UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission File Number: 001-37552
WILLSCOT MOBILE MINI HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
82-3430194
(I.R.S. Employer Identification No.)
4646 E Van Buren St., Suite 400
Phoenix, Arizona 85008
(Address of principal executive offices)
(480) 894-6311
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, par value $0.0001 per share
Trading Symbol(s)
WSC
Name of Each Exchange on Which Registered
The Nasdaq Capital Market
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 the preceding 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 the past 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 Regulations S-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 ☐
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Non-accelerated filer ☐
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 or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an
error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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 voting and non-voting common equity held by non-affiliates of the registrant, computed by reference to the price at which the common equity was last
sold as of June 30, 2023 (the last business day of the registrant’s most recently completed second fiscal quarter), was approximately $9.3 billion.
Shares of Common Stock, par value $0.0001 per share, outstanding: 189,970,639 shares at February 14, 2024.
The 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 proxy statement for the 2024
annual meeting of stockholders, which definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this
Report relates.
Documents Incorporated by Reference
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PART I
PART II
PART III
WillScot Mobile Mini Holdings Corp.
Annual Report on Form 10-K
Table of Contents
Item 1
Business
Item 1A
Risk Factors
Item 1B
Unresolved Staff Comments
Item 1C
Item 2
Item 3
Item 4
Item 5
Item 6
Item 7
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
Item 8
Item 9
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A
Controls and Procedures
Item 9B
Other Information
Item 10
Directors, Executive Officers and Corporate Governance
Item 11
Executive Compensation
Item 12
Security Ownership of Certain Beneficial Owners and Management Related Stockholder Matters
Item 13
Certain Relationships and Related Transactions, and Director Independence
Item 14
Principal Accountant Fees and Services
PART IV
SIGNATURES
Item 15
Exhibit and Financial Statement Schedules
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Cautionary Note Regarding Forward Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995 and
Section 21E of the Securities Exchange Act. The words “estimates,” “expects,” “anticipates,” “believes,” “forecasts,” “plans,” “intends,” “may,” “will,” “should,” “shall,”
“outlook,” “guidance” and variations of these words and similar expressions identify forward-looking statements, which are generally not historical in nature and
relate to expectations for future financial performance or business strategies or objectives. Forward-looking statements are subject to a number of risks,
uncertainties, assumptions and other important factors, many of which are outside our control, which could cause actual results or outcomes to differ materially from
those discussed in the forward-looking statements. Although we believe that these forward-looking statements are based on reasonable assumptions, we can give
no assurance that any such forward-looking statement will materialize. Important factors that may affect actual results or outcomes include, among others:
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impacts of various laws and regulations and recent pronouncements related to laws and regulations governing antitrust, climate-related disclosures, privacy,
government contracts, anti-corruption and the environment;
our ability to successfully acquire and integrate new operations;
the effect of global or local economic conditions in the industries and markets in which the Company operates and any changes therein, including financial
market conditions and levels of end market demand;
risks associated with cybersecurity threats and IT systems disruptions, including our ability to manage the business in the event a cybersecurity incident or a
disaster shuts down or materially impacts our management information systems;
trade policies and changes in trade policies, including the imposition of tariffs, their enforcement and downstream consequences;
our ability to effectively compete in the modular space and portable storage industries;
our ability to effectively manage our credit risk, collect on our accounts receivable, or recover our rental equipment;
inflationary pressures and fluctuations in interest rates and commodity prices;
risks associated with labor relations, labor costs and labor disruptions;
changes in the competitive environment of our customer base as a result of the global, national or local economic climate in which they operate and/or
economic or financial disruptions to their industry;
our ability to adequately protect our intellectual property and other proprietary rights that are material to our business;
natural disasters and other business disruptions such as pandemics, fires, floods, hurricanes, earthquakes and terrorism;
our ability to establish and maintain the appropriate physical presence in our markets;
property, casualty or other losses not covered by our insurance;
our ability to close our unit sales transactions;
our ability to maintain an effective system of internal controls and accurately report our financial results;
evolving public disclosure, financial reporting and corporate governance expectations;
our ability to achieve our environmental, social and governance goals;
operational, economic, political and regulatory risks;
effective management of our rental equipment;
the effect of changes in state building codes on our ability to remarket our buildings;
foreign currency exchange rate exposure;
significant increases in the costs and restrictions on the availability of raw materials and labor;
fluctuations in fuel costs or a reduction in fuel supplies;
our reliance on third party manufacturers and suppliers;
impairment of our goodwill, intangible assets and indefinite-life intangible assets;
our ability to use our net operating loss carryforwards and other tax attributes;
our ability to recognize deferred tax assets such as those related to our tax loss carryforwards and, as a result, utilize future tax savings;
unanticipated changes in tax obligations, adoption of a new tax legislation, or exposure to additional income tax liabilities;
our ability to access the capital and credit markets or the ability of key counterparties to perform their obligations to us;
our ability to service our debt and operate our business;
our ability to incur significant additional amounts of debt, which could further exacerbate the risks associated with our substantial indebtedness;
covenants that limit our operating and financial flexibility;
our stock price volatility;
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risks associated with the completion of the McGrath Acquisition within the expected timeframe, the completion of the McGrath Acquisition, and the realization of
anticipated synergies from the McGrath Acquisition; and
other 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, to update or revise
any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
ITEM 1. Business
PART I
Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refers to WillScot Mobile Mini Holdings Corp. ("WillScot Mobile Mini") and its
subsidiaries.
Our Company
Headquartered in Phoenix, Arizona, we are a leading business services provider specializing in innovative and flexible turnkey temporary space solutions.
Our diverse product offering includes modular office complexes, mobile offices, classrooms, restroom solutions, blast-resistant modules, clearspan structures,
portable storage containers, and climate-controlled storage units. We offer our customers a thoughtfully curated selection of “Ready to Work” solutions with value-
added products and services, such as the rental of steps, ramps, furnishings, appliances, electrical and lighting products, space optimization assets, and other items
that improve the overall customer experience. These turnkey space solutions offer customers flexible, low-cost, and timely solutions to meet their temporary space
needs on an outsourced basis.
With roots dating back more than 80 years, we service diverse end markets across all sectors of the economy from a network of approximately 250 branch
locations and additional drop lots throughout the United States (“US”), Canada, and Mexico. We lease turnkey temporary space solutions (our “lease fleet”) to
customers in the construction, commercial and industrial, retail and wholesale trade, energy and natural resources, education, government, healthcare and other
end markets.
WillScot Mobile Mini is the holding company for the Williams Scotsman and Mobile Mini families of companies, which resulted from the merger of WillScot
Corporation ("WillScot") and Mobile Mini, Inc. ("Mobile Mini") on July 1, 2020 (the "Merger"). On September 30, 2022, the Company completed the sale of its former
Tank and Pump Solutions ("Tank and Pump") segment. On January 31, 2023, the Company completed the sale of its former United Kingdom Storage Solutions ("UK
Storage Solutions") segment. The accompanying consolidated financial statements present the historical financial results of the former Tank and Pump and UK
Storage Solutions segments as discontinued operations for all periods presented.
During 2023, we acquired a U.S. national provider of climate-controlled storage solutions, which consisted primarily of approximately 2,200 climate-
controlled containers and refrigerated storage trailers, a regional modular space manufacturing and leasing business, which consisted primarily of approximately
1,300 modular leasing units, and a U.S. national provider of premium large clearspan structures. We also acquired certain assets and liabilities of five smaller
entities, which consisted primarily of approximately 1,800 storage units and 700 modular units.
Products and Services
Modular Space Solutions
Our modular space units meet a broad range of customer needs. Our modular units are typically made of steel and aluminum frames, as well as traditional
building materials, and range from standalone portable units as small as 24 square feet to large complex units that can be coupled together or stacked to create
versatile workspaces in excess of 10,000 square feet. In all cases, we deploy modular units to customers rapidly from our extensive branch network using our hybrid
in-house and outsourced logistics and service infrastructure. We specialize in turnkey ‘Ready to Work’ solutions, which means our units can arrive fully equipped
with air conditioning, heating, and filtration units, electrical and Ethernet ports, plumbing and utility hookups, as well as our proprietary line of furnishings and
appliances, which we refer to collectively as Value-Added Products and Services (“VAPS”). Our units are transported by truck, either towed (if fitted with axles and
hitches) or mounted on flat-bed trailers.
Modular space units have attractive economic characteristics, and our ability to lease and maintain our assets’ profitability over economic lives, which often
exceed 20 years, is a unique capability and competitive advantage. We utilize standard fleet maintenance procedures across the branch network, monitor fleet
condition and allocate capital expenditures centrally, and ensure all units meet consistent quality and condition requirements, regardless of unit age, prior to delivery
to a customer. Modular leasing is complemented by new unit sales and sales of rental units. In connection with our leasing and sales activities, we provide services
including delivery and installation, maintenance and ad hoc services, and removal services at the end of lease transactions.
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Panelized and Stackable Offices. Our FLEX panelized and stackable offices are the next generation of modular space technology and offer maximum
flexibility and design configurations. These units provide a modern, innovative design, smaller footprint, ground level access, and interchangeable panels, including
all glass panels that allow customers to configure the space to their precise requirements. These units can expand upwards up to three stories and outwards, which
provides maximum versatility.
TM
Single-Wide Modular Space Units. Single-wide modular space units include mobile offices and sales offices. These units offer maximum 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, heating and filtration units, partitions and toilet facilities.
Section Modulars and Redi-Plex. Section modulars are two or more units combined into one structure. Redi-Plex complexes offer advanced versatility for
large, open floor plans or custom layouts with private offices. Redi-Plex is built with clearspan construction, which eliminates interference from support columns and
allows for up to sixty feet of open building width and building lengths that increase in twelve-foot 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.
Examples of section modular units include hospital diagnostic annexes, special events headquarters, temporary data centers, and larger general commercial offices.
Classrooms. Classroom units are generally double-wide units or FLEX panelized units adapted specifically for use by school systems or universities.
Classroom units usually feature teaching aids, air conditioning, heating and filtration units, windows and, if requested, restroom facilities.
Ground Level Offices. We also offer steel ground level offices from 10 to 40 feet in length and 8 or 10 feet in width. Many of these units are converted to
office use from International Organization for Standardization ("ISO") certified shipping containers. These offices are available in various configurations, including all-
office floor plans or office and storage combination units that provide a 10‑ or 15‑foot office with the remaining area available for storage. Ground level offices
provide the advantage of ground accessibility for ease of access and high security in an all‑steel design. These office units are equipped with electrical wiring, air
conditioning, heating and filtration units, phone jacks, carpet or tile, high security doors, and windows with security bars or shutters. If requested, these offices are
also equipped with sinks, hot water heaters, cabinets and restroom facilities.
Blast-Resistant Modules. Our diverse fleet of blast-resistant modules has been specifically designed to protect our petrochemical, energy, refinery, and
defense customers and any customers operating in blast radius zones. These modules range from 480 square foot units to 2,400 square foot complexes and can be
stacked to maximize space. Our blast-resistant units are built for quick deployment to enhance worksite safety in the most hazardous industries, conditions, and
blast threats.
Clearspan Structures. Our temporary and semi-permanent clearspan structures allow us to offer more expansive flexible spaces to customers. These
highly configurable and durable temporary fabric structures are commonly utilized by existing customers across virtually all end markets that we serve. Clearspan
structures, also referred to as fabric buildings or industrial tents, are rapidly deployable and have numerous use cases including large-scale industrial warehousing,
controlled environments for construction sites, retail and distribution space, and high-end event spaces among many others.
Other Modular Space. We offer a range of other specialty products that vary across regions and provide flexibility to serve demands for local markets.
Examples include workforce accommodation units with dining facilities used to house workers, often in remote locations, and stand-alone restroom facilities to
complement office and classroom units.
Portable Storage Solutions
TM
Portable Storage Containers. Our portable storage containers offer an assortment of differentiated features such as patented locking systems, premium
and multiple door options, optional climate control, and numerous configuration options. Standard portable storage containers are made from weather‑resistant
corrugated steel and are available in lengths ranging from 5 to 48 feet, widths of either 8 or 10 feet, and a variety of configuration options. Doors can be placed at
the front, front and back, or the sides of containers. Other options include partitions, ramps, lighting, shelving, and other interior organizational solutions, including
PRORACK , our innovative complete system of sturdy readily movable surfaces. We provide our customers with various differentiated portable storage offerings,
ranging from a standard ISO container to more premium products with enhanced security and other features. Storage containers can be equipped with our patented
Tri‑Cam Locking System®, which features a waist‑level opening lever and interlocking bars to provide easy access for the customer without sacrificing security. We
also offer ContainerGuardLock®, an optional security device, which features a hidden six‑pin tumbler system and is made from drill‑resistant hardened steel. We
believe these steel storage containers are a more convenient and cost‑effective alternative to mass warehouse storage, with a high level of security to protect our
customers' goods on location at their job site, facility, retail location, or office site.
Steel containers have a long useful life with no technical obsolescence. Our portable storage containers generally have estimated useful lives of 30 years
from the date we build or acquire and remanufacture them, with average residual values in excess of 50%. We maintain our steel containers on a regular basis by
removing rust, painting them with rust inhibiting paint, plug-welding holes, and occasionally replacing the wooden floor or a rusted steel panel. Repainting the
outside
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of storage units is the most common maintenance item. A properly maintained container is essentially in the same condition as when it was initially acquired or
remanufactured.
The remanufacturing process begins with the purchase of used ISO-certified containers from leasing companies, shipping lines, and brokers. These
containers were originally built to ISO standards and are 8 feet wide, up to 9.5 feet high and 20, 40 or 45 feet long. After acquisition, we remanufacture and modify
these ISO containers. Remanufacturing typically involves cleaning, removing rust and dents, repairing floors and sidewalls, painting, and adding company logos or
signs, and may include further customization by adding our proprietary easy opening door system and our patented Tri‑Cam Locking System®. Modification typically
involves splitting some containers into differing lengths.
Cold Storage Containers and Trailers. We also offer climate-controlled containers, walk-in freezers, refrigerated storage trailers, and dock-height
refrigerated trailers. These turnkey cold storage solutions come in a variety of sizes and are available for lease across the United States.
VAPS
We 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, integral tool racking, heavy duty capacity shelving,
workstations, electrical and lighting products and other items to our customers for use in connection with our products. We also offer our lease customers a damage
waiver program that protects them in case the leased unit is damaged. For customers who do not select the damage waiver program, we bill them for the cost of
repairs above and beyond normal wear and tear. Importantly, management believes that our scale, branch network, supply chain, and sales performance
management tools give us a significant advantage in delivering “Ready to Work” turnkey temporary space solutions to our customers and growing VAPS revenue
relative to our competitors.
Delivery, Installation and Removal
We operate a hybrid in-house and outsourced logistics and service infrastructure that provides delivery, site work, installation, disassembly, unhooking and
removal, and other services to our customers for an additional fee as part of our leasing and sales operations. Revenue from delivery, site work, and installation
results from the transportation of units to a customer's location, as well as site work required prior to installation, and installation of the units which have been leased
or sold. Typically, modular units are placed on temporary foundations constructed by our in‑house service technicians or subcontractors. These in‑house service
technicians or subcontractors also generally install any ancillary products and VAPS. We also derive revenue from disassembling, unhooking, and removing units
once a lease expires. We believe that our logistics and service capabilities are unrivaled in the industry, differentiate us from competitors, and enhance our value
proposition to our customers.
Product Leases
We primarily lease, rather than sell, our turnkey temporary space solutions to customers, which results in a highly diversified and predictable recurring
revenue stream. For the year ended December 31, 2023, over 90% of new lease orders were on our standard lease agreement, pre-negotiated master lease, or
national account agreements. Rental contracts with customers within our Modular segment are generally based on a 28-day or monthly rate and billing cycle. The
initial lease periods vary, and our leases are customarily renewable on a month-to-month basis after their initial term. For the year ended December 31, 2023, the
average effective duration of our consolidated lease portfolio for modular space and portable storage units, excluding seasonal portable storage units, was
approximately 37 months. As a result, our lease revenue is highly predictable due to its recurring nature and the underlying stability and diversification of our lease
portfolio.
For the year ended December 31, 2023, our average minimum contractual lease term at the time of delivery in our Modular segment for modular space
units was 13 months. However, given that our customers value flexibility, they consistently extend their leases or renew on a month-to-month basis such that the
average effective duration of our Modular segment lease portfolio was over 36 months. Customers are responsible for the costs of delivery and set-up, dismantling
and pick-up, customer-specified modifications, costs to return custom modifications back to standard configuration at end of lease, and any loss or damage beyond
normal wear and tear. Our leases generally require customers to maintain liability and property insurance covering the units during the lease term and to indemnify
us from losses caused by the negligence of the customer or their employees.
Rental contracts with customers within our Storage segment are generally based on a 28‑day rate and billing cycle. The rental continues until cancelled by
the customer or us. On average, steel storage containers on rent for the year ended December 31, 2023 in our Storage segment, excluding seasonal portable
storage units, had been in place for over 38 months, and the steel ground level offices on rent for the year ended December 31, 2023 had been in place for
approximately 22 months. Rental contracts provide that the customer is responsible for the cost of delivery and pickup and specify that the customer is liable for any
damage done to the unit beyond ordinary wear and tear. Customers may purchase a damage waiver to avoid damage liability in certain circumstances, which
provides an additional source of recurring revenue. Customer possessions stored within a portable storage unit are the responsibility of that customer unless
covered under our contents insurance products.
Demand for our products varies by end market. Construction customers typically reflect higher demand during months with more temperate weather, while
demand from large retailers is stronger from September through December, when
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more space is needed to store holiday inventories. Retail customers usually return these rented units in December and early in the following year, but also
undertake ongoing rolling store renovations which present consistent recurring demand throughout the year.
As of December 31, 2023, we had over 368,000 total units including over 156,000 modular space units, approximately 212,000 portable storage units, and
other value-added products representing fleet net book value of $3.4 billion and approximately 130 million square feet of relocatable commercial space.
Approximately 99,000 of our modular space units, or 63%, and 151,000 of our portable storage units, or 71%, were on rent as of December 31, 2023.
Product Sales
We complement our core leasing business by selling both new and used units, allowing us to leverage our scale, achieve purchasing benefits, and
redeploy capital employed in our lease fleet. Generally, we purchase new units from a broad network of third-party manufacturers, or in some instances,
manufacture the units ourselves. We only purchase new modular space units for resale when 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 our overall supplier
relationships and purchasing terms. New unit sales are a natural extension of our leasing operations in situations where customers have long-lived or permanent
projects, making it more cost-effective to purchase rather than to lease a unit, and our customers benefit from our product expertise and delivery and installation
capabilities.
In the normal course of managing our business, we also sell idle, used rental units at fair market value and units that are already on rent if the customer
expresses interest in owning, rather than continuing to rent, the unit. The sale of units from our rental equipment has historically been both a profitable and cost-
effective method to finance the replenishment and upgrade of our lease fleet, as well as to generate free cash flow during periods of lower rental demand and
utilization. Our sales business may include modifying or customizing units to meet customer requirements. We also offer delivery, installation, and removal-related
services for an additional fee as part of our sales operations.
Customers
Our customers operate in a diversified set of end markets, including construction, commercial and industrial, retail and wholesale trade, energy and natural
resources, education, government and institutions, and healthcare. Core to our operating model is the ability to redeploy standardized assets across end markets,
as we did to service emerging demand in the healthcare and government sectors related to COVID‑19, as well as expanded space requirements related to social
distancing. We track several market leading indicators to predict demand, including those related to our two largest end markets, the commercial and industrial
segment and the construction segment, each of which accounted for approximately 43% and 42% of our revenues, respectively, for the year ended December 31,
2023. To optimize the use of fleet assets across our branch network, we centrally manage fleet rebalancing across our end markets. This allows us to serve 15
distinct end markets in which no single customer accounted for more than 2% of revenues for the year ended December 31, 2023.
For the year ended December 31, 2023, our top 10 customers accounted for approximately 6% of revenues, and our top 50 customers accounted for
approximately 13% of revenues, reflecting low customer concentration and significant project diversification within our portfolio.
Our logistics and service infrastructure is designed to meet or exceed our customers’ expectations by reacting quickly, efficiently, and with consistent
service levels. As a result, we have established strong relationships with a diverse customer base, ranging from large multinational companies to local sole
proprietors. We served over 85,000 unique customers in 2023. We believe that our customers prefer our modular space and portable storage products over fixed,
on-site built space because they are a quick, flexible, cost-effective, and low-risk solution for temporary or permanent expansion or storage.
Our strategy involves operating standardized rental equipment and "Ready to Work" solutions that can be redeployed across our diversified customer base
and branch network in 15 discrete end markets. Key customer end markets include:
Construction and Infrastructure
We provide office and storage space to a broad array of contractors associated with non-residential buildings and non-building infrastructure, and to a
lesser extent, residential construction. Our client portfolio includes many of the largest general contractors and engineering, architecture, procurement, and
construction companies in North America, working across all of the non-residential construction sub-sectors. Examples include highway, street, bridge, and tunnel
contractors; 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 construction as well as capital improvements in
the private, institutional, and municipal arenas. Units are used as offices, lunch and break rooms, accommodations, restroom facilities, material and equipment
storage facilities, security offices, and other applications.
Commercial and Industrial
Customers in this category use our products as their primary office or retail space, to expand their existing commercial workspace, to increase their storage
capabilities, or as temporary space for festivals, trade shows, sporting, and
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other events. Customers in this category span a variety of industries ranging from commercial offices; diversified manufacturing; agriculture, forestry and fishing;
arts, media, hotels, and entertainment; and many other industrial end markets.
The commercial and industrial segment also includes customers in retail and wholesale trade. These include department, drug, grocery, and strip mall
stores, logistics, warehousing and distribution services, as well as restaurants, service stations, and dry cleaners. Our customers in retail and wholesale trade
include some of the world's largest retailers who have storage needs throughout all stages of their supply chain. On a stand‑alone basis, retail and wholesale trade
customers comprised approximately 13% of fiscal year 2023 rental revenue.
Energy and Natural Resources
Our products are leased to companies involved in electricity generation and transmission, utilities, up- mid- and down-stream oil and gas, mining
exploration and extraction, and other related sectors. Increasingly, the development of renewable energy infrastructure has emerged to complement our traditional
energy clientele. Units are used as temporary offices, break rooms, accommodations, security offices, blast-resistant facilities, and other applications.
Education
Rapid shifts in populations within regions, as well as expanding square footage per student requirements in in-person education settings, often necessitate
quick and cost-effective expansion of education facilities, across the spectrum of elementary and secondary schools and universities and colleges. Regional and
local governmental budgetary pressures, classroom size reduction legislation, refurbishment of existing facilities, and the expansion of charter schools have made
modular classrooms a convenient and cost-effective way to expand capacity in education settings. In addition, our products are used as classrooms when schools
are undergoing large scale modernization, which allows continuous operation of a school while modernization progresses.
Government and Institutions
Government customers consist of national, state, provincial, and local public sector organizations. Modular space and portable storage solutions are
particularly attractive to focused niches such as healthcare facilities, small municipal buildings, courthouses, military installations, national security buildings, and
offices during building modernization, as well as disaster relief.
Competitive Strengths
We believe that the following competitive strengths have been instrumental to our success and position us for future growth:
North American Leader in Turnkey Temporary Space Solutions
We are an industry-leading business services provider specializing in innovative turnkey temporary space solutions. We have a wide and flexible offering of
temporary relocatable commercial spaces, a diverse customer base with over 85,000 customers across different end markets, and a geographic footprint of
approximately 250 branch locations and additional drop lots.
Our network serves the largest North American metropolitan areas with local teams who are experts in their respective markets. Our cost‑effective
coverage model serves smaller customers at the local and regional level, while also addressing the needs of larger national customers looking for a full suite of high-
quality services that can be provided on a consistent basis throughout North America. Since geographic proximity to customers is a competitive advantage when
offering temporary commercial space, we believe that our extensive branch network allows us to better serve existing customers and attract new customers.
We believe our extensive scale 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" turnkey solutions across all of our branch locations.
Value-Added Products and Services ("VAPS")
We deliver "Ready to Work" solutions through our growing offering of VAPS, such as the rental of steps, ramps, furniture, appliances, internet connectivity
devices, integral tool racking, heavy duty capacity shelving, workstations, electrical and lighting products, and other amenities. This thoughtfully curated portfolio of
VAPS makes modular space and portable storage units more productive, comfortable, and secure for our customers and allows us to generate higher revenue per
transaction and return on capital and differentiates us from our competitors. These turnkey solutions offer customers flexible, low‑cost, capital efficient, and timely
solutions to meet their space needs on an outsourced basis.
VAPS have been a substantial source of revenue growth for us over the last decade. We have been able to successfully drive a material increase in
customer VAPS spend into our recently acquired businesses, which generates highly tangible revenue synergies. We believe our ability to drive VAPS growth
following our historical acquisitions highlights the value proposition our VAPS provide to our customers.
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Sophisticated Logistics and Service Capabilities
Building from the largest branch network in the industry, we operate a sophisticated hybrid in-house and outsourced logistics and service infrastructure that
we believe is highly differentiated from our competitors and enhances the value proposition we provide to customers. Precise scheduling of installations and
removals, same-day delivery capabilities on certain products, and ability to mobilize large volumes of equipment in any geography serviced by our branch network
are all unique capabilities that differentiate WillScot Mobile Mini, particularly among more demanding customer segments. We believe that continuing to further
optimize our logistics and service capabilities through the deployment of technology and in-sourcing our services is an opportunity for further cost efficiency and
differentiation with our customers.
Investments in Technology
We believe our technology serves as a primary differentiator relative to our competition and is a key component of our customer value proposition. Our US
and Canadian Modular and Storage teams operate using a single consolidated customer relationship management ("CRM") software platform which provides
greater visibility into our customer base and enhances our ability to cross-sell our portfolio of products to our customers. We leverage our state of the art SAP
enterprise resource planning platform and our data and analytics platform to achieve operating efficiencies and enhance the overall customer experience. Effective
use of real‑time information allows us to monitor and optimize the utilization of our fleet, allocate our fleet to the highest demand markets, optimize pricing, and
determine the best allocation of our capital to invest in fleet and branches.
We are able to dynamically price and approach customer accounts in a strategic and statistically informed manner. We also believe our ability to leverage
this data helps us to increase our market share and effectively manage supply and demand dynamics in our fleet to maximize cash flow in all phases of the
economic cycle, including identifying opportunities where underutilized lease fleet can be sold to generate cash.
Similarly, advancements in technology continue to shape our fleet and inventory, enabling us to offer an enhanced experience for our customers. Unit
tracking, customer service portals, and other customer‑facing technological benefits differentiate our offering from competitors who have not invested in these
capabilities. We believe we possess superior technology infrastructure relative to our competition and we intend to extend this advantage further by leveraging our
infrastructure investments.
Diversified Revenue Base by End Market, Product, Service and Geography
We have established strong relationships with a diverse customer base, ranging from large national accounts to small local businesses. Our customers
operate in a diversified set of end markets, including commercial and industrial, construction, education, energy and natural resources, government, and other end
markets. For the year ended December 31, 2023, the top 50 customers for WillScot Mobile Mini accounted for approximately 13% of total revenues. We believe that
the diversity of our customer end markets reduces our exposure to changes related to a given customer, shifts within an industry or geographic region, and end
market industry seasonality, while also providing significant opportunities to grow our business. Furthermore, the nature of our products is such that their use is
generally agnostic to industry. This flexibility insulates utilization from exposure to industry‑specific shocks, provided there are other needs and applications for these
products within a reasonable distance.
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The following chart illustrates the breakdown of our customers and revenue by end market as of December 31, 2023. To optimize the use of fleet assets
across our branch network, we centrally manage fleet rebalancing across our end markets. This allows us to serve 15 distinct end markets in which no customer
accounted for more than 2% of revenue for the year ended December 31, 2023.
Proven Track Record Realizing Acquisition Synergies and Deploying Best Practices
We have a strong track record of integrating and generating significant revenue and cost synergies with our acquisitions. Since our public listing in 2017,
we have executed 33 acquisitions and divestitures totaling approximately $5.4 billion in cumulative enterprise value. These transactions have included small local
storage portfolios, regional operators with mixed modular and storage fleets, and larger transformational acquisitions such as Modular Space Corporation in 2018
and Mobile Mini in 2020. Most recently in 2023, we acquired a U.S. national provider of cold storage solutions, a regional modular space manufacturing and leasing
business, and a U.S. national provider of premium large clearspan structures. We also acquired certain assets and liabilities of five regional and local modular space
and storage businesses in 2023 and, given the scalability of our operating platform, quickly integrated these assets into our leasing portfolio and branch network.
Opportunities such as these allow us to reach new customers, expand our product and service offering, and provide further opportunities for revenue and cost
synergies. See “Risk Factors—We may be unable to successfully acquire and integrate new operations, which could cause our business to suffer."
Our Asset Base Provides Highly Attractive Asset-Level Returns with Long Useful Lives
The combination of long, predictable lease durations, long asset lives, and attractive unit economics underpins the compelling cash generation capability in
our business model. As such, we have made significant investments in our lease fleet and consolidated several competitors. For the year ended December 31,
2023, our modular space and portable storage lease fleet consisted of approximately 130 million square feet of relocatable space, comprising over 156,000 modular
space units and approximately 212,000 portable storage units.
We generate an attractive internal rate of return ("IRR") in our modular space portfolio driven by the long economic life of our fleet, exceeding 20 years on
average, inclusive of any capital expenditure ("capex") required to maintain the fleet to its value maximizing earning potential. When we evaluate the purchase of
new modular units and storage containers, we consistently target and realize unit-level IRRs, including VAPS, in excess of 25%.
The stability of cash flows combined with strong economic returns make both modular space and portable storage containers highly attractive specialty
rental asset classes, and our logistics and service capabilities and investments in technology further enhance the returns we can generate from these assets.
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The following chart illustrates the breakdown of the net book value ("NBV") of our rental equipment between modular space units, portable storage units
and VAPS as of December 31, 2023.
Our Business Generates Predictable Recurring Cash Flow Due to Our Long-Term Leases and Flexible Capex Requirements
Our recurring revenue, combined with our flexible capex requirements and efficient use of working capital has allowed us to generate substantial Free
Cash Flow, both in periods of growth and economic downturn. The long term nature of our leases, with average lease durations of approximately 37 months as of
December 31, 2023, produces strong operating income and predictable cash flow.
Due to the longevity and relative simplicity of our products, we exercise control and discretion over capex, investing only where needed and when needed
to meet demand, and selling excess fleet during lower utilization periods. During periods of economic stress, we have the ability to substantially reduce capex and
variable costs throughout the portfolio to maximize cash flow, resulting in a Free Cash Flow profile that we believe is counter‑cyclical.
Our Industry
We operate within the modular space and portable storage markets, which we believe are attractive subsegments within the $1 trillion North American
market for commercial space. Our services also span across a variety of related sectors, including furniture rental, transportation and logistics, facility management,
job site services, commercial storage, and commercial real estate.
Modular Space Market
The 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, utilizing manufacturing techniques to prefabricate single or
multi-story whole building solutions in deliverable modular sections. Units are typically constructed of steel, wood and conventional building materials and can be
permanent or relocatable. Blast-resistant modules have been specifically designed to protect our petrochemical, energy, refinery, and defense customers and any
customers operating in blast radius zones. Clearspan structures, also referred to as fabric buildings or industrial tents, are rapidly deployable and have numerous
use cases including large-scale industrial warehousing, controlled environments for construction sites, retail and distribution space, and high-end event spaces.
The modular space market has evolved in recent years as businesses and other potential customers increasingly recognize the value of modular space.
The key growth drivers in this market are similar to portable storage and include:
Growing need and demand for space: driven by general economic activity, including gross domestic product growth, industrial production, mining and
natural resources activity, non-residential construction, urbanization, public and education spending, and the scale and frequency of special events.
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:
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Quick to install: the pre-fabrication of modular space units allows them to be put in place rapidly, providing potential long-term solutions to needs that
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 to adjust
their space as their needs change.
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Cost effectiveness: modular space units provide a cost-effective solution for temporary and permanent space requirements and allow customers to
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 consistent quality.
•
• Mobility: modular space units can easily be disassembled, transported to a new location and re-assembled.
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Environmentally friendly: relocatable buildings promote the reuse of facilities, on an as-needed basis, by the occupants, and leave no residual
footprint once removed.
Portable Storage Market
The portable storage market, like the modular space market, is highly fragmented and remains primarily local in nature. Portable storage units are typically
ground‑level entry, windowless storage containers made of heavy exterior metals for secure storage and water tightness. Portable storage units can be built to
specification or can be remanufactured from existing storage products, such as ISO shipping containers. Remanufacturing typically involves cleaning, removing rust
and dents, repairing floors and sidewalls, painting, and adding company logos or signs, and may include further customization by adding our proprietary easy
opening door system and our patented Tri‑Cam Locking System®. Portable storage units also include climate-controlled storage containers, walk-in freezers,
refrigerated storage trailers and dock-height refrigerated trailers.
Portable storage units continue to find new applications as business needs change and develop. Demand for portable storage is driven by a number of
factors, including:
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Versatility: portable storage units can be easily customized to suit customer specifications. While standard applications include locking double‑door
systems to facilitate loading, custom entrances, such as rolling or sliding doors, can be added for personnel access. Units can also be outfitted with
partitions, ramps, lighting, shelving and other interior organizational solutions, including PRORACK™, our innovative complete system of sturdy, readily
movable surfaces that can increase the capacity and functionality of our products.
Affordability: portable storage provides customers with a flexible and low‑cost storage alternative to permanent warehouse space and fixed‑site
self‑storage.
Safety: units can be easily outfitted with fire and water‑resistant surfaces and materials. ISO containers are often wind and leak‑proof by virtue of their
uses in logistics and shipping. Nearly all units are made from steel, which is a low‑cost, durable material.
Security: a variety of enhanced locking mechanisms are available for portable storage units, including our patented Tri‑Cam Locking System® and
ContainerGuardLock®. These features offer additional protection for high‑value goods and inventory.
Convenience: portable storage units provide immediate ground‑level access for consumers and can be easily transported in large quantities via truck, rail,
or cargo ship to their job site, facility, retail location, or office site.
Aesthetics: portable storage units can be easily painted and decorated with company colors and logos and are less conspicuous than other portable
storage alternatives.
Other Related Markets
In the normal course of providing our “Ready to Work” solutions, we perform services that are characteristic of activities in other industries. For example,
we coordinate a broad network of third-party and in-house transportation and service resources to support the timely movement of our products to, as well as
maintenance on, customer sites. Additionally, we design, source, lease, and maintain a broad offering of ancillary products, including furniture, which render our
modular and storage units immediately functional in support of our customers’ needs. We have developed networks of third‑party service providers that we
coordinate to expand the breadth of capabilities that our customers can source through us. These third‑party‑managed services represent incremental revenue and
margin opportunities for us and simplify the number of vendor touchpoints for our customers.
We also provide technical expertise and oversight for customers regarding building design and permitting, site preparation, and expansion or contraction of
installed space based on changes in project requirements. Further, we have the capability to compete in adjacent markets, such as other job site services, facilities
management, logistics, and others that are natural extensions of our temporary commercial space capabilities. We believe that this broad service capability
differentiates us from other commercial space rental and service providers and is a competitive advantage in the marketplace.
Competition
Although our competition varies significantly by local market, the temporary space industry is highly competitive and fragmented as a whole. We believe
that participants in our industry compete based on of customer relationships, product quality and availability, delivery speed, VAPS and service capabilities, pricing
and overall ease of doing business. We typically compete with one or more local providers in all of our markets, as well as with a limited number of national and
regional companies.
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Our competitors include lessors of storage units, mobile offices, and other structures used for portable storage, as well as traditional commercial office
space and conventional fixed self-storage facilities. Some of our competitors may have greater market share in certain geographic regions. Significant competitors
include McGrath RentCorp, United Rentals, ATCO Structures & Logistics, and Satellite Shelters. Numerous other regional and local companies compete across the
markets that we serve.
Our Business and Growth Strategies
We intend to maintain a leading market position and increase our revenue and profitability by pursuing the following strategies, all of which we have
demonstrated in our historical operating performance:
Expand Penetration of Value-Added Products and Services ("VAPS")
VAPS have been a prominent growth driver in our business for almost a decade. We believe this growth opportunity could be substantially larger if we
successfully penetrate more of our modular space and portable storage units and continue to expand our VAPS offerings through new product introductions.
Optimize Rate Across Fleet
We continue to advance multiple pricing strategies, customer segmentation, and contract standardization across our fleet to drive revenue growth. Our long
history of success, demonstrated by 25 consecutive quarters of double-digit rate growth as of December 31, 2023 in the US within our Modular segment, gives us
confidence that we can continue to successfully deploy this strategy. The turnover of our fleet, with average lease durations of approximately three years, creates
natural and reoccurring opportunities to capture incremental price increases. As the market leader in our industry, we offer the broadest fleet portfolio, the most
differentiated turnkey VAPS, and the most consistent service capabilities across the largest branch network to help our customers be 'Ready to Work'.
Enhance Market Penetration Between Segments
The combination of WillScot and Mobile Mini through the Merger created a leading business services provider specializing in innovative flexible workspace
and portable storage solutions. At the time of the Merger, we recognized that there was 80% end-market overlap and 40% customer overlap, a clear strategic
opportunity for our complementary product lines. By offering a combined product suite, we simplify our customers' procurement needs and enable productivity from
start to finish for projects. We believe cross-selling will continue to increase utilization and yield of our combined fleet.
Our sales force is optimally positioned to improve efficiency by leveraging our management information systems and using real-time information to monitor
and optimize conversion of customer opportunities across our core segments. During 2022 and 2023, we made significant investments in our CRM software
platform, moving from our legacy WillScot and Mobile Mini CRM instances into one new, consolidated CRM platform. Starting in February 2023, our US and
Canadian Modular and Storage teams began to operate in a single CRM system which provides greater visibility into our customer base and enhances our ability to
cross-sell our portfolio of products to our customers. We believe this investment will significantly accelerate our market share convergence as well as increase
penetration of our VAPS, while enhancing customer satisfaction. In turn, we expect that our broadened and enhanced fleet will attract new customers, increase
customer retention, and increase margins and return on invested capital.
Generate Cash Flow Through Operational Efficiencies, Cost Reductions, and Technology
We are implementing many initiatives designed to improve operations and increase profitability. We continually assess our branch operating footprint,
vendor base, and operating structure to maximize revenue generation while minimizing costs. We believe the increased scale, numerous operational best practices,
and state-of-the-art SAP ERP platform provided by the Merger, as well as the new, consolidated CRM platform will significantly improve our operating efficiency over
time. To improve our logistics capabilities, in 2024 we plan to implement a consolidated logistics platform and algorithm-based route optimization processes to
minimize mileage, fuel cost and emissions. With a single ERP and CRM platform in place and a single logistics platform on the horizon, we have assessed our field
management structure and in 2024 will be unifying our go-to-market approach for our modular and storage businesses to a single field sales and operations
management structure where all modular and storage products will be managed by a unified team in each local market. We believe this new structure will allow us
to cross-sell our various products more effectively by being closer to our customers in each geographical market, improve operations through sharing of logistics
and service capabilities, and provide increased opportunities for our employees for career development and growth as we continue to expand our product offerings
and services.
Leverage Scale and Organic Initiatives with Accretive Acquisitions
Our markets for modular space and portable storage solutions are fragmented. We estimate that approximately 50% of the modular market and
approximately 70% of the portable storage market in North America are supplied by regional and local competitors. We believe we have the broadest network of
operating branches in North America, as well as a scalable corporate center and information technology systems, which position us to continue to acquire and
integrate other companies while expanding the products and services available and offered to acquired customers. During 2023, we acquired a U.S. national
provider of cold storage solutions, which consisted primarily of approximately 2,200 climate-controlled containers and refrigerated storage trailers, a regional
modular space manufacturing and leasing business, which consisted primarily of
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approximately 1,300 modular leasing units, and a U.S. national provider of premium large clearspan structures. We also continued our programmatic tuck-in
strategy and acquired certain assets and liabilities of five smaller entities in 2023, which consisted primarily of approximately 1,800 storage units and 700 modular
units. We expect to pursue acquisitions opportunistically that will provide further scale efficiencies and allow us to improve returns generated by the acquired assets.
We have a proven track record of efficiently integrating acquisitions and quickly eliminating operational redundancies while maintaining acquired customer
relationships.
Deploy Capital to Strategically Support Organic Growth and Optimize Returns
We maintain a disciplined focus on our return on capital and invest opportunistically across multiple uniquely attractive asset classes, prioritizing our
investments to where we see the strongest potential returns. We continually assess both our existing lease fleet and customer demand for opportunities to deploy
capital more efficiently. We manage our maintenance capex and growth capex to align with the economic conditions in which we operate. Within our existing lease
fleet, we examine the potential cash and earnings generation of an asset sale versus continuing to lease the asset. In addition, we examine the relative benefits of
organic expansion opportunities versus expansion through acquisition to obtain a favorable return on capital.
Use Free Cash Flow to Drive Value Creation
Our Free Cash Flow generation has accelerated rapidly in recent years, and we expect this trend to continue as we execute our strategy. While we see
numerous organic and inorganic opportunities to re-invest in our core businesses, we believe we can generate surplus Free Cash Flow with which we can both
reduce leverage and return capital to shareholders over time. We view this as an additional powerful value creation lever, and we are committed to deploying this
capital as productively as possible in the interests of our shareholders.
Human Capital Management
As of December 31, 2023, we employed approximately 5,000 people in North America (the US, Canada and Mexico), the majority of whom are full time.
Approximately 77% of employees work in our approximately 250 branch locations, while 23% of employees serve in various corporate functions. We have not
experienced a strike or significant work stoppage, and we consider our relations with our employees to be good.
The Compensation Committee of our Board of Directors ("Board of Directors" or "Board") is responsible for providing oversight of our human capital
strategy. Our Executive Vice President and Chief Human Resources Officer leads the execution of the Company's human capital strategy, in collaboration with our
executive leadership team, to align human capital resources with our strategic objectives. This includes optimizing human resources ("HR") delivery through talent
acquisition, compensation and benefits and initiatives for inclusion, diversity, equity and accessibility. In 2023, we implemented an HR Excellence function to
enhance our focus on HR technology and business processes while continuing to build upon key initiatives in employee communications and engagement.
Whether in our operational or commercial teams at branch locations or onsite with customers, or in our shared services and corporate function teams, we
believe our people give WillScot Mobile Mini a competitive advantage in the industry. That differentiation begins with our values. Our Company values are lived
through our employees, acknowledged by our vendors and aligned to the needs of our customers and communities. Our values provide the basis of our approach to
human capital management as well as how we treat our stakeholders.
Company Values
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•
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•
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Dedicated to Health & Safety: We take responsibility for our own well-being and for those around us. Health and safety are first, last and everything in-
between.
Committed to Inclusion & Diversity: We are stronger together when we celebrate our differences and strive for inclusiveness. We encourage
collaboration and support the diverse voices and thoughts of our employees and communities.
Driven to Excellence: We measure success through our results and the achievement of our goals. We continuously improve ourselves, our products and
services in pursuit of shareholder value.
Trustworthy & Reliable: We hold ourselves accountable to do the right thing, especially when nobody's looking.
Devoted to Our Customers: We anticipate the growing needs of our customers, exceed their expectations and make it easy to do business with us.
Community Focused: We actively engage in the communities we serve and deliver sustainable solutions.
Our employee value proposition begins with our Dedication to Health & Safety. We take responsibility for our own well-being and those around us.
Wherever our employees are in life’s journey, we support physical well-being, financial well-being and emotional well-being through a range of programs and
initiatives to support our employees and their families to Be Well.
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Physical Well-being
We provide comprehensive medical benefits to all US-based employees, whether hourly or salaried. Core healthcare coverage includes medical, dental
and vision benefits. We offer high-deductible healthcare plans to all eligible employees to promote positive consumer behaviors, and we pay an average of 75% of
the cost of employee premiums. Through Health Savings Accounts (“HSA”) contributions, we cover between 35% and 50% of employee deductibles. We also
provide paid parental leave. Additional programs include voluntary supplemental medical benefits, employer-paid short- and long-term disability and basic life and
AD&D, legal and ID theft, home and auto, and pet insurance. Recognizing that physical well-being is a journey, we also offer additional medical plan benefits
including family planning support for fertility treatment, adoption and surrogacy, and personalized care for chronic conditions including diabetes and back, joint and
muscle pain.
Financial Well-being
Providing financial security for our employees is critical to overall well-being. Approximately 90% of employees participate in our 401(k) retirement savings
program, which includes a company match up to 4.5% on the first 6% of an employee’s contribution. We matched $14.1 million in 401(k) contributions in 2023. We
also offer several educational services employees can use to strengthen their financial acumen.
In addition to supporting employees’ long-term financial security, we employ market-based pay practices to ensure fair, competitive wages at every level of
the organization. We use compensation benchmarking data from human capital consulting firms to set and maintain pay ranges and pay levels in line with market-
based standards. We also administer multiple incentive pay plans designed to motivate and reward eligible employees commensurate with Company performance.
Incentives may be either individually based (sales commissions), group-based (regional performance bonuses), or Company-based (corporate and executive
employees).
Emotional Well-being
Caring for the emotional well-being of our employees means offering programs that meet a diverse range of work-life needs. Our Employee Assistance
Program ("EAP") provides both mental health access and practical support for personal needs. From short-term counseling to clinical support for anxiety, depression
and stress-related issues or substance abuse, our EAP enables our employees to access the care they need. Employees and members of their household can also
access financial experts and legal guidance for help including retirement planning, tax assistance, wills and trusts and family law matters.
Inclusion, Diversity, Equity and Accessibility
Our commitment to inclusion at all levels of the organization is amplified by our Inclusiveness Resource Teams (“IRTs”): Women of WSMM (“WOW"), Black
Organization for Leadership & Direction (“BOLD”), Veterans United, Hispanos, and People Respecting that Identity and Sexuality Matters (“PRISM”). IRTs are
voluntary, employee-led groups that work to foster an inclusive and diverse workplace aligned with our values and strategy. These groups were established to
support our employees from specific demographic groups and their allies, to provide opportunities for development and sharing the lived experiences of our
employees. We are stronger together when we celebrate our differences and strive for inclusiveness. Our IRTs encourage collaboration and support the diverse
voices and thoughts of our employees and communities.
Learning and Development
We measure success through our results and the achievement of our goals. We continuously improve ourselves, our products and services in pursuit of
shareholder value. In 2023, our employees completed more than 27,000 hours of training across a range of courses dedicated to compliance, safety and job-related
learning and skill development. Our learning and development system houses a library of more than 6,000 courses. We also offer a language learning program and
tuition reimbursement to increase access to skills associated with social determinants of health.
Our Driver Apprentice Program provides developmental opportunities for individuals interested in becoming a Commercial Driver’s License Class A driver
for the Company. Our foundational leadership development program (“LDP”) enrolls an average of 70 participants annually. We also host multiple in-person training
events throughout the course of the year to connect employees to our strategic priorities and their career development goals.
Community
We are community focused – we actively engage in the communities we serve and deliver sustainable solutions. Our employees participate in pro-social
giving through our “Give Where You Live” program and giving their time, talent and/or treasure to local non-profit organizations. We provide employees up to 16
hours per year in volunteer paid time off to participate in “Give Where You Live”.
In addition to giving directly to charitable organizations that are meaningful to our employees and the communities we serve, we have national, non-profit
partnerships with certain 501(c)3 organizations in our core causes of Shelter, Hunger, Education and Health & Wellness. Through these partnerships, our
employees participate in build days with Habitat for Humanity, food bank volunteering with Feeding America and St. Mary’s Food Bank, blood drives and emergency
response initiatives with the American Red Cross, and work readiness and financial literacy programs with Junior Achievement.
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Compliance and Risk Mitigation
Being trustworthy and reliable means, we hold ourselves accountable to do the right thing, especially when nobody is looking. Initiatives that the Company
has implemented to maintain the highest level of professionalism and integrity include annual compliance training that focuses on the applicable cybersecurity, data
privacy, legal and regulatory requirements needed to maintain a high level of security and risk standards. Employees also receive phishing simulation tests
approximately once every six months and supplemental IT training on a quarterly basis. Additionally, the new hire onboarding process covers cybersecurity and data
safety training for all employees. When we source talent through external sources for skilled trades, sales associates, and professional staff, we retain reputable
recruiting firms that perform background checks as part of our new hire process.
Environmental, Social and Governance ("ESG")
We are committed to upholding high standards when it comes to our environmental, social and governance responsibilities, as well as the safety of our
employees and our business partners. These commitments began with a comprehensive review of the industry landscape, which laid the groundwork for an
industrial circular economy powered by our customer-focused innovation and our talented workforce. As the leader in innovative and flexible temporary space
solutions, our approach to ESG seeks to balance short-term and long-term solutions and considers the interests of our stakeholders in our everyday actions. The
principal products we provide to our customers are long-lived, reusable and relocatable, while producing minimal waste. For decades, we have committed ourselves
to circular economic practices to reuse as many of our assets as possible.
Our Board of Directors, at the direction of our Nominating and Corporate Governance Committee, is actively involved in the development of our ESG
strategy and approach. With their guidance, in 2020, we conducted an assessment of our readiness to pursue an ESG strategy with the goal of determining our
focus areas. In late 2021, we rolled out our formal ESG strategy at our Investor Day, called “Deliver Opportunity.” In 2022, we formalized our ESG strategy around
key aspects ingrained in our values such as built-in sustainability, team safety, community focus and inclusion and diversity. In 2023, we continued to execute on the
five pillars that make up our ESG strategy: environmental responsibility, sustainable solutions for customers, effective governance, empowering our people, and
community impact.
Our business is managed for long-term success in a manner that we believe is economically, environmentally and socially responsible, and our ESG efforts
are focused in areas where we see tangible business impact. Over the next several years, we will continue to focus on ensuring a future where the communities in
which we operate and customers we support can thrive.
In formalizing our own ESG framework, we analyzed our business and identified priority opportunities that enable positive impact, including alignment with
disclosure frameworks and guiding principles, such as the U.N. Sustainable Development Goals and the recommendations from the Task Force on Climate-Related
Financial Disclosures.
Environmental
Circular Business Model
Our business model is inherently sustainable as it is centered around minimizing waste and maximizing resource efficiency by prioritizing the reuse and
refurbishment of manufactured products and materials. We continue to strengthen and expand our environmentally sustainable practices to reduce our impact on
the planet. We are minimizing our resource use and increasing our energy efficiency through circular solutions, fleet optimization, and greenhouse gas ("GHG")
emission and waste characterization studies that help us identify and understand other areas of opportunity. These initial and critical steps provide quantifiable
metrics enabling us to benchmark and prioritize our efforts for future improvements and to continually bolster our circular economic approach with our space
solutions.
We lease temporary space solutions which are reusable, reconfigurable, relocatable, and repurposed or recycled. We also maintain, repair, and reuse our value
added products and services (“VAPS”) packages, which are used to outfit an office, classroom or even a media room for events. This not only promotes the mindset
of circularity, but it also obviates the need for single-use purchases of new materials, additional transportation of those products, and disposal at the end of projects.
We have industry-leading refurbishment capabilities for our units and VAPS which allow these assets to cycle through different customers, typically seven times over
their 20-year lifetime with a minimal refresh before each new cycle. Typically, in the second half of the product’s life, we complete a full refurbishment, which can
extend the asset life by another 10 years, allowing many of our modular units to be in service for 30 years. With the cost of a full refurbishment at only 20-30% of the
cost of a new unit, it’s more capital efficient to refurbish our units and reduce the environmental impact of extracting raw materials to build new ones. The reuse and
refurbishment of assets results in a lower embodied carbon for the units and helps mitigate climate impact.
Our innovative panelized product, FLEX, can be re-configured and reused significantly reducing labor and material waste resulting in our most efficient and
environmentally friendly product. FLEX provides customized configurations that allow for stacking up to three stories and connection end to end allowing for use in
tighter spaces. Due to its modularity, workspaces such as FLEX can quantifiably outperform traditional units in several key areas, including energy efficiency through
the use of motion activated LED lighting, lower GHG emissions, less waste and material use and increased recycling.
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We also have world class modernization solutions to support our storage assets, which we can acquire as end-of-life shipping containers and put into service as
storage units. Further, we offer innovative systems for space optimization, such as our PRORACK line, which enable our customers to maximize the functionality,
organization and safety of any given space.
TM
VAPS add a multiplier effect to our circular story because we are able to reuse, repair, and maintain VAPS that come off rent, which helps drive better margins
and growth. In addition, putting VAPS into our circular business model not only reduces material usage, but also reduces packaging waste, and transportation miles
both for us and for our customers.
Circular by design, our business model helps us reduce material usage, emissions and costs, while helping our customers with their ESG goals. We aim to be
the industry's most innovative partner in diverting waste, reducing emissions, and driving sustainable economic growth.
Waste Management / Reduction
Not only do we help our customers reduce waste with our reusable products, but we have also prioritized waste internally to focus on diversion, compliance,
mitigation, and efficiencies. Our goals for reducing waste generation and disposal are fourfold and include developing baseline generation data, optimizing waste
collection practices, increasing recycling, and reducing overall generation. Our strategy to reach these goals includes reducing packaging, eliminating single-use
products where feasible, increasing use of reusable materials, educating our employees on proper sorting, introducing consistent signage, and centralizing and
optimizing our waste collections points. To date, we have conducted nine waste composition studies across our branch network, and developed an operational
waste diversion program that will enable us to identify opportunities for increased recycling and optimization of valuable materials such as wood, metal, and
cardboard.
