to the acquisition of ModSpace. Legal and professional feesincreased $10.9 million over 2017 before realization of all expected cost savings and due to operating as a public company for all of 2018. Theremaining increases of $21.3 million are primarily related to increased insurance, computer, marketing, office, tax and bad debt expensesrelated to operating a larger operation as a result of our recent acquisitions and our expanded employee base and branch network.We estimate cost synergies of approximately $6.4 million related to the Acton and Tyson acquisitions were realized in 2018 and ourintegration plans remain on track. Acton sales and operations were integrated in April of 2018, and effective November 1, 2018, we begandelivering all units acquired from ModSpace under a combined operating and information technology platform. Effective January 7, 2019, wecompleted the ModSpace system integration and all billing activities on existing ModSpace contracts are now fully integrated. Exit activities forredundant branch locations, such as preparing units and materials for transport to other locations remain on schedule. These activities areexpected to continue through 2019 and we expect over $60.0 million of annual reoccurring cost savings as we execute the establishedintegration plans for Acton and ModSpace.Other Depreciation and Amortization: Other depreciation and amortization increased $4.6 million, or 52.9%, to $13.3 million for theyears ended December 31, 2018, compared to $8.7 million for the year ended December 31, 2017. The increase was driven primarily bydepreciation on property, plant and equipment acquired as part of the Acton and ModSpace acquisitions in December of 2017 and August of2018, respectively.45Impairment losses on Goodwill: Impairment losses on goodwill were $0.0 million and $60.7 million for the years ended December 31,2018 and 2017, respectively. The 2017 impairment loss on goodwill relates to our reporting unit in Canada.Impairment losses on Long-Lived Assets: Impairment losses on long-lived assets were $1.6 million for the year ended December31, 2018 as compared to $0.0 million for the year ended December 31, 2017. In the fourth quarter of 2018, we reclassified certain branchfacilities that we intend to exit from property, plant and equipment to held for sale and recognized an impairment on these assets as theestimated fair value was less than the carrying value of the facilities.Restructuring Costs: Restructuring costs were $15.5 million for the year ended December 31, 2018 as compared to $2.2 million forthe year ended December 31, 2017. The 2018 restructuring charges relate entirely to employee termination and lease breakage costs related tothe Acton and ModSpace acquisitions and integrations. The 2017 restructuring charges relate to the Algeco Group corporate function andrelated employee termination costs.Currency (Gains) Losses, net: Currency (gains) losses, net were a $2.5 million loss for the year ended December 31, 2018 comparedto a $12.9 million gain for the year ended December 31, 2017. The decrease in currency gains was primarily attributable to the impact of foreigncurrency exchange rate changes on loans and borrowings and intercompany receivables and payables denominated in a currency other thanthe subsidiaries’ functional currency. The majority of the intercompany receivables and payables contributing to these gains and losses weresettled concurrently with the Business Combination.Other (Income) Expense, Net: Other expense, net was $4.6 million of other income for the year ended December 31, 2018 and $2.8million of other expense for the year ended December 31, 2017. The increase in other income was driven by the receipt of insurance proceedsrelated to assets damaged during Hurricane Harvey which contributed $4.8 million and other settlements which contributed $0.8 million to other(income) expense, net, for the year ended December 31, 2018.Interest Expense: Interest expense decreased $20.9 million, or 17.5%, to $98.4 million for the year ended December 31, 2018 from$119.3 million for the year ended December 31, 2017. Upon consummation of the Business Combination in November 2017, we issued the2022 Secured Notes and entered into the ABL Facility to fund our operations as a stand-alone company. In the third quarter as part of financingthe ModSpace acquisition, we upsized our ABL Facility to $1.425 billion, issued the 2023 Secured Notes, and issued the Unsecured Notes. Inconnection with the ModSpace acquisition, the Company incurred bridge financing fees and upfront commitment fees of $20.5 million in thethird quarter, which are included in interest expense in 2018 and are not expected to reoccur.The majority of the interest costs incurred during the year ended December 31, 2017 relate to the previous debt structure of WSII as partof the Algeco Group, including $58.4 million of interest expense incurred in 2017 on notes payable to affiliates, which were settled in full inconnection with the Algeco Group restructuring that occurred prior to the Business Combination. The decrease in interest expense is driven byour lower average debt and notes payable balances in 2018 under our new debt structure as compared to the Algeco Group debt structure inplace in 2017, partially offset by bridge financing and upfront commitment fees of $20.5 million incurred in connection with the ModSpaceacquisition and higher average debt balances subsequent to the August of 2018 ModSpace acquisition. See Note 12 to the consolidatedfinancial statements for further discussion of our debt, and the additional debt incurred during the third quarter as part of financing theModSpace acquisition, which we expect will increase our interest expense in future periods.Interest Income: Interest income decreased $12.2 million, or 100.0%, to $0.0 million for the year ended December 31, 2018 from$12.2 million for the year ended December 31, 2017. This decrease is due to the decrease in the principal balance of notes due from affiliates,which were settled upon consummation of the Business Combination in November 2017.Income Tax Benefit: Income tax benefit increased $37.7 million to $38.6 million for the year ended December 31, 2018 compared to$0.9 million for the year ended December 31, 2017. The increase in tax benefit was principally driven by the pre-tax loss tax benefit of $19.4million, a tax benefit of $11.9 million, related to a reduction in the valuation allowance and a tax benefit of $7.0 million related to a change in theCompany asserting indefinite re-investment in certain of its foreign businesses. In 2017, a pre-tax loss tax benefit was reduced by theimpairment of Canadian Goodwill, an unfavorable permanent adjustment, with no tax basis which reduces the expected pre-tax loss benefit. Inaddition, as a result of the Tax Act, the Company remeasured their net deferred tax liabilities and recognized a net tax benefit of $28.1 millionwhich was offset by a $50.5 million valuation allowance at December 22, 2017. Also, refer to Note 14 regarding the Tax Act enacted in the US onDecember 22, 2017 and additional components of the rate reconciliation.Business SegmentsOur principal line of business is modular leasing and sales. The Company formerly operated a remote accommodations business(the "Remote Accommodations Business"), which consisted of Target Logistics Management LLC and its subsidiaries and Chard CampCatering Services, that was carved out in connection with the Business Combination and was no longer a part of our business as of December31, 2017. The Remote Accommodations Business was considered a single reportable segment. Modular leasing and sales comprises tworeportable segments: Modular - US and Modular - Other North America. The Modular - US reportable segment includes the contiguous 48 statesand Hawaii, and the Modular - Other North America reportable segment includes Alaska, Canada and Mexico.46The following tables and discussion summarize our reportable segment financial information for the years ended December 31, 2019,2018 and 2017. Consistent with the presentation of our financial statements, the below segment results only include results from Acton, Tyson,and ModSpace for the periods subsequent to the respective acquisition dates and do not include any unrealized incremental cost savings,revenue growth, or pro forma adjustments that management expects to result from the integrations of the acquired businesses. Future changesto our organizational structure may result in changes to the segments disclosed.Business Segment ResultsYears Ended December 31, 2019, 2018 and 2017(in thousands, except for units on rent and rates)Modular - USModular - OtherNorth AmericaTotalYear Ended December 31, 2019Revenue$961,683$101,982$1,063,665Gross profit$374,859$38,454$413,313Adjusted EBITDA(a)$325,068$31,480$356,548Capital expenditures for rental equipment$193,453$11,653$205,106Modular space units on rent (average during the period)82,7098,97391,682Average modular space utilization rate74.2%56.1%72.0%Average modular space monthly rental rate$617$590$614Portable storage units on rent (average during the period)16,46241616,878Average portable storage utilization rate66.2%53.7%65.8%Average portable storage monthly rental rate$120$111$120(in thousands, except for units on rent and rates)Modular - USModular - OtherNorth AmericaTotalYear Ended December 31, 2018Revenue$677,590$73,822$751,412Gross profit$264,320$25,064$289,384Adjusted EBITDA(a)$196,410$19,123$215,533Capital expenditures for rental equipment$151,407$9,476$160,883Modular space units on rent (average during the period)63,3366,92170,257Average modular space utilization rate73.7%56.8%71.6%Average modular space monthly rental rate$551$559$552Portable storage units on rent (average during the period)15,08939115,480Average portable storage utilization rate69.4%55.6%68.9%Average portable storage monthly rental rate$119$108$119(in thousands, except for units on rent andrates)Modular - USModular - OtherNorth AmericaCorporate and OtherTotalYear Ended December 31, 2017Revenue$392,933$53,656$(647)$445,942Gross profit$148,685$17,532$(647)$165,570Adjusted EBITDA(a)$110,822$13,099$(15,112)$108,809Capital expenditures for rental equipment$96,378$5,832$-$102,210Modular space units on rent (average during theperiod)36,1665,097-41,263Average modular space utilization rate73.9%52.2%-%70.3%Average modular space monthly rental rate$538$532$-$538Portable storage units on rent (average duringthe period)12,246353-12,599Average portable storage utilization rate72.2%52.6%-%71.4%Average portable storage monthly rental rate$116$119$-$116(a) See “Reconciliation of non-GAAP Financial Measures” in Item 6 of this Annual Report on Form 10-K.47Modular - US SegmentComparison of Years Ended December 31, 2019 and 2018Revenue: Total revenue increased $284.1 million, or 41.9%, to $961.7 million for the year ended December 31, 2019 from $677.6million for the year ended December 31, 2018. Modular leasing revenue increased $208.2 million, or 44.4%, driven by improved volumes andpricing. Average modular space units on rent increased 19,373 units, or 30.6%, to 82,709 units on rent and resulting modular space utilizationincreased by 50 bps. Average modular space monthly rental rates in the Modular - US segment increased 12.0% for the year ended December31, 2019 to $617. Improved volumes were driven by units acquired as part of the ModSpace acquisition, as well as increased modular deliveryand installation revenues, which increased $63.2 million, or 45.7%, due to the increased delivery volumes as compared to 2018. Improvedpricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Ready to Work”solutions and increased VAPS penetration across our customer base, offset partially by the average modular space monthly rental rates onacquired units. New unit sales revenue increased $5.9 million, or 12.0%, in 2019 and rental unit sales revenue increased $6.8 million, or32.2%. Increases for both new unit sales and rental unit sales were a result of the ModSpace acquisition and our larger post-acquisition fleetsize.On a pro forma basis, including results of WillScot and ModSpace for all periods presented, total revenues increased $2.4 million, or0.2%, year over year for the year ended December 31, 2019. This increase was driven by modular leasing revenue, which increased $52.8million, or 8.4%, driven primarily by continued pricing improvement, with increases in pro forma average modular space monthly rental rates of$80, or 14.9%, year over year for the year ended December 31, 2019. Offset by a decline in new sales, which decreased $39.5 million, or 41.9%driven primarily by one large sale recognized in 2018 in the amount of $29.0 million, and decreased rental unit sales, which declined $9.9million, or 26.2%. Modular space units on rent decreased 4.5% on a pro forma basis to 82,709 and pro forma utilization for our modular spaceunits increased to 74.2% up 40 bps from 73.8% for the year ended December 31, 2018.Gross Profit: Gross profit increased $110.5 million, or 41.8%, to $374.8 million for the year ended December 31, 2019 from $264.3million for the year ended December 31, 2018. The increase in gross profit was driven by higher revenues driven both by the ModSpaceacquisition and by organic growth. The increase in gross profit from higher revenues was partially offset by a $50.0 million, or 47.0% increase indepreciation of rental equipment for the year ended December 31, 2019 primarily related to units acquired in the ModSpace acquisition, and asa result of continued capital investment in our fleet.Adjusted EBITDA: Adjusted EBITDA increased $128.6 million, or 65.5%, to $325.0 million for the year ended December 31, 2019 from$196.4 million for the year ended December 31, 2018. The increase was driven by higher revenues and gross profits discussed aboveexcluding depreciation, partially offset by increases in SG&A, excluding discrete items and other items, of $29.7 million. Discrete and other itemswithin SG&A decreased for the year ended December 31, 2019, compared to the year ended December 31, 2018, by $19.8 million as decreasesin transaction costs and integration costs related to the ModSpace and Acton acquisitions and subsequent integrations of $19.8 million and$6.3 million, respectively, were partially offset by increases in stock compensation expense and other acquisition-related activities of $3.2 millionand a $3.1 million, respectively. Increases in SG&A, excluding discrete items, primarily related to increased employee costs of $18.1 milliondriven by the increased size of the workforce offset partially by employee savings achieved as a result of restructuring activities; and occupancycosts increased $7.5 million largely due to the expansion of our branch network and storage lots, including a portion of the expected cost savingas we have exited redundant locations. The remaining increases in SG&A of $4.2 million were primarily related to increased insurance,computer, marketing, office, and tax expenses related to operating a larger operation as a result of our recent acquisitions and our expandedemployee base and branch network.Capital Expenditures: Capital expenditures for rental equipment increased $42.0 million, or 27.7%, to $193.4 million for the year endedDecember 31, 2019 from $151.4 million for the year ended December 31, 2018. Net capital expenditures also increased $24.4 million, or19.0%, to $152.5 million. The increases for both were driven by increased spend for refurbishments and VAPS to drive revenue growth and formaintenance of a larger fleet following our recent acquisitions.Comparison of Years Ended December 31, 2018 and 2017Revenue: Total revenue increased $284.7 million, or 72.5%, to $677.6 million for the year ended December 31, 2018 from $392.9million for the year ended December 31, 2017. Modular leasing revenue increased $205.0 million, or 77.6%, driven by improved volumes andpricing. Average modular space units on rent increased 27,170 units, or 75.1% to 63,336 units on rent and resulting modular space utilizationdecreased by 20 bps. Average modular space monthly rental rates in the Modular - US segment increased 2.4% for the year ended December31, 2018 to $551. Improved volumes were driven by units acquired as part of the Acton, Tyson, and ModSpace acquisitions, as well as increasedmodular delivery and installation revenues, which increased $57.2 million, or 70.6%, due to the increased delivery volumes as compared to2017. Improved pricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Readyto Work” solutions and increased VAPS penetration across our customer base, offset partially by the average modular space monthly rentalrates on acquired units. New unit sales revenue increased $19.7 million, or 67.2%, nearly half of which was driven by a single large sale project.Rental unit sales revenue increased $2.8 million, or 15.3%, primarily a result of the ModSpace acquisition and our larger post-acquisition fleetsize.48Gross Profit: Gross profit increased $115.6 million, or 77.7%, to $264.3 million for the year ended December 31, 2018 from $148.7million for the year ended December 31, 2017. The increase in gross profit was driven by higher revenues driven both by the Acton, Tyson andModSpace acquisitions and by organic growth. The increase in gross profit from higher revenues was partially offset by a $46.1 million, or76.5% increase in depreciation of rental equipment for the year ended December 31, 2018 primarily related to acquired units in the Acton, Tyson,and ModSpace acquisitions, and as a result of continued capital investment in our fleet.Adjusted EBITDA: Adjusted EBITDA increased $85.6 million, or 77.3%, to $196.4 million for the year ended December 31, 2018 from$110.8 million for the year ended December 31, 2017. The increase was driven by higher revenues and gross profits discussed aboveexcluding depreciation, partially offset by increases in SG&A, excluding discrete items, of $81.5 million primarily related to the acquisitions ofActon and ModSpace during the year. Employee costs increased $37.9 million driven by the increased size of the workforce before realization ofall expected employee savings to be achieved as a result of the restructuring activities. Occupancy costs increased $12.7 million largely due tothe expansion of our branch network and storage lots before expected savings are realized as we exit redundant locations. Legal andprofessional fees increased $11.0 million over 2017 before realization of all expected cost savings and due to operating as a public company forall of 2018. The remaining increases of $19.9 million are primarily related to increased insurance, computer, marketing, office, tax and bad debtexpenses related to operating a larger operation as a result of our recent acquisitions and our expanded employee base and branch network.Capital Expenditures: Capital expenditures for rental equipment increased $55.0 million, or 57.1%, to $151.4 million for the year endedDecember 31, 2018 from $96.4 million for the year ended December 31, 2017. The increases for both were driven by increased spend for newunits, VAPS, and refurbishments as a result of the increased fleet size due to the Acton, Tyson and ModSpace acquisitions. During the year, ourmodular space unit fleet grew by nearly 125%, and our average modular space unit fleet grew over 70% in 2018 as compared to 2017.Modular - Other North America SegmentComparison of Years Ended December 31, 2019 and 2018Revenue: Total revenue increased $28.1 million, or 38.1%, to $101.9 million for the year ended December 31, 2019 from $73.8 millionfor the year ended December 31, 2018. Modular leasing revenue increased $17.6 million, or 36.0%, which is primarily driven by improvedvolumes and pricing. Average modular space units on rent increased by 2,052 units, or 29.6% to 8,973 units on rent, and average modularspace monthly rental rates in the Modular - Other North America segment increased 5.5% for the year ended December 31, 2019 to $590.Improved volumes were driven by units acquired as part of the ModSpace acquisition, as well as increased modular delivery and installationrevenues, which increased $2.3 million, or 14.0%, due to increased transaction volumes as a result of the combined company. Improved pricingwas driven by a combination of our price optimization tools and processes as well as by continued growth in our “Ready to Work” solutions andincreased VAPS penetration across our customer base, as well as by the average modular space monthly rental rates on acquired units. Newunit sales revenue decreased $0.4 million, or 8.7%, associated with decreased sale opportunities. Rental unit sales revenue increased $8.6million, or 220.5%, as a result of several large rental unit sale opportunities during the year.On a pro forma basis, including results of WillScot and ModSpace for all periods presented, total revenues decreased $2.9 million, or2.8%, year over year for the year ended December 31, 2019. This decline was driven by reduced modular delivery and installation revenues andreduced new unit sales, which declined $6.1 million, or 24.7%, and $2.2 million, or 33.7%, respectively. The decline in modular delivery andinstallation revenues was driven by several large projects that began or were completed during the prior year and resulted in large delivery andinstallation revenues. These declines were partially offset by increased rental unit sales of $4.5 million, or 56.9%. Core modular leasingrevenues increased $0.8 million, or 1.3%, with increases in pro forma average modular space monthly rental rates of $25, or 4.4%, for the yearended December 31, 2019, being partially offset by a decrease in modular space units on rent of 2.5% on a pro forma basis to 8,973. Pro formautilization for our modular space units decreased to 56.1%, down 30 bps from 56.4%, for the year ended December 31, 2018.Gross Profit: Gross profit increased $13.4 million, or 53.4%, to $38.5 million for the year ended December 31, 2019 from $25.1 millionfor the year ended December 31, 2018. The effects of favorable foreign currency movements increased gross profit by $0.3 million, as theCanadian Dollar and Mexican Peso strengthened against the US dollar during the year. The increase in gross profit, excluding the effects offoreign currency, was driven by higher revenues as a result of the ModSpace acquisition and organic growth. The increase in gross profit fromhigher revenues was partially offset by a $3.1 million, or 20.5%, increase in depreciation of rental equipment for the year ended December 31,2019 primarily related to units acquired in the ModSpace acquisition.Adjusted EBITDA: Adjusted EBITDA increased $12.4 million, or 64.9%, to $31.5 million for the year ended December 31, 2019 from$19.1 million for the year ended December 31, 2018. This increase was primarily driven by higher modular leasing margin due to increasedmodular volumes and average monthly rental rates, offset by increased SG&A expense, excluding discrete items, of $4.1 million primarily relatedto the ModSpace acquisition. Employee costs increased $1.5 million as a result of the increased size of our workforce. Occupancy costsincreased $2.8 million largely due to the expansion of our branch network and storage lots.49Capital Expenditures: Capital expenditures for rental equipment increased $2.2 million, or 23.2%, to $11.7 million for the year endedDecember 31, 2019 from $9.5 million for the year ended December 31, 2018. The increase was driven by increased spend for new fleet andVAPS to drive revenue growth and for maintenance of a larger fleet following the ModSpace acquisition. Net capital expenditures decreased $5.9million, or 98.2%, to $0.1 million, as a result of increased rental unit sales in the period.Comparison of Years Ended December 31, 2018 and 2017Revenue: Total revenue increased $20.1 million, or 37.4%, to $73.8 million for the year ended December 31, 2018 from $53.7 millionfor the year ended December 31, 2017. Modular leasing revenue increased $14.8 million, or 43.4%, which is primarily attributable driven byimproved volumes and pricing. Average modular space units on rent increased by 1,824 units, or 35.8% to 6,921 units on rent, and averagemodular space monthly rental rates in the Modular - Other North America segment increased 5.1% for the year ended December 31, 2018 to$559. Improved volumes were driven by units acquired as part of the ModSpace acquisition, as well as increased modular delivery andinstallation revenues, which increased $7.6 million, or 86.4%, due to increased transaction volumes as a result of the combined company.Improved pricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Ready toWork” solutions and increased VAPS penetration across our customer base, as well as by the average modular space monthly rental rates onacquired units. New unit sales revenue decreased $2.5 million, or 35.2%, associated with decreased sale opportunities. Rental unit salesrevenue increased $0.2 million, or 5.4%.Gross Profit: Gross profit increased $7.6 million, or 43.4%, to $25.1 million for the year ended December 31, 2018 from $17.5 millionfor the year ended December 31, 2017. The effects of favorable foreign currency movements increased gross profit by $0.6 million, as theCanadian Dollar and Mexican Peso strengthened against the US dollar during the year. The increase in gross profit, excluding the effects offoreign currency, was driven by higher revenues as a result of the ModSpace acquisition and organic growth. The increase in gross profit fromhigher revenues was partially offset by a $2.8 million, or 22.8% increase in depreciation of rental equipment for the year ended December 31,2018 primarily related to acquired units in ModSpace acquisition.Adjusted EBITDA: Adjusted EBITDA increased $6.0 million, or 45.8%, to $19.1 million for the year ended December 31, 2018 from$13.1 million for the year ended December 31, 2017. This increase was primarily driven by higher modular leasing margin due to increasedmodular volumes and average monthly rental rates, offset by increased SG&A expense, excluding discrete items, of $4.3 million primarily relatedto the ModSpace acquisition during the year. Employee costs increased $2.0 million as a result of the increased size of the workforce and beforerealization of all expected employee savings as a result of the restructuring to capture operating synergies as a result of integrating thesebusinesses into WillScot. Occupancy costs increased $1.0 million largely due to the expansion of our branch network and storage lots beforeexpected savings are realized as we exit redundant locations. The remaining increases of $1.2 million are primarily related to increasedinsurance, computer, marketing, office, tax and bad debt expenses related to operating a larger operation as a result of our recent acquisitionand our expanded employee base and branch network.Capital Expenditures: Capital expenditures for rental equipment increased $3.7 million, or 63.8%, to $9.5 million for the year endedDecember 31, 2018 from $5.8 million for the year ended December 31, 2017. The increase was driven by increased spend for new units, VAPS,and refurbishments as a result of the increased fleet size due to the ModSpace acquisition. During the year, our modular space unit fleet grew byover 65%.Corporate and Other for the Year Ended December 31, 2017The Corporate and other segment was discontinued in 2017.Gross Profit: The Corporate and other adjustments to revenue and gross profit pertain to the elimination of intercompany leasingtransactions between the Modular business segments and the legacy Remote Accommodations Business segment, which was carved out in2017 and is reflected as discontinued operations in our financial statements.Adjusted EBITDA: Corporate and other costs and eliminations to consolidated Adjusted EBITDA increased $15.1 million or 100.0% to$0.0 million for the year ended December 31, 2018 from a loss of $15.1 million for the year ended December 31, 2017. The 2017 costs relatedto the Algeco Group operations, which separated from the Company in 2017. Similar costs incurred in 2019 and 2018 by WillScot are includedprimarily in the Modular - US segment.Liquidity and Capital ResourcesOverviewWillScot is a holding company that derives all of its operating cash flow from its operating subsidiaries. Our principal sources ofliquidity include cash generated by operating activities from our subsidiaries, credit facilities, and sales of equity and debt securities.Our liquidity as of December 31, 2019 consisted of cash and cash equivalents and unused commitments under our ABL Facility whichis discussed below. Our practice is to maintain sufficient liquidity through cash from operations and our ABL Facility, to mitigate the impacts ofany adverse financial market conditions on our operations. We believe that cash generated50from operations, together with amounts available under the ABL Facility, will be adequate to permit us to meet our obligations over the nexttwelve months. However, we cannot assure you that our cash provided by operating activities, cash and cash equivalents or cash availableunder our ABL Facility, will be sufficient to meet our future needs. If we are unable to generate sufficient cash flows from operations in the future,and if availability under our ABL Facility is not sufficient, we may have to obtain additional financing.As of December 31, 2019, we had approximately $1.6 billion of total nominal indebtedness outstanding. A substantial portion of ourliquidity needs arise from debt service on our indebtedness and from the funding of our costs of operations and capital expenditures.We may from time to time seek to retire our securities for cash or other consideration in open market purchases, privately-negotiatedtransactions, exchange offers or otherwise. Additionally, we may pursue additional strategic acquisitions. Any such transactions will depend onprevailing market conditions, our liquidity requirements, contractual restrictions and other factors.Borrowing Capacity and AvailabilityBorrowing availability under the ABL Facility is equal to the lesser of $1.425 billion and the applicable borrowing bases (the “Line Cap”).The borrowing bases are a function of, among other things, the value of the assets in the relevant collateral pool. At December 31, 2019, theLine Cap was $1.425 billion and we had $509.1 million of available borrowing capacity under the ABL Facility.See Note 12 in Part II, Item 8, herein for further discussion of WillScot's indebtedness.Cash FlowsSignificant factors driving our liquidity include cash flows generated from operating activities and capital expenditures for rentalequipment. With the exception of 2017 when we incurred significant discrete costs related to the Business Combination, we historically havegenerated and expect to continue to generate positive cash flow from operations.Prior to the Business Combination in the fourth quarter of 2017, WSII was subject to a centralized cash management strategy utilized bythe Algeco Group. As part of this strategy, significant intercompany notes due to and from Algeco Group affiliates were created to fund theoperating needs of certain Algeco Group affiliates as well as to fund the debt obligations of the Algeco Group. The impacts