In addition, we conduct a thorough waste vendor assessment to ensure consistency and compliance with waste regulations, but also to shift our focus from
simple waste disposal to waste mitigation. Our aim is to work with vendors who are willing to support our waste diversion efforts. This includes, but is not limited to,
increased recycling of single stream materials and construction and demolition waste, right sizing of containers, optimization of service levels, education and training
for users, and holistic waste data tracking. We also engage with our suppliers to establish takeback programs and identify opportunities to purchase product in bulk
and/or reusable packaging to further eliminate waste generation.
Greenhouse Gas Emissions
Our greenhouse gas footprint and risk are small, however we can strive to do better. Our business requires management of a diverse and active delivery and
set-up fleet and operation of yard equipment. We have both short- and long-term initiatives in place to improve efficiency and reduce emissions from our rolling stock
fleet. In the short term, we are leveraging available technology and analytics to optimize the routes driven by our team, which in turn can reduce mileage, fuel
consumption, and costs. We continue to actively invest in technology solutions to help us realize these and other efficiencies.
Longer term, we are in the process of replacing older vehicles with modern, efficient vehicles, and have started acquiring vehicles fueled by alternative fuel
methods, including renewable natural gas and electric alternatives, among others. In California we are piloting the use of compressed natural gas trucks, which emit
roughly 20% fewer GHG emissions than their gasoline-powered counterparts. We plan to expand the program in California in 2024. Additionally, in 2023, we
decommissioned more than 400 older diesel vehicles, and auctioned them off, where possible, to avoid waste. We replace older vehicles with new vehicles that
have more efficient engines, and we continue exploring additional options for utilizing alternative fuel.
Over time, we believe these efforts will also help to reduce our fuel costs and risks, while also helping us secure contracts with like-minded customers. We are
constantly developing new solutions to help our customers improve their business, reduce their carbon footprint and be better corporate citizens. These solutions
include route optimization solutions to reduce travel distances and idle times and optimizing fleet vehicle usage to eliminate use of oversized or unnecessary
equipment, each of which reduces greenhouse gas and improves customer efficiency.
Social
Safety
The protection of people and the environment is a core value at WillScot Mobile Mini. Our health and safety priorities are a driving force that shape who we
are and what we do. Safety extends beyond our branches and yards and includes travel and activities at the customer sites. WillScot Mobile Mini fosters an
environment in which our employees feel empowered and choose to make the safest and best decisions possible. We empower and reward employees for being
personally accountable and exceeding safety guidelines in every task. Proper safety culture fosters personal accountability, leading to increased safety, active
employee engagement and a strong commitment to the Company and our customers.
Today, we believe we are operating at high levels of safety and low levels of injury. In 2023, our Total Recordable Incident Rate (“TRIR”) was less than 1.0,
which translates to keeping our employees very safe, and we remain committed to creating a zero-harm culture. Every Company employee has “stop-work”
authority allowing employees to stop work, report near misses and identify improvements that impact their own safety and that of others, which supports our
constant goal to identify and correct safety issues before they turn into incidents.
WillScot Mobile Mini leverages technology to assist our drivers and other team members in the safety arena. We created an assessment tool, our “Safety
Save” application, that tracks employee safety engagement and measures the number of safety engagements as our team members complete them. Experienced
safety professionals design and partner
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with the operating teams to use Safely Save reports to identify near misses, reported injuries, or plan safety focus areas based on reported or observed behaviors or
findings. Additionally, with driver consent, we have implemented an onboard driver behavior monitoring system which detects risky driving behavior and informs
leaders so they can coach drivers and gain commitment for improvement. We also use artificial intelligence applications to constantly assess and monitor driver
performance. Any employee is encouraged to complete a safety assessment on an observation of a task, tool, behavior or other condition during working duties.
Use of the Safety Save application and driver behavior monitoring system are just two examples we use to manage safety leadership at all levels.
Lastly, the Company maintains a robust safety assessment program that includes an annual commitment to environmental, health and safety by all
employees that drives increased focus to our Health and Safety core value by providing increased visibility. Our goal is to help each team member succeed and
enjoy a safe working experience. Who we are as people ultimately defines what we are as a business, and safety is everyone’s responsibility.
Our environmental, health and safety management system (“EHSMS”) revolves around four main components, “plan,” “do,” “check” and “act.” Our safety
management team is designed around these four main components and is responsible for developing, maintaining, and administering our EHSMS by assisting
operations teams, providing training to ensure local teams are aware of and using safe practices, and auditing and monitoring safety performance. Our EHSMS is
based on legal requirements and hazards that our employees face daily. As to “plan,” our health and safety culture policy, drafted by members of our senior
executive team, highlights the tenets of our commitment to safe culture. We are subject to certain environmental, health, and safety laws and regulations in the
countries, states, provinces, and localities in which we operate. Our health and safety programs are designed around global standards with appropriate variations
addressing the multiple jurisdictions, regulations, hazards, and unique working environments where we operate. Hazard assessments are regularly conducted to
reveal issues and trends and determine root causes. As to “do,” and based on our hazard assessments, the Company evaluates each task, creating or modifying
standard operating procedures and work instructions. We provide safety and health training that exceeds regulatory requirements in line with employees’ tasks and
the hazards they face during the completion of daily tasks. As it pertains to “check,” our corporate safety team conducts regular audits, and where deficiencies or
corrective actions are needed, action plans are prepared, executed and tracked to closure. We focus on leading indicators as a better and more reliable gauge of
organizational health than lagging indicators. This allows us to stay ahead of incident management behaviors, conditions or issues that can be corrected before an
incident occurs. We use safety scorecards to track the safety performance of our drivers, branches, and divisions. Our scorecards include safety-leading indicators,
allowing us to spot trends and prevent them from becoming problems. These leading indicators are reported and discussed no less than monthly in each region in
which we operate. Lastly, as it pertains to “act,” among other initiatives, we have partnered with our insurers for several years to conduct external audits of our safety
management system and practices. Seasoned safety auditors from the insurer visit and assess our operational safety practices to look for injury potential based on
the latest trends at select branch locations. The Company uses these results to continuously update our EHSMS. We continue to focus on the root cause of our
incidents, changing our approach as needed to target trending safety metrics.
Community
We are scaling our community outreach consistent with our distributive business model. Our reach as a company gives us the ability to support all the
communities in which we work and live. The following represents highlights of our giving approach.
•
•
In addition to our Give Where You Live program, we partner with several national non-profit organizations such as Habitat for Humanity, St. Mary's Food
Bank, Feeding America, Food Banks Canada, Bancos de Alimento Mexico, Junior Achievement, and the American Red Cross. We have partnered with
Habitat for Humanity for over 17 years to provide in-kind donations and physical and monetary support to help families build and improve places to call
home. Local branches are able to make an impact with local Habitat for Humanity affiliates by donating containers for up to seven months during a
neighborhood build. In addition to corporate donations to St. Mary's Food Bank, Feeding America, Food Banks Canada, and Bancos de Alimento Mexico,
employees across the Company have opportunities to hold food drives and volunteer their time at local food banks. Our partnership with Junior
Achievement, supports our core cause of education. Junior Achievement provides work readiness, financial awareness, and entrepreneurship programs for
students through chapters in all US states and internationally. Our partnership includes sponsoring a BizTown shop in Tempe, Arizona for the 2023-24,
2024-25, and 2025-26 school years, as well as opportunities for employees to volunteer at a BizTown, in the classroom and as a mentor. We established a
community partnership with the American Red Cross to support our core cause of health and wellness. In addition to a corporate financial contribution in
2023, employees were encouraged to get involved with the Red Cross through blood drives, first aid kit builds and other volunteering opportunities. In
addition, employees in Phoenix wrote cards to military service members and veterans in April 2023, expressing gratitude for their sacrifices and heroism,
with similar projects completed for Veterans Day and the end-of-year holidays. The intersectionality of our IRTs with Give Where You Live is extending the
social impact across our network.
Our Minions of Kindness ("MoK") Fund is a 501(c)(3) organization that was established to help our employees and their immediate family members who
experience unique and dire circumstances. This fund is supported exclusively through employee donations, with 100% of the donations we receive going
directly to employees and their families in need. The MoK Fund is governed by a board of directors that is made up of volunteers within WillScot Mobile
Mini.
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Governance
Good governance enables everything we do. We are committed to operating with the highest ethical standards of corporate governance. Several years
ago, our Board of Directors created a roadmap to improve the Company’s governance practices, which we have continued to develop and execute.
Our Nominating and Corporate Governance Committee oversees our ESG initiatives and is responsible for our efforts to identity and seek diverse
candidates for our Board, which not only represents our commitment to creating a more diverse Board, but also our commitment to bringing in directors with strong
experience to enhance our Board in key areas. In 2023, the Board acted to increase the size of the Board from eight to nine members and appointed Natalia
Johnson to serve as a director to fill the vacancy created by that increase. Ms. Johnson brings significant human capital management, technological and digital
modeling, systems and systems integration, end-market and industry, operational effectiveness, strategic planning and risk oversight experience to the Board. This
decision reinforces the strategic direction of the Company, and the Board continues to evaluate talent, skill sets and diversity to align with the Company’s long-term
future. The Company continues to pursue its commitment to creating a more racially and gender-diverse Board by seeking diverse candidates for Board seats.
Moving forward, we plan to continue to seek potential director candidates with key qualifications and diverse backgrounds.
Our Audit Committee reviews the Board of Directors’ and the Company’s activities to identify enterprise risks, including climate, develops plans to mitigate
those risks and is also responsible for monitoring our risk management framework on behalf of the Board. The committee considers a variety of potential risks that
may affect the Company, including the competitive and macroeconomic landscape, cybersecurity and information technology, environmental health and safety,
statutory/regulatory compliance, ESG risks, and ability to scale human capital and business systems for future growth. In 2023 we modified our Audit Committee
Charter to specifically task the Audit Committee with periodically reviewing the Company’s policies and processes related to cybersecurity, data-protection threats
and incident response, and to ensure compliance with the new SEC cybersecurity rules and related disclosure obligations. In conjunction, we have established a
dedicated cybersecurity team to focus on protecting data confidentiality and integrity and ensuring continued availability of critical information systems that contain
sensitive customer and employee data.
Over the past several years we have also implemented significant stockholder-focused actions as part of our governance efforts, including converting all
prior outstanding warrants to a single class of common stock, setting requirements for a 12-month vesting period for Board member equity compensation, removing
super majority voting requirements for all Board actions, and approving a biennial pay equity review and report from the Compensation Committee.
Lastly, our executive leadership team regularly reviews and refines our key governance policies, including policies on human rights, environmental
responsibility, and vendor ethics, affirming our dedication to continuous improvement. These documents provide a strong structure that enables our directors and
management to effectively pursue our goals on behalf of our business, our employees, and our stockholders.
Intellectual Property
We operate primarily under the WillScot and Mobile Mini brands. We protect our products and services through the use of trademarks and patents, none of
which are individually material to our business. Our trademarks and patents are registered or pending application for registrations in the US Patent and Trademark
Office and various non‑US jurisdictions. On our Modular fleet, we maintain a patent for the design of our FLEX units in the US and other patents in the US and non-
US jurisdictions concerning various assembly and panel components. On our Storage fleet, we have patented our proprietary Tri‑Cam Locking System®,
ContainerGuardLock® and other continued improvements in locking technology in the markets in which we operate and have obtained a trademark for
PRORACK , our innovative complete system of sturdy, readily movable surfaces. We believe that continued innovation differentiates WillScot Mobile Mini with our
customers and represents a source of long-term competitive advantage.
TM
Available Information
Our website address is www.willscotmobilemini.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) or 15(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”) as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the United States
Securities and Exchange Commission (the “SEC”). The SEC maintains an internet website at www.sec.gov that contains reports, proxy and information statements
and other information regarding WillScot Mobile Mini. Our website also includes our Corporate Governance Policies, Code of Business Conduct and Ethics and
charters of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee of our Board of Directors.
Regulatory and Environmental Compliance
We are subject to certain environmental, transportation, anti-corruption, import control, health and safety, and other laws and regulations in countries,
states or provinces, and localities in which we operate. We incur significant costs in our business to comply with these laws and regulations. However, from time to
time we may be subject to additional costs and penalties as a result of non-compliance. The discovery of currently unknown matters or conditions, new laws and
regulations,
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or different enforcement or interpretation of existing laws and regulations 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, no environmental matter has been material to our
operations. Based on our management’s assessment, we believe that any environmental matters 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 Practices Act of 1977, as
amended (the “FCPA”). These regulations prevent companies and their officers, employees, and agents from making payments to officials and public entities of
foreign countries to facilitate obtaining new contracts. Violations of these laws and regulations may result in criminal sanctions and significant monetary penalties.
Certain of our units are subject to regulation in certain states under motor vehicle and similar registrations and certificate of title statutes. Management
believes that the Company has complied, in all material respects, with all motor vehicle registration and similar certificate of title statutes in states where such
statutes clearly apply to modular space units. We have not taken actions under such statutes in states where we have determined that such statutes do not apply to
modular space units. However, in certain states, the applicability of such statutes to modular space units is not clear beyond doubt. If additional registration and
related requirements are deemed to be 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, we could be subject to additional costs, fees, and taxes as well as administrative burdens to comply with such statutes and requirements.
Management does not believe that the effect of such compliance will be material to our business or financial condition.
ITEM 1A. Risk Factors
Risks Relating to Our Business
We are subject to various laws and regulations, including recent pronouncements related to laws and regulations governing antitrust,
climate related disclosures, privacy, government contracts, anti-corruption and the environment. Obligations and liabilities under these
laws and regulations may materially harm our business.
Our operations are subject to an array of governmental regulations in each of the jurisdictions in which we operate. For example, our activities in the US
are subject to regulation by several federal and state government agencies, including the Occupational Safety and Health Administration, and by federal and state
laws. Our operations and activities in other jurisdictions are subject to similar governmental regulations. Similar to conventionally constructed buildings, the modular
business industry is also subject to regulations by multiple governmental agencies in each jurisdiction relating to, among others, environmental, zoning and building
standards, and health, safety and transportation matters. These regulations affect our Storage Solutions customers, most of whom use our storage units to store
their goods on their own properties for various lengths of time. If local zoning laws or planning permission regulations in one or more of our markets no longer allow
our units to be stored on customers' sites, our business in that market will suffer. Noncompliance with applicable regulations, implementation of new regulations or
modifications to existing regulations may increase costs of compliance, require a termination of certain activities or otherwise materially adversely affect our
business, results of operations and financial condition.
Recent Pronouncements
Recent pronouncements by the SEC, Federal Trade Commission, Department of Justice, and the state of California, among others, related to antitrust,
climate related disclosures, and privacy could have the impact of increasing Company compliance costs, increasing potential liability to the Company as a result of
frivolous lawsuits, or place the Company in a position of not knowing when or if the laws are settled in a particular area for the Company to effectively comply.
US Government Contract Laws and Regulations
Our government customers include the US government, which means we are subject to various statutes and regulations applicable to doing business with
the US government. These types of contracts customarily contain provisions that give the US government substantial rights and remedies, many of which are not
typically found in commercial contracts and which are unfavorable to contractors, including provisions that allow 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 company may generally recover only its incurred or committed costs, settlement expenses and
profit on work completed prior to the termination. If the government terminates a contract for default, the defaulting company may be liable for any extra costs
incurred by the government in procuring undelivered items from another source.
In addition, US government contracts and grants normally contain additional requirements that may increase our costs of doing business, reduce our
profits, and expose us to liability for failure to comply with these terms and conditions. These requirements include, for example: (a) specialized disclosure and
accounting requirements unique to US government
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contracts; (b) financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been
spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the US government; (c) public disclosures
of certain contract and company information; and (d) mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and
affirmative action programs and environmental 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/or other liability under our
contracts or under the Federal Civil False Claims Act (the "False Claims Act"). The False Claims Act’s “whistleblower” provisions allow private individuals, including
present and former employees, to sue on behalf of the US government. The False Claims Act statute provides for treble damages and other penalties, and if our
operations are found to be in violation of the False Claims Act, we could face other adverse actions, including suspension or prohibition from doing business with the
US government. Any penalties, damages, fines, suspension or damages could adversely affect our ability to operate our business and our financial results.
Department of Transportation and Titling Regulations
We operate in the US pursuant to operating authority granted by the US Department of Transportation (the “DOT”). Our drivers must comply with the safety
and fitness regulations of the DOT, including those relating to drug and alcohol testing and hours of service. Such matters as equipment weight and dimensions are
also subject to government regulations. Our safety record could be ranked poorly compared to peer firms. A poor safety ranking may result in the loss of customers
or difficulty attracting and retaining qualified drivers which could affect our results of operations. Should additional rules be enacted in the future, compliance with
such rules could result in additional costs.
Additionally, we are subject to, and may be required to expend funds to ensure compliance with a variety of laws, regulations, and ordinances related to
unit titling, stamping, and registration rules and procedures, and notification requirements to agencies and law enforcement relating to unit transfers, particularly
when acquiring new assets and operations. Many of these laws and regulations are frequently complex and subject to interpretation, and failure to comply with
present or future regulations or changes in interpretations of existing laws or regulations may result in impairment or suspension of our operations and the imposition
of penalties and other liabilities. At various times, we may be involved in disputes with local governmental officials regarding the development and/or operation of our
units. We may be subject to similar types of regulations by governmental agencies in new markets. In addition, new legal or regulatory requirements or changes in
existing requirements may delay or increase the cost of acquiring and integrating new units, which may adversely impact our ability to conduct business.
Anti-Corruption Laws and Regulations
We are subject to various anti-corruption laws that prohibit improper payments or offers of payments to foreign governments and their officials by a US
person for the purpose of obtaining or retaining business. We operate in countries that may present a more corruptible business environment than the US. Such
activities create the risk of unauthorized payments or offers of payments by one of our employees or agents that could be in violation of various laws, including the
FCPA. We have implemented safeguards and policies to discourage these practices by our employees and agents. However, existing safeguards and any future
improvements may prove to be ineffective and employees or 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 record our transactions, we
may be subject to regulatory sanctions. Violations of the FCPA or other anti-corruption laws may result in severe criminal or civil sanctions and penalties, including
suspension or debarment from US government contracting, and we may be subject to other liabilities which could materially adversely affect our business, results of
operations and financial condition. We are also subject to similar anti-corruption laws in other jurisdictions.
Environmental Laws and Regulations
We are subject to a variety of national, state, regional and local environmental laws and regulations. Among other things, these laws and regulations
impose limitations and prohibitions on the discharge and emission of, and establish standards for the use, disposal and management of, regulated materials and
waste and impose liabilities for the costs of investigating and cleaning up, and damages resulting from, present and past spills, disposals or other releases of
hazardous substances or materials. In the ordinary course of business, we use and generate substances that are regulated or may be hazardous under
environmental laws. We have an inherent risk of liability under environmental laws and regulations, both with respect to ongoing operations and with respect to
contamination that may have occurred in the past on our properties or as a result of our operations. While we endeavor to comply with all regulatory requirements,
from time to time, our operations or conditions on properties that we have acquired have resulted in liabilities under these environmental laws. We may in the future
incur material costs to comply with environmental laws or sustain material liabilities from claims concerning noncompliance or contamination. Under certain
environmental laws, we could be held responsible for all of the costs relating to any contamination at, or migration to or from, our or our predecessors' past or
present facilities. These laws often impose liability even if the owner, operator or lessor did not know of, or was not responsible for, the release of such hazardous
substances. While we maintain certain related insurance coverages, we have no reserves for any such liabilities.
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We are also required to obtain environmental permits from governmental authorities for certain of our operations. If we violate or fail to obtain or comply
with these laws, regulations, or permits, we could be fined or otherwise sanctioned by regulators. We could also become liable if employees or other parties are
improperly exposed to hazardous materials.
We cannot predict what environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered
or interpreted, or what environmental conditions may be found to exist at our facilities or at third party sites for which we may be liable. Enactment of stricter laws or
regulations, stricter interpretations of existing laws and regulations or the requirement to undertake the investigation or remediation of currently unknown
environmental contamination at sites we own or third-party sites may require us to make additional expenditures, some of which could be material. Responding to
governmental investigations or other actions may be both time-consuming and disruptive to our operations and could divert the attention of our management and
key personnel from our business operations. The impact of these and other investigations and lawsuits could have a material adverse effect on our financial
statements.
We may be unable to successfully acquire and integrate new operations, which could cause our business to suffer.
We have historically achieved a significant portion of our growth through acquisitions, and we will continue to consider potential acquisitions on a selective
basis. There can be no assurance that we will be able to identify suitable acquisition opportunities in the future or that we will be able to consummate any such
transactions on terms and conditions acceptable to us.
Additionally, we cannot predict if or when acquisitions will be completed, and we may face significant competition for acquisition targets. Acquisitions
involve numerous risks, including (a) difficulties in integrating the operations, technologies, management information systems, products and personnel of the
acquired companies; (b) diversion of management’s attention from normal daily operations of the business; (c) loss of key employees; (d) difficulties in entering
markets in which we have no or limited prior experience and where our competitors in such markets have stronger market positions; (e) difficulties in complying with
regulations, such as antitrust and environmental regulations, and managing risks related to an acquired business; (f) an inability to timely obtain financing, including
any amendments required to existing financing agreements; (g) an inability to implement uniform standards, controls, procedures and policies; (h) undiscovered and
unknown problems, defects, liabilities or other issues related to any acquisition that become known to us only after the acquisition, particularly relating to rental
equipment on lease that are unavailable for inspection during the diligence process; and (i) loss of key customers or suppliers.
Acquisitions are inherently risky, and we cannot provide assurance that any future acquisitions will be successful or will not materially adversely affect our
business, results of operations and financial condition. If we do not manage new markets effectively, some of our new branches and acquisitions may lose money or
fail, and we may have to close unprofitable branches. We must continue to take actions to realize the combined cost synergies and commercial synergies that we
forecast for our 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 cost savings or commercial synergies we anticipated. Any of these events could
cause reductions in our earnings per share, impact our ability to borrow funds under our credit facility, decrease or delay the accretive effect of the acquisitions that
we anticipated and negatively impact our stock price.
Global or local economic movements could have a material adverse effect on our business.
Our business, which operates in the US, Canada, and Mexico, may be negatively impacted by economic movements or downturns in the local markets in
which we operate or global markets generally. These adverse economic conditions may reduce commercial activity, cause disruption and extreme volatility in global
financial markets and increase rates of default and bankruptcy. Reduced economic activity has at times historically resulted in reduced demand for our products and
services. Disruptions in financial markets could negatively impact the ability of our customers to pay their obligations to us in a timely manner and increase our
counterparty risk. If economic conditions worsen, we may face reduced demand and an increase, relative to historical levels, in the time it takes to receive customer
payments. If we are not able to adjust our business in a timely and effective manner to changing economic conditions, our business, results of operations and
financial condition may be materially adversely affected.
Moreover, the level of demand for our products and services is sensitive to the level of demand within various sectors, particularly the commercial and
industrial, construction, education, energy and natural resources, and government end markets. Each of these sectors is influenced 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 in global or local energy prices may materially adversely
affect demand for modular buildings within the energy and resources sector. The levels of activity in these sectors and geographic regions may also be cyclical, and
we may not be able to predict the timing, extent or duration of the activity cycles in the markets in which we or our key customers operate. A decline or slowed
growth in any of these sectors or geographic regions could result in reduced demand for our products and services, which may materially adversely affect our
business, results of operations and financial condition.
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Any failure of our management information systems could disrupt our business operations, which could result in decreased lease or sale
revenue and increase overhead costs.
We rely heavily on information systems across our operations. We also utilize third-party cloud providers to host certain of our applications and to store
data. Our ability to effectively manage our business depends significantly on the reliability and capacity of these systems. The failure of our management information
systems to perform as anticipated could damage our reputation with our customers, disrupt our business or result in, among other things, decreased lease and sales
revenue and increased overhead costs. Any such failure could harm our business, results of operations and financial condition. In addition, the delay or failure to
implement information system upgrades and new systems effectively could disrupt our business, distract management’s focus and attention from business
operations and growth initiatives and increase our implementation and operating costs, any of which could materially adversely affect our operations and operating
results. Moreover, the integration of any acquisition may create unforeseen challenges for our management information systems which could result in unforeseen
expenditures and other risks, including difficulties in managing facilities and employees in different geographic areas.
We believe we have implemented appropriate measures to mitigate potential risks; however, like other companies, our information technology systems
may be vulnerable to a variety of interruptions due to our own error or events beyond our control. The measures that we employ to protect our systems may not
detect or prevent cybersecurity threats or incidents, natural disasters, terrorist attacks, telecommunication failures, computer viruses, hackers, phishing attacks, and
other security issues. We have previously been the target of attempted cyber-attacks and have, from time to time, experienced threats to our data and information
systems, computer virus attacks and phishing attempts, and we may be subject to breaches of the information systems that we use. We have not experienced a
material cybersecurity incident. We have programs in place that are intended to detect, contain and respond to data security incidents and that provide employee
awareness training regarding phishing, malware, and other cyber risks to protect against cyber risks and security breaches. However, because the techniques used
to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be
unable to anticipate these techniques or implement adequate preventative measures. In addition, because our systems contain information about individuals and
other businesses, the failure to maintain the security of the data we hold, whether the result of our own error 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.
Trade policies and changes in trade policies, including the imposition of tariffs, their enforcement and downstream consequences, 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. From time to time, the US government has historically imposed and may in the future impose tariffs on steel,
aluminum and lumber imports from certain countries, which could result in increased costs to us for these materials. Without limitation, (i) tariffs currently 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 our products that we are offering for sale
or lease, (b) the cost of certain products that we source from foreign manufacturers, and (c) the cost of certain 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 able to secure sources of certain products and materials that are not subject to tariffs
on a timely basis. Although we actively monitor our procurement policies and practices to avoid undue reliance on foreign-sourced goods subject to tariffs, when
practicable, such developments may materially adversely affect our business, financial condition and results of operations.
We face significant competition in the modular space and portable storage industries. Such competition may result in pricing pressure or
an inability to maintain or grow our market share. If we are unable to compete successfully, we could lose customers and our revenue
and profitability could decline.
Although our competition varies significantly by market, the modular space and portable storage industries are highly competitive and highly fragmented.
We compete based on of a number of factors, including customer relationships, product quality and availability, delivery speed, VAPS and service capabilities,
pricing, and overall ease of doing business. We may experience pricing pressures in our operations as some of our competitors seek to obtain market share by
reducing prices, and we may face reduced demand for our products and services if our competitors are able to provide new or innovative products or services that
better appeal to customers. In most of our end markets, we face competition from national, regional and local companies who have an established market position in
the specific service area, and we expect to encounter similar competition in any new markets that we may enter. In certain markets, some of our competitors may
have greater market share, less debt, greater pricing flexibility, more attractive product or service offerings, better brand recognition or superior marketing and
financial resources. Increased competition could result in lower profit margins, substantial pricing pressure and reduced market share. Price competition, together
with other forms of competition, may materially adversely affect our business, results of operations and financial condition.
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If we do not manage our credit risk effectively, collect on our accounts receivable, or recover our rental equipment from our 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 security from our customers
when we identify a significant credit risk. Failure to manage our credit risk and receive timely payments on our customer accounts receivable may result in the write-
off of customer receivables and loss of units if we are unable to recover our rental equipment from our customers’ sites. If we are not able to manage credit risk, or if
a large number of our customers should have financial difficulties at the same time, 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.
Fluctuations in interest rates and commodity prices may also materially adversely affect our revenues, results of operations and cash
flows.
Although we have fixed-rate debt through our Senior Secured Notes, our borrowings under our senior secured revolving credit facility remain variable rate
debt. Fluctuations in interest rates may negatively impact the amount 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,
assuming other factors are held constant.
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. It is possible that strikes,
public demonstrations or other coordinated actions and publicity may disrupt our operations. We may incur increased legal costs and indirect labor costs as a result
of contractual disputes, negotiations or other labor-related disruptions. We have collective bargaining agreements with employees in portions of our Mexico-based
operations, which accounted for less than 1% of our total employees as of December 31, 2023. These operations may be more highly affected by labor force
activities than others, and all collective bargaining agreements must be renegotiated annually. Other locations may also face organizing activities or effects. Labor
organizing activities could result in additional employees becoming unionized. Furthermore, collective bargaining agreements may limit our ability to reduce the size
of work forces during an economic downturn, which could put us at a competitive disadvantage. We believe a unionized workforce outside of Mexico would
generally increase our operating costs, divert attention of management from servicing customers and increase the risk of work stoppages, all of which could have a
material adverse effect on our business, results of operations or financial condition.
Our ability to profitably execute our business plan depends on our ability to attract, develop and retain qualified personnel. Certain of our key executives,
managers and employees have knowledge and an understanding of our business and our industry, and/or have developed meaningful 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, including the implementation of adequate drivers of retention and rewards based on performance, and work
environment. Failure to retain qualified key personnel may materially adversely affect our business, results of operations and financial condition. The departure of
any key personnel and our inability to enforce non-competition agreements could have a negative impact on our business.
Moreover, labor shortages, the inability to hire or retain qualified employees and increased labor costs could have a material adverse effect on our ability to
control expenses and efficiently conduct our operations. We may not be able to continue to hire and retain the sufficiently skilled labor force necessary to operate
efficiently and to support our operating strategies. Labor expenses could also increase as a result of continuing shortages in the supply of personnel.
Our customer base includes customers operating in a variety of industries which may be subject to changes in their competitive
environment as a result of the global, national or local economic climate in which they operate and/or economic or financial disruptions
to their industry.
Our customer base includes customers operating in a variety of industries, including commercial and industrial, construction, education, energy and natural
resources, government, retail and other end markets. Many of these customers, across this wide range of industries, are facing economic and/or financial pressure
from changes to their industry resulting from the global, national and local economic climate in which they operate and industry-specific economic and financial
disruptions, including, in some cases, consolidation and lower sales revenue from physical locations, resulting from changes in political, social and economic
conditions. These and any future changes to any of the industries in which our customers operate could cause them to rent fewer units from us or otherwise be
unable to satisfy their obligations to us. In addition, certain of our customers are facing financial pressure and such pressure, or other factors, may result in
consolidation in some industries and/or an increase in bankruptcy filings by certain customers. Each of these facts and industry impacts, individually or in the
aggregate, could have a materially adverse effect on our operating results.
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We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business.
Our ability to compete effectively depends in part upon protection of our rights in trademarks, copyrights and other intellectual property rights we own or
license, including patents to the Mobile Mini locking system. Our use of contractual provisions, confidentiality procedures and agreements, and trademark, copyright,
unfair competition, trade secret and other laws to protect our intellectual property and other proprietary rights may not be adequate. Litigation may be necessary to
enforce our intellectual property rights and protect our proprietary information and patents, or to defend against claims by third parties that our services or our use of
intellectual property infringe their intellectual property rights. Any litigation or claims brought by or against us could result in substantial costs and diversion of
resources. A successful claim of trademark, copyright or other intellectual property infringement against us could prevent us from providing services, which could
harm our business, financial condition or results of operations. In addition, a breakdown in our internal policies and procedures may lead to an unintentional
disclosure of our proprietary, confidential or material non-public information, which could in turn harm our business, financial condition or results of operations.
Our operations could be subject to natural disasters and other business disruptions, which could materially adversely affect our
information systems, 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 pandemics, fires, floods, hurricanes, earthquakes and
terrorism, which could adversely affect our information systems, future revenue, financial condition, and cash flows and increase our costs and expenses. In
addition, the occurrence and threat of terrorist attacks may directly or indirectly affect economic conditions, which could adversely affect demand for 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 significant amount of our rental equipment were to experience a
catastrophic loss, it could disrupt our operations, delay orders, shipments and revenue recognition and result in expenses to repair or replace the damaged rental
equipment and facility not covered by asset, liability, business continuity or other insurance contracts. Also, we could face significant increases in premiums or
losses of coverage due to the loss experienced during and associated with these and potential future natural or man-made disasters that may materially adversely
affect our business. In addition, attacks or armed conflicts that directly impact one or more of our properties could significantly affect our ability to operate those
properties 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 the global economy and
worldwide financial markets. Any such occurrence could materially adversely affect our business, results of operations and financial condition.
Our operations are dependent, in part, on our ability to establish and profitably maintain the appropriate physical presence in the markets
we serve.
Our operations depend, in part, on our ability to develop and optimize our branch network and market coverage while maintaining profitability. Our ability to
optimize our branch network and market coverage requires active management of our real estate portfolio in a manner that permits locations and offerings to evolve
over time, which to the extent it involves the relocation of existing branch locations or the opening of additional branch locations will depend on a number of factors,
including our identification and availability of suitable locations; our success in negotiating leases on acceptable terms; and our timely development of new branch
locations, including the availability of construction materials and labor and the absence of significant construction and other delays based on weather or other
events. These factors could potentially increase the cost of doing business and the risk that our business practices could result in liabilities that may adversely affect
our business, results of operations and financial condition.
We have in the past, and we intend in the future, to expand our operations into new geographic markets. This expansion could require financial resources
that would not therefore be available for other aspects of our business. In addition, this expansion could require the time and attention of management, leaving less
time to focus on existing business. If we fail to manage the risks inherent in our geographic expansion, we could incur capital and operating costs without any
related increase in revenue, which would harm our operating results.
We may incur property, casualty or other losses not covered by our insurance.
We are partly self-insured for a number of different risk categories, such as general liability (including product liability), workers' compensation, automobile
claims, crime, and cyber liability, with insurance coverage for certain catastrophic risks. The types and amounts of insurance may vary from time to time based on
our decisions with respect to risk retention and regulatory requirements. Effective August 1, 2023, we are self-insured for property risks. The occurrence of
significant claims, a substantial rise in costs to maintain our insurance, or the failure to maintain adequate insurance coverage could have an adverse impact on our
financial condition and results of operations.
Failure to close our unit sales transactions as we project could cause our actual revenue or cash flow for a particular fiscal period to
differ from expectations.
Sales of new and used modular space and portable storage units to customers represented approximately 4% of WillScot Mobile Mini's revenue during the
year ended December 31, 2023. Sale transactions are subject to certain factors that
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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 these transactions may take longer than we expect. As a result, our actual revenue and cash flow in a particular fiscal period may not consistently
correlate to our internal operational plans and budgets. If we are unable to accurately predict the timing of these sales, we may fail to take advantage of business
and growth opportunities otherwise available, and our business, results of operations, financial condition and cash flows 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. We devote significant
resources and time to comply with the internal control over financial reporting requirements of the Sarbanes-Oxley Act of 2002 as amended (the "Sarbanes-Oxley
Act"). There is no assurance that material weaknesses or significant deficiencies will not occur or that we will be successful in adequately remediating any such
material weaknesses and significant deficiencies. We may in the future discover areas of our internal controls that need improvement. We cannot be certain that we
will be successful in maintaining adequate internal control over our financial reporting and financial processes. Furthermore, as we grow our business, including
through acquisition, our internal controls will become more complex, and we will require significantly more resources to ensure our internal controls remain effective.
Additionally, the existence of any material weakness or significant deficiency would require management to devote significant time and incur significant expense to
remediate any such material weaknesses or significant deficiencies, and management may not be able to remediate any such material weaknesses or significant
deficiencies in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial
statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations, subject us to investigations from regulatory
authorities or cause stockholders to lose confidence in our reported financial information, all of which could materially and adversely affect us.
We are subject to evolving public disclosure, financial reporting and corporate governance expectations and regulations that impact
compliance costs and risks of noncompliance.
We are subject to changing rules and regulations promulgated by a number of governmental and self-regulatory organizations, including the SEC and
Nasdaq, as well as evolving investor expectations around disclosures, financial reporting, corporate governance and environmental and social practices. These
rules and regulations continue to evolve in scope and complexity, and many new requirements have been created in response to laws enacted by the US and
foreign governments, making compliance more difficult and uncertain. The increase in costs to comply with such evolving expectations, rules and regulations, as
well as any risk of noncompliance, could adversely impact us.
We may be unable to achieve our environmental, social and governance goals.
We are dedicated to corporate social responsibility and sustainability and our employees, customers, and stockholders expect us to make significant
advancements in environmental, social and governance matters. In part to address these concerns, we established certain goals as part of our ESG strategy.
Achievement of our goals is subject to risks and uncertainties, many of which are outside of our control, and it is possible that we may fail to achieve these goals or
that our colleagues, customers, or stockholders might not be satisfied with our efforts. These risks and uncertainties include, but are not limited to: our ability to
execute our operational strategies and achieve our goals within the currently projected costs and the expected timeframes; the availability and cost of renewable
energy and other materials; compliance with, and changes or additions to, global and regional regulations, taxes, charges, mandates or requirements relating to
climate-related goals; labor-related regulations and requirements that restrict or prohibit our ability to impose requirements on third-party contractors; the actions of
competitors and competitive pressures; and an acquisition of or merger with another company that has not adopted similar goals or whose progress towards
reaching its goals is not as advanced as ours. A failure to meet our goals could adversely affect public perception of our business, employee morale or customer or
stockholder support.
Further, an increasing percentage of employees, customers, and stockholders considers sustainability factors in making employment, business and
investment decisions. If we are unable to meet our goals, we may lose employees, and have difficulty recruiting new employees, investors, customers, or partners,
our stock price may be negatively impacted, our reputation may be negatively affected, and it may be more difficult for us to compete effectively, all of which would
have an adverse effect on our business, operating results, 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, 2023, approximately 94%, 5%, and 1% of our revenue was generated in the
US, Canada, and Mexico, respectively. Our operations in any of these countries could be affected by foreign and domestic economic, political and regulatory risks,
including (a) regulatory requirements that are subject to change and that could restrict our ability to assemble, lease or sell products; (b) economic downturns,
inflationary and recessionary markets, including in capital and equity markets, fluctuations in foreign currency exchange and interest rates; (c) trade protection
measures, including increased duties and taxes and import or export licensing requirements; (d) compliance with applicable antitrust and other regulatory rules and
regulations relating to potential acquisitions; (e) different local product preferences and product requirements; (f) pressures on management time and attention due
to the complexities
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of overseeing multi-national operations; (g) challenges in maintaining staffing; (h) different labor regulations and the potential impact of collective bargaining; (i)
potentially adverse consequences from changes in, or interpretations of, tax laws; (j) potentially adverse consequences from change in, or interpretation of,
securities laws and other financial reporting regulations; (k) political and economic instability; (l) enforcement of remedies in various jurisdictions; (m) the risk that the
business partners upon whom we depend for technical assistance will not perform as expected; (n) compliance with applicable export control laws and economic
sanctions laws and regulations; (o) price controls and ownership regulations; (p) obstacles to the repatriation of earnings and cash; (q) differences in business
practices that may result in violation of Company policies, including, but not limited to, bribery and collusive practices; and (r) reduced protection for intellectual
property in some countries. Additionally, any sustained international conflict may have a negative economic or other impact on the markets we serve, our operations
and financial results. These and other risks may materially adversely affect our business, results of operations and financial condition.
Effective management of our fleet is vital to our business, and our failure to properly safeguard, design, manufacture, repair, maintain
and manage 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 leasing business. Rental
equipment asset management requires designing and building long-lived products that anticipate customer needs and changes 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 the needs of our customers change, we may incur costs to relocate or retrofit our assets to
better meet shifts in demand. If the distribution of our assets is not aligned with regional demand, we may be unable to take advantage of sales and leasing
opportunities in certain regions, despite excess inventory in other regions. If we are not able to successfully manage our lease assets, our business, results of
operations and financial condition 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 such repair or maintenance
or suffer unexpected losses of rental equipment due to theft or obsolescence, we may be required to incur impairment charges for equipment that is beyond
economic repair or incur significant capital expenditures to acquire new rental equipment to serve demand. These failures may also result in personal injury or
property damage claims, including claims based on poor indoor air quality and termination of leases or contracts by customers. Costs of contract performance,
potential litigation and profits lost from termination could materially adversely affect our future operating results and cash flows. If a significant number of leased
units are returned in a short period of time, a large supply of units would need to be remarketed. Our failure to effectively remarket a large influx of units returning
from leases could materially adversely affect our financial performance.
Changes in state building codes could adversely impact our ability to remarket our buildings, which could have a material adverse
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 ongoing effort to keep the
regulations current and improve the life, safety and welfare of the buildings' occupants. All aspects of a given code are subject to change, including, but not limited
to, such items as structural specifications for earthquake safety, energy efficiency and environmental standards, fire and life safety, transportation, lighting and noise
limits. On occasion, state agencies have undertaken studies of indoor air quality and noise levels with a focus on permanent and modular classrooms. This process
leads to a systematic change that requires engagement in the process and recognition that past methods will not always be accepted. New modular construction is
very similar to conventional construction where newer codes and regulations generally increase cost. New governmental regulations may increase our costs to
acquire new 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 interpret building 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 unanticipated delays or increases in the cost of compliance in particular
markets. The construction and modular industries have developed many “best practices” 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 practices retroactively, at which time we may not be in compliance with such regulations and we may be required to incur costly remediation. If
we are unable to pass these increased costs on to our customers, our business, financial condition, operating cash flows and results of operations could be
negatively impacted.
Our operations face foreign currency exchange rate exposure, which may materially adversely affect our business, results of operations
and financial condition.
We hold assets, incur liabilities, earn revenue and pay expenses in certain currencies other than the US Dollar, primarily the Canadian Dollar and the
Mexican Peso. Our consolidated financial results are denominated in US Dollars, and therefore, during times of a strengthening US Dollar, our reported revenue in
non-US Dollar jurisdictions will be reduced because the local currency will translate into fewer US Dollars. Revenue and expenses are translated into US Dollars at
the
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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 the balance sheet date. Foreign currency exchange adjustments arising from certain intercompany obligations with and between our domestic companies
and our foreign subsidiaries are marked-to-market and recorded as a non-cash loss or gain in each of our financial periods in our consolidated statements of
operations. Accordingly, changes in currency exchange rates will cause our foreign currency translation adjustment in the consolidated statements of
comprehensive income (loss) to fluctuate. In addition, fluctuations in foreign currency exchange rates will impact the amount of US Dollars we receive when we
repatriate funds from our non-US Dollar operations.
Significant increases in the costs and restrictions on the availability of raw materials and labor could increase our operating costs
significantly and harm our profitability.
We incur labor costs and purchase raw materials, including steel, lumber, siding and roofing, paint, glass, fuel and other parts and materials to perform
periodic repairs, modifications and refurbishments to maintain physical conditions of our units and in connection with get-ready, delivery and installation of our units.
The volume, timing and mix of such work may vary quarter-to-quarter and year-to-year. Generally, increases in labor and raw material costs will increase the
acquisition costs of new units and also increase the repair and maintenance costs of our fleet. We also maintain a truck fleet to deliver units to and return units from
our customers, the cost of which is sensitive to maintenance, replacement, fuel costs, and rental rates on leased equipment. During periods of rising prices for labor
or raw materials, and in particular, when the prices increase rapidly or to levels significantly higher than normal, we may incur significant increases in our acquisition
costs for new units and higher operating costs that we may not be able to recoup from customers through changes in pricing, which could materially adversely affect
our business, results of operations and financial condition. If raw material prices decline significantly, we may have to write down our raw materials inventory values.
If this happens, our results of operations and financial condition could decline.
In addition, the availability of raw materials components fluctuates from time to time due to factors outside of our control, including trade laws and tariffs,
natural disasters, global pandemics, military conflicts, supply chain constraints and disruptions, and may impact our ability to meet the production demands of our
customers. If the costs of raw materials increase or the availability thereof is restricted, it could adversely affect our financial condition, operating results and cash
flows.
Fluctuations in fuel costs or a reduction in fuel supplies may have a material adverse effect on our business and results of operations.
In connection with our business, to better serve our customers and optimize our capital expenditures, we often move our fleet from branch to branch. In
addition, most of our customers arrange for delivery and pickup of our units through us. Accordingly, we could be materially adversely affected by significant
increases in fuel prices that result in higher costs to us for transporting equipment. In the event of fuel and trucking cost increases, we may not be able to promptly
raise our prices to make up for increased costs. A significant or prolonged price fluctuation or disruption of fuel supplies could have a material adverse effect on our
financial condition and results of operations.
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-term contracts with
third-party suppliers. We may experience supply problems as a result of financial or operating difficulties or the failure or consolidation of our suppliers. We may also
experience supply problems as a result of shortages and discontinuations resulting from product obsolescence or other shortages or allocations by suppliers.
Unfavorable economic conditions may also adversely affect our suppliers or the terms on which we purchase products. In the future, we may not be able to
negotiate arrangements with third parties to secure products that we require in sufficient quantities or on reasonable terms. If we cannot negotiate arrangements
with third parties to produce our products or if the third parties fail to produce our products to our specifications or in a timely manner, our business, results of
operations and financial condition may be materially adversely affected.
If we determine that our goodwill, intangible assets, and indefinite-life intangible assets have become impaired, we may incur 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 total purchase price of our
acquisitions over the fair value of the assets acquired, and other intangible assets. As of December 31, 2023, we had approximately $1,176.6 million and $419.7
million of goodwill and intangible assets, net, respectively, in our consolidated balance sheet, which represented approximately 19.2% and 6.8% of total assets,
respectively, and primarily arose through our acquisition of Mobile Mini.
We evaluate goodwill and indefinite-lived intangible assets for impairment on an annual basis and when events occur or circumstances change that
indicate that the fair value of the reporting unit or intangible asset may be below its carrying amount. Fair value determinations require considerable judgment and
are sensitive to inherent uncertainties and changes in estimates and assumptions regarding revenue growth 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. Impairment may result from, among other things, deterioration in the
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performance of the business, adverse market conditions, stock price and adverse changes in applicable laws and regulations, including changes that restrict our
activities. Declines in market conditions, a trend of weaker than anticipated financial performance for our reporting units or declines in projected revenue, a decline
in our share 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 event impairment is identified, a charge
to earnings would be recorded which may materially adversely affect our financial condition and results of operations.
Risks Relating to Income Tax
Our ability to use our net operating loss carryforwards and other tax attributes may be limited.
As of December 31, 2023, we had US net operating loss (“NOL”) carryforwards of approximately $465.2 million and $240.3 million for US federal income
tax and state tax purposes, respectively, available to offset future taxable income, prior to consideration of annual limitations that Section 382 of the Internal
Revenue Code of 1986 may impose. The US NOL carryforwards begin to expire in 2025 for state and 2037 for federal if not utilized.
Our US NOL and tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities. Under Section 382 of the Internal
Revenue Code and corresponding provisions of US state law, if a corporation undergoes an “ownership change,” generally defined 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 and other applicable tax attributes before the ownership
change, such as research and development tax credits, to offset its income after the ownership change may be limited. Similar provisions apply with respect to
certain state and non-US jurisdictions which could limit our ability to offset taxable income. In addition, at the state level, there may be periods during which the use
of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. We have tax attributes subject to the foregoing
provisions primarily from the Merger.
Lastly, we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our
control. If we determine that an ownership change has occurred and our ability to use our historical NOL and tax credit carryforwards is materially limited, it may
result in increased future tax obligations and income tax expense.
Some of the tax loss carryforwards could expire, and if we do not have sufficient taxable income in future years to use the tax benefits before they expire,
the benefit may be permanently lost. In addition, the taxing authorities could challenge our calculation of the amount of our tax attributes, which could reduce certain
of our recognized tax benefits. Further, tax laws in certain jurisdictions may limit the ability to use carryforwards upon a change in control.
We may be unable to recognize deferred tax assets such as those related to our tax loss carryforwards and, as a result, lose future 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 be utilized against future
taxable income and the benefit will be sustained upon ultimate settlement with the applicable taxing authority. Such deductible temporary differences primarily relate
to tax loss carryforwards and business interest expense limitations. Tax loss carryforwards arising in a given tax jurisdiction may be carried forward to offset taxable
income in future years from such tax jurisdiction and reduce or eliminate income taxes otherwise payable on such taxable income, subject to certain limitations.
Deferred interest expense exists primarily within our US operating companies, where interest expense was not previously deductible as incurred but may become
deductible in the future subject to certain limitations. We may have to write down, through income tax expense, the carrying amount of certain deferred tax assets to
the extent we determine it is not probable that we will realize such deferred tax assets under accounting principles generally accepted in the US.
Unanticipated changes in our tax obligations, the adoption of a new tax legislation, or exposure to additional income tax liabilities 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. Tax authorities 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 no assurance that we will accurately predict the outcomes of these
potential examinations, and the amounts that we ultimately pay upon resolution of examinations could be materially different from the amounts we previously
included in our income tax provision and, therefore, could have a material impact on our results of operations and cash flows. In addition, our future effective tax rate
could be adversely affected by changes to our operating structure, changes in the mix of earnings in countries with differing statutory tax rates, changes in the
valuation allowance of deferred tax assets, changes in tax laws and the discovery of new information during our tax return preparation process. Changes in tax laws
or regulations, including changes in the US related to the treatment of accelerated depreciation expense, carry-forwards of net operating losses, and taxation of
foreign income and expenses may increase tax uncertainty and adversely affect our results of operations.
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Risks Relating to Our Capital Structure
Global capital and credit market conditions could materially and adversely affect our ability to access the capital and credit markets or
the ability of key counterparties to perform their obligations to us.
In the future we may need to raise additional funds to, among other things, refinance existing indebtedness, fund existing operations, improve or expand
our operations, respond to competitive pressures or make acquisitions. If adequate funds are not available on acceptable terms, we may be unable to achieve our
business or strategic objectives or compete effectively. Our ability to pursue certain future opportunities may depend in part on our ongoing access to debt and
equity capital markets. We cannot assure you that any such financing will be 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. Additionally,
future credit market conditions could increase the likelihood that one or more of our lenders may be unable to honor their commitments under our credit facility,
which could have an adverse effect on our financial condition and results of operations.
Economic disruptions affecting key counterparties could also materially adversely affect our business. We monitor the financial strength of our larger
customers, derivative counterparties, lenders, vendors, service providers and insurance carriers on a periodic basis using publicly-available information to evaluate
our exposure to those who have or who we believe may likely experience significant threats to their ability to adequately perform their obligations to us. The
information available will differ from counterparty to counterparty and may be insufficient for us to adequately interpret or evaluate our exposure and/or determine
appropriate or timely responses.
Our leverage may make it difficult for us to service our debt and operate our business.
As of December 31, 2023, we had $3.6 billion of total indebtedness, excluding deferred financing fees, consisting of $2.0 billion of borrowings under our
ABL Facility, $526.5 million of our 2025 Secured Notes, $500.0 million of our 2028 Secured Notes, $500.0 million of our 2031 Secured Notes, and $117.1 million of
finance leases. Our leverage could have important consequences, including (a) making it more difficult to satisfy our obligations with respect to our various debt and
liabilities; (b) requiring us to dedicate a substantial portion of our cash flow from operations to debt payments, thus reducing the availability of cash flow to fund
internal growth through working capital and capital expenditure on our existing fleet or a new fleet and for other general corporate purposes; (c) increasing our
vulnerability to a downturn in our business or adverse economic or industry conditions; (d) placing us at a competitive disadvantage compared to our competitors
that have less debt in relation to cash flow and that, therefore, may be able to take advantage of opportunities that our leverage would prevent us from pursuing; (e)
limiting our flexibility in planning for or reacting to changes in our business and industry; (f) restricting us from pursuing strategic acquisitions or exploiting certain
business opportunities or causing us to make non-strategic divestitures; restricting us from pursuing strategic acquisitions or exploiting certain business
opportunities or causing us to make non-strategic divestitures; (g) requiring additional monitoring, reporting and borrowing base requirements under our ABL Facility
if borrowings significantly increase or if certain liquidity thresholds are not satisfied; and (h) limiting our ability to borrow additional funds or raise equity capital in the
future and increasing the costs of such additional 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 borrowings are 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 to refinance all or a portion of our indebtedness on or before its maturity, sell assets, reduce or delay
capital investments or seek to raise additional capital, any of which could have a material adverse effect on our operations. In addition, we may not be able to affect
any of these actions, if necessary, on commercially reasonable terms or at all. Any refinancing of our debt could be at higher interest rates and may require us to
comply with more onerous covenants, which could further restrict our business operations. The terms of our existing or future debt instruments may limit or prevent
us from taking any of these actions. If we default on the payments required under the terms of certain of our indebtedness, that indebtedness, together with debt
incurred pursuant to other debt agreements or instruments that contain cross-default or cross-acceleration provisions, may become payable on demand, and we
may not have sufficient funds to repay all of our debts. As a result, our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance
or restructure our obligations on commercially reasonable terms or at all, would have an adverse effect, which could be material, on our business, financial condition
and results of operations, 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 amounts of 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, including in connection with capital leases. Although the credit
agreement that governs our credit facility and the indentures that govern our outstanding notes 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 that we could incur in
compliance with these restrictions could be substantial. In addition, the credit agreement that governs our credit facility and the indentures do not prevent us from
incurring other obligations that do not constitute indebtedness under those agreements. If we add debt to
31
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.