of these notes areincluded within investing and financing activities in our 2017 consolidated statements of cash flows. Additionally, prior to the BusinessCombination, the activity of the Remote Accommodations Business, which is no longer part of the Company, is included within the 2017consolidated statements of cash flows. The significant non-cash activity of the Remote Accommodations Business is discussed further in Note3 to the consolidated financial statements.The following summarizes our change in cash and cash equivalents cash flows for the periods presented:Year Ended December 31,(in thousands)201920182017Net cash from operating activities$172,566$37,149$(1,362)Net cash from investing activities(152,582)(1,217,202)(392,650)Net cash from financing activities(26,063)1,180,037396,833Effect of exchange rate changes on cash and cash equivalents166(211)202Net change in cash and cash equivalents$(5,913)$(227)$3,023Comparison of the Years Ended December 31, 2019 and 2018 and December 31, 2018 and 2017Cash Flows from operating activitiesCash provided by operating activities for the year ended December 31, 2019 was $172.6 million as compared to $37.1 million for theyear ended December 31, 2018, an increase of $135.5 million. This increase was primarily due to a $159.1 million increase in net income,adjusted for non-cash items, in 2019 as compared to 2018, as a result of the impact of the ModSpace acquisition on operations, which isreflected in our results for all of 2019, but is only included for four and a half months in 2018. This increase in net income, adjusted for non-cashitems, was partially offset by a decrease of $23.7 million in the net movements of the operating assets and liabilities. The decrease in operatingassets and liabilities was attributable to an increase in trade receivables and an increase in cash interest payments during the year endedDecember 31, 2019, partially offset by an increase in accounts payable and accrued liabilities.Cash provided by operating activities for the year ended December 31, 2018 was $37.1 million as compared to cash used in operatingactivities of $1.4 million for the year ended December 31, 2017, an increase of $38.5 million. This was primarily due to a $30.1 million increaseof net income, adjusted for non-cash items, during 2018 as compared to 2017 due to the impact of the Acton, Tyson, and ModSpaceacquisitions on revenue and gross profit. An $8.5 million increase in the net movements of the operating assets and liabilities also contributedto the overall increase in cash provided by operating activities. This increase was driven by lower interest payments in 2018 compared to 2017,offset partially by higher use of cash51to pay down accounts payable and accrued liabilities, both associated with transaction expenses incurred for the Business Combination as wellas normal operating liabilities.Cash flows from investing activitiesCash used in investing activities for the year ended December 31, 2019 was $152.6 million as compared to $1,217.2 million for theyear ended December 31, 2018, a decrease of $1,064.6 million. The decrease in cash used in investing activities was driven by a $1,083.1million decrease in cash used for business acquisitions, an $11.3 million increase in proceeds from the sale of rental equipment, and an $18.1million increase in proceeds from the sale of property, plant, and equipment. The decrease in cash used in business acquisitions was due tothe acquisition of ModSpace during the year ended December 31, 2018, with no business acquisitions during the year ended December 31,2019. Proceeds from the sale of rental equipment increased due to increased sales volume as a result of the acquisition of ModSpace.Proceeds from the sale of property, plant and equipment increased primarily as a result of the sale of non-operating branch locations during theyear ended December 31, 2019, as part of the ongoing integration and consolidation process following the acquisition of ModSpace. The overalldecrease in cash used in investing activities for the year ended December 31, 2019 was partially offset by an increase in capital expenditures of$44.2 million in 2019, which was primarily driven by increased refurbishments of existing fleet, following our recent acquisitions, and purchasesof VAPS to drive revenue growth.Cash used in investing activities for the year ended December 31, 2018 was $1,217.2 million as compared to $392.7 million for theyear ended December 31, 2017, an increase of $824.5 million. This increase was principally the result of an increase in cash used of $846.0million for the acquisition of businesses and an increase in cash used of $49.2 million for the purchase of rental equipment. In 2018, weacquired ModSpace and Tyson for combined cash consideration of $1,083.1 million compared to the acquisition of Acton in 2017 for cashconsideration of $237.1 million. We incurred capital expenditures for the purchase of rental equipment of $160.9 million and $111.7 millionduring the years ended December 31, 2018 and 2017, respectively. The increase in capital expenditures was driven primarily by strategicinvestment in refurbishment of existing fleet, purchase of VAPS, and new fleet purchases to maintain and grow units on rent. The increase incash used in investing activities was partially offset by a $67.8 million decrease in cash used in lending activities to affiliates. In 2018, we did notengage in any lending activities as the notes due from affiliates were settled as part of the Business Combination in 2017.Cash flows from financing activitiesCash used in financing activities for the year ended December 31, 2019 was $26.1 million as compared to $1,180.0 million cashprovided by financing activities for the year ended December 31, 2018, an increase of $1,206.1 million cash used. The increase in cash used byfinancing activities is primarily due to a reduction in borrowings, net of repayments of $1,086.0 million, a decrease in receipts from the issuanceof common stock of $146.3 million primarily related to the financing of the ModSpace acquisition and an increase in debt extinguishment costsof $7.1 million. In connection with the ModSpace acquisition, in 2018 we borrowed an aggregate of $1,097.1 million related to the issuance ofthe 2023 Secured Notes and the Unsecured Notes, and through the up-sized ABL Facility. The 2018 stock issuance was used to finance theacquisition of ModSpace. We paid redemption premium costs of $7.1 million in 2019 as a result of the redemption of the Unsecured Notes andthe $30.0 million prepayment on the 2022 Secured Notes. The decrease in cash provided by financing activities was partially offset by adecrease in financing fees payments of $34.0 million due to the significant fees incurred in 2018 as part of the financing activities noted above inconnected with the acquisition of ModSpace.Cash provided by financing activities for the year ended December 31, 2018 was $1,180.0 million as compared to $396.8 million cashprovided by financing activities for the year ended December 31, 2017, an increase of $783.2 million. The increase is primarily driven by a$1,093.2 million increase in borrowings net of repayments and a $123.9 million decrease in net repayments on notes due to affiliates. In orderto finance the cash consideration for the acquisition of ModSpace in the third quarter of 2018, we issued $300.0 million of 2023 Secured Notes,issued $200.0 million of Unsecured Notes, and borrowed an additional $597.1 million on the up-sized ABL Facility, which drove the overallincrease in borrowings, net of repayments. In 2017, in connection with the Business Combination, the obligations under the notes due toaffiliates were settled and there was no activity related to these notes in 2018. The increase in cash provided by financing activities was partiallyoffset by a $424.6 million decrease in cash receipts from the issuance of common stock. We had cash receipts of $147.2 million and $571.8million from the issuance of common stock during the years ended December 31, 2018 and 2017, respectively. The 2018 stock issuance wasused to finance the acquisition of ModSpace and the 2017 stock issuance was made in connection with the Business Combination.52Contractual ObligationsThe following table presents information relating to our contractual obligations and commercial commitments as of December 31,2019:(in thousands)TotalLess than 1 yearBetween 1 to 3YearsBetween 3 and 5yearsMore than 5 yearsLong-term indebtedness,including current portion andinterest(a)(b)$1,965,362$103,505$1,350,802$511,055$-Operating lease liabilities185,84737,64861,67238,61147,916Total$2,151,209$141,153$1,412,474$549,666$47,916(a) Long-term indebtedness includes borrowings and interest under the ABL Facility and the Senior Secured Notes.(b) Includes the obligations under our interest rate swap agreement that effectively convert $400.0 million in aggregate notional amount of variable-rate debt underthe Company’s ABL Facility into fixed-rate debt. The future obligations under the interest rate swaps was calculated using the 1-month LIBOR rate as of December31, 2019.At December 31, 2019, in addition to the above contractual obligations, the Company had $22.6 million of potential long-term taxliabilities, including interest and penalties, related to uncertain tax positions. Because of the high degree of uncertainty regarding the future cashflows associated with these potential long-term tax liabilities, the Company is unable to estimate the years in which settlement will occur withthe respective taxing authorities.Off-Balance Sheet ArrangementsWe have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financialcondition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.Critical Accounting Policies and EstimatesOur discussion and analysis of our financial condition, results of operations, liquidity and capital resources is based on ourconsolidated financial statements, which have been prepared in accordance with GAAP. GAAP requires that we make estimates and judgmentsthat affect the reported amount of assets, liabilities, revenue, expenses and the related disclosure of contingent assets and liabilities. We basethese estimates on historical experience and on various other assumptions that we consider reasonable under the circumstances, andreevaluate our estimates and judgments as appropriate. The actual results experienced by us may differ materially and adversely from ourestimates. We believe that the following critical accounting policies involve a higher degree of judgment or complexity in the preparation offinancial statements:Revenue RecognitionA performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price isallocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.Modular Leasing and Services RevenueThe majority of revenue is generated by rental income subject to the guidance of ASC 840, Leases ("ASC 840") in 2017 and 2018 andASC 842 in 2019. The remaining revenue is generated by performance obligations in contracts with customers for services or sale of unitssubject to the guidance in ASC 605, Revenue ("ASC 605"), in 2017 and 2018 and ASU 2014-09, Revenue from Contracts with Customers (Topic606) ("ASC 606") in 2019.Leasing RevenueIncome from operating leases is recognized on a straight-line basis over the lease term. The Company's lease arrangements typicallyinclude multiple lease and non-lease components. Examples of lease components include, but are not limited to, the lease of modular spaceor portable storage units, and examples of non-lease components include, but are not limited to, the delivery, installation, maintenance, andremoval services commonly provided in a bundled transaction with the lease components. Arrangement consideration is allocated betweenlease 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 anadjusted market approach.When leases and services are billed in advance, recognition of revenue is deferred until services are rendered. If equipment is returnedprior to the contractually obligated period, the excess, if any, between the amount the customer is contractually required to pay over thecumulative amount of revenue recognized to date is recognized as incremental revenue upon return.53Rental equipment is leased primarily under operating leases and, from time to time, under sales-type lease arrangements. Operatinglease minimum contractual terms generally range from 1 month to 60 months and averaged approximately 12 months across the Company'srental fleet for the year ended December 31, 2019. There were no material sales-type lease arrangements as of December 31, 2019.The adoption of ASC 842 at January 1, 2019, did not have a significant impact on the recognition of leasing revenue. Per therequirements of ASC 842 the Company records changes in estimated collectibility, directly against leasing revenue.Services RevenueThe 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; andRemoval 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 standaloneselling prices using the estimated cost plus a margin approach. Revenue from these activities is recognized as the services are performed.Sales RevenueSales revenue is generated by the sale of new and rental units. Revenue from the sale of new and rental units is generally recognizedat a point in time upon the transfer of control to the customer, which occurs when the unit is delivered and installed in accordance with thecontract. Sales transactions constitute a single performance obligation.Other MattersThe Company's non-lease revenues do not include material amounts of variable consideration, other than the variability noted forservices arrangements expected to be performed beyond a twelve month period.The Company's payment terms vary by the type and location of its customer and the product or services offered. The time betweeninvoicing and when payment is due is not significant. While the Company may bill certain customers in advance, its contracts do not contain asignificant financing component based on the short length of time between upfront billings and the performance of contracted services. Forcertain products, services, or customer types, the Company requires payment before the products or services are delivered to the customer.Revenue is recognized net of taxes collected from customers, which are subsequently remitted to governmental authorities.Goodwill and Goodwill ImpairmentFor acquired businesses, the Company records assets acquired and liabilities assumed at their estimated fair values on therespective acquisition dates. Based on these values, the excess purchase price over the fair value of the net assets acquired is recorded asgoodwill. Generally, reporting units are one level below the operating segment (the component level), if discrete financial information is preparedand regularly reviewed by segment management. Goodwill acquired in a business combination is assigned to each of the Company’s reportingunits that are expected to benefit from the combination.The Company performs its annual impairment test of goodwill as of October 1 at the reporting unit level, as well as during any reportingperiod in which events or changes in circumstances that, in management’s judgment, may constitute triggering events under ASC 350-20,Intangibles - Goodwill and Other, Testing Goodwill for Impairment. The Company uses an independent valuation specialist for its annualimpairment tests to assist in the valuation.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 marketcomparables. Management bases fair value estimates on assumptions it believes to be reasonable but that are unpredictable and inherentlyuncertain. Actual future results may differ from these estimates.If the carrying amount of the reporting unit exceeds the calculated fair value of the reporting unit, an impairment charge would berecognized for the excess, not to exceed the amount of goodwill allocated to that reporting unit.Purchase AccountingWe account for acquisitions of businesses under the acquisition method. Under the acquisition method of accounting, we recordassets acquired and liabilities assumed at their estimated fair value on the date of acquisition. Goodwill is measured as the excess of the fairvalue of the consideration transferred over the fair value of the identifiable net assets. Estimated fair values of acquired assets and liabilities areprovisional and could change as additional information is received. Valuations are finalized as soon as practicable, but not later than one yearfrom the acquisition date. Any subsequent changes to purchase price allocations result in a corresponding adjustment to goodwill.54Rental EquipmentRental equipment is comprised of modular space and portable storage units held for rent or on rent to customers and VAPS which arein 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 betterments to rentalequipment are capitalized when such costs extend the useful life of the equipment or increase the rental value of the unit. Costs incurred forequipment to meet a particular customer specification are capitalized and depreciated over the lease term taking in consideration the residualvalue of the asset. Maintenance and repair costs are expensed as incurred.Depreciation is generally computed using the straight-line method over estimated useful lives, as follows:Estimated Useful LifeResidual ValueModular space and portable storage units10 - 20 years20 - 50%VAPS and other related rental equipment2 - 8 years0%Trade Receivables and Allowance for Doubtful AccountsTrade receivables primarily consist of amounts due from customers from the lease or sale of rental equipment and their delivery andinstallation. Trade accounts receivable are recorded net of an allowance for doubtful accounts. The allowance for doubtful accounts is basedupon the amount of losses expected to be incurred in the collection of these accounts. These estimated losses are calculated using the lossrate method based upon a review of outstanding receivables, related aging, including specific accounts if deemed necessary and on historicalcollection experience. In accordance with the adoption of ASC 842, effective January 1, 2019, specifically identifiable operating lease receivablesnot deemed probable of collection are recorded as a reduction of revenue. The remaining provision for doubtful accounts is recorded as selling,general and administrative expenses. For the years ended December 31, 2018 and 2017, the entire provision for doubtful accounts is recordedas a selling, general and administrative expense. The Company reviews the adequacy of the allowance on a quarterly basis.Income TaxesThe Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assetsand 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 andliabilities 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 ondeferred 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. Inmaking such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred taxliabilities, projected future taxable income, tax planning strategies and recent results of operations. Valuation allowances are recorded to reducethe 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 believesrealization of any deferred tax assets is not likely, the Company establishes a valuation allowance. When a valuation allowance is established orthere is an increase in an allowance in a reporting period, tax expense is generally recorded in the Company’s consolidated statement ofoperations. Conversely, to the extent circumstances indicate that a valuation allowance is no longer necessary, that portion of the valuationallowance 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 unlesssuch earnings are permanently reinvested, or will only be repatriated when possible to do so at minimal additional tax cost. Current income taxrelating 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 benefitrecognition model with a two-step approach; a more-likely-than-not recognition criterion; and a measurement approach that measures theposition 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 totiming of when an item is included on a tax return are considered to have met the recognition threshold. The Company classifies interest on taxdeficiencies and income tax penalties within income tax expense.55ITEM 7A. Quantitative and Qualitative Disclosures about MarketRiskWe are exposed to certain market risks from changes in foreign currency exchange rates and interest rates. Changes in these factorscause fluctuations in our earnings and cash flows. We evaluate and manage exposure to these market risks as follows:Interest Rate RiskWe are primarily exposed to interest rate risk through our ABL Facility, which bears interest at variable rates based on LIBOR. We had$903.0 million in outstanding principal under the ABL Facility at December 31, 2019.In order to manage this risk, on November 6, 2018, WSII entered into an interest rate swap agreement that effectively converts $400.0million in aggregate notional amount of variable-rate debt under our ABL Facility into fixed-rate debt. The swap agreement will terminate on May29, 2022, at the same time our ABL Facility matures. The swap agreement provides for WillScot to pay a fixed rate of 3.06% per annum on theoutstanding debt in exchange for receiving a variable interest rate based on 1-month LIBOR. The effect is a synthetic rate of 5.56%-5.81% on the$400.0 million notional amount, when including the current applicable margin.An increase in interest rates by 100 basis points on our ABL Facility, inclusive of the impact of our interest rate swaps, would increaseannual interest expense by approximately $4.1 million.Foreign Currency RiskWe currently generate the majority of our consolidated net revenues in the US, and the reporting currency for our consolidated financialstatements is the US dollar. As our net revenues and expenses generated outside of the US increase, our results of operations could beadversely impacted by changes in foreign currency exchange rates. Since we recognize foreign revenues in local foreign currencies, if the USdollar strengthens, it could have a negative impact on our foreign revenues upon translation of those results into the US dollar for consolidationinto our financial statements.In addition, we are exposed to gains and losses resulting from fluctuations in foreign currency exchange rates on transactionsgenerated by our foreign subsidiaries in currencies other than their local currencies. These gains and losses are primarily driven byintercompany transactions and rental equipment purchases denominated in currencies other than the functional currency of the purchasingentity. These exposures are included in currency (gains) losses, net, on the consolidated statements of operations.To date, we have not entered into any hedging arrangements with respect to foreign currency risk.SeasonalityAlthough demand from certain of our customers is seasonal, our operations as a whole are not impacted in any material respect byseasonality.Impact of InflationInflationary factors such as increases in the cost of our product and overhead costs may adversely affect our operating results. We donot believe that inflation has had a material effect on our results of operations.568. Financial Statements and SupplementaryDataReport of Independent Registered Public Accounting FirmTo the Shareholders and the Board of Directors of WillScot CorporationOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of WillScot Corporation (the Company) as of December 31, 2019 and 2018,the related consolidated statements of operations, comprehensive loss, changes in equity and cash flows for each of the three years in theperiod ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, theconsolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018,and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S.generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), theCompany's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March2, 2020 expressed an unqualified opinion thereon.Adoption of New Accounting StandardAs discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’sfinancial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent withrespect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities andExchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our auditsincluded performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts anddisclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basisfor our opinion.Critical Audit MattersThe critical audit matters communicated below are matters arising from the current period audit of the financial statements that werecommunicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to thefinancial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit mattersdoes not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the criticalaudit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.57Valuation of Canadian Reporting Unit GoodwillDescription of the MatterAt December 31, 2019, the Company’s goodwill balance was $235.2 million, including $31.2million related to the Canadian reporting unit. As discussed in Note 1 to the consolidatedfinancial statements, goodwill is quantitatively tested for impairment at least annually as ofOctober 1. When determining the fair value of the reporting units under the impairment test,management uses the assistance of an independent valuation specialist. Auditing management’s annual goodwill impairment test for the Canadian reporting unit washighly judgmental due to the significant estimation required in determining the fair value of thereporting unit. In particular, management’s conclusion that the fair value of the reporting unitexceeded its carry value was sensitive to changes in significant assumptions, such as thediscount rate, revenue growth rates, and forecasted operating margins, which are affected byexpectations about future economic and market conditions.How We Addressed the Matter in OurAuditWe obtained an understanding, evaluated the design and tested the operating effectiveness ofcontrols over the Company’s goodwill impairment review process, including controls overmanagement’s review of the significant assumptions described above.To test the estimated fair value of the Company’s Canadian reporting unit, we performed auditprocedures with the assistance of our valuation specialists that included, among others,assessing the fair value methodology and testing the significant assumptions discussed aboveand the completeness and accuracy of the underlying data used by the Company in its analyses.We compared the significant assumptions used by management to current industry andeconomic trends and considered changes in the Company’s business model and the marketsin which they operate. We independently determined assumptions for the discount rate andcompared these to the rate selected by management. We also compared the implied marketmultiples from management’s income approach to guideline public company multiples. Weassessed the historical accuracy of management’s ability to estimate its future operating resultsand performed sensitivity analyses of significant assumptions to evaluate whether changes inthe fair value of the reporting unit would result from changes in the assumptions and affectmanagement’s conclusions about whether goodwill was impaired.In addition, we reviewed the reconciliation of the aggregate fair value of the reporting units to themarket capitalization of the Company as of the annual impairment date of October 1, 2019.58Valuation Allowance for Deferred Tax AssetsDescription of the MatterAs discussed in Note 14 to the consolidated financial statements, at December 31, 2019 theCompany had deferred tax assets on deductible temporary differences and tax losscarryforwards of $366.1 million (net of a $80.2 million valuation allowance). Deferred tax assetsare reduced by a valuation allowance if, based upon the weight of all available evidence, it ismore likely than not that some portion, or all, of the deferred tax assets will not be realized.Auditing management’s assessment of the realizability of its deferred tax assets involvedcomplex auditor judgment because of the complex interplay between financial accounting forincome taxes and the application and interpretations of relevant tax law. In particular, theapplication of the tax law regarding the ordering of the consumption of tax attributes is complexand includes consideration of the chronology as to when such attributes arose, any limitationsimposed on annual usage and uncertain tax positions.How We Addressed the Matter in OurAuditWe obtained an understanding, evaluated the design and tested the operating effectiveness ofcontrols over the Company’s deferred tax asset realizability and valuation allowance process.For example, we tested controls over management’s review of the scheduling of future taxableincome expected to be generated from the reversal of existing taxable temporary differences andthe evaluation that such reversals are more likely than not expected to result in the realization ofexisting deferred tax assets.We evaluated the changes in the Company’s valuation allowance for deferred tax assets. Ouraudit procedures included, among others, testing the measurement of the tax attributes, and thescheduling of future taxable income expected to be generated from the reversal of existingtaxable temporary differences. Our audit procedures also included evaluating, with theassistance of our income tax professionals, the appropriateness of utilizing such taxable incomeas a source of future taxable income to support the realization of the Company’s deferred taxassets based on applicable tax laws./s/ Ernst & Young LLPWe have served as the Company’s auditor since 2017.Baltimore, MarylandMarch 2, 202059WillScot CorporationConsolidated Balance Sheets(in thousands, except share data)December 31,20192018AssetsCash and cash equivalents$3,045$8,958Trade receivables, net of allowances for doubtful accounts at December 31, 2019 and December 31,2018 of $15,828 and $9,340, respectively247,596206,502Inventories15,38716,218Prepaid expenses and other current assets14,62121,828Assets held for sale11,9392,841Total current assets292,588256,347Rental equipment, net1,944,4361,929,290Property, plant and equipment, net147,689183,750Operating lease assets146,698-Goodwill235,177247,017Intangible assets, net126,625131,801Other non-current assets4,4364,280Total long-term assets2,605,0612,496,138Total assets$2,897,649$2,752,485Liabilities and equityAccounts payable$109,926$90,353Accrued liabilities82,35584,696Accrued interest16,02020,237Deferred revenue and customer deposits82,97871,778Operating lease liabilities - current29,133-Current portion of long-term debt-1,959Total current liabilities320,412269,023Long-term debt1,632,5891,674,540Deferred tax liabilities70,69367,384Deferred revenue and customer deposits12,3427,723Operating lease liabilities - non-current118,429-Other non-current liabilities34,22931,618Long-term liabilities1,868,2821,781,265Total liabilities2,188,6942,050,288Commitments and contingencies (see Note 19)Class A common stock: $0.0001 par, 400,000,000 shares authorized at December 31, 2019 andDecember 31, 2018; 108,818,854 and 108,508,997 shares issued and outstanding at December 31,2019 and December 31, 