We 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 instruments that govern any
future debt obligations, contain covenants that impose significant restrictions on the way our subsidiaries can operate, including restrictions on the ability to (a) incur
or guarantee additional debt and issue certain types of stock; (b) create or incur certain liens; (c) make certain payments, including dividends or other distributions,
with respect to our equity securities; (d) prepay or redeem junior debt; (e) make certain investments or acquisitions, including participating in joint ventures; (f)
engage in certain transactions with affiliates; (g) create unrestricted subsidiaries; (h) create encumbrances or restrictions on the payment of dividends or other
distributions, loans or advances to, and on the transfer of, assets to the issuer or any restricted subsidiary; (i) sell assets, consolidate or merge with or into other
companies; (j) sell or transfer all or substantially all our assets or those of our subsidiaries on a consolidated basis; and (k) 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 finance future operations and
capital needs and our ability to pursue acquisitions and other business activities that may be in our interest. Our subsidiaries’ ability to comply with these covenants
and restrictions may be affected by events beyond our control. These include prevailing economic, 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, immediately due and payable and proceed against any collateral securing that debt. If the debt under our credit facility, the
indentures or any other material financing arrangement that we enter into were to be accelerated, our assets may be insufficient to repay in full such indebtedness.
The credit agreement that governs our credit facility also requires our subsidiaries to satisfy specified financial maintenance tests in the 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 cannot assure that we will meet these tests. If an event of default
occurs under our credit facility, the lenders could terminate their commitments and declare all amounts borrowed, together with accrued and unpaid interest and
other fees, to be immediately due and payable. Borrowings under other debt instruments that contain cross-acceleration or cross-default provisions also may be
accelerated or become payable on demand. In these 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 periodic borrowing base valuation of
the collateral thereunder. As a result, our access to credit under the credit facility is subject to potential fluctuations depending on the value of the borrowing base of
eligible assets as of any measurement date, as well as certain discretionary rights of the agent in respect of the calculation of such borrowing base value. As a result
of any change in valuation, the availability under the credit facility may be reduced, or we may be required to make a repayment of the credit facility, which may be
significant. The inability to borrow under the credit facility or the use of available cash to repay the credit facility as a result of a valuation change may adversely
affect our liquidity, results of operations and financial position.
The historical market price of WillScot Mobile Mini’s Common Stock has been volatile and the market price of our Common Stock may
continue to be volatile and the value of your investment may decline.
The historical market price of our Common Stock has been volatile and the market price of our Common Stock may continue to be volatile moving forward.
Volatility may cause wide fluctuations in the price of our Common Stock on Nasdaq. The market price of our Common Stock is likely to be affected by (a) changes in
general conditions in the economy, geopolitical events or the financial markets; (b) variations in our quarterly operating results; (c) changes in financial estimates by
securities analysts; (d) our share repurchase or dividend policies; (e) other developments affecting us, our industry, customers or competitors; (f) changes in
demand for our products or the prices we charge due to changes in economic conditions, competition or other factors; (g) general economic conditions in the
markets where we operate; (h) the cyclical nature of our customers’ businesses and certain end markets that we service; (i) rental rate changes in response to
competitive factors; (j) bankruptcy or insolvency of our customers, thereby reducing demand for our used units; (k) seasonal rental patterns; (l) acquisitions or
divestitures and related costs; (m) labor shortages, work stoppages or other labor difficulties; (n) possible unrecorded liabilities of acquired companies; (o) possible
write-offs or exceptional charges due to changes in applicable accounting standards, goodwill impairment, or divestiture or impairment of assets; (p) the operating
and stock price performance of companies that investors deem comparable to us; (q) the number of shares available for resale in the public markets under
applicable securities laws; (r) the composition of our shareholder base; and (s) other unspecified circumstances that may be company specific circumstances or
overall industry and market driven.
32
Risks Related to the McGrath Acquisition
The McGrath Acquisition may not be completed within the expected timeframe, if at all, and the failure to complete the McGrath
Acquisition, or the failure to realize the anticipated synergies from the McGrath Acquisition, may negatively affect the price of our
common stock and could adversely affect our financial results.
The McGrath Acquisition is subject to risks and uncertainties, including: (i) the risk that it may not be completed, or completed within the expected
timeframe, including as a result of the possibility that a governmental entity may prohibit, delay or refuse an approval required to complete the acquisition; or (ii)
costs relating to the acquisition, including the financing thereof, may be greater than expected. If the McGrath Acquisition is not completed, or there are significant
delays in completing the McGrath Acquisition, the trading price of our common stock could be negatively impacted and our business and financial results may be
adversely affected. The failure to consummate the McGrath Acquisition could also result in a negative reaction from the financial markets, particularly if the current
market prices reflect market assumptions that the McGrath Acquisition will be completed, which could cause the value of our common stock to decline.
Additionally, the anticipated benefits of the McGrath Acquisition, including anticipated cost savings, will depend on our ability to realize anticipated
synergies. Our success in realizing these cost synergies, and the timing thereof, will depend our ability to integrate McGrath successfully. Even if we integrate
McGrath successfully, we may not realize the full benefits of the anticipated cost synergies, and we cannot guarantee that these benefits will be achieved within
anticipated timeframes or at all. For example, we may not be able to eliminate duplicative costs. Moreover, we may incur unanticipated expenses in connection with
the integration. While it is anticipated that certain expenses will be incurred to achieve cost synergies, such expenses are difficult to estimate accurately and may
exceed current estimates. Accordingly, the benefits from the McGrath Acquisition may be offset by costs incurred to, or delays in, integrating the businesses.
ITEM 1B. Unresolved Staff Comments
None.
ITEM 1C. Cybersecurity
The Board of Directors is committed to maintaining a strong cybersecurity and data protection framework intended to protect our customers, shareholders,
employees, and other stakeholders, as well as the integrity of our operations. Our Board is involved in the oversight of the Company’s cybersecurity risk
management efforts. Our cybersecurity risk management consists of a set of processes designed to assess, identify and effectively manage material risks arising
from cybersecurity and data protection threats. These processes are aligned with the Framework for Improving Critical Infrastructure Cybersecurity established by
the National Institute of Standards and Technology. Our processes have been integrated into our overall risk management system, consistent with our commitment
to safeguarding our operations and data on a Company-wide basis. Our cybersecurity risk management efforts are overseen by our Audit Committee in
collaboration with individual members of our management team, specifically our Chief Information Officer, Chief Legal Officer, and Vice President of Risk
Management. Generally, our cybersecurity risk management efforts seek to address cybersecurity risks and incident response through a comprehensive, cross-
functional approach that is focused on preserving the confidentiality, security and availability of the information we collect by identifying, preventing and mitigating
cybersecurity threats and effectively responding to incidents when they occur. Our efforts also emphasize continuity of systems to ensure minimal disruption and
maintain operational integrity during cybersecurity threats and incidents. We regularly review and update our contingency plans, aiming to enhance the resilience of
our operations and the consistent functionality of our systems in the face of potential disruptions.
Risk Management and Strategy
As part of the Company’s overall approach to cybersecurity, the Company’s cybersecurity risk management processes are focused on the following key
areas.
Governance: As discussed in more detail under the “Governance” heading, the Audit Committee provides oversight of the Company’s cybersecurity risk
management processes in collaboration with our Chief Information Officer, Chief Legal Officer, Vice President of Risk Management, information technology team
and other internal and external experts.
Collaborative Approach: Our cybersecurity risk management efforts include the implementation of a comprehensive, cross-functional approach to identify,
prevent and mitigate cybersecurity threats and incidents. We have various tools in place that allow us to monitor and address threats and incidents that have the
potential to materially affect our business strategy, financial condition, and results of operations, which allows us to determine the materiality of and ensure timely
public disclosure of any such threat or incident, as appropriate.
Technical Safeguards: The Company deploys technical safeguards designed to protect our information systems from cybersecurity threats, including
firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, all of which are evaluated and improved through vulnerability
assessments on a periodic basis.
33
Incident Response and Recovery Plans: The Company has established and maintains comprehensive incident response and recovery plans, which detail
the steps to be taken from the initial internal reporting of a potential cybersecurity incident.
Third Party Involvement and Risk Assessment: We actively and routinely engage assessors, consultants, auditors and other relevant third parties with
appropriate expertise in their respective fields for the purposes of effectively maintaining and improving the quality and effectiveness of our processes. We believe
this allows us to employ best practices and reduce the risks associated with evolving cybersecurity and data protection threats. We have also implemented industry-
recommended practices to oversee and identify threats associated with the use of our third-party service providers.
Education and Awareness: The Company provides regular, mandatory trainings for applicable personnel with the purpose of providing personnel with
effective tools to address cybersecurity threats and incidents, and to effectively communicate our cybersecurity risk management processes, including all related
information, security policies, standards, process and practices.
Certain cybersecurity threats have the potential to materially affect our business strategy, financial condition, and results of operations. These threats
include the risk of cyberattacks that could result in the disruption of our business operations, loss of sensitive information or data and damage to our reputation with
our customers, shareholders, and other stakeholders. We conduct periodic assessments of these threats, and we have developed action plans that are already
implemented, or are currently underway to be implemented, based on the results of our periodic assessments.
Governance
In accordance with our internal policies, our Chief Information Officer, Chief Legal Officer and Vice President of Risk Management, are tasked with certain
oversight and management responsibilities related to the monitoring, prevention, mitigation and remediation of cybersecurity threats and incidents. These
management members report to the Audit Committee, and the Audit Committee reports to the full Board of Directors, as appropriate. These reports include updates
on the Company’s cybersecurity risks and threats, the status of efforts to strengthen our information security systems, assessments of our cybersecurity risk
management processes, recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the emerging threat landscape,
technological trends and information security considerations arising with respect to the Company’s peers and third parties. These individuals enable the Company to
implement measures that help reduce and address the cybersecurity and data protection threats the Company faces. Such measures include, but are not limited to,
disaster recovery and business continuity, solution monitoring, network resiliency and simplification, sensitive data security, employee training and testing, system
functionality and stability, infrastructure upgrades and more.
The Audit Committee (i) periodically reviews the Company's policies related to cybersecurity and data protection, which include the assessment,
identification and management of material risks, mitigation strategy, governance and incident reporting, (ii) routinely coordinates with management and the Board of
Directors, as applicable, in exercising its oversight over cybersecurity matters, (iii) receives timely information related to cybersecurity threats and incidents that
meet specified materiality thresholds, as well as ongoing updates regarding any such threats or incidents until they have been addressed.
Management consistently assesses, monitors and manages our cybersecurity practices to align with the evolving threat landscape. Our cybersecurity risk
management efforts are designed to protect the Company’s information systems from cybersecurity threats and to appropriately respond to any threats or incidents.
Through ongoing communications, management and other applicable personnel monitor the prevention, detection, mitigation and remediation of cybersecurity
threats and incidents in real time and report such threats and incidents to the Audit Committee and the Board, as appropriate.
The Company’s Chief Information Officer has served in various roles in information technology and information security for over 29 years and holds
degrees in Business Information Systems and Accounting. The Vice President of Risk Management has served in various roles in information technology and
information security for over 18 years, holds an undergraduate degree in Accounting and a Master of Business Administration degree, and is a Certified Public
Accountant.
The Company tests and evaluates its cybersecurity risk management processes on a regular basis. As of the date of this report, the Company is not aware
of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business
strategy, financial condition or results of operations.
ITEM 2. Properties
Our primary corporate headquarters is located in Phoenix, Arizona. We operate approximately 250 branch locations and additional drop lots across the US,
Canada, and Mexico. Collectively, we lease approximately 84% of our branch properties and own the remaining balance.
Our management believes that none of our properties, on an individual basis, is material to our operations, and that our properties are well maintained and
suitable for their intended use. We further believe that these locations generally have adequate capacity and can accommodate seasonal demands, changing
product mixes and additional growth.
Subject to certain exceptions, substantially all of our owned real and personal property in the US and Canada is encumbered under our credit facility and
our secured notes. We do not believe that the encumbrances will materially detract from the value of our properties, or materially interfere with their use in the
operation of our business.
34
ITEM 3. Legal Proceedings
The Company is involved in various lawsuits, claims and legal proceedings that arise in the ordinary course of business. The Company assesses these
matters on a case-by-case basis as they arise and establishes reserves as required. As of December 31, 2023, with respect to these outstanding matters, the
Company believes that the amount or range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on the
consolidated financial position, results of operations, or cash flows of the Company. However, the outcome of such matters is inherently unpredictable and subject to
significant uncertainties.
ITEM 4. Mine Safety Disclosures
Not applicable.
35
PART II
ITEM 5. Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities
Common Stock
Our Common Stock is listed on the Nasdaq Capital Market under the symbol “WSC.” Our certificate of incorporation authorizes the issuance of
500,000,000 shares of Common Stock with a par value of $0.0001 per share. The Company had 189,967,135 shares of Common Stock issued and outstanding as
of December 31, 2023. The outstanding shares of the Company's Common Stock are duly authorized, validly issued, fully paid and non-assessable.
Preferred Stock
Our certificate of incorporation authorizes the issuance of 1,000,000 shares of Preferred Stock with a par value of $0.0001 per share. As of December 31,
2023, no shares of Preferred Stock were issued and outstanding, and no designation of rights and preferences of preferred stock had been adopted.
Holders
As of February 14, 2024, there were 30 holders of record of our Common Stock and no holders of record of our Preferred Stock. The number of holders of
record does not include a substantially greater number of “street name” holders or beneficial holders whose Common Stock are held of record by banks, brokers
and other financial institutions.
Dividend Policy
To date, we have not declared or paid dividends on our Common Stock. We have strong recurring cash flows, which gives us flexibility in how we allocate
capital, and we review the appropriate mix of growth investments, debt reduction, and returns to shareholders on an ongoing basis. Declaration or payment of
dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial condition, results of operations, capital
requirements and other factors deemed relevant by the Board of Directors.
Repurchases
In May 2023, the Board of Directors approved a reset of the share repurchase program authorizing the Company to repurchase up to $1.0 billion of its
outstanding shares of Common Stock and equivalents. The stock repurchase program does not obligate us to purchase any particular number of shares, and the
timing and exact amount of any repurchases will depend on various factors, including market pricing and conditions, business, legal, accounting, and other
considerations. As of December 31, 2023, $498.2 million of the $1.0 billion share repurchase authorization remained available for use.
The following table summarizes our purchase of Common Stock during the fourth quarter of 2023:
Period
October 1, 2023 to October 31, 2023
November 1, 2023 to November 30, 2023
December 1, 2023 to December 31, 2023
Total
Total Numbers of Shares
and Equivalents
Purchased as part of
Publicly Announced
Plan (in thousands)
Maximum Dollar Value
of Shares and
Equivalents that May
Yet Be Purchased
Under the Plan (in
thousands)
2,087.2 $
1,408.8 $
— $
3,496.0
550.4
498.2
498.2
Total Number of
Shares and
Equivalents
Purchased (in
thousands)
Average Price
Paid per Share
40.13
37.05
—
2,087.2 $
1,408.8 $
— $
3,496.0
36
Performance Graph
The following stock price performance graph should not be deemed incorporated by reference by any general statement incorporating by reference this
Annual Report on Form 10-K into any filing under the Exchange Act or the Securities Act of 1933, as amended, 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 Common Stock from January 1, 2019 through December 31, 2023, with the comparable
cumulative return of two indices: the S&P 400 Index and the Russell 1000 Index. The graph plots the growth in value of an initial investment of $100 in each of our
common shares, the S&P 400 Index and the Russell 1000 Index over the indicated time periods, and assumes reinvestment of all dividends, if any, paid on the
securities. We have not paid any cash dividends and, therefore, the cumulative total return calculation for us is based solely upon share price appreciation and not
upon reinvestment of cash dividends. The share price performance shown on the graph is not necessarily indicative of future price performance.
ITEM 6. [Reserved]
37
ITEM 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand
WillScot Mobile Mini Holdings Corp. ("WillScot Mobile Mini") operations and our present business environment. MD&A is provided as a supplement to, and should
be read in conjunction with, our financial statements and the accompanying notes thereto, contained in Part II, Item 8 of this report. The discussion of results of
operations in this MD&A is presented on a historical basis, as of or for the year ended December 31, 2023 or prior periods. In connection with the closing of the
merger of WillScot Corporation ("WillScot") and Mobile Mini, Inc. ("Mobile Mini") on July 1, 2020 (the "Merger"), Mobile Mini became a wholly-owned subsidiary of
WillScot and the Company changed its name to WillScot Mobile Mini Holdings Corp. WillScot Mobile Mini is the holding company for the Williams Scotsman and
Mobile Mini families of companies.
On September 30, 2022, the Company completed the sale of its former Tank and Pump Solutions ("Tank and Pump") segment. On January 31, 2023, the
Company completed the sale of its UK Storage Solutions segment. This MD&A presents the historical financial results of the former Tank and Pump segment and
the former UK Storage Solutions segment as discontinued operations for all periods presented. The divestitures of the UK Storage Solutions segment and the
former Tank and Pump segment completed the Company's transition of its portfolio to core turnkey temporary space solutions in North America. Following the
completion of these transactions, the Company operates in two reportable segments as follows: Modular Solutions ("Modular") and Storage Solutions ("Storage").
The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the US (“GAAP”). We use certain non-
GAAP financial metrics to supplement the GAAP reported results to highlight key operational metrics that are used by management to evaluate Company
performance. Reconciliations of GAAP financial information to the disclosed non-GAAP measures are provided in the Reconciliation of Non-GAAP Financial
Measures section.
Executive Summary
We are a leading business services provider specializing in innovative and flexible turnkey temporary space solutions. We service diverse end markets
across all sectors of the economy throughout the United States ("US"), Canada, and Mexico. As of December 31, 2023, our branch network included approximately
250 branch locations and additional drop lots to service our over 85,000 customers. We offer our customers an extensive selection of “Ready to Work” temporary
space solutions with over 156,000 modular space units and over 212,000 portable storage units in our fleet.
We primarily lease, rather than sell, our modular and portable storage units to customers, which results in a highly diversified and predictable recurring
revenue stream. Over 90% of new lease orders are on our standard lease agreement, pre-negotiated master lease or national account agreements. The initial lease
periods vary, and our leases are customarily renewable on a month-to-month basis after their initial term. Our lease revenue is highly predictable due to its recurring
nature and the underlying stability and diversification of our lease portfolio. Furthermore, given that our customers value flexibility, they consistently extend their
leases or renew on a month-to-month basis such that the average effective duration of our lease portfolio, excluding seasonal portable storage units, is
approximately 37 months. We complement our core leasing business by selling both new and used units, allowing us to leverage scale, achieve purchasing benefits
and redeploy capital employed in our lease fleet.
We remain focused on our core priorities of growing leasing revenues by increasing units on rent, both organically and through our acquisition strategy,
delivering “Ready to Work” turnkey solutions to our customers with value added products and services ("VAPS"), and on continually improving the overall customer
experience.
For the year ended December 31, 2023, key drivers of our financial performance included:
•
Total revenues increased $222.1 million, or 10.4%, attributable to organic revenue growth levers in the business and due to the impact of acquisitions.
Leasing revenue increased $212.2 million, or 13.1%, delivery and installation revenue increased $8.0 million, or 1.9%, and new unit sales revenue
increased $7.8 million, or 19.3%. These increases were partially offset by a reduction in rental unit sales revenue, which decreased $5.9 million, or 11.5%.
We estimate that recent acquisitions completed in 2023 contributed approximately $59.0 million to total revenues for the year ended December 31, 2023.
Key leasing revenue drivers included:
–
Average modular space monthly rental rate increased $153, or 16.9%, to $1,058 driven by strong pricing performance across both segments.
Average modular space monthly rental rates increased by $145, or 15.0%, in the Modular segment and by $144, or 21.1%, in the Storage
segment.
38
–
–
–
Average portable storage monthly rental rate increased $46, or 24.0%, to $238 driven by increased pricing as a result of our price management
tools and processes as well as due to higher rental rates on the acquired climate-controlled containers and refrigerated storage units, which drove
approximately 5% of the 24.0% increase.
Average utilization for portable storage units decreased to 73.2%, from 86.8% in 2022, driven by decreased demand in 2023 as compared to very
strong demand in 2022. Average utilization for modular space units decreased 380 basis points ("bps") to 64.7% in 2023.
Average modular space units on rent decreased 3,986 units, or 3.8%, and average portable storage units on rent decreased 15,179 units, or
9.0%. The decreases were mainly driven by lower construction start activity in 2023 versus record demand in 2022, and for portable storage
products, also by fewer retail remodels and lower seasonal retail demand versus the prior year.
• Modular segment revenue represented 63.2% of consolidated revenue for the year ended December 31, 2023, and increased $153.6 million, or 11.4%, to
$1,495.7 million. The increase was driven by increased leasing revenue, which increased $145.4 million, or 14.6%, due to continued growth of pricing and
VAPS, and increased delivery and installation revenues, which increased $10.7 million, or 3.9%. These increases were partially offset by a decrease in
sales revenue of $2.4 million, or 3.1%, driven by lower rental unit sales. Modular revenue drivers for the year ended December 31, 2023 included:
– Modular space average monthly rental rate of $1,111 increased $145, or 15.0%, year over year representing a continuation of our long-term price
–
–
optimization and VAPS penetration opportunities across our portfolio.
Average modular space units on rent decreased 647 units, or 0.8%, year over year.
Average modular space monthly utilization decreased 190 basis points to 65.6% for the year ended December 31, 2023, as compared to the year
ended December 31, 2022.
•
•
•
•
Storage segment revenue, which represented 36.8% of consolidated revenue for the year ended December 31, 2023, increased $68.5 million, or 8.6%, to
$869.1 million. The increase was driven by increased leasing revenue, which grew $66.9 million, or 10.6%, due to increased pricing and contributions from
the recently acquired climate-controlled containers and refrigerated storage units, partially offset by lower overall units on rent. Delivery and installation
revenues decreased $2.7 million, or 1.7%, driven by decreased activity. Rental unit sales increased $4.3 million, or 50.7% given greater fleet availability in
the current year. Storage segment revenue drivers for the year ended December 31, 2023 included:
–
–
–
Portable storage average monthly rental rate of $238 increased 24.0% year over year as a result of our price management tools and processes
and early benefits from increased VAPS penetration opportunities, as well as due to higher rates on the acquired climate-controlled containers and
refrigerated storage units. Excluding the impacts of the acquired climate-controlled containers and refrigerated storage units, portable storage
average monthly rental rates increased $37, or 19.3%. Modular space average monthly rental rate of $826 increased $144, or 21.1%, year over
year as a result of price optimization and increased VAPS penetration.
Average portable storage units on rent decreased 15,159, or 9.0%, year over year driven by lower demand during 2023 versus the high growth
achieved in 2022 including the impact of fewer retail remodels and lower seasonal demand versus the prior year. Average modular space units on
rent decreased 3,339, or 15.0%, year over year due to lower demand.
Average portable storage monthly utilization decreased 13.6% to 73.3% for the year ended December 31, 2023, as compared to the year ended
December 31, 2022. Average modular space monthly utilization decreased 11.3% to 61.1% for the year ended December 31, 2023, as compared
to the year ended December 31, 2022.
Generated income from continuing operations of $341.8 million for the year ended December 31, 2023, representing an increase of $65.5 million versus
the year ended December 31, 2022. Net Income including income from discontinued operations was $476.5 million for the year ended December 31, 2023,
representing an increase of $136.9 million versus the year ended December 31, 2022.
Generated Adjusted EBITDA from continuing operations of $1,061.5 million for the year ended December 31, 2023, representing an increase of $177.6
million, or 20.1%, as compared to 2022. This increase was driven by continued expansion of most product and service line margins. Most significantly,
leasing margins increased 15.3% versus prior year and delivery and installation margins increased 12.7% versus prior year, both driven primarily by
increased pricing. SG&A expenses included in Adjusted EBITDA decreased as a percentage of revenue by 120 bps versus 2022.
Net cash provided by operating activities increased $16.6 million to $761.2 million for the year ended December 31, 2023. This increase was limited by the
divestitures of the former Tank and Pump and UK Storage Solutions segments which both contributed to operating cash flows for the year ended
December 31, 2022. Net cash used in investing activities, excluding cash used as part of acquisitions and proceeds from the sale of discontinued
operations, decreased $229.7 million to $184.7 million as a result of reduced refurbishment spending and decreased purchases
39
of new fleet as a result of lower utilization and due to the divestitures of the former Tank and Pump and UK Storage Solutions segments.
•
Generated Free Cash Flow of $576.6 million for the year ended December 31, 2023, representing an increase of $246.3 million, or 74.5%, as compared to
2022. This Free Cash Flow, along with the proceeds from the sale of our former UK Storage Solutions segment and additional net borrowings under the
asset-based credit agreement (the "ABL Facility") were deployed to:
◦
◦
◦
Acquire five smaller storage and modular portfolios for $150.0 million in 2023;
Acquire a national provider of cold storage solutions, a regional modular space manufacturing and leasing business, and a national provider of
premium large clearspan structures for $411.6 million in 2023;
Repurchase $810.8 million of our Common stock, reducing outstanding Common Stock by 18.5 million shares;
• We believe the predictability of our Free Cash Flow allows us to pursue multiple capital allocation priorities opportunistically, including investing in organic
opportunities we see in the market, maintaining leverage in our stated range, opportunistically executing accretive acquisitions, and returning capital to
shareholders.
In addition to using GAAP financial measurements, we use Adjusted EBITDA and Free Cash Flow, which are non-GAAP financial measures, to evaluate
our operating results. As such, we include in this Annual Report on Form 10-K reconciliations to their most directly comparable GAAP financial measures. These
reconciliations and descriptions of why we believe these measures provide useful information to investors as well as a description of the limitations of these
measures are included in "Reconciliation of non-GAAP Financial Measures."
Significant Developments
Entry into an Agreement to Acquire McGrath RentCorp
On January 28, 2024, the Company, along with its newly formed subsidiaries, Brunello Merger Sub I, Inc. (“Merger Sub I”) and Brunello Merger Sub II, LLC
(“Merger Sub II”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with McGrath RentCorp ("McGrath"). Merger Sub I will merge with and
into McGrath (the “First-Step Merger”), with McGrath surviving the First-Step Merger and, immediately thereafter, McGrath will merge with and into Merger Sub II
(the “Second-Step Merger” and together with the First-Step Merger, the “McGrath Acquisition”), with Merger Sub II surviving the Second-Step Merger as a wholly
owned subsidiary of the Company. At the effective time of the First-Step Merger, and subject to the terms and subject to the conditions set forth in the Merger
Agreement, each outstanding share of the common stock of McGrath shall be converted into the right to receive either (i) $123.00 in cash or (ii) 2.8211 shares of
validly issued, fully paid and nonassessable shares of the Company’s common stock. Under the terms of the Merger Agreement, we expect McGrath’s shareholders
would own approximately 12.6% of the Company following the McGrath Acquisition.
The McGrath Acquisition has been approved by the Company and McGrath’s respective boards of directors. The McGrath Acquisition is subject to
customary closing conditions, including receipt of regulatory approval and approval by McGrath’s shareholders, and is expected to close in the second quarter of
2024.
In connection with the Merger Agreement, the Company entered into a commitment letter on January 28, 2024, which was further amended and restated
on February 12, 2024 (the "Commitment Letter"), pursuant to which certain financial institutions have committed to make available to WSI, in accordance with the
terms of the Commitment Letter, (i) an $875 million eight year senior secured bridge credit facility, (ii) an $875 million five year senior secured bridge credit facility
and (iii) an upsize to WSI's existing $3.7 billion ABL Facility by $750 million to $4.45 billion to repay McGrath's existing credit facilities and notes, fund the cash
portion of the consideration, and pay the fees, costs and expenses incurred in connection with the McGrath Acquisition and the related transactions, subject to
customary conditions.
Divestiture
On January 31, 2023, we completed the sale of our former UK Storage Solutions segment for total cash consideration of $418.1 million. Proceeds from the
sale were used to support ongoing reinvestment in our Modular and Storage operating segments in North America and other capital allocation priorities.
Reportable Segments
Following the divestitures of the UK Storage Solutions and Tank and Pump segments, we operate in two reportable segments: Modular Solutions
("Modular") and Storage Solutions ("Storage"). The reportable segments are aligned with how we operate and analyze our business results. During the first quarter
of 2023, the ground level office business within the Modular segment was transferred to the Storage segment, and associated revenues, expenses, and operating
metrics were transferred to the Storage segment. All periods presented have been retrospectively revised to reflect this adjustment within the Modular and Storage
segments. For the year ended December 31, 2022, this resulted in approximately $49.8 million of revenue and $28.5 million of gross profit being transferred from
the Modular segment to the Storage segment.
40
In January 2024, the Company launched a unified go-to market approach to achieve local product unification within each metropolitan statistical area. In
connection with this change in operating model, the Company realigned the composition of its segments to reflect how its Chief Operating Decision Maker reviews
information to make operating decisions and assess performance. As a result, the Company concluded that its divisions represent its operating segments, which are
aggregated into one reportable segment as the divisions have similar economic characteristics, offer similar products to similar customers, use similar methods to
distribute products and are subject to similar competitive risks. This change in reportable segments will be reflected in our financial statements beginning in 2024.
Customer Relationship Management ("CRM") System
On February 6, 2023, we successfully completed the harmonization of our separate Modular and Storage CRM systems onto a single unified system. With
this enhanced platform, we have a combined view of our customers and projects across the entire sales team. Going forward, we will focus on productivity
management and building a more targeted and predictive approach to anticipate and service customer demand, with continued improvement in engagement and
outreach underpinned by our data warehouse.
Business Combinations
During 2023, we acquired a U.S. national provider of cold storage solutions, which consisted primarily of approximately 2,200 climate-controlled containers
and refrigerated storage trailers, a regional modular space manufacturing and leasing business, which consisted primarily of approximately 1,300 modular leasing
units, and a U.S. national provider of premium large clearspan structures for total cash consideration of $411.6 million, net of cash acquired.
Asset Acquisitions
During 2023, we also acquired certain assets and liabilities of five regional and local storage and modular companies, which consisted primarily of
approximately 1,800 storage units and 700 modular units, for $150.0 million in cash, net of cash acquired. As of the acquisition dates, the fair value of rental
equipment acquired was $147.6 million.
Financing Activities
On September 25, 2023, Williams Scotsman, Inc. (“WSI”), a subsidiary of the Company, completed a private offering of $500.0 million in aggregate
principal amount of 7.375% senior secured notes due 2031 (the "2031 Secured Notes") to qualified institutional buyers pursuant to Rule 144A of the Securities Act
of 1933, as amended. Proceeds were used to repay approximately $494.0 million of outstanding indebtedness under the ABL Facility and certain fees and
expenses.
Interest Rate Swap Agreements
In January 2023, the Company entered into two interest rate swap agreements with financial counterparties relating to $750.0 million in aggregate notional
amount of variable-rate debt under the ABL Facility. Under the terms of the agreements, the Company receives a floating rate equal to one-month term SOFR and
will make payments based on a weighted average effective fixed interest rate of 3.44% on the notional amount. The swap agreements were designated and
qualified as hedges of the Company’s exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility. The
swap agreements terminate on June 30, 2027.
In January 2024, the Company entered into two interest rate swap agreements with financial counterparties relating to $500.0 million in aggregate notional
amount of variable-rate debt under the Company's ABL Facility. Under the terms of the agreements, the Company receives a floating rate equal to one-month term
SOFR and will make payments based on a weighted average fixed interest rate of 3.70% on the notional amount. The swap agreements were designated and
qualified as hedges of the Company's exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility. The
swap agreements terminate on June 30, 2027.
Share Repurchases
In May 2023, our Board of Directors approved a reset of our share repurchase program authorizing us to repurchase up to $1.0 billion of our outstanding
shares of Common Stock and equivalents. During the year ended December 31, 2023, we repurchased 18,533,819 shares of Common Stock for $810.8 million. As
of December 31, 2023, $498.2 million of the approved share repurchase pool remained available.
Inflation
Similar to many other organizations, we have faced inflationary pressures over the past several years across most of our input costs such as building
materials, labor, transportation and fuel. Inflation has contributed to increased capital costs both for new units as well as for refurbishment of our existing units.
However, given our scale and our strong rate performance, we believe we have been able to navigate the inflationary environment well and have consistently driven
margin improvements during this period of rising costs.
41
Business Environment and Outlook
Our customers operate in a diversified set of end markets, including construction, commercial and industrial, retail and wholesale trade, energy and natural
resources, education, government and institutions and healthcare. We track several market leading indicators to predict demand, including those related to our two
largest end markets, the commercial and industrial sector and the construction sector, which collectively accounted for approximately 85% of our revenues in the
year ended December 31, 2023.
Core to our operating model is the ability to redeploy standardized assets across end markets, as we did over the last few years to service emerging
demand in the healthcare and government sectors related to COVID-19. We remain focused on our core priorities of growing leasing revenues by increasing units
on rent, both organically and through mergers and acquisitions, delivering "Ready to Work" solutions to our customers with VAPS, and continually improving the
overall customer experience.
Even in an uncertain macro-economic environment, market catalysts such as increased infrastructure spending and onshoring and reshoring, and
idiosyncratic growth levers such as continued penetration of our customer base with our VAPS offering, long-term pricing tailwinds, cross-selling between our
Modular and Storage segment customers, and other commercial best practice sharing between our segments provide us confidence in our continued organic growth
outlook.
Components of Our Consolidated Historical Results of Operations
Revenue
Our revenue consists mainly of leasing, services and sales revenue. We derive our leasing and services revenue primarily from the leasing of modular
space and portable storage units. Included in leasing revenue are VAPS, such as furniture, steps, ramps, basic appliances, internet connectivity devices, integral
tool racking, heavy duty capacity shelving, workstations, electrical and lighting products, and other items our customers use in connection with our products.
Delivery and installation revenue includes fees that we charge for the delivery, site work, installation, disassembly, unhooking and removal, and other services to our
customers for an additional fee as part of our leasing and sales operations.
The key drivers of changes in our leasing revenue are:
•
•
the average number of units on rent;
the average monthly rental rate per unit, including VAPS.
The average number of units on rent during a period represents the number of units in use from the time they are leased to a customer until the time they
are returned to us. Our average monthly rental rate per unit for a period is equal to the ratio of (i) our rental income for that period including VAPS but excluding
delivery and installation services and other leasing-related revenues, to (ii) the average number of lease units rented to our customers during that period. We also
measure the average utilization rate of our lease units, which is the ratio of (i) the average number of units on rent to (ii) the average total number of units available
for lease in our fleet during a period.
In addition to leasing revenue, we also generate revenue from sales of new and used modular space and portable storage units to our customers, as well
as delivery, installation, maintenance, removal services and other incidental items related to accommodation services for our customers. Included in our sales
revenue are charges for modifying or customizing sales equipment to customers’ specifications.
Gross Profit
We define gross profit as the difference between total revenues and cost of revenues. Cost of revenues associated with our leasing business includes
payroll and payroll-related costs for branch operations personnel, material and other costs related to the repair, maintenance, storage and transportation of rental
equipment. Cost of revenues also includes depreciation expense associated with our rental equipment. Cost of revenues associated with our new unit sales
business includes the cost to purchase, assemble, transport and customize units that are sold. Cost of revenues for our rental unit sales consist primarily of the net
book value of the unit at date of sale.
Selling, General and Administrative Expense
Our selling, general and administrative (“SG&A”) expense includes all costs associated with our selling efforts, including marketing costs, marketing
salaries and benefits, as well as the salary and commissions of sales personnel. It also includes the leasing of facilities we occupy, professional fees and information
systems, our overhead costs, such as salaries and other employee costs of management, administrative and corporate personnel, and integration costs associated
with acquisitions and business combinations.
Other Depreciation and Amortization
Other depreciation and amortization includes depreciation of our property, plant and equipment, as well as the amortization of our intangible assets.
42
Currency Losses, Net
Currency losses, net includes unrealized and realized gains and losses on monetary assets and liabilities denominated in foreign currencies other than our
functional currency at the reporting date.
Other (Income) Expense, Net
Other (income) expense, net primarily consists of the gain (loss) on disposal of non-operational property, plant and equipment, insurance proceeds, other
financing related costs and other non-recurring charges.
Interest Expense
Interest expense consists of the costs of external debt including the Company’s ABL credit facility, 2025 Secured Notes, 2028 Secured Notes, 2031
Secured Notes and interest on obligations under finance leases.
Fair Value Loss on Common Stock Warrant Liabilities
In 2021, fair value loss on common stock warrant liabilities consists of non-cash gains and losses recorded related to changes in the fair value of common
stock warrant liabilities as the common stock warrant liabilities are marked-to-market liabilities. It also includes gains and losses recorded related to the settlement of
common stock warrant liabilities.
Loss on Extinguishment of Debt
In 2021, using cash on hand and borrowings on the ABL Facility, we redeemed $123.5 million of our 2025 Secured Notes and recorded a loss on
extinguishment of debt.
Income Tax Expense
After the sale of the UK Storage Solutions segment, we are subject to income taxes in the US, Canada, and Mexico. Our overall effective tax rate is
affected by a number of factors, such as the relative amounts of income we earn in differing tax jurisdictions, tax law changes, and certain non-deductible expenses
such as compensation disallowance. The rate is also affected by discrete items that may occur in any given year, such as legislative enactments. These discrete
items may not be consistent from year to year. Income tax expense (benefit), deferred tax assets and liabilities and liabilities for unrecognized tax benefits reflect our
best estimate of current and future taxes to be paid.
Income from Discontinued Operations
Income from discontinued operations was related to the former Tank and Pump and UK Storage Solutions segments which were sold in 2022 and 2023,
respectively.
43
Consolidated Results of Operations
Certain consolidated results of operations for the years ended December 31, 2023, 2022, and 2021 are presented below.
Years Ended December 31,
2023
2022
2021
2023 vs. 2022
Change
2022 vs 2021
Change
Revenues:
Leasing and services revenue:
Leasing
Delivery and installation
Sales revenue:
New units
Rental units
Total revenues
Costs:
Costs of leasing and services:
Leasing
Delivery and installation
Costs of sales:
New units
Rental units
Depreciation of rental equipment
Gross profit
Expenses:
Selling, general and administrative
Other depreciation and amortization
Currency losses, net
Other (income) expense, net
Operating income
Interest expense
Fair value loss on common stock warrant liabilities
Loss on extinguishment of debt
Income from continuing operations before income tax
Income tax expense from continuing operations
Income from continuing operations
Discontinued operations:
Income from discontinued operations before income
tax
Income tax expense from discontinued operations
Gain on sale of discontinued operations
Income from discontinued operations
$
1,833,935 $
437,179
1,621,690 $
429,152
1,252,490 $
321,129
212,245 $
8,027
48,129
45,524
2,364,767
398,467
317,117
26,439
23,141
265,733
1,333,870
596,090
72,921
6,754
(15,354)
673,459
205,040
—
—
468,419
126,575
341,844
4,003
45,468
176,078
134,613
40,338
51,443
2,142,623
376,868
322,636
24,011
26,907
256,719
1,135,482
567,407
62,380
886
(6,673)
511,482
146,278
—
—
365,204
88,863
276,341
63,468
35,725
35,456
63,199
46,993
52,368
1,672,980
282,576
267,533
31,348
28,030
218,790
844,703
480,407
61,777
427
1,715
300,377
116,358
26,597
5,999
151,423
36,528
114,895
58,267
13,018
—
45,249
7,791
(5,919)
222,144
21,599
(5,519)
2,428
(3,766)
9,014
198,388
28,683
10,541
5,868
(8,681)
161,977
58,762
—
—
103,215
37,712
65,503
(59,465)
9,743
140,622
71,414
369,200
108,023
(6,655)
(925)
469,643
94,292
55,103
(7,337)
(1,123)
37,929
290,779
87,000
603
459
(8,388)
211,105
29,920
(26,597)
(5,999)
213,781
52,335
161,446
5,201
22,707
35,456
17,950
Net income
$
476,457 $
339,540 $
160,144 $
136,917 $
179,396
44
Cash Flow Data:
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Other Financial Data:
Adjusted EBITDA from continuing operations
Adjusted EBITDA from discontinued operations
Adjusted EBITDA from continuing and discontinued
operations
(a)
(a)
(a)
(a)
Free Cash Flow
Adjusted Gross Profit
Net CAPEX
(a)
(a)
Balance Sheet Data (end of year):
Cash and cash equivalents
Rental equipment, net
Total assets
Long-term debt
Total shareholders’ equity
$
$
$
$
$
$
$
$
$
$
$
$
$
761,240 $
(350,003) $
(418,935) $
744,658 $
(309,333) $
(429,368) $
539,902 $
(384,047) $
(167,887) $
16,582 $
(40,670) $
10,433 $
204,756
74,714
(261,481)
1,061,465 $
4,124
883,874 $
85,750
649,604 $
90,789
1,065,589 $
969,624 $
740,393 $
576,589 $
1,599,603 $
184,651 $
330,334 $
1,392,201 $
414,324 $
303,027 $
1,063,493 $
236,875 $
10,958 $
3,381,315 $
6,137,915 $
3,538,516 $
1,261,250 $
7,390 $
3,077,287 $
5,827,651 $
3,063,042 $
1,565,300 $
6,393 $
2,777,800 $
5,773,599 $
2,671,831 $
1,996,763 $
177,591 $
(81,626)
95,965 $
246,255 $
207,402 $
(229,673) $
3,568 $
304,028 $
310,264 $
475,474 $
(304,050) $
234,270
(5,039)
229,231
27,307
328,708
177,449
997
299,487
54,052
391,211
(431,463)
(a) WillScot Mobile Mini presents Adjusted EBITDA, Free Cash Flow, Adjusted Gross Profit and Net CAPEX, which are measurements not calculated in accordance with GAAP and are
defined below in the section "Reconciliation of non-GAAP Financial Measures," because they are key metrics used by management to assess financial performance. Our business is
capital intensive, and these additional metrics allow management to further evaluate its operating performance. See below for reconciliations of non-GAAP financial measures.
(in thousands, except for units on rent and monthly rental rate)
Modular space units on rent (average during the period)
Average modular space utilization rate
Average modular space monthly rental rate
Portable storage units on rent (average during the period)
Average portable storage utilization rate
Average portable storage monthly rental rate
Earnings per share - basic
Earnings per share - diluted
Weighted average shares - basic
Weighted average shares - diluted
Comparison of Years Ended December 31, 2023 and 2022
2023
Year Ended December 31,
2022
2021
100,822
64.7 %
1,058
154,386
73.2 %
238
2.40
2.36
$
$
$
$
104,808
68.5 %
905
169,565
86.8 %
192
1.57
1.53
$
$
$
$
101,304
69.2 %
765
135,775
80.1 %
155
0.71
0.69
198,554,885
201,849,836
216,808,577
221,399,162
226,518,931
232,793,902
$
$
$
$
Revenue: Total revenue increased $222.1 million, or 10.4%, to $2,364.8 million for the year ended December 31, 2023 from $2,142.6 million for the year
ended December 31, 2022. Leasing revenue increased $212.2 million, or 13.1%, as compared to 2022 driven by improved pricing and value-added products
penetration, partially offset by a decrease of 19,165, or 7.0%, in total average modular space and portable storage units on rent. Delivery and installation revenues
increased $8.0 million, or 1.9%, due to increased pricing across both segments. New unit sales increased $7.8 million, or 19.3%, and rental unit sales decreased
$5.9 million, or 11.5%.
Total average units on rent for the years ended December 31, 2023 and 2022 were 255,208 and 274,373, respectively. Modular space average units on
rent decreased 3,986 units, or 3.8%, and portable storage average units on rent decreased by 15,179 units, or 9.0%, for the year ended December 31, 2023 as
compared to the year ended December 31, 2022. The average modular space unit utilization rate during the year ended December 31, 2023 was 64.7%, as
compared to
45
68.5% during 2022. The average portable storage unit utilization rate during the year ended December 31, 2023 was 73.2%, as compared to 86.8% during 2022.
Modular space average monthly rental rates increased 16.9% to $1,058 for the year ended December 31, 2023. Average portable storage monthly rental
rates of $238 represented an increase of $46, or 24.0%, compared to the year ended December 31, 2022. Increases were driven by a continuation of the long-term
price optimization and VAPS penetration opportunities across our Modular segment as well as by application of these same price management tools and processes
across the Storage segment and from early benefits from increased VAPS penetration opportunities on our basic VAPS offerings in the Storage segment, which
began in the second quarter of 2022.
Gross Profit: Gross profit increased $198.4 million, or 17.5%, to $1,333.9 million for the year ended December 31, 2023 from $1,135.5 million for the year
ended December 31, 2022. The increase in gross profit is a result of a $190.6 million increase in leasing gross profit, a $13.5 million increase in delivery and
installation gross profit, and a $3.2 million increase of new and rental unit sale margins. Increases were primarily a result of increased revenues due to favorable
average monthly rental rates and delivery and installation pricing across both portable storage and modular space units, which offset lower unit on rent volumes.
Cost of leasing and services increased by $16.1 million, or 2.3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, driven by
a $23.9 million, or 10.3%, increase in labor costs, a $4.8 million, or 5.1%, increase in vehicle, equipment and other costs, and a $3.2 million, or 3.2%, increase in
materials costs, partially offset by a $15.9 million, or 5.8%, decrease in subcontractor costs.
Sales Revenue increased by $1.9 million, or 2.0%, to $93.7 million for the year ended December 31, 2023, while cost of sales decreased by $1.3 million, or
2.6%, resulting in improved sales gross profit margins. The year over year change was mainly driven by increased new unit sales margin.
Increases in gross profit were partially offset by increased depreciation of $9.0 million, or 3.5%, as a result of capital investments made over the past twelve
months.
Our gross profit percentage was 56.4% and 53.0% for the years ended December 31, 2023 and 2022, respectively. Our gross profit percentage, excluding
the effects of depreciation ("adjusted gross profit percentage"), was 67.6% and 65.0% for the years ended December 31, 2023 and 2022, respectively. These
increases were driven primarily by continued price optimization within leasing and execution of VAPS penetration opportunities that have outpaced increases in cost
of leasing and services.
SG&A Expense: SG&A expense increased $28.7 million, or 5.1%, to $596.1 million for the year ended December 31, 2023, compared to $567.4 million for
the year ended December 31, 2022. Real estate and occupancy costs increased $10.9 million, or 14.6%, travel expenses increased $4.6 million, or 25.1%, due to
increased travel and training, service agreements and professional fees increased $3.9 million, or 5.1%, and non-income business taxes increased $3.5 million, or
47.4%. Our provision for credit losses increased $12.2 million, or 108.7%. Stock compensation expense increased $4.9 million to $34.5 million for the year ended
December 31, 2023, compared to $29.6 million for the year ended December 31, 2022. Partially offsetting these increases, integration expenses decreased $5.1
million, or 33.1%, to $10.4 million for the year ended December 31, 2023, compared to $15.5 million for the year ended December 31, 2022. Employee SG&A
excluding stock compensation decreased $10.8 million, or 4.0%.
Other Depreciation and Amortization: Other depreciation and amortization increased $10.5 million, or 16.9%, to $72.9 million for the year ended
December 31, 2023, compared to $62.4 million for the year ended December 31, 2022. The increase was a result of our recent investments in our CRM system and
other infrastructure improvements across our branch networks.
Currency Losses, net: Currency losses, net increased by $5.9 million to $6.8 million for the year ended December 31, 2023 compared to $0.9 million for
the year ended December 31, 2022. The increase in currency losses, net, was primarily attributable to a loss on the settlement of the contingent foreign currency
forward contract relating to the sale of the former UK Storage Solutions segment.
Other (Income) Expense, Net: Other income, net was $15.4 million for the year ended December 31, 2023 compared to $6.7 million for the year ended
December 31, 2022. The increase in other income, net was related to the gain on sale of fixed assets related to a real estate sale transaction during the year ended
December 31, 2023.
Interest Expense: Interest expense increased $58.8 million, or 40.2%, to $205.0 million for the year ended December 31, 2023 from $146.3 million for the
year ended December 31, 2022. The increase in interest expense was a result of higher overall weighted average interest rates as a result of increased benchmark
rates and higher outstanding debt balances. See Note 10 to the consolidated financial statements for further discussion of our debt.
Income Tax Expense: Income tax expense increased $37.7 million to $126.6 million for the year ended December 31, 2023 compared to $88.9 million for
the year ended December 31, 2022. The increase in income tax expense was driven by an increase in income from continuing operations before income tax for the
year ended December 31, 2023 as compared to the year ended December 31, 2022.
46
Income from Discontinued Operations: Income from discontinued operations increased $71.4 million to $134.6 million for the year ended December 31,
2023 compared to $63.2 million for the year ended December 31, 2022. The increase in income from discontinued operations was driven by the increase in gain on
sale of discontinued operations of $140.6 million to a total of $176.1 million for the year ended December 31, 2023 compared to $35.5 million for the year ended
December 31, 2022, partially offset by having no contribution from the former Tank and Pump segment and only one month of activity for the former UK Storage
Solutions segment in 2023 and an increase in income tax expense from discontinued operations.
Comparison of Years Ended December 31, 2022 and 2021
Revenue: Total revenue increased $469.6 million, or 28.1%, to $2,142.6 million for the year ended December 31, 2022 from $1,673.0 million for the year
ended December 31, 2021. Leasing revenue increased $369.2 million, or 29.5%, as compared to 2021 driven by an increase of 37,294, or 15.7%, total average
modular space and portable storage units on rent and improved pricing and value-added products. Delivery and installation revenues increased $108.0 million, or
33.6%, due to increased overall activity and higher pricing. New unit sales decreased $6.7 million, or 14.2%, and rental unit sales decreased $0.9 million, or 1.8%.
Total average modular space and portable storage units on rent for the years ended December 31, 2022 and 2021 were 274,373 and 237,079,
respectively. The increase was primarily driven by strong customer demand within the storage segment and due to acquisitions. In total, modular space average
units on rent increased 3,504 units, or 3.5%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021. Modular space average
monthly rental rates increased 18.3% to $905 for the year ended December 31, 2022. Improved pricing was driven by a continuation of the long-term price
optimization and VAPS penetration opportunities across our portfolio. Portable storage average units on rent increased by 33,790 units, or 24.9%, for the year
ended December 31, 2022. Average portable storage monthly rental rates of $192 represented an increase of $37, or 23.9%, compared to the year ended
December 31, 2021. This increase was driven by the accretive impact of higher rates from the Mobile Mini portable storage fleet. The average modular space unit
utilization rate during the year ended December 31, 2022 was 68.5%, as compared to 69.2% during 2021. The average portable storage unit utilization rate during
the year ended December 31, 2022 was 86.8%, as compared to 80.1% during 2021.
Gross Profit: Gross profit increased $290.8 million, or 34.4%, to $1,135.5 million for the year ended December 31, 2022 from $844.7 million for the year
ended December 31, 2021. The increase in gross profit is a result of a $274.9 million increase in leasing gross profit, increased delivery and installation gross profit
of $52.9 million, and increased new and rental unit sale margins of $0.9 million. Increases were primarily a result of increased revenues due to favorable average
monthly rental rates and delivery and installation pricing across both portable storage and modular space units, which offset lower unit on rent volumes. Cost of
leasing and services increased by $149.4 million, or 27.2%, to $699.5 million for the year ended December 31, 2022 from $550.1 million the year ended December
31, 2021, driven by a $59.3 million, or 34.9%, increase in labor costs, a $56.1 million, or 26.1%, increase in subcontractor costs, a $23.8 million, or 33.7%, increase
in vehicle, equipment and other costs, and a $10.2 million, or 10.8%, increase in material costs. Cost of sales decreased by $8.5 million, or 14.3%, which is in line
with decreased sales revenues of 7.6% for the year ended December 31, 2022, resulting in improved sales gross profit margins. The year over year changes in
each of these cost components was consistent with historical trends and management's expectations given the change in sales volume and inflationary pressures
impacting our business.
These increases were partially offset by increased depreciation of $37.9 million as a result of acquired fleet and capital investments made over the past
twelve months in our existing rental equipment.
Our gross profit percentage was 53.0% and 50.5% for the years ended December 31, 2022 and 2021, respectively. Our gross profit percentage, excluding
the effects of depreciation ("adjusted gross profit percentage"), was 65.0% and 63.6% for the years ended December 31, 2022 and 2021, respectively.
SG&A Expense: SG&A expense increased $87.0 million, or 18.1%, to $567.4 million for the year ended December 31, 2022, compared to $480.4 million
for the year ended December 31, 2021. For 2022, SG&A expense for Modular and Storage totaled $304.9 million and $215.7 million respectively. Employee costs
excluding stock compensation increased $57.6 million, or 27.3%, driven by a 12% increase in SG&A headcount to support both organic and inorganic growth. Legal
and professional fees increased $23.8 million, or 45.5%. Stock compensation expense increased $10.6 million to $29.6 million for the year ended December 31,
2022, compared to $19.0 million for the year ended December 31, 2021. Integration costs decreased $12.9 million to $15.5 million for the year ended December 31,
2022, compared to $28.4 million for the year ended December 31, 2021. The remaining increases were primarily driven by increased economic activity and
inflationary increases, including increased occupancy and office costs, insurance, travel expenses, and marketing cost increases. .
Other Depreciation and Amortization: Other depreciation and amortization increased $0.6 million, or 1.0%, to $62.4 million for the year ended December
31, 2022, compared to $61.8 million for the year ended December 31, 2021.
Currency Losses, net: Currency losses, net increased by $0.5 million to a $0.9 million loss for the year ended December 31, 2022 compared to $0.4
million for the year ended December 31, 2021. The increase in currency losses, net, was primarily attributable to the impact of foreign currency exchange rate
changes on intercompany receivables and payables denominated in a currency other than the subsidiaries’ functional currency.