2018, respectively1111Class B common stock: $0.0001 par, 100,000,000 shares authorized at December 31, 2019 andDecember 31, 2018; 8,024,419 shares issued and outstanding at December 31, 2019 andDecember 31, 201811Additional paid-in-capital2,396,5012,389,548Accumulated other comprehensive loss(62,775)(68,026)Accumulated deficit(1,689,373)(1,683,319)Total shareholders' equity644,365638,215Non-controlling interest64,59063,982Total equity708,955702,197Total liabilities and equity$2,897,649$2,752,485See the accompanying notes which are an integral part of these consolidated financial statements.60WillScot CorporationConsolidated Statements of Operations(in thousands, except share and per share data)Years Ended December 31,201920182017Revenues:Leasing and services revenue:Modular leasing$744,185$518,235$297,821Modular delivery and installation220,057154,55789,850Sales revenue:New units59,08553,60336,371Rental units40,33825,01721,900Total revenues1,063,665751,412445,942Costs:Costs of leasing and services:Modular leasing213,151143,12083,588Modular delivery and installation194,107143,95085,477Costs of sales:New units42,16036,86326,025Rental units26,25516,65912,643Depreciation of rental equipment174,679121,43672,639Gross profit413,313289,384165,570Expenses:Selling, general and administrative271,004254,871162,351Other depreciation and amortization12,39513,3048,653Impairment losses on goodwill--60,743Impairment losses on long-lived assets2,8481,600-Lease impairment expense and other related charges8,674--Restructuring costs3,75515,4682,196Currency (gains) losses, net(688)2,454(12,878)Other (income) expense, net(2,200)(4,574)2,827Operating income (loss)117,5256,261(58,322)Interest expense122,50498,433119,308Interest income--(12,232)Loss on extinguishment of debt8,755--Loss from continuing operations before income tax(13,734)(92,172)(165,398)Income tax benefit(2,191)(38,600)(936)Loss from continuing operations(11,543)(53,572)(164,462)Income from discontinued operations, net of tax--14,650Net loss(11,543)(53,572)(149,812)Net loss attributable to non-controlling interest, net of tax(421)(4,532)(2,110)Net loss attributable to WillScot(11,122)(49,040)(147,702)Non-cash deemed dividend related to warrant exchange-(2,135)-Net loss attributable to WillScot common shareholders$(11,122)$(51,175)$(147,702)(Loss) income per share attributable to WillScot common shareholders -basic and dilutedNet loss per share attributable to WillScot common shareholders$(0.10)$(0.59)$(8.21)Income per share attributable to discontinued operations$0.00$0.00$0.74Net loss per share attributable to WillScot common shareholders$(0.10)$(0.59)$(7.47)Weighted average shares: basic & diluted108,683,82087,209,60519,760,189See the accompanying notes which are an integral part of these consolidated financial statements.61WillScot CorporationConsolidated Statements of Comprehensive Loss(in thousands)Year Ended December 31,201920182017Net loss$(11,543)$(53,572)$(149,812)Other comprehensive (loss) income:Foreign currency translation adjustment, net of income tax expense(benefit) of $0, $(161) and $1,153 for the years ended December 31,2019, 2018 and 2017, respectively10,586(11,639)6,768Net loss on derivatives, net of income tax benefit of $(1,471), $(1,822) and$0 for the years ended December 31, 2019, 2018 and 2017, respectively(4,809)(5,955)-Comprehensive loss(5,766)(71,166)(143,044)Comprehensive income (loss) attributable to non-controlling interest105(6,137)(2,118)Total comprehensive loss attributable to WillScot$(5,871)$(65,029)$(140,926)See the accompanying notes which are an integral part of these consolidated financial statements.62WillScot CorporationConsolidated Statements of Changes in Equity(in thousands)Class A CommonStockClass B CommonStockSharesAmountSharesAmountAdditionalPaid-inCapitalAccumulatedOtherComprehensiveLossAccumulatedDeficitTotalShareholders'EquityNon-ControllingInterestTotal EquityBalance at December 31, 201614,546$1-$-$1,569,175$(56,928)$(1,489,117)$23,131$-$23,131Net loss------(147,702)(147,702)(2,110)(149,812)Other comprehensive income (loss)-----6,768-6,768(8)6,760Capital contribution----6,192--6,192-6,192Stock-based compensation----2,970--2,970-2,970Recapitalization transaction70,09978,0241543,589663-544,26051,049595,309Balance at December 31, 201784,64588,02412,121,926(49,497)(1,636,819)435,61948,931484,550Net loss------(49,040)(49,040)(4,532)(53,572)Other comprehensive loss-----(15,989)-(15,989)(1,605)(17,594)Adoption of ASU 2018-02-----(2,540)2,540---Stock-based compensation----3,439--3,439-3,439Issuance of common stock andcontribution of proceeds to WSII9,2001--131,460--131,4617,574139,035Acquisition of ModSpace and therelated financing transactions includingstock and warrants6,4581--134,493--134,49413,614148,108Common stock issued in warrantexchange8,2061-(1,770)--(1,769)-(1,769)Balance at December 31, 2018108,509118,02412,389,548(68,026)(1,683,319)638,21563,982702,197Net loss------(11,122)(11,122)(421)(11,543)Other comprehensive income-----5,251-5,2515265,777Adoption of ASC 606------345345-345Adoption of ASC 842------4,7234,7235035,226Issuance of common stock from theexercise of options and warrants81---921--921-921Stock-based compensation andissuance of common stock fromvesting229---6,032--6,032-6,032Balance at December 31, 2019108,819$118,024$1$2,396,501$(62,775)$(1,689,373)$644,365$64,590$708,955See the accompanying notes which are an integral part of these consolidated financial statements.63WillScot CorporationConsolidated Statements of Cash Flows(in thousands)Years Ended December 31,201920182017Operating activities:Net loss$(11,543)$(53,572)$(149,812)Adjustments to reconcile net loss to net cash provided by operatingactivities:Depreciation and amortization189,436136,467107,876Provision for doubtful accounts14,4967,6565,062Impairment losses on goodwill and intangibles--60,743Impairment losses on long-lived assets2,8481,600-Impairment on right of use assets4,160--Gain on sale of rental equipment and other property, plant and equipment(11,660)(12,878)(9,310)Interest receivable capitalized into notes due from affiliates--(3,915)Amortization of debt discounts and debt issuance costs11,4507,65221,887Loss on extinguishment of debt8,755--Stock-based compensation expense6,6863,4392,970Deferred income tax benefit(2,624)(40,192)12,959Unrealized currency (gains) losses(745)1,982(26,342)Changes in operating assets and liabilities, net of effect of businessesacquired:Trade receivables(63,648)(36,452)(20,563)Inventories869(1,241)682Prepaid and other assets8,2378,416(11,925)Operating lease assets and liabilities(438)--Accrued interest receivable--(7,725)Accrued interest(4,217)17,526(20,631)Accounts payable and other accrued liabilities4,865(14,462)39,771Deferred revenue and customer deposits15,63911,208(3,089)Net cash provided by operating activities172,56637,149(1,362)Investing activities:Acquisition of businesses-(1,083,146)(237,148)Proceeds from sale of rental equipment42,10130,76128,041Purchase of rental equipment and refurbishments(205,106)(160,883)(111,701)Lending on notes due from affiliates--(69,939)Repayments on notes due from affiliates--2,151Proceeds from the sale of property, plant and equipment18,763688392Purchase of property, plant and equipment(8,340)(4,622)(4,446)Net cash used in investing activities(152,582)(1,217,202)(392,650)Financing activities:Receipts from issuance of common stock921147,201571,778Receipts from borrowings552,2301,212,6291,155,651Receipts on borrowings from notes due to affiliates--75,000Payment of financing costs(2,623)(36,579)(31,316)Repayment of borrowings(568,686)(143,094)(1,179,340)Repayment of notes due to affiliates--(198,896)64Principal payments on capital lease obligations(99)(120)(2,236)Contribution from Algeco Group--6,192Withholding taxes paid on behalf of employees on net settled stock-basedawards(654)--Payment of debt extinguishment premium costs(7,152)--Net cash (used in) provided by financing activities(26,063)1,180,037396,833Effect of exchange rate changes on cash and cash equivalents166(211)202Net change in cash and cash equivalents(5,913)(227)3,023Cash and cash equivalents at the beginning of the period8,9589,1856,162Cash and cash equivalents at the end of the period$3,045$8,958$9,185Supplemental cash flow information:Interest paid$115,582$51,986$115,756Income taxes paid (refunded), net$(1,148)$2,617$(1,389)Capital expenditures accrued or payable$23,946$20,785$11,919Non-cash settlements of notes due to/from affiliates and accrued interest$-$-$216,278Non-cash deemed dividend related to warrant exchange$-$2,135$-Non-cash acquisition of a business$-$148,108$-See the accompanying notes which are an integral part of these consolidated financial statements.65WillScot CorporationNotes to the Consolidated Financial StatementsNOTE 1 - Summary of Significant Accounting PoliciesOrganization and Nature of OperationsWillScot Corporation (“WillScot” and, together with its subsidiaries, the “Company”), is a leading provider of modular space andportable storage solutions in the United States (“US”), Canada and Mexico. The Company leases, sells, delivers and installs mobile offices,modular buildings and storage products through an integrated network of branch locations that spans North America.WillScot, whose Class A common shares are listed on the Nasdaq Capital Market (Nasdaq: WSC), serves as the holding company forthe Williams Scotsman family of companies. All of WillScot's assets and operations are owned through Williams Scotsman Holdings Corp.(“WS Holdings”). WillScot operates and owns 91.0% of WS Holdings, and Sapphire Holding S.a r.l (“Sapphire”), an affiliate of TDR Capital LLR(“TDR Capital”), owns the remaining 9.0%.WillScot was incorporated as a Cayman Islands exempt company, under the name Double Eagle Acquisition Corporation (“DoubleEagle”), on June 26, 2015. Prior to November 29, 2017, Double Eagle was a Nasdaq-listed special purpose acquisition company formed for thepurpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination. OnNovember 29, 2017, Double Eagle indirectly acquired Williams Scotsman International, Inc. (“WSII”) from Algeco Scotsman S.a r.l., (together withits subsidiaries, the “Algeco Group”), which is majority owned by an investment fund managed by TDR Capital. As part of the transaction (the“Business Combination”), Double Eagle domesticated to Delaware and changed its name to WillScot Corporation.Basis of PresentationThe consolidated financial statements were prepared in conformity with accounting principles generally accepted in the US (“GAAP”).Principles of ConsolidationThe consolidated financial statements comprise the financial statements of WillScot and its subsidiaries that it controls due toownership of a majority voting interest. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Companyobtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries areprepared for the same reporting period as WillScot. All intercompany balances and transactions are eliminated.The Business Combination was accounted for as a reverse recapitalization in accordance with Accounting Standard Codification(“ASC”) 805, Business Combinations. Although WillScot was the indirect acquirer of WSII for legal purposes, WSII was considered the acquirerfor accounting and financial reporting purposes. As a result of WSII being the accounting acquirer, the financial reports filed with the USSecurities and Exchange Commission (the "SEC") by the Company subsequent to the Business Combination are prepared “as if” WSII is thepredecessor and legal successor to the Company. The historical operations of WSII are deemed to be those of the Company. Thus, the financialstatements included in this report reflect (i) the historical operating results of WSII prior to the Business Combination; (ii) the combined resultsof the Company and WSII following the Business Combination on November 29, 2017; (iii) the assets and liabilities of WSII at their historicalcost; and (iv) WillScot’s equity structure for all periods presented. The recapitalization of the number of shares of common stock attributable tothe purchase of WSII in connection with the Business Combination is reflected retroactively to January 1, 2017 and will be utilized for calculatingearnings per share in all prior periods presented. No step-up basis of intangible assets or goodwill was recorded in the Business Combinationtransaction consistent with the treatment of the transaction as a reverse capitalization of WSII.As described in further detail in Notes 2 and 3, WSII’s remote accommodations business (the “Remote Accommodations Business”)was transferred to other Algeco Group members on November 28, 2017 in a transaction under common control and was not included as part ofthe Business Combination. The operating results of the Remote Accommodations Business, net of tax, have been reported as discontinuedoperations in the consolidated financial statements. Amounts previously reported have been reclassified to conform to this presentation inaccordance with ASC 205, Presentation of Financial Statements, to allow for meaningful comparison of continuing operations.Accounting EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affectthe amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.Cash and Cash EquivalentsThe Company considers all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents.66Trade Receivables and Allowance for Doubtful AccountsTrade receivables primarily consist of amounts due from customers from the lease or sale of rental equipment and their delivery andinstallation. Trade accounts receivable are recorded net of an allowance for doubtful accounts. The allowance for doubtful accounts is basedupon the amount of losses expected to be incurred in the collection of these accounts. These estimated losses are calculated using the lossrate method based upon a review of outstanding receivables, related aging, including specific accounts if deemed necessary and on historicalcollection experience. In accordance with the adoption of ASC 842, effective January 1, 2019, specifically identifiable operating lease receivablesnot deemed probable of collection are recorded as a reduction of revenue. The remaining provision for doubtful accounts is recorded as selling,general and administrative expenses. For the years ended December 31, 2018 and 2017, the entire provision for doubtful accounts is recordedas a selling, general and administrative expense. The Company reviews the adequacy of the allowance on a quarterly basis.Activity in the allowance for doubtful accounts for the years ended December 31 was as follows:(in thousands)201920182017Balance at beginning of year$9,340$4,845$4,167Provision for doubtful accounts(a)14,4967,6564,715Write-offs(7,945)(3,089)(3,984)Foreign currency translation and other(63)(72)(53)Balance at end of period$15,828$9,340$4,845(a) For the year ended December 31, 2019, the provision for doubtful accounts includes $10.0 million recorded as a reduction to revenue for the provision ofspecific receivables whose collection is not considered probable.Concentration of Credit RiskThe Company’s trade accounts receivable subject the Company to potential concentrations of credit risk. The Company performs on-going credit evaluations of its customers. Receivables related to sales are generally secured by the product sold to the customer. The Companygenerally has the right to repossess its rental units in the event of non-payment of receivables relating to the Company’s leasing operations.The Company’s large number of customers in diverse geographic areas and end markets mitigates the concentration of credit risk. No singlecustomer accounted for more than 1.5% and 1.2% of the Company’s receivables at December 31, 2019 and 2018, respectively. The Company’stop five customers accounted for 4.1% and 3.6% of the receivables at December 31, 2019 and 2018, respectively.InventoriesInventories consist of raw materials, parts and supplies, and work in process inventories. Inventories are measured at the lower of costor net realizable value based on the weighted-average cost. The cost includes expenditures incurred in acquiring the inventories, production orconversion costs and other costs incurred in bringing them to their existing location and condition.Rental EquipmentRental equipment is comprised of modular space and portable storage units held for rent or on rent to customers and value-addedproducts and services (“VAPS”) which are in use or available to be used by customers. Rental equipment is measured at cost less accumulateddepreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Costs ofimprovements and betterments to rental equipment are capitalized when such costs extend the useful life of the equipment or increase therental value of the unit. Costs incurred for equipment to meet a particular customer specification are capitalized and depreciated over the leaseterm taking in consideration the residual value of the asset. Maintenance and repair costs are expensed as incurred.Depreciation is generally computed using the straight-line method over estimated useful lives, as follows:Estimated UsefulLifeResidual ValueModular space and portable storage units10 - 20 years20 - 50%VAPS and other related rental equipment2 - 8 years-Property, Plant and EquipmentProperty, plant and equipment is stated at cost, net of accumulated depreciation and impairment losses. Assets leased under capitalleases are depreciated over the shorter of the lease term or their useful life, unless it is reasonably certain that the Company will obtainownership by the end of the lease term. Land is not depreciated. Maintenance and repair costs are expensed as incurred.67Depreciation is generally computed using the straight-line method over estimated useful lives as follows:TypeEstimated Useful LifeBuildings and leasehold improvements10 - 40 yearsMachinery and equipment3 - 10 yearsFurniture and fixtures7 - 10 yearsSoftware3 - 5 yearsLand improvements for owned properties are amortized over 15 years, and are amortized over the lease term for our leased properties.Held for SaleProperty, plant and equipment to be sold is classified as held for sale in the period in which: (i) the Company has approved andcommitted to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate abuyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being activelymarketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will bemade or that the plan will be withdrawn.Assets held for sale are initially measured at the lower of the carrying value or the fair value less cost to sell. Losses resulting from thismeasurement are recognized in the period in which the held for sale criteria are met while gains are not recognized until the date of sale. Oncedesignated as held for sale, the Company stops recording depreciation expense on the asset. The Company assesses the fair value less costto sell of long-lived assets held for sale at each reporting period until it no longer meets this classification.Impairment of Long Lived AssetsWhen circumstances indicate the carrying amount of long-lived assets in a held-for-use asset group may not be recoverable, theCompany evaluates the assets for potential impairment using internal projections of undiscounted cash flows resulting from the use andeventual disposal of the assets. Events or changes in circumstances that may necessitate a recoverability evaluation include, but are not limitedto, adverse changes in the regulatory environment or an expectation it is more likely than not that the asset will be disposed of before the end ofits previously estimated useful life. If the carrying amount of the assets exceeds the undiscounted cash flows, an impairment expense isrecognized for the amount by which the carrying amount of the asset group exceeds its fair value (subject to the carrying amount not beingreduced below fair value for any individual long-lived asset that is determinable without undue cost and effort).Consistent with the provisions of ASU 2016-02, Leases (Topic 842) ("ASC 842"), the Company assesses whether any operating leaseassets impairment exists in accordance with the measurement guidance in ASC 360, Property Plant and Equipment.Goodwill and Goodwill ImpairmentFor acquired businesses, the Company records assets acquired and liabilities assumed at their estimated fair values on therespective acquisition dates. Based on these values, the excess purchase price over the fair value of the net assets acquired is recorded asgoodwill. Generally, reporting units are one level below the operating segment (the component level), if discrete financial information is preparedand regularly reviewed by segment management. Goodwill acquired in a business combination is assigned to each of the Company’s reportingunits that are expected to benefit from the combination.The Company performs its annual impairment test of goodwill as of October 1 at the reporting unit level, as well as during any reportingperiod in which events or changes in circumstances that, in management’s judgment, may constitute triggering events under ASC 350-20,Intangibles - Goodwill and Other, Testing Goodwill for Impairment. The Company uses an independent valuation specialist for its annualimpairment tests to assist in the valuation.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 marketcomparables. Management bases fair value estimates on assumptions it believes to be reasonable but that are unpredictable and inherentlyuncertain. Actual future results may differ from these estimates.If the carrying amount of the reporting unit exceeds the calculated fair value of the reporting unit, an impairment charge would berecognized for the excess, not to exceed the amount of goodwill allocated to that reporting unit.Intangible Assets Other than GoodwillIntangible assets that are acquired by the Company and determined to have an indefinite useful life are not amortized, but are tested forimpairment at least annually. The Company’s indefinite-lived intangible asset consists of the Williams Scotsman trade name. The Companycalculates fair value using a relief-from-royalty method. This method is used to estimate the cost savings that accrue to the owner of anintangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. If the carryingamount of the indefinite-lived intangible asset exceeds its68fair value, an impairment charge would be recorded to the extent the recorded indefinite-lived intangible asset exceeds the fair value.Other intangible assets that have finite useful lives are measured at cost less accumulated amortization and impairment losses, if any.Amortization is recognized in profit or loss over the estimated useful lives of the intangible asset.Purchase AccountingThe Company accounts for acquisitions of businesses under the acquisition method. Under the acquisition method of accounting, theCompany records assets acquired and liabilities assumed at their estimated fair value on the date of acquisition. Goodwill is measured as theexcess of the fair value of the consideration transferred over the fair value of the identifiable net assets. Estimated fair values of acquired assetsand liabilities are provisional and could change as additional information is received. Valuations are finalized as soon as practicable, but notlater than one year from the acquisition date. Any subsequent changes to purchase price allocations result in a corresponding adjustment togoodwill.Debt Issuance Costs, Debt Discounts and Debt PremiumsDebt issuance costs and debt discounts, net of debt premiums, are recorded as direct deductions to the corresponding debt in long-term debt on the consolidated balance sheets. If no amounts are outstanding under the Company’s ABL credit agreement (the “ABL Facility”) asof a period end, the related debt issuance costs are recorded in other non-current assets in the consolidated balance sheets. Debt issuancecosts and debt discounts, net of premiums, are deferred and amortized to interest expense over the term of the respective debt using theeffective interest method or straight-line interest method as appropriate.Retirement Benefit ObligationThe Company provides benefits to certain of its employees under defined contribution benefit plans. The Company’s contributions tothese plans are generally based on a percentage of employee compensation or employee contributions. These plans are funded on a currentbasis. For its US and Canada employees, the Company sponsors defined contribution benefit plans that have discretionary matchingcontribution and profit-sharing features. For the years ended December 31, 2019, 2018 and 2017, the Company made matching contributions of$5.4 million, $3.8 million and $2.7 million to these plans, respectively. In 2017, the employer contribution match on the US plan increased from amaximum of 2.5% to 4.5% of an employee’s base salary. The Company did not contribute under the profit-sharing feature during 2019, 2018and 2017.Stock-Based CompensationFor periods prior to the Business Combination, WSII maintained certain share-based payment plans as part of the Algeco Group. Theterms of those plans resulted in the awards being treated as liability plans. When the liability was dependent on a performance conditionoutside of WSII’s control, no accrual was made unless the performance condition was probable. The cost of awards under these plans wasmeasured initially at fair value at the grant date, which was the date at which WSII and the participants had a shared understanding of the termsand conditions of the arrangement. The fair value of awards for which the performance obligation was probable was expensed over theapplicable service period with recognition of a corresponding liability. The liability was remeasured to fair value at each reporting date withchanges in fair value attributed to vested awards recognized as expense in the period.On November 16, 2017, the Company’s shareholders approved a new long-term incentive award plan (the “Plan”). The Plan isadministered by the Compensation Committee of WillScot's Board of Directors. Under the Plan, the Committee may grant an aggregate of4,000,000 shares of Class A common stock in the form of non-qualified stock options, incentive stock options, stock appreciation rights,restricted stock awards ("RSAs"), restricted stock units, and performance compensation awards and stock bonus awards. Stock-basedpayments including the grant of stock options, restricted stock units, and RSAs are subject to service-based vesting requirements, and expenseis recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur.Stock-based compensation expense includes grants of stock options, time-based restricted stock units ("Time-Based RSUs"), andmarket-based restricted stock units ("Market-Based RSUs", and together with the Time-Based RSUs, the "RSUs"), which are recognized in thefinancial statements based on their fair value, and stock-based payments to non-executive directors include grants of RSAs. Time-Based RSUsand RSAs are valued based on the intrinsic value of the difference between the exercise price, if any, of the award and the fair market value ofWillScot's common stock on the grant date. Market-Based RSUs were valued based on a Monte Carlo simulation model to reflect the impact ofthe Market-Based RSU market condition. The probability of satisfying a market condition is considered in the estimation of the grant-date fairvalue for Market-Based RSUs and the compensation cost is not reversed if the market condition is not achieved, provided the requisite servicehas been provided.RSAs cliff vest in a one-year period. Time-Based RSUs vest ratably over a four-year period. Market-Based RSUs vest based onachievement of the relative total stockholder return ("TSR") of the Company's common stock as compared to the TSR of the constituents of theRussell 3000 Index at grant date over the three-year period performance period. The target number of Market-Based RSUs may be adjustedfrom 0% to 150% based on the TSR attainment levels defined by the Compensation Committee. The 100% target payout is tied to performanceat the 50% percentile, with a payout curve ranging from 0% (for performance less than the 25% percentile) to 150% (for performance at or abovethe 75% percentile). Vesting is69also subject to continued service requirements through the vesting date. Each Market-Based RSU represents a contingent right to receive oneshare upon vesting of the Company’s Class A common stock, or its cash equivalent.Stock options vest in tranches over a period of four years and expire ten years from the grant date. The fair value of each stock optionaward on the grant date is estimated using the Black-Scholes option-pricing model with the following assumptions: expected dividend yield,expected stock price volatility, weighted-average risk-free interest rate and weighted-average expected term of the options. The volatilityassumption used in the Black-Scholes option-pricing model is based on peer group volatility as the Company does not have a sufficient tradinghistory as a stand-alone public company. Additionally, due to an insufficient history with respect to stock option activity and post-vestingcancellations, the expected term assumption is based on the simplified method under GAAP, which is based on the vesting period andcontractual term for each tranche of awards. The mid-point between the weighted-average vesting term and the expiration date is used as theexpected term under this method. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yieldcurve at the date of grant with a remaining term equal to the Company’s expected term assumption. WillScot has never declared or paid a cashdividend on common shares.Foreign Currency Translation and TransactionsThe Company’s reporting currency is the US Dollar (“USD”). Exchange rate adjustments resulting from foreign currency transactionsare recognized in profit or loss, whereas effects resulting from the translation of financial statements are reflected as a component ofaccumulated other comprehensive loss, which is a component of shareholders’ equity.The assets and liabilities of subsidiaries whose functional currency is different from the USD are translated into USD at exchange ratesat the reporting date and income and expenses are translated using average exchange rates for the respective period.Exchange rate adjustments resulting from transactions in foreign currencies (currencies other than the Company entities’ functionalcurrencies) are remeasured to the respective functional currencies using exchange rates at the dates of the transactions and are recognized incurrency (gains) losses on the consolidated statements of operations.Foreign exchange gains and losses arising from a receivable or payable to a consolidated Company entity, the settlement of which isneither planned nor anticipated in the foreseeable future, are considered to form part of a net investment in the Company entity and are includedwithin accumulated other comprehensive loss.Derivative Instruments and Hedging ActivitiesThe Company utilizes derivative financial instruments, specifically interest rate swaps, to manage its exposure to fluctuations in interestrates on variable rate debt. The Company does not use derivatives for trading or speculative purposes.The Company records derivatives on the balance sheet at fair value within prepaid and other current assets and other assets (if in anunrealized gain position) or within accrued liabilities and other non-current liabilities (if in an unrealized loss position). If a derivative isdesignated as a cash flow hedge and meets the highly effective threshold, the changes in the fair value of derivatives are recorded inaccumulated other comprehensive income (loss). Amounts reported in accumulated other comprehensive income (loss) related to the cashflow hedges are reclassified to earnings within interest expense when the hedged item impacts earnings. For any derivative instruments notdesignated as hedging instruments, changes in fair value would be recognized in earnings within interest expense in the period that the changeoccurs. Cash flows from derivative instruments are presented within net cash provided by operating activities in the consolidated statements ofcash flows. The Company assesses, both at the inception of the hedge and on an ongoing quarterly basis, whether the derivatives designatedas cash flow hedges are highly effective in offsetting the changes in cash flows of the hedged items.The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractualarrangements are not able to perform under the agreements. To mitigate this risk, the Company enters into derivative financial instruments onlywith counterparties with high credit ratings and with major financial institutions. The Company does not anticipate that any of the counterpartieswill fail to meet their obligations.Revenue RecognitionA performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price isallocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.Modular Leasing and Services RevenueThe majority of revenue is generated by rental income subject to the guidance of ASC 840, Leases ("ASC 840") in 2017 and 2018 andASC 842 in 2019. The remaining revenue is generated by performance obligations in contracts with customers for services or sale of unitssubject to the guidance in ASC 605, Revenue ("ASC 605"), in 2017 and 2018 and Accounting Standards Update ("ASU") 2014-09, Revenue fromContracts with Customers (Topic 606) ("ASC 606") in 2019.Leasing Revenue70Income from operating leases is recognized on a straight-line basis over the lease term. The Company's lease arrangements typicallyinclude multiple lease and non-lease components. Examples of lease components include, but are not limited to, the lease of modular spaceor portable storage units, and examples of non-lease components include, but are not limited to, the delivery, installation, maintenance, andremoval services commonly provided in a bundled transaction with the lease components. Arrangement consideration is allocated betweenlease 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 anadjusted market approach.When leases and services are billed in advance, recognition of revenue is deferred until services are rendered. If equipment is returnedprior to the contractually obligated period, the excess, if any, between the amount the customer is contractually required to pay over thecumulative amount of revenue recognized to date is recognized as incremental revenue upon return.Rental equipment is leased primarily under operating leases and, from time to time, under sales-type lease arrangements. Operatinglease minimum contractual terms generally range from 1 month to 60 months and averaged approximately 12 months across the Company'srental fleet for the year ended December 31, 2019. There were no material sales-type lease arrangements as of December 31, 2019.The adoption of ASC 842 at January 1, 2019, did not have a significant impact on the recognition of leasing revenue. Per therequirements of ASC 842 the Company records changes in estimated collectibility, directly against leasing revenue.Services RevenueThe 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; andRemoval 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 standaloneselling prices using the estimated cost plus a margin approach. Revenue from these activities is recognized as the services are performed.Sales RevenueSales revenue is generated by the sale of new and rental units. Revenue from the sale of new and rental units is generally recognizedat a point in time upon the transfer of control to the customer, which occurs when the unit is delivered and installed in accordance with thecontract. Sales transactions constitute a single performance obligation.Other MattersThe Company's non-lease revenues do not include material amounts of variable consideration, other than the variability noted forservices arrangements expected to be performed beyond a twelve month period.The Company's payment terms vary by the type and location of its customer and the product or services offered. The time betweeninvoicing and when payment is due is not significant. While the Company may bill certain customers in advance, its contracts do not contain asignificant financing component based on the short length of time between upfront billings and the performance of contracted services. Forcertain products, services, or customer types, the Company requires payment before the products or services are delivered to the customer.Revenue is recognized net of taxes collected from customers, which are subsequently remitted to governmental authorities.Leases as LesseeThe Company leases real estate for certain of its branch offices, administrative offices and rental equipment storage properties,vehicles and equipment used in its rental and administrative operations. The Company determines if an arrangement is or contains a lease atinception. Leases are classified as either finance or operating at inception of the lease, with classification affecting the pattern of expenserecognition in the income statement. Short-term leases, defined as leases with an initial term of 12 months or less, are not recorded on thebalance sheet. Lease expense for short-term leases is recognized on a straight-line basis over the lease term.The Company has leases that contain both lease and non-lease components and has elected, as an accounting policy, to not separatelease components and non-lease components. Right of use ("ROU") assets and operating lease liabilities are recognized at thecommencement date based on the present value of lease payments over the lease term. The lease liability is calculated as the present value ofthe remaining minimum rental payments for existing operating leases using either the rate implicit in the lease or, if none exists, the Company'sincremental borrowing rate, as the discount rate. As most of the Company's leases do not provide an implicit rate, the Company uses itsincremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. TheCompany's incremental borrowing rate is a hypothetical rate based on its understanding of what would be the Company's secured credit rating.71Variable lease payments are expensed in the period in which the obligation for those payments is incurred. Variable lease payments includepayments for common area maintenance, real estate taxes, management fees and insurance.Many of the Company’s real estate lease agreements include options to extend the lease, which are not included in the minimumlease terms unless the Company is reasonably certain it will exercise the option. Many of these leases include one or more options to renew.Additionally, the Company’s leases do not generally include options to terminate the lease prior to the end of the lease term. The Company’slease agreements do not contain any material residual value guarantees or material restrictive covenants.Advertising and PromotionAdvertising and promotion expense, which is expensed as incurred, was $4.0 million, $4.4 million and $3.3 million for the years endedDecember 31, 2019, 2018 and 2017, respectively.Shipping CostsThe Company includes costs to deliver rental equipment to customers in cost of leasing and services, and cost of sales.Income TaxesThe Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assetsand 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 andliabilities 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 ondeferred 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. Inmaking such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred taxliabilities, projected future taxable income, tax planning strategies and recent results of operations. Valuation allowances are recorded to reducethe 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 believesrealization of any deferred tax assets is not likely, the Company establishes a valuation allowance. When a valuation allowance is established orthere is an increase in an allowance in a reporting period, tax expense is generally recorded in the Company’s consolidated statement ofoperations. Conversely, to the extent circumstances indicate that a valuation allowance is no longer necessary, that portion of the valuationallowance 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 unlesssuch earnings are permanently reinvested, or will only be repatriated when possible to do so at minimal additional tax cost. Current income taxrelating 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 benefitrecognition model with a two-step approach; a more-likely-than-not recognition criterion; and a measurement approach that measures theposition 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 totiming of when an item is included on a tax return are considered to have met the recognition threshold. The Company classifies interest on taxdeficiencies and income tax penalties within income tax expense.Fair Value MeasurementsThe Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Afinancial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair valuemeasurement. The inputs are prioritized into three levels that may be used to measure fair value. See further discussion of the levels in Note 16.Recently Issued and Adopted Accounting StandardsThe Company qualified as an emerging growth company (“EGC”) as defined under the Jumpstart Our Business Startups Act (the“JOBS Act”) until December 31, 2019. Using exemptions provided under the JOBS Act, the Company elected to defer compliance with new orrevised financial accounting standards until a company that is not an issuer (as defined under section 2(a) of the Sarbanes-Oxley Act) wasrequired to comply with such standards. WillScot ceased to be an EGC as of December 31, 2019, and as such, is required to comply with thestandards and compliance dates for large accelerated filers.72Recently Issued Accounting StandardsIn June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic326), which prescribes that financial assets (or a group of financial assets) should be measured at amortized cost and presented at the netamount expected to be collected. Credit losses relating to available-for-sale debt securities should be recorded through an allowance for creditlosses. The new standard is effective for public entities for fiscal years beginning after December 15, 2019, including interim periods withinthose fiscal years. Early adoption is permitted for all entities for the fiscal years beginning after December 15, 2018, including interim periodswithin those fiscal years. The Company is currently evaluating the impact of the adoption of the pronouncement on the statements, and intendsto prospectively adopt this standard in the first quarter of 2020.In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, whichsimplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes. The new standard iseffective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption, including the adoptionin any interim period, is permitted for all entities. The Company is currently evaluating the potential impact of adoption of the pronouncement onits consolidated financial statements but does not expect the impact to be material.Recently Adopted Accounting StandardsFrom time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by theCompany as of the specified effective date.In May 2014, the FASB issued ASC 606. ASC 606, along with its subsequent related updates prescribe a single comprehensive modelfor entities to use in the accounting for revenue arising from contracts with customers. The core principle contemplated by this new standardwas that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount reflecting theconsideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount,timing and uncertainty of revenue and cash flows arising from contracts with customers are also required.On January 1, 2019, the Company adopted ASC 606 as well as subsequent updates using the modified retrospective transitionapproach to those contracts that were not completed as of January 1, 2019. The comparative financial statement information has not beenrestated and continues to be reported under the accounting standards in effect for those periods. The adoption of the guidance did not have amaterial impact on the Company's consolidated balance sheet as of January 1, 2019. The Company's accounting for modular leasing revenueis primarily outside the scope of ASC 606 and is recorded under ASC 842 (defined below).In February 2016, the FASB issued ASC 842. This guidance revises existing practice related to accounting for leases under ASC 840,for both lessees and lessors. ASC 842 requires that lessees recognize: a) a lease liability, which is a lessee’s obligation to make leasepayments arising from a lease, measured on a discounted basis; and b) a ROU asset, which is an asset that represents the lessee’s right touse, or control the use of, a specified asset for the lease term. ASC 842 also requires that the seller recognize any gain or loss (based on theestimated fair value of the asset at the time of sale) when control of the asset is transferred instead of amortizing it over the lease period forqualifying sale-leaseback transactions.At December 31, 2019, the Company became a large accelerated filer and no longer qualifies as an emerging growth company, atwhich point the Company was required to retrospectively adopt ASC 842, effective January 1, 2019. In connection with the adoption of ASC 842,the Company reversed the previous accounting for certain failed sale-leaseback transactions, and reduced property, plant and equipment by$31.0 million, reduced outstanding debt by $37.9 million, increased deferred tax liability by $1.8 million and increased January 1, 2019 equity by$5.2 million. The Company recognized lease liabilities and ROU assets of $138.5 million and $141.4 million as of January 1, 2019, primarilyrelated to its real estate and equipment leases.The adoption of ASC 842 at January 1, 2019, did not have a significant impact on the recognition of leasing revenue. Per therequirements of ASC 842 the Company records changes in estimated collectibility, directly against lease income. Such amounts werepreviously classified as selling, general and administrative expenses. For the year ended December 31, 2019 operating lease receivables notdeemed probable of collection and recorded as a reduction of revenue totaled $10.0 million.The Company elected the package of practical expedients permitted under the transition guidance within the new standard that allowsit to not reassess: (a) whether any expired or existing contracts are or contain leases, (b) the lease classification for any expired or existingleases and (c) initial direct costs for any expired or existing leases. Historical financial information was not updated and the financialdisclosures required under ASC 842 are not provided for periods prior to January 1, 2019.73NOTE 2 - Business Combinations and Acquisitions2017 Business CombinationBackground and SummaryOn November 29, 2017, the legal predecessor company consummated the Business Combination pursuant to the terms of the StockPurchase Agreement, dated as of August 21, 2017, as amended on September 6, 2017 and November 6, 2017 (the “Stock PurchaseAgreement”), by and among Double Eagle, WS Holdings, Algeco Group and Algeco Scotsman Holdings Kft., a Hungarian limited liabilitycompany (“Algeco Holdings” and, together with Algeco Group, the “Sellers”). Double Eagle, through its wholly-owned subsidiary, WS Holdings,acquired all of the issued and outstanding shares of the common stock of WSII from the Sellers.Under the Stock Purchase Agreement, WS Holdings purchased WSII for $1.1 billion, of which (A) $1.0215 billion was paid in cash and(B) the remaining $78.5 million was paid to the Sellers, on a pro rata basis, in the form of (i) 8,024,419 shares of common stock, par value$0.0001 per share of WS Holdings, which shares are exchangeable for shares of WillScot’s Class A common stock and (ii) 8,024,419 shares ofWillScot’s Class B common stock, par value $0.0001 per share representing a non-economic voting interest in WillScot. The Class B commonstock shares can only be held by the Sellers or their permitted transferee. Upon conversion or cancellation of any WS Holdings shares, thecorresponding shares of Class B common stock of WillScot are automatically canceled for no consideration. The Class B common stockshares of WillScot have voting rights, but are not entitled to share in dividends or other distributions.The shares of WillScot Class B common stock issued to the Sellers initially represented 10% of the issued and outstanding WSHoldings common stock at the date of the Business Combination, which is presented in the consolidated balance sheets and statement ofchanges in equity as a non-controlling interest. During the year ended December 31, 2018, the non-controlling interest was diluted to 9% as aresult of common stock transactions detailed in Note 13. Further, the portion of net loss attributable to the non-controlling interest is separatelystated on the consolidated statement of operations, net of tax. The non-controlling interest was 9% as of December 31, 2019.The net proceeds from the Business Combination, as reported in the consolidated statements of cash flows for the year endedDecember 31, 2017 within the financing section are summarized below:(in thousands)Net proceedsCash in Double Eagle's Trust (net of redemptions)$288,381Cash from private placement of common stock to TDR Capital affiliate418,261Gross cash received by WillScot from Business Combination706,642Less: purchase of WSII's outstanding equity(125,676)Less: fees to underwriters(9,188)Net cash received by WillScot in connection with the Business Combination and related financing transactions$571,778An additional $300.0 million obtained through WSII’s offering of senior secured notes and $190.0 million through WSII’s entry into anew ABL facility are aggregated in receipts from borrowings in the consolidated statements of cash flows.Prior to the Business Combination, Double Eagle had 49,704,329 of Class A common stock shares outstanding and $500.8 millionheld in a trust account. In connection with the Business Combination, 21,128,456 shares of Double Eagle’s common stock were redeemedresulting in a total payment to redeeming shareholders of $212.4 million.The number of shares of Class A and Class B common stock of WillScot issued and outstanding immediately following theconsummation of the Business Combination is summarized as follows:74Number of Sharesof Class A CommonStock of WillScotNumber of Sharesof Class B CommonStock of WillScotDouble Eagle public shares outstanding prior to the Business Combination49,704,329-Less: Redemption of Double Eagle public shares21,128,456-Plus: Conversion of Double Eagle Class B shares to Double Eagle Class A shares(a)12,500,000-Total Double Eagle shares outstanding immediately prior to the effective date of the BusinessCombination41,075,873-Class B shares issued as part of consideration for WSII purchase-8,024,419Common shares issued through private placement to TDR Capital affiliate43,568,901-Total shares of common stock of WillScot outstanding at closing, November 29, 201784,644,7748,024,419(a) 12,425,000 of the converted Class B ordinary shares were placed into escrow as of the Business Combination date and were subject to the earnoutarrangement. All of the escrowed shares were released to shareholders in 2018.Upon completion of the Business Combination and the other transactions contemplated by the Stock Purchase Agreement, WSIIbecame an indirect subsidiary of WillScot.The Company incurred transaction costs related to the Business Combination of $22.1 million, which are included in selling, generaland administrative expenses on the consolidated statement of operations for the year ended December 31, 2017.Algeco Group Restructuring Impact on WillScotPrior to the effective date of the Business Combination, WSII was a wholly owned subsidiary of the Algeco Group, which is majorityowned by an investment fund managed by TDR Capital. Subsequent to the Business Combination, a TDR affiliate is the controlling shareholderof the Company’s common stock. Certain transactions between the Algeco Group and the Company are treated as transfers between entitiesunder common control.Prior to the Business Combination, the Algeco Group performed an internal restructuring. As part of this reorganization, WSII’s RemoteAccommodations Business, which consisted of Target Logistics Management LLC (“Target”) and its subsidiaries and Chard Camp CateringServices (“Chard”), were transferred to another entity within the Algeco Group. As a result, the operating results of the Remote AccommodationsBusiness have been reported as discontinued operations in the Company’s consolidated financial statements (see Note 3).Prior to the internal restructuring, WSII owned 100% of the equity in Target and Chard. In the internal restructuring, WSII transferred toAlgeco Group entities (a) 100% of the equity and assets in Target and Chard, (b) the outstanding notes due from affiliates and related accruedinterest receivable, and (c) intercompany receivables with Algeco Group entities, in exchange for the partial settlement of outstanding notes dueto affiliates and related accrued interest and the settlement of intercompany liabilities. The notes due to affiliates and the corresponding accruedinterest amounts were fully repaid between the internal restructuring non-cash offsetting transfers and the $226.3 million cash payment made inconnection with the Business Combination. As a result of the settlement of notes due to affiliates and the transfer of Target and Chard, therewas a $19.9 million difference between book value and fair value of transferred amounts. The Company has recorded these amounts toadditional paid-in capital in the consolidated balance sheets and statements of changes in equity in accordance with the guidance in ASC 805,Business Combinations, which states that any difference between the fair value of the proceeds and the book value of the related assets inconnection with transfers between two entities under common control should be recognized as an equity transaction.The fair value of Target and Chard were determined using the using the income approach. The estimate of fair value required theCompany to use significant unobservable inputs, representative of a Level 3 fair value measurement, including assumptions related to thefuture performance of reporting units and the markets in which they operate. The Company used discount rates of 16.0% and 14.5% andterminal growth rates of 3.0% and 3.0% to calculate the present value of estimated future cash flows for Chard and Target, respectively. The fairvalue of the notes due from affiliates and other intercompany amounts was primarily calculated using the pricing of the Algeco Group’s publiclytraded senior notes assuming that the credit quality of each obligor was equal to that of its parent. The estimate is representative of a Level 2 fairvalue measurement.As part of the internal restructuring, WSII also transferred certain employees in corporate functions to another entity in the Algeco Group,as they primarily supported the Algeco Group. Liabilities associated with these employees, primarily pertaining to compensation and benefits, of$7.8 million, were transferred to the Algeco Group as part of this transaction. These amounts were also recorded to additional paid-in capital asa deemed capital contribution as the transfer occurred between two entities under common control.75Acton and Tyson AcquisitionsOn December 20, 2017, the Company acquired 100% of the issued and outstanding ownership interests of Acton Mobile Holdings LLC(“Acton”) for a cash purchase price of $237.1 million. Additionally, on January 3, 2018, the Company acquired all of the issued and outstandingmembership interests of Onsite Space LLC (d/b/a Tyson Onsite (“Tyson”) for $24.0 million in cash consideration, net of cash acquired. Thepurchase price allocations for both the Acton and Tyson acquisitions were subject to certain adjustments, which were both finalized in the fourthquarter of 2018. The offsets of these adjustments were recorded to goodwill as detailed in Note 10. Pro forma results for Acton are presented inthe aggregate with the ModSpace acquisition below.ModSpace AcquisitionOn August 15, 2018, the Company acquired Modular Space Holdings, Inc. ("ModSpace"), a privately-owned national provider of officetrailers, portable storage units and modular buildings. The acquisition was consummated by merging a special purpose subsidiary of theCompany with and into ModSpace, with ModSpace surviving the merger as a subsidiary of WSII.Purchase PriceThe aggregate purchase price for ModSpace was $1.2 billion and consisted of (i) $1.1 billion in cash, (ii) 6,458,229 shares of WillScot'sClass A common stock (the "Stock Consideration") with a fair market value of $95.8 million, (iii) warrants to purchase an aggregate of10,000,000 shares of WillScot’s Class A common stock at an exercise price of $15.50 per share (the "2018 Warrants") with a fair market value of$52.3 million, and (iv) a working capital adjustment of $4.7 million.The acquisition was funded by the net proceeds of WillScot's issuance of 9,200,000 shares of Class A common stock (see Note 13),the net proceeds of WSII’s issuance of $300.0 million in senior secured notes and $200.0 million in senior unsecured notes (see Note 12), andborrowings under the ABL Facility (see Note 12).As of the date of acquisition, the fair market values of the Stock Consideration and 2018 Warrants were $14.83 per share and $5.23 perwarrant, respectively, with the warrant values determined using a Black-Scholes valuation model. The fair market value of the Class A shareswas determined utilizing the $15.78 per share closing price of the Company's shares on August 15, 2018, discounted by 6.0%, to reflect a lackof marketability based on the lock-up restrictions contemplated by the merger agreement.The estimated fair values of the Stock Consideration and 2018 Warrants are Level 3 fair value measurements, as defined in Note 16.The fair value of each share and warrant was estimated using the Black-Scholes model with the following assumptions: expected dividendyield, expected stock price volatility, weighted-average risk-free interest rate, the average expected term of the lock-up period on the shares, andthe weighted average expected term of the warrants. The volatility assumption used in the Black-Scholes model is derived from the historicaldaily change in the market price of the Company's common stock, as well as the historical daily changes in the market price of its peer group,based on weighting, as determined by the Company, and over a time period equivalent to the lock-up restriction (for the shares) and the warrantterm. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with aremaining term equal to the Company’s expected term assumption. The Company has never declared or paid a cash dividend on commonshares.The following table summarizes the key inputs utilized to determine the fair value of the Stock Consideration and 2018 Warrantsincluded within the purchase price of ModSpace.StockConsideration fair value inputs2018 Warrants fairvalue inputsExpected volatility28.6%35.0%Risk-free rate of interest2.2%2.7%Dividend Yield-%-%Expected life (years)0.54.376Opening Balance SheetThe purchase price of ModSpace was assigned to the underlying assets acquired and liabilities assumed based upon their fair valuesat the date of acquisition, August 15, 2018. The Company recorded the fair values based on independent valuations, discounted cash flowanalyses, quoted market prices, contributory asset charges, and estimates made by management. The following table summarizes the August15, 2018 preliminary fair values of the assets acquired and liabilities assumed at December 31, 2018 and adjustments made between thesepreliminary balances and the final recorded fair value.(in thousands)Preliminary BalanceAdjustmentsFinal BalanceAugust 15, 2018Trade receivables, net(a)$81,320$(8,175)$73,145Prepaid expenses and other current assets17,34296518,307Inventories4,757-4,757Rental equipment853,986(1,210)852,776Property, plant and equipment(b)110,41327,248137,661Intangible assetsFavorable leases3,976-3,976Trade name3,000-3,000Deferred tax assets, net$1,855$(1,855)$-Total identifiable assets acquired$1,076,649$16,973$1,093,622Accrued liabilities$31,551$1,936$33,487Accounts payable37,67842138,099Deferred revenue and customer deposits15,938-15,938Deferred tax liabilities-1,1541,154Total liabilities assumed$85,167$3,511$88,678Total goodwill(c)$215,764$(13,462)$202,302(a) As of the acquisition date, the fair value of accounts receivable was $73.1 million and the gross contractual amount was $89.0 million. The Company analyzedinformation available at the time of acquisition in estimating uncollectible receivables and the fair value of remaining receivables. The Company's analysis, as of theacquisition date, included an assessment of the risk of collectibility of receivables by analyzing historical payment trends, the status of collection efforts, and anyother pertinent customer specific information that existed as of the acquisition date.(b) Upon completion of the valuation analysis, the Company recorded a net increase in property, plant and equipment of $27.2 million related to the finalization ofour valuations of acquired land. The fair value of acquired land was determined using valuations from third party specialists which were based on sales prices forcomparable assets at the date of acquisition.(c) The goodwill is reflective of ModSpace’s going concern value and operational synergies that the Company expects to achieve that would not be available toother market participants. A portion of the goodwill from the ModSpace acquisition is deductible for income tax purposes.77Pro Forma InformationThe unaudited pro forma information below has been prepared using the purchase method of accounting, giving effect to the Acton andModSpace acquisitions as if they had been completed on January 1, 2017. The pro forma information is not necessarily indicative of theCompany’s results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of the Company’s futureresults. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from theacquisition, and also does not reflect additional revenue opportunities following the acquisition.(unaudited, in thousands)Year EndedDecember 31,2018(a)Year EndedDecember 31,2017(a)WillScot revenues$751,412$445,942(b)Acton and ModSpace revenues312,609537,393(c)Pro forma revenues$1,064,021$983,335WillScot loss from operations before income tax$(92,172)$(165,398)(d)Acton and ModSpace loss from operations before income tax(7,457)(111,319)(c)Loss from operations before income tax before pro forma adjustments(99,629)(276,717)Pro forma adjustments to combined loss from operations before income tax:Impact of fair value adjustments/useful life changes on depreciation10,13513,557(e)Intangible asset amortization(625)(f)(1,708)(f)Interest expense(41,178)(g)(75,031)(h)Elimination of Acton and ModSpace interest20,279(i)45,461(i)Pro forma loss from operations before income tax(111,018)(j)(294,438)Income tax benefit(43,462)(k)(34,228)(k)Income from discontinued operations-14,650Pro forma net loss$(67,556)$(245,560)(a) Pro forma results for the year ended December 31, 2017 reflects both Acton and ModSpace historical activity. Pro forma results for the year ended December31, 2018 include ModSpace historical activity, but do not reflect any adjustments for Acton, as they were included in WillScot results for the entire year. Post-acquisition ModSpace and Acton revenues and pre-tax income are reflected in WillScot's historical revenue and pre-tax income amounts.(b) Excludes historical revenues and pre-tax income from discontinued operations.(c) Historical Acton revenues were $93.9 million and historical ModSpace revenues were $443.5 million, respectively, for the year ended December 31, 2017.Historical Acton pre-tax loss was $3.2 million and historical ModSpace pre-tax loss was $108.1 million, respectively, for the year ended December 31, 2017.(d) Excludes historical revenues and pre-tax income from discontinued operations. Includes historical Corporate and other selling, general and administrative("SG&A") expenses related to Algeco Group costs, which were $45.1 million for the year ended December 31, 2017.(e) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups of equipment acquired in the Acton and ModSpaceacquisitions. For the year ended December 31, 2017, Acton had additional depreciation expense of $5.3 million and ModSpace had a reduction of $18.9 million. Theuseful lives assigned did not change significantly from the useful lives used by ModSpace.(f) Amortization of the trade names acquired. A value of $0.7 million was assigned to the Acton tradename, which was amortized over one year. The ModSpacetradename was assigned a value of $3.0 million and a life of three years.(g) In connection with the ModSpace acquisition, the Company drew an incremental $419.0 million on the ABL Facility (see Note 12) and issued $300.0 million of2023 Secured Notes and $200.0 million of Unsecured Notes (see Note 12). An interest rate of 6.54% was used to calculate pro forma interest expense as a resultof the ModSpace acquisition, which represents the weighted-average interest rate for the aforementioned borrowings at December 31, 2018. Interest expenseincludes amortization of related deferred financing fees on debt incurred in conjunction with the ModSpace acquisition.(h) In connection with the Acton acquisition, the Company drew $237.1 million on the ABL Facility. The weighted-average interest rate of ABL borrowings was4.02%. In connection with the ModSpace acquisition, the Company drew an incremental $419.0 million on the ABL Facility and issued $300.0 million of securednotes and $200.0 million of unsecured notes. The weighted-average interest rate of all ModSpace acquisition borrowings was 6.54%. Interest expense includesamortization of related deferred financing fees on debt incurred in conjunction with ModSpace acquisition.(i) Interest on Acton and ModSpace historical debt was eliminated. Historical Acton interest was $5.1 million and historical ModSpace interest was $40.4 million,respectively, for the year ended December 31, 2017.(j) Pro forma loss from operations before income taxes includes $15.5 million of restructuring expense, $30.0 million of integration costs, and $20.1 million oftransaction costs incurred by WillScot for the year ended December 31, 2018. Additionally, pro forma pre-tax loss for the year78ended December 31, 2018 also includes $20.5 million of interest expense associated with bridge financing fees incurred in connection with the acquisition ofModSpace.(k) As the combined pro forma company was in a tax loss position in 2018 and 2017, all pro forma adjustments for US tax effects are at the federal and state USstatutory tax rate of 25.8% since the adjustments represent future deductible or taxable temporary differences.Transaction and Integration CostsThe Company incurred $26.6 million in integration costs within SG&A expenses for the year ended December 31, 2019 related to theModSpace acquisition. The Company incurred $30.0 million in integration costs related to the acquisitions of ModSpace, Acton and Tyson in2018.The Company incurred $20.1 million in transaction costs during the year ended December 31, 2018 related to the ModSpaceacquisition.NOTE 3 - Discontinued OperationsWSII’s Remote Accommodations Business was transferred to another entity included in the Algeco Group prior to the BusinessCombination in 2017. Accordingly, the Remote Accommodations segment has been reported as discontinued operations in the condensedconsolidated statements of operations for the year ended December 31, 2017.Significant Accounting Policies Related to Discontinued OperationsRevenue Recognition - Remote AccommodationsRevenue related to the Remote Accommodations Business, such as lodging and related ancillary services, was recognized pursuantto the terms of the contractual relationships with customers in the period in which services were provided. In some contracts, rates varied overthe contract term. In these cases, revenue was generally recognized on a straight-line basis over the contract. Certain of the remoteaccommodations arrangements contained a lease of the lodging facilities and other non-lease services. Arrangement consideration wasallocated between lodging and services based on the relative estimated selling price of each deliverable. The estimated price of the lodging andservices deliverables was based on the price of lodging and services when sold separately, or based upon the best estimate of selling pricemethod.Remote Accommodations Business revenue pertained entirely to the Remote Accommodations segment (see Note 20). There wereno revenues or costs related to the Remote Accommodations segment for the year ended December 31, 2019 or 2018. Revenues and costsrelated to the Remote Accommodations Business for the period ended November 28, 2017 were as follows:(in thousands)Period EndedNovember 28, 2017Remote accommodations revenue:Lease revenue$53,571Service revenue67,282Total remote accommodations revenue$120,853Remote accommodation costs:Cost of leases$7,837Cost of services46,134Total remote accommodations costs$53,971Rental Equipment - Remote AccommodationsRemote accommodations rental equipment was measured at cost less accumulated depreciation and impairment losses. Costincluded expenditures that were directly attributable to the acquisition of the asset. Costs of improvements and betterments to remoteaccommodations rental equipment were capitalized when such costs extended the useful life of the equipment or increased the rental value ofthe unit. Costs incurred for remote accommodations equipment to meet a particular customer specification were capitalized and depreciatedover the lease term, taking in consideration the residual value of the asset. Maintenance and repair costs were expensed as incurred.Depreciation was generally computed using the straight-line method over estimated useful life, as follows:EstimatedUseful LifeResidualValueRemote accommodations15 years0 - 25%79Results from Discontinued OperationsIncome from discontinued operations, net of tax, for the period ended November 28, 2017 was as follows:(in thousands)Period EndedNovember 28, 2017Remote accommodations revenue$120,853Rental unit sales1,522Remote accommodations costs of leasing and services53,971Rental unit cost of sales901Depreciation of rental equipment21,995Gross profit45,508Selling, general and administrative expenses11,513Other depreciation and amortization4,589Restructuring costs1,714Other income(52)Operating profit27,744Interest expense2,444Income from discontinued operations, before income tax25,300Income tax expense10,650Income from discontinued operations, net of tax$14,650Cash flows from the Company’s discontinued operations are included in the consolidated statements of cash flows for the yearsended December 31, 2017. The significant cash flow items from discontinued operations for the years ended December 31, 2017 were asfollows:(in thousands)2017Depreciation and amortization$26,584Capital expenditures$9,890NOTE 4 - RevenueRevenue DisaggregationGeographic AreasThe Company had total revenue in the following geographic areas for the years ended December 31 as follows:Year Ended December 31,(in thousands)201920182017US$966,766$685,350$396,039Canada80,51450,14436,357Mexico16,38515,91813,546Total revenues$1,063,665$751,412$445,942Major Product and Service LinesModular leasing is the Company’s core business, which significantly impacts the nature, timing, and uncertainty of the Company’srevenue and cash flows. This includes rental of both modular space and portable storage units along with VAPS, which include furniture, steps,ramps, basic appliances, internet connectivity devices, and other items used by customers in connection with the Company's products. Modularleasing is complemented by new unit sales and sales of rental units. In connection with its leasing and sales activities, the Company providesservices including delivery and installation, maintenance and ad hoc services, and removal services at the end of lease transactions.80The Company’s revenue by major product and service line for the years ended December 31 was as follows:Year Ended December 31,(in thousands)201920182017Modular space leasing revenue$516,299$360,240$206,556Portable storage leasing revenue24,27721,68217,480VAPS(a)159,327104,87059,088Other leasing-related revenue(b)44,28231,44314,697Modular leasing revenue744,185518,235297,821Modular delivery and installation revenue220,057154,55789,850Total leasing and services revenue964,242672,792387,671New unit sales revenue59,08553,60336,371Rental unit sales revenue40,33825,01721,900Total revenues$1,063,665$751,412$445,942(a) Includes $15.9 million, $10.8 million and $8.4 million of VAPS service revenue for the years ended December 31, 2019, 2018 and 2017, respectively.(b) Primarily damage billings, delinquent payment charges, and other processing fees.Modular Leasing and Services RevenueThe majority of revenue (68%, 68% and 65% for the years ended December 31, 2019, 2018 and 2017, respectively) is generated bylease income subject to the guidance of ASC 840, or ASC 842 for periods after January 1, 2019. The remaining revenue is generated byperformance obligations in contracts with customers for services or sale of units subject to the guidance in ASC 605, or ASC 606 for periodsafter January 1, 2019.Future committed modular leasing revenues under non-cancelable operating leases with the Company’s customers at December 31,2019 for the years ended December 31, 2020 - 2024 and thereafter were as follows:(in thousands)Operating Leases2020$215,084202173,135202228,913202311,72720244,160Thereafter2,772Total$335,791Receivables, Contract Assets and LiabilitiesAs reflected above, approximately 68% of the Company's rental revenue is generated by lease income subject to the guidance of ASC840, or ASC 842 for periods after January 1, 2019. The customers that are responsible for the remaining revenue that is accounted for underASC 606 (and ASC 605 prior to 2019) are generally the same customers that rent the Company's equipment. The Company manages credit riskassociated with its accounts receivables at the customer level. Because the same customers generate the revenues that are accounted forunder both ASC 606 and ASC 842, the discussions below on credit risk and the Company's allowance for doubtful accounts address theCompany's total revenues.Concentration of credit risk with respect to the Company's receivables is limited because of a large number of geographically diversecustomers who operate in a variety of end user markets. The Company's top five customers with the largest open receivables balancesrepresented 4.1% of the total receivables balance as of December 31, 2019. The Company manages credit risk through credit approvals, creditlimits, and other monitoring procedures.The Company's allowance for doubtful accounts reflects its estimate of the amount of receivables that it will be unable to collect. Theestimated losses are based upon a review of outstanding receivables, the related aging, including specific accounts if deemed necessary, andon our historical collection experience. The estimated losses are calculated using the loss rate method based upon a review of outstandingreceivables, related aging, and on historical collection experience. The Company's estimates reflect changing circumstances, includingchanges in the economy or in the particular circumstances of individual customers, and as a result, the Company may be required to increaseor decrease its allowance. During the years ended December 31, 2019, 2018 and 2017, the Company recognized bad debt expense of $4.5million, $7.7 million and $4.7 million, respectively, within SG&A in its consolidated statements of income, which included changes in itsallowances for81doubtful accounts. In accordance with the collectibility provisions of ASC 842, the Company has recorded $10.0 million as a reduction of revenuein 2019 that would have been recorded as bad debt expense prior to the adoption of ASC 842.When customers are billed in advance, the Company defers recognition of revenue until the related services are performed, whichgenerally occurs at the end of the contract. As of January 1, 2019 and upon the implementation of ASC 606, the Company had approximately$32.1 million of deferred revenue that relates to removal services for lease transactions and advance billings for sale transactions, which arewithin the scope of ASC 606. As of December 31, 2019, the Company had approximately $42.6 million of deferred revenue relating to theseservices, which are included in deferred revenue and customer deposits in the consolidated balance sheets. During the year ended December31, 2019, $14.0 million of deferred revenue at January 1, 2019, relating to removal services for lease transactions and advance billings for saletransactions was recognized as revenue.The Company does not have material contract assets and it did not recognize any material impairments of any contract assets.The Company's uncompleted contracts with customers have unsatisfied (or partially satisfied) performance obligations. For the futureservices revenues that are expected to be recognized within twelve months, the Company has elected to utilize the optional disclosureexemption made available regarding transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations. The transactionprice for performance obligations that will be completed in greater than twelve months is variable based on the costs ultimately incurred toprovide those services and therefore the Company is applying the optional exemption to omit disclosure of such amounts.The primary costs to obtain contracts for new and rental unit sales with the Company's customers are commissions. The Companypays its sales force commissions on the sale of new and rental units. For new and rental unit sales, the period benefited by each commissionis less than one year. As a result, the Company has applied the practical expedient for incremental costs of obtaining a sales contract and willexpense commissions as incurred.NOTE 5 - LeasesAs discussed in Note 1, at December 31, 2019, the Company retrospectively adopted ASC 842, effective January 1, 2019. As a result ofthe retrospective adoption to January 1, 2019, the Company recast the unaudited quarterly results as shown in Note 22.As of December 31, 2019, the undiscounted future lease payments for operating lease liabilities were as follows:(in thousands)2020$37,648202133,903202227,769202321,926202416,685Thereafter47,916Total lease payments185,847Less: interest(38,285)Present value of lease liabilities$147,562As of December 31, 2018, under the prior lease guidance of ASC 840, the undiscounted future lease payments for operating leaseswere as follows:(in thousands)2019$38,876202029,797202124,627202218,879202313,467Thereafter25,055Total lease payments$150,70182The Company’s lease activity during the year December 31, 2019 was as follows:Financial Statement Line(in thousands)Operating Lease ExpenseFixed lease expenseCost of leasing and services$6,737Selling, general and administrative34,058Lease impairment expense and other related charges2,611Short-term lease expenseCost of leasing and services29,729Selling, general and administrative2,071Variable lease expenseCost of leasing and services3,787Selling, general and administrative4,231Total operating lease expense$83,224During the year ended December 31, 2019, the Company initiated certain restructuring plans associated with the ModSpaceacquisition in order to capture operating synergies as a result of integrating ModSpace into WillScot. The restructuring activities primarily includethe termination of leases for duplicative branches, equipment and corporate facilities. As part of this plan, certain of its leased locations werevacated and leases were terminated or impaired. The Company recorded $8.7 million in lease impairment expense and other related chargeswhich is comprised of $4.2 million in ROU asset impairment on four leased locations no longer used in operations, $1.9 million loss on leaseexit and $2.6 million in closed location rent expense.Rent expense included in the consolidated statement of operations was $31.0 million and $22.0 million for the years ended December31, 2018 and 2017, respectively.Supplemental cash flow information related to operating leases for the year ended December 31, 2019 was as follows:Supplemental Cash Flow Information:(in thousands)Cash paid for the amounts included in the measurement of lease liabilities$42,111Right of use assets obtained in exchange for lease obligations$43,013Weighted-average remaining operating lease term and the weighted average discount rate as of December 31, 2019 were as follows:Lease Terms and Discount Rates:Weighted-average remaining lease term6.51 yearsWeighted-average discount rate7.0%The Company presents information related to leasing revenues in Note 4 - Revenue.NOTE 6 - InventoriesInventories at December 31, consisted of the following:(in thousands)20192018Raw materials and consumables$15,387$16,022Work in process-196Total inventories$15,387$16,21883NOTE 7 - Prepaid Expenses and Other Current AssetsPrepaid expenses and other current assets at December 31 consisted of the following:(in thousands)20192018Prepaid expenses$5,726$9,200Other current assets8,89512,506Receivables due from affiliates-122Total prepaid expenses and other current assets$14,621$21,828NOTE 8 - Rental Equipment, netRental equipment, net at December 31 consisted of the following:(in thousands)20192018Modular units and portable storage$2,455,471$2,333,776Value-added products121,85590,526Total rental equipment2,577,3262,424,302Less: accumulated depreciation(632,890)(495,012)Rental equipment, net$1,944,436$1,929,290NOTE 9 - Property, Plant and Equipment, netProperty, plant and equipment, net at December 31 consisted of the following:(in thousands)20192018Land, buildings and leasehold improvements$139,861$185,870Manufacturing and office equipment62,16958,481Software and other27,34229,632Total other property, plant and equipment229,372273,983Less: accumulated depreciation(81,683)(90,233)Property, plant and equipment, net$147,689$183,750Depreciation expense related to property, plant and equipment was $11.4 million, $12.2 million and $8.7 million for the years endedDecember 31, 2019, 2018 and 2017, respectively.As of December 31, 2018, the gross cost of property, plant and equipment assets under capital leases was $0.8 million, with relatedaccumulated depreciation of $0.7 million. The depreciation expense for these assets is presented in other depreciation and amortization in theconsolidated statement of operations.As more fully disclosed in Note 1, the Company had previously entered into various sale-leaseback transactions associated withseveral of its branches in North America. In connection with the adoption of ASC 842 as of January 1, 2019, the Company reversed the previousaccounting and reduced property, plant and equipment by $31.0 million.Assets Held for SaleDuring the year ended December 31, 2019, the Company closed eleven owned branch facilities and reclassified them from property,plant and equipment to assets held for sale and recorded an impairment of $2.9 million in impairment losses on long-lived assets. TheCompany sold nine held for sale properties for net cash proceeds of $18.5 million during the year ended December 31, 2019.During the year ended December 31, 2018, the Company reclassified three branch facilities from property, plant and equipment toassets held for sale and recognized an impairment charge of $1.6 million in impairment losses on long-lived assets.The fair value of the assets held for sale is a Level 2 fair value measure and was calculated using current sales prices for comparableassets in the market.84NOTE 10 - Goodwill and Intangible AssetsGoodwillChanges in the carrying amount of goodwill were as follows:Modular - USModular - OtherNorth AmericaTotalBalance at December 31, 2017$28,609$-$28,609Acquisition of businesses183,71135,128218,839Changes to preliminary purchase price accounting944-944Effects of movements in foreign exchange rates-(1,375)(1,375)Balance at December 31, 2018213,26433,753247,017Changes to preliminary purchase price accounting(9,331)(4,148)(13,479)Effects of movements in foreign exchange rates-1,6391,639Balance at December 31, 2019$203,933$31,244$235,177The Company acquired ModSpace in August 2018 and finalized the valuation of the acquired net assets in the third quarter of 2019. Theacquisition of ModSpace resulted in the recognition of $171.3 million of goodwill in the Modular - US segment (as defined in Note 20) which isnon-deductible for income tax purposes, and $31.0 million of goodwill in the Modular - Other North America segment (as defined in Note 20), aportion of which is deductible for income tax purposes.The Company acquired Tyson in January 2018 and Acton in December 2017, and finalized the valuation of the acquired net assets ofboth Tyson and Acton in the fourth quarter of 2018. The acquisition of Tyson and Acton resulted in the recognition of $3.1 million and $29.5million of goodwill in the Modular - US segment (as defined in Note 20).The Company conducted its annual goodwill impairment test by performing a quantitative assessment as of October 1, 2019. Afterconducting an analysis of the fair value of each reporting unit as of October 1, 2019, the Company determined that there was no impairment ofgoodwill identified as a result of the annual impairment analysis.During the fourth quarter of 2017, the Company recognized a goodwill impairment charge of $60.7 million, equal to the differencebetween the carrying value and estimated fair value of the Canadian reporting unit. The impairment was primarily driven by a longer expectedrecovery period in the estimated future cash flows for the reporting unit, specifically as it related to customers in the oil and gas industry.Accumulated goodwill impairment losses were $792.8 million as of December 31, 2019, 2018 and 2017. The $792.8 million ofaccumulated impairment losses as of December 31, 2019 includes: $726.5 million of losses pertaining to the Modular - US segment and $66.3million of losses pertaining to the Modular - Other North America segment, respectively.IntangiblesIntangible assets other than goodwill at December 31, consisted of the following:December 31, 2019(in thousands)Weightedaverageremaining life (inyears)Gross carryingamountAccumulatedamortizationNet book valueIntangible assets subject to amortization:ModSpace trade name1.7$3,000$(1,375)$1,625Total intangible assets subject to amortization3,000(1,375)1,625Indefinite-lived intangible assets:Trade names125,000-125,000Total intangible assets other than goodwill$128,000$(1,375)$126,62585December 31, 2018(in thousands)Weightedaverageremaining life (inyears)Gross carryingamountAccumulatedamortizationNet book valueIntangible assets subject to amortization:Favorable lease rights(a)6.7$4,523$(347)$4,176ModSpace trade name2.73,000(375)2,625Total intangible assets subject to amortization7,523(722)6,801Indefinite-lived intangible assets:Trade names125,000-125,000Total intangible assets other than goodwill$132,523$(722)$131,801(a) Following the adoption of ASC 842 as of January 1, 2019, favorable lease assets were combined with ROU assets and the favorable lease assets remainingat the end of 2018 were reclassified to operating lease assets.In the ModSpace acquisition, the Company allocated $3.0 million and $4.0 million to definite-lived intangible assets, related to theModSpace trade name and favorable lease rights. The Company allocated $3.9 million and $0.1 million of the favorable lease rights to theModular - US segment and Modular - Other North America segment, defined in Note 20, respectively. At the time of the acquisition, managementestimated that the ModSpace trade name had an estimated useful life of three years and the favorable lease assets were amortized over the lifeof the leases.For the year ended December 31, 2019, the aggregate amount recorded to depreciation and amortization expense for intangible assetssubject to amortization, was $1.0 million. For the year ended December 31, 2018, the aggregate amortization expense for intangible assetssubject to amortization was $1.4 million, of which $1.1 million was recorded in depreciation and amortization expense, and $0.3 million relatedto the favorable lease rights was recorded in SG&A.As of December 31, 2019, the expected future amortization expense for intangible assets was $1.6 million, consisting of $1.0 million in2020 and $0.6 million in 2021.NOTE 11 - Deferred Revenue and Customer DepositsDeferred revenue and customer deposits at December 31 consisted of the following:(in thousands)20192018Current:Deferred revenue$81,303$68,398Customer deposits1,6753,380Total current deferred revenue and customer deposits$82,978$71,778Long-term:Deferred revenue$12,342$7,723Total long-term deferred revenue and customer deposits$12,342$7,72386NOTE 12 - DebtThe carrying value of debt outstanding at December 31 consisted of the following:(in thousands, except rates)Interest rateYear of maturity201920182022 Secured Notes7.875%2022$264,576$292,2582023 Secured Notes6.875%2023482,768293,918Unsecured Notes10.00%2023-198,931US ABL FacilityVaries2022885,245853,409Canadian ABL Facility(a)Varies2022--Capital lease and other financing obligations(b)-37,983Total debt1,632,5891,676,499Less: current portion of long-term debt-(1,959)Total long-term debt$1,632,589$1,674,540(a) As of December 31, 2019, the Company had no outstanding principal borrowings on the Canadian ABL Facility and $2.1 million of related debt issuance costs.No related debt issuance costs were recorded as a direct offset against the principal of the Canadian ABL Facility and the remaining $2.1 million, in excess ofprincipal, has been included in other non-current assets on the consolidated balance sheet. As of December 31, 2018, the Company had $0.9 million of outstandingprincipal borrowings on the Canadian ABL Facility and $2.9 million of related debt issuance costs. $0.9 million of the related debt issuance costs are recorded as adirect offset against the principal of the Canadian ABL Facility and the remaining $2.0 million, in excess of principal, has been included in other non-current assetson the condensed consolidated balance sheet.