Other (Income) Expense, Net: Other (income) expense, net was $6.7 million of income for the year ended December 31, 2022 and $1.7 million of
expense for the year ended year ended December 31, 2021. The increase in other
47
(income) expense, net is primarily related to insurance recoveries received in 2022 related to Hurricane Ida in the Gulf Coast ares of the United States in 2021.
Interest Expense: Interest expense increased $29.9 million, or 25.7%, to $146.3 million for the year ended December 31, 2022 from $116.4 million for the
year ended December 31, 2021. The increase was driven by increased average borrowings to support our capital allocation priorities, as well as an increase in
interest rates during 2022.
Fair Value Loss on Common Stock Warrant Liabilities: For the year ended year ended December 31, 2021, the fair value loss on common stock
warrant liabilities of $26.6 million was primarily attributable to the change in estimated fair value of common stock warrant liabilities.
Loss on Extinguishment of Debt: For the year ended year ended December 31, 2021, we recorded a loss on extinguishment of debt of $6.0 million
related to the redemption premium and write off of unamortized deferred financing costs associated with the redemption of $123.5 million of our 2025 Secured
Notes.
Income Tax Expense: Income tax expense increased $52.3 million to $88.9 million for the year ended December 31, 2022 compared to a $36.5 million for
the year ended December 31, 2021. The increase in income tax expense was a result of higher pre-tax income partially offset with a reduction of the valuation
allowance for deferred tax assets.
Business Segments
The Company operates in two reportable segments as follows: Modular and Storage. Modular represents the activities of the North America modular
business, excluding ground level offices, which were transferred to the Storage segment during the first quarter of 2023. Storage represents the activities of the
North America portable storage and ground level office business. As part of the transfer of the ground level offices to Storage, we also adjusted the average modular
space monthly rental rate in the Storage segment to only include VAPS specifically applicable to ground level offices, which has also been reflected in the total
average modular space monthly rental rate.
The following tables and discussion summarize our reportable segment financial information for the years ended December 31, 2023, 2022 and 2021.
Business Segment Results
Years Ended December 31, 2023, 2022 and 2021
(in thousands, except for units on rent and rates)
Revenue
Gross profit
Adjusted EBITDA
Capex for rental equipment
Average modular space units on rent
Average modular space utilization rate
Average modular space monthly rental rate
Average portable storage units on rent
Average portable storage utilization rate
Average portable storage monthly rental rate
Year Ended December 31, 2023
Modular
Storage
Total
1,495,666
700,226
598,354
184,993
81,870
65.6 %
1,111
496
62.5 %
251
$
$
$
$
$
$
869,101
633,644
463,111
41,612
18,952
61.1 %
826
153,890
73.3 %
238
$
$
$
$
$
$
2,364,767
1,333,870
1,061,465
226,605
100,822
64.7 %
1,058
154,386
73.2 %
238
$
$
$
$
$
$
48
(in thousands, except for units on rent and rates)
Revenue
Gross profit
Adjusted EBITDA
Capex for rental equipment
Average modular space units on rent
Average modular space utilization rate
Average modular space monthly rental rate
Average portable storage units on rent
Average portable storage utilization rate
Average portable storage monthly rental rate
(in thousands, except for units on rent and rates)
Revenue
Gross profit
Adjusted EBITDA
Capex for rental equipment
Average modular space units on rent
Average modular space utilization rate
Average modular space monthly rental rate
Average portable storage units on rent
Average portable storage utilization rate
Average portable storage monthly rental rate
Modular Segment
Comparison of Years Ended December 31, 2023 and 2022
Modular
Year Ended December 31, 2022
Storage
Total
1,342,033
583,837
508,343
279,079
82,517
67.5 %
966
516
58.7 %
208
$
$
$
$
$
$
800,590
551,645
375,531
118,297
22,291
72.4 %
682
169,049
86.9 %
192
$
$
$
$
$
$
2,142,623
1,135,482
883,874
397,376
104,808
68.5 %
905
169,565
86.8 %
192
Modular
Year Ended December 31, 2021
Storage
Total
1,120,483
471,656
404,577
187,495
79,879
67.1 %
820
7,312
68.8 %
131
$
$
$
$
$
$
552,497
373,047
245,027
45,426
21,425
78.2 %
561
128,463
80.9 %
156
$
$
$
$
$
$
1,672,980
844,703
649,604
232,921
101,304
69.2 %
765
135,775
80.1 %
155
$
$
$
$
$
$
$
$
$
$
$
$
Revenue: Total revenue increased $153.6 million, or 11.4%, to $1,495.7 million for the year ended December 31, 2023 from $1,342.0 million for the year
ended December 31, 2022. The increase was primarily the result of increased leasing revenue of $145.4 million, or 14.6%, compared to 2022, and increased
delivery and installation revenue of $10.7 million, or 3.9%, compared to 2022. Average modular space monthly rental rates increased 15.0% for the year ended
December 31, 2023 to $1,111 driven primarily by increased pricing on new deliveries. Average modular space units on rent decreased by 647 units, or 0.8%.
Average portable storage monthly rental rates increased 20.7% for the year ended December 31, 2023 to $251 driven by our price management tools, processes
and early benefits from increased VAPS penetration opportunities on our basic VAPS offerings, which began in the second quarter of 2022.
Gross Profit: Gross profit increased $116.4 million, or 19.9%, to $700.2 million for the year ended December 31, 2023 from $583.8 million for the year
ended December 31, 2022. The increase in gross profit was driven higher leasing gross profit, which increased $107.1 million, or 14.9%, driven by improved pricing
and by a $7.8 million increase in delivery and installation gross profit. These increases in gross profit for the year ended December 31, 2023 were further
complemented by a $4.7 million increase in new unit sales gross profit, offset by a $4.7 million decrease in rental unit sales gross profit. Cost of leasing and services
increased by $41.2 million, or 8.3%, for the year ended December 31, 2023 versus the year ended December 31, 2022, driven by a $10.2 million, or 13.5%,
increase in material costs, a $21.4 million, or 13.5%, increase in labor costs, a $4.6 million, or 2.2%, increase in subcontractor costs, and a $5.0 million, or 9.5%,
increase in vehicle, equipment and other costs.
Cost of sales decreased by $2.3 million, or 5.6%, which is in line with decreased sales revenues of 3.1% for the year ended December 31, 2023. The year
over year changes in each of these cost components was consistent with historical trends and management's expectations given the respective changes in sales
volume.
The increase in gross profit was also partially driven by a $1.6 million decrease in depreciation of rental equipment as a result of lower capital investments
made in refurbishments of rental equipment over the past twelve months
Adjusted EBITDA: Adjusted EBITDA increased $90.0 million, or 17.7%, to $598.4 million for the year ended December 31, 2023 from $508.3 million for
the year ended December 31, 2022. The increase was driven by higher leasing
49
gross profit discussed above. SG&A, excluding discrete costs, increased $14.5 million, or 4.6%, for the year ended December 31, 2023 compared to the year ended
December 31, 2022 driven primarily by a $2.4 million, or 5.7%, increase in service agreements and professional fees, a $5.2 million, or 9.8%, increase in real estate
costs, a $4.2 million, or 32.7%, increase in travel costs, a $2.2 million, or 43.6%, increase in advertising costs, a $2.1 million, or 30.8%, increase in taxes and fees, a
$7.1 million, or 81.9%, increase to the provision for credit losses, a $3.0 million, or 66.3%, increase in employee insurance costs, and a $5.9 million increase in
salaries. These increases were partially offset by a $10.6 million decrease in variable compensation.
Capex for rental equipment: purchases of rental equipment decreased $94.1 million, or 33.7%, to $185.0 million for the year ended December 31, 2023
from $279.1 million for the year ended December 31, 2022 driven by reduction in fleet purchases and successful efforts to reduce our refurbishment costs through
better unit selection and work scope during 2023.
Comparison of Years Ended December 31, 2022 and 2021
Revenue: Total revenue increased $221.6 million, or 19.8%, to $1,342.0 million for the year ended December 31, 2022 from $1,120.5 million for the year
ended December 31, 2021. The increase was primarily driven by increased leasing revenue of $164.6 million, or 19.9%, compared to 2021, increased delivery and
installation revenue of $58.9 million, or 27.6% compared to 2021 and partially offset by decreased sales revenue of $2.0 million, or 2.6%, compared to 2021.
Average modular space monthly rental rates increased 17.8% for the year ended December 31, 2022 to $966 driven by continuation of the long-term price
optimization and VAPS penetration opportunities across our portfolio. Improved pricing was aided by higher volumes as average modular space units on rent
increased by 2,638 units, or 3.3%, year over year driven by acquisitions.
Gross Profit: Gross profit increased $112.2 million, or 23.8%, to $583.8 million for the year ended December 31, 2022 from $471.7 million for the year
ended December 31, 2021. The increase in gross profit was driven by higher leasing gross profit, which increased $110.9 million or 18.2%, driven by improved
volume, pricing and VAPS. The increase in gross profit from leasing for the year ended December 31, 2022 was further complemented by a $28.2 million increase in
delivery and installation gross profit primarily driven by increased pricing, a $3.2 million increase in rental unit sales gross profit, and a $0.6 million increase in new
unit sales gross profit. In addition, cost of leasing and services increased by $84.5 million, or 20.6%, for the year ended December 31, 2022 versus the year ended
December 31, 2021, driven by a $3.5 million, or 1.7%, increase in subcontractor costs, and a $19.6 million, or 14.1%, increase in labor costs, partially offset by a
$9.9 million, or 11.6%, decrease in material cost and a $1.3 million, or 2.4%, decrease in vehicle, equipment and other costs.
Cost of sales decreased by $5.8 million, or 12.2%, which is in line with the decreased sales revenues of 2.6% for year ended December 31, 2022. The year
over year changes in each of these cost components was consistent with historical trends and management's expectations given the change in sales volume and
inflationary pressures impacting our business.
The increase in gross profit from leasing revenues was partially offset by a $30.6 million increase in depreciation of rental equipment primarily as a result of
capital investments made over the past twelve months in our existing rental equipment for the year ended December 31, 2022.
Adjusted EBITDA: Adjusted EBITDA increased $103.8 million, or 25.6%, to $508.3 million for the year ended December 31, 2022 from $404.6 million for
the year ended December 31, 2021. The increase was driven by higher leasing gross profits discussed above, partially offset by increases in SG&A, excluding
discrete and other items of $48.8 million. SG&A increases were primarily related to increases in salaries and variable compensation of $12.1 million and $8.9 million,
respectively, service agreement and professional fee increases of $13.9 million, real estate and occupancy costs increases of $7.0 million, and increased travel
expenses of $6.1 million.
Capex for rental equipment: Capex for rental equipment increased $91.6 million, or 48.8%, to $279.1 million for the year ended December 31, 2022 from
$187.5 million for the year ended December 31, 2021. The increase was mainly driven by increased spending on refurbishments and fleet and VAPS purchases.
Storage Segment
Comparison of Years Ended December 31, 2023 and 2022
Revenue: Total revenue increased $68.5 million, or 8.6%, to $869.1 million for the year ended December 31, 2023 from $800.6 million for the year ended
December 31, 2022. The increase was primarily driven by increased leasing revenue of $66.9 million, or 10.6%, compared to 2022, partially offset by decreased
delivery and installation revenue of $2.7 million, or 1.7%, compared to 2022. Average portable storage monthly rental rates increased 24.0% for the year ended
December 31, 2023 to $238 as a result of our price management tools. Average portable storage units on rent decreased by 15,159 units, or 9.0%, year over year
mainly driven by lower demand. Average modular space monthly rental rates increased 21.1% for the year ended December 31, 2023 to $826 driven by the
continuation of our long-term price optimization initiative and VAPS penetration opportunities across our portfolio. Average modular space units on rent decreased
by 3,339 units, or 15.0%.
Gross Profit: Gross profit increased $82.0 million, or 14.9%, to $633.6 million for the year ended December 31, 2023 from $551.6 million for the year
ended December 31, 2022. The increase in gross profit was driven by an $83.5 million increase in leasing gross profit and an increase of $5.7 million in delivery and
installation gross profit. The increase in gross profit from leasing and delivery and installation revenues was partially offset by a $10.6 million increase in
depreciation of
50
rental equipment primarily as a result of capital investments made over the past twelve months of additional rental equipment for the year ended December 31,
2023.
Cost of leasing and services decreased by $25.1 million, or 12.3%, for the year ended December 31, 2023 as compared to the year ended December 31,
2022, driven by a $7.0 million, or 27.7%, decrease in material costs, a $20.4 million, or 32.9%, decrease in subcontractor costs, partially offset by a $2.6 million, or
3.4%, increase in labor costs. Cost of sales increased by $1.0 million, or 11.0%, as sales revenues increased $4.3 million, or 29.0%, driving improved sales gross
profit margins for the year ended December 31, 2023. The year over year changes in each of these cost components was consistent with historical trends and
management's expectations given the respective changes in sales volume and inflationary pressures impacting our business.
These increases were partially offset by increased depreciation of $10.6 million, or 30.0%, as a result of capital investments made over the past twelve
months in rental equipment including acquired fleet.
Adjusted EBITDA: Adjusted EBITDA increased $87.6 million, or 23.3%, to $463.1 million for the year ended December 31, 2023 from $375.5 million for
the year ended December 31, 2022. The increase was driven by higher leasing gross profits discussed above, partially offset by an increase in SG&A costs,
excluding discrete and other items of $15.3 million. The SG&A increase was driven by an increase of $5.8 million in real estate and occupancy costs, an increase of
$3.9 million in salaries and wages, and an increase of $1.5 million in service agreements and professional fees.
Capex for rental equipment: Capex for rental equipment decreased $76.7 million, or 64.8%, to $41.6 million for the year ended December 31, 2023 from
$118.3 million for the year ended December 31, 2022 driven by a reduction in container purchases during the year given lower utilization and demand.
Comparison of Years Ended December 31, 2022 and 2021
Revenue: Total revenue increased $248.1 million, or 44.9%, to $800.6 million for the year ended December 31, 2022 from $552.5 million for the year
ended December 31, 2021. The increase was primarily driven by increased leasing revenue of $204.6 million, or 48.2%, compared to 2021, and increased delivery
and installation revenue of $49.1 million, or 45.7%, compared to 2021. Average portable storage monthly rental rates increased 23.1% for the year ended December
31, 2022 to $192 as a result of our price management tools and processes, further supported by high utilization, and by an acceleration earlier into the third quarter
of our seasonal retail business. Average portable storage units on rent increased by 40,586 units, or 31.6%, year over year driven by increases in organic activity of
approximately 15%, or 19,500 units on rent, including an acceleration earlier into the third quarter of our seasonal retail business. The remaining increase was
driven by approximately 15,000 units on rent added in recent acquisitions and approximately 6,000 units of the increase was due to the transfer of approximately
12,000 portable storage units on rent from the Modular segment, which occurred in the third quarter of 2021. Average modular space monthly rental rates increased
21.6% for the year ended December 31, 2022 to $682 driven by the continuation of our long-term price optimization initiative and VAPS penetration opportunities
across our portfolio. Average modular space units on rent increased by 866 units, or 4.0%, year over year, of which approximately 1,100 was acquisition driven.
Gross Profit: Gross profit increased $178.6 million, or 47.9%, to $551.6 million for the year ended December 31, 2022 from $373.0 million for the year
ended December 31, 2021. The increase in gross profit was driven by a $164.0 million increase in leasing gross profit driven by improved volume, pricing and
VAPS. The increase in gross profit from leasing for the year ended December 31, 2022 was further complemented by an increase of $24.8 million in delivery and
installation gross profit primarily driven by increased pricing, and a $0.1 million increase in new unit sales gross profit. The increase in gross profit from leasing for
the year ended December 31, 2022 was partially offset by a $3.0 million decrease in rental unit sales gross profit. In addition, cost of leasing and services increased
by $64.9 million, or 46.4%, for the year ended December 31, 2022 versus the year ended December 31, 2021, driven by a $21.9 million, or 54.7%, increase in
subcontractor costs, a $9.7 million, or 61.4%, increase in material costs, a $19.8 million, or 35.8%, increase in labor costs, and a $12.3 million, or 41.3%, increase in
vehicle, equipment and other costs.
Cost of sales decreased by $2.7 million, or 22.5%, which is in line with the decreased sales revenues of 27.3% for year ended December 31, 2022.
The increase in gross profit from leasing and delivery and installation revenues was partially offset by a $7.3 million increase in depreciation of rental
equipment primarily as a result of capital investments made over the past twelve months of additional rental equipment for the year ended December 31, 2022.
Adjusted EBITDA: Adjusted EBITDA increased $130.5 million, or 53.3%, to $375.5 million for the year ended December 31, 2022 from $245.0 million for
the year ended December 31, 2021. The increase was driven by higher leasing gross profits discussed above, partially offset by increases in SG&A, excluding
discrete and other items of $55.4 million. SG&A increases were primarily related to increases in salaries and variable compensation of $20.1 million and $14.7
million, respectively, service agreement and professional fee increases of $9.9 million, real estate and occupancy costs increases of $1.9 million, and increased
travel expenses of $2.6 million.
Capex for rental equipment: Capex for rental equipment increased $72.9 million, or 160.4%, to $118.3 million for the year ended December 31, 2022
from $45.4 million for the year ended December 31, 2021 driven by a significant increase
51
in container purchases during the year given high utilization and strong demand, as well as due to expansion of our VAPS offering in Storage.
Reconciliation of Non-GAAP Financial Measures
In addition to using GAAP financial measurements, we use certain non-GAAP financial measures to evaluate our operating results. As such, we include in
this Annual Report on Form 10-K reconciliations to their most directly comparable GAAP financial measures. Set forth below are definitions and reconciliations to
the nearest comparable GAAP measure of certain non-GAAP financial measures used in this Annual Report on Form 10-K along with descriptions of why we
believe these measures provide useful information to investors as well as a description of the limitations of these measures. Each of these non-GAAP financial
measures has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for analysis of, results reported under GAAP. Our
measurements of these metrics may not be comparable to similarly titled measures of other companies.
Adjusted EBITDA
We define EBITDA as net income (loss) plus interest (income) expense, income tax expense (benefit), depreciation and amortization. Our adjusted
EBITDA ("Adjusted EBITDA") reflects the following further adjustments to EBITDA to exclude certain non-cash items and the effect of what we consider transactions
or events not related to our core business operations:
•
•
•
•
•
•
•
•
Currency (gains) losses, net on monetary assets and liabilities denominated in foreign currencies other than the subsidiaries’ functional currency.
Substantially all such currency gains (losses) are unrealized and attributable to financings due to and from affiliated companies.
Goodwill and other impairment charges related to non-cash costs associated with impairment charges to goodwill, other intangibles, rental fleet
and property, plant and equipment.
Restructuring costs, lease impairment expense, and other related charges associated with restructuring plans designed to streamline operations
and reduce costs including employee and lease termination costs.
Transaction costs including legal and professional fees and other transaction specific related costs.
Costs to integrate acquired companies, including outside professional fees, non-capitalized costs associated with system integrations, non-lease
branch and fleet relocation expenses, employee training costs, and other costs required to realize cost or revenue synergies.
Non-cash charges for stock compensation plans.
Gains and losses resulting from changes in fair value and extinguishment of common stock warrant liabilities.
Other expense, including consulting expenses related to certain one-time projects, financing costs not classified as interest expense, and gains
and losses on disposals of property, plant, and equipment.
Our Chief Operating Decision Maker ("CODM") evaluates business segment performance utilizing Adjusted EBITDA as shown in the reconciliation of the
Company’s consolidated income from continuing operations to Adjusted EBITDA below. Management believes that evaluating segment performance excluding such
items is meaningful because it provides insight with respect to the intrinsic and ongoing operating results of the Company and captures the business performance of
the segments, inclusive of indirect costs.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider the measure in isolation or as a substitute for net income (loss), cash
flow from operations or other methods of analyzing WillScot Mobile Mini’s results as reported under US GAAP. Some of these limitations are:
•
•
•
•
•
•
•
Adjusted EBITDA does not reflect changes in, or cash requirements for our working capital needs;
Adjusted EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our
indebtedness;
Adjusted EBITDA does not reflect our tax expense or the cash requirements to pay our taxes;
Adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
Adjusted EBITDA does not reflect the impact on earnings or changes resulting from matters that we consider not to be indicative of our future
operations;
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the
future and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
other companies in our industry may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.
Because of these limitations, Adjusted EBITDA should not be considered as discretionary cash available to reinvest in the growth of our business or as a
measure of cash that will be available to meet our obligations.
52
The following table provides unaudited reconciliations of Income from continuing operations to Adjusted EBITDA:
(in thousands)
Income from continuing operations
Income tax expense from continuing operations
Income from continuing operations before income tax
Loss on extinguishment of debt
Interest expense
Fair value loss on common stock warrant liabilities
Depreciation and amortization
Currency losses, net
Restructuring costs, lease impairment expense and other related charges
Transaction costs
Integration costs
Stock compensation expense
Other
Adjusted EBITDA from continuing operations
Adjusted EBITDA from discontinued operations
Adjusted EBITDA from continuing and discontinued operations
2023
Year Ended December 31,
2022
2021
$
$
341,844 $
126,575
468,419
—
205,040
—
338,654
6,754
22
2,259
10,366
34,486
(4,535)
1,061,465
4,124
1,065,589 $
276,341 $
88,863
365,204
—
146,278
—
319,099
886
168
25
15,484
29,613
7,117
883,874
85,750
969,624 $
114,895
36,528
151,423
5,999
116,358
26,597
280,567
427
14,754
1,375
28,410
18,728
4,966
649,604
90,789
740,393
The following table provides unaudited reconciliations of Income from discontinued operations to Adjusted EBITDA:
(in thousands)
Income from discontinued operations
Gain on sale of discontinued operations
Income tax expense from discontinued operations
Income from discontinued operations before income tax and gain on sale
Interest expense
Depreciation and amortization
Currency losses, net
Restructuring costs, lease impairment expense and other related charges
Integration costs
Stock compensation expense
Other
Adjusted EBITDA from discontinued operations
2023
Year Ended December 31,
2022
2021
$
$
134,243 $
175,708
45,468
4,003
56
—
—
—
—
(196)
261
4,124 $
63,199 $
35,456
35,725
63,468
1,301
24,408
138
—
—
215
(3,780)
85,750 $
45,249
—
13,018
58,267
1,629
35,000
121
2
14
261
(4,505)
90,789
53
Adjusted EBITDA Margin
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. Management believes that the presentation of Adjusted EBITDA Margin
provides useful information to investors regarding the performance of our business.
The following table provides unaudited reconciliations of Adjusted EBITDA Margin:
(in thousands)
Adjusted EBITDA from continuing operations (A)
Revenue (B)
Adjusted EBITDA Margin from Continuing Operations (A/B)
Income from continuing operations (C)
Income from Continuing Operations Margin (C/B)
Adjusted Gross Profit and Adjusted Gross Profit Percentage
$
$
$
2023
1,061,465
2,364,767
44.9 %
341,844
14.5 %
Year Ended December 31,
2022
$
$
$
883,874
2,142,623
41.3 %
276,341
12.9 %
$
$
$
2021
649,604
1,672,980
38.8 %
114,895
6.9 %
We define Adjusted Gross Profit as gross profit plus depreciation on rental equipment. Adjusted Gross Profit Percentage is defined as Adjusted Gross
Profit divided by revenue. Adjusted Gross Profit and Adjusted Gross Profit Percentage are not measurements of our financial performance under GAAP and should
not be considered as alternatives to gross profit, gross profit percentage, or other performance measures derived in accordance with GAAP. In addition, our
measurement of Adjusted Gross Profit and Adjusted Gross Profit Percentage may not be comparable to similarly titled measures of other companies. Management
believes that the presentation of Adjusted Gross Profit and Adjusted Gross Profit Percentage provides useful information regarding our results of operations and
assists in analyzing the underlying performance of our business.
The following table provides an unaudited reconciliation of gross profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage:
(in thousands)
Revenue (A)
Gross profit (B)
Depreciation of rental equipment
Adjusted Gross Profit (C)
Gross Profit Percentage (B/A)
Adjusted Gross Profit Percentage (C/A)
Net CAPEX
2023
2,364,767
1,333,870
265,733
1,599,603
Year Ended December 31,
2022
$
$
$
2,142,623
1,135,482
256,719
1,392,201
$
$
$
$
$
$
2021
1,672,980
844,703
218,790
1,063,493
56.4 %
67.6 %
53.0 %
65.0 %
50.5 %
63.6 %
We define Net CAPEX as purchases of rental equipment and refurbishments and purchases of property, plant and equipment (collectively, "Total Capital
Expenditures"), less proceeds from the sale of rental equipment and proceeds from the sale of property, plant and equipment (collectively, "Total Proceeds"), which
are all included in cash flows from investing activities. Management believes that the presentation of Net CAPEX provides useful information regarding the net
capital invested in our rental fleet and property, plant and equipment each year to assist in analyzing the performance of our business. As presented below, Net
CAPEX includes amounts for the former Tank and Pump segment through September 30, 2022 and the UK Storage Solutions segment through January 31, 2023.
The following table provides unaudited reconciliations of Net CAPEX:
(in thousands)
Total Capital Expenditures
Total Proceeds
Net CAPEX
2023
Year Ended December 31,
2022
2021
$
$
249,213 $
64,562
184,651 $
486,802 $
72,478
414,324 $
308,996
72,121
236,875
54
Free Cash Flow
We define Free Cash Flow as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and
equipment, which are all included in cash flows from investing activities. Management believes that the presentation of Free Cash Flow provides useful additional
information concerning cash flow available to fund our capital allocation alternatives. As presented below, Free Cash Flow includes amounts for the former Tank and
Pump segment through September 30, 2022 and the UK Storage Solutions segment through January 31, 2023.
The following table provides a reconciliation of net cash provided by operating activities to Free Cash Flow:
(in thousands)
Net cash provided by operating activities
Purchase of rental equipment and refurbishments
Proceeds from sale of rental equipment
Purchase of property, plant and equipment
Proceeds from the sale of property, plant and equipment
Free Cash Flow
Liquidity and Capital Resources
Overview
2023
Year Ended December 31,
2022
2021
$
$
761,240 $
(226,976)
51,290
(22,237)
13,272
576,589 $
744,658 $
(443,138)
70,703
(43,664)
1,775
330,334 $
539,902
(278,498)
55,210
(30,498)
16,911
303,027
WillScot Mobile Mini is a holding company that derives its operating cash flow from its operating subsidiaries. Our principal sources of liquidity include cash
generated by operating activities from our subsidiaries, borrowings under our ABL Facility, and sales of equity and debt securities. We believe that our liquidity
sources and operating cash flows are sufficient to address our operating, debt service and capital requirements over the next twelve months.
We have consistently accessed the debt and equity capital markets both opportunistically and as necessary to support the growth of our business, desired
leverage levels, and other capital allocation priorities. We believe we have ample liquidity in the ABL Facility and are generating substantial free cash flow, which
together support both organic operations and other capital allocation priorities as they arise.
We continue to review available acquisition opportunities with the awareness that any such acquisition may require us to incur additional debt to finance the
acquisition and/or to issue shares of our Common Stock or other equity securities as acquisition consideration or as part of an overall financing plan. In addition, we
will continue to evaluate alternatives to optimize our capital structure, which could include the issuance or repurchase of additional unsecured and secured debt,
equity securities and/or equity-linked securities. There can be no assurance as to the timing of any such issuance or repurchase. If we obtain additional capital by
issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and
other covenants that may significantly restrict our operations. Availability of financing and the associated terms are inherently dependent on the debt and equity
capital markets and subject to change. From time to time, we may also seek to streamline our capital structure and improve our financial position through
refinancing or restructuring our existing debt or retiring certain of our securities for cash or other consideration.
Our revolving credit facility provides an aggregate principal amount of up to $3.7 billion, consisting of: (i) a senior secured asset-based US dollar revolving
credit facility in the aggregate principal amount of $3.3 billion (the “US Facility”) and (ii) a $400.0 million senior secured asset-based multicurrency revolving credit
facility (the "Multicurrency Facility," and together with the US Facility, the “ABL Facility”). Borrowing availability under the ABL Facility is equal to the lesser of
$3.7 billion and the applicable borrowing bases. The borrowing bases are a function of, among other things, the value of the assets in the relevant collateral pool of
which our rental equipment represents the largest component. At December 31, 2023, we had $1.2 billion of available borrowing capacity under the ABL Facility.
55
Cash Flows
Significant factors driving our liquidity include cash flows generated from operating activities and capital expenditures. Our ability to fund our capital needs
will be affected by our ongoing ability to generate cash from operations and access to capital markets.
The consolidated statements of cash flows include amounts for the former Tank and Pump segment through September 30, 2022 and the UK Storage
Solutions segment through January 31, 2023. See Note 3 to the financial statements for disclosure of significant operating and investing items related to the former
Tank and Pump segment and the UK Storage Solutions segment. The following summarizes our change in cash and cash equivalents for the periods presented:
(in thousands)
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
2023
Year Ended December 31,
2022
2021
$
$
761,240 $
(350,003)
(418,935)
882
(6,816) $
744,658 $
(309,333)
(429,368)
(882)
5,075 $
539,902
(384,047)
(167,887)
(206)
(12,238)
Comparison of the Years Ended December 31, 2023 and 2022 and December 31, 2022 and 2021
Cash Flows from operating activities
Cash provided by operating activities for the year ended December 31, 2023 was $761.2 million as compared to $744.7 million for the year ended
December 31, 2022, an increase of $16.6 million, or 2%. The increase in cash provided by operating activities was driven by an increase of $54.5 million of net
income, adjusted for non-cash items, and a decrease of $37.9 million in the net movements of the operating assets and liabilities.
Cash provided by operating activities for the year ended December 31, 2022 was $744.7 million as compared to $539.9 million for the year ended
December 31, 2021, an increase of $204.8 million, or 38%. The increase in cash provided by operating activities was driven by an increase of $198.6 million of net
income, adjusted for non-cash items, and an increase of $6.2 million in the net movements of the operating assets and liabilities.
Cash flows from investing activities
Cash used in investing activities for the year ended December 31, 2023 was $350.0 million as compared to $309.3 million for the year ended December
31, 2022, an increase of $40.7 million. The increase in cash used in investing activities was driven by a $341.0 million increase in cash used in acquisitions, net of
cash acquired, a $19.4 million decrease in proceeds from the sale of rental equipment, and a $7.7 million increase in payments for the settlement of foreign currency
forward contract. The increase was partially offset by a $216.2 million decrease in cash used for the purchase of rental equipment and refurbishments, a $78.4
million increase in proceeds from the sale of discontinued operations, a $21.4 million decrease in cash used for the purchase of property, plant, and equipment, and
an $11.5 million increase in proceeds from sale of property, plant and equipment.
Cash used in investing activities for the year ended December 31, 2022 was $309.3 million as compared to $384.0 million for the year ended December
31, 2021, a decrease of $74.7 million. The decrease in cash used in investing activities was driven by the proceeds of $325.6 million from the sale of discontinued
operations and a $15.5 million increase in proceeds from the sale of rental equipment. Proceeds from sale of rental equipment increased compared to the prior year
due to higher sales demand. The decrease was partially offset by a $73.4 million increase in cash used in acquisitions, net of cash acquired, a $164.6 million
increase in cash used for the purchase of rental equipment and refurbishments to support growing demand for new project deliveries across all segments, a $15.1
million decrease in proceeds from sale of property, plant and equipment and a $13.2 million increase in cash used for the purchase of property, plant, and
equipment.
Cash flows from financing activities
Cash used in financing activities for the year ended December 31, 2023 was $418.9 million as compared to $429.4 million for the year ended December
31, 2022, a decrease of $10.4 million. The decrease in cash used in financing activities was driven by a $60.5 million increase in net borrowings, a $25.6 million
decrease in principal payments on finance lease obligations, and a $1.7 million decrease in payments of financing costs. The decrease was partially offset by an
increase of $66.4 million in repurchases of common stock and a $10.7 million decrease in receipts from the issuance of common stock.
Cash used in financing activities for the year ended December 31, 2022 was $429.4 million as compared to $167.9 million for the year ended December
31, 2021, an increase of $261.5 million. The increase in cash used in financing activities was driven by an increase of $388.2 million in repurchases of common
stock and warrants as well as an increase of $76.6 million in repayment of borrowings, partially offset by a $235.6 million increase in receipts from borrowings.
56
Material cash requirements
The Company’s material cash requirements include the following contractual and other obligations:
Debt
The Company has outstanding debt related to its ABL Facility, 2025 Secured Notes, 2028 Secured Notes, 2031 Secured Notes and finance leases,
including interest, totaling $3.6 billion as of December 31, 2023, $18.8 million of which is obligated to be repaid within the next twelve months. Refer to Note 10 for
further information regarding outstanding debt.
Operating leases
The Company has commitments for future minimum rental payments relating to operating leases, which are primarily for real estate. As of December 31,
2023, the Company had lease obligations of $288.7 million, with $69.4 million payable within the next twelve months.
In addition to the cash requirements described above, the Company has a Share Repurchase program authorized by the Board of Directors, which allows
the Company to repurchase up to $1.0 billion of outstanding shares of Common Stock and equivalents. This program does not obligate the Company to repurchase
any specific amount of shares.
The Company believes its cash, cash flows generated from ongoing operations, and continued access to its revolving credit facility as well as access to
debt markets are sufficient to satisfy its currently anticipated cash requirements over the next twelve months and thereafter for the foreseeable future.
Critical Accounting Estimates
The Company's discussion and analysis of its financial condition, results of operations, liquidity and capital resources is based on its consolidated financial
statements, which have been prepared in accordance with GAAP. GAAP requires that management make estimates and judgments that affect the reported amount
of assets, liabilities, revenue, expenses and the related disclosure of contingent assets and liabilities. The Company's management bases these estimates on
historical experience and on various other assumptions that they consider reasonable under the circumstances and reevaluate their estimates and judgments as
appropriate. The actual results experienced by the Company may differ materially and adversely from its estimates. The Company believes that the following critical
accounting estimates involve a higher degree of judgment or complexity in the preparation of financial statements:
Revenue Recognition
Leasing Revenue
The Company's lease arrangements can include multiple lease and non-lease components. Examples of lease components include, but are not limited to,
the lease of modular space and portable storage units and VAPS. Examples of non-lease components include, but are not limited to, the delivery, installation,
maintenance, and removal services commonly provided in a bundled transaction with the lease components. Arrangement consideration is allocated between lease
deliverables and non-lease components based on the relative estimated selling (leasing) price of each deliverable. Estimated selling (leasing) price of the lease
deliverables is based upon the estimated stand-alone selling price of the related performance obligations using an adjusted market approach.
Services Revenue
The Company generally has three non-lease service-related performance obligations in its contracts with customers:
•
Delivery and installation of the modular or portable storage unit;
• Maintenance and other ad hoc services performed during the lease term; and
•
Removal services that occur at the end of the lease term.
Consideration is allocated to each of these performance obligations within the contract based upon their estimated relative standalone selling prices using
an adjusted market approach.
Purchase Accounting
The Company accounts for acquisitions of businesses under the acquisition method. Under the acquisition method of accounting, the Company records
assets acquired and liabilities assumed, including intangible assets, at their respective estimated fair values on the date of acquisition. Goodwill is measured as the
excess of the fair value of the consideration transferred over the fair value of the identifiable net assets and is assigned to the Company's reporting units that are
expected to benefit from the acquisition.
Judgment is exercised in the determination of the estimated fair value of intangible assets acquired and their estimated useful lives. The estimated fair
value and useful lives of customer relationships is determined based on estimates and judgments regarding discounted future after-tax earnings and cash flows
expected from customer relationships. The fair value of trade name intangible assets is determined utilizing the relief from royalty method. A royalty rate based on
observed market royalties is applied to projected revenue supporting the trade name and discounted to present value.
Actual results may vary from these estimates which may result in adjustments to the fair value of assets acquired and liabilities assumed, including
intangibles. The Company may record adjustments to the fair values and corresponding
57
adjustment to goodwill during the measurement period, not to exceed one year from the date of acquisition if new information is obtained related to facts and
circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the consolidated statements of
operations. Note 2 to the Consolidated Financial Statements included in Item 8 of Part II of this annual report provides further discussion regarding business
combinations and any fair value adjustments to amounts previously reported.
Evaluation of Goodwill Impairment
The Company performs its assessment of goodwill utilizing either a qualitative or quantitative impairment test. The qualitative impairment test assesses
company-specific, industry, market and general economic factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its
carrying amount. If the Company concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or elects not to use
the qualitative impairment test, a quantitative impairment test is performed. The quantitative impairment test involves a comparison of the estimated fair value of a
reporting unit to its carrying amount. The Company estimates the fair value of a reporting unit by using a discounted cash flow model that calculates fair value as the
present value of expected cash flows of the reporting units.
Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and
assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, value of net operating
losses, future economic and market conditions and determination of appropriate market comparables. Management bases fair value estimates on assumptions it
believes to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from these estimates and the estimate is inherently
sensitive to any material changes to the inputs noted above; these changes could potentially impact the fair value of reporting units.
If the carrying amount of the reporting unit exceeds the calculated fair value of the reporting unit, an impairment charge would be recognized for the excess
of carrying value over fair value, not to exceed the amount of goodwill allocated to that reporting unit.
The Company's 2023 impairment test indicated that the estimated fair values of the Company's reporting units were in excess of their carrying values. The
Company believes that only significant changes in the cash flow assumptions would result in an impairment of goodwill.
Indefinite-lived Intangible Assets
Intangible assets that are acquired by the Company and determined to have an indefinite useful life are not amortized but are tested for impairment at least
annually. The Company’s indefinite-lived intangible assets consist of the Williams Scotsman and Mobile Mini trade names. The Company performs its assessment of
indefinite-lived intangible assets utilizing either a qualitative or quantitative impairment test. When utilizing a quantitative impairment test, the Company calculates
fair value using a relief-from-royalty method. This method is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise
have to pay royalties or license fees on revenues earned through the use of the asset. If the carrying amount of the indefinite-lived intangible asset exceeds its fair
value, an impairment charge would be recorded to the extent the recorded indefinite-lived intangible asset exceeds the fair value. The relief-from-royalty method
requires the Company to make assumptions regarding future revenue and the appropriate selection of royalty and discount rates. Any material deviation in actual
results could affect the calculated fair value of the intangible asset.
The Company's 2023 impairment test indicated that the estimated fair values of the Company's indefinite lived intangible assets were in excess of their
carrying values.
Rental Equipment
Rental equipment is comprised of modular space and portable storage units held for rent or on rent to customers and value-added products and services
(“VAPS”) which are in use or available to be used by customers. Rental equipment is measured at cost less accumulated depreciation and impairment losses. Cost
includes expenditures that are directly attributable to the acquisition of the asset. Costs of improvements and conversions of rental equipment are capitalized when
such costs extend the useful life of the equipment or increase the rental value of the unit. Costs incurred for equipment to meet a particular customer specification
are either capitalized and depreciated over the lease term taking into consideration the residual value of the asset or charged to the customer at the beginning of the
lease and expensed as incurred. Maintenance and repair costs are expensed as incurred.
Depreciation is computed using the straight-line method over estimated useful lives, as follows:
Modular space units
Portable storage units
VAPS and other related rental equipment
Estimated Useful Life
10 - 30 years
7 - 30 years
1 - 10 years
Residual Value
20 - 55%
20 - 55%
0%
58
Allowance for Credit Losses
The Company is exposed to credit losses from trade receivables. The Company assesses each customer’s ability to pay for the products it leases or sells
by conducting a credit review. The credit review considers expected billing exposure and timing for payment and the customer’s established credit rating. The
Company performs its credit review of new customers at inception of the customer relationship and for existing customers when the customer transacts after a
defined period of dormancy. The Company also considers contract terms and conditions, country risk and business strategy in the evaluation.
The Company monitors ongoing credit exposure through an active review of customer balances against contract terms and due dates. The Company may
employ collection agencies and legal counsel to pursue recovery of defaulted receivables. The allowance for credit losses reflects the estimate of the amount of
receivables that the Company will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and
supportable forecasts that affect collectability. Judgment and uncertainties are present in determining the allowance for credit losses due to the sensitivity of
changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, the Company may be required to
increase or decrease its allowances.
Changes in estimates are reflected in the period they become known. If circumstances were to change that required a change in estimates, such as a
change in financial condition of customers or unanticipated changes in the economy, additional allowances may be required. There were no changes in the
Company's estimates or underlying assumptions relating to the determination of the allowance for credit losses for the year ended December 31, 2023 that would
have materially impacted the allowance for credit losses. Refer to Note 1 to the Consolidated Financial Statements included in Item 8 of Part II of this annual report
for a summary of activity in the allowance for credit losses.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are
determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the
enactment date.
The Company records deferred tax assets to the extent it believes that it is more likely than not that these assets will be realized. In making such
determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable
income, tax planning strategies and recent results of operations. Valuation allowances are recorded to reduce the deferred tax assets to an amount that will more
likely than not be realized.
The Company assesses the likelihood that each of the deferred tax assets will be realized. To the extent management believes realization of any deferred
tax assets is not likely, the Company establishes a valuation allowance. When a valuation allowance is established or there is an increase in an allowance in a
reporting period, tax expense is generally recorded in the Company’s consolidated statement of operations. Conversely, to the extent circumstances indicate that a
valuation allowance is no longer necessary, that portion of the valuation allowance is reversed, which generally reduces the Company’s income tax expense.
Deferred tax liabilities are recognized for the income taxes on the undistributed earnings of wholly-owned foreign subsidiaries unless such earnings are
indefinitely reinvested, or will only be repatriated when possible to do so at minimal additional tax cost. Income tax relating to items recognized directly in equity is
recognized in equity and not in profit (loss) for the year.
In accordance with applicable authoritative guidance, the Company accounts for uncertain income tax positions using a benefit recognition model with a
two-step approach; a more-likely-than-not recognition criterion; and a measurement approach that measures the position as the largest amount of tax benefit that is
greater than 50% likely of being realized upon ultimate settlement. If it is not more-likely-than-not that the benefit of the tax position will be sustained on its technical
merits, no benefit is recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the
recognition threshold. The Company classifies interest on tax deficiencies and income tax penalties within income tax expense. The evaluation of uncertain tax
positions involves judgment in the application of GAAP and complex tax laws.
None of the critical accounting estimates or assumptions noted above have changed materially since the prior year.
59
ITEM 7A. Quantitative and Qualitative Disclosures about
Market Risk
We are exposed to certain market risks from changes in foreign currency exchange rates and interest rates. Changes in these factors cause fluctuations in
our earnings and cash flows. We evaluate and manage exposure to these market risks as follows:
Interest Rate Risk
We are primarily exposed to interest rate risk through our ABL Facility, which bears interest at variable rates. We had $2.0 billion in outstanding principal
under the ABL Facility at December 31, 2023. To manage interest rate risk, we maintain interest rate swap agreements that effectively convert $750.0 million in
aggregate notional amount of variable-rate debt under our ABL Facility into fixed rate debt. The swap agreements provide for us to pay a weighted average effective
fixed interest rate of 3.44% per annum and receive a variable interest rate equal to one-month term SOFR, with maturity dates of June 30, 2027. After taking into
account the impact of the swaps, an increase in interest rates by 100 basis points on our ABL Facility would have increased annual interest expense by
approximately $12.1 million based on outstanding borrowings at December 31, 2023.
In January 2024, we entered into two interest rate swap agreements with financial counterparties relating to $500.0 million in aggregate notional amount of
variable-rate debt under our ABL Facility. Under the terms of the agreements, we receive a floating rate equal to one-month term SOFR and will make payments
based on a weighted average fixed interest rate of 3.70% on the notional amount. The swap agreements were designated and qualified as hedges of our exposure
to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility. The swap agreements terminate on June 30, 2027.
Foreign Currency Risk
In 2023, we generated approximately 94% of our consolidated net revenues in the US, and the reporting currency for our consolidated financial statements
is the US dollar. However, we are exposed to currency risk through our operations in Canada and Mexico. For the operations outside the US, we bill customers
primarily in their local currency, which is subject to foreign currency rate changes. As our net revenues and expenses generated outside of the US increase, our
results of operations could be adversely impacted by changes in foreign currency exchange rates. Since we recognize foreign revenues in local foreign currencies, if
the US dollar strengthens, it could have a negative impact on our foreign revenues upon translation of those results into the US dollar for consolidation into our
financial statements.
In addition, we are exposed to gains and losses resulting from fluctuations in foreign currency exchange rates on transactions generated by our foreign
subsidiaries in currencies other than their local currencies. These gains and losses are primarily driven by intercompany transactions and rental equipment
purchases denominated in currencies other than the functional currency of the purchasing entity. 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.
Seasonality
Although demand from certain of our customers is seasonal, our operations as a whole are not impacted in any material respect by seasonality.
Impact of Inflation
Similar to many other organizations, we face inflationary pressures across most of our input costs such as building materials, labor, transportation and fuel.
Inflation has contributed to increased capital costs for both new units and refurbishment of our existing units. However, given our scale and our strong rate
performance, we believe we have been able to navigate the inflationary environment well and have consistently driven margin improvements during this period of
rising costs. Therefore, we do not believe that inflation has had a material effect on our results of operations.
60
Item 8. Financial Statements and Supplementary
Data
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of WillScot Mobile Mini Holdings Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of WillScot Mobile Mini Holdings Corp. (the Company) as of December 31, 2023 and 2022, the
related consolidated statements of operations, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December
31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal
control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 20, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements
based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be
communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
61
Description of the
Matter
Allowance for Credit Losses
As described in Note 1 to the consolidated financial statements, the Company maintains an allowance for credit losses on trade
receivables. At December 31, 2023 the allowance for credit losses was $81.7 million, or 15.3% of gross trade receivables. The allowance
for credit losses is estimated based on historical write-off experience and, as applicable, current conditions and reasonable and
supportable forecasts that affect collectability.
Auditing the Company's estimation of the allowance for credit losses was judgmental due to the subjectivity in assessing the
appropriateness of the assumptions made by management. The assumptions include an expectation that the Company’s collection of
receivables will be consistent with historical write-off experience and the consideration of current or forecasted conditions that may affect
the Company’s customers’ ability to pay outstanding trade receivables.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company's controls over its
estimation of the allowance for credit losses, including internal controls over the Company’s process to develop the assumptions used to
estimate credit losses.
To test the allowance for credit losses, we performed audit procedures that included, among others, testing management's process for
developing the allowance for credit losses, testing the completeness, accuracy, and relevance of the data used; and evaluating
significant assumptions used by management, including assessing the Company’s expectation that the collection of receivables will be
consistent with historical write-off experience. For example, we compared the days sales outstanding, customer concentration, and days
past due as of December 31, 2023, to the Company’s historical experience to evaluate the relevancy of the historical data utilized to
estimate the allowance for credit losses. We also performed sensitivity analyses of the significant assumptions to evaluate the change in
the allowance that would result from changes in assumptions.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2017
Baltimore, Maryland
February 20, 2024
62
WillScot Mobile Mini Holdings Corp.
Consolidated Balance Sheets
(in thousands, except share data)
Assets
Cash and cash equivalents
Trade receivables, net of allowance for credit losses at December 31, 2023 and December 31, 2022 of $81,656
and $57,048, respectively
Inventories
Prepaid expenses and other current assets
Assets held for sale – current
Total current assets
Rental equipment, net
Property, plant and equipment, net
Operating lease assets
Goodwill
Intangible assets, net
Other non-current assets
Assets held for sale – non-current
Total long-term assets
Total assets
Liabilities and equity
Accounts payable
Accrued expenses
Accrued employee benefits
Deferred revenue and customer deposits
Operating lease liabilities - current
Current portion of long-term debt
Liabilities held for sale – current
Total current liabilities
Long-term debt
Deferred tax liabilities
Operating lease liabilities – non-current
Other non-current liabilities
Liabilities held for sale – non-current
Long-term liabilities
Total liabilities
Preferred Stock: $0.0001 par, 1,000,000 shares authorized and zero shares issued and outstanding at December
31, 2023 and 2022
Common Stock: $0.0001 par, 500,000,000 shares authorized and 189,967,135 and 207,951,682 shares issued
and outstanding at December 31, 2023 and December 31, 2022, respectively
Additional paid-in-capital
Accumulated other comprehensive loss
Accumulated deficit
Total shareholders' equity
Total liabilities and shareholders' equity
December 31,
2023
2022
$
10,958 $
7,390
451,130
47,406
57,492
2,110
569,096
3,381,315
340,887
245,647
1,176,635
419,709
4,626
—
5,568,819
6,137,915 $
86,123 $
129,621
45,564
224,518
57,408
18,786
—
562,020
3,538,516
554,268
187,837
34,024
—
4,314,645
4,876,665
409,766
41,030
31,635
31,220
521,041
3,077,287
304,659
219,405
1,011,429
419,125
6,683
268,022
5,306,610
5,827,651
109,349
109,542
56,340
203,793
50,499
13,324
19,095
561,942
3,063,042
401,453
169,618
18,537
47,759
3,700,409
4,262,351
—
—
20
2,089,091
(52,768)
(775,093)
1,261,250
6,137,915 $
21
2,886,951
(70,122)
(1,251,550)
1,565,300
5,827,651
$
$
$
See the accompanying notes which are an integral part of these consolidated financial statements.
63
WillScot Mobile Mini Holdings Corp.
Consolidated Statements of Operations
(in thousands, except share and per share data)
2023
Years Ended December 31,
2022
2021
Revenues:
Leasing and services revenue:
Leasing
Delivery and installation
Sales revenue:
New units
Rental units
Total revenues
Costs:
Costs of leasing and services:
Leasing
Delivery and installation
Costs of sales:
New units
Rental units
Depreciation of rental equipment
Gross profit
Expenses:
Selling, general and administrative
Other depreciation and amortization
Currency losses, net
Other (income) expense, net
Operating income
Interest expense
Fair value loss on common stock warrant liabilities
Loss on extinguishment of debt
Income from continuing operations before income tax
Income tax expense from continuing operations
Income from continuing operations
Discontinued operations:
Income from discontinued operations before income tax
Gain on sale of discontinued operations
Income tax expense from discontinued operations
Income from discontinued operations
$
1,833,935 $
437,179
1,621,690 $
429,152
48,129
45,524
2,364,767
398,467
317,117
26,439
23,141
265,733
1,333,870
596,090
72,921
6,754
(15,354)
673,459
205,040
—
—
468,419
126,575
341,844
4,003
176,078
45,468
134,613
40,338
51,443
2,142,623
376,868
322,636
24,011
26,907
256,719
1,135,482
567,407
62,380
886
(6,673)
511,482
146,278
—
—
365,204
88,863
276,341
63,468
35,456
35,725
63,199
1,252,490
321,129
46,993
52,368
1,672,980
282,576
267,533
31,348
28,030
218,790
844,703
480,407
61,777
427
1,715
300,377
116,358
26,597
5,999
151,423
36,528
114,895
58,267
—
13,018
45,249
Net income
$
476,457 $
339,540 $
160,144
Earnings per share from continuing operations attributable to WillScot Mobile Mini common shareholders:
Basic
Diluted
Earnings per share from discontinued operations attributable to WillScot Mobile Mini common shareholders:
Basic
Diluted
Earnings per share attributable to WillScot Mobile Mini common shareholders:
Basic
Diluted
Weighted average shares:
Basic
Diluted
$
$
$
$
$
$
1.72 $
1.69 $
0.68 $
0.67 $
2.40 $
2.36 $
198,554,885
201,849,836
1.27 $
1.25 $
0.30 $
0.28 $
1.57 $
1.53 $
0.51
0.49
0.20
0.20
0.71
0.69
216,808,577
221,399,162
226,518,931
232,793,902
See the accompanying notes which are an integral part of these consolidated financial statements.
64
WillScot Mobile Mini Holdings Corp.
Consolidated Statements of Comprehensive Income
(in thousands)
Net income
Other comprehensive income (loss):
Foreign currency translation adjustment, net of income tax benefit of $—, $— and
$60 for the years ended December 31, 2023, 2022 and 2021, respectively
Net gain on derivatives, net of income tax expense of $1,088, $1,171 and $2,661
for the years ended December 31, 2023, 2022 and 2021, respectively
Total other comprehensive income (loss)
Total comprehensive income
$
$
2023
Years Ended December 31,
2022
2021
476,457 $
339,540 $
160,144
14,091
(44,548)
3,263
17,354
493,811 $
3,497
(41,051)
298,489 $
(880)
9,016
8,136
168,280
See the accompanying notes which are an integral part of these consolidated financial statements.
65
WillScot Mobile Mini Holdings Corp.