(b) In connection with the adoption of ASC 842, the capital leases and financing obligations and associated deferred financing costs that related to the failed saleleaseback transactions were reversed. At December 31, 2019, the Company has no remaining capital leases and other financing obligations.There are aggregate annual principal maturities of debt of $1,173.0 million in 2022 and of $490.0 million in 2023. There are noaggregate annual principal maturities of debt in 2020, 2021, 2024 or thereafter.The Company has debt discounts, net of premiums, and debt issuance costs recorded as offsets against the carrying value of therelated debt.These debt costs will be amortized and included as part of interest expense over the remaining contractual terms of those debtinstruments for each of the next five years as follows:(in thousands)Debt discount anddebt issuance costamortization2020$11,677202111,98220227,43520231,4032024 and thereafter-Former Algeco Group RevolverPrior to the Business Combination, WSII depended on the Algeco Group for financing, which centrally managed all cash management.The Algeco Group maintained a multicurrency asset-based revolving credit facility (the “Algeco Group Revolver”).On March 31, 2017, the Algeco Group Revolver was amended (the “Amended Algeco Group Revolver”) to provide for a maximumavailability of the equivalent of $1.1 billion, with a maturity date of July 10, 2018. As amended, the maximum USD and CAD availability to WSIIwas reduced to $740.0 million and $100.0 million, respectively. WSII incurred $10.2 million in debt issuance costs in connection with theamendment, which were deferred and amortized through the new maturity date.Borrowings under the Amended Algeco Group Revolver bore interest payable on the first day of each quarter for the preceding quarter ata variable rate based on LIBOR or another applicable regional bank rate plus a margin of 3.75%. Borrowings were secured by a first lien ontangible assets which comprised substantially all Algeco Group rental equipment, property, plant and equipment and trade receivables in theUS, Canada, the United Kingdom, Australia and New Zealand.On November 29, 2017, the $669.5 million that had been drawn by WSII on the Amended Algeco Group Revolver under the direction ofthe Algeco Group’s centralized treasury function was repaid in full, using the proceeds from the Business Combination (see Note 2), and WSII’sproperties were released from all liens related to the Amended Algeco Group Revolver.87Interest expense of $29.2 million related to the Algeco Group Revolver was included in the interest expense for the year endedDecember 31, 2017.ABL FacilityOn November 29, 2017, WS Holdings, WSII and certain of its subsidiaries entered into the ABL Facility that provided a senior securedrevolving credit facility in the initial aggregate principal amount of up to $600.0 million.For accounting purposes, the ABL Facility is treated as a modification of the Amended Algeco Group Revolver. Certain of the lendersunder the Amended Algeco Group Revolver are also lenders under the ABL Facility. As the borrowing capacity of each of the continuing lendersin the ABL Facility was greater than the borrowing capacity of the Amended Algeco Group Revolver, any unamortized debt issuance costs ofcontinuing lenders were deferred and amortized through the maturity date of the ABL Facility. The amount of unamortized debt issuance costspertaining to continuing ABL lenders was $3.5 million as of the date of the modification. Any debt issuance costs from the Amended AlgecoGroup Revolver that pertain to non-continuing lenders were expensed through interest expense on the consolidated statement of operations asof the modification date. The Company recognized a charge of $2.8 million in interest expense related to the write-off of debt issuance costspertaining to non-continuing lenders for the year ended December 31, 2017. As a result of entering into the ABL Facility, the Company incurreddebt issuance and discounts costs of $11.2 million that are deferred and amortized through the maturity date of the ABL FacilityIn July and August 2018, the Company entered into three amendments (the "ABL Amendments") to the ABL Facility that, among otherthings, (i) permitted the ModSpace acquisition and the Company’s financing thereof, (ii) increased the ABL Facility limit to $1.425 billion in theaggregate, with an accordion feature allowing up to $1.8 billion of capacity, and (iii) increased certain thresholds, basket sizes and default andnotice triggers to account for the Company’s increased scale following the ModSpace acquisition.After giving effect to the ABL Amendments, the ABL Facility, which matures on May 29, 2022, consists of (i) a $1.285 billion asset-backedrevolving credit facility (the “US ABL Facility”) for WSII and certain of its domestic subsidiaries (the “US Borrowers”), (ii) a $140.0 million asset-based revolving credit facility (the “Canadian ABL Facility”) for certain Canadian subsidiaries of WSII (the “Canadian Borrower,” and together withthe US Borrowers, the “Borrowers”), and (iii) an accordion feature that permits the Borrowers to increase the lenders’ commitments in anaggregate amount not to exceed $375.0 million, subject to the satisfaction of customary conditions, plus any voluntary prepayments that areaccompanied by permanent commitment reductions under the ABL Facility.Borrowings under the ABL Facility, at the Borrower’s option, bear interest at an adjusted LIBOR or base rate, in each case plus anapplicable margin. The initial applicable margin was 2.50% for LIBOR borrowings and 1.50% for base rate borrowings. Commencing on March31, 2018, the applicable margins were subject to one step-down of 0.25% or one step-up of 0.25%, based on excess availability levels withrespect to the ABL Facility. The ABL Facility requires the payment of an annual commitment fee on the unused available borrowings of between0.375% and 0.5% per annum. At December 31, 2019, the weighted average interest rate for borrowings under the ABL Facility was 4.51%. Theweighted average interest rate on the balance outstanding as of year end, as adjusted for the effects of the interest rate swap agreements was5.10%. Refer to Note 15 for a more detailed discussion on interest rate management.Borrowing availability under the US ABL Facility and the Canadian ABL Facility is equal to the lesser of (i) with respect to US Borrowers,$1.285 billion and the US Borrowing Base (defined below) (the “US Line Cap”), and (ii) with respect to the Canadian Borrower, $140.0 millionand the Canadian Borrowing Base (defined below) (the “Canadian Line Cap,” together with the US Line Cap, the “Line Cap”).The US Borrowing Base is, at any time of determination, an amount equal to the sum of:85% of the net book value of the US Borrowers’ eligible accounts receivable, plusthe lesser of (i) 95% of the net book value of the US Borrowers’ eligible rental equipment and (ii) 85% of the net orderly liquidation value of the USBorrowers’ eligible rental equipment, minuscustomary reserves.The Canadian Borrowing Base is, at any time of determination, an amount equal to the sum of:85% of the net book value of the Canadian Borrower’s eligible accounts receivable, plusthe lesser of (i) 95% of the net book value of the Canadian Borrower's eligible rental equipment and (ii) 85% of the net orderly liquidation value ofthe Canadian Borrower's eligible rental equipment, plusportions of the US Borrowing Base that have been allocated to the Canadian Borrowing Base, minuscustomary reserves.At December 31, 2019, the Line Cap was $1.425 billion and the Borrowers had $509.1 million of available borrowing capacity under theABL Facility, including $369.3 million under the US ABL Facility and $139.8 million under the Canadian ABL Facility.Borrowing capacity under the US ABL Facility is made available for up to $75.0 million of letters of credit and up to $75.0 million ofswingline loans, and borrowing capacity under the Canadian ABL Facility is made available for up to $60.088million of letters of credit, and $50.0 million of swingline loans. At December 31, 2019, letters of credit and bank guarantees carried fees of2.875%. The Company had issued $12.7 million and $13.0 million of standby letters of credit under the ABL Facility at December 31, 2019 andDecember 31, 2018, respectively.The obligations of the US Borrowers are unconditionally guaranteed by WS Holdings and each existing and subsequently acquired ororganized direct or indirect wholly-owned US organized restricted subsidiary of WS Holdings, other than excluded subsidiaries (together withWS Holdings, the "US Guarantors"). The obligations of the Canadian Borrowers are unconditionally guaranteed by the US Borrowers and the USGuarantors, and each existing and subsequently acquired or organized direct or indirect wholly-owned Canadian organized restricted subsidiaryof WS Holdings other than certain excluded subsidiaries.The Company had $903.0 million and $879.4 million in outstanding principal under the ABL Facility at December 31, 2019 andDecember 31, 2018, respectively.Debt issuance costs and discounts of $17.8 million and $26.0 million are included in the carrying value of the ABL Facility at December31, 2019 and December 31, 2018, respectively.2022 Senior Secured NotesIn connection with the closing of the Business Combination, WSII issued $300.0 million aggregate principal amount of 7.875% seniorsecured notes due December 15, 2022 (the “2022 Secured Notes”) under an indenture dated November 29, 2017 (the “Indenture”). TheIndenture was entered into by and among WSII, the guarantors named therein (the “Note Guarantors”), and Deutsche Bank Trust CompanyAmericas, as trustee and as collateral agent. Interest is payable semi-annually on June 15 and December 15 beginning June 15, 2018.Prior to December 15, 2019, WSII was able to redeem the 2022 Secured Notes at a redemption price equal to 100% of the principalamount thereof, plus a customary make whole premium for the 2022 Secured Notes being redeemed, plus accrued and unpaid interest, if any,to but not including the redemption date. On December 13, 2019, the Company completed a partial redemption of $30.0 million of the 2022Secured Notes at a redemption price of 103% using proceeds from its ABL Facility. Following the redemption, $270.0 million of 2022 SecuredNotes were outstanding as of December 31, 2019. The Company recorded a loss on extinguishment of debt of $1.5 million, which included $0.9million of an early redemption premium and $0.6 million related to the write-off of unamortized deferred financing fees.On or after December 15, 2019, WSII, at its option, may redeem the 2022 Secured Notes, in whole or in part, at the redemption pricesexpressed as percentages of principal amount set forth below, plus accrued and unpaid interest to, but not including, the applicable redemptiondate (subject to the right of 2022 Secured Note holders on the relevant record date to receive interest due on an interest payment date falling onor prior to the redemption date), if redeemed during the twelve-month period beginning on December 15 of each of the years set forth below:YearRedemption Price2019103.938%2020101.969%2021 and thereafter100.000%The 2022 Secured Notes are unconditionally guaranteed by the Note Guarantors. WillScot is not a guarantor of the 2022 SecuredNotes. The Note Guarantors, as well as certain of the Company’s non-US subsidiaries, are guarantors or borrowers under the ABL Facility. Tothe extent that lenders under the ABL Facility release the guarantee of any Note Guarantor, such Note Guarantor will also be released fromobligations under the 2022 Secured Notes. These guarantees are secured by a second priority security interest in substantially all of the assetsof WSII and the Note Guarantors, subject to customary exclusions. The guarantees of the 2022 Secured Notes by WillScot Equipment II, LLC, aDelaware limited liability company which holds certain of WSII’s assets in the US, will be subordinated to its obligations under the ABL Facility.As of December 31, 2019 and 2018, unamortized debt issuance costs pertaining to the 2022 Secured Notes were $5.4 million and$7.7 million, respectively.2023 Senior Secured NotesOn August 6, 2018, a special purpose subsidiary of WSII completed a private offering of $300.0 million in aggregate principal amount ofits 6.875% senior secured notes due August 15, 2023 (the “Initial 2023 Secured Notes”). The issuer entered into an indenture dated August 6,2018 with Deutsche Bank Trust Company Americas, as trustee (“2023 Secured Notes Indenture”), which governs the terms of the Initial 2023Secured Notes. In connection with the ModSpace acquisition, the issuer merged with and into WSII and WSII assumed the Initial 2023 SecuredNotes. Interest is payable semi-annually on February 15 and August 15 of each year, beginning February 15, 2019.On May 14, 2019, WSII completed a tack-on offering of $190.0 million in aggregate principal amount to the Initial 2023 Secured Notes(the "Tack-On Notes"). The Tack-on Notes were issued as additional securities under the 2023 Secured Notes Indenture. The Tack-On Notesand the Initial 2023 Secured Notes (the "2023 Secured Notes", and together with the 2022 Secured Notes, the "Senior Secured Notes") aretreated as a single class of debt securities under the 2023 Secured Notes Indenture. The Tack-on Notes have identical terms to the Initial 2023Secured Notes, other than with respect to the issue89date and issue price. WSII incurred a total of $3.0 million in debt issuance costs in connection with the tack-on offering, which were deferred andwill be amortized through the August 15, 2023 maturity date. The Tack-On Notes were issued at a premium of $0.5 million which will beamortized through the August 15, 2023 maturity date. The proceeds of the Tack-On Notes were used to repay a portion of the US ABL Facility.WSII may redeem the 2023 Secured Notes at any time before August 15, 2020 at a redemption price equal to 100% of the principalamount thereof, plus a customary make whole premium for the 2023 Secured Notes being redeemed, plus accrued and unpaid interest, if any,to but not including the redemption date. Before August 15, 2020, WSII may redeem up to 40% of the aggregate principal amount of the 2023Secured Notes at a price equal to 106.875% of the principal amount of the 2023 Secured Notes being redeemed, plus accrued and unpaidinterest, if any, to but not including the redemption date with the net proceeds of certain equity offerings. WSII may also redeem up to 10% of theaggregate principal amount of the 2023 Secured Notes at any time prior to the second anniversary of the closing date of this offering at aredemption price equal to 103% of the principal amount of the 2023 Secured Notes being redeemed during each twelve-month periodcommencing with the issue date, plus accrued and unpaid interest, if any, to but not including the redemption date. If WSII undergoes a changeof control or sells certain of its assets, WSII may be required to offer to repurchase the 2023 Secured Notes.On and after August 15, 2020, WSII may redeem the 2023 Secured Notes, in whole or in part, at the redemption prices expressed aspercentages of principal amount set forth below plus accrued and unpaid interest to but not including the applicable redemption date (subject tothe holders' right to receive interest due on an interest payment date falling on or prior to the redemption date), if redeemed during the twelve-month period beginning on August 15 of each of the years set forth below.YearRedemption Price2020103.438%2021101.719%2022 and thereafter100.000%The 2023 Secured Notes are unconditionally guaranteed by the Note Guarantors. WillScot is not a guarantor of the 2023 SecuredNotes. The Note Guarantors and certain of the Company's non-US subsidiaries are guarantors or borrowers under the ABL Facility. Theseguarantees are secured by a second priority security interest in substantially all of the assets of WSII and the Note Guarantors (subject tocustomary exclusions) and are subordinated to the Company's obligations under the ABL Facility.Unamortized debt issuance costs and discounts, net of premiums, of $7.2 million and $6.1 million are included in the carrying value ofthe debt as of December 31, 2019 and 2018, respectively.2023 Senior Unsecured NotesOn August 3, 2018, a special purpose subsidiary of WSII completed a private offering of $200.0 million in aggregate principal amount ofits senior unsecured notes due November 15, 2023 (the “Unsecured Notes”). The issuer entered into an indenture with Deutsche Bank TrustCompany Americas, as trustee, which governed the terms and conditions of the Unsecured Notes. In connection with the ModSpace acquisition,the issuer merged with and into WSII and WSII assumed the Unsecured Notes.On June 19, 2019 (the "Redemption Date"), WSII used proceeds from its US ABL Facility to redeem all $200.0 million in aggregateoutstanding principal amount of the Unsecured Notes at a redemption price of 102.0%, plus a make-whole premium of 1.126% and anyaccrued and unpaid interest to, but not including, the Redemption Date. The Company recorded a loss on extinguishment of $7.2 million, whichincluded $6.2 million of make-whole premiums and $1.0 million related to the write-off of unamortized deferred financing fees.Prior to the redemption, the Unsecured Notes bore interest at a rate of 10% per annum. Interest was payable semi-annually onFebruary 15 and August 15 of each year, beginning February 15, 2019.Unamortized debt issuance costs and discounts pertaining to the Unsecured Notes were $1.1 million as of December 31, 2018.The Company is in compliance with all debt covenants and restrictions for the aforementioned debt instruments as of December 31,2019.Capital Lease and Other Financing ObligationsThe Company entered into several arrangements in which they sold branch locations and simultaneously leased the associatedproperties back from the various purchasers. Due to the terms of the lease agreements, these transactions were treated as financingarrangements. These transactions contain non-recourse financing which was considered a form of continuing involvement and precluded theuse of sale-leaseback accounting under ASC 840. In connection with the adoption of ASC 842, these transactions were deemed to comply withsale-leaseback accounting and the associated liabilities under these90agreements were reversed and recorded as part of the entry recorded to retained earnings upon the adoption of ASC 842, retroactive to January1, 2019. The Company no longer had any other financing obligations as of December 31, 2019.As of December 31, 2018 and prior to the adoption of ASC 842, the Company’s capital lease and financing obligations primarilyconsisted of $37.9 million under sale-leaseback transactions and $0.1 million of capital leases. The Company’s financing obligations arepresented net of $1.6 million of debt issuance costs for the year ended December 31, 2018. The terms of the financing arrangements rangedfrom approximately eighteen months to ten years. The interest rates implicit in these financing arrangements were approximately 8.0%.NOTE 13 - EquityCommon StockWillScot's certificate of incorporation authorizes the issuance of 400,000,000 shares of Class A common stock with a par value of$0.0001 per share, 100,000,000 shares of Class B common stock with a par value of $0.0001 per share and 1,000,000 shares of preferredstock, par value $0.0001 per share. The common shareholders possess the same voting rights, but only Class A shareholders are entitled todividends or other distributions made by the Company.On July 30, 2018, WillScot closed a public offering of 8,000,000 shares of its Class A common stock at an offering price of $16.00 pershare. On August 10, 2018, the underwriters exercised their right to purchase an additional 1,200,000 shares at the public offering price. The netoffering proceeds, including the exercise of the over-allotment option, were $139.0 million, after deducting discount and offering expenses of$8.2 million. The Company used the proceeds to fund the ModSpace acquisition and to pay related fees and expenses.On August 15, 2018, WillScot issued 6,458,229 unregistered shares of its Class A common stock to former ModSpace shareholdersas part of the consideration paid for ModSpace. In connection with the private placement, WillScot entered into a registration rights agreementdated July 26, 2018, under which WillScot granted customary registration rights to the holders of the unregistered common shares. Subject tolimited exception, the unregistered shares issued to former ModSpace shareholders could not be sold or otherwise transferred prior to February15, 2019.On December 11, 2018 pursuant to the terms of the Warrant Exchange discussed in more detail below, the Company issued 8,205,841registered Class A common shares.The Company has 108,818,854 shares of Class A common stock and 8,024,419 shares of Class B common stock issued andoutstanding as of December 31, 2019. The outstanding shares of the Company’s common stock are duly authorized, validly issued, fully paidand non-assessable.In connection with the stock compensation vesting and stock option exercises described in Note 18, the Company issued 309,857shares of common stock during the year ended December 31, 2019.Private PlacementOn November 29, 2017, in connection with the closing of the Business Combination, Sapphire purchased 43,568,901 shares ofWillScot’s Class A common stock at a price of $9.60 per share, for a total purchase price of $418.3 million. The proceeds from the privateplacement, together with other funds, were used by WillScot to effectuate the transactions contemplated by the Business Combination.In connection with the private placement, the Company, Sapphire and certain other parties entered into a registration rights agreementthat amended and restated a 2015 registration rights agreement between Double Eagle and certain of its initial investors. Under the amendedand restated registration rights agreement, WillScot provided to Sapphire and the Double Eagle investors customary demand, shelf andpiggyback registration rights for unregistered securities held by the shareholders.Earnout ArrangementOn November 29, 2017, in connection with the closing of the Business Combination, WillScot, Sapphire, Double Eagle Acquisition LLC(“DEAL”) and Harry E. Sloan (together with DEAL, the “Founders”) entered into an earnout agreement (the “Earnout Agreement”), pursuant towhich 12,425,000 shares of WillScot Class A common stock held by the Founders were placed in escrow and 14,550,000 warrants to purchaseshares of WillScot Class A common stock owned by the Founders were restricted. The escrowed shares and warrant restrictions were subjectto release upon the occurrence of certain triggering events set forth in the Earnout Agreement and associated escrow agreement.On January 19, 2018, 3,106,250 escrowed shares were released to each of the Founders and Sapphire. The release was triggeredwhen the closing price of WillScot’s Class A shares exceeded $12.50 per share for a period of 20 out of 30 trading days.On August 21, 2018, the remaining escrowed shares were released to the Founders and Sapphire, the Founders transferred4,850,000 warrants to Sapphire, and the restrictions on the Founders’ warrants lapsed. The releases and warrant transfer were triggered whenthe Company completed the ModSpace acquisition, which constituted a “Qualifying Acquisition”91under the Earnout Agreement. The Earnout Agreement and escrow agreement were effectively terminated upon the release of the escrowedshares and warrant restrictions.Warrants2015 WarrantsDouble Eagle issued warrants to purchase its common stock as components of units sold in its initial public offering (the “PublicWarrants”). Each Public Warrant entitles the holder to purchase one-half of one share of WillScot Class A common stock at a price of $5.75 perhalf share (or $11.50 per whole share), subject to adjustment. Public Warrants may be exercised only for a whole number of WillScot Class Ashares and they expire on November 29, 2022. The Company may redeem the Public Warrants for $0.01 per warrant if the closing price ofWillScot’s Class A shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third tradingday prior to the date the Company sends a notice of redemption to the warrant holders, providing for a 30 day notice period. The Company shareprice performance target was achieved on January 21, 2020 and, on January 24, 2020, the Company issued the notice of its intent to redeemoutstanding Public Warrants for $0.01 in 30 days.Double Eagle also issued warrants to purchase its common stock in a private placement concurrently with its initial public offering (the“Private Warrants,” and together with the Public Warrants, the "2015 Warrants"). The Private Warrants were purchased at a price of $0.50 per unitfor an aggregate purchase price of $9.75 million. The Private Warrants are identical to the Public Warrants, except that, if held by Double Eagle’ssponsor or founders (or their permitted assignees), the Private Warrants may be exercised on a cashless basis and are not subject toredemption.On July 12, 2018, the Public Warrants were suspended from trading on the Nasdaq Capital Market (“Nasdaq”) based on WillScot'sfailure to satisfy a minimum holder requirement applicable to the warrants. The Public Warrants were delisted on October 8, 2018.During the year ended December 31, 2019, 135,000 of the Public Warrants were exercised, resulting in the issuance of 67,500 sharesof Class A common stock and $0.8 million in proceeds.2018 WarrantsOn August 15, 2018, WillScot issued warrants to purchase approximately 10.0 million WillScot Class A common shares (the "2018Warrants"), to the former shareholders as part of the ModSpace acquisition. Each 2018 Warrant entitles the holder thereof to purchase oneshare of WillScot Class A common stock at an exercise price of $15.50 per share, subject to potential adjustment. Subject to limited exception,the 2018 Warrants were not exercisable or transferable until February 11, 2019. The 2018 Warrants expire on November 29, 2022. Under aregistration rights agreement dated July 26, 2018, WillScot agreed to file a registration statement, and to use its reasonable best efforts tocause the registration statement to become effective, by the six-month anniversary of the issuance date.On December 13, 2019, the Company repurchased and terminated 22,063 of the 2018 Warrants for less than $0.1 million.Warrant ExchangeOn November 8, 2018, WillScot commenced an offer to exchange the 2015 Warrants for shares of its Class A common stock in acashless transaction (the “Warrant Exchange”). In the tender offer, each warrant holder had the opportunity to receive 0.18182 registered shareof Class A common stock in exchange for each warrant tendered by the holder and exchanged pursuant to the offer.The Warrant Exchange offer expired on December 7, 2018 and a total of 45,131,827 of the outstanding 69,499,694 warrants weretendered and accepted for exchange. Pursuant to the terms of the Warrant Exchange, WillScot issued 8,205,841 shares of Class A commonstock on December 11, 2018. In lieu of issuing fractional shares of common stock, WillScot paid $347 in cash to holders of warrants who wouldotherwise have been entitled to receive fractional shares, after aggregating all such fractional shares of such holder, in an amount equal to suchfractional part of a share multiplied by the last sale price of a share of WillScot common stock on December 7, 2018. In connection with theWarrant Exchange, the Company capitalized $1.8 million of offering expenses within additional paid-in capital in December 2018.As the fair value of the warrants exchanged in the Warrant Exchange offer was less than the fair value of the common stock issued, theCompany recorded a non-cash deemed dividend of $2.1 million for the incremental fair value provided to the warrant holders. The fair value ofthe warrants was determined using the over-the-counter market price on December 7, 2018, a Level 2 fair value input. The fair value of thecommon stock was determined using the closing market price of the Company's common stock on December 7, 2018, a Level 1 fair valueinput.At December 31, 2019, 24,232,867 of the 2015 Warrants and 9,977,516 of the 2018 Warrants were outstanding.Registration StatementsOn February 12, 2019, a shelf registration statement filed by WillScot with the SEC became effective. Under the shelf registrationstatement, 562,542 shares of WillScot Class A common stock issued to the former ModSpace shareholders,928,914,969 2018 Warrants and up to 9,999,579 new WillScot Class A shares issuable upon the exercise of the 2018 Warrants were registered forresale.On November 28, 2018, a registration statement filed by WillScot with the SEC became effective. Under the shelf registration statement,61,865,946 shares of WillScot Class A common stock issued in private placements to the Founders and certain of their transferees, Sapphireand certain of its transferees, and the former ModSpace shareholders were registered for resale.Accumulated Other Comprehensive LossThe changes in accumulated other comprehensive loss ("AOCI"), net of tax, for the years ended December 31, 2019, 2018 and 2017,were as follows:(in thousands)Foreign CurrencyTranslationUnrealized losseson hedgingactivitiesTotalBalance at December 31, 2016$(56,928)$-$(56,928)Other comprehensive income before reclassifications6,760-6,760Reclassifications from AOCI to additional paid-in capital(a)663-663Less other comprehensive income attributable to non-controlling interest8-8Balance at December 31, 2017(49,497)-(49,497)Other comprehensive loss before reclassifications(11,639)(6,240)(17,879)Reclassifications from AOCI to income(b)-285285Reclassifications from AOCI to retained earnings(c)(2,540)-(2,540)Less other comprehensive income attributable to non-controlling interest1,0685371,605Balance at December 31, 2018(62,608)(5,418)(68,026)Other comprehensive income (loss) before reclassifications10,586(7,930)2,656Reclassifications from AOCI to income(b)-3,1213,121Less other comprehensive (loss) income attributable to non-controllinginterest(960)434(526)Balance at December 31, 2019$(52,982)$(9,793)$(62,775)(a) In connection with the transfer of WSII’s equity interest in Chard as part of the Algeco Group internal restructuring that occurred prior to the BusinessCombination, $0.6 million was reclassified from accumulated other comprehensive loss into additional paid-in capital in the fourth quarter of 2017.(b) For the years ended December 31, 2019 and 2018, $3.3 million and $0.4 million, respectively, was reclassified from AOCI into the consolidated statement ofoperations within interest expense related to the interest rate swaps discussed in Note 15. For the years ended December 31, 2019 and 2018, the Companyrecorded a tax benefit of $0.8 million and $0.1 million associated with this reclassification, respectively.(c) In the first quarter of 2018, the Company elected to early adopt ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) -Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which resulted in a discrete reclassification of $2.5 million fromaccumulated other comprehensive loss to accumulated deficit effective January 1, 2018.Non-Controlling InterestThe changes in non-controlling interest for the years ended December 31, 2019 and 2018 were as follows:(in thousands)201920182017Balance at beginning of period$63,982$48,931$-Net loss attributable to non-controlling interest(421)(4,532)(2,110)Other comprehensive income (loss)526(1,605)(8)Issuance of common stock and contribution of proceeds to WSII-7,574-Acquisition of ModSpace and the related financing transactions includingstock and warrants-13,614-Adoption of ASC842503--Recapitalization transaction--51,049Balance at end of period$64,590$63,982$48,93193Shareholders AgreementOn November 29, 2017, in connection with the closing of the Business Combination, WillScot and the Sellers entered into ashareholders agreement (the “Shareholders Agreement”) that governs the ownership and operation of WS Holdings. The agreement contains,among other things, (i) preemptive rights that permit Sapphire (to whom the Sellers’ interest was assigned in 2017) to avoid dilution andmaintain its ownership percentage in WS Holdings on a fully diluted basis upon any future issuance of shares of WS Holdings or WillScot; (ii)customary tag along and drag along provisions; (iii) protective provisions designed to protect Sapphire from changes to WS Holdings’organizational documents that would have a materially disproportionate effect on Sapphire; and (iv) transfer restrictions on the shares ofWillScot Class B common stock held by Sapphire. The Shareholder Agreement also provides to WillScot a right of first refusal to purchaseSapphire’s shares of WS Holdings, and provides that acquisitions of businesses similar to WSII’s business must be consummated by WSHoldings or one of its wholly-owned subsidiaries.Exchange AgreementOn November 29, 2017, in connection with the closing of the Business Combination, WillScot, the Sellers and WS Holdings enteredinto an exchange agreement (the “Exchange Agreement”). Under the agreement, Sapphire (to whom the Sellers’ interest was assigned in 2017)acquired the right at any time prior to November 29, 2022, to exchange all, but not less than all, of its WS Holdings shares into new shares ofWillScot Class A common stock in a private placement.Subject to potential adjustment, Sapphire’s common shares of WS Holdings (representing Sapphire’s then-current ownershippercentage of WS Holdings) are exchangeable into new WillScot Class A shares representing an equal ownership percentage of WillScot ClassA common stock. The exchange ratio is subject to adjustment based on, among other things, (i) Sapphire’s election to exercise, or to refrainfrom exercising, its preemptive rights under the Shareholders Agreement and (ii) the dilutive effect of certain issuances of equity securities andderivatives by WS Holdings or WillScot that do not trigger such preemptive rights. Upon Sapphire’s exercise of its exchange right, WillScot willautomatically redeem for no consideration all of its Class B common shares owned by Sapphire.As disclosed above, during the year ended December 31, 2018, WillScot issued 9,200,000 shares of Class A common stock throughan underwritten public offering, the proceeds of which were immediately contributed down through WS Holdings to WSII for purposes of fundingpart of the ModSpace acquisition. Sapphire waived its preemptive right to participate in the public offering under the shareholders agreementand Sapphire's ownership interest in WS Holdings was adjusted from 10% to 9% accordingly. As disclosed in Note 2, the Company closed onthe ModSpace acquisition that resulted in the contribution of ModSpace's net assets of $991.5 million to WSII. The net impact of the transactionsabove, resulted in a non-recurring adjustment of $21.2 million to additional paid-in capital and non-controlling interest on the consolidatedbalance sheets. Despite the dilution in the non-controlling interest ownership in WS Holdings, the adjustment increases the non-controllinginterest equity as a result of the significant increase in net assets from the ModSpace acquisition.Under the Exchange Agreement, the non-controlling interest can be exchanged for a 9% interest in WillScot, subject to certain anti-dilution adjustments contemplated by the Exchange Agreement.NOTE 14 - Income TaxesThe components of income tax (benefit) expense from continuing operations for the years ended December 31, 2019, 2018 and 2017are comprised of the following:(in thousands)201920182017US Federal and StateCurrent$827$668$(1,817)Deferred1,904(36,149)3,450Outside of USCurrent(395)924(1,422)Deferred(4,527)(4,043)(1,147)Total income tax benefit$(2,191)$(38,600)$(936)94Income tax results from continuing operations differed from the amount computed by applying the US statutory income tax rate of 21%,21%, and 35% to the loss from continuing operations before income taxes for the following reasons for the years ended December 31, 2019,2018 and 2017:(in thousands)201920182017Loss from continuing operations before income taxUS$(9,477)$(80,824)$(97,009)Non-US(4,257)(11,348)(68,389)Total loss from continuing operations before income tax$(13,734)$(92,172)$(165,398)US Federal statutory income tax benefit$(2,884)$(19,356)$(57,889)Effect of tax rates in foreign jurisdictions(207)(626)5,626State income tax (benefit) expense, net of federal benefit1,829(2,478)(5,188)Unremitted foreign earnings-(6,793)(2,493)Valuation allowances961(11,871)59,679Non-deductible items(233)--Non-deductible executive compensation490--Non-deductible transaction costs(12)1,1341,297Non-deductible goodwill impairment--15,849Non-deductible deferred financing fees--2,715Non-deductible Stewardship (a)--1,658Non-deductible monitoring fee (b)--422Tax law changes (excluding valuation allowance) (c)(2,785)64(23,115)Other6501,326503Reported income tax benefit$(2,191)$(38,600)$(936)Effective income tax rate15.95%41.88%0.56%(a) Prior to the Business Combination, certain expenses incurred by the Company in performing services to its immediate shareholder were not deductible underUS tax law.(b) Prior to the Business Combination, certain fees charged by TDR Capital to the Company were not deductible under US tax law.(c) Tax law changes includes the following amounts: 2017 and 2018 represent US tax reform items and 2019 represents change in provision tax law in a non-USjurisdiction.95Deferred Income TaxesDeferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities andtheir tax bases, as well as from net operating loss and carryforwards. Significant components of the Company’s deferred tax assets andliabilities are as follows:(in thousands)20192018Deferred tax assetsLoans and borrowings$138,206$122,456Employee benefit plans1,9163,395Accrued liabilities8,4948,715Currency losses, net-408Deferred revenue20,95116,310Operating lease liability37,438-Other7,8174,724Tax loss carryforwards231,503239,282Deferred tax assets, gross446,325395,290Valuation allowance(80,241)(79,132)Net deferred income tax asset$366,084$316,158Deferred tax liabilitiesRental equipment and other property, plant and equipment$(375,682)$(360,766)Intangible assets(23,690)(22,654)ROU asset(37,218)-Deferred tax liability(436,590)(383,420)Net deferred income tax liability$(70,506)$(67,262)The Company's valuation allowance increased by $1.1 million from 2018. The increase is a $0.1 million adjustment to the valuationallowance recorded in purchase accounting for ModSpace and a change in estimate about the realizability of deferred tax assets for a totalamount of $1.0 million recorded in tax expense.Tax loss carryforwards at December 31, 2019 are outlined in the table below and include US Federal, US State and non-US (Mexico &Canada). The availability of these tax losses to offset future income varies by jurisdiction. Furthermore, the ability to utilize the tax losses may besubject to additional limitations upon the occurrence of certain events, such as a change in the ownership of the Company.The Company’s tax loss carryforwards are as follows at December 31, 2019 (in millions):JurisdictionLossCarryforwardExpirationUS - Federal$899.52022 - 2037, IndefiniteUS - State619.92019 -2039, IndefiniteForeign - Mexico & Canada20.72021 - 2038Total$1,540.1As of December 31, 2019, the total amount of the basis difference in investments outside the US for which deferred taxes have notbeen provided is approximately $120.0 million. The tax, if any, associated with the recovery of the basis difference is dependent on the manner inwhich it is recovered and is not readily determinable.Unrecognized Tax PositionsThe Company is subject to taxation in US, Canada, Mexico and state jurisdictions. The Company’s tax returns are subject toexamination by the applicable tax authorities prior to the expiration of statute of limitations for assessing additional taxes, which generallyranges from two to five years after the end of the applicable tax year. Therefore, as of December 31, 2019, tax years for 2013 through 2019generally remain subject to examination by the tax authorities. In addition, in certain taxing jurisdictions, in the case of carryover tax attributes toyears open for assessment, such attributes may be subject to reduction by taxing authorities.96A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:(in thousands)201920182017Unrecognized tax benefits - January 1,$64,444$72,660$64,974Increases based on tax positions related to current period-1,5457,895Increases based on tax positions related to prior period268-355Decreases based on tax positions related to prior period(287)(9,016)(564)Decrease from expiration of statute of limitations(678)(745)-Unrecognized tax benefits - December 31,$63,747$64,444$72,660At December 31, 2019, 2018 and 2017, respectively, there were $59.3 million, $60.0 million and $67.2 million of unrecognized taxbenefits that, if recognized, would affect the annual effective tax rate.The Company classifies interest on tax deficiencies and income tax penalties within income tax expense. During the years endedDecember 31, 2019, 2018 and 2017, the Company recognized approximately $0.8 million, $1.0 million and $0.4 million in interest andpenalties, respectively. The Company had approximately $2.4 million and $1.6 million for the payment of interest and penalties accrued atDecember 31, 2019 and 2018, respectively.Future tax settlements or statute of limitation expirations could result in a change to the Company’s uncertain tax positions. TheCompany believes that it is reasonably possible that approximately $10.5 million of unrecognized tax benefits, as of December 31, 2019, coulddecrease in the next twelve months as a result of statute of limitation expirations, audit settlements or resolution of tax uncertainties.NOTE 15 - DerivativesOn November 6, 2018, WSII entered into an interest rate swap agreement (the “Swap Agreement”) with a financial counterparty thateffectively converts $400.0 million in aggregate notional amount of variable-rate debt under the Company’s ABL Facility into fixed-rate debt. TheSwap Agreement will terminate on May 29, 2022, at the same time the Company’s ABL Facility matures. Under the terms of the SwapAgreement, the Company receives a floating rate equal to 1 month LIBOR and makes payments based on a fixed rate of 3.06% on the notionalamount. The receive rate under the terms of the Swap Agreement was 1.74% and 2.44% at December 31, 2019 and 2018, respectively.The Swap Agreement was designated and qualified as a hedge of the Company’s exposure to changes in interest payment cash flowscreated by fluctuations in variable interest rates on the ABL Facility.The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of December 31was as follows:(in thousands)Balance Sheet Location20192018Cash Flow Hedges:Interest rate swapAccrued liabilities$5,348$1,709Interest rate swapOther long-term liabilities$8,943$6,192The fair value of the interest rate swap is based on dealer quotes of market forward rates, a Level 2 input on the fair value hierarchy, andreflects the amount that the Company would receive or pay as of December 31, 2019 for contracts involving the same attributes and maturitydates.The following table discloses the impact of the interest rate swap, excluding the impact of income taxes, on other comprehensiveincome (“OCI”), AOCI and the Company’s statement of operations for the years ended December 31:(in thousands)20192018Loss recognized in OCI$(6,280)$(7,777)Location of loss recognized in incomeInterest expenseInterest expenseLoss reclassified from AOCI into income (effective portion)$(3,254)$(373)97NOTE 16 - Fair Value MeasuresThe fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a currenttransaction between willing parties, other than in a forced or liquidation sale.The Company utilizes the suggested accounting guidance for the three levels of inputs that may be used to measure fair value:Level 1 -Observable inputs such as quoted prices in active markets for identical assets or liabilities;Level 2 -Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; andLevel 3 -Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptionsThe Company has assessed that the fair value of cash and short-term deposits, trade receivables, trade payables, capital lease andother financing obligations, and other current liabilities approximate their carrying amounts.The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair valuehierarchy:December 31, 2019December 31, 2018CarryingAmountFair ValueCarryingAmountFair Value(in thousands)Level 1Level 2Level 3Level 1Level 2Level 3Financial liabilities notmeasured at fair valueUS ABL Facility(a)$885,245$-$903,000$-$853,409$-$878,500$-Canadian ABL Facility(a)------918-2022 Secured Notes(a)264,576-282,250-292,258-297,027-2023 Secured Notes(a)482,768-517,334-293,918-288,633-Unsecured Notes(a)----198,931-197,462-Total$1,632,589$-$1,702,584$-$1,638,516$-$1,662,540$-(a) The carrying value of the US ABL Facility, the Canadian ABL Facility, the 2022 Secured Notes, the 2023 Secured Notes and the Unsecured Notes includes$17.8 million, $0.0 million, $5.4 million, $7.2 million, and $0.0 million of unamortized debt issuance costs for the year ended December 31, 2019, which are presentedas a direct reduction of the corresponding liability. The carrying value of the 2023 Secured Notes also includes a $0.5 million premium, which is net against the debtissuance costs for the year ended December 31, 2019. The carrying value of the US ABL Facility, the Canadian ABL Facility, the 2022 Secured Notes, the 2023Secured Notes and the Unsecured Notes includes $25.1 million, $0.9 million, $7.7 million, $6.1 million, and $1.1 million of unamortized debt issuance costs for theyear ended December 31, 2018, which are presented as a direct reduction of the corresponding liability.There were no transfers of financial instruments between the three levels of the fair value hierarchy during the years ended December31, 2019 and 2018. The carrying value of the ABL Facility, excluding debt issuance costs, approximates fair value as the interest rates arevariable and reflective of market rates. The fair value of the 2022 Secured Notes, the 2023 Secured Notes and the Unsecured Notes is based ontheir last trading price at the end of each period obtained from a third party. The location and the fair value of derivative assets and liabilitiesdesignated as hedges in the consolidated balance sheet are disclosed in Note 15.NOTE 17 - RestructuringRestructuring costs include charges associated with exit or disposal activities that meet the definition of restructuring under FASB ASCTopic 420, Exit or Disposal Cost Obligations (“ASC 420”). The Company's restructuring plans are generally country or region specific and aretypically completed within a one year period. Restructuring costs incurred under these plans include (i) one-time termination benefits related toemployee separations, (ii) contract termination costs, and, (iii) other related costs associated with exit or disposal activities including, but notlimited to, costs for consolidating or closing facilities. As a result of the adoption of ASC 842, on January 1, 2019 lease exit costs related to thetermination of leases for duplicative branches and corporate facilities are now recorded in operating lease liabilities and are not part of therestructuring liabilities. Costs related to the integration of acquired businesses that do not meet the definition of restructuring under ASC 420,such as employee training costs, duplicate facility costs, and professional services expenses, are included within SG&A expense.98The Company incurred costs associated with restructuring plans designed to streamline operations and reduce costs of $3.8 million,$15.5 million and $2.2 million net of reversals, during the years ended December 31, 2019, 2018 and 2017, respectively. The following is asummary of the activity in the Company’s restructuring accruals for years ended December 31:(in thousands)Year Ended December 31,201920182017EmployeeCostsFacilityExit CostsTotalEmployeeCostsFacilityExit CostsTotalEmployeeCostsFacilityExit CostsTotalBeginning balance$4,544$972$5,516$227$-$227$1,793$-$1,793Reclassification of liabilityto operating lease asset atthe adoption of ASC 842(a)-(972)(972)------Charges1,9551,8003,75510,1825,28615,4682,196-2,196Cash payments(5,694)-(5,694)(5,806)(4,314)(10,120)(1,806)-(1,806)Foreign currency translation(136)-(136)(59)-(59)12-12Non-cash movements(222)(1,800)(2,022)---(1,968)-(1,968)Ending balance$447$-$447$4,544$972$5,516$227$-$227(a) As a result of the adoption of ASC 842, the January 1, 2019 restructuring liability attributable to “cease-use” locations was reclassified to operating leaseassets and 2019 costs related to the termination of leases for duplicative branches and corporate facilities are now recorded in lease impairment charges andother related costs.The Company initiated certain restructuring plans associated with the ModSpace acquisition in order to capture operating synergies asa result of integrating ModSpace into WillScot. The restructuring activities primarily include the termination of employees in connection with theconsolidation of overlapping facilities and functions within our existing business. At December 31, 2019, the Company is substantially completewith actions related to employee costs.The restructuring charges for the year ended December 31, 2018 primarily relate to employee termination costs and lease exist costsin connection with the integration of Acton, Tyson, and ModSpace acquisitions in order to capture operating synergies as a result of integratingthese businesses into WillScot. The restructuring activities include the termination of leases for 26 duplicative branch and corporate facilitiesand the termination of employees in connection with the consolidation of these overlapping facilities and functions within our existing business.The restructuring charges for the year ended December 31, 2017 primarily relate to a reduction of corporate employees which resultedin employee termination costs. As part of the corporate restructuring plan, certain employees were required to render future service in order toreceive their termination benefits. The termination costs associated with these employees was recognized over the period from the date ofcommunication of termination to the employee to the earlier of the actual date of termination or the Business Combination date. As part of theAlgeco Group internal restructuring that occurred prior to the Business Combination, $2.0 million of WSII’s restructuring liability, related toemployees that were transferred, was transferred to other entities within the Algeco Group. The Company has no remaining liability associatedwith these employees and does not anticipate incurring future charges under the corporate restructuring plan. The remaining restructuring 2017charges are employee termination costs related to the Company’s US and Canadian operations.SegmentsThe $3.8 million of restructuring charges for the year ended December 31, 2019 includes: $3.3 million of charges pertaining to theModular - US segment; and $0.5 million of charges pertaining to the Modular - Other North America segment.The $15.5 million of restructuring charges for the year ended December 31, 2018 includes: $14.0 million of charges pertaining to theModular - US segment; and $1.5 million of charges pertaining to Modular - Other North America segment.The $2.2 million of restructuring charges for the year ended December 31, 2017 includes: $0.3 million of charges pertaining to theModular - US segment and $1.9 million of charges pertaining to Corporate.99NOTE 18 - Stock-Based CompensationFormer Algeco Long-Term Incentive PlanPrior to the Business Combination, certain WSII employees participated in the Algeco Group’s long-term cash incentive plan and equityincentive plans (collectively, the “Algeco LTIP”). In connection with the Business Combination, the participating WSII Employees (i) forfeited theirrights to participate in the Algeco LTIP and assigned those rights back to the Algeco Group and (ii) transferred any shares they owned in theAlgeco LTIP. In exchange, the WSII employees received $4.2 million in cash, which was paid by WSII and reimbursed by the Algeco Group.Prior to the Business Combination, WillScot’s non-executive Chairman of the Board served as the non-executive Chairman of WSII andthe Algeco Group and participated in the Algeco LTIP. In connection with the Business Combination, he resigned from those positions andentered into a transaction similar to the ones entered into by the participating WSII employees. He received $2.0 million in cash, which was paidby WSII and reimbursed by the Algeco Group, and 300,000 shares of WillScot Class A stock from Sapphire on the closing date of the BusinessCombination. The fair value of the shares at the time of the award was $9.90 per share or approximately $3.0 million.The $4.2 million and $2.0 million paid to the participating WSII employees and the non-executive Chairman, respectively, and the $3.0million of stock compensation are presented in selling, general and administrative expense on the consolidated statement of operations for theyear ended December 31, 2017. The corresponding amounts are reflected as a capital contribution and as share-based compensationexpense in the changes to additional paid-in capital in the consolidated statements of changes in shareholders’ equity.WillScot Incentive Stock PlanOn November 16, 2017, the Company’s shareholders approved a long-term incentive award plan (the “Plan”). The Plan is administeredby the Compensation Committee of WillScot's Board of Directors. Under the Plan, the Committee may grant an aggregate of 4,000,000 sharesof Class A common stock in the form of non-qualified stock options, incentive stock options, stock appreciation rights, RSAs, RSUs,performance compensation awards and stock bonus awards.RSAsThe following table summarizes the Company’s RSA activity during the year ended December 31, 2019:RSAsWeighted-AverageGrant Date FairValueOutstanding RSAs, December 31, 201872,053$15.57Granted during 201952,755$14.69Forfeited during 2019-$-Vested during 2019(72,053)$15.57Outstanding RSAs, December 31, 201952,755$14.69Compensation expense for RSAs recognized in SG&A expense on the consolidated statements of operations was $1.0 million and$0.5 million for the years ended December 31, 2019 and 2018, respectively, with associated tax benefits of $0.2 million and $0.1 million. AtDecember 31, 2019 unrecognized compensation expense related to RSAs totaled $0.4 million and is expected to be recognized over theweighted average remaining vesting period of 0.5 years.There was no compensation expense for RSAs for the years ended December 31, 2017.Time-Based RSUsThe following table summarizes the Company's Time-Based RSU award activity during the year ended December 31, 2019:Time-Based RSUsWeighted-AverageGrant Date FairValueOutstanding Time-Based RSUs, December 31, 2018852,733$13.60Granted during 2019478,400$11.69Forfeited during 2019(52,648)$12.78Vested during 2019(213,180)$12.78Outstanding Time-Based RSUs, December 31, 20191,065,305$12.78Compensation expense for Time-Based RSUs recognized in SG&A expense on the consolidated statements of operations was $3.9million and $2.3 million for the years ended December 31, 2019 and 2018, respectively, with associated100tax benefits of $0.9 million and $0.5 million, respectively. At December 31, 2019, unrecognized compensation expense related to Time-BasedRSUs totaled $10.3 million and is expected to be recognized over a remaining period of 2.6 years.There was no compensation expense for Time-Based RSUs for the year ended December 31, 2017.Market-Based RSUsThe following table summarizes the Company's Market-Based RSU award activity during the year ended December 31, 2019:Market-BasedRSUsWeighted-AverageGrant Date FairValueOutstanding Market-Based RSUs, December 31, 2018-$-Granted during 2019302,182$13.22Forfeited during 2019(13,901)$13.22Vested during 2019-$-Outstanding Market-Based RSUs, December 31, 2019288,281$13.22Compensation expense for Market-Based RSUs recognized in SG&A expense on the condensed consolidated statements ofoperations was $1.0 million for the year ended December 31, 2019, with associated tax benefit of $0.2 million. At December 31, 2019,unrecognized compensation expense related to Market-Based RSUs totaled $2.8 million and is expected to be recognized over a remainingperiod of 2.2 years.There was no compensation expense for Market-Based RSUs for the years ended December 31, 2018 and 2017.Stock Option AwardsThe following table summarizes the Company's stock option activity as of December 31, 2019:OptionsWeighted -Average ExercisePrice per ShareOutstanding stock options, December 31, 2018589,257$13.60Granted during 2019-$-Forfeited during 2019(41,302)$13.60Vested during 2019(147,313)$13.60Outstanding stock options, December 31, 2019400,642$13.60Exercised during 2019(13,767)$13.60Vested and exercisable stock options, December 31, 2019133,546$13.60Compensation expense for stock options recognized in SG&A expense on the consolidated statements of operations was $0.8 millionand $0.6 million for the years ended December 31, 2019 and 2018, respectively, with associated tax benefits of $0.2 million and $0.1 million,respectively. At December 31, 2019, unrecognized compensation expense related to Time-Based RSUs totaled $1.6 million and is expected tobe recognized over a remaining period of 2.2 years.As of December 31, 2019, the total intrinsic value of stock options outstanding and currently exercisable was $2.0 million and $0.7million, respectively. No stock options were exercised during the years ended December 31, 2018 or 2017. The total intrinsic value of stockoptions exercised during the year ended December 31, 2019 was less than $0.1 million.There was no compensation expense for stock options for the year ended December 31, 2017.The fair value of each option award at grant date was estimated using the Black-Scholes option-pricing model with the followingassumptions:AssumptionsExpected volatility36.0%Expected dividend yield-Risk-free interest rate2.7%Expected term (in years)6.25Exercise price$13.60Weighted-average grant date fair value$5.51101NOTE 19 - Commitments and ContingenciesCommitmentsAt December 31, 2019 and 2018, commitments for the acquisition of rental equipment and property, plant and equipment were $4.5million and $10.0 million, respectively.Contingencies - Legal ClaimsThe Company is involved in various lawsuits or claims in the ordinary course of business. Management is of the opinion that there isno pending claim or lawsuit which, if adversely determined, would have a material impact on the Company’s financial condition, results ofoperations or cash flows.NOTE 20 - Segment ReportingThe Company has historically operated in two principal lines of business: modular leasing and sales and remote accommodations,which were managed separately. The Remote Accommodations Business was considered a single operating segment. Following theBusiness Combination, the Remote Accommodations segment is no longer owned by the Company and is reported as discontinuedoperations in the consolidated financial statements. As such, the segment was excluded from the segment information below.Modular leasing and sales is comprised of two operating segments: US and other North America. The US modular operating segment(“Modular - US”) consists of the contiguous 48 states and Hawaii. The Other North America operating segment (“Modular - Other NorthAmerica”) consists of Alaska, Canada and Mexico. Corporate and other includes eliminations of costs and revenue between segments andAlgeco Group corporate costs not directly attributable to the underlying segments. Following the Business Combination, no additional AlgecoGroup corporate costs were incurred and the Company's ongoing corporate costs are included within the Modular - US segment. Total assetsfor each reportable segment are not available because the Company utilizes a centralized approach to working capital management.Transactions between reportable segments are not significant.As discussed in Note 10, the net assets acquired from ModSpace were allocated to both the Modular - US and Modular - Other NorthAmerica segments. The US operations of ModSpace are included in the Modular - US segment and the Canadian operations of ModSpace areincluded in the Modular - Other North America segment. The operations and net assets acquired from Acton and Tyson are both included in theModular - US segment.The Company defines EBITDA as net (loss) income plus interest (income) expense, income tax (benefit) expense, depreciation andamortization. The Company reflects the further adjustments to EBITDA ("Adjusted EBITDA") to exclude certain non-cash items and the effect ofwhat the Company considers transactions or events not related to its core business operations. The Company evaluates business segmentperformance on Adjusted EBITDA, as shown in the reconciliation of the Company’s (loss) income from operations before income taxes toAdjusted EBITDA below. Management believes that evaluating segment performance excluding such items is meaningful because it providesinsight with respect to intrinsic operating results of the Company.The Company also regularly evaluates gross profit by segment to assist in the assessment of its operational performance. TheCompany considers Adjusted EBITDA to be the more important metric because it more fully captures the business performance of thesegments, inclusive of indirect costs.102Reportable SegmentsThe following tables set forth certain information regarding each of the Company’s reportable segments for the years ended December31, 2019, 2018 and 2017, respectively:Year Ended December 31, 2019(in thousands)Modular - USModular - OtherNorth AmericaCorporate andOtherTotalRevenuesLeasing and services revenue:Modular space leasing$677,593$66,592$-$744,185Modular space delivery and installation201,36818,689-220,057Sales:New units54,8514,234-59,085Rental units27,87112,467-40,338Total Revenues961,683101,982-1,063,665CostsCost of leasing and services:Modular space leasing197,70715,444-213,151Modular space delivery and installation176,12417,983-194,107Cost of sales:New units39,3432,817-42,160Rental units17,2419,014-26,255Depreciation of rental equipment156,40918,270-174,679Gross profit$374,859$38,454$-$413,313Adjusted EBITDA$325,068$31,480$-$356,548Other selected dataSelling, general and administrative expense$242,734$28,270$-$271,004Other depreciation and amortization$11,542$853$-$12,395Purchase of rental equipment and refurbishments$193,453$11,653$-$205,106103Year Ended December 31, 2018(in thousands)Modular - USModular - OtherNorth AmericaCorporate andOtherTotalRevenuesLeasing and services revenue:Modular space leasing$469,302$48,933$-$518,235Modular space delivery and installation138,18116,376-154,557Sales:New units48,9844,619-53,603Rental units21,1233,894-25,017Total Revenues677,59073,822-751,412CostsCost of leasing and services:Modular space leasing131,84611,274-143,120Modular space delivery and installation127,93616,014-143,950Cost of sales:New units33,4843,379-36,863Rental units13,6503,009-16,659Depreciation of rental equipment106,35415,082-121,436Gross profit$264,320$25,064$-$289,384Adjusted EBITDA$196,410$19,123$-$215,533Other selected dataSelling, general and administrative expense$232,754$22,117$-$254,871Other depreciation and amortization$12,201$1,103$-$13,304Purchase of rental equipment and refurbishments$151,407$9,476$-$160,883104Year Ended December 31, 2017(in thousands)Modular - USModular - OtherNorth AmericaCorporate andOtherTotalRevenuesLeasing and services revenue:Modular space leasing$264,351$34,036$(566)$297,821Modular space delivery and installation81,0368,814-89,850Sales:New units29,2757,096-36,371Rental units18,2713,710(81)21,900Total Revenues392,93353,656(647)445,942CostsCost of leasing and services:Modular space leasing75,6157,973-83,588Modular space delivery and installation77,3038,174-85,477Cost of sales:New units20,9195,106-26,025Rental units10,0992,544-12,643Depreciation of rental equipment60,31212,327-72,639Gross profit (loss)$148,685$17,532$(647)$165,570Adjusted EBITDA$110,822$13,099$(15,112)$108,809Other selected dataSelling, general and administrative expense$100,427$16,790$45,134$162,351Other depreciation and amortization$5,333$1,014$2,306$8,653Purchase of rental equipment and refurbishments$96,378$5,832$-$102,210105The following table presents a reconciliation of the Company’s loss before income tax by segment to Adjusted EBITDA by segment:(in thousands)Modular - USModular - OtherNorth AmericaCorporate andOtherTotal2019(Loss) income from continuing operations before incometaxes$(19,883)$6,149$-$(13,734)Loss on extinguishment of debt8,755--8,755Interest expense120,7581,746-122,504Depreciation and amortization167,95119,123-187,074Currency gains, net(267)(421)-(688)Restructuring costs, lease impairment expense and otherrelated charges11,602827-12,429Goodwill and other impairments2,178670-2,848Integration costs23,5803,027-26,607Stock compensation expense6,686--6,686Other expense3,708359-4,067Adjusted EBITDA$325,068$31,480$-$356,5482018Loss from continuing operations before income taxes$(88,206)$(3,966)$-$(92,172)Interest expense, net96,1082,325-98,433Depreciation and amortization118,55516,185-134,740Currency losses, net5091,945-2,454Restructuring costs, lease impairment expense and otherrelated charges13,9301,538-15,468Goodwill and other impairments1,600--1,600Integration costs29,260746-30,006Stock compensation expense3,439--3,439Transaction costs19,780271-20,051Other expense1,43579-1,514Adjusted EBITDA$196,410$19,123$-$215,5332017Loss from continuing operations before income taxes$(12,345)$(64,580)$(88,473)$(165,398)Interest expense, net65,7094,60336,764107,076Depreciation and amortization65,64513,3412,30681,292Currency gains, net(10,942)(1,040)(896)(12,878)Goodwill and other impairments-60,743-60,743Restructuring costs, lease impairment expense and otherrelated charges326101,8602,196Transaction costs1,841-22,04023,881Algeco LTIP Expense115-9,2679,382Other expense473222,0202,515Adjusted EBITDA$110,822$13,099$(15,112)$108,809106AssetsAssets related to the Company’s reportable segments include the following:(in thousands)Modular - USModular - OtherNorth AmericaCorporate andOtherTotalAs of December 31, 2019:Goodwill$203,932$31,245$-$235,177Intangible assets, net$126,625$-$-$126,625Rental equipment, net$1,652,065$292,371$-$1,944,436As of December 31, 2018:Goodwill$213,264$33,753$-$247,017Intangible assets, net$6,707$94$125,000$131,801Rental equipment, net$1,635,014$294,276$-$1,929,290NOTE 21 - Related PartiesRelated party balances included in the Company’s consolidated balance sheet at December 31 consisted of the following:(in thousands)Financial statement line Item20192018Receivables due under TSAPrepaid expenses and other current assets$-$122Trade receivables due from affiliatesAccounts receivable, net26-Amounts due to affiliatesAccrued liabilities(236)(1,379)Total related party liabilities, net$(210)$(1,257)On November 29, 2017, in connection with the closing of the Business Combination, the Company, WSII, WS Holdings and AlgecoGlobal entered into a transition services agreement (the “TSA”). Pursuant to the TSA, each party will provide or cause to be provided to the otherparty or its affiliates certain services, use of facilities and other assistance on a transitional basis. The services period under the TSA rangesfrom six months to three years based on the services, but includes early termination clauses. The Company had $0.1 million in receivables duefrom affiliates pertaining to the TSA for the year ended December 31, 2018.The Company had accrued expenses of $0.6 million and $1.2 million at December 31, 2019 and December 31, 2018 respectively,included in amounts due to affiliates, related to rental equipment purchases from an entity within the Algeco Group.Related party transactions included in the Company’s consolidated statement of operations for the year ended December 31, 2019,2018 and 2017, respectively, consisted of the following:(in thousands)Financial statementline item201920182017Leasing revenue from related partiesModular leasing revenue$316$720$-Rental unit sales to related partiesRental unit sales-1,548-Management fees and recharge incomeon transactions with affiliatesSelling, general &administrative expenses--1,309Consulting expense to related party(a)Selling, general &administrative expenses(1,029)(3,070)(104)Interest income on notes due fromaffiliates(b)Interest income--12,177Interest expense on notes due toaffiliates(b)Interest expense--(58,448)Total related party income(expense), net$(713)$(802)$(45,066)(a) Two of the Company's directors also serve on the board of directors to a consulting firm with which the Company incurs professional fees.