Consolidated Statements of Changes in Equity
(in thousands)
Common Stock
Shares
Amount
Additional
Paid-in Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
(1,751,234) $
160,144
—
Total
Shareholders'
Equity
2,063,873
160,144
8,136
Balance at December 31, 2020
Net income
Other comprehensive income
Stock-based compensation and issuance of Common
Stock from vesting
Repurchase and cancellation of options and warrants
Issuance of Common Stock from the exercise of options
and warrants
Withholding taxes on net share settlement of stock-based
compensation and option exercises
Balance at December 31, 2021
Net income
Other comprehensive loss
Stock-based compensation and issuance of Common
Stock from vesting
Repurchase and cancellation of Common Stock and
warrants
Issuance of Common Stock from the exercise of options
and warrants
Withholding taxes on net share settlement of stock-based
compensation and option exercises
Balance at December 31, 2022
Net income
Other comprehensive income
Stock-based compensation and issuance of Common
Stock from vesting
Repurchase and cancellation of Common Stock
Issuance of Common Stock from the exercise of options
Withholding taxes on net share settlement of stock-based
compensation and option exercises
Balance at December 31, 2023
229,038 $
—
—
23 $
—
—
3,852,291 $
—
—
485
(11,851)
6,268
—
223,940
—
—
594
(19,836)
3,254
—
207,952
—
—
514
(18,534)
35
—
(1)
—
—
22
—
—
—
(2)
1
—
21
—
—
—
(1)
—
26,184
(340,375)
85,979
(7,177)
3,616,902
—
—
29,613
(756,906)
11,230
(13,888)
2,886,951
—
—
34,486
(818,673)
498
—
189,967 $
—
20 $
(14,171)
2,089,091 $
See the accompanying notes which are an integral part of these consolidated financial statements.
66
(37,207) $
—
8,136
—
—
—
—
—
—
—
(29,071)
—
(41,051)
—
(1,591,090)
339,540
—
—
—
—
—
—
—
—
(70,122)
—
17,354
—
(1,251,550)
476,457
—
—
—
—
—
—
—
—
—
(52,768) $
(775,093) $
26,184
(340,376)
85,979
(7,177)
1,996,763
339,540
(41,051)
29,613
(756,908)
11,231
(13,888)
1,565,300
476,457
17,354
34,486
(818,674)
498
(14,171)
1,261,250
WillScot Mobile Mini Holdings Corp.
Consolidated Statements of Cash Flows
(in thousands)
Operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Provision for credit losses
Gain on sale of discontinued operations
Gain on sale of rental equipment and other property, plant and equipment
Amortization of debt discounts and debt issuance costs
Fair value loss on common stock warrant liabilities
Loss on extinguishment of debt
Stock-based compensation expense
Deferred income tax expense
Loss on settlement of foreign currency forward contract
Unrealized currency (gains) losses, net
Other
Changes in operating assets and liabilities, net of effect of businesses acquired:
Trade receivables
Inventories
Prepaid expenses and other assets
Operating lease assets and liabilities
Accounts payable and other accrued expenses
Deferred revenue and customer deposits
Net cash provided by operating activities
Investing activities:
Proceeds from sale of discontinued operations
Acquisitions, net of cash acquired
Proceeds from sale of rental equipment
Purchase of rental equipment and refurbishments
Payment for settlement of foreign currency forward contract
Proceeds from the sale of property, plant and equipment
Purchase of property, plant and equipment
Net cash used in investing activities
Financing activities:
Repurchase and cancellation of Common Stock and warrants
Receipts from issuance of Common Stock from the exercise of options
Taxes paid on employee stock awards
Receipts from borrowings
Repayment of borrowings
Payment of financing costs
67
2023
Years Ended December 31,
2022
2021
$
476,457 $
339,540 $
160,144
338,654
49,650
(176,078)
(32,724)
11,211
—
—
34,486
141,641
7,715
(1,374)
3,413
(76,357)
(3,276)
(18,310)
1,045
(14,836)
19,923
761,240
403,992
(561,629)
51,290
(226,976)
(7,715)
13,272
(22,237)
(350,003)
(818,182)
498
(14,171)
1,911,230
(1,475,219)
(6,457)
343,507
34,835
(35,456)
(31,196)
12,064
—
—
29,613
100,849
—
753
4,081
(94,463)
(12,345)
149
856
9,443
42,428
744,658
325,611
(220,620)
70,703
(443,138)
—
1,775
(43,664)
(309,333)
(751,795)
11,230
(13,888)
964,308
(588,808)
(8,187)
318,202
38,191
—
(26,175)
14,033
26,597
5,999
26,184
36,563
—
295
—
(105,053)
(9,083)
3,324
473
27,525
22,683
539,902
—
(147,172)
55,210
(278,498)
—
16,911
(30,498)
(384,047)
(363,586)
7,484
(7,177)
728,677
(512,181)
—
Principal payments on finance lease obligations
Payment of debt extinguishment premium costs
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
Supplemental cash flow information:
Interest paid, net
Income taxes paid, net
Capital expenditures accrued or payable
Reconciliation of cash and cash equivalents to the consolidated balance sheet:
Cash and cash equivalents of continuing operations
Cash and cash equivalents included in assets held for sale
Total cash and cash equivalents shown in the consolidated statement of cash flows
(16,634)
—
(418,935)
882
(6,816)
17,774
10,958 $
184,863 $
32,949 $
19,557 $
10,958 $
—
10,958 $
(42,228)
—
(429,368)
(882)
5,075
12,699
17,774 $
130,463 $
25,092 $
21,052 $
7,390 $
10,384
17,774 $
(17,399)
(3,705)
(167,887)
(206)
(12,238)
24,937
12,699
103,795
9,855
27,667
6,393
6,306
12,699
$
$
$
$
$
$
See the accompanying notes which are an integral part of these consolidated financial statements.
68
WillScot Mobile Mini Holdings Corp.
Notes to the Consolidated Financial Statements
NOTE 1 - Summary of Significant Accounting Policies
Organization and Nature of Operations
WillScot Mobile Mini Holdings Corp. (“WillScot Mobile Mini” and, together with its subsidiaries, the “Company”) is a leading business services provider
specializing in innovative and flexible turnkey temporary space solutions in the United States (“US”), Canada and Mexico. The Company leases, sells, delivers and
installs modular space solutions and portable storage products through an integrated network of branch locations that spans North America.
On July 1, 2020, a wholly-owned subsidiary of WillScot Corporation, a Delaware corporation, merged with and into Mobile Mini, Inc. (the “Merger”). At the
effective time of the Merger, Mobile Mini, Inc. ("Mobile Mini") continued its existence as the surviving corporation in the Merger and a wholly-owned subsidiary of
WillScot Corporation (“WillScot”). Immediately following the Merger, WillScot changed its name to “WillScot Mobile Mini Holdings Corp.”
On September 30, 2022, the Company completed the sale of its former Tank and Pump Solutions ("Tank and Pump") segment. On January 31, 2023, the
Company completed the sale of its former United Kingdom Storage Solutions ("UK Storage Solutions") segment. The consolidated financial statements present the
historical financial results of the former Tank and Pump segment and the UK Storage Solutions segment as income from discontinued operations for all periods
presented and the carrying values of the UK Storage Solutions segment assets and liabilities within assets and liabilities held for sale for reporting periods prior to
the segments' disposals. See Note 3 for further discussion.
Basis of Presentation and Principles of Consolidation
The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the US (“GAAP”). The consolidated
financial statements comprise the financial statements of WillScot Mobile Mini and its subsidiaries that it controls due to ownership of a majority voting interest.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date
when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as WillScot Mobile Mini. All intercompany
balances and transactions are eliminated.
Reclassifications
Certain reclassifications have been made to prior year financial statements to conform to the current year presentation.
Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts
reported in these consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents.
Trade Receivables and Allowance for Credit Losses
The Company is exposed to credit losses from trade receivables. The Company assesses each customer’s ability to pay for the products it leases or sells
by conducting a credit review. The credit review considers expected billing exposure and timing for payment and the customer’s established credit rating. The
Company performs its credit review of new customers at inception of the customer relationship and for existing customers when the customer transacts after a
defined period of dormancy. The Company also considers contract terms and conditions, country risk and business strategy in the evaluation.
The Company monitors ongoing credit exposure through an active review of customer balances against contract terms and due dates. The Company may
employ collection agencies and legal counsel to pursue recovery of defaulted receivables. The allowance for credit losses reflects the estimate of the amount of
receivables that the Company will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and
supportable forecasts that affect collectability. This estimate is sensitive to changing circumstances, including changes in the economy or in the particular
circumstances of individual customers. Accordingly, the Company may be required to increase or decrease its allowances.
Specifically identifiable lease revenue receivables and sales receivables not deemed probable of collection are recorded as a reduction of revenue. The
remaining provision for credit losses is recorded as selling, general and administrative expenses.
69
Activity in the allowance for credit losses for the years ended December 31 was as follows:
(in thousands)
Balance at beginning of period
Provision for credit losses, net of recoveries
Write-offs
Foreign currency translation and other
(a)
Balance at end of period
2023
2022
2021
$
$
57,048 $
49,650
(25,182)
140
81,656 $
45,773 $
34,881
(23,705)
99
57,048 $
28,105
37,469
(19,777)
(24)
45,773
(a) For the years ended December 31, 2023, 2022 and 2021, the provision for credit losses included $25.2 million, $23.7 million and $19.8 million, respectively, recorded as a reduction
to revenue for the provision of specific receivables whose collection was not considered probable.
The Company’s trade accounts receivable subject the Company to potential concentrations of credit risk. The Company performs on-going credit
evaluations of its customers. Receivables related to sales are generally secured by the product sold to the customer. The Company generally has the right to
repossess its rental units in the event of non-payment of receivables relating to the Company’s leasing operations.
Inventories
Inventories consist of raw materials, supplies, and finished units for sale. Inventories are measured at the lower of cost or net realizable value based on the
weighted-average cost. The cost includes expenditures incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing
them to their existing location and condition.
Rental Equipment
Rental equipment is comprised of modular space and portable storage units held for rent or on rent to customers and value-added products and services
(“VAPS”) which are in use or available to be used by customers. Rental equipment is measured at cost less accumulated depreciation and impairment losses. Cost
includes expenditures that are directly attributable to the acquisition of the asset. Costs of improvements and conversions of rental equipment are capitalized when
such costs extend the useful life of the equipment or increase the rental value of the unit. Costs incurred for equipment to meet a particular customer specification
are either capitalized and depreciated over the lease term taking into consideration the residual value of the asset or charged to the customer at the beginning of the
lease and expensed as incurred. Maintenance and repair costs are expensed as incurred.
Depreciation is computed using the straight-line method over estimated useful lives, as follows:
Modular space units
Portable storage units
VAPS and other related rental equipment
Property, Plant and Equipment
Estimated Useful Life
10 - 30 years
7 - 30 years
1 - 10 years
Residual Value
20 - 55%
20 - 55%
0%
Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses.
The Company capitalizes external costs and directly attributable internal costs to acquire or create internal use software incurred subsequent to the
completion of the preliminary project stage. Costs associated with post-implementation activities are expensed as incurred. The Company evaluates implementation
costs incurred in a cloud computing arrangement that is a service contract as described in Cloud Computing Arrangements below.
Land is not depreciated. Leasehold improvements are amortized over the lease term. Assets leased under finance leases are depreciated over the shorter
of the lease term or their useful life, unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Maintenance and repair
costs are expensed as incurred.
Depreciation is computed using the straight-line method over estimated useful lives as follows:
Buildings and leasehold improvements
Vehicles, machinery, and equipment
Furniture and fixtures
Software
Impairment of Long-Lived Assets
Estimated Useful Life
10 - 40 years
3 - 30 years
3 - 10 years
3 - 10 years
When circumstances indicate the carrying amount of long-lived assets in a held-for-use asset group may not be recoverable, the Company evaluates the
assets for potential impairment using internal projections of undiscounted cash flows
70
resulting from the use and eventual disposal of the assets. Events or changes in circumstances that may necessitate a recoverability evaluation include, but are not
limited to, adverse changes in the regulatory environment or an expectation it is more likely than not that the asset will be disposed of before the end of its
previously estimated useful life. If the carrying amount of the assets exceeds the undiscounted cash flows, an impairment expense is recognized for the amount by
which the carrying amount of the asset group exceeds its fair value (subject to the carrying amount not being reduced below fair value for any individual long-lived
asset that is determinable without undue cost and effort).
Consistent with the provisions of Leases (Topic 842) ("ASC 842"), the Company assesses whether any operating lease asset impairment exists in
accordance with the measurement guidance in Accounting Standard Codification ("ASC") 360, Property Plant and Equipment.
Cloud Computing Arrangements
In accordance with ASU 2018-15, Goodwill and Other – Internal-Use Software (Subtopic 350-40) (“ASC 350-40"), the Company evaluates implementation
costs incurred in a cloud computing arrangement that is a service contract under the internal-use software framework. Costs related to preliminary project activities
and post implementation activities are expensed as incurred. Costs incurred in the development stage are generally capitalized as other assets. Amortization
expense is calculated on a straight-line basis over the contractual term of the cloud computing arrangement and recorded as selling, general and administrative
expense.
Purchase Accounting
The Company accounts for acquisitions of businesses under the acquisition method. Under the acquisition method of accounting, the Company records
assets acquired and liabilities assumed at their respective estimated fair values on the date of acquisition. Goodwill is measured as the excess of the fair value of
the consideration transferred over the fair value of the identifiable net assets and is assigned to the Company's reporting units that are expected to benefit from the
acquisition. When appropriate, our estimates of the fair values of assets and liabilities acquired include assistance from independent third-party valuation firms.
Valuations are finalized as soon as practicable, but not later than one year from the acquisition date. Any subsequent changes to purchase price allocations result in
a corresponding adjustment to goodwill. Transaction costs are expensed in the acquisition of a business.
Long-lived assets (principally rental equipment), goodwill and other intangible assets generally represent the largest components of our acquisitions. Rental
equipment is valued utilizing a market approach or a replacement cost approach. Intangible assets are recognized at their estimated fair values as of the date of
acquisition and generally consist of customer relationships and trade names. Determination of the estimated fair value of intangible assets requires judgment. The
estimated fair value of customer relationships is determined based on estimates and judgments regarding discounted future after-tax earnings and cash flows
arising from lease renewals and new lease arrangements expected from customer relationships. The fair value of trade name intangible assets is determined
utilizing the relief from royalty method. Under this form of the income approach, a royalty rate based on observed market royalties is applied to projected revenue
supporting the trade name and discounted to present value.
Acquisitions of assets and liabilities that do not meet the definition of a business are accounted for as asset acquisitions. An asset acquisition is accounted
for by allocating the cost of the acquisition to the individual assets acquired and liabilities assumed on a relative fair value basis. Goodwill is not recognized in
an asset acquisition. Any consideration in excess of net assets acquired is allocated to qualifying acquired assets on a relative fair value basis. The Company
measures the fair value of assets acquired utilizing observable market transaction data for comparable assets or recent purchase prices. Transaction costs are
considered a component of the cost of an asset acquisition.
Evaluation of Goodwill Impairment
The Company performs its annual impairment test of goodwill at the reporting unit level as of October 1, as well as during any reporting period in which
events or changes in circumstances occur that, in management’s judgment, may constitute triggering events under ASC 350-20, Intangibles – Goodwill and Other,
Testing Goodwill for Impairment. The Company performs its assessment of goodwill utilizing either a qualitative or quantitative impairment test. The qualitative
impairment test assesses company-specific, industry, market and general economic factors to determine whether it is more likely than not that the fair value of the
reporting unit is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying
amount, or elects not to use the qualitative impairment test, a quantitative impairment test is performed. The quantitative impairment test involves a comparison of
the estimated fair value of a reporting unit to its carrying amount.
Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and
assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, value of net operating
losses, future economic and market conditions and determination of appropriate market comparables. Management bases fair value estimates on assumptions it
believes to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from these estimates.
If the carrying amount of the reporting unit exceeds the calculated fair value of the reporting unit, an impairment charge would be recognized for the excess
of carrying value over fair value, not to exceed the amount of goodwill allocated to that reporting unit.
71
Intangible Assets Other than Goodwill
Intangible assets that are acquired by the Company and determined to have an indefinite useful life are not amortized but are tested for impairment at least
annually. The Company’s indefinite-lived intangible assets consist of the Williams Scotsman and Mobile Mini trade names. The Company performs its assessment of
indefinite-lived intangible assets utilizing either a qualitative or quantitative impairment test. When utilizing a quantitative impairment test, the Company calculates
fair value using a relief-from-royalty method. This method is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise
have to pay royalties or license fees on revenues earned through the use of the asset. If the carrying amount of the indefinite-lived intangible asset exceeds its fair
value, an impairment charge would be recorded to the extent the recorded indefinite-lived intangible asset exceeds the fair value.
Other intangible assets that have finite useful lives are measured at cost less accumulated amortization and impairment losses, if any. Amortization is
recognized in profit or loss over the estimated useful lives of the intangible asset.
Retirement Benefit Obligation
The Company provides benefits to certain of its employees under defined contribution benefit plans. The Company’s contributions to these plans are
generally based on a percentage of employee compensation or employee contributions. These plans are funded on a current basis. For its US and Canada
employees, the Company sponsors defined contribution benefit plans that have discretionary matching contribution and profit-sharing features. For the years ended
December 31, 2023, 2022 and 2021, the Company made matching contributions of $14.1 million, $13.8 million and $10.9 million to these plans, respectively.
Stock-Based Compensation
Prior to the Merger, stock awards were granted under the WillScot Corporation 2017 Incentive Award Plan (the "2017 Incentive Plan"), which included
Restricted Stock Awards ("RSAs") and Restricted Stock Units. On June 24, 2020, WillScot's stockholders approved the WillScot Mobile Mini 2020 Incentive Award
Plan ("2020 Incentive Plan") to take effect pending completion of the Merger and, as a result, all future incentive awards are granted under the 2020 Incentive Plan.
The 2020 Incentive Plan is administered by the Compensation Committee. Under the 2020 Incentive Plan, the Compensation Committee may grant an aggregate of
6,488,988 shares of Common Stock in the form of non-qualified stock options, incentive stock options, stock appreciation rights, RSAs, RSUs, performance
compensation awards and stock bonus awards. Stock-based payments, including the grant of stock options, RSAs and RSUs, are subject to service-based vesting
requirements, and expense is recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur.
Stock-based compensation expense includes grants of stock options, time-based RSUs ("Time-Based RSUs") and performance-based RSUs
("Performance-Based RSUs", together with Time-Based RSUs, the "RSUs"). RSUs are recognized in the financial statements based on their fair value. In addition,
stock-based payments to non-executive directors include grants of RSAs. Time-Based RSUs and RSAs are valued based on the intrinsic value of the difference
between the exercise price, if any, of the award and the fair market value of WillScot Mobile Mini's Common Stock on the grant date. Performance-Based RSUs are
valued based on a Monte Carlo simulation model to reflect the impact of the Performance-Based RSUs market condition. The probability of satisfying a market
condition is considered in the estimation of the grant-date fair value for Performance-Based RSUs and the compensation cost is not reversed if the market condition
is not achieved, provided the requisite service has been provided.
RSAs cliff vest in a one year period. Time-Based RSUs vest ratably over a period of four years. Certain Performance-Based RSUs cliff vest based on
achievement of the relative total stockholder return ("TSR") of the Company's Common Stock as compared to the TSR of the constituents in an Index at the grant
date over the performance period of three years. For certain 2023, 2022, and 2021 grants, the TSR of the Company's Common Stock is compared to the TSR of the
constituents in the S&P 400 index. The target number of RSUs may be adjusted from 0% to 200% based on the TSR attainment levels defined by the
Compensation Committee. The 100% target payout is tied to performance at the 50% percentile, with a payout curve ranging from 0% (for performance less than
the 25% percentile) to 200% (for performance at or above the 85% percentile). For grants in 2020 and prior, the TSR of the Company's Common Stock is compared
to the TSR of constituents in the Russell 3000 index. The target number of RSUs may be adjusted from 0% to 150% based on the TSR attainment levels defined by
the Compensation Committee. The 100% target payout is tied to performance at the 50% percentile, with a payout curve ranging from 0% (for performance less
than the 25% percentile) to 150% (for performance at or above the 75% percentile). Vesting is also subject to continued service requirements through the vesting
date.
For 555,790 Performance-Based RSUs granted in 2021, the awards cliff vest based on achievement of specified share prices of the Company's Common
Stock at annual measurement dates over performance periods of 4.5 years to 4.8 years. The target number of RSUs may be adjusted from 0 to 1,333,334 based on
the stock price attainment levels defined by the Company's Compensation Committee. The 555,790 RSU target payout is tied to a stock price of $47.50, with a
payout ranging from 0 RSUs (for a stock price less than $42.50) to 1,333,334 RSUs (for a stock price of $60.00 or greater).
Stock options vest in tranches over a period of four years and expire ten years from the grant date. The fair value of each stock option award on the grant
date is estimated using the Black-Scholes option-pricing model with the following assumptions: expected dividend yield, expected stock price volatility, weighted-
average risk-free interest rate and weighted-average expected term of the options. The volatility assumption used in the Black-Scholes option-pricing model was
based on a blend of peer group volatility and Company trading history as the Company did not have a sufficient trading history as a
72
stand-alone public company to rely exclusively on its own trading history. Future calculations may use the Company trading history. Additionally, due to an
insufficient history with respect to stock option activity and post-vesting cancellations, the expected term assumption was based on the simplified method under
GAAP, which is based on the vesting period and contractual term for each tranche of awards. The mid-point between the weighted-average vesting term and the
expiration date is used as the expected term under this method. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill
yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. WillScot Mobile Mini has never declared or paid a cash
dividend on common shares.
Foreign Currency Translation and Transactions
The Company’s reporting currency is the US Dollar (“USD”). Exchange rate adjustments resulting from foreign currency transactions are recognized in
profit or loss, whereas effects resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive loss, which is
a component of shareholders’ equity.
The assets and liabilities of subsidiaries whose functional currency is different from the USD are translated into USD at exchange rates at the reporting
date and income and expenses are translated using average exchange rates for the respective period.
Exchange rate adjustments resulting from transactions in foreign currencies (currencies other than the Company entities’ functional currencies) are
remeasured to the respective functional currencies using exchange rates at the dates of the transactions and are recognized in currency (gains) losses on the
consolidated statements of operations.
Foreign exchange gains and losses arising from a receivable or payable to a consolidated Company entity, the settlement of which is neither planned nor
anticipated in the foreseeable future, are considered to form part of a net investment in the Company entity and are included within accumulated other
comprehensive loss.
Derivative Instruments and Hedging Activities
The Company utilizes derivative financial instruments to manage its exposure to fluctuations in interest rates on variable rate debt and currency exchange
rates. The Company does not use derivatives for trading or speculative purposes.
The Company records derivatives on the balance sheet at fair value within prepaid expenses and other current assets and other non-current assets (if in an
unrealized gain position) or within accrued liabilities and other non-current liabilities (if in an unrealized loss position). If a derivative is designated as a cash flow
hedge and meets the highly effective threshold, the changes in the fair value of derivatives are recorded in accumulated other comprehensive loss. Amounts
reported in accumulated other comprehensive loss related to the cash flow hedges are reclassified to earnings when the hedged item impacts earnings. For any
derivative instruments not designated as hedging instruments, changes in fair value would be recognized in earnings in the period that the change occurs. The
Company assesses, both at the inception of the hedge and on an ongoing quarterly basis, whether the derivatives designated as cash flow hedges are highly
effective in offsetting the changes in cash flows of the hedged items. In the consolidated statements of cash flows, cash inflows and outflows related to derivative
instruments are presented based on the underlying nature of the hedged items.
The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to
perform under the agreements. To mitigate this risk, the Company enters into derivative financial instruments only with counterparties with high credit ratings and
with major financial institutions. The Company does not anticipate that any of the counterparties will fail to meet their obligations.
Revenue Recognition
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each
distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.
Leasing and Services Revenue
The majority of revenue is generated by rental income subject to the guidance in ASC 842. The remaining revenue is generated by performance
obligations in contracts with customers for services or sale of units subject to the guidance in Accounting Standards Update No. 2014-09, Revenue from Contracts
with Customers (Topic 606) ("ASC 606").
Leasing Revenue
Income from operating leases is recognized on a straight-line basis over the lease term. The Company's lease arrangements can include multiple lease
and non-lease components. Examples of lease components include, but are not limited to, the lease of modular space and portable storage units and VAPS.
Examples of non-lease components include, but are not limited to, the delivery, installation, maintenance, and removal services commonly provided in a bundled
transaction with the lease components. Arrangement consideration is allocated between lease deliverables and non-lease components based on the relative
estimated selling (leasing) price of each deliverable. Estimated selling (leasing) price of the lease deliverables is based upon the estimated stand-alone selling price
of the related performance obligations using an adjusted market approach.
When leases and services are billed in advance, recognition of revenue is deferred until services are rendered. If equipment is returned prior to the
contractually obligated period, the excess, if any, between the amount the customer is
73
contractually required to pay over the cumulative amount of revenue recognized to date is recognized as incremental revenue upon return.
Rental equipment is leased primarily under operating leases. Rental contracts with customers within our Modular segment, as defined in Note 18, are
generally based on a 28‑day or monthly rate and billing cycle. Operating lease minimum contractual terms generally range from 1 month to 60 months and our
leases are customarily renewable on a month-to-month basis after their initial term. Operating lease minimum contractual terms averaged approximately 10 months
across this segment's rental fleet for the year ended December 31, 2023. Rental contracts with customers within the Storage segment, as defined in Note 18, are
generally based on a 28-day rate and billing cycle. The rental continues until cancelled by the Company or the customer. The Company records changes in
estimated collectability directly against leasing revenue.
The Company may use third parties to satisfy its performance obligations, including both the provision of VAPS and other services. To determine whether it
is the principal or agent in the arrangement, the Company reviews each third-party relationship on a contract-by-contract basis. The Company is considered an
agent when its role is to arrange for another entity to provide the VAPS and other services to the customer. In these instances, the Company does not control the
rental unit or service before it is provided and the risk of performance is held by the third party. The Company is considered the principal when it controls the VAPS
or other services prior to transferring control to the customer and retains the risk of performance. WillScot Mobile Mini may be a principal in the fulfillment of some
leasing contracts and services elements and an agent for other elements within the same contract. Revenue is recognized on a gross basis when the Company is
the principal in the arrangement and on a net basis when it is the agent.
Services Revenue
The Company generally has three non-lease service-related performance obligations in its contracts with customers:
•
Delivery and installation of the modular or portable storage unit;
• Maintenance and other ad hoc services performed during the lease term; and
•
Removal services that occur at the end of the lease term.
Consideration is allocated to each of these performance obligations within the contract based upon their estimated relative standalone selling prices using
an adjusted market approach. Revenue from these activities is recognized as the services are performed.
Sales Revenue
Sales revenue is generated by the sale of new and rental units. Revenue from the sale of new and rental units is generally recognized at a point in time
upon the transfer of control to the customer, which occurs when the unit is delivered and installed in accordance with the contract. Sales transactions constitute a
single performance obligation.
Other Matters
The Company's non-lease revenues do not include material amounts of variable consideration, other than the variability noted for services arrangements
expected to be performed beyond a twelve-month period.
The Company's payment terms vary by the type and location of its customer and the product or services offered. The time between invoicing and when
payment is due is not significant. While the Company may bill certain customers in advance, its contracts do not contain a significant financing component based on
the short length of time between upfront billings and the performance of contracted services. For certain products, services, or customer types, the Company
requires payment before the products or services are delivered to the customer. At December 31, 2023, current deferred revenue and customer deposits included
deferred revenue of $222.5 million and customer deposits of $2.0 million, respectively. At December 31, 2022, current deferred revenue and customer deposits
included deferred revenue of $195.8 million and customer deposits of $8.0 million, respectively.
Revenue is recognized net of sales tax billed to customers, which is subsequently remitted to governmental authorities.
Leases as Lessee
The Company leases real estate for certain of its branch offices, administrative offices, rental equipment storage properties, vehicles and equipment, and
administrative operations. The Company determines if an arrangement is or contains a lease at inception. Leases are classified as either finance or operating at
inception of the lease, with classification affecting the pattern of expense recognition in the income statement. Short-term leases, defined as leases with an initial
term of 12 months or less, are not recorded on the balance sheet. Lease expense for short-term leases is recognized on a straight-line basis over the lease term.
The Company has leases that contain both lease and non-lease components and has elected, as an accounting policy, to not separate lease components
and non-lease components. Right of use ("ROU") assets and liabilities are recognized at the commencement date based on the present value of lease payments
over the lease term. The lease liability is calculated as the present value of the remaining minimum rental payments for existing leases using either the rate implicit
in the lease or, if none exists, the Company's incremental borrowing rate, as the discount rate. The Company uses its incremental borrowing rate at commencement
date in determining the present value of lease payments for those leases where the implicit rate is not known. The Company's incremental borrowing rate is a
hypothetical rate based on its understanding of what would be the Company's secured credit rating. Variable lease payments are expensed in the period in which
the
74
obligation for those payments is incurred. Variable lease payments include payments for common area maintenance, real estate taxes, management fees and
insurance.
Many of the Company’s real estate lease agreements include one or more options to extend the lease, which are not included in the minimum lease terms
unless the Company is reasonably certain it will exercise the option. Additionally, the Company’s leases do not generally include options to terminate the lease prior
to the end of the lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Advertising and Promotion
Advertising and promotion costs, which are expensed as incurred, were $10.5 million, $8.5 million and $7.6 million for the years ended December 31, 2023,
2022 and 2021, respectively.
Shipping Costs
The Company includes third-party costs to deliver rental equipment to customers in costs of leasing and services and cost of sales.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are
determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the
enactment date.
The Company records deferred tax assets to the extent it believes that it is more likely than not that these assets will be realized. In making such
determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable
income, tax planning strategies and recent results of operations. Valuation allowances are recorded to reduce the deferred tax assets to an amount that will more
likely than not be realized.
The Company assesses the likelihood that each of the deferred tax assets will be realized. To the extent management believes realization of any deferred
tax assets is not likely, the Company establishes a valuation allowance. When a valuation allowance is established or there is an increase in an allowance in a
reporting period, tax expense is generally recorded in the Company’s consolidated statement of operations. Conversely, to the extent circumstances indicate that a
valuation allowance is no longer necessary, that portion of the valuation allowance is reversed, which generally reduces the Company’s income tax expense.
Deferred tax liabilities are recognized for the income taxes on the undistributed earnings of wholly-owned foreign subsidiaries unless such earnings are
indefinitely reinvested, or will only be repatriated when possible to do so at minimal additional tax cost. Income tax relating to items recognized directly in equity is
recognized in equity and not in profit (loss) for the year.
In accordance with applicable authoritative guidance, the Company accounts for uncertain income tax positions using a benefit recognition model with a
two-step approach; a more-likely-than-not recognition criterion; and a measurement approach that measures the position as the largest amount of tax benefit that is
greater than 50% likely of being realized upon ultimate settlement. If it is not more-likely-than-not that the benefit of the tax position will be sustained on its technical
merits, no benefit is recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the
recognition threshold. The Company classifies interest on tax deficiencies and income tax penalties within income tax expense.
The Company accounts for any impacts of the Global Intangible Low-Taxed Income ("GILTI") in the period in which they are incurred.
Fair Value Measurements
The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s
categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The inputs are prioritized into
three levels that may be used to measure fair value. See further discussion of the levels in Note 15.
Warrants
The Company accounted for warrants in accordance with applicable accounting guidance provided in ASC 815-40, Contracts in Entity's Own Equity, as
either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreements. In periods subsequent to issuance, warrants
classified as liabilities were subject to remeasurement at each balance sheet date and transaction date with changes in the estimated fair values of the common
stock warrant liabilities and gains and losses on extinguishment of common stock warrant liabilities reported in the consolidated statements of operations. Effective
November 29, 2022, no warrants were outstanding.
75
Recently Issued and Adopted Accounting Standards
Recently Issued Accounting Standards
ASU 2023-07. Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2023-07 Segment Reporting (Topic 280):
Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 expands the breadth and frequency of segment disclosures, requiring disclosure
of (i) significant segment expenses, (ii) other segment items, (iii) the chief operating decision maker's title and position, (iv) how the chief operating decision maker
uses the reported measures of a segment's profit or loss and (v) interim disclosure of all segment profit, loss and asset disclosures currently required annually. ASU
2023-07 clarifies that a public entity may report one or more measures of segment profit or loss and requires that single reportable segment entities provide all
required segment disclosures. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after
December 15, 2024. Early adoption is permitted.
ASU 2023-09. Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued Accounting Standards Update No. 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures
("ASU 2023-09"). ASU 2023-09 requires entities to disclose more detailed information in their reconciliation of their statutory tax rate to their effective tax rate. Public
business entities (PBEs) are required to provide this incremental detail in a numerical, tabular format, while all other entities will do so through enhanced qualitative
disclosures. The ASU also requires entities to disclose more detailed information about income taxes paid, including by jurisdiction; pretax income (or loss) from
continuing operations; and income tax expense (or benefit). ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is
permitted.
Recently Adopted Accounting Standards
ASU 2021-08. Business Combinations (Topic 815): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers
In October 2021, the FASB issued Accounting Standards Update No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and
Contract Liabilities from Contracts with Customers ("ASU 2021-08"). ASU 2021-08 requires that an acquirer recognize and measure contract assets and liabilities
acquired in a business combination in accordance with FASB Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606"). The
Company adopted ASU 2021-08 on January 1, 2023 on a prospective basis. The adoption of ASU 2021-08 did not have a material impact on the Company's
financial statements or related disclosures.
NOTE 2 - Business Combinations and Acquisitions
Business Combinations
During the year ended December 31, 2023, the Company acquired a national provider of cold storage solutions, which consisted primarily of approximately
2,200 climate-controlled containers and refrigerated storage trailers; a regional modular space manufacturing and leasing business, which consisted primarily of
approximately 1,300 modular leasing units; and a national provider of premium large clearspan structures.
76
The aggregate purchase price paid for these acquisitions and the opening balance sheet were as follows:
(in thousands)
Purchase Price:
Cash used in acquisitions, net of cash acquired of $3,245
Allocated as follows:
Trade receivables
Inventories
Deferred tax assets
Rental equipment
Property, plant, and equipment
Operating lease assets
Intangibles - customer relationships
Other assets
Accounts payable
Deferred revenue
Operating lease liabilities
Other liabilities
Total identifiable net assets
Goodwill
Total net assets acquired
$
$
411,593
8,452 (a)
2,017
931
214,936 (b)
3,376
5,028
26,408 (b)
3,669
(276)
(11,635)
(3,633)
(2,182)
247,091
164,502
411,593
(a) As of the acquisition date, the fair value of accounts receivable was $8.5 million, and the gross contractual amount was $11.5 million. The Company analyzed information available
at the time of acquisition in estimating uncollectible receivables and the fair value of acquired receivables.
(b) The initial fair value assumptions used included preliminary estimates of the replacement cost of rental equipment, discount rates, royalty rates, and customer attrition rates which
have been updated in preparing these valuations and the underlying assets have been adjusted from those previously recorded accordingly. Rental equipment and intangible
assets were increased by approximately $12.9 million and $26.4 million from amounts previously reported, respectively.
Goodwill recognized is attributable to expected operating synergies, assembled workforces, and the going concern value of the acquired businesses.
Goodwill recorded for these acquisitions is deductible for tax purposes. Revenue and earnings from business combinations are not available, as the businesses are
integrated into the Company's centralized financial and operational processes following acquisition.
Asset Acquisitions
During 2023, the Company acquired certain assets and liabilities of five smaller entities, which consisted primarily of approximately 1,800 storage units and
700 modular units for $150.0 million in cash. As of the acquisition dates, the fair value of rental equipment acquired was $147.6 million.
Integration Costs
The Company records integration costs related to business combinations, asset acquisitions and the Merger within selling, general and administrative
("SG&A") expense. The Company incurred $10.4 million, $15.5 million and $28.4 million in integration costs for business combinations, asset acquisitions and the
Merger for the years ended December 31, 2023, 2022 and 2021, respectively.
NOTE 3 - Discontinued Operations
Tank and Pump Divestiture
On September 30, 2022, the Company sold its former Tank and Pump segment for $321.9 million. Exiting the former Tank and Pump segment represented
the Company’s strategic shift to concentrate its operations on its core modular and storage businesses. Results for the former Tank and Pump segment are reported
in income from discontinued operations within the consolidated statements of operations for all periods presented.
UK Storage Solutions Divestiture
On January 31, 2023, the Company sold its former UK Storage Solutions segment for $418.1 million. Exiting the UK Storage Solutions segment
represented the Company’s strategic shift to concentrate its operations on its core modular and storage businesses in North America. Results for the former UK
Storage Solutions segment are reported in income from discontinued operations within the consolidated statements of operations for all periods presented. The
carrying value of the UK Storage Solutions segment's assets and liabilities are presented within assets and liabilities held for sale on the consolidated balance sheet
as of December 31, 2022.
77
The following tables present the results of the former Tank and Pump segment and the former UK Storage Solutions segment as reported in income from
discontinued operations within the consolidated statements of operations, and the carrying value of the former UK Storage Solutions segment's assets and liabilities
as presented within assets and liabilities held for sale on the consolidated balance sheet as of December 31, 2022. The 2022 results for the former Tank and Pump
segment represent results for the nine months ended September 30, 2022 as the Company sold the former Tank and Pump segment on September 30, 2022. The
2023 results for the former UK Storage Solutions segment represent results for one month as the Company sold the former UK Storage Solutions segment on
January 31, 2023.
(in thousands)
Revenues:
Leasing and services revenue:
Leasing
Delivery and installation
Sales revenue:
New units
Rental units
Total revenues
Costs:
Costs of leasing and services:
Leasing
Delivery and installation
Costs of sales:
New units
Rental units
Gross profit
Expenses:
Selling, general and administrative
Other income, net
Operating income
Interest expense
Income from discontinued operations before income tax
Gain on sale of discontinued operations
Income tax expense from discontinued operations
Income from discontinued operations
Other selected data:
Adjusted EBITDA from discontinued operations
Year Ended December 31, 2023
UK Storage Solutions
6,389
1,802
54
449
8,694
1,407
1,213
38
492
5,544
1,486
(1)
4,059
56
4,003
175,708
45,468
134,243
4,124
$
$
$
In January 2023, a $0.4 million adjustment was made to the gain on sale of the former Tank and Pump segment due to the final contractual working capital
adjustment. Including this adjustment, the total gain on sale of discontinued operations was $176.1 million for the year ended December 31, 2023.
78
(in thousands)
Revenues:
Leasing and services revenue:
Leasing
Delivery and installation
Sales revenue:
New units
Rental units
Total revenues
Costs:
Costs of leasing and services:
Leasing
Delivery and installation
Costs of sales:
New units
Rental units
Depreciation of rental equipment
Gross profit
Expenses:
Selling, general and administrative
Other depreciation and amortization
Currency losses, net
Other expense, net
Operating income
Interest expense
Income from discontinued operations before income tax
Income tax expense from discontinued operations
Gain on sale of discontinued operations
Income from discontinued operations
Other selected data:
Adjusted EBITDA from discontinued operations
Tank and Pump
Year Ended December 31, 2022
UK Storage Solutions
Total
$
65,572 $
27,665
79,772 $
22,876
1,106
1,455
105,209
16,737
14,867
738
1,012
4,254
67,601
21,795
5,906
138
(7)
39,769
789
38,980
34,882
— $
4,098 $
2,202
917
96,356
13,828
23,285
1,636
310
8,145
49,152
18,045
6,103
—
4
25,000
512
24,488
843
35,456
59,101 $
37,016 $
48,734 $
145,344
50,541
3,308
2,372
201,565
30,565
38,152
2,374
1,322
12,399
116,753
39,840
12,009
138
(3)
64,769
1,301
63,468
35,725
35,456
63,199
85,750
$
$
79
(in thousands)
Revenues:
Leasing and services revenue:
Leasing
Delivery and installation
Sales revenue:
New units
Rental units
Total revenues
Costs:
Costs of leasing and services:
Leasing
Delivery and installation
Costs of sales:
New units
Rental units
Depreciation of rental equipment
Gross profit
Expenses:
Selling, general and administrative
Other depreciation and amortization
Restructuring costs
Currency gains, net
Other expense, net
Operating income
Interest expense
Income from discontinued operations before income tax
Income tax expense from discontinued operations
Income from discontinued operations
Other selected data:
Adjusted EBITDA from discontinued operations
Tank and Pump
Year Ended December 31, 2021
UK Storage Solutions
Total
77,527 $
29,530
2,355
1,479
110,891
17,045
25,057
1,672
536
14,319
52,262
22,194
9,366
2
—
11
20,689
779
19,910
5,277
14,633 $
82,106 $
24,023
3,534
1,363
111,026
17,440
14,271
2,357
1,287
4,428
71,243
24,974
6,887
—
121
54
39,207
850
38,357
7,741
30,616 $
41,750 $
49,039 $
159,633
53,553
5,889
2,842
221,917
34,485
39,328
4,029
1,823
18,747
123,505
47,168
16,253
2
121
65
59,896
1,629
58,267
13,018
45,249
90,789
$
$
$
80
(in thousands)
Assets
Cash and cash equivalents
Trade receivables, net of allowances for doubtful accounts of $300
Inventories
Prepaid expenses and other current assets
Rental equipment, net
Property, plant and equipment, net
Operating lease assets
Goodwill
Intangible assets, net
Other non-current assets
Total assets held for sale
Liabilities
Accounts payable
Accrued expenses
Accrued employee benefits
Deferred revenue and customer deposits
Deferred tax liabilities
Operating lease liabilities
Other non-current liabilities
Total liabilities held for sale
December 31, 2022
UK Storage Solutions
10,384
15,991
3,058
1,787
165,853
20,645
15,134
58,144
6,414
1,832
299,242
4,515
3,273
1,009
6,850
29,737
15,192
6,278
66,854
$
$
$
$
For the years ended December 31, 2022 and 2021, significant operating and investing items related to the former Tank and Pump segment were as
follows:
(in thousands)
Operating activities of discontinued operations:
Depreciation and amortization
Investing activities of discontinued operations:
Proceeds from sale of rental equipment
Purchases of rental equipment and refurbishments
Proceeds from sale of property, plant and equipment
Purchases of property, plant and equipment
Years Ended December 31,
2022
2021
$
$
$
$
$
14,248 $
918 $
(21,831) $
— $
(525) $
23,685
1,480
(17,747)
388
(1,743)
81
The following table presents reconciliations of Income from discontinued operations before income tax to Adjusted EBITDA from discontinued operations
for the former Tank and Pump segment for the years ended December 31, 2022 and 2021, respectively. See Note 18 for further information regarding Adjusted
EBITDA.
(in thousands)
Income from discontinued operations
Gain on sale of discontinued operations
Income tax expense from discontinued operations
Income from discontinued operations before income tax and gain on sale
Interest expense
Depreciation and amortization
Restructuring costs, lease impairment expense and other related charges
Integration costs
Stock compensation expense
Other
Adjusted EBITDA from discontinued operations
Years Ended December 31,
2022
2021
$
$
59,101 $
35,456
843
24,488
512
14,248
—
—
18
(2,250)
37,016 $
14,633
—
5,277
19,910
779
23,685
2
14
222
(2,862)
41,750
For the years ended December 31, 2023, 2022 and 2021, significant operating and investing items related to the UK Storage Solutions segment were as
follows:
(in thousands)
Operating activities of discontinued operations:
Depreciation and amortization
Investing activities of discontinued operations:
Proceeds from sale of rental equipment
Purchases of rental equipment and refurbishments
Proceeds from sale of property, plant and equipment
Purchases of property, plant and equipment
Years Ended December 31,
2023
2022
2021
$
$
$
$
$
— $
514 $
(371) $
8 $
(64) $
10,160 $
1,455 $
(23,931) $
504 $
(3,752) $
11,315
1,363
(27,830)
387
(1,680)
The following table presents reconciliations of Income from discontinued operations before income tax to Adjusted EBITDA from discontinued operations
for the UK Storage Solutions segment for the years ended December 31, 2023, 2022 and 2021, respectively. See Note 18 for further information regarding Adjusted
EBITDA.
(in thousands)
Income from discontinued operations
Gain on sale of discontinued operations
Income tax expense from discontinued operations
Income from discontinued operations before income tax and gain on sale
Interest expense
Depreciation and amortization
Currency losses, net
Stock compensation expense
Other
Adjusted EBITDA from discontinued operations
$
$
82
2023
Years Ended December 31,
2022
2021
134,243 $
175,708
45,468
4,003
56
—
—
(196)
261
4,124 $
4,098 $
—
34,882
38,980
789
10,160
138
197
(1,530)
48,734 $
30,616
—
7,741
38,357
850
11,315
121
39
(1,643)
49,039
NOTE 4 - Revenue
Revenue Disaggregation
Geographic Areas
The Company had total revenue in the following geographic areas for the years ended December 31, as follows:
(in thousands)
US
Canada
Mexico
Total revenues
Major Product and Service Lines
2023
Years Ended December 31,
2022
2021
$
$
2,219,561 $
120,123
25,083
2,364,767 $
1,998,796 $
125,536
18,291
2,142,623 $
1,542,076
116,070
14,834
1,672,980
Equipment leasing is the Company's core business and the primary driver of the Company's revenue and cash flows. This includes turnkey temporary
modular space and portable storage units along with VAPS, which include furniture, steps, ramps, basic appliances, internet connectivity devices, integral tool
racking, heavy duty capacity shelving, workstations, electrical and lighting products and other items used by customers in connection with the Company's products.
The Company also offers its lease customers a damage waiver program that protects them in case the leased unit is damaged. Leasing is complemented by new
unit sales and sales of rental units. In connection with its leasing and sales activities, the Company provides services including delivery and installation,
maintenance and ad hoc services and removal services at the end of lease transactions. The Company’s revenue by major product and service line for the years
ended December 31, was as follows:
(in thousands)
Modular space leasing revenue
Portable storage leasing revenue
VAPS and third party leasing revenues
Other leasing-related revenue
(b)
(a)
Leasing revenue
Delivery and installation revenue
Total leasing and services revenue
New unit sales revenue
Rental unit sales revenue
Total revenues
2023
Years Ended December 31,
2022
2021
$
$
953,822 $
396,781
391,948
91,384
1,833,935
437,179
2,271,114
48,129
45,524
2,364,767 $
840,926 $
361,197
343,625
75,942
1,621,690
429,152
2,050,842
40,338
51,443
2,142,623 $
697,852
233,868
263,021
57,749
1,252,490
321,129
1,573,619
46,993
52,368
1,672,980
(a) Includes $23.9 million, $25.3 million, and $17.1 million of VAPS service revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
(b) Includes primarily damage billings, delinquent payment charges, and other processing fees.
Leasing and Services Revenue
The majority of revenue (77%, 75%, and 74% for the years ended December 31, 2023, 2022 and 2021, respectively) is generated by lease income subject
to the guidance of ASC 842. The remaining revenue is generated by performance obligations in contracts with customers for services or sale of units subject to the
guidance in ASC 606.
83
At December 31, 2023 and for the years ended December 31, 2024 through 2028 and thereafter, future committed leasing revenues under non-cancelable
operating leases with the Company’s customers, excluding revenue from delivery and installation and potential lease extensions, were as follows:
(in thousands)
2024
2025
2026
2027
2028
Thereafter
Total
Receivables
Operating Leases
367,965
129,048
42,698
17,988
7,887
5,399
570,985
$
$
The Company manages credit risk associated with its accounts receivables at the customer level. Because the same customers generate the revenues
that are accounted for under both ASC 606 and ASC 842, the discussions below on credit risk and the Company's allowance for credit losses address the
Company's total revenues.
Concentration of credit risk with respect to the Company's receivables is limited because of a large number of geographically diverse customers who
operate in a variety of end user markets. No single customer accounted for more than 1.0% and 1.7% of the Company’s receivables at December 31, 2023 and
2022, respectively. The Company's top five customers with the largest open receivables balances represented 4.3% and 5.4% of the total receivables balance as of
December 31, 2023 and 2022, respectively. The Company manages credit risk through credit approvals, credit limits, and other monitoring procedures.
The Company's allowance for credit losses reflects its estimate of the amount of receivables that it will be unable to collect. The estimated losses are
calculated using the loss rate method based upon a review of outstanding receivables, related aging, and historical collection experience. The Company's estimates
reflect changing circumstances, and the Company may be required to increase or decrease its allowance. During the years ended December 31, 2023, 2022 and
2021, the Company recognized bad debt expense to reflect changes in the allowance for credit losses of $23.4 million, $10.4 million, and $16.4 million, respectively,
within SG&A expense in its consolidated statements of operations. For the years ended December 31, 2023, 2022 and 2021, the provision for credit losses included
$25.2 million, $23.7 million and $19.8 million, respectively, recorded as a reduction to revenue for the provision of specific receivables whose collection was not
considered probable.
Contract Assets and Liabilities
When customers are billed in advance for services, the Company defers recognition of revenue until the related services are performed, which generally
occurs at the end of the contract. The balance sheet classification of deferred revenue is determined based on the contractual lease term. For contracts that
continue beyond their initial contractual lease term, revenue continues to be deferred until the services are performed. As of December 31, 2023 and 2022, the
Company had approximately $124.1 million and $102.2 million, respectively, of deferred revenue related to services billed in advance. During the years ended
December 31, 2023, 2022 and 2021, $67.6 million, $47.2 million and $38.8 million, respectively, of deferred revenue billed in advance was recognized as revenue.
The Company does not have material contract assets, and it did not recognize any material impairments of any contract assets.
The Company's uncompleted contracts with customers have unsatisfied (or partially satisfied) performance obligations. For the future services revenues
that are expected to be recognized within twelve months, the Company has elected to utilize the optional disclosure exemption made available regarding transaction
price allocated to unsatisfied (or partially unsatisfied) performance obligations. The transaction price for performance obligations that will be completed in greater
than twelve months is variable based on the market rate in place at the time those services are provided, and therefore, the Company is applying the optional
exemption to omit disclosure of such amounts.
The primary costs to obtain contracts for new and rental unit sales with the Company's customers are commissions. The Company pays its sales force
commissions on the sale of new and rental units. For new and rental unit sales, the period benefited by each commission is less than one year. As a result, the
Company has applied the practical expedient for incremental costs of obtaining a sales contract and expenses commissions as incurred.
84
NOTE 5 - Leases
As of December 31, 2023, the undiscounted future lease payments for operating and finance lease liabilities were as follows:
(in thousands)
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less: interest
Present value of lease liabilities
Operating Leases
Finance Leases
$
$
69,429 $
60,490
47,465
36,903
26,212
48,153
288,652
(43,407)
245,245 $
Finance lease liabilities are included within long-term debt and current portion of long-term debt on the consolidated balance sheets.
The Company’s lease activity during the years ended December 31, 2023, 2022, and 2021 was as follows:
Financial Statement Line (in thousands)
Finance Lease Expense
Amortization of finance lease assets
Interest on obligations under finance leases
Total finance lease expense
Operating Lease Expense
Fixed lease expense
Cost of leasing and services
Selling, general and administrative
Short-term lease expense
Cost of leasing and services
Selling, general and administrative
Variable lease expense
Cost of leasing and services
Selling, general and administrative
Total operating lease expense
2023
Years Ended December 31,
2022
2021
16,945 $
3,777
20,722 $
13,900 $
1,899
15,799 $
1,396 $
67,374
26,010
1,789
2,109
8,380
107,058 $
2,797 $
60,017
32,947
1,792
5,388
7,289
110,230 $
$
$
$
$
Supplemental cash flow information related to leases for the years ended December 31, 2023, 2022, and 2021 were as follows:
Supplemental Cash Flow Information (in thousands)
Cash paid for the amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases
Operating cash outflows from finance leases
Financing cash outflows from finance leases
Right of use assets obtained in exchange for lease obligations
Assets obtained in exchange for finance leases
2023
Years Ended December 31,
2022
2021
$
$
$
$
$
68,889 $
3,715 $
16,510 $
95,897 $
58,737 $
61,418 $
1,895 $
15,159 $
55,005 $
29,803 $
85
23,927
23,550
23,234
19,982
22,473
22,138
135,304
(18,205)
117,099
12,602
1,406
14,008
3,979
56,005
22,335
794
7,794
5,134
96,041
58,931
1,432
12,476
66,887
19,435
Weighted-average remaining operating lease terms and the weighted average discount rates as of December 31 were as follows:
Lease Terms and Discount Rates
Weighted-average remaining lease term - operating leases
Weighted-average discount rate - operating leases
Weighted-average remaining lease term - finance leases
Weighted-average discount rate - finance leases
NOTE 6 - Inventories
Inventories at December 31, consisted of the following:
(in thousands)
Raw materials
Finished units
Inventories
NOTE 7 - Rental Equipment, net
Rental equipment, net at December 31 consisted of the following:
(in thousands)
Modular space units
Portable storage units
Value added products
Total rental equipment
Less: accumulated depreciation
Rental equipment, net
NOTE 8 – Property, Plant and Equipment, net
Property, plant and equipment, net at December 31 consisted of the following:
(in thousands)
Land, buildings, and leasehold improvements
Vehicles and equipment
Office furniture, fixtures and software
Total property, plant and equipment
Less: accumulated depreciation
Property, plant and equipment, net
2023
2022
5.4 years
5.9 %
5.0 years
4.8 %
5.8 years
5.4 %
5.1 years
3.4 %
2023
2022
43,071 $
4,335
47,406 $
38,611
2,419
41,030
2023
2022
3,541,451 $
1,009,059
204,933
4,755,443
(1,374,128)
3,381,315 $
3,197,779
849,193
203,444
4,250,416
(1,173,129)
3,077,287
2023
2022
178,117 $
233,793
109,460
521,370
(180,483)
340,887 $
174,322
167,337
106,747
448,406
(143,747)
304,659
$
$
$
$
$
$
Depreciation expense related to property, plant and equipment was $47.1 million, $38.6 million, and $37.5 million for the years ended December 31, 2023,
2022 and 2021, respectively. The depreciation expense for these assets was presented in other depreciation and amortization in the consolidated statements of
operations.
As of December 31, 2023 and 2022, the gross cost of property, plant and equipment assets under finance leases was $133.3 million and $84.7 million,
respectively, with related accumulated depreciation of $40.8 million and $26.9 million, respectively.
86
NOTE 9 - Goodwill and Intangible Assets
Goodwill
Changes in the carrying amount of goodwill were as follows:
(in thousands)
Balance at December 31, 2021
Effects of movements in foreign exchange rates
Balance at December 31, 2022
Additions from acquisitions
Effects of movements in foreign exchange rates
Balance at December 31, 2023
Modular
Storage
Total
$
$
521,049 $
(2,172)
518,877
61,111
704
580,692 $
492,552 $
—
492,552
103,391
—
595,943 $
1,013,601
(2,172)
1,011,429
164,502
704
1,176,635
The Company conducted its annual impairment test of goodwill as of October 1, 2023 and determined that there was no impairment of goodwill identified.
Accumulated historical goodwill impairment losses were $792.8 million and pertain to the Modular segment (as defined in Note 18) prior to Double Eagle Acquisition
Corporation's acquisition of Williams Scotsman International, Inc. in 2017. There were no goodwill impairments recorded for the years ended December 31, 2023,
2022 and 2021.
Intangible Assets
Intangible assets other than goodwill at December 31, consisted of the following:
(in thousands)
Intangible assets subject to amortization:
Customer Relationships
Technology
Indefinite-lived intangible assets:
Trade name – Mobile Mini
Trade name – WillScot
Total intangible assets other than goodwill
(in thousands)
Intangible assets subject to amortization:
Customer Relationships
Technology
Indefinite-lived intangible assets:
Trade name - Mobile Mini
Trade name - WillScot
Total intangible assets other than goodwill
Weighted average
remaining life (in
years)
4.5
2.5
Weighted average
remaining life (in
years)
5.5
3.5
$
$
$
$
December 31, 2023
Gross carrying
amount
Accumulated
amortization
Net book value
214,408 $
1,500
164,000
125,000
504,908 $
(84,324) $
(875)
—
—
(85,199) $
130,084
625
164,000
125,000
419,709
December 31, 2022
Gross carrying
amount
Accumulated
amortization
Net book value
188,000 $
1,500
164,000
125,000
478,500 $
(58,750) $
(625)
—
—
(59,375) $
129,250
875
164,000
125,000
419,125
For the years ended December 31, 2023, 2022 and 2021, the aggregate amount recorded to depreciation and amortization expense for intangible assets
subject to amortization was $25.8 million, $23.8 million and $24.3 million, respectively.
87
As of December 31, 2023, the expected future amortization expense for intangible assets is as follows:
(in thousands)
2024
2025
2026
2027
2028
Total
NOTE 10 - Debt
The carrying value of debt outstanding at December 31 consisted of the following:
(in thousands, except rates)
2025 Secured Notes
ABL Facility
2028 Secured Notes
2031 Secured Notes
Finance Leases
Total debt
Less: current portion of long-term debt
Total long-term debt
Interest rate
6.125%
Varies
4.625%
7.375%
Varies
Year of maturity
2025
2027
2028
2031
Varies
Amortization Expense
29,122
29,122
28,997
28,684
14,784
130,709
$
$
2023
2022
$
$
522,735 $
1,929,259
494,500
493,709
117,099
3,557,302
18,786
3,538,516 $
Maturities of debt, including finance leases, during the years subsequent to December 31, 2023 are as follows:
(in thousands)
2024
2025
2026
2027
2028
Thereafter
Total
$
$
520,350
1,988,176
493,470
—
74,370
3,076,366
13,324
3,063,042
23,927
550,050
23,234
1,975,992
522,473
522,138
3,617,814
The Company records debt issuance costs as offsets against the carrying value of the related debt. These debt costs are amortized and included as part of
interest expense over the remaining contractual terms of those debt instruments for each of the next five years as follows:
(in thousands)
2024
2025
2026
2027
2028
Thereafter
Debt issuance cost
amortization
11,891
10,664
9,555
5,852
1,677
2,667
$
$
$
$
$
$
Asset Backed Lending Facility
On July 1, 2020, certain subsidiaries of the Company entered into an asset-based credit agreement (the "ABL Facility") that initially provided for revolving
credit facilities in the aggregate principal amount of up to $2.4 billion, consisting of: (i) a senior secured asset-based US dollar revolving credit facility in the
aggregate principal amount of $2.0 billion and (ii) a $400.0 million senior secured asset-based multicurrency revolving credit facility available to be drawn in US
Dollars, Canadian Dollars, British Pounds Sterling or Euros. The ABL Facility was initially scheduled to mature on July 1, 2025.
88
On June 30, 2022, certain subsidiaries of the Company entered into an amendment to the ABL Facility to, among other things, extend the expiration date
until June 30, 2027 and increase the aggregate principal amount of the revolving credit facilities to $3.7 billion, consisting of: (i) a senior secured asset-based US
dollar revolving credit facility in the aggregate principal amount of $3.3 billion (the “US Facility”), (ii) a $400.0 million senior secured asset-based multicurrency
revolving credit facility (the "Multicurrency Facility"), available to be drawn in US Dollars, Canadian Dollars, British Pounds Sterling or Euros, and (iii) an accordion
feature that permits the Company to increase the lenders' commitments in an aggregate amount not to exceed the greater of $750.0 million and the amount of
suppressed availability as defined in the ABL Facility, subject to the satisfaction of customary conditions including lender approval, plus any voluntary prepayments
that are accompanied by permanent commitment reductions under the ABL facility. The amendment also converted the interest rate for borrowings denominated in
US Dollars from a LIBOR-based rate to a Term SOFR-based rate with an interest period of one month and adjusted the applicable margins. The applicable margin
for Canadian BA rate, Term SOFR, British Pounds Sterling and Euros loans is 1.50%. The facility includes a credit spread adjustment of 0.10% in addition to the
applicable margin. The applicable margin for base rate and Canadian Prime Rate loans is 0.50%. The applicable margins are subject to one step down of 0.25%
based on excess availability or one step up of 0.25% based on the Company's leverage ratio. The ABL Facility requires the payment of a commitment fee on the
unused available borrowings of 0.20% annually. At December 31, 2023, the weighted average interest rate for borrowings under the ABL Facility, as adjusted for the
effects of the 2023 interest rate swap agreements, was 6.24%. Refer to Note 14 for a more detailed discussion on interest rate management.
Borrowing availability under the US Facility and the Multicurrency Facility is equal to the lesser of (i) the aggregate Revolver Commitments and (ii) the
Borrowing Base ("Line Cap"). At December 31, 2023, the Line Cap was $3.2 billion and the Borrowers had approximately $1.2 billion of available borrowing capacity
under the ABL Facility, including $1.0 billion under the US Facility and $189.4 million under the Multicurrency Facility. Borrowing capacity under the ABL Facility is
made available for up to $220.0 million letters of credit and $220.0 million of swingline loans. At December 31, 2023, the available capacity was $191.5 million of
letters of credit and $216.2 million of swingline loans. At December 31, 2023, letters of credit and bank guarantees carried fees of 1.625%. The Company had
issued $28.5 million of standby letters of credit under the ABL Facility at December 31, 2023.
The Company had approximately $2.0 billion outstanding principal under the ABL Facility at December 31, 2023. Debt issuance costs of $26.8 million and
$31.8 million were included in the carrying value of the ABL Facility at December 31, 2023 and December 31, 2022. As of December 31, 2022, the Company had no
outstanding principal borrowings on the Multicurrency Facility and $2.5 million of related debt issuance costs, which were recorded in other non-current assets on
the consolidated balance sheets.
The obligations of the US Borrowers are unconditionally guaranteed by Holdings and each existing and subsequently acquired or organized direct or
indirect wholly-owned US organized restricted subsidiary of Holdings, other than excluded subsidiaries (together with Holdings, the "US Guarantors"). The
obligations of the Multicurrency Borrowers are unconditionally guaranteed by the US Borrowers and the US Guarantors, and each existing and subsequently
acquired or organized direct or indirect wholly-owned Canadian organized restricted subsidiary of Holdings other than certain excluded subsidiaries (together with
the US Guarantors, the "ABL Guarantors").
Senior Secured Notes
On June 15, 2020, the Company completed a private offering of $650.0 million in aggregate principal amount of its 6.125% senior secured notes due 2025
(the "2025 Secured Notes") to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended ("Rule 144A"). The 2025 Secured
Notes mature on June 15, 2025 and bear interest at a rate of 6.125% per annum. Interest is payable semi-annually on June 15 and December 15 of each year. In
2021, using cash on hand and borrowings on the ABL Facility, the Company redeemed $123.5 million of its 2025 Secured Notes and recorded a loss on
extinguishment of debt in the consolidated statement of operations of $6.0 million comprised of a redemption premium of $3.7 million and write off of unamortized
deferred financing fees of $2.3 million. As of December 31, 2023 the aggregate principal amount outstanding for the 2025 Secured Notes was $526.5 million.
Unamortized deferred financing costs pertaining to the 2025 Secured Notes were $3.8 million as of December 31, 2023.
On August 25, 2020, the Company completed a private offering of $500.0 million in aggregate principal amount of 4.625% senior secured notes due 2028
(the "2028 Secured Notes") to qualified institutional buyers pursuant to Rule 144A. The 2028 Secured Notes mature on August 15, 2028 and bear interest at a rate
of 4.625% per annum. Interest is payable semi-annually on August 15 and February 15 of each year. Unamortized deferred financing costs pertaining to the 2028
Secured Notes were $5.5 million as of December 31, 2023.
On September 25, 2023, the Company completed a private offering of $500.0 million in aggregate principal amount of 7.375% senior secured notes due
2031 (the "2031 Secured Notes") to qualified institutional buyers pursuant to Rule 144A. Proceeds were used to repay approximately $494.0 million of outstanding
indebtedness under the ABL Facility and certain fees and expenses. The 2031 Secured Notes mature on October 1, 2031 and bear interest at a rate of 7.375% per
annum. Interest is payable semi-annually on April 1 and October 1 of each year, beginning April 1, 2024. Unamortized deferred financing costs pertaining to the
2031 Secured Notes were $6.3 million as of December 31, 2023.
The tables below depict the redemption prices (expressed as percentages of the principal amount) of the notes if redeemed during the twelve-month period
commencing on the dates below, plus accrued and unpaid interest, if any, to but not including the date of redemption.
89
2025 Secured Notes
Year
June 15, 2023
June 15, 2024 and thereafter
2028 Secured Notes
Year
August 15, 2023
August 15, 2024
August 15, 2025 and thereafter
2031 Secured Notes
Redemption Price
101.531 %
100.000 %
Redemption Price
102.313 %
101.156 %
100.000 %
The Company may redeem the 2031 Secured Notes at any time before October 1, 2026 at a redemption price equal to 100% of the principal amount
thereof, plus a customary make whole premium for the 2031 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the
redemption date. Before October 1, 2026, the Company may redeem up to 40% of the aggregate principal amount of the 2031 Secured Notes at a price equal to
107.375% of the principal amount of the 2031 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date with
the net proceeds of certain equity offerings. At any time prior to October 1, 2026, the Company may also redeem up to 10% of the aggregate principal amount at a
redemption price equal to 103% of the principal amount of the 2031 Secured Notes being redeemed during each twelve-month period commencing with the issue
date, plus accrued and unpaid interest, if any, to but not including the redemption date.
Year
October 1, 2026
October 1, 2027
October 1, 2028 and thereafter
Redemption Price
103.688 %
101.844 %
100.000 %
The 2025 Secured Notes, the 2028 Secured Notes, and the 2031 Secured Notes (collectively, “the Secured Notes”) are unconditionally guaranteed by
certain subsidiaries of the Company (collectively, “the Note Guarantors”). WillScot Mobile Mini is not a guarantor of the Secured Notes. The Note Guarantors are
guarantors or borrowers under the ABL Facility. To the extent lenders under the ABL Facility release the guarantee of any Note Guarantor, such Note Guarantor will
also be released from obligations under the Secured Notes. The Secured Notes and related guarantees are secured by a second priority security interest in
substantially the same assets of Williams Scotsman, Inc., a wholly owned indirect subsidiary of the Company (“WSI”), and the Note Guarantors securing the ABL
Facility. Upon the repayment of the 2025 Secured Notes and the 2028 Secured Notes, if the lien associated with the ABL Facility represents the only lien
outstanding on the collateral under the 2031 Secured Notes (other than certain permitted), the collateral securing the 2031 Secured Notes will be released and the
2031 Secured Notes will become unsecured subject to satisfaction of customary conditions.
Finance Leases
The Company maintains finance leases primarily related to transportation related equipment. At December 31, 2023 and December 31, 2022, obligations
under the finance leases were $117.1 million and $74.4 million, respectively.
The Company is in compliance with all debt covenants and restrictions for the aforementioned debt instruments for the year ended December 31, 2023.
NOTE 11 - Equity
Preferred Stock
WillScot Mobile Mini's certificate of incorporation authorizes the issuance of 1,000,000 shares of Preferred Stock with a par value of $0.0001 per share. As
of December 31, 2023 and 2022, the Company had zero shares of Preferred Stock issued and outstanding.
Common Stock
WillScot Mobile Mini's certificate of incorporation authorizes the issuance of 500,000,000 shares of Common Stock with a par value of $0.0001 per share.
The Company had 189,967,135 shares of Common Stock issued and outstanding as of December 31, 2023. The outstanding shares of the Company's Common
Stock are duly authorized, validly issued, fully paid and non-assessable.
In connection with stock compensation vesting and stock option exercises described in Note 16, and the warrant exercises described in Note 12, the
Company issued 549,272, 3,847,905 and 6,752,647 shares of Common Stock during the years ended December 31, 2023, 2022 and 2021, respectively.
90
Stock Repurchase Program
In May 2023, the Board of Directors approved a reset of the share repurchase program authorizing the Company to repurchase up to $1.0 billion of its
outstanding shares of Common Stock and equivalents. The stock repurchase program does not obligate the Company to purchase any particular number of shares,
and the timing and exact amount of any repurchases will depend on various factors, including market pricing, business, legal, accounting, and other considerations.
The Company may repurchase its shares in open market transactions or through privately negotiated transactions in accordance with federal securities laws, at the
Company's discretion. The repurchase program, which has no expiration date, may be increased, suspended, or terminated at any time. The program is expected to
be implemented over the course of several years and will be conducted subject to the covenants in the agreements governing indebtedness.
In August 2022, the Inflation Reduction Act of 2022 was enacted into law and imposed a nondeductible 1% excise tax on the net value of certain stock
repurchases made after December 31, 2022. The Company reflected the applicable excise tax in equity as part of the cost basis of the stock repurchased and
recorded a corresponding liability for the excise taxes payable in accrued expenses on the consolidated balance sheet.
During the year ended December 31, 2023, the Company repurchased 18,533,819 shares of Common Stock for $810.8 million. During the year ended
December 31, 2022, the Company repurchased 19,854,424 shares of Common Stock and stock equivalents for $756.9 million. As of December 31, 2023,
$498.2 million of the authorization for future repurchases of our common stock remained available.
Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive loss ("AOCI"), net of tax, for the years ended December 31, 2023, 2022 and 2021, were as follows:
(in thousands)
Balance at December 31, 2020
Other comprehensive loss before reclassifications
Reclassifications from AOCI to income
(a)
Balance at December 31, 2021
Other comprehensive loss before reclassifications
Reclassifications from AOCI to income
(a)
Balance at December 31, 2022
Other comprehensive income before reclassifications
Reclassifications from AOCI to income
(a)
Balance at December 31, 2023
Foreign Currency
Translation
Unrealized (gains)
losses on hedging
activities
Total
$
$
(24,694) $
(880)
—
(25,574)
(44,548)
—
(70,122)
14,091
—
(56,031) $
(12,513) $
(2,985)
12,001
(3,497)
(1,033)
4,530
—
14,813
(11,550)
3,263 $
(37,207)
(3,865)
12,001
(29,071)
(45,581)
4,530
(70,122)
28,904
(11,550)
(52,768)
(a) For the years ended December 31, 2023, 2022 and 2021, $(11.6) million, $4.5 million and $12.0 million, respectively, was reclassified from AOCI into the consolidated statements of
operations within interest expense related to the interest rate swaps discussed in Note 14. For the years ended December 31, 2023, 2022 and 2021, the Company recorded tax benefits
of $2.9 million, $1.1 million and $3.0 million, respectively, associated with this reclassification.
NOTE 12 - Warrants
Warrants
2015 Private Warrants
The Company issued warrants to purchase its Common Stock in a private placement concurrently with its initial public offering (the “2015 Private
Warrants”). The 2015 Private Warrants were purchased at a price of $0.50 per unit for an aggregate purchase price of $9.75 million. If held by certain original
investors (or their permitted assignees), the 2015 Private Warrants could be exercised on a cashless basis and were not subject to redemption.
During the year ended December 31, 2021, 3,055,000 of the 2015 Private Warrants were repurchased for $25.5 million and cancelled, and 9,655,000
warrants were exercised on a cashless basis, resulting in the issuance of 2,939,898 shares of Common Stock. As a result of these transactions, effective May 2021,
no 2015 Private Warrants were outstanding.
2018 Warrants
In connection with the acquisition of Modular Space Holdings, Inc. ("ModSpace") in 2018, the Company issued warrants to purchase approximately 10.0
million shares of its Common Stock (the "2018 Warrants") to former shareholders of ModSpace. Each 2018 Warrant entitled the holder to purchase one share of
Common Stock at an exercise price of $15.50 per share, subject to potential adjustment. The 2018 Warrants expired on November 29, 2022.
91
During the year ended December 31, 2021, 254,373 of the 2018 Warrants were repurchased for $2.9 million and cancelled. In addition, during the year
ended December 31, 2021, 5,397,695 of the 2018 Warrants were exercised on a cashless basis, resulting in the issuance of 2,835,968 shares of Common Stock.
During the year ended December 31, 2022, 33,965 of the 2018 Warrants were repurchased for $0.6 million and cancelled. In addition, during the year
ended December 31, 2022, 4,011,665 of the 2018 Warrants were exercised on a cashless basis, resulting in the issuance of 2,590,940 shares of Common Stock.
The remaining 32,543 of 2018 Warrants expired on November 29, 2022. Effective November 29, 2022, no 2018 Warrants were outstanding.
The Company accounted for its warrants as follows: (i) the 2015 Private Warrants as liabilities through their final repurchase or exercise in May 2021 and
(ii) subsequent to June 30, 2020, the 2018 Warrants were equity classified through their expiration in November 2022.
NOTE 13 – Income Taxes
The components of income tax expense from continuing operations for the years ended December 31, are comprised of the following:
(in thousands)
Current
Federal
State
Foreign
Deferred
Federal
State
Foreign
Total income tax expense from continuing operations
2023
2022
2021
$
$
— $
12,250
7,382
80,698
27,276
(1,031)
126,575 $
— $
11,327
6,204
63,585
8,917
(1,170)
88,863 $
—
4,645
1,795
23,707
(2,671)
9,052
36,528
Income tax expense from continuing operations differed from the amount computed by applying the US statutory income tax rate of 21% to the income
from continuing operations before income taxes for the following reasons for the years ended December 31,:
(in thousands)
Income from continuing operations before income tax
US
Foreign
Total income from continuing operations before income tax
US Federal statutory income tax expense
Effect of tax rates in foreign jurisdictions
State income tax expense, net of federal benefit
Valuation allowances
Non-deductible (non-taxable) items
Non-deductible executive compensation
Non-deductible remeasurement of common stock warrant liabilities
Uncertain tax positions
Tax law changes (excluding valuation allowance)
Other
(a)
Income tax expense from continuing operations
Effective income tax rate
(a) Tax law changes primarily represent changes in tax law in foreign jurisdictions.
$
$
$
$
92
2023
2022
2021
444,557
23,862
468,419
98,368
1,434
25,016
(815)
775
2,014
—
(523)
(50)
356
126,575
$
$
$
$
341,412
23,792
365,204
76,693
1,085
16,917
(6,907)
1,147
1,258
—
(804)
(94)
(432)
88,863
$
$
$
$
137,922
13,501
151,423
31,798
743
1,130
(2,595)
(410)
2,309
5,585
(11,748)
8,411
1,305
36,528
27.02 %
24.33 %
24.12 %
Deferred Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well
as from net operating loss and carryforwards. Significant components of the Company’s deferred tax assets and liabilities as of December 31, are as follows:
(in thousands)
Deferred tax assets
Deferred interest expense
Employee benefit plans
Accrued liabilities
Allowance for credit losses
Deferred revenue
Operating lease liability
Other
Tax loss carryforwards
Deferred tax assets, gross
Valuation allowance
Net deferred income tax asset
Deferred tax liabilities
Rental equipment and other property, plant and equipment
Intangible assets
Right of use asset
Deferred gain
Deferred tax liability
Net deferred income tax liability
2023
2022
$
$
$
$
116,982 $
9,079
5,996
21,964
57,494
61,849
5,006
99,676
378,046
(1,430)
376,616 $
(808,873) $
(60,358)
(61,653)
—
(930,884)
(554,268) $
133,223
6,233
8,043
15,143
50,531
59,740
6,127
233,133
512,173
(2,245)
509,928
(770,964)
(84,390)
(59,258)
(26,691)
(941,303)
(431,375)
As of December 31, 2022, the net deferred income tax liability presented in the table above included net deferred tax liability of $29.7 million ($33.7 million
of deferred tax liability, net of $4.0 million of deferred tax asset) related to the UK Storage Solutions segment and recorded in liabilities held for sale - non-current on
the consolidated balance sheet.
The Company's valuation allowance decreased by $0.8 million from 2022, related to a reduction to the valuation allowance on state NOL where the
Company determined that it is more likely than not realizable due to sufficient current and future taxable income.
Tax loss carryforwards as of December 31, 2023 are outlined in the table below and include US Federal, US State and foreign (Canada and Mexico). The
availability of these tax losses to offset future income varies by jurisdiction. Furthermore, the ability to utilize the tax losses may be subject to additional limitations
upon the occurrence of certain events, such as a change in the ownership of the Company. Some of the Company’s tax attributes are subject to annual limitations
due to historical changes in ownership from acquisitions, mergers or other related ownership shift events; however, the Company anticipates that our remaining
available net operating losses will be consumed prior to their expiration.
The Company’s tax loss carryforwards are as follows at December 31, 2023:
(in thousands)
Jurisdiction:
US - Federal
US - State
Total
Loss
Carryforward
Deferred Tax
Expiration
$
$
465,179 $
240,335
705,514 $
88,887
10,789
99,676
2037, Indefinite
2025 – 2042, Indefinite
As of December 31, 2023, the total amount of the basis difference in investments outside the US, which are indefinitely reinvested and for which deferred
taxes have not been provided, is approximately $174.2 million. The tax, if any, associated with the recovery of the basis difference is dependent on the manner in
which it is recovered and is not readily determinable.
93
Unrecognized Tax Positions
The Company is subject to taxation in US, Canada, Mexico, and state jurisdictions. The Company’s tax returns are subject to examination by the applicable
tax authorities prior to the expiration of statute of limitations for assessing additional taxes, which generally ranges from two to five years after the end of the
applicable tax year. As of December 31, 2023, generally, tax years for 2016 through 2022 remain subject to examination by the tax authorities. In addition, in certain
taxing jurisdictions, in the case of carryover tax attributes to years open for assessment, such attributes may be subject to reduction by taxing authorities.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in thousands)
Unrecognized tax benefits – January 1,
Increases based on tax positions related to prior period
Decrease from expiration of statute of limitations
Unrecognized tax benefits – December 31,
2023
2022
2021
$
$
43,627 $
—
(493)
43,134 $
44,314 $
—
(687)
43,627 $
54,494
9
(10,189)
44,314
At December 31, 2023, 2022 and 2021, respectively, there were $41.8 million, $42.3 million and $43.3 million of unrecognized tax benefits that, if
recognized, would affect the annual effective tax rate.
The Company classifies interest on tax deficiencies and income tax penalties within income tax expense. During the years ended December 31, 2022 and
2021, the Company recognized approximately $0.1 million, and $1.0 million in interest, respectively. The Company accrued approximately $0.4 million for the
payment of interest at both December 31, 2023 and 2022.
Future tax settlements or statute of limitation expirations could result in a change to the Company’s uncertain tax positions. As of December 31, 2023, the
Company believes that it is reasonably possible that approximately $0.7 million of unrecognized tax benefits could decrease in the next twelve months as a result of
the expiration of statutes of limitation, audit settlements or resolution of tax uncertainties.
NOTE 14 - Derivatives
Interest Rate Swaps
In 2018, the Company entered into an interest rate swap agreement (the “Swap Agreement”) with a financial counterparty that effectively converted
$400.0 million in aggregate notional amount of variable-rate debt under the Company’s ABL Facility into fixed-rate debt. Under the terms of the Swap Agreement,
the Company received a floating rate equal to one-month LIBOR and made payments based on a fixed rate of 3.06% on the notional amount. The Swap Agreement
was designated and qualified as a hedge of the Company’s exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on
the ABL Facility. The Swap Agreement terminated on May 29, 2022.
In January 2023, the Company entered into two interest rate swap agreements with financial counterparties relating to $750.0 million in aggregate notional
amount of variable-rate debt under the Company’s ABL Facility. Under the terms of the agreements, the Company receives a floating rate equal to one-month term
SOFR and makes payments based on a weighted average fixed interest rate of 3.44% on the notional amount. The swap agreements were designated and qualified
as hedges of the Company’s exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility. The swap
agreements terminate on June 30, 2027. The floating rate that the Company receives under the terms of these swap agreements was 5.36% at December 31, 2023.
The location and the fair value of derivative instruments designated as hedges were as follows:
(in thousands)
Cash Flow Hedges:
Interest rate swap
Interest rate swap
Balance Sheet Location
2023
Prepaid expenses and other current assets
Other non-current liabilities
$
$
9,145
(4,595)
Over the next twelve months, the Company expects to reclassify $9.1 million, net of tax, from accumulated other comprehensive loss into the consolidated
statements of operations within interest expense related to the interest rate swaps.
The fair value of the interest rate swaps was based on dealer quotes of market forward rates, a Level 2 input on the fair value hierarchy, and reflected the
amount that the Company would receive or pay for contracts involving the same attributes and maturity dates.
94
The following table discloses the impact of the interest rate swaps, excluding the impact of income taxes, on other comprehensive income (“OCI”), AOCI
and the Company’s statement of operations for the years ended December 31:
(in thousands)
Gain recognized in OCI
Location of gain (loss) recognized in income
(Gain) loss reclassified from AOCI into income
Foreign Currency Contract
2023
2022
2021
15,901 $
4,669 $
11,677
Interest expense, net
Interest expense, net
Interest expense, net
(11,550) $
4,530 $
12,001
$
$
In December 2022, the Company executed a contingent forward contract to sell £330.0 million upon the closing of the sale of the former UK Storage
Solutions segment at a price ranging from 1.20550 to 1.20440 USD to British Pounds Sterling. The price was dependent upon the date of the closing of the sale.
This contract, which was to expire on September 11, 2023, mitigated the foreign currency risk of the USD relative to the British Pound Sterling prior to the closing of
the sale of the former UK Storage Solutions segment. This contract did not qualify for hedge accounting and was revalued at fair value at the reporting date with
unrealized gains and losses reflected in the Company's results of operations. Upon the closing of the sale of the UK Storage Solutions segment on January 31,
2023, the Company settled the contingent forward contract and received cash at an exchange rate of 1.205 USD to British Pounds Sterling.
The location and the fair value of the foreign currency contract in the consolidated balance sheet as of December 31, 2022 was as follows:
(in thousands)
Derivative Contracts:
Foreign currency contract
Balance Sheet Location
2022
Accrued liabilities
$
930
The fair value of the foreign currency contract was based on dealer quotes of market forward rates, a Level 2 input on the fair value hierarchy, and reflected
the amount that the Company would receive or pay for contracts involving the same attributes and maturity dates.
The following table discloses the impact of the foreign currency contract, excluding the impact of income taxes, on the Company’s statement of operations
for the years ended December 31:
(in thousands)
Loss recognized in income
Location of loss recognized in income
NOTE 15 - Fair Value Measures
2023
2022
$
7,715 $
930
Currency losses, net
Currency losses, net
The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale.
The Company utilizes the suggested accounting guidance for the three levels of inputs that may be used to measure fair value:
Level 1 -
Level 2 -
Level 3 -
Observable inputs such as quoted prices in active markets for identical assets or liabilities;
Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and
Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions
The Company has assessed that the fair value of cash and short-term deposits, trade receivables, trade payables, capital lease and other financing
obligations, and other current liabilities approximate their carrying amounts.
95
The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy:
December 31, 2023
Fair Value
Level 1
Level 2
Level 3
Carrying
Amount
Level 1
December 31, 2022
(in thousands)
ABL Facility
2025 Secured Notes
2028 Secured Notes
2031 Secured Notes
Total
Carrying
Amount
$
$
1,929,259 $
522,735
494,500
493,709
3,440,203 $
— $
—
—
—
— $
1,956,011 $
527,021
474,285
528,075
3,485,392 $
— $
—
—
—
— $
1,988,176 $
520,350
493,470
—
3,001,996 $
Fair Value
Level 2
2,020,000 $
526,800
450,135
—
2,996,935 $
— $
—
—
—
— $
Level 3
—
—
—
—
—
As of December 31, 2023, the carrying values of the ABL Facility, the 2025 Secured Notes, the 2028 Secured Notes, and the 2031 Secured Notes included
$26.8 million, $3.8 million, $5.5 million, and $6.3 million, respectively, of unamortized debt issuance costs, which were presented as a direct reduction of the
corresponding liability. As of December 31, 2022, the carrying values of the ABL Facility, the 2025 Secured Notes, and the 2028 Secured Notes included
$31.8 million, $6.2 million, and $6.5 million, respectively, of unamortized debt issuance costs which were presented as a direct reduction of the corresponding
liability.
There were no transfers of financial instruments between the three levels of the fair value hierarchy during the years ended December 31, 2023 and 2022.
The carrying value of the ABL Facility, excluding debt issuance costs, approximates fair value as the interest rates are variable and reflective of market rates. The
fair values of the 2025 Secured Notes, the 2028 Secured Notes, and the 2031 Secured Notes are based on their last trading price at the end of each period
obtained from a third party. The location and the fair value of derivative assets and liabilities in the consolidated balance sheet are disclosed in Note 14.
NOTE 16 - Stock-Based Compensation
Restricted Stock Awards
The
following
table summarizes
the Company's RSA activity during
the years ended December 31, 2023, 2022 and 2021:
Balance December 31, 2020
Granted
Forfeited
Vested
Balance December 31, 2021
Granted
Vested
Balance December 31, 2022
Granted
Vested
Balance December 31, 2023
Number of Shares
Weighted-Average
Grant Date Fair Value
11.75
29.30
29.30
11.75
29.30
37.17
29.30
37.17
44.44
37.17
44.44
57,448 $
44,708 $
(8,532) $
(57,448) $
36,176 $
35,244 $
(36,176) $
35,244 $
28,946 $
(35,244) $
28,946 $
Compensation expense for RSAs recognized in SG&A expense in the consolidated statements of operations was $1.3 million, $1.2 million, and $0.8 million
for the years ended December 31, 2023, 2022, and 2021, respectively. At December 31, 2023, unrecognized compensation cost related to RSAs totaled $0.6 million
and was expected to be recognized over the remaining weighted average vesting period of 0.4 years. The total fair value of RSA's vested in 2023, 2022, and 2021
was $1.6 million, $1.3 million, and $1.6 million, respectively.
96
Time-Based RSUs
The following table summarizes the Company's Time-Based RSU activity during the years ended December 31, 2023, 2022 and 2021:
Balance December 31, 2020
Granted
Forfeited
Vested
Balance December 31, 2021
Granted
Forfeited
Vested
Balance December 31, 2022
Granted
Forfeited
Vested
Balance December 31, 2023
Number of Shares
Weighted-Average
Grant Date Fair Value
13.46
27.25
17.80
13.99
18.54
35.40
31.35
16.42
26.16
50.74
36.75
21.38
36.07
1,325,862 $
415,737 $
(72,505) $
(671,643) $
997,451 $
377,804 $
(106,570) $
(478,906) $
789,779 $
213,388 $
(61,848) $
(322,483) $
618,836 $
Compensation expense for Time-Based RSUs recognized in SG&A expense in the consolidated statements of operations was $8.1 million, $8.2 million,
and $9.0 million for the years ended December 31, 2023, 2022, and 2021, respectively. At December 31, 2023, unrecognized compensation cost related to Time-
Based RSUs totaled $14.2 million and was expected to be recognized over the remaining weighted average vesting period of 2.0 years. The total fair value of Time-
Based RSU's vested in 2023, 2022, and 2021 was $16.2 million, $18.0 million, and $18.5 million, respectively.
Included in restructuring costs for the year ended December 31, 2021 was expense of approximately $5.9 million recognized as a result of the modification
of certain RSUs with the Transition, Separation and Release Agreement entered into on February 25, 2021, with the Company's former President and Chief
Operating Officer.
Performance-Based RSUs
The following table summarizes the Company's Performance-Based RSU award activity during the years ended December 31, 2023 and 2022 and 2021:
Balance December 31, 2020
Granted
Forfeited
Vested
Balance December 31, 2021
Granted
Forfeited
Vested
Balance December 31, 2022
Granted
Forfeited
Vested
Balance December 31, 2023
Number of Shares
Weighted-Average
Grant Date Fair Value
14.88
33.21
27.92
14.70
26.34
42.34
41.66
16.45
33.67
69.52
47.52
16.34
42.95
593,388 $
977,645 $
(23,753) $
(10,886) $
1,536,394 $
745,079 $
(74,071) $
(313,152) $
1,894,250 $
376,826 $
(37,451) $
(293,934) $
1,939,691 $
Compensation expense for Performance-Based RSUs recognized in SG&A expense in the consolidated statements of operations was $24.9 million, $20.2
million and $8.3 million for the years ended December 31, 2023, 2022, and 2021, respectively. At December 31, 2023, unrecognized compensation cost related to
Performance-Based RSUs totaled $35.2 million and was expected to be recognized over the remaining vesting period of 1.5 years. The total fair value of
Performance-
97
Based RSU's vested in 2023, 2022, and 2021 was $15.0 million, $11.9 million and $0.3 million, respectively. Refer to Note 1 for the details of conditions required for
the performance-based RSUs to vest.
Included in restructuring costs for the year ended December 31, 2021, was expense of approximately $1.3 million recognized as a result of the modification
of certain Performance-Based RSUs with the Transition, Separation and Release Agreement entered into on February 25, 2021, with the Company's former
President and Chief Operating Officer.
Stock Options
The following table summarizes the Company's stock option activity during the years ended December 31, 2023, 2022 and 2021:
Balance December 31, 2020
Forfeited
Exercised
Balance at December 31, 2021
Exercised
Balance at December 31, 2022
Exercised
Balance at December 31, 2023
Fully vested and exercisable options, December 31, 2023
WillScot Options
Weighted-Average
Exercise Price per
Share
Converted
Mobile Mini Options
Weighted-Average
Exercise Price per
Share
534,188 $
— $
— $
534,188 $
— $
534,188 $
— $
534,188 $
534,188 $
13.60
—
—
13.60
—
13.60
—
13.60
13.60
2,031,455 $
(6,240) $
(497,572) $
1,527,643 $
(663,367) $
864,276 $
(35,030) $
829,246 $
829,246 $
14.78
12.19
15.21
14.66
16.93
12.91
14.21
12.86
12.86
Under our stock option plans, the Company may issue shares on a net basis at the request of the option holder. This occurs by netting the option costs in
shares from the shares exercised. No options were granted in the years ended December 31, 2023, 2022, and 2021.
At December 31, 2023, the intrinsic value of both stock options outstanding and stock options fully vested and currently exercisable was $42.7 million. At
December 31, 2023, the weighted-average remaining contractual term of options outstanding was 4.2 years for WillScot options and 3.1 years for converted Mobile
Mini options. The total pre-tax intrinsic value of stock options exercised during the years ended December 31, 2023, 2022, and 2021 was $1.1 million, $16.0 million
and $6.2 million, respectively.
Compensation expense for stock option awards, recognized in SG&A expense in the consolidated statements of operations was $0.2 million and $0.7
million for the years ended December 31, 2022 and 2021, respectively. At December 31, 2023, all compensation cost related to stock option awards had been
recognized.
NOTE 17 - Commitments and Contingencies
The Company is involved in various lawsuits, claims and legal proceedings that arise in the ordinary course of business. The Company assesses these
matters on a case-by-case basis as they arise and establishes reserves as required. As of December 31, 2023, with respect to these outstanding matters, the
Company believes that the amount or range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on the
consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant
uncertainties.
NOTE 18 - Segment Reporting
The Company operates in two reportable segments as follows: Modular Solutions ("Modular") and Storage Solutions ("Storage").
Prior to the third quarter of 2021, the Modular segment represented the activities of WillScot historical segments prior to the Merger. During the third quarter
of 2021, the majority of the portable storage product business within the Modular segment was transitioned to the Storage segment, and associated revenues,
expenses, and operating metrics beginning in the third quarter of 2021 were transferred to the Storage segment, representing a shift of approximately $5.0 million of
revenue and gross margin per quarter from the Modular segment to the Storage segment. This adjustment was not made to the historical segment results of prior
periods, as the Company believes such adjustments to be immaterial.
98
During the first quarter of 2023, the ground level office business within the Modular segment was transferred to the Storage segment, and associated
revenues, expenses, and operating metrics were transferred to the Storage segment. All periods presented have been retrospectively revised to reflect this change
between the Modular and Storage segments. For the year ended December 31, 2022, $49.8 million of revenue and $28.5 million of gross profit were reclassified
from the Modular segment to the Storage segment.
In January 2024, the Company launched a unified go-to market approach to achieve local product unification within each metropolitan statistical area. In
connection with this change in operating model, the Company realigned the composition of its segments to reflect how its Chief Operating Decision Maker reviews
information to make operating decisions and assess performance. As a result, the Company concluded that its divisions represent its operating segments, which are
aggregated into one reportable segment as the divisions have similar economic characteristics, offer similar products to similar customers, use similar methods to
distribute products and are subject to similar competitive risks. This change in reportable segments will be reflected in our financial statements beginning in 2024.
Total assets for each reportable segment are not available because the Company utilizes a centralized approach to working capital management.
The Company defines EBITDA as net income (loss) plus interest (income) expense, income tax (benefit) expense, depreciation and amortization. The
Company reflects the further adjustments to EBITDA (“Adjusted EBITDA”) to exclude certain non-cash items and the effect of what the Company considers
transactions or events not related to its core and ongoing business operations. In addition, the Chief Operating Decision Maker ("CODM") evaluates business
segment performance utilizing Adjusted EBITDA as shown in the reconciliation of the Company’s income from continuing operations to Adjusted EBITDA
below. Management believes that evaluating segment performance excluding such items is meaningful because it provides insight with respect to the intrinsic and
ongoing operating results of the Company. The Company considers Adjusted EBITDA to be an important metric because it reflects the business performance of the
segments, inclusive of indirect costs. The Company also regularly evaluates gross profit by segment to assist in the assessment of its operational performance.
Reportable Segments
The following tables set forth certain information regarding each of the Company’s reportable segments for the years ended December 31, 2023, 2022, and
2021, respectively.
(in thousands)
Revenues:
Leasing and services revenue:
Leasing
Delivery and installation
Sales revenue:
New units
Rental units
Total revenues
Costs:
Cost of leasing and services:
Leasing
Delivery and installation
Cost of sales:
New units
Rental units
Depreciation of rental equipment
Gross profit
Other selected data:
Adjusted EBITDA from continuing operations
Selling, general and administrative expense
Purchases of rental equipment and refurbishments
Modular
Storage
Unallocated Costs
Total
Year Ended December 31, 2023
696,250
153,746
6,352
12,753
869,101
86,966
92,446
2,840
7,341
45,864
633,644
$
$
463,111
217,604 $
41,612
$
49,418 $
$
1,833,935
437,179
48,129
45,524
2,364,767
398,467
317,117
26,439
23,141
265,733
1,333,870
1,061,465
596,090
226,605
$
1,137,685 $
283,433
41,777
32,771
1,495,666
311,501
224,671
23,599
15,800
219,869
700,226 $
598,354 $
329,068 $
184,993 $
$
$
$
$
99
(in thousands)
Revenues:
Leasing and services revenue:
Leasing
Delivery and installation
Sales revenue:
New units
Rental units
Total Revenues
Costs:
Cost of leasing and services:
Leasing
Delivery and installation
Cost of sales:
New units
Rental units
Depreciation of rental equipment
Gross profit
Other selected data:
Adjusted EBITDA from continuing operations
Selling, general and administrative expense
Purchases of rental equipment and refurbishments
Modular
Storage
Unallocated Costs
Total
Year Ended December 31, 2022
629,374
156,403
6,353
8,460
800,590
103,635
100,852
3,536
5,636
35,286
551,645
$
$
375,531 $
215,732 $
118,297 $
— $
46,738 $
— $
1,621,690
429,152
40,338
51,443
2,142,623
376,868
322,636
24,011
26,907
256,719
1,135,482
883,874
567,407
397,376
992,316 $
272,749
33,985
42,983
1,342,033
273,233
221,784
20,475
21,271
221,433
583,837 $
508,343 $
304,937 $
279,079 $
$
$
$
$
$
100
(in thousands)
Revenues:
Leasing and services revenue:
Leasing
Delivery and installation
Sales revenue:
New units
Rental units
Total revenues
Costs:
Cost of leasing and services:
Leasing
Delivery and installation
Cost of sales:
New units
Rental units
Depreciation of rental equipment
Gross profit
Other selected data:
Adjusted EBITDA from continuing operations
Selling, general and administrative expense
Purchase of rental equipment and refurbishments
Modular
Storage
Unallocated Costs
Total
Year Ended December 31, 2021
$
$
$
$
$
827,677 $
213,818
40,322
38,666
1,120,483
219,462
191,011
27,386
20,163
190,805
471,656 $
404,577 $
256,168 $
187,495 $
424,813
107,311
6,671
13,702
552,497
63,114
76,522
3,962
7,867
27,985
373,047
$
$
245,027 $
160,300 $
45,426 $
— $
63,939 $
— $
1,252,490
321,129
46,993
52,368
1,672,980
282,576
267,533
31,348
28,030
218,790
844,703
649,604
480,407
232,921
The following tables present a reconciliation of the Company’s Income from continuing operations to Adjusted EBITDA for the years ended December 31,
2023, 2022, and 2021, respectively:
(in thousands)
Income from continuing operations
Income tax expense from continuing operations
Loss on extinguishment of debt
Fair value loss on common stock warrant liabilities
Interest expense
Depreciation and amortization
Currency losses, net
Restructuring costs, lease impairment expense and other related charges
Transaction costs
Integration costs
Stock compensation expense
Other
Adjusted EBITDA from continuing operations
2023
Year Ended December 31,
2022
2021
$
$
341,844 $
126,575
—
—
205,040
338,654
6,754
22
2,259
10,366
34,486
(4,535)
1,061,465 $
276,341 $
88,863
—
—
146,278
319,099
886
168
25
15,484
29,613
7,117
883,874 $
114,895
36,528
5,999
26,597
116,358
280,567
427
14,754
1,375
28,410
18,728
4,966
649,604
Included in restructuring costs for the year ended December 31, 2021 was expense of approximately $7.2 million recognized as a result of the modification
of certain equity awards associated with the Transition, Separation and Release Agreement entered into on February 25, 2021 with the Company's former President
and Chief Operating Officer. For the year ended December 31, 2021, stock-based compensation expense reported in the Statement of Cash Flows included these
charges.
101
Assets
Assets related to the Company’s reportable segments include the following:
(in thousands)
As of December 31, 2023:
Goodwill
Intangible assets, net
Rental equipment, net
As of December 31, 2022:
Goodwill
Intangible assets, net
Rental equipment, net
Modular
Storage
Total
$
$
$
$
$
$
580,692 $
126,620 $
2,141,848 $
518,877 $
125,000 $
2,004,055 $
595,943 $
293,089 $
1,239,467 $
492,552 $
294,125 $
1,073,232 $
1,176,635
419,709
3,381,315
1,011,429
419,125
3,077,287
NOTE 19 - Earnings Per Share
Basic earnings per share (“EPS”) is calculated by dividing net income attributable to WillScot Mobile Mini common shareholders by the weighted average
number of shares of Common Stock outstanding during the period. The shares of Common Stock issued as a result of the vesting of RSUs and RSAs as well as the
exercise of stock options or redemption of warrants are included in EPS based on the weighted average number of days in which they were outstanding during the
period.
Diluted EPS is computed similarly to basic EPS, except that it includes the potential dilution that could occur if dilutive securities were exercised. Effects of
potentially dilutive securities are presented only in periods in which they are dilutive.
The following table reconciles income from continuing operations attributable to WillScot Mobile Mini common shareholders to net income attributable to
common shareholders for the dilutive EPS calculation and the weighted average shares outstanding for the basic calculation to the weighted average shares
outstanding for the diluted calculation for the years ended December 31:
(in thousands)
Numerator:
Income from continuing operations
Income from discontinued operations
Net income
Denominator:
Weighted average Common Shares outstanding - basic
Dilutive effect of outstanding securities:
Warrants
RSAs
Time-Based RSUs
Performance-Based RSUs
Stock Options
Weighted average Common Shares outstanding - dilutive
2023
2022
2021
$
$
341,844 $
134,613
476,457 $
276,341 $
63,199
339,540 $
198,555
—
15
274
2,040
966
201,850
216,809
1,605
18
401
1,471
1,095
221,399
114,895
45,249
160,144
226,519
3,589
24
594
955
1,113
232,794
The following potential common shares were excluded from the computation of dilutive EPS because their effect would have been anti-dilutive:
(in thousands)
Time-based RSUs
Performance-based RSUs
2023
2022
2021
106
277
—
591
—
375
102
NOTE 20 - Subsequent Events
Interest Rate Swaps
In January 2024, the Company entered into two interest rate swap agreements with financial counterparties relating to $500.0 million in aggregate notional
amount of variable-rate debt under the Company's ABL Facility. Under the terms of the agreements, the Company receives a floating rate equal to one-month term
SOFR and will make payments based on a weighted average fixed interest rate of 3.70% on the notional amount. The swap agreements were designated and
qualified as hedges of the Company's exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility. The
swap agreements terminate on June 30, 2027.
Entry into an Agreement to Acquire McGrath RentCorp
On January 28, 2024, the Company, along with its newly formed subsidiaries, Brunello Merger Sub I, Inc. (“Merger Sub I”) and Brunello Merger Sub II, LLC
(“Merger Sub II”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with McGrath RentCorp ("McGrath"). Merger Sub I will merge with and
into McGrath (the “First-Step Merger”), with McGrath surviving the First-Step Merger and, immediately thereafter, McGrath will merge with and into Merger Sub II
(the “Second-Step Merger” and together with the First-Step Merger, the “McGrath Acquisition”), with Merger Sub II surviving the Second-Step Merger as a wholly
owned subsidiary of the Company. At the effective time of the First-Step Merger, and subject to the terms and subject to the conditions set forth in the Merger
Agreement, each outstanding share of the common stock of McGrath shall be converted into the right to receive either (i) $123.00 in cash or (ii) 2.8211 shares of
validly issued, fully paid and nonassessable shares of the Company’s common stock. Under the terms of the Merger Agreement, we expect McGrath’s shareholders
would own approximately 12.6% of the Company following the McGrath Acquisition.
The McGrath Acquisition has been approved by the Company and McGrath’s respective boards of directors. The McGrath Acquisition is subject to
customary closing conditions, including receipt of regulatory approval and approval by McGrath’s shareholders, and is expected to close in the second quarter of
2024.
In connection with the Merger Agreement, the Company entered into a commitment letter on January 28, 2024, which was further amended and restated
on February 12, 2024 (the "Commitment Letter"), pursuant to which certain financial institutions have committed to make available to WSI, in accordance with the
terms of the Commitment Letter, (i) an $875 million eight year senior secured bridge credit facility, (ii) an $875 million five year senior secured bridge credit facility
and (iii) an upsize to WSI's existing $3.7 billion ABL Facility by $750 million to $4.45 billion to repay McGrath's existing credit facilities and notes, fund the cash
portion of the consideration, and pay the fees, costs and expenses incurred in connection with the McGrath Acquisition and the related transactions, subject to
customary conditions.
103
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
ITEM 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls
and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”) as of December 31, 2023. Based upon
that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31,
2023.
Management’s Report on Internal Control over Financial Reporting
As required by SEC rules and regulations, our management is responsible for establishing and maintaining adequate internal control over financial
reporting (“ICFR”), as such term is defined in Exchange Act Rule 13a-15(f). Our ICFR is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with GAAP. Our ICFR includes policies
and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
Company’s assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
GAAP, and that receipts and expenditures are being made only in accordance with the authorization of management and directors of the Company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could 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 financial statements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because 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 the Company's ICFR as of
December 31, 2023 using the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 Framework). Based on that assessment, the Company's management believes that, as of December 31, 2023, the Company's ICFR was
effective based on those criteria.
The effectiveness of the Company’s ICFR as of December 31, 2023 has been audited by Ernst & Young LLP, an independent registered public accounting
firm, as stated in their report appearing below, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting
as of December 31, 2023.
Changes in Internal Control over Financial Reporting
There were no changes in our ICFR that occurred during the quarter ended December 31, 2023 that materially affected, or are reasonably likely to
materially affect, our ICFR.
104
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of WillScot Mobile Mini Holdings Corp.
Opinion on Internal Control Over Financial Reporting
We have audited WillScot Mobile Mini Holdings Corp.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our
opinion, WillScot Mobile Mini Holdings Corp. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December
31, 2023, 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 2023 consolidated
financial statements of the Company and our report dated February 20, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an
opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
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 other procedures 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 Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition 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 any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Baltimore, Maryland
February 20, 2024
105
ITEM 9B. Other Information
During the three months ended December 31, 2023, no director or Section 16 officer of the Company adopted or terminated a "Rule 10b5-1 trading
arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
106
PART III
ITEM 10. Directors, Executive Officers and Corporate
Governance
Executive Officers
The following table sets forth information concerning our executive officers, as of February 20, 2024.
Name
Bradley L. Soultz
Timothy D. Boswell
Hezron T. Lopez
Felicia K. Gorcyca
Graeme Parkes
Sally J. Shanks
Executive Officer Biographies
Age
Title
54
45
52
45
51
47
Chief Executive Officer (CEO)
President and Chief Financial Officer (CFO)
Executive Vice President – Chief Legal & Compliance Officer & ESG (CLO)
Executive Vice President – Chief Human Resources Officer (CHRO)
Executive Vice President, Chief Information Officer (CIO)
Senior Vice President, Chief Accounting Officer (CAO)
Bradley L. Soultz Mr. Soultz is CEO of WillScot Mobile Mini and served as President and CEO of WillScot prior to the WillScot Mobile Mini merger. Prior to
becoming WillScot’s President and CEO in November of 2017, he served as President and CEO of Williams Scotsman International Inc. (“WSII”). He was responsible for the strategic
and operational aspects of WSII’s North American business and for helping the Company transition to a publicly traded company. Before joining WSII, Mr. Soultz was the Chief
Commercial and Strategy Officer of Novelis Inc., the world leader in aluminum rolling and recycling. He previously held various leadership roles with Novelis and Cummins in Europe and
North America. Mr. Soultz is a graduate of Purdue University.
Timothy D. Boswell Mr. Boswell has served as our President and Chief Financial Officer since September 2021, having previously served as Chief Financial
Officer since the completion of the Williams Scotsman carve-out transaction (formerly Algeco Scotsman) in November 2017. Mr. Boswell was previously Vice President, Finance and
Treasurer of Williams Scotsman International, where he was responsible for the company’s North American finance, strategy and IT functions. He also previously served as the
company’s Vice President of Strategy and Business Development, where he was responsible for the development and execution of strategic initiatives and for pricing, value-added
products and services, and marketing. Prior to joining Algeco Scotsman in June 2012, Mr. Boswell was a Vice President of Sterling Partners, a Chicago-based private equity firm with $4
billion of assets under management, with responsibilities for principal investing and portfolio company management. Earlier in his career he worked at Banc of America Capital Investors,
Edgeview Partners, and Bear, Stearns & Co. Mr. Boswell holds a Bachelor of Arts degree in Economics and Psychology from Davidson College and a Master of Business Administration
degree from the Darden School of Business at the University of Virginia.
107
Hezron T. Lopez Mr. Lopez has served as our Executive Vice President – Chief Legal & Compliance Officer & ESG since June 2022. He joined WillScot in
June 2019 and served as Vice President, General Counsel & Corporate Secretary until the merger with Mobile Mini in July 2020. Following the merger, he assumed the role of EVP -
Chief Human Resources Officer & ESG of WillScot Mobile Mini. Previously, Mr. Lopez served from 2012 to 2018 as Senior Vice President, General Counsel and Corporate Secretary of
Herman Miller, Inc. (Nasdaq: MLHR), a manufacturer of home and office furniture. From 2008 to 2012, Mr. Lopez served as Associate General Counsel and Head of Mergers &
Acquisitions, Commercial and International for A.O. Smith Corporation (NYSE: AOS), the leading manufacturer of water heating equipment and water treatment products. Mr. Lopez
holds a Bachelor of Science degree in City & Regional Planning from California Polytechnic State University, San Luis Obispo, and a Juris Doctor degree from the Indiana University
Maurer School of Law.