(b) Prior to the Business Combination, the Algeco Group distributed borrowings from its third party notes through intercompany loans to WSII. WSII recorded theseintercompany loans as notes due to affiliates with fixed maturity dates and interest that was payable on a semi-annual basis. Conversely, WSII also distributedborrowings to other entities within the Algeco Group through intercompany loans, and earned interest income on the principal. In conjunction with the BusinessCombination, all notes due to and from affiliates were settled.107On August 22, 2018, WillScot’s majority stockholder, Sapphire, entered into a margin loan (the "Margin Loan") under which all of itsWillScot Class A common stock was pledged to secure $125.0 million of borrowings under the loan agreement. WillScot is not a party to theloan agreement and has no obligations thereunder, but WillScot delivered an issuer agreement to the lenders under which WillScot has agreedto certain obligations relating to the shares pledged by Sapphire and, subject to applicable law and stock exchange rules, not to take any actionsthat are intended to materially hinder or delay the exercise of any remedies with respect to the pledged shares. In connection with the MarginLoan, on August 24, 2018, WSII entered into a two-year supply agreement with Target, an affiliate controlled by Sapphire, under which, subject tolimited exception, WSII acquired the exclusive right to supply modular units, portable storage units, and other ancillary products ordered by theaffiliate in the US. As of December 31, 2019, the 49,053,740 shares of WillScot Class A common stock pledged by Sapphire representedapproximately 45.1% of WillScot’s issued and outstanding Class A shares.The Company had capital expenditures of rental equipment purchased from related party affiliates of $4.7 million, $4.3 million and $2.1million for the years ended December 31, 2019, 2018 and 2017, respectively.NOTE 22 - Quarterly Financial DataThe following tables present certain unaudited consolidated quarterly financial information for each of the eight quarters endedDecember 31, 2019. This quarterly information has been prepared on the same basis as the consolidated financial statements except for theimpact of adoption of ASC 842 further discussed below, and includes all adjustments necessary to state fairly the information for the periodspresented.The quarterly amounts below during 2019 were adjusted for the adoption of ASC 842, effective retroactively to January 1, 2019, of andtherefore do not agree to the Quarterly Reports filed on Form 10-Q for the respective periods of 2019.Quarter Ended (unaudited, except per share amounts)2019March 31June 30September 30December 31Leasing and services revenue(a)$227,292$241,784$249,411$245,755Total revenue(b)$253,685$263,713$268,222$278,045Gross profit(c)$103,331$101,484$99,307$109,191Operating income(d)$21,464$26,294$29,781$39,986Net (loss) income(e)$(10,029)$(11,438)$996$8,928Net (loss) income attributable to WillScot commonshareholders$(9,271)$(10,606)$701$8,054Net (loss) income per share attributable to WillScot- basic$(0.09)$(0.10)$0.01$0.07Net (loss) income per share attributable to WillScot- diluted$(0.09)$(0.10)$0.01$0.07Average number of common shares outstanding -basic108,523,269108,693,924108,720,857108,793,847Average number of common shares outstanding -diluted108,523,269108,693,924112,043,866114,080,059The impact of adoption and reconciliation to the amounts previously reported is:Quarter Ended (unaudited)Change from previously reported 2019 amountMarch 31June 30September 30(a)Leasing and services revenue$(1,211)$(2,204)$(3,766)(b)Total revenue$(1,323)$(2,412)$(4,118)(c)Gross profit$(1,323)$(2,412)$(4,118)(d)Operating income$275$(519)$(618)(e)Net (loss) income$1,132$337$234108Quarter Ended (unaudited, except per share amounts)2018March 31June 30September 30December 31Leasing and services revenue$123,512$132,662$188,437$228,181Total revenue$134,751$140,333$218,924$257,404Gross profit$50,921$54,640$80,946$102,877Operating income (loss)$4,464$5,889$211$(4,303)Net (loss) income(a)$(6,835)$379$(36,729)$(10,387)Net (loss) income attributable to WillScot(a)(b)$(6,187)$236$(33,519)$(11,705)Net (loss) income per share attributable to WillScot- basic and diluted$(0.08)$0.00$(0.37)$(0.11)Average number of common shares outstanding -basic & diluted77,189,77478,432,27490,726,921102,176,225NOTE 23 - Loss Per ShareBasic loss per share (“LPS”) is calculated by dividing net loss attributable to WillScot by the weighted average number of Class Acommon shares outstanding during the period. The common shares issued as a result of the vesting RSUs and RSAs as well as the exerciseof stock options, were included in LPS based on the weighted average number of days in which they were vested and outstanding during theperiod. Concurrently with the Business Combination, 12,425,000 of WillScot's Class A common shares were placed into escrow byshareholders and became ineligible to vote or participate in the economic rewards available to other Class A shareholders. Escrowed shareswere therefore excluded from the LPS calculation while deposited in the escrow account. 6,212,500 of the escrowed shares were released toshareholders on January 19, 2018, and the remaining escrowed shares were released to shareholders on August 21, 2018.Class B common shares have no rights to dividends or distributions made by the Company and, in turn, are excluded from the LPScalculation. Pursuant to the exchange agreement entered into by WS Holding's shareholders, Sapphire has the right, but not the obligation, toexchange all, but not less than all, of its shares of WS Holdings into newly issued shares of WillScot’s Class A common stock in a privateplacement transaction.Diluted LPS is computed similarly to basic LPS, except that it includes the potential dilution that could occur if dilutive securities wereexercised. Effects of potentially dilutive securities are presented only in periods in which they are dilutive.For the year ended December 31, 2019, stock options, Time-Based RSUs, Market-Based RSUs, and RSAs representing 534,188,1,065,305, 288,281 and 52,755 shares of Class A common stock outstanding were excluded from the computation of diluted LPS because theireffect would have been anti-dilutive. Market-Based RSUs can vest at 0% to 150% of the amount granted.For the year ended December 31, 2018, stock options, Time-Based RSUs and RSAs, representing 589,257, 852,733 and 72,053shares of Class A common stock outstanding were excluded from the computation of diluted LPS because their effect would have been anti-dilutive.For the years ended December 31, 2019, 2018 and 2017, warrants representing 22,093,950, 22,183,513 and 34,750,000 shares ofClass A shares, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.NOTE 24 - Subsequent EventsWarrant RedemptionOn January 24, 2020, the Company delivered a notice (the “Redemption Notice”) to redeem all of its outstanding Public Warrants topurchase the Company’s Class A common stock, that were issued under the warrant agreement, dated September 10, 2015, by and betweenDouble Eagle and Continental Stock Transfer & Trust Company, as warrant agent (the “Warrant Agreement”), as part of the units sold in DoubleEagle's initial public offering that remain unexercised at 5:00 p.m. New York City time on February 24, 2020. As further described in theRedemption Notice and permitted under the Warrant Agreement, holders of the Public Warrants who exercised such Public Warrants followingthe date of the Redemption Notice were required to do so on a cashless basis.From January 1, 2020 through January 24, 2020, 796,610 Public Warrants were exercised for cash, resulting in the Company receivingcash proceeds of $4.6 million in the aggregate. An aggregate of 398,305 shares of the Company's Class A common stock were issued inconnection with these exercises.109After January 24, 2020 through February 24, 2020, 5,836,040 Public Warrants were exercised on a cashless basis. An aggregate of1,097,162 shares of the Company's Class A common stock were issued in connection with these exercises. Thereafter, the Companycompleted the redemption of 38,509 remaining Public Warrants for $0.01 per warrant.Following the redemption of the Public Warrants, (i) 17,561,700 Private Warrants, and (ii) 9,966,070 2018 Warrants remain outstanding.As of February 28, 2020, 110,316,368 shares of the Company's Class A common stock were issued and outstanding.MergerOn March 1, 2020, the Company, along with its newly formed subsidiary, Picasso Merger Sub, Inc. (“Merger Sub”), entered into anAgreement and Plan of Merger (the “Merger Agreement”) with Mobile Mini, Inc. (“Mobile Mini”). The Merger Agreement provides for the merger ofMobile Mini with and into Merger Sub (the “Merger”), with Mobile Mini surviving as a wholly-owned subsidiary of the Company. At the effective timeof the Merger, and subject to the terms and subject to the conditions set forth in the Merger Agreement, each outstanding share of the commonstock of Mobile Mini shall be converted into the right to receive 2.4050 shares of WillScot Class A common stock.The Merger has been unanimously approved by the Company and Mobile Mini’s boards of directors. The Merger is subject tocustomary closing conditions, including receipt of regulatory and stockholder approvals by the Company and Mobile Mini’s stockholders, and isexpected to close in third quarter of 2020. Additionally, the transaction also has the support of TDR Capital, the Company's largest shareholder,which has entered into a customary voting agreement in support of the Merger.In connection with the Merger, the Company entered into a commitment letter (the “Commitment Letter”), dated March 1, 2020, with thelenders party thereto (the “Lenders”). Pursuant to the Commitment Letter, the Lenders have agreed to provide debt financing to refinance theCompany’s existing ABL Facility, Mobile Mini’s existing ABL credit facility and Mobile Mini’s outstanding senior notes due 2024 on the terms andconditions set forth in the Commitment Letter.110ITEM 9. Changes in and Disagreements withAccountants on Accounting and Financial DisclosureNone.ITEM 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresOur management, with participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of ourdisclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as ofDecember 31, 2019. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controlsand procedures were effective as of December 31, 2019.Management’s Report on Internal Control over Financial ReportingAs required by SEC rules and regulations, our management is responsible for establishing and maintaining adequate internal controlover financial reporting (“ICFR”), as such term is defined in Exchange Act Rule 13a-15(f). Our ICFR is designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reportingpurposes in accordance with GAAP. Our ICFR includes policies and procedures that: (1) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets, (2) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts andexpenditures are being made only in accordance with the authorization of management and directors of the Company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets thatcould have a material effect on the financial statements.ICFR, no matter how well designed, has inherent limitations and may not prevent or detect misstatements in our consolidated financialstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.Under the supervision of the Chief Executive Officer and Chief Financial Officer, management assessed the effectiveness of theCompany's ICFR as of December 31, 2019 using the criteria set forth in Internal Control - Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (2013 Framework). Based on that assessment, the Company's management believesthat, as of December 31, 2019, the Company's ICFR was effective based on those criteria.Changes in Internal Control over Financial ReportingDuring the year ended December 31, 2019, there were no changes in our ICFR that have materially affected, or are reasonably likely tomaterially affect, our ICFR.111Report of Independent Registered Public Accounting FirmTo the Shareholders and the Board of Directors of WillScot CorporationOpinion on Internal Control Over Financial ReportingWe have audited WillScot Corporation’s internal control over financial reporting as of December 31, 2019, based on criteria established inInternal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)(the COSO criteria). In our opinion, WillScot Corporation (the Company) maintained, in all material respects, effective internal control overfinancial reporting as of December 31, 2019, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2019consolidated financial statements of the Company and our report dated March 2, 2020 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over FinancialReporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are apublic accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such otherprocedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Acompany’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accountingprinciples, and that receipts and expenditures of the company are being made only in accordance with authorizations of management anddirectors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, ordisposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, orthat the degree of compliance with the policies or procedures may deteriorate./s/ Ernst & Young LLPBaltimore, MarylandMarch 2, 2020112ITEM 9B. Other InformationNone.PART IIIITEM 10. Directors, Executive Officers and Corporate GovernanceThe information to be included under the captions “Proposal 1 - Election of Directors. “Section 16(a) Beneficial Ownership ReportingCompliance,” “Codes of Business Conduct and Ethics,” and “Audit Committee”, if applicable, in the Company’s definitive proxy statement for the2020 annual meeting of stockholders, to be filed with the Securities and Exchange Commission, is hereby incorporated by reference in answerto this item.ITEM 11. Executive CompensationThe information to be included under the captions “Executive Compensation,” “Compensation Committee Interlocks and InsiderParticipation,” and “Compensation Committee Report”, if applicable, in the Company’s definitive proxy statement for the 2020 annual meeting ofstockholders, to be filed with the Securities and Exchange Commission, is hereby incorporated by reference in answer to this item.ITEM 12. Security Ownership of Certain Beneficial Owners andManagement and Related Stockholder MattersThe information to be included under the captions “Equity Compensation Plan Information,” and “Security Ownership of CertainBeneficial Owners and Management”, if applicable, in the Company’s definitive proxy statement for the 2020 annual meeting of stockholders, tobe filed with the Securities and Exchange Commission, is hereby incorporated by reference in answer to this item.ITEM 13. Certain Relationships and Related Transactions, andDirector IndependenceThe information to be included under the captions “Certain Relationships and Related Party Transactions” and “DirectorIndependence”, if applicable, in the Company’s definitive proxy statement for the 2020 annual meeting of stockholders, to be filed with theSecurities and Exchange Commission, is hereby incorporated by reference in answer to this item.ITEM 14. Principal Accounting Fees and ServicesThe information to be included under the caption “Independent Registered Public Accounting Firm Fee Information”, if applicable, in theCompany’s definitive proxy statement for the 2020 annual meeting of stockholders, to be filed with the Securities and Exchange Commission, ishereby incorporated by reference in answer to this item.113PART IVITEM 15. Exhibits, Financial Statement SchedulesThe following documents are filed as part of this report:Consolidated Financial StatementsPageNumberReport of Independent Registered Public Accounting Firm56Consolidated Balance Sheet as of December 31, 2019 and December 31, 201860Consolidated Statements of Operations for the Years Ended December 31, 2019, 2018 and 201761Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2019, 2018 and 201762Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018, 2017 and 201663Consolidated Statements of Cash Flow for the Years Ended December 31, 2019 and December 31, 201864Notes to the Audited Consolidated Financial Statements65Financial Statement ScheduleAll schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financialstatements or notes thereto.ExhibitsThe exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this Annual Report on Form 10-K.114Exhibit IndexExhibit No.Exhibit Description2.1Stock Purchase Agreement dated August 21, 2017 among Double Eagle Acquisition Corp., Williams Scotsman HoldingsCorp. (“Holdings”), Algeco Scotsman Global S.á r.l. and Algeco Scotsman Holdings Kft., dated as of August 21, 2017(incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed August 21, 2017).2.2Amendment to the Stock Purchase Agreement dated September 6, 2017 among Double Eagle Acquisition Corp., Holdings,Algeco Scotsman Global S.á r.l. and Algeco Scotsman Holdings Kft. (incorporated by reference to Exhibit 2.2 of theCompany’s Form S-4, filed September 6, 2017).2.3Second Amendment to the Stock Purchase Agreement dated November 6, 2017 among Double Eagle Acquisition Corp.,Holdings, Algeco Scotsman Global S.á r.l. and Algeco Scotsman Holdings Kft. (incorporated by reference to Exhibit 2.3 ofAmendment No. 3 to the Company’s Form S-4, filed November 6, 2017).3.1Certificate of Incorporation of WillScot Corporation (incorporated by reference to Exhibit 3.1 of the Company’s Current Reporton Form 8-K, filed December 5, 2017).3.2Certificate of Ownership and Merger of WillScot Sub Corporation into Double Eagle Acquisition Corp. (incorporated byreference to Exhibit 3.2 to the Company’s Registration Statement on Form S-3, filed on December 21, 2017).3.3Bylaws of WillScot Corporation, as amended, (incorporated by reference to Exhibit 3.1 of the Company’s Current Report onForm 8-K filed November 15, 2019).4.1Specimen Class A Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Company’s Annual Report onForm 10-K, filed March 16, 2018).4.2Warrant Agreement dated as of September 10, 2015 between Double Eagle Acquisition Corp. and Continental StockTransfer & Trust Company (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filedSeptember 16, 2015).4.3Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-1, filed August 13, 2015).4.4Warrant Agreement between WillScot Corporation and Continental Stock Transfer & Trust Company, dated as of August 15,2018 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, filed August 16, 2018).4.5Specimen Warrant Certificate (incorporated by reference to Exhibit 4.5 of the Company's Registration Statement on Form S-3. filed January 24, 2019).4.6Indenture dated November 29, 2017, by and among WSII, the Guarantors party thereto, and the Deutsche Bank TrustCompany Americas as trustee and collateral Agent (incorporated by reference to Exhibit 10.2 of the Company’s CurrentReport on Form 8-K, filed December 5, 2017).4.7Supplemental Indenture dated February 15, 2018, by and among WSII, the Guarantors party thereto, and Deutsche BankTrust Company Americas as trustee and collateral Agent (incorporated by reference to Exhibit 4.7 of the Company’s AnnualReport on Form 10-K, filed March 16, 2018).4.8Supplemental Indenture dated August 3, 2018, to the Indenture, dated November 29, 2017, by and among WSII, theGuarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee and collateral agent (incorporated byreference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q, filed August 8, 2018).4.9Supplemental Indenture dated as of August 15, 2018, to the Indenture dated November 29, 2017, by and among WSII, theGuarantors party thereto, and Deutsche Bank Trust Company Americas as trustee and collateral agent (incorporated byreference to Exhibit 10.5 to the Company’s Form 8-K filed August 16, 2018).4.10Indenture dated August 3, 2018, by and among Mason Finance Sub, Inc., the Guarantors party thereto, and Deutsche BankTrust Company Americas, as trustee (incorporated by reference to Exhibit 1.1 to the Company’s Form 8-K filed August 7,2018).4.11Supplemental Indenture dated as of August 15, 2018, to the Indenture dated August 3, 2018, by and among WSII, theGuarantors party thereto, and Deutsche Bank Trust Company Americas as trustee (incorporated by reference to Exhibit 10.3to the Company’s Form 8-K filed August 16, 2018).4.12Indenture dated August 6, 2018, by and among Mason Finance Sub, Inc., the Guarantors party thereto, and Deutsche BankTrust Company Americas, as trustee (incorporated by reference to Exhibit 1.2 to the Company’s Form 8-K filed August 7,2018).4.13Supplemental Indenture dated as of August 15, 2018, to the Indenture dated August 6, 2018, by and among WSII, theGuarantors party thereto, and Deutsche Bank Trust Company Americas as trustee and collateral agent (incorporated byreference to Exhibit 10.4 to the Company’s Form 8-K filed August 16, 2018).4.14Description of Registered Securities11510.1Private Placement Warrant Purchase Agreement dated September 10, 2015 among Double Eagle Acquisition Corp., DoubleEagle Acquisition LLC, Harry E. Sloan, Dennis A. Miller, James M. McNamara, Fredric D. Rosen, the Sara L. Rosen Trust, theSamuel N. Rosen 2015 Trust and the Fredric D. Rosen IRA, (incorporated by reference to Exhibit 10.3 of the Company’sCurrent Report on Form 8-K, filed September 16, 2015).10.2Amended and Restated Registration Rights Agreement dated November 29, 2017 by and among WillScot Corporation,Sapphire Holding S.á r.l., Algeco/Scotsman Holdings S.á r.l., Double Eagle Acquisition LLC and the other parties namedtherein (incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K, filed December 5, 2017).10.3Registration Rights Agreement between WillScot Corporation and each of the ModSpace Investors defined therein(incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed August 16, 2018).10.4ABL Credit Agreement dated November 29, 2017 by and among WSII, Willscot Equipment II, LLC, Williams Scotsman ofCanada, Inc., Holdings, and the lenders named therein (incorporated by reference to Exhibit 10.1 of the Company’s CurrentReport on Form 8-K, filed December 5, 2017).10.5First Amendment to the ABL Credit Agreement, dated as of July 9, 2018, by and among WSII, certain subsidiaries of WSII,Holdings, the lenders party thereto, and Bank of America, N.A., as administrative agent and collateral agent (incorporated byreference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q, filed August 8, 2018).10.6Second Amendment to the ABL Agreement, dated as of July 24, 2018, by and among WSII, certain subsidiaries of WSII,Holdings, the lenders party thereto, and Bank of America, N.A., as administrative and collateral agent (incorporated byreference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q, filed August 8, 2018).10.7Third Amendment to the ABL Credit Agreement, dated as of July 9, 2018, by and among WSII, certain subsidiaries of WSII,Holdings, the lenders party thereto, and Bank of America, N.A., as administrative agent and collateral agent (incorporated byreference to Exhibit 10.2 to the Company’s Form 8-K filed August 16, 2018).10.8Shareholders Agreement dated November 29, 2017 by and among WillScot Corporation, Holdings, Algeco Scotsman GlobalS.á r.l., and Algeco Scotsman Holdings Kft. (incorporated by reference to Exhibit 10.10 of the Company’s Current Report onForm 8-K, filed December 5, 2017).10.9Exchange Agreement dated November 29, 2017 by and among WillScot Corporation, Holdings, Algeco Scotsman Global S.ár.l., and Algeco Scotsman Holdings Kft. (incorporated by reference to Exhibit 10.11 of the Company’s Current Report on Form8-K, filed December 5, 2017).10.10Equity Commitment Letter between Double Eagle Acquisition Corp. and TDR Capital II Holdings L.P., dated as of August 21,2017 (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q, filed November 9, 2017).10.11WillScot 2017 Incentive Award Plan (incorporated by reference to Exhibit 10.13 of the Company’s Current Report on Form 8-K, filed December 5, 2017).10.12First Amendment to the 2017 Incentive Award Plan dated November 14, 2019 (incorporated by reference to Exhibit 10.1 ofthe Company's Current Report on Form 8-K, filed November 15, 2019).10.13Employment Agreement with Bradley L. Soultz (incorporated by reference to Exhibit 10.14 of the Company’s Current Reporton Form 8-K, filed December 5, 2017).10.14Employment Agreement with Timothy D. Boswell (incorporated by reference to Exhibit 10.15 of the Company’s CurrentReport on Form 8-K, filed December 5, 2017).10.15Employment Letter with Bradley L. Bacon (incorporated by reference to Exhibit 10.16 of the Company’s Current Report onForm 8-K, filed December 5, 2017).10.16Separation and Release of Claims Agreement with Bradley L. Bacon dated May 17, 2019 (incorporate by reference to Exhibit10.1 to the Company’s Current Report on Form 8-K, filed May 17, 2019).10.17Employment Letter with Sally Shanks dated August 23, 2017 (incorporated by reference to Exhibit 10.17 of the Company’sAnnual Report on Form 10-K, filed March 16, 2018).10.18Amended Employment Letter with Sally Shanks dated March 18, 2019 (incorporated by reference to Exhibit 10.1 to theCompany’s Current Report on Form 8-K, filed March 21, 2019).10.19Form of Nonqualified Stock Option Award Agreement (incorporated by reference to Exhibit 10.1 of the Company’s CurrentReport on Form 8-K, filed March 26, 2018).10.20Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Current Report onForm 8-K, filed March 26, 2018).10.21Form of Performance-Based RSU Award Agreement (incorporated by reference to Exhibit 10.1 to the Company’s CurrentReport on Form 8-K, filed March 22, 2019).10.22Employment Agreement with Hezron Timothy Lopez (incorporated by reference to Exhibit 10.1 to the Company’s CurrentReport on Form 8-K, filed June 19, 2019).14.1Code of Ethics for the Chief Executive Officer and Senior Financial Officers, effective November 14, 2019 (incorporated byreference to Exhibit 14.1 of the Company’s Current Report on Form 8-K, filed November 15, 2019).11621.1Subsidiaries of the registrant23.1Consent of Ernst & Young LLP31.1Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act31.2Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act32.1Certification of Chief Executive Officer Pursuant to 18 USC. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act32.2Certification of Chief Financial Officer Pursuant to 18 USC. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act117SignaturePursuant to the requirements of the Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, the registrant hasduly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.WillScot CorporationBy:/s/ HEZRON TIMOTHY LOPEZDate:March 2, 2020Hezron Timothy LopezVice President, General Counsel& Corporate SecretaryPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalfof the registrant and in the capacities and on the dates indicated.SignatureTitleDate/s/ BRADLEY L. SOULTZPresident and Chief Executive Officer and Director(Principal Executive Officer)March 2, 2020Bradley L. Soultz/s/ TIMOTHY D. BOSWELLChief Financial Officer (Principal Financial Officer)March 2, 2020Timothy D. Boswell/s/ SALLY J. SHANKSChief Accounting Officer (Principal AccountingOfficer)March 2, 2020Sally J. Shanks/s/ GERARD E. HOLTHAUSChairman of the BoardMarch 2, 2020Gerard E. Holthaus/s/ MARK S. BARTLETTDirectorMarch 2, 2020Mark S. Bartlett/s/ GARY LINDSAYDirectorMarch 2, 2020Gary Lindsay/s/ REBECCA L. OWENDirectorMarch 2, 2020Rebecca L. Owen/s/ STEPHEN ROBERTSONDirectorMarch 2, 2020Stephen Robertson/s/ JEFF SAGANSKYDirectorMarch 2, 2020Jeff Sagansky118

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