Felicia Gorcyca Ms. Gorcyca has served as our Executive Vice President – Chief Human Resources Officer since June 2023. Ms. Gorcyca has diversified
experience in strategic human resources roles, most recently as Chief People Officer for LifeStance Health (NASDAQ: LFST) and President of LifeStance Health Foundation. Previously
with TPG Capital, she was an Operations Director and member of the Global Human Capital team where she partnered with TPG portfolio companies to build transformative leadership
teams and boards, and expanded the TPG CHRO Network with a focus on HR strategy and practices. Prior to joining TPG, Ms. Gorcyca held senior HR leadership roles including Chief
People Officer for Stack Sports, and Global Head of People Operations for Solera Holdings, Inc., where she gained extensive experience in non-U.S. labor markets. She previously
served as a Consultant in the Los Angeles office of Spencer Stuart where she spent 13 years with the firm conducting executive search assignments and advising clients on leadership
development and succession planning. Ms. Gorcyca holds a Master of Public Health degree with Delta Omega honors from UCLA, and a Bachelor of Science degree in International
Business from Pepperdine University.
Graeme Parkes Mr. Parkes has served as our Executive Vice President – Chief Information Officer since the merger with Mobile Mini in July 2020. He
previously served as CIO for Mobile Mini, which he joined in 2014. Mr. Parkes has a proven international track record in information technology, information security, software
development and supporting the growth of the businesses through IT related revenue generating programs. He also serves as Vice Chairman of the board of St. Mary’s Foodbank, the
oldest and one of the largest Foodbanks in America. Mr. Parkes received a Bachelor of Commerce degree in Information Systems from the University of KwaZulu-Natal in South Africa.
Sally J. Shanks Ms. Shanks has served as our Senior Vice President – Chief Accounting Officer since 2022, having served as Chief Accounting Officer
for WillScot since 2017. She is responsible for the Company’s accounting, reporting and tax functions. Ms. Shanks joined WillScot Mobile Mini from Merkle Inc., a global technology-
enabled performance marketing agency, where she served in various financial leadership roles from 2009 - 2017, including Senior Vice President, Accounting & Treasury. Prior to that
she held the role of Director of Accounting and Reporting for Laureate Education. Ms. Shanks started her career with PricewaterhouseCoopers, holds a Bachelor of Science degree in
Accounting from Providence College, and is a certified public accountant.
108
Non-Executive Directors
The names of the non-executive members of our Board, their respective ages and other biographical information as of February 20, 2024 are set forth below. All Directors serve for a
term ending at the next annual meeting following the annual meeting at which the Director was elected or following their appointment, as applicable, and until their successors are
elected and qualified, or until their earlier death, resignation, disqualification or removal.
Mark S. Bartlett
Independent
Director Since: 2017
Age: 73
Key Skills & Qualifications
& Leadership Independence Industry
Strategy Public Company Finance
The Board believes Mr. Bartlett’s risk and oversight, accounting and finance expertise,
experience as a director of public and private companies, and knowledge of our
Company and industry enables him to provide meaningful guidance to our Board.
Principal Occupation & Business Experience
Mr. Bartlett has served as a Director since 2017 including as a Director of WillScot Mobile Mini since the completion of the WillScot Mobile Mini merger. Mr. Bartlett spent his entire
career with Ernst & Young LLP, serving in various executive roles before retiring as partner in 2012. He serves as a director and member of the Audit Committee at FTI Consulting,
Inc., and director and Chair of the Audit Committee at each of Zurn Water Solutions and T. Rowe Price Group, Inc. Mr. Bartlett is a graduate of West Virginia University and a
Certified Public Accountant.
Other Public Company Directorships in the Last 5 Years
Committees of the WillScot Mobile
Mini Board of Directors
• FTI Consulting, Inc.
• Zurn Water Solutions
• T. Rowe Price Group, Inc.
Erika T. Davis
Independent
Director Since: 2022
Age: 59
Audit Committee - Chair
Compensation Committee
Key Skills & Qualifications
& Leadership Independence
Strategy Public Company
The Board believes Ms. Davis’ experience in Human Resources and various
Operational and Administrative roles, as well as her leadership experience at large
publicly traded companies in the areas of M&A integration, technology and customer-
facing support, enables her to provide meaningful guidance to our Board.
Principal Occupation & Business Experience
Ms. Davis has served as Performance Food Group’s Executive Vice President & Chief Human Resources Officer since July 2019. Ms. Davis joined Performance Food Group after
a 26-year career with Owens & Minor, a global healthcare services company. For nearly 20 of those years, she served in senior leadership roles including Chief Administrative
Officer, Corporate Chief of Staff, and Senior Vice President for Administration & Operations and for Human Resources. Ms. Davis earned her undergraduate degree from the
University of Richmond (VA) and holds a master’s in Public Administration from the University of North Carolina at Chapel Hill.
Other Public Company Directorships in the Last 5 Years
Committees of the WillScot Mobile
Mini Board of Directors
None
Compensation Committee
109
Gerard E. Holthaus
Independent
Director Since: 2017
Age: 74
Key Skills & Qualifications
& Leadership Independence Finance
Strategy Public Company Industry
The Board believes Mr. Holthaus’ executive leadership in our industry, including various
CFO and CEO roles, risk and oversight, M&A, accounting and finance, corporate
governance expertise, experience as a director of public and private companies, and
knowledge of our Company enable him to provide meaningful guidance to our Board.
Principal Occupation & Business Experience
Mr. Holthaus serves as the Lead Independent Director of WillScot Mobile Mini. He served as Non-Executive Chairman of WillScot until the completion of the WillScot Mobile Mini
merger and is the former Non-Executive Chairman of Algeco Scotsman Global S.á.r.l. Mr. Holthaus has served in various executive leadership positions, including CEO, CFO and/or
Chairman of various companies in our industry. Mr. Holthaus is Non-Executive Chairman of the Board of FTI Consulting and the Baltimore Life Companies. Mr. Holthaus is a graduate
of Loyola University Maryland.
Other Public Company Directorships in the Last 5 Years
Committees of the WillScot Mobile
Mini Board of Directors
• FTI Consulting, Inc.
• NESCO Holdings (former)
Nominating & Corporate Governance Committee - Chair
Audit Committee
Natalia Johnson
Independent
Director Since: 2023
Age: 46
Key Skills & Qualifications
& Leadership Independence Industry
Strategy
The Board believes that Ms. Johnson’s leadership experience at large publicly-traded
companies in the areas of digital and technological transformation, human capital, data
science, risk management and operational strategy enables her to provide meaningful
guidance to our Board.
Principal Occupation & Business Experience
Ms. Johnson joined the Board in August 2023 following a vacancy created by the Board’s decision to expand the Board from eight (8) to nine (9) directors. Ms. Johnson has served as
Chief Administrative Officer of Public Storage since August 2020, having previously served as Chief Human Resources Officer from July 2016 to August 2020. Prior to joining Public
Storage, Ms. Johnson spent 13 years in several leadership roles at Bank of America, most recently as SVP, Chief Operating Officer - Mortgage Technology. Earlier in her career, she
held various management roles for Coca-Cola and San Cristóbal Insurance in her home country of Argentina. She holds a bachelor’s in Business Administration from Universidad
Católica De Córdoba, Argentina.
Other Public Company Directorships in the Last 5 Years
Committees of the WillScot Mobile
Mini Board of Directors
None
Audit Committee
Compensation Committee
110
Erik Olsson
Independent
Director Since: 2020
Age: 61
Key Skills & Qualifications
& Leadership Independence Finance
Strategy Public Company Industry
The Board believes Mr. Olsson’s extensive experience in our industry and adjacent
businesses, global perspective, financial expertise, his leadership in M&A and related
integration, forward-looking technology enablement, as well as his experience as a
director and/or Chair of public companies, enable him to provide meaningful guidance to
our Board.
Principal Occupation & Business Experience
Mr. Olsson became Mobile Mini’s Non-Executive Chairman of the Board on October 1, 2019, and has continued in this capacity for WillScot Mobile Mini since the completion of the
WillScot Mobile Mini merger. Mr. Olsson previously served as CEO of Mobile Mini and as CFO, COO and CEO of RSC Equipment Rentals until its merger with United Rentals, Inc. He
is Chairman of the board of Ritchie Brothers Auctioneers Incorporated and a member of the board of Dometic Group AB. Mr. Olsson also serves on the board of directors of St. Mary’s
Foodbank Alliance. Mr. Olsson is a graduate of the University of Gothenburg, Sweden.
Other Public Company Directorships in the Last 5 Years
Committees of the WillScot Mobile
Mini Board of Directors
• Dometic Group AB
• RB Global, Inc.
• Mobile Mini (until merger)
• Pontem Corporation (former)
Rebecca L. Owen
Independent
Director Since: 2021
Age: 62
Key Skills & Qualifications
& Leadership Independence Finance
Strategy Public Company
The Board believes Ms. Owen’s depth of knowledge of the storage, real estate,
construction and adjacent markets, governance expertise, finance, risk and oversight
experience, as well as her experience as a director of two public companies enable her to
provide meaningful guidance to our Board.
Principal Occupation & Business Experience
Ms. Owen joined the WillScot Mobile Mini Board in November 2021. She serves as Chairman and founder of Battery Reef, LLC, a commercial real estate investment and management
company. She has served in various leadership roles at Clark Enterprises, Inc., including as President and Chief Investment Officer of CEI Realty, Inc. and Chief Legal Officer of Clark
Enterprises, Inc. Ms. Owen also serves on the board of Public Storage (NYSE: PSA). She previously served on WillScot’s board prior to the WillScot Mobile Mini merger as well as on
the boards of Jernigan Capital, Inc. (formerly NYSE: JCAP) and Columbia Equity Trust, Inc. (formerly NYSE: COE). Ms. Owen also serves on the private boards of Carr Properties, a
private office and residential REIT; the board of The Feil Organization, a commercial real estate investment and management company; and the Real Estate Investment Advisory
Committee of ASB Capital Management, LLC. Ms. Owen received a Juris Doctorate from University of Chicago Law School and a Bachelor of Arts in Economics from Hamilton College.
Further, Ms. Owen has been certified in Cybersecurity Oversight by Carnegie Mellon University.
Other Public Company Directorships in the Last 5 Years
Committees of the WillScot Mobile
Mini Board of Directors
• Public Storage
• Jernigan Capital, Inc.(former)
Compensation Committee
Nominating & Corporate Governance Committee
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Jeff Sagansky
Independent
Director Since: 2017
Age: 72
Key Skills & Qualifications
& Leadership Independence Finance Strategy Public Company
The Board believes Mr. Sagansky’s experience with mergers and acquisitions and capital
markets, together with his experience as a senior executive and director of growth-
oriented public and private companies, enables him to provide meaningful guidance to our
Board.
Principal Occupation & Business Experience
Mr. Sagansky has served as a Director since November 2017 including as a Director of WillScot Mobile Mini since the completion of the WillScot Mobile Mini merger. Mr. Sagansky has
served in various leadership positions with Paxson Communications, Sony Pictures, CBS Entertainment, and Tristar Pictures, to name a few. He was Chairman and CEO of Diamond
Platinum Eagle Acquisition Corp., when the company effected a three-way merger with Draft Kings and SB Tech. Mr. Sagansky served as Chairman and CEO of Platinum Eagle
Acquisition Corp. and as a director for several other publicly traded companies. He is a graduate of Harvard University.
Other Public Company Directorships in the Last 5 Years
Committees of the WillScot Mobile
Mini Board of Directors
• Target Hospitality Corp.
• Screaming Eagle Acquisition Corp.
• Sharecare, Inc.
• Diamond Eagle Acquisition Corp.(former)
• Platinum Eagle Acquisition Corp.(former)
• Global Eagle Entertainment Inc. (former)
• Falcon Capital Acquisition Corp. (former)
Michael W. Upchurch
Compensation Committee - Chair
Nominating & Corporate Governance Committee
Independent
Director Since: 2020
Age: 63
Key Skills & Qualifications
& Leadership Independence
Strategy Finance
The Board believes Mr. Upchurch's leadership experience in business, management
operations and finance, including his 15-year tenure as CFO, as well as his 34 years of
leadership experience with publicly traded companies, including guiding large M&A
transactions and navigating the related regulatory and integration regimes enables him to
provide meaningful guidance to our Board.
Principal Occupation & Business Experience
Mr. Upchurch served as a Director of Mobile Mini beginning in February 2019 and has continued as a Director of WillScot Mobile Mini. He served as Executive Vice President and
Chief Financial Officer for Kansas City Southern (“KCS”), a transportation holding company that has railroad investments in the U.S., Mexico and Panama linking the commercial and
industrial centers of North America, prior to retiring in April 2023. Mr. Upchurch served as Chief Financial Officer at KCS since October 2008, having joined KCS in March 2008. Prior
to KCS, Mr. Upchurch held various positions at Sprint, most recently as senior vice president – financial operations. He began his career as an accountant with Price Waterhouse. Mr.
Upchurch is a certified public accountant and has a B.S. degree in Business Administration from Kansas State University.
Other Public Company Directorships in the Last 5 Years
• Mobile Mini, Inc. (until merger)
Committees of the WillScot Mobile
Mini Board of Directors
Audit Committee
Nominating & Corporate Governance Committee
Audit Committee
Members: Mark Bartlett (Chair), Gerard E. Holthaus, Natalia Johnson and Michael W. Upchurch
The Board has determined that each Audit Committee member is independent and otherwise qualifies as an Audit Committee member pursuant to applicable rules
of the SEC and Nasdaq. The Board has determined that Mark S. Bartlett, Gerard E. Holthaus and Michael W. Upchurch each qualifies as an “audit committee
financial expert” within the meaning stipulated by the SEC, based upon the education and experience described in their biography.
The Audit Committee’s primary responsibilities are to monitor: (i) the integrity of our financial statements and accounting and financial reporting processes; (ii) our
compliance with legal and regulatory requirements; (iii) the independent auditor’s
112
qualifications, performance, and independence; (iv) the performance of our internal audit and disclosure controls functions; (v) our risk management framework, and
(vi) our policies and processes related to cybersecurity and data-protection threats.
In discharging these responsibilities, the Audit Committee, among other things: (i) selects, oversees, and retains our independent auditor; (ii) reviews and discusses
the scope of the annual audit and written communications by our independent auditor to the Audit Committee and management; (iii) oversees our financial reporting
activities, including the annual audit and the accounting standards and principles we follow; (iv) approves audit and non-audit services by our independent auditor
and applicable fees; (v) reviews and discusses our periodic reports filed with the SEC; (vi) reviews and discusses our earnings press releases and communications;
(vii) oversees our internal audit activities; (viii) oversees our disclosure controls and procedures and reviews our internal controls over financial reporting; (ix)
monitors, reviews and discusses the Company’s risk management framework, consisting of a variety of potential risks such as cybersecurity, privacy, and ESG; (x)
periodically reviews our policies and processes related to cybersecurity and data-protection threats, including assessment, identification and management of
material risks, mitigation strategy, governance and incident reporting, and coordinates with the Board and management, as applicable, to provide oversight over the
preparation of relevant disclosures, including those required by the new SEC cybersecurity rules; (xi) oversees the administration of our Code of Business Conduct
and Ethics and other ethics policies; (xii) oversees and periodically reviews and edits our Whistleblower Policy; (xiii) reviews, discusses, and approves insider and
affiliated person transactions; (xiv) administers the policy with respect to the hiring of former employees of our independent auditor; and (xv) with respect to all of the
foregoing responsibilities, interfaces with management, the independent auditor, the internal audit department, and any other parties to discuss, review, and execute
such responsibilities. In addition, the Audit Committee performs an annual self-evaluation, reviews its charter and recommends changes to the Nominating and
Corporate Governance Committee for submission to the Board for approval, and prepares the Audit Committee report required to be included in our annual proxy
statement.
Code of Business Conduct & Ethics
Our Board has adopted a Code of Business Conduct and Ethics (“Code of Business Conduct”), which applies to our directors, officers and employees, and a Code
of Ethics for the Chief Executive Officer and Senior Financial Officers (“Code of Ethics”), which supplements our Code of Business Conduct and applies to our CEO,
principal financial officer, principal accounting officer and controller. Copies of the Code of Business Conduct and the Code of Ethics are available online at
http://www.willscotmobilemini.com/corporate-governance/governance-overview. If the Board grants a waiver under our Code of Business Conduct to any director,
executive officer or senior financial officer, or we make any substantive amendment to the Code of Ethics or grant any waiver thereunder to a covered officer, we will
promptly disclose the nature of the applicable waiver or amendment on our website.
Process for Recommending Directors
The Nominating and Corporate Governance Committee solicits and receives recommendations for potential director candidates from stockholders, management,
directors and other sources. The Board will select nominees based on independence, character, ability to exercise sound judgment, diversity, age, demonstrated
leadership, qualifications, skills, including financial literacy, experience in the context of the needs of the Board, and other relevant factors.
Each year, the Board (via the Nominating and Corporate Governance Committee) conducts a rigorous evaluation to help determine whether the Board and its
committees are functioning effectively. In 2023, this effort included the engagement of an independent third-party evaluation firm to augment the Board’s annual
evaluation and succession planning processes. The self-evaluation process solicits input from individual directors and provides an opportunity for directors to
identify areas for improvement. Improvement areas may include the need for new skills and experiences, which helps guide the Board’s direction for specific skills,
attributes and experiences needed to effectuate the Company’s strategy.
The Board values diversity of talents, skills, abilities and experiences and believes Board diversity of all types provides significant benefits to the Company. Our
Corporate Governance Guidelines state that directors will be selected in the context of assessing the Board’s needs at the time and with the objective of ensuring
diversity in the background, experience, and viewpoints of Board members. To assist in promoting diversity, the Board actively seeks and includes women and
minority candidates in the pool of nominees when selecting new director candidates.
The Nominating and Corporate Governance Committee considers unsolicited inquiries and director candidates recommended by stockholders in the same manner
as candidates from all other sources. Recommendations should be sent to the Corporate Secretary at 4646 E. Van Buren Street, Suite 400, Phoenix, Arizona
85008.
Delinquent Section 16(a) Reports
Based solely on a review of the reports filed for fiscal year ended December 31, 2023 and related written representations from reporting persons, we are not aware
of any late or delinquent filings under Section 16(a) of the Securities Exchange Act of 1934.
113
ITEM 11. Executive Compensation
Director Compensation
Our director compensation program is designed to compensate non-executive directors fairly for their service and to align their interests with the long-term interests
of our stockholders. Every other year, the Compensation Committee reviews the compensation level of our non-executive directors and makes recommendations to
the Board. In 2022, the Committee engaged independent compensation consultant Pay Governance to evaluate the compensation program relative to the director
compensation programs of our executive compensation peer group. Pay Governance found that our non-executive director annual retainer was below the peer
th
group median, while other elements of pay (e.g., committee membership, and Board and committee leadership) are generally positioned between the 50 and 75
percentiles. Pay Governance advised that they expect increases in director pay, at median, of 3% to 5% for companies looking to maintain their competitive
positioning. As a result, for 2023, Pay Governance recommended, and the Nominating and Corporate Governance Committee concurred and approved, an increase
in our annual retainer to position our compensation at the 50 percentile of our peer group. In 2023, the annual compensation package for non-executive directors
consisted of the following.
th
th
2023-Type of Fee
Retainers
Non-Executive Chair Cash
Non-Executive Chair Restricted Stock (one year vesting)
Lead Independent Director Cash
Lead Independent Director Stock (one year vesting)
All Other Non-Executive Directors Cash
All Other Non-Executive Directors Restricted Stock (one year vesting)
Committee Chair / Member Cash Stipend
Audit Committee
Compensation Committee
Nominating and Corporate Governance Committee
Meeting fees
Amount ($)
150,000
185,000
105,000
150,000
80,000
150,000
30,000 / 10,000
22,500 / 7,500
15,000 / 6,000
—
$
$
$
$
$
$
$
$
$
$
2023 Non-Employee Director Compensation Table
The table below summarizes the compensation paid to our non-employee directors for the year ended December 31, 2023. Mr. Soultz is a member of the Board but
does not receive any additional compensation for services provided as a director.
Director Name
Fees Earned or Paid in Cash ($)
(1)
Stock Awards ($)
(2)
Total ($)
Mark S. Bartlett
Sara R. Dial
(3)
Jeffrey S. Goble
(3)
Gerard E. Holthaus
Natalia Johnson
(4)
Kimberly J. McWaters
(3)
Erik Olsson
Rebecca L. Owen
Jeff Sagansky
Michael W. Upchurch
Erika T. Davis
$
$
$
$
$
$
$
$
$
$
$
117,500 $
— $
— $
130,000 $
60,000 $
— $
150,000 $
86,000 $
108,500 $
90,000 $
87,500 $
150,000 $
— $
— $
150,000 $
150,000 $
— $
185,000 $
150,000 $
150,000 $
150,000 $
150,000 $
267,500
—
—
280,000
210,000
—
335,000
236,000
258,500
240,000
237,500
(1) The amounts in this column represent annual cash retainers and fees paid during 2023.
(2) The amounts reflected in this column represent the aggregate grant date fair value of the restricted stock awards computed in accordance with Accounting Standards Codification
Topic 718 (“ASC 718”). The grant date fair value of the stock awards under ASC 718 is calculated based on the number of shares of our Common Stock underlying the award, multiplied
by the closing price of a share of our Common Stock on the date of grant. Furthermore, non-employee directors must retain their equity grants for 12 months before their equity grants
will vest.
(3) Ms. Dial, Mr. Goble and Ms. McWaters ceased serving on the Board at the conclusion of the 2023 annual meeting.
(4) Ms. Johnson was appointed to the Board in August 2023.
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The aggregate number of shares of restricted stock issued as director compensation that were outstanding and unvested as of December 31, 2023 held by each
non-employee director (in their capacity as non-employee directors) was as follows:
Director
Mark S. Bartlett
Erika T. Davis
Gerard E. Holthaus
Natalia Johnson
Erik Olsson
Rebecca L. Owen
Jeff Sagansky
Michael W. Upchurch
Executive Compensation
Compensation Discussion and Analysis
Number of Shares of Restricted Stock Unvested as of
December 31, 2023
3,523
3,523
3,523
3,463
4,345
3,523
3,523
3,523
This Compensation Discussion and Analysis, or "CD&A," section describes the material elements of our executive officer compensation program and policies for
2023, and the principles and objectives of our decisions with respect to 2023 compensation for our named executive officers.
Executive Officers Covered by this Compensation Discussion and Analysis
In this CD&A, we provide information regarding our compensation policies and decisions relating to our Chief Executive Officer (“CEO”), President and Chief
Financial Officer (“CFO”), Executive Vice President – Chief Legal & Compliance Officer & ESG (“CLO”), Executive Vice President – Chief Human Resources Officer
(“CHRO”), Executive Vice President – Chief Information Officer (“CIO”) and Senior Vice President – Chief Accounting Officer (“CAO”). We refer to these executive
officers as our “named executive officers” (“NEOs”). We intend this CD&A to provide information regarding, among other things, the overall objectives of our
compensation program and each element of compensation that we provided to the NEOs.
The named executive officers for 2023 and their titles are listed in the following table:
Name
Bradley L. Soultz
Timothy D. Boswell
Hezron T. Lopez
Felicia K. Gorcyca
Graeme Parkes
Sally J. Shanks
Age
54
45
52
45
51
47
Title
Chief Executive Officer (CEO)
President and Chief Financial Officer (CFO)
Executive Vice President – Chief Legal & Compliance Officer & ESG (CLO)
Executive Vice President – Chief Human Resources Officer (CHRO)
Executive Vice President – Chief Information Officer (CIO)
Senior Vice President – Chief Accounting Officer (CAO)
Our Executive Compensation Program
We lease turnkey modular offices and portable storage units with furniture and appliances, or Value-Added Products, so that our customers are immediately
productive, safe, and comfortable. We maximize value by safely and frugally growing lease revenue, driving units on rent, rate optimization, and Value-Added
Products penetration to delight our customers, support our employees, and deliver outstanding returns to our stockholders. In 2023, WillScot Mobile Mini generated
$2.36B of revenue, $1.06B of Adjusted EBITDA, $341.8M of income from continuing operations, and $576.6M of Free Cash Flow representing growth relative to
2022 of 10.4%, 20.1%, 23.7%, and 74.5%, respectively. We progressed every growth initiative that management previously described at our 2021 Investor Day,
and we achieved one of our milestones of $1B of Adjusted EBITDA in 2023.
(1)
(1) All metrics presented from continuing operations. Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. For a discussion of our use of non-GAAP financial
measures, please see the “Reconciliation of Non-GAAP Financial Measures” section in Item 7 of this Annual Report on Form 10-K.
Our goal is to retain and attract experienced and talented executive officers and to motivate them to achieve our short-term and long-term financial, operational, and
strategic objectives that produce and promote stockholder value. To achieve this goal, we strongly emphasize a culture of pay for performance to provide incentives
and accountability for our executive officers in working toward the achievement of our objectives. Accordingly, we have designed our incentive compensation with
the goal of ensuring that actual realized pay varies above, or below targeted compensation opportunity based on achievement of challenging performance goals and
demonstration of meaningful individual commitment and contribution.
115
The table below outlines each of the principal elements of our executive compensation program:
Pay Element
Base Salary
STIP
Performance-
Based RSUs
Time-Based RSUs
Who Receives
All named
executive officers
All named
executive officers
All named
executive (cliff
vesting) officers
All named
executive officers
Key 2023 Compensation Actions
When
Granted
Bi-weekly
Form of
Delivery
Cash
Annually
Cash
Annually
Equity
Type of
Performance
Short-term emphasis
(fixed)
Short-term emphasis
(variable)
Long-term emphasis
(variable)
Performance
Period
Bi-weekly
How Payout
Determined
Pre-established at each
payroll date
2023 Performance
Measures
Individual
1 year
3 years
Pre-established formula Adjusted EBITDA, Q4
Core Lease Revenue
Delivered
Pre-established formula Relative TSR vs. S&P
MidCap 400 Index
Annually
Equity
Long-term emphasis
(variable)
4 years (ratable
annual vesting)
Stock price at each
vesting date
Service Period
The elements of our total direct compensation, which consist of base salary, short-term cash incentive compensation and long-term equity incentive compensation,
for our named executive officers and a summary of the actions that our Compensation Committee took during 2023 are set forth below.
Compensation Component
Base Salary
Short-Term Cash Incentive
(“STIP”) Compensation
Long-Term Equity Incentive
Compensation
Link to Business and Talent Strategies
2023 Compensation Actions
•
•
•
•
•
Competitive base salaries help attract and retain executive
talent.
Focus executives on achieving annual financial results that
are key indicators of annual financial and operational
performance.
2023 annual equity-based awards consisted of Performance-
Based RSUs and Time-Based RSUs.
Performance-Based RSUs are based on relative total
shareholder return (TSR) over a 3-year period versus
constituent companies in the S&P MidCap 400 Index.
Time-Based RSUs provide focus on stock price growth and
support and underpin our talent retention objectives
•
•
•
•
•
The CEO’s merit based increase for 2023 was 4.6%
and the merit based increases for the other NEOs for
2023 ranged from 4% to 13.9%, to reflect role and
responsibility changes and increases, respectively;
strong Company performance; and for improved
alignment with market compensation levels.
Named executive officers earned annual cash
incentive awards valued at 117.34% of target
(Adjusted EBITDA payout above target; Q4 Core
Lease Revenue Delivered below target).
The target annual equity award mix is 70%
Performance-Based RSUs and 30% Time-Based
RSUs for the CEO, CFO CLO and CHRO; and 65%
Performance-Based RSUs and 35% Time-Based
RSUs for all other named executive officers. For 2023,
the Compensation Committee elected to increase the
weighting of Performance-Based RSUs for Messrs.
Lopez and Parkes and Ms. Shanks.
Performance-Based RSUs are subject to a 3-year
performance period (3 years following the grant date).
Time-Based RSUs vest over four years, in equal
annual installments.
116
Pay Mix is Majority Performance Based
Emphasis on Performance-Based Elements of Compensation
It remains our firm belief that the majority of compensation of our senior executives should be based on our overall performance. A significant portion of our
executives’ pay is incentive-based and therefore at risk. In 2023, as shown in the preceding chart, performance-linked components (Annual Performance Bonus
(“STIP”) and long-term incentive compensation) were 88% of the CEO’s target total direct compensation opportunity, which we define as base salary, target STIP
and target value of long-term incentive compensation, and 79% of the average target total direct compensation opportunity for the other named executive officers.
117
Our Governance Practices
The Compensation Committee reviews on an ongoing basis our executive compensation program to evaluate whether it supports our executive compensation
philosophies and objectives and is aligned with stockholder interests. We also seek to implement strong corporate governance practices in other areas as well as
compensation. Our compensation and other corporate governance practices include the following:
We do (✔)
We do not (X)
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
Have pay for performance by structuring a
significant percentage of target annual
compensation in the form of variable, at-risk
compensation
Have pre-established performance goals that
are aligned with creation of stockholder value
Have a comprehensive Code of Business
Conduct, Code of Ethics, and Corporate
Governance Guidelines
Conduct annual market comparison of
executive compensation against a relevant
peer group
Have double-trigger vesting for equity awards
in the event of a change in control
Have an equity plan dilution within market
practices
Have robust stock ownership guidelines for
executives and Directors that reinforce
alignment with stockholders
Have a recoupment policy that authorizes
recovery of cash and equity incentive
compensation and exceeds SEC regulations
Have cash severance within market practices
Provide senior executives generally the same
benefits as full-time employees
Mitigate undue risks, particularly by annual
review of plans, policies and practices
✔ Actively solicit feedback from our stockholders
on compensation and governance matters
X
Offer compensation-related tax gross-ups
✔ Have Board oversight of ESG and other
sustainability matters
✔ Have Audit Committee and Compensation
Committee oversight of the Company’s
Enterprise Risk Management Program
✔ Elect directors by majority vote
✔ Grant the Board and each committee express
authority to retain outside advisors
✔ Split the roles of Chairman and Chief
Executive Officer
✔ Perform annual Board and committee self-
evaluations
✔ Perform an annual review of a CEO
succession plan
✔ Perform an annual review of senior
management succession planning
✔ Have a Nominating and Corporate
Governance Committee with oversight over
the Company’s governance framework
✔ Have oversight of the Company’s goals and
objectives relating to human capital
management, diversity and inclusion by the
Compensation Committee
X
X
X
X
X
X
X
X
X
Allow hedging, short sales, monetization,
derivative and similar transactions of our
securities by directors, officers or other
employees, unless approved by the Board
Allow pledging of our securities by directors,
officers or other employees
Pay dividends on unearned performance-
based awards
Pay dividends on unvested Time-Based
awards
Grant stock options with exercise prices less
than the fair market values of our common
stock on the grant date
Reprice or buy-out underwater stock options
without stockholder approval
Provide reload provisions in any stock option
grant
Provide defined benefit pension plans for
executives
Have any significant perquisites
Have an independent compensation
consultant advising the Compensation
Committee
✔ Have a Lead Independent Director
How We Determine Executive Compensation
Executive Compensation Philosophy
The Compensation Committee and the Board believe our executive compensation program should reward actions and behaviors that drive stockholder value
creation. The Compensation Committee seeks to foster these objectives through a compensation system that focuses heavily on variable, performance-based
incentives that create a balanced focus on our
118
short-term and long-term financial, operational, and strategic goals. To that end, the Compensation Committee’s goal is to implement an executive compensation
program that is built upon the following objectives:
•
•
•
Attracting and Retaining the Right Talent. Executive compensation should be market-competitive to attract and retain highly motivated talent with a
performance-driven mindset.
Pay for Performance. A significant percentage of an executive’s compensation should be directly aligned with Company performance, with a balance
between short-term and long-term performance.
Alignment with Stockholder Interests. Our executives’ interests should be aligned with stockholder interests through the risks and rewards of stock
ownership in the Company.
Oversight Responsibilities for Executive Compensation
Compensation Committee
All Board Members
Independent Compensation
Consultant – Pay Governance
CEO and Management
Use of Market Data
•
•
•
•
•
•
•
Establishes executive compensation philosophy and oversees human capital management strategy
Approves incentive compensation and target performance expectations for the STIP and long-term incentive
awards
Reviews NEO compensation and approves all compensation actions for the NEOs, including base salary, target
and actual STIP and long-term incentive awards
Assess performance of the CEO and provide governance oversight for other executive compensation matters,
including with regard to considering the results of “Say on Pay” votes, receiving and considering feedback on an
on-going basis from stockholders and other sources regarding executive compensation, overseeing the application
of stock ownership guidelines that are applicable to the CEO, and other similar responsibilities
Provides independent advice, research and analytical services on a variety of subjects to the Compensation
Committee, including talent and retention, compensation of executive officers, nonemployee director compensation
and executive compensation trends
Participates in Compensation Committee meetings as requested and communicates with the Chair of the
Compensation Committee between meetings
Reports to the Compensation Committee, does not perform any other services for the Company, and has no
economic or other ties to the Company or the management team that could compromise its independence or
objectivity
• Management, including the CEO, develops preliminary recommendations regarding compensation matters with
respect to all NEOs, other than the CEO, and provides these recommendations to the Compensation Committee,
which reviews its recommendations and makes the final decisions, with advice from its independent consultant, as
appropriate
•
Responsible for the administration of the compensation program once Compensation Committee decisions are
finalized
In setting executive compensation, our Compensation Committee considers the competitive pay environment and seeks to ensure that our executives’
compensation opportunities are competitive with the market. For 2023, the Compensation Committee, working with its independent compensation consultant, Pay
Governance, recommended a peer group of companies that would serve as a reference point when setting pay levels and understanding pay practices. This peer
group was drawn from companies that aligned well with our business, our size (based on ROIC, growth, free cash flow, revenue, EBITDA, and market
capitalization), our industry, our customer base, our national scope or similarity of distribution. The Compensation Committee also selected companies that may
compete with us for talent, customers or both talent and customers.
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The Compensation Committee reviews the peer group annually. In 2022, due to the merger of Duke Realty Corporation into Prologis the Compensation Committee
(with advice from Pay Governance) approved the exit of Duke Realty from our peer group and the addition of Waste Connections, and approved the following peer
group for use in setting compensation for 2023:
•
•
•
•
•
•
•
•
•
Air Lease Corporation
Americold Realty Trust
Cintas Corporation
Clean Harbors, Inc.
CubeSmart
Extra Space Storage Inc.
GATX Corporation
GFL Environmental Inc.
Herc Holdings Inc.
•
•
•
•
•
•
•
•
Iron Mountain Incorporated
Lamar Advertising Company (REIT)
Republic Services, Inc.
Stericycle, Inc.
Triton International Limited
UniFirst Corporation
United Rentals, Inc.
Waste Connections
The group reflects the complexities of our business beyond that of a typical general rent organization, including our long-duration lease portfolio and emphasis on
and expertise developing turnkey space and storage solutions. Our business also uses long-lived assets, due to our ability to lease a unit, renew and refurbish it
upon return, and reuse it up to seven times over a 20- to 30-year period. Finally, as we continue to scale and grow our business, we updated the peer group to
include larger peers than we had included in the past.
Because there is limited information on positions other than the CEO and CFO in the peer group data, the Compensation Committee also reviews data from national
survey sources related to general industry when it considers the market competitiveness of named executive officer compensation levels or market practices. The
Compensation Committee does not review the specific companies included in these surveys and the data presented to the Compensation Committee are general
and not specific to any particular subset of companies.
The Compensation Committee does not target a specific competitive position versus the peer group or other survey data in determining the compensation of our
named executive officers. Instead, the compensation practices of the peer group and the Company’s industry survey information are two data points that the
Compensation Committee considers, in addition to pay for performance and the other principles of our compensation program, in seeking to establish compensation
for our executive officers that best furthers our performance objectives and stockholder interests.
2023 Named Executive Officer Compensation Elements in Detail
Base Salaries
The Compensation Committee approved changes in NEO base salaries for 2023 based on an assessment of individual performance and to better align with market
compensation levels and to reflect role and responsibility changes and increases, respectively, and strong Company performance. Base salary represents the fixed
amount that we pay to each named executive officer for performing their normal duties and responsibilities. We determine the amount based on the NEO’s overall
performance, level of responsibility and comparison to the peer group and other survey data. Based on these criteria, the Compensation Committee established the
following 2023 base salaries for the NEOs:
Executive Officer
Bradley L. Soultz
Timothy D. Boswell
Hezron T. Lopez
Felicia K. Gorcyca
Graeme Parkes
Sally J. Shanks
$
$
$
$
$
$
2023 Base Salary
2022 Base Salary
Year Over Year Change
979,440 $
655,627 $
546,000 $
450,000
436,800 $
410,000 $
936,000
624,000
525,000
N/A
420,000
360,000
4.6%
(1)
5.1%
(2)
4.0%
N/A
4.0%
13.9%
(3)
(1) In 2023 the Board eliminated the annual automobile allowance from Mr. Soultz’s compensation and rolled a proportionate share of the allowance into his base compensation, which
with his 4% annual increase resulted in a YoY change of 4.6%.
(2) In 2023 the Board eliminated the annual automobile allowance from Mr. Boswell’s compensation and rolled a proportionate share of the allowance into his base compensation, which
with his 4% annual increase resulted in a YoY change of 5.1%.
(3) Following a competitive market review and based on individual performance, the Compensation Committee approved this base salary increase for Ms. Shanks in 2023.
Short Term Incentive Plan
Our annual STIP rewards employees for achieving critical business and financial goals that are key indicators of operational performance. The Compensation
Committee establishes performance goals for the STIP at the beginning of each fiscal year.
120
Where minimum threshold performance targets are satisfied, annual incentive payments can range from 0% to 200% of the target award opportunity, based on
performance relative to the performance goals, as determined by the Compensation Committee.
2023 STIP Target Award Percentages
The Compensation Committee reviews our STIP opportunities each year to ensure that they are competitive. For 2023, the Compensation Committee granted STIP
awards to our named executive officers with the target levels expressed as the following percentages of the corresponding base salaries:
Executive Officer
Bradley L. Soultz
Timothy D. Boswell
Hezron T. Lopez
Felicia K. Gorcyca
Graeme Parkes
Sally J. Shanks
2023 Target Percentage of Base
Salary
150%
125%
90%
75%
75%
50%
2022 Target Percentage of Base
Salary
150%
125%
90%
N/A
50%
75%
Year Over Year Change
0%
0%
0%
N/A
0%
0%
2023 STIP Performance Goals and Actual Performance
The Compensation Committee undertook a rigorous review and analysis to establish the 2023 performance goals under the STIP. The Committee established the
performance levels such that achieving threshold levels would represent minimum acceptable performance and achieving maximum levels would represent
outstanding performance. The target performance goals aligned with our annual operating plan.
The Compensation Committee determined the 2023 STIP awards for our named executive officers using the following framework, with the STIP payout based on
the Target/Payout Table that appears below:
Base Salary
X
Target Percentage X
Financial
Performance
= Annual Cash Incentive
Award
STIP Target/Payout Table
Financial Performance Achievement
Percentage
Below 90%
90%
100%
Above or equal to 120%
Payout Percentage
0%
50%
100%
200%
Annual Cash Earned
For 2023, the Compensation Committee established the following financial goals and payout levels under the STIP:
Measure
Weighting
Rationale for Measure
Adjusted EBITDA
Q4 Core Lease
Revenue Delivered
70%
(1)
30%
Adjusted EBITDA reflects our operating performance and is a key measure for our investors. We
calculate the measure on a semi-annual basis (with the first-half and second-half performance
equally weighted at 35%).
Q4 Core Lease Revenue Delivered provides for clearer alignment and motivation to drive run-
rate revenues headed into the subsequent plan year. The measure is derived coincidental with
the annual budget process and represents a more stable, predictable and visible metric.
Payout Range
(2)
50% - 200%
50% - 200%
(1) The weighting percentage may be lower for certain employees at the vice president level and below.
(2) Performance below 90% of the target performance goals results in a 0% payout.
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The threshold, target and maximum performance and payout opportunities under the 2023 STIP (subject to interpolation between points), along with the actual
performance achieved and related payout percentage, are set forth below:
Payout %
Adjusted EBITDA – First Half ($ millions)
Adjusted EBITDA – Second Half ($ millions)
Q4 Core Lease Revenue Delivered
($ millions)
Weighting
Threshold
100%
35%
35%
30%
50%
$396.8
$501.7
$446.8
Target
100%
$440.9
$557.4
$496.5
Weighted Average Payout: 117.34%
Maximum
Actual
% of Target
Achieved
Payout %
200%
$529.1
$668.9
$595.8
$507.7
$552.6
$471.2
115.2%
99.1%
94.9%
175.7%
95.7%
74.5%
Based on the achievement of the 2023 financial performance goals, the Compensation Committee approved the following STIP awards that our NEOs who were
serving as of the last day of 2023 earned for 2023.
Executive Officer
Bradley L. Soultz
Timothy D. Boswell
Hezron T. Lopez
Felicia K. Gorcyca
Graeme Parkes
Sally J. Shanks
Target STIP Opportunity
$1,469,160
$819,534
$491,400
$337,500
$327,600
$205,000
Payout % of Target
117.34%
117.34%
117.34%
117.34%
117.34%
117.34%
STIP Earned
$1,723,971
$961,674
$576,628
(1)
$231,021
$384,419
$240,555
(1) Ms. Gorcyca’s payout is pro-rated based on her hire date.
2023 Long-Term Incentive Awards
For 2023, for our annual grants, each of our named executive officers received a long-term equity incentive target grant denoted in terms of a dollar value, which we
allocated between Performance-Based RSUs and Time-Based RSUs. We provide details on the types of equity awards we granted in the table below.
Annual Equity Award
Target Weighting
Rationale and Key Features
Performance-Based RSUs
70% for CEO, CFO, CLO
and CHRO, 65% for all
other NEOs
Time-Based RSUs
30% for CEO, CFO,CLO
and CHRO, 35% for all
other NEOs
•
•
•
•
•
•
•
Incentivize NEOs to achieve specific measurable stock price performance over a three-year
performance period.
Performance will be measured relative to constituent companies in the S&P MidCap 400 Index
as of the date of grant.
Earned shares vest and are issued at the end of the performance cycle and range from 0% for
below threshold performance to 200% of the target number of shares for maximum
performance.
Additional Performance-Based RSU grants made to the NEOs had the effect of increasing the
Performance-Based mix of the grants beyond 70% and 65%.
Align pay and Company performance as reflected in our stock price.
Encourage retention of our executive officers’ services and promote ownership by our
executives in Company stock.
Time-Based RSUs vest in one-fourth installments at the end of each of the first four years
following grant.
The Compensation Committee annually considers various alternative performance-based metrics including, but not limited to, financial return metrics such as ROIC.
We believe sustained and improving financial returns correlate to long-term stockholder value creation. While ROIC is a critical financial metric for the Company and
underpins our human and financial capital allocation decisions, we believe rTSR reflects both the effect of sustained and improving financial returns along with
continued robust growth. The Performance-Based RSUs granted in 2023 are based solely on our TSR performance relative to the constituents in the S&P 400
MidCap Index. We believe that relative TSR aligns our NEOs’ long-term incentive compensation with our stockholders. In addition to relative TSR, the Committee
also considers key financial metrics (e.g., ROIC, EBITDA) when sizing the awards for NEOs as the growth and improvement in these metrics is highly correlated to
our stock price performance.
122
Below sets forth the 2023 LTIP performance thresholds (based on relative Total Shareholder Return) relative to constituent companies in the S&P MidCap 400 Index
and corresponding payout for Performance-Based RSUs.
th
Financial Performance
Achievement
<25 Percentile
25 Percentile
50 Percentile
85 Percentile
>85 Percentile
th
th
th
th
Payout Percentage
0%
50% (Threshold)
100% (Target)
200% (Maximum)
200%
The Compensation Committee approved the following grants of Performance-Based RSUs and Time-Based RSUs to our named executive officers for 2023:
Performance-Based RSUs
Time-Based RSUs
Executive officer
Threshold Shares
(#)
Target
Shares (#)
Maximum
Shares (#)
Award (#)
Target Value ($)
(1)
Award (#)
Target Value ($)
Bradley L. Soultz
Timothy D. Boswell
Hezron T. Lopez
Felicia K. Gorcyca
Graeme Parkes
Sally J. Shanks
31,041
12,416
13,935
N/A
11,841
6,640
62,081
24,832
27,869
N/A
23,681
13,279
124,162
49,664
55,738
N/A
47,362
26,558
62,081
24,832
27,869
N/A
23,681
13,279
$ 3,150,000
$ 1,260,000
$ 1,414,073
N/A
$ 1,201,574
$ 673,776
26,606
10,642
5,912
N/A
5,173
2,414
$
$
$
$
$
1,350,000
540,000
300,000
N/A
262,500
122,500
(1) For 2023, the Compensation Committee, at the recommendation of Mr. Soultz, approved an increase to the weighting of the performance-based RSUs versus the target weighting
noted above.
Other Compensation and Benefits
Employment Agreements & Individual Compensation Decisions
We have entered into employment agreements or compensation letters with each of our current named executive officers as summarized below.
The employment agreements or compensation letters do not provide for any gross-ups with respect to any excise tax imposed by Section 280G of the Code. In the
event that any payments under the employment agreements or offer letters would subject the executive officer to the excise tax under Section 280G of the Code,
the amounts payable to the executive officer will be reduced to the level at which the excise tax will not apply, but only if such reduction would result in a greater
after-tax amount to the participating executive officer.
Bradley L. Soultz, Chief Executive Officer
Effective March 25, 2024, the Board approved an increase in salary for Mr. Soultz for 2024 to $1,018,618. He is eligible for a target short-term incentive bonus of
$1,527,927, or 150% of his annual base salary, and annual long-term incentive awards with a target grant date value of $4,500,000, 30% in the form of Time-Based
RSUs vesting ratably over four years and 70% in the form of Performance-Based RSUs vesting over three years. Mr. Soultz’s STIP and LTIP levels remained
unchanged. The Board also eliminated the annual automobile allowance from Mr. Soultz’s compensation and rolled a proportionate share of the allowance into his
base compensation so that at target the overall compensation paid would not exceed the actual allowance amount.
On March 1, 2020, in connection with the WillScot Mobile Mini merger, the Company entered into an employment agreement with Mr. Soultz, which became
effective upon the completion of the merger. On September 8, 2021, we amended Mr. Soultz’s agreement to include an additional 48 months to end March 1, 2026.
The amendment also extended the non-compete period from 12 to 24 months.
As of September 8, 2021, the amended agreement also contemplated an additional retention and performance incentive award consisting of a target number of
312,632 performance-based restricted stock units. The actual number of units that will vest and become unrestricted will be determined in accordance with the
performance results as set in the agreement and may range from 0 to 750,000 units. The units will become vested and unrestricted on the vesting date, March 1,
2026. This performance-based grant had no intrinsic value at grant and would not become eligible to vest unless the Company’s share price reaches at least $42.50
during the performance period. The performance-based grant begins to qualify for vesting at $42.50 per share, with maximum earning potential if the share price
exceeds $60.00 per share during the contract extension period. Related to the September 2021 Performance-Based RSU grants on February 10, 2023, the
Compensation Committee ratified the stock price attainment, following the first of four annual test periods, each of which coincides with the 60 day average price
following the Company’s filing of its third quarter results. The calculation was performed by FTI, which utilized
123
share price thresholds as the primary performance criteria. Following such ratification, the Committee approved the earned but not vested equity associated with the
September 2021 Performance-Based RSU grants. Mr. Soultz surpassed the attainment of the $45.00 per share threshold calculated as the share price over a period
of 60 consecutive trading days following the filing of the Company’s third quarter results with an attainment of $46.40 per share.
Timothy D. Boswell, President and Chief Financial Officer
Effective March 25, 2024, the Board provided an increase in annual base salary for Mr. Boswell for 2024 to $681,852. He is eligible for a target short-term incentive
bonus of $852,315, or 125% of his annual base salary, and annual long-term incentive awards with a target grant value of $1,800,000, 30% in the form of Time-
Based RSUs vesting ratably over four years and 70% in the form of Performance-Based RSUs vesting over three years. Mr. Boswell’s STIP and LTIP levels
remained unchanged. The Board also eliminated the annual automobile allowance from Mr. Boswell’s compensation and rolled a proportionate share of the
allowance into his base compensation so that at target the overall compensation paid would not exceed the actual allowance amount.
On March 1, 2020, in connection with the WillScot Mobile Mini merger, the Company entered into an employment agreement with Mr. Boswell, effective as of March
1, 2020. On September 8, 2021, we amended Mr. Boswell’s agreement to include an additional 39 months to end July 1, 2026, after which point the agreement will
automatically renew for successive one-year periods. The agreement also includes non-compete and employment non-solicitation provisions for 12 months post-
termination of employment.
As of September 8, 2021, the amended agreement also contemplated an additional retention and performance incentive award consisting of a target number of
243,158 performance-based restricted stock units. The actual number of Restricted Stock Units that will vest and become unrestricted will be determined in
accordance with the performance results as set in the agreement and may range from 0 to 583,334 units. The units will become vested and unrestricted on the
vesting date, July 1, 2026. This performance-based grant had no intrinsic value at grant and would not become eligible to vest unless the Company’s share price
reaches at least $42.50 during the performance period. The performance-based grant begins to qualify for vesting at $42.50 per share, with maximum earning
potential if the share price exceeds $60.00 per share during the contract extension period. Related to the September 2021 Performance-Based RSU grants on
February 10, 2023, the Compensation Committee ratified the stock price attainment, following the first of four annual test periods, each of which coincides with the
60 day average price following the Company’s filing of its third quarter results. The calculation was performed by FTI, which utilized share price thresholds as the
primary performance criteria. Following such ratification, the Committee approved the earned but not vested equity associated with the September 2021
Performance-Based RSU grants. Mr. Boswell surpassed the attainment of the $45.00 per share threshold calculated as the share price over a period of 60
consecutive trading days following the filing of the Company’s third quarter results with an attainment of $46.40 per share.
Hezron T. Lopez, Executive Vice President – Chief Legal & Compliance Officer & ESG
Effective March 25, 2024, the Board provided an increase in annual base salary for Mr. Lopez for 2024 to $575,000. He is eligible for a target short-term incentive
bonus of $575,000, or 100% of his annual base salary, and annual long-term incentive awards with a target grant value of $1,500,000, 30% in the form of Time-
Based RSUs vesting ratably over four years and 70% in the form of Performance-Based RSUs vesting over three years.
On June 6, 2022, we entered into an amended and restated employment agreement with Mr. Lopez, effective June 3, 2022. The terms of the agreement, among
other things, (a) extended Mr. Lopez’s employment term through June 3, 2027, with automatic one-year renewals thereafter, (b) updated Mr. Lopez’s title to
Executive Vice President – Chief Legal & Compliance Officer & ESG, (c) provided for an annual base salary of $525,000 per calendar year, (d) provided for an
annual target bonus opportunity of 90% of his base salary, (e) set the target grant value of Mr. Lopez’s annual equity award at $1,000,000, 70% of which shall be in
the form of performance-based restricted stock units vesting over three years and 30% in the form of restricted stock units vesting over four years, (f) approved an
annual allowance of $40,000 (g) eliminated the annual automobile allowance, (h) provided for severance payments in the event of a termination without Cause or for
Good Reason or following a Change in Control (each as defined in the agreement) to include an amount equal to 1.5 times Mr. Lopez’s annual target bonus and
continued base salary for 18 months, and (i) extended the non-compete period from 12 to 18 months.
Felicia K. Gorcyca, Executive Vice President – Chief Human Resources Officer
On June 26, 2023, we entered into an employment agreement with Ms. Gorcyca, which provides for annual base salary of $450,000. Effective March 25, 2024, the
Board provided an increase in annual base salary for Ms. Gorcyca for 2024 to $468,000. She is eligible for a target short-term incentive bonus of $351,00 or 75% of
her annual base salary, and annual long-term incentive awards with a target grant value of $750,000, 30% in the form of Time-Based RSUs vesting ratably over four
years and 70% in the form of Performance-Based RSUs vesting over three years.
Under the terms of Ms. Gorcyca’s employment agreement, in the event of a termination without Cause or for Good Reason or following a Change in Control (each
as defined in the agreement) to include an amount equal to 1 times Ms. Gorcyca’s annual target bonus and continued base salary for 18 months and sets a non-
compete period of 24 months.
Graeme Parkes, Executive Vice President – Chief Information Officer
Effective March 25, 2024, the Board provided an increase in annual base salary for Mr. Parkes for 2024 to $454,272. He is eligible for a target short-term incentive
bonus of $340,704, or 75% of his annual base salary, and annual long-term incentive awards with a target grant value of $750,000, 35% in the form of Time-Based
RSUs vesting ratably over four years and 65% in
124
the form of Performance-Based RSUs vesting over three years. The Compensation Committee made these increases with confidence given Mr. Parkes’ continued
performance and strong stewardship of his duties.
On February 15, 2023, as a result of a market review of the position, responsibilities and compensation levels, we entered into an amended and restated
employment agreement with Mr. Parkes. The terms of the agreement instituted a double trigger requirement in the event of a Change in Control and, among other
things, (a) provided for severance payments in the event of a termination without Cause or for Good Reason or following a Change in Control to include an amount
equal to 1 times Mr. Parkes’ annual target bonus and continued base salary for 18 months, (b) extended the non-compete period to 18 months, (c) provided for an
annual target bonus opportunity of 75% of his base salary, and (d) set the target grant value of Mr. Parkes’ annual equity award at $750,000, 35% in the form of
Time-Based RSUs vesting ratably over four years and 65% in the form of Performance-Based RSUs vesting over three years.
Sally J. Shanks, Senior Vice President – Chief Accounting Officer
Effective March 25, 2024, the Board provided an increase in annual base salary for Ms. Shanks for 2024 to $426,400,. She is eligible for a target short-term
incentive bonus of $231,200, or 50%, of her annual base salary, and annual long-term incentive awards with a target grant value of $350,000, with 35% in the form
of Time-Based RSUs vesting ratably over four years and 65% in the form of Performance-Based RSUs vesting ratably over three years. The Compensation
Committee made these increases with confidence given Ms. Shanks’ continued performance and strong stewardship of her duties. The Board also eliminated the
annual automobile allowance from Ms. Shanks’ compensation and rolled a proportionate share of the allowance into her base compensation so that at target the
overall compensation paid would not exceed the actual allowance amount.
Perquisites
We made available all or some of the following perquisites to our named executive officers during 2023: premiums for life and supplemental individual disability
insurance and an executive travel allowance for Mr. Lopez in the amount of $40,000 . We reflect the aggregate incremental cost of these perquisites in the “All
Other Compensation” column of the Summary Compensation Table. The Compensation Committee (and the Board related to Mr. Soultz) eliminated the annual
automobile allowances for NEOs, effective in 2023 (a proportionate share of the allowance was added to base compensation so that, at target, the overall
compensation paid would not exceed the actual allowance amount previously provided).
(1)
(1)
Increased to $50,000 for 2024.
Other Benefits
Our named executive officers are eligible to participate in broad-based employee benefit plans, including a 401(k) plan and group health insurance, which are
generally available to all U.S. salaried employees and do not discriminate in favor of our NEOs.
Compensation Governance Policies
Executive Officer Stock Ownership Guidelines
We maintain stock ownership guidelines for our executive officers with the following target ownership levels:
Executive Level
Chief Executive Officer
President & Chief Financial Officer
Chief Legal Officer
Other NEOs
Target Ownership Level As Multiple of Base Salary
6x
5x
3x
2x
(1)
(1) For purposes of calculating stock ownership, vested stock are included in such calculation. Unvested equity is not included in such calculation.
We expect executive officers to meet their target ownership level by the later of the fifth anniversary of their appointment as an executive officer or November 1,
2028, which is the fifth anniversary of the effective date of the guidelines. We expect executive officers who have not achieved their target ownership level by the
applicable deadline to retain 100% of their equity awards, including any net shares acquired upon any future vesting of restricted stock units and/or the exercise of
stock options, net of an amount of shares sufficient to cover any taxes or exercise price due in connection with such equity awards, until they meet the target
ownership level. Once an executive officer has met the target ownership level, we will deem the executive officer to have satisfied the target ownership level until
such time as the executive officer disposes of any shares, after which we will remeasure compliance. As of the date of this Annual Report on Form 10-K, all of our
executive officers either had met the target ownership level or had additional time to do so. Our Compensation Committee reviews annually the ownership levels for
executive officers. We have also adopted stock ownership guidelines for our non-employee directors which we discuss above.
Securities Trading Policy (Hedging and Pledging Prohibited)
The Company’s Securities Trading Policy: (i) provides that prohibitions on short sales, hedging transactions, and monetization transactions apply not only to the
Company’s officers and directors, but also to the Company’s employees; and (ii) makes clear
125
that all officers, directors, and employees are prohibited from holding Company securities in a margin account or otherwise pledging Company securities as
collateral for a loan except as may be approved by the Board.
Compensation Recoupment Policy
During 2023, we modified our Compensation Recoupment Policy to comply with the SEC’s recently issued regulations and the stock exchange listing standards that
implemented those regulations. Our policy as modified provides that, if we are required to prepare a qualifying accounting restatement, then, unless an exception
applies, we will recover reasonably promptly the excess of (1) the amount of incentive-based compensation received by a person who served as a covered officer at
any time during the applicable performance period during the three completed years immediately preceding the date we are required to prepare the accounting
restatement over (2) the amount that would have been received had it been determined based on the restated financials.
Our policy also authorizes us to recover, reduce or cancel, incentive-based and equity compensation paid or awarded to, or earned by, covered officers if the officer
has engaged in prohibited conduct that has caused, or might reasonably be expected to cause, significant reputational or financial harm to our Company.
Regulatory Considerations
Section 162(m) of the Internal Revenue Code of 1986 generally disallows a tax deduction to public corporations for compensation in excess of $1 million paid for
any fiscal year to any covered employee. Covered employees generally include our named executive officers. Accordingly, the tax deduction we take for
compensation paid to our NEOs may be limited by Code Section 162(m). The Compensation Committee nevertheless retains full discretion to award compensation
that attracts, retains and rewards successful executive officers even if the deductibility of such compensation is limited. At the time of determining our executive
compensation for 2023, we reviewed the tax impact of such compensation on us as well as on our executive officers. In addition, we reviewed the impact of our
compensation program against other considerations, such as accounting impact, stockholder alignment, market competitiveness, effectiveness and perceived value
to employees.
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth above, and based on such
review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the
Company’s Annual Report on Form 10-K and proxy statement relating to the 2024 annual meeting of shareholders.
Respectfully submitted,
Jeff Sagansky, Chair
Mark Bartlett
Erika T. Davis
Natalia Johnson
Rebecca L. Owen
126
Compensation Tables
Summary Compensation Table for Fiscal Year 2023
The following table shows for the fiscal years ended December 31, 2023, 2022 and 2021, compensation awarded or paid to, or earned by, the individuals who
served as executive officers during 2023.
Name and Principal
Position
Bradley L. Soultz
Chief Executive Officer
Timothy D. Boswell
President and Chief Financial
Officer
Hezron T. Lopez
EVP, Chief Legal & Compliance
Officer & ESG
Felicia K. Gorcyca
EVP, Chief Human Resources
Officer
(6)
Graeme Parkes
EVP, Chief Information Officer
(7)
Sally J. Shanks
SVP, Chief Accounting Officer
Year
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Salary
(1)
Bonus
(2)
Stock Awards
(3)
Options
Awards
Non-Equity Plan
(4)
Compensation
All Other
Compensation
(5)
Total
967,745 $
934,615 $
886,539 $
647,112 $
623,077 $
579,807 $
540,346 $
508,020 $
460,961 $
216,346 $
N/A
N/A
432,277 $
418,653 $
N/A
396,538 $
359,424 $
338,295 $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
N/A
N/A
— $
— $
N/A
— $
— $
— $
5,665,871 $
5,103,737 $
14,635,168 $
2,266,321 $
2,041,503 $
8,760,710 $
2,237,453 $
1,495,497 $
1,275,016 $
— $
N/A
N/A
1,908,803 $
1,439,256 $
N/A
1,045,656 $
653,543 $
531,234 $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
N/A
N/A
— $
— $
N/A
— $
— $
— $
1,723,971 $
2,517,372 $
2,102,166 $
961,674 $
1,398,540 $
1,167,870 $
576,628 $
847,193 $
707,460 $
231,021 $
N/A
N/A
384,419 $
564,795 $
N/A
240,555 $
322,740 $
269,509 $
34,062 $
39,074 $
36,727 $
8,391,649
8,594,799
17,660,600
30,355 $
3,905,461
35,131 $
4,098,252
509,160 $
11,017,548
190,997 $
3,545,425
51,292 $
2,902,001
60,880 $
2,504,318
9,659 $
N/A
N/A
23,763 $
16,590 $
N/A
21,603 $
33,203 $
28,404 $
457,027
N/A
N/A
2,749,262
2,439,294
N/A
1,704,353
1,368,911
1,167,442
(1) Amounts in this column represent the dollar value of base salary we paid to our named executive officers.
(2) Amounts in this column represent discretionary bonuses, retention bonuses and signing bonuses.
(3) Amounts in this column for 2023 represent the aggregate grant fair value calculated in accordance with ASC 718 with respect to restricted stock unit grants to our named executive
officers in March under our 2023 Incentive Award Plan (“LTIP”). For the assumptions used in determining these values, see Note 1 to our 2023 audited financial statements contained in
this Annual Report on Form 10-K.
(4) Amounts in this column represent payments under our STIP for 2023.
(5) Amounts in this column for 2023 are set forth in the table below.
(6) Ms. Gorcyca was appointed CHRO in June 2023.
(7) Mr. Parkes was not an NEO prior to 2022.
Name
Bradley L. Soultz
Timothy D. Boswell
Hezron T. Lopez
Felicia K. Gorcyca
Graeme Parkes
Sally J. Shanks
Auto Allowance
$
3,750 $
$
$
$
$
$
3,750 $
— $
— $
— $
3,750 $
Employer 401(k)
Contributions
Life and Supplemental
Individual Disability Insurance
Premiums
Other Allowance
Relocation
Total
14,850 $
14,850 $
14,850 $
8,567 $
14,850 $
14,850 $
15,462 $
11,733 $
25,348 $
1,092 $
8,913 $
3,003 $
— $
22 $
— $
— $
34,062
30,355
40,000 $
110,800 $
190,997
— $
— $
— $
— $
— $
— $
9,659
23,763
21,603
Grants of Plan-Based Awards for Fiscal Year 2023
The following table sets forth information regarding all grants of plan-based awards that we made to our NEOs during 2023. The information supplements the
disclosure of stock and non-equity incentive plan awards in the Summary Compensation
127
Table by providing additional details about these awards. Non-equity incentive plan awards are awards that are not subject to ASC 718 and are intended to serve as
an incentive for performance to occur over a specified period.
Estimated Future Payouts Under Non-Equity
Incentive Plan Awards
Estimated Future Payouts Under Equity
Incentive Plan Awards (PSU)
Awards
Name
Grant Date
Threshold ($)
Target ($)
Maximum ($)
Threshold (#) Target (#) Maximum (#)
All Other Stock
Awards: Number
of Shares of
Stock or Units
(#)
RSU Only
All Other
Option
Awards:
Number
of Securities
Underlying
Options (#)
Exercise or
Base
Price of
Option
Awards
($/Sh)
Bradley L. Soultz
Timothy D. Boswell
Hezron T. Lopez
Felicia K. Gorcyca
(2)
Graeme Parkes
Sally J. Shanks
2/24/2023 $
2/24/2023 $
734,580 $
409,767 $
146,916 $
2,938,321
819,534 $
1,639,068
31,041
12,416
62,081
24,832
124,162
49,664
2/24/2023 $
245,700 $
491,400 $
982,800
13,935
27,869
55,738
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2/24/2023 $
163,800 $
327,600 $
655,200
11,841
23,681
2/24/2023 $
102,500 $
205,000 $
410,000
6,640
13,279
47,362
26,558
26,606
10,642
5,912
5,173
2,414
(1)
(2)
Values are calculated in accordance with ASC 718
Ms. Gorcyca did not receive equity award in 2023 due to her start date.
Outstanding Equity Awards at Fiscal 2023 Year-End
The following table presents certain information concerning equity awards that our named executive officers held as of December 31, 2023.
Option Awards
Stock Awards
Grant Date Fair
Value of Stock
and Option
(1)
Awards ($)
$
$
$
$
$
5,665,871
2,266,321
2,237,453
N/A
1,908,803
1,045,656
Name
Options
Unexercised and
Exercisable
Options
Unexercised and
Unexercisable
Option
Exercise
Price
Option expiration
date
Number of
shares or units
of stock that
have not vested
(#)
Market value of
shares or units
of stock that
have not vested
($)
(1)
Bradley L. Soultz
Timothy D. Boswell
Hezron T. Lopez
Felicia K. Gorcyca
Graeme Parkes
Sally J. Shanks
408,497
(2)
125,691
(2)
N/A
N/A
1,301
6,070
12,859
24,092
20,981
9,739
N/A
$
$
$
$
$
$
$
$
13.60
13.60
N/A
N/A
19.70
17.79
10.91
13.54
12.19
13.54
N/A
March 20, 2028
108,594 $
4,832,433
44,218 $
20,895 $
N/A
16,698 $
1,967,701
929,828
N/A
743,061
March 20, 2028
N/A
N/A
October 27, 2024
January 22, 2025
January 20, 2026
February 1, 2027
July 19, 2027
January 28. 2030
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#)
Equity Incentive
Plan Awards:
Market Payout
Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($)
(1)
564,450 $
334,335 $
83,048 $
N/A
70,224 $
25,118,025
14,877,908
3,695,636
N/A
3,124,968
(1) Market value was calculated based upon the closing price of the shares of Common Stock on Nasdaq of $44.50 on December 29, 2023, the last trading day of the Company’s last completed fiscal year.
(2) Consists of stock options awarded on March 20, 2018. Each stock option represents the right upon vesting to buy one share of Common Stock.
128
N/A
9,124 $
406,018
37,677 $
1,676,627
Option Exercises and Stock Vested in Fiscal Year 2023
Option Awards
Stock Awards
Name
Number of Shares Acquired
on Exercise (#)
Value Realized on Exercise ($)
Number of Shares Acquired
on Vesting (#)
Value Realized on Vesting ($)
(1)
Bradley L. Soultz
Timothy D. Boswell
Hezron T. Lopez
Felicia K. Gorcyca
Graeme Parkes
Sally J. Shanks
N/A
— $
— $
— $
— $
— $
N/A
—
—
—
—
—
N/A
276,545 $
136,331 $
50,766 $
6,268 $
12,865 $
13,966,700
6,772,410
2,601,218
315,532
661,522
N/A
(1) Value for shares acquired on vesting are pre-tax value.
Potential Payments Upon Termination or Change in Control
The following table discloses potential payments and benefits under our compensation benefit plans and agreements with the named executive officers in each
situation in the table below assuming that the termination of employment or change in control of our Company occurred on December 31, 2023, the last business
day of our fiscal year, and that our Common Stock was valued at the closing market price as of December 29, 2023 of $44.5. The prorated bonus payout assumes
full year exit maximum at December 31 of the year. The actual amount of payments and benefits can only be determined at the time of such a termination or change
in control, and therefore the actual amounts would vary from the estimated amounts in the tables below. In addition, the amount of payments and benefits that
named executive officers would actually receive may be materially less than the estimated amounts in the tables below because all such amounts in the tables
below are on a pre-tax basis.
Descriptions of the circumstances that would trigger payments or benefits to the named executive officer, how such payments and benefits are determined under the
circumstances, material conditions and obligations applicable to the receipt of payments or benefits and other material factors regarding such plans and
agreements, as well as other material assumptions we have made in calculating the estimated compensation, follow these tables.
129
Employment Agreement Provisions Relating to Termination of Employment or Change in Control
Name
Termination by Death
($)
Termination by Disability
($)
Termination by Company without
Cause or by Executive for Good
Reason ($)
Change in Control and
Termination by Company without
Cause or for Disability or by
Executive for Good Reason ($)
Bradley L. Soultz
Severance
Pro Rata Bonus
Vesting of Stock Options
Vesting of Restricted Stock Units
(1)
Insurance
Total
Timothy D. Boswell
Severance
Pro Rata Bonus
Vesting of Stock Options
Vesting of Restricted Stock Units
(1)
Insurance
Total
Hezron T. Lopez
Severance
Pro Rata Bonus
Vesting of Stock Options
Vesting of Restricted Stock Units
(1)
Insurance
Total
Felicia K. Gorcyca
Severance
(2)
Pro Rata Bonus
Vesting of Stock Options
Vesting of Restricted Stock Units
(1)
Insurance
Total
Graeme Parkes
Severance
Pro Rata Bonus
Vesting of Stock Options
Vesting of Restricted Stock Units
(1)
Insurance
Total
Sally J. Shanks
Severance
(3)
Pro Rata Bonus
Vesting of Stock Options
Vesting of Restricted Stock Units
(1)
Insurance
Total
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
979,440 $
1,723,971 $
— $
29,950,458 $
— $
32,653,896 $
655,627 $
961,674 $
— $
16,845,609 $
— $
18,462,909 $
546,000 $
576,628 $
— $
4,625,464 $
— $
5,747,092 $
— $
231,021 $
— $
— $
21,957 $
231,021 $
436,800 $
384,419 $
— $
3,868,029 $
— $
4,689,248 $
— $
— $
— $
— $
— $
— $
— $
1,723,971 $
— $
29,950,458 $
15,087 $
31,689,516 $
— $
961,674 $
— $
16,845,609 $
21,957 $
17,829,239 $
— $
576,628 $
— $
4,625,464 $
23,608 $
5,225,700 $
450,000 $
231,021 $
— $
— $
— $
681,021 $
— $
384,419 $
— $
3,868,029 $
— $
4,252,448 $
— $
— $
— $
— $
— $
— $
Includes performance based RSU's at target performance.
(1)
(2) 956,250 in the case of termination without cause.
(3) Only payable in the case of Termination by Company without Cause (with or without a Change in Control)
130
4,897,201 $
1,723,971 $
— $
35,138,512 $
30,173 $
41,789,857 $
2,212,742 $
961,674 $
— $
18,495,867 $
32,935 $
21,703,218 $
1,556,100 $
576,628 $
— $
5,871,324 $
35,413 $
8,039,465 $
787,500 $
231,021 $
— $
— $
21,957 $
1,040,478 $
764,400 $
384,419 $
— $
4,584,039 $
— $
5,732,858 $
307,500 $
240,555 $
— $
— $
— $
548,055 $
6,366,362
1,723,971
—
35,138,512
30,173
43,258,018
4,589,390
961,674
—
18,495,867
32,935
24,079,866
2,293,200
576,628
—
5,871,324
35,413
8,776,565
787,500
231,021
—
—
21,957
1,051,456
982,800
384,419
—
4,584,039
—
5,951,258
307,500
240,555
—
—
—
548,055
As discussed above under “Compensation Discussion and Analysis – Elements of Compensation - In Detail – Other Compensation and Benefits – Employment
Agreements,” we have entered into employment agreements or compensation letters with each of our current named executive officers. Those agreements or
compensation letters provide for severance and other benefits upon termination that are quantified in the table above. A summary of the provisions of the
agreements or compensation letters relating to termination of employment is below.
Bradley L. Soultz, Chief Executive Officer
The Soultz Agreement provides that in the event of a termination of employment without Cause (as defined in the Soultz Agreement) or due to the delivery of a
notice of non-renewal of the term by the Company or a resignation for Good Reason (as defined in the Soultz Agreement), in addition to Accrued Benefits (as
defined in the Soultz Agreement), Mr. Soultz will be entitled to receive (i) a cash severance payment of his continued base salary for 24 months, (ii) a pro rata
portion of the annual bonus he would have received based on actual performance, (iii) his full target annual bonus for the year of termination, (iv) continued vesting
of any annual equity awards for 24 months and full vesting of the retention award and any annual equity awards granted within 24 months following the completion
of the merger (based on actual performance, as applicable), (v) payments equal to the cost of continuing coverage under the Company’s health insurance plan for
twelve months, and (vi) up to $25,000 in outplacement services. Mr. Soultz will be entitled to the same benefits in the event of a termination of employment without
Cause or a resignation for Good Reason during the 30-month period following the completion of the merger or the 12-month period after any subsequent Change in
Control (as defined in the Soultz Agreement), except that he will receive (i) a cash severance payment equal to 2x the sum of his base salary at the rate in effect at
the time of termination and his target bonus for the year of termination, (ii) the cost of continuing coverage under the Company’s health insurance plan for 24
months, and (iii) any outstanding equity awards will immediately vest in full upon such termination.
Timothy D. Boswell, President and Chief Financial Officer
The Boswell Agreement provides that in the event of a termination of employment without Cause (as defined in the Boswell Agreement) or due to the delivery of a
notice of non-renewal of the term by the Company or a resignation for Good Reason (as defined in the Boswell Agreement), in addition to Accrued Benefits (as
defined in the Boswell Agreement), Mr. Boswell will be entitled to receive (i) a cash severance payment of his continued base salary for 18 months, (ii) a pro rata
portion of the annual bonus he would have received based on actual performance, (iii) his full target annual bonus for the year of termination, (iv) continued vesting
of any annual equity awards for 18 months and full vesting of the retention award and any annual equity awards granted within 24 months following the completion
of the merger, (v) payments equal to the cost of continuing coverage under the Company's health insurance plan for 12 months, and (vi) up to $25,000 in
outplacement services. Mr. Boswell will be entitled to the same benefits in the event of a termination of employment during the 30-month period following the
completion of the merger or the 12-month period after any subsequent change in control, except that he will receive (i) a cash severance payment equal to the sum
of his continued base salary for 18 months and his target bonus for the year of termination, (ii) the cost of continuing coverage under the Company's health
insurance plan for 24 months, and (iii) any outstanding equity awards will immediately vest in full upon such termination. If Mr. Boswell's employment is terminated
within three years of his relocation to Phoenix, Arizona, Mr. Boswell is also eligible for certain additional relocation benefits.
Hezron T. Lopez, Executive Vice President – Chief Legal & Compliance Officer & ESG
The Lopez Agreement provides that in the event of a termination of employment without Cause (as defined in the Lopez Agreement) or due to the delivery of a
notice of non-renewal of the term by the Company or a resignation for Good Reason (as defined in the Lopez Agreement), in addition to Accrued Benefits (as
defined in the Lopez Agreement), Mr. Lopez will be entitled to receive (i) a cash severance payment of his continued base salary for 18 months, (ii) a pro rata portion
of the annual bonus he would have received based on actual performance, (iii) a lump sum equal to 1.5x the target bonus for the year of termination, (iv) any
outstanding equity awards granted should continue to vesting for 18 months, (v) The Post-Merger Equity Award (as defined in the Lopez Agreement) shall
immediately vest in full, (vi) cost of continuing coverage under the company’s health insurance plan for 18 months, and (vi) up to $25,000 in outplacement services.
Mr. Lopez will be entitled to the same benefits in the event of a termination of employment without Cause or a resignation for Good Reason during the 30-month
period following the completion of the merger or the 12-month period after any subsequent Change in Control (as defined in the Lopez Agreement), except that he
will receive (i) a cash severance payment equal to 1.5x the sum of his base salary at the rate in effect at the time of termination and his target bonus for the year of
termination, (ii) the cost of continuing coverage under the Company’s health insurance plan for 18 months, and (iii) any outstanding equity awards will immediately
vest in full upon such termination. If Mr. Lopez’ employment is terminated within three years of his relocation to Phoenix, Arizona, Mr. Lopez is also eligible for
certain additional relocation benefits.
Felicia K. Gorcyca, Executive Vice President – Chief Human Resources Officer
The Gorcyca Agreement provides that in the event of a termination of employment without Cause (as defined in the Gorcyca Agreement) or due to the delivery of a
notice of non-renewal of the term by the Company or a resignation for Good Reason (as defined in the Gorcyca Agreement), in addition to Accrued Benefits (as
defined in the Gorcyca Agreement), Ms. Gorcyca will be entitled to receive (i) a cash severance payment of her continued base salary for either (x) 18 months for
termination without Cause or due to the delivery of a notice of non-renewal of the term by the Company, or (y) 12 months for resignation for Good Reason, (ii) a pro
rata portion of the annual bonus she would have received based on actual performance, (iii) a lump sum equal to 1x the target bonus for the year of termination, (iv)
any outstanding equity awards granted should continue to vesting for 18 months, and (v) cost of continuing coverage under the company’s health insurance plan for
12 months. Ms.
131
Gorcyca will be entitled to the same benefits in the event of a termination of employment without Cause or a resignation for Good Reason during 12-month period
after any subsequent Change in Control (as defined in the Gorcyca Agreement), except that she will receive (i) any outstanding equity awards will immediately vest
in full upon such termination, (ii) the Continued Coverage Payment (as defined in the Gorcyca Agreement) shall be equal to 18 months following termination and
shall be paid in a lump sum; and (iii) the incremental Cash Severance Payment (as defined in the Gorcyca Agreement) shall be paid in a lump sum.
Graeme Parkes, Executive Vice President – Chief Information Officer
The Parkes Agreement, effective February 1, 2023, provides that in the event of a termination of employment without Cause (as defined in the Parkes Agreement)
or due to the delivery of a notice of non-renewal of the term by the Company or a resignation for Good Reason (as defined in the Parkes Agreement), in addition to
Accrued Benefits (as defined in the Parkes Agreement), Mr. Parkes will be entitled to receive (i) a cash severance payment of his continued base salary for 12
months in the event of resignation for Good Reason or 18 months in the event of termination without Cause, respectively, (ii) a pro rata portion of the annual bonus
he would have received based on actual performance, (iii) a lump sum equal to 1x the target bonus for the year of termination, (iv) any outstanding equity awards
granted will continue to vest during the severance period (v) payments equal to the cost of continuing coverage under the Company's health insurance plan for 18
months. Mr. Parkes will be entitled to the same benefits in the event of a termination of employment without Cause or a resignation for Good Reason during the 12-
month period after a Change in Control (as defined in the Parkes Agreement), except that he will receive (i) a lump sum cash severance payment equal to 18
months of base salary, (ii) the cost of continuing coverage under the Company’s health insurance plan for 18 months, and (iii) any outstanding equity awards will
immediately vest in full upon such termination.
Sally J. Shanks, Senior Vice President – Chief Accounting Officer
Under Ms. Shanks’s compensation letter, if we terminate her employment without cause, we will pay Ms. Shanks nine months’ base salary plus a pro rata STIP
award. Ms. Shanks will also be eligible for health benefits continuation for up to one year.
Equity Plan Provisions Relating to Termination of Employment and Change in Control
Our named executive officers hold equity-based awards granted under our LTIP. The LTIP and the award agreements entered into with our NEOs with respect to
their awards provide for “double trigger” vesting on a change in control such that, if a change in control occurs and the NEO’s employment is terminated by us
without cause or by the NEO for good reason within 12 months after the change in control, then the award will immediately become vested in full.
Risk Considerations and Review of Executive Compensation Practices
The Compensation Committee conducts an annual risk assessment of our compensation policies and practices for employees, including those related to our
executive compensation program. As part of the risk assessment, the Compensation Committee reviews our compensation program for design features that have
been identified as having the potential to encourage excessive risk-taking. Based on this review, the Compensation Committee has determined that, for all
employees, our compensation program does not encourage excessive risk. The Compensation Committee, with the assistance of independent advisors, intends to
continue on an on-going basis a process of reviewing our compensation policies and program to ensure that our compensation program and risk mitigation
strategies continue to discourage imprudent risk-taking activities.
2023 CEO to Median Employee Pay Ratio
In accordance with SEC rules, the Company is required to determine the ratio of the CEO’s annual total compensation (under the Summary Compensation Table
definition) to that of the Company’s median employee. Set forth below is the annual total compensation of our median employee, the annual total compensation of
Mr. Soultz and the ratio of those two values for the year ended December 31, 2023:
•
•
•
The annual total compensation of the employee identified as the median employee of the Company (other than our CEO) was $68,433
The annual total compensation of Mr. Soultz as disclosed in the Summary Compensation Table above was $8,391,150 and
The ratio of the annual total compensation of Mr. Soultz to the annual total compensation of our median employee was 122.6.
In determining the median employee for 2023, we used our employee population as of December 31, 2023, and, in accordance with SEC rules, excluded the CEO
to arrive at the median employee consideration pool. We then measured compensation for this population based on gross wages for the period January 1, 2023 to
December 31, 2023. We also annualized gross wages for those employees who were not employed for the full January 1, 2023 to December 31, 2023 period.
International employee pay was converted to U.S. dollars using the applicable exchange rates at the close of business on December 31, 2023.
We calculated 2023 annual total compensation for our median employee using the same methodology that we use to determine our CEO’s annual total
compensation for the Summary Compensation Table.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology
described above. The SEC rules for identifying the median compensated employee
132
and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions,
and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be
comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different
methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
Pay Versus Performance Disclosure
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the
following information about the relationship between compensation actually paid to our Named Executive Officers (NEOs) and certain financial performance metrics
of the Company using a methodology that has been prescribed by the SEC.
As discussed in our Compensation Discussion and Analysis, our pay-for-performance philosophy aligns our executive officers’ compensation with our short-term
and long-term objectives as well as emphasizing stockholder value creation. While the Compensation Committee did not use the information provided below to
determine compensation for our NEOs for 2023, the results are aligned with this philosophy. We have grown Adjusted EBITDA from continuing and discontinued
operations, the primary metric of our short-term cash incentive plan, from $534 million in 2020 to $740 million in 2021 to $970 million in 2022 and further to $1.06
billion in 2023, year-over-year increases of 39%, 31% and 10%, respectively. Our stockholders have seen a return of 141% over this four-year period; outperforming
both our indexed peer group and the broader S&P 400 Index. In turn, our NEOs’ compensation, which is primarily equity-based, has appreciated compared to the
values when they were first awarded, though the figures below do not represent compensation actually realized. Compensation actually paid (CAP) has been
determined under the SEC-defined methodology. However, for equity-based compensation, in addition to equity that has vested in the applicable year, CAP includes
the change in fair value for unvested awards. Importantly, these unvested award values have not actually been earned or realized by the executives. For Messrs.
Soultz and Boswell, CAP values include the special one-time performance-based RSU awards granted in 2021, which have served to both retain and motivate them
thus far in the execution of our long-term strategic plan. The awards were made on September 7, 2021, at a share price of $29.20 and as of December 31, 2023,
our share price was $44.50, a 52% increase. Any earned performance-based RSUs awards related to this grant will not vest until 2026.
Summary
Compensation
Table Total
(1)
for PEO
Compensation
Actually Paid
to PEO
(1)(2)
Value of Initial Fixed $100
Investment Based on:
Average Summary
Compensation
Table Total
for non-PEO NEOs
(1)
Average
Compensation
Actually Paid
to non-PEO NEOs
(2)
(1)
Total
Shareholder
Return
Peer Group
Total
Shareholder
Return
(3)
(b)
(c)
(d)
(e)
(f)
(g)
8,391,649 $
8,594,799 $
17,660,600 $
6,276,605 $
4,663,073 $
20,813,067 $
47,137,307 $
9,893,532 $
2,472,305 $
2,444,495 $
4,713,100 $
2,009,027 $
1,619,849 $
4,501,198 $
8,546,475 $
3,024,177 $
240.67 $
244.29 $
220.88 $
125.31 $
191.45 $
149.43 $
161.27 $
114.85 $
Fiscal
Year
(a)
2023
2022
2021
2020
$
$
$
$
Net Income
($ millions)
(h)
Adjusted
(4)
EBITDA
($ millions)
(i)
476 $
340 $
160 $
74 $
1,061
970
740
534
(1) Our principal executive officer (PEO) for 2020-2023 is Mr. Soultz. The non-PEO named executive officers reflected in columns (d) and (e) include the following individuals: Mr.
Boswell (2020-2023), Mr. Lopez (2020-2023), Ms. Shanks (2020-2023), Mr. Parkes (2022-2023), Ms. Gorcyca (2023) Christopher J. Miner (2020-2022), and Kelly Williams (2020-2021).
(2) The following amounts were deducted from / added to Summary Compensation Table (SCT) total compensation in accordance with the SEC-mandated adjustments to calculate
Compensation Actually Paid (CAP) to our principal executive officer (PEO) and average CAP to our non-PEO named executive officers. The fair value of equity awards was determined
using methodologies and assumptions developed in a manner substantively consistent with those used to determine the grant date fair value of such awards.
133
PEO SCT Total to CAP Reconciliation
Fiscal Year
SCT Total
- Change in Actuarial Present Value of Pension Plans Reported in Fiscal Year
+ Service Cost of Pension in Fiscal Year
+ Prior Service Cost of Pension in Fiscal Year
- Grant Date Fair Value of Stock Awards Granted in Fiscal Year
+ Fair Value at Fiscal Year-End of Outstanding Unvested Stock Awards Granted in Fiscal Year
± Change in Fair Value of Outstanding Unvested Stock Awards Granted in Prior Fiscal Years
+ Fair Value at Vesting of Stock Awards Granted in Fiscal Year That Vested During Fiscal Year
± Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years For
Which Applicable Vesting Conditions Were Satisfied During Fiscal Year
- Fair Value as of Prior Fiscal Year-End of Stock Awards Granted in Prior Fiscal Years That Failed
to Meet Applicable Vesting Conditions During Fiscal Year
+ Dividends Accrued During Fiscal Year
Compensation Actually Paid
2020
2021
2022
2023
6,276,605 $
17,660,600 $
8,594,799 $
8,391,649
— $
— $
— $
— $
— $
— $
— $
— $
— $
(3,593,204) $
(14,635,168) $
6,223,671 $
2,694,702 $
— $
30,020,871 $
13,368,813 $
— $
(5,103,737) $
8,174,053 $
10,303,770 $
— $
—
—
—
(5,665,871)
4,131,113
(3,668,762)
—
(1,708,241) $
722,191 $
(1,155,818) $
1,474,944
— $
— $
— $
— $
— $
— $
—
—
9,893,532 $
47,137,307 $
20,813,067 $
4,663,073
$
$
$
$
$
$
$
$
$
$
$
$
Non-PEO NEO Average SCT Total to Average CAP Reconciliation
Fiscal Year
Average SCT Total
- Change in Actuarial Present Value of Pension Plans Reported in Fiscal Year
+ Service Cost of Pension in Fiscal Year
+ Prior Service Cost of Pension in Fiscal Year
- Grant Date Fair Value of Stock Awards Granted in Fiscal Year
+ Fair Value at Fiscal Year-End of Outstanding Unvested Stock Awards Granted in Fiscal Year
± Change in Fair Value of Outstanding Unvested Stock Awards Granted in Prior Fiscal Years
+ Fair Value at Vesting of Stock Awards Granted in Fiscal Year That Vested During Fiscal Year
± Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years For Which
Applicable Vesting Conditions Were Satisfied During Fiscal Year
- Fair Value as of Prior Fiscal Year-End of Stock Awards Granted in Prior Fiscal Years That Failed to
Meet Applicable Vesting Conditions During Fiscal Year
+ Dividends Accrued During Fiscal Year
Average Compensation Actually Paid
2020
2021
2022
2023
2,009,027 $
4,713,100 $
2,444,495 $
2,472,305
— $
— $
— $
— $
— $
— $
— $
— $
— $
—
—
—
(1,212,320) $
(3,314,083) $
(1,356,246) $
(1,491,647)
2,148,971 $
197,467 $
— $
5,205,205 $
1,491,613 $
147,770 $
1,831,987 $
1,623,529 $
208,160 $
1,066,149
(633,986)
—
(118,969) $
302,869 $
(250,726) $
207,028
— $
— $
— $
— $
— $
— $
—
—
3,024,177 $
8,546,475 $
4,501,198 $
1,619,849
$
$
$
$
$
$
$
$
$
$
$
$
(i) Certain of Mr. Williams’ equity awards were modified in February 2021 as part of his Separation and Release Agreement, consistent with his employment agreement. The rules
prescribed by the SEC did not specify how compensation actually paid should reflect the incremental fair value expense recorded in connection with the modification and reported in
the “Stock Awards” column. As compensation actually paid is meant to track the value of an equity award over the course of its vesting period, we are not adding any additional fair
value when calculating the “Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During
Fiscal Year” as we believe this methodology best reflects the value of the award to Mr. Williams.
(3) The Peer Group for which Total Shareholder Return is provided in column (g) for each listed fiscal year consists of the constituent companies in the S&P MidCap 400 Index listed as
our compensation benchmarking peer group in the Compensation Discussion & Analysis for fiscal year 2023. In 2023, Waste Connections, Inc. was added to the peer group and Duke
Realty Corporation was removed as further described in the “Use of Market Data” section of our Compensation Discussion and Analysis section for fiscal year 2022.
134
The table below compares the indexed TSR of the current and prior Peer Group.
Year
2023
2022
2021
2020
Peer Group used in prior
year
Peer Group used in current
year
$192
$149
$161
$115
$199
$152
$166
$115
(4) Adjusted EBITDA is a non-GAAP financial measure and represents Adjusted EBITDA from continuing and discontinued operations at budgeted foreign exchange rates. For a
discussion of our use of non-GAAP financial measures, please see the “Reconciliation of Non-GAAP Financial Measures” section in Item 7 of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2023.
CHARTS OF CAP VERSUS PERFORMANCE METRICS
The chart below illustrates the relationship between the PEO and average Non-PEO CAP amounts and the Company’s and Peer Group’s TSR during the period
2020-2023.
135
The charts below illustrate the relationship between the PEO and Non-PEO CAP amounts and the Company’s Net Income and Adjusted EBITDA during the period
2020-2023.
IMPORTANT PERFORMANCE MEASURES
The three items listed below represent the most important performance metrics we used to determine CAP for 2023 as further described in our Compensation
Discussion and Analysis (CD&A) within the sections titled “Short-Term Incentive Plan” and “2023 Long-Term Incentive Awards.”
TABULAR
LIST
OF MOST
Most Important Financial Measures
•
•
•
Adjusted EBITDA
Stock Price
Relative TSR
136
ITEM 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters
Beneficial Ownership
The following table sets forth information regarding the beneficial ownership of our Common Stock as of February 14, 2024, by each person who is the beneficial
owner of more than 5% of our Common Stock; each of our NEOs and Directors; and all of our executive officers and Directors as a group. The beneficial ownership
of our Common Stock is based on 189,970,639 shares of our Common Stock issued and outstanding as of February 14, 2024.
Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all shares of Common
Stock beneficially owned by them. To our knowledge, no shares of Common Stock beneficially owned by any executive officer or Director have been pledged as
security.
Name and Address of Beneficial Owner
Directors and Executive Officers
(1)
Common Stock
Number of Shares
%
Bradley L. Soultz
(2) (3)
Timothy D. Boswell
(2) (4)
Hezron T. Lopez
(2)
Felicia K. Gorcyca
Graeme Parkes
(2) (5)
Sally J. Shanks
(2)
Erik Olsson
(6)
Gerard E. Holthaus
(7)
Mark S. Bartlett
(7)
Jeff Sagansky
(7)
Michael W. Upchurch
(7)
Rebecca L. Owen
(7)
Erika T. Davis
(7)
Natalia Johnson
(7)
1,010,986
347,895
30,147
—
124,403
25,263
1,324,840
402,294
146,077
2,495,905
36,541
31,147
9,836
3,463
*
*
*
*
*
*
*
*
*
1.3%
*
*
*
*
All executive officers and directors as a group
5,988,797
3.2%
Five Percent Holders
(8)
The Vanguard Group, Inc.
(9)
Fidelity Management & Research Company LLC
(10)
BlackRock, Inc.
(11)
T. Rowe Price Associates, Inc.
(12)
(*) Less than one percent
17,516,434
11,860,827
11,553,229
11,220,134
9.2%
6.2%
6.1%
5.9%
(1) Beneficial ownership is determined in accordance with the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses
sole or shared voting or investment power over that security, including options or warrants that are currently exercisable or exercisable within 60 days. Unless otherwise noted, the
business address of each stockholder listed above is 4646 E. Van Buren Street, Suite 400, Phoenix, Arizona 85008.
(2) Does not include any unvested stock options, Performance-Based RSUs or Time-Based RSUs granted under the Plan, all of which are subject to forfeiture.
(3) Includes 530,601 shares held in an irrevocable trust of which Mr. Soultz is the sole trustee and 408,497 vested options held in a different irrevocable trust of which Mr. Soultz’s
spouse is a co-trustee.
(4) Includes 125,691 vested options.
(5) Includes 75,042 vested options.
(6) Includes 4,345 unvested restricted shares of our Common Stock that are subject to forfeiture, which were granted to Mr. Olsson in June 2023 as part of our annual non-executive
director compensation program.
137
(7) Includes 3,523 unvested restricted shares of our Common Stock that are subject to forfeiture, which were granted to Mr. Holthaus, Mr. Bartlett, Mr. Sagansky, Ms. Owen, Ms. Davis
and Mr. Upchurch in June 2023, and includes 3,463 unvested restricted shares of our Common Stock that are subject to forfeiture, which were granted to Ms. Johnson as part of our
annual non-executive director compensation program.
(8) Beneficial Ownership for stockholders with 5% or more ownership is based the most recently available 13G filings.
(9) According to a Schedule 13G/A filed February 13, 2024, on behalf of The Vanguard Group. The Vanguard Group has beneficial ownership over the shares reported. The Vanguard
Group has shared voting power with respect to 72,696 shares, and sole and shared dispositive power with respect to 17,236,886 shares and 279,548 shares, respectively. The business
address of this stockholder is 100 Vanguard Blvd., Malvern, PA 19355.
(10) According to a Schedule 13G/A filed February 9, 2024, on behalf of Fidelity Management & Research Company. Fidelity Management & Research Company has beneficial
ownership over the shares reported. Fidelity Management & Research Company has sole voting power with respect to 11,853,707 shares and sole dispositive power with respect to
11,860,827 shares. The business address of this stockholder is 245 Summer Street, Boston, Massachusetts 02210.
(11) According to a Schedule 13G/A filed January 29, 2024, on behalf of BlackRock, Inc. BlackRock, Inc. has beneficial ownership over the shares reported. BlackRock, Inc. has sole
voting power with respect to 10,726,632 shares and sole dispositive power with respect to 11,553,229 shares. The business address of this stockholder is 50 Hudson Yards, New York,
NY 10001.
(12) According to Schedule 13G filed February 14, 2014, on behalf of T. Rowe Price Associates, Inc. T. Rowe Price Associates, Inc. has beneficial ownership over the shares reported. T.
Rowe Price Associates, Inc. has sole voting power with respect to 2,496,152 shares and sole dispositive power with respect to 11,211,516 shares. The business address of this
stockholder is 100 E. Pratt Street, Baltimore, MD 21202.
Securities Authorized for Issuance under Equity Compensation Plans
On February 5, 2018, we filed a registration statement on Form S-8, registering 4,000,000 shares of Common Stock, relating to awards to be undertaken in the
future, with such vesting conditions, as applicable, to be determined in accordance with the WillScot Corporation 2017 Incentive Award Plan (the "2017 Incentive
Award Plan"). On July 2, 2020, we filed a registration statement on Form S-8 registering 6,488,988 shares of Common Stock (including 1,488,988 shares that
remained available under the 2017 Incentive Award Plan), relating to awards to be undertaken in the future, with such vesting conditions, as applicable, to be
determined in accordance with the WillScot Mobile Mini 2020 Incentive Award Plan (the "2020 Incentive Plan"). The following types of awards can be issued under
the 2020 Incentive Plan: non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance
compensation awards and stock bonus awards. See Note 16 in Part II, Item 8 herein for additional information.
The following table sets forth information as of December 31, 2023 with respect to compensation plans under which equity securities are authorized for issuance:
Plan Category
Equity compensation plans approved by security
holders
Equity compensation plans not approved by
security holders
Total
Number of securities to be issued
upon exercise of outstanding
options, warrants and rights
Weighted-average exercise price
of outstanding options,
warrants, and rights
Number of securities remaining
available for issuance under equity
compensation plans (excluding
securities reflected the first column)
3,630,394 (1)
$
N/A
3,630,394
$
13.60 (2)
N/A
13.60
3,197,415
N/A
3,197,415
(1) Includes (a) 0.5 million stock options, (b) 0.6 million restricted stock units and 2.4 million performance-based restricted stock units based on relative total stockholder return ("TSR")
attainment levels at December 31, 2023, and (c) 0.03 million restricted stock awards issued to non-employee directors.
(2) The weighted-average exercise price is reported for the outstanding stock options reported in the first column. There are no exercise prices for the restricted stock units,
performance-based restricted stock units or restricted stock awards in the first column.
In connection with the Merger, on July 2, 2020, we converted Mobile Mini's outstanding fully vested stock options to 7,361,516 WillScot Mobile Mini stock options
using a conversion ratio of 2.405. As of December 31, 2023, 829,246 options were outstanding and exercisable; each option is exercisable for one share of
Common Stock. The weighted average exercise price of the outstanding options was $12.86 as of December 31, 2023. These options are not included in the table
above as they were not issued under the incentive award plans.
138
ITEM 13. Certain Relationships and Related Transactions,
and Director Independence
Director Independence
Nasdaq listing rules require a majority of our Board to be independent. An “independent director” is defined generally as a person other than an officer or
employee of the Company or its subsidiaries or any other individual having a relationship which, in the opinion of the Company’s Board of Directors, would interfere
with the director’s exercise of independent judgment in carrying out the responsibilities of a director.
Our Board annually makes an affirmative determination regarding the independence of each director based upon the recommendation of the Nominating
and Corporate Governance Committee and pursuant to the standards in our Corporate Governance Guidelines. Applying these standards, the Board has
affirmatively determined that Messrs. Bartlett, Holthaus, Olsson, Sagansky, and Upchurch, and Mmes. Davis, Johnson, and Owen are “independent directors”. The
Board has determined that Mr. Soultz is not an “independent director” due to his role as CEO of the Company. The Board determined that Erik Olsson (Chairman of
the Board) is an independent director under applicable NASDAQ and SEC rules on the basis that his prior employment was with Mobile Mini prior to our merger, and
that employment ceased three and one-half years ago. Furthermore, the size, scale and scope of the Company’s business have significantly changed since Mr.
Olsson led Mobile Mini. Additionally, the board membership of the Company and the executive leadership’s members and structure is such that Mr. Olsson is not in
a position to create a conflict of interest among himself and prior Mobile Mini leadership and the present management of the Company.
In making these determinations, the Board considered the following factors, among others: (i) the ownership positions and contractual arrangements of our
Board members and their affiliates with our Company; (ii) the corporate governance and other policies adopted by the Board to help avoid conflicts and potential
conflicts of interest; (iii) the contractual arrangements and annual payments between our Company and other companies upon which our directors also serve as
directors; and, (iv) the alignment of the long-term interests of the stockholders that appointed our Board members with the long-term interests of our other
stockholders.
ITEM 14. Principal Accounting Fees and Services
Audit Fees & Approval Process
The Audit Committee pre-approves all audit and non-audit services to be performed by the independent registered public accounting firm in compliance
with the Sarbanes-Oxley Act and the SEC rules regarding auditor independence. These services may include audit services, audit-related services, tax services and
all other services. Proposed services may either be pre-approved without consideration of specific case-by-case services by the Audit Committee or require the
specific pre-approval of the Audit Committee. Unless a type of service has received general pre-approval, it will require specific pre-approval if it is to be provided by
the Company’s independent registered public accounting firm, Ernst & Young LLP (“EY”). Any proposed services exceeding pre-approved cost levels or budgeted
amounts will also require specific pre-approval.
Pre-approval fee levels or budgeted amounts for all services to be provided by EY are established annually by the Audit Committee. Any proposed services
exceeding these levels or amounts require specific pre-approval by the Audit Committee. The Audit Committee may delegate either type of approval authority to one
or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit
Committee at its next scheduled meeting. The Audit Committee has delegated to its Chair the authority to pre-approve any permissible non-audit services with a fee
of $50,000 or less.
In 2023, all of the services were approved by our Audit Committee or, if applicable, the Committee Chair.
139
Independent Registered Public Accounting Firm Fee Information
Fees for professional services provided by our independent registered public accounting firm, EY, included the following:
Audit
(1)
Audit-Related
Tax Compliance
(2)
Tax Planning
(3)
All Other
2023
2022
3,518,090 $
3,671,492
— $
— $
231,581 $
— $
—
—
159,873
—
$
$
$
$
$
(1) Audit fees include, without limitation, fees billed for professional services rendered for the audit of annual financial statements, including certain required statutory audits, support of
acquisitions and divestitures accounting, and ongoing M&A activity; the review of interim financial statements; and, comfort letters and consents.
(2) Tax compliance fees include, without limitation, fees billed for tax services rendered for the review of tax returns.
(3) Tax planning fees include, without limitation, fees billed for tax services rendered for routine tax advisory services.
140
PART IV
ITEM 15. Exhibit and Financial Statement Schedules
The following documents are filed as part of this report:
Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm (Ernst & Young, LLP, Baltimore, MD, PCAOB ID: 42)
Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022
Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flow for the Years Ended December 31, 2023, 2022 and 2021
Notes to the Audited Consolidated Financial Statements
Financial Statement Schedule
Page
Number
61
63
64
65
66
67
69
All schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes
thereto.
Exhibits
The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this Annual Report on Form 10-K.
141
Exhibit No.
2.1
3.1
3.2
4.1*
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9*
10.1
10.2
10.3
10.4
10.5*
10.6
10.7
10.8
10.9
10.10
Exhibit Index
Exhibit Description
Agreement and Plan of Merger, dated as of January 28, 2024, by and among WillScot Mobile Mini Holdings Corp., Brunello Merger Sub I,
Inc., Brunello Merger Sub II, LLC, and McGrath RentCorp (incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form
8-K, filed January 29, 2024)
Amended and Restated Certificate of Incorporation of WillScot Mobile Mini Holdings Corp., Amended as of June 3, 2022 (incorporated by
reference to Exhibit 3.1 of the Company's Quarterly Report on Form 10-Q, filed on April 27, 2023)
Fifth Amended and Restated Bylaws of WillScot Mobile Mini Holdings Corp. (incorporated by reference to Exhibit 3.1 of the Company’s
Current Report on Form 8-K, filed November 2, 2022).
Specimen Common Stock Certificate
Indenture, dated as of June 15, 2020, by and between Picasso Finance Sub, Inc., and Deutsche Bank Trust Company Americas, as trustee
(incorporated by reference to Exhibit 4.1 of WillScot Corporation’s Report on Form 8-K, filed June 16, 2020).
Supplemental Indenture, dated July 1, 2020, to the Indenture dated June 15, 2020, by and among Williams Scotsman International, Inc. (as
successor to Picasso Finance Sub, Inc.), the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee (incorporated
by reference to Exhibit 4.1 to WillScot Corporation’s Current Report on Form 8-K, filed July 1, 2020).
Indenture, dated as of August 25, 2020, by and between Williams Scotsman International, Inc., the guarantors named therein, and Deutsche
Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 to WillScot Corporation’s Current Report on Form 8-K,
filed on August 27, 2020.
Shareholders Agreement, dated July 1, 2020, by and among WillScot Mobile Mini Holdings Corp., Sapphire Holdings, S.á r.l., TDR Capital
Holdings L.P. and TDR Capital, L.L.P (incorporated by reference to Exhibit 1.1 of the Company’s Current Report on Form 8-K, filed July 1,
2020).
Second Supplemental Indenture, dated December 23, 2021, to the Indenture dated June 15, 2020, by and among Williams Scotsman, Inc.,
the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee and collateral agent (incorporated by reference to
Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed December 27, 2021).
First Supplemental Indenture, dated December 23, 2021, to the Indenture dated August 25, 2020, by and among Williams Scotsman, Inc., the
guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee and collateral agent (incorporated by reference to Exhibit
4.2 of the Company’s Current Report on Form 8-K, filed December 27, 2021).
Indenture, dated as of September 25, 2023, by and among Williams Scotsman, Inc., the guarantors party thereto and Deutsche Bank Trust
Company Americas, as trustee and collateral agent (incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K,
filed September 29, 2023).
Description of Registered Securities
ABL Credit Agreement, dated July 1, 2020, by and among Williams Scotsman Holdings Corp., WSII, the guarantors party thereto, the lenders
party thereto, and Bank of America, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K, filed July 1, 2020).
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed July 1,
2020).
WillScot Mobile Mini Holdings Corp. 2020 Incentive Plan (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form
8-K, filed July 1, 2020).
Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K, filed July
1, 2020).
Form of Performance-Based Restricted Stock Unit Agreement
Amended and Restated Employment Agreement, dated as of September 7, 2021, by and between WillScot Mobile Mini Holdings Corp. and
Bradley Soultz (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed September 8, 2021).
Amended and Restated Employment Agreement, dated as of September 7, 2021, by and between WillScot Mobile Mini Holdings Corp. and
Timothy Boswell (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed September 8, 2021).
Amended and Restated Employment Agreement, dated as of June 3, 2022, by and between WillScot Mobile Mini Holdings Corp. and Hezron
Lopez (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed June 7, 2022).
Employment Letter with Sally Shanks dated August 23, 2017 (incorporated by reference to Exhibit 10.17 of WillScot Corporation’s Annual
Report on Form 10-K, filed March 16, 2018).
Amended Employment Letter with Sally Shanks dated March 18, 2019 (incorporated by reference to Exhibit 10.1 to WillScot Corporation’s
Current Report on Form 8-K, filed March 21, 2019).
142
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18*
14.1
21.1*
23.1*
31.1*
31.2*
32.1**
32.2**
97.1*
101*
104*
Form of Performance-Based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 of the Company’s Current
Report on Form 8-K, filed September 8, 2021).
First Amendment to the ABL Credit Agreement, dated December 2, 2020, among Williams Scotsman International, Inc. and Bank of America,
N.A., as Administrative Agent (incorporated by reference to Exhibit 10.16 of the Company’s Annual Report on Form 10-K, filed February 25,
2022).
LIBOR Transition Amendment, dated December 6, 2021, among Williams Scotsman International, Inc. and Bank of America, N.A., as
Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed December 13, 2021).
Third Amendment to the ABL Credit Agreement, dated December 16, 2021, by and among Williams Scotsman International, Inc., the other
loan parties party thereto and Bank of America, N.A., as administrative agent and collateral agent for itself and the other secured parties
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed December 16, 2021).
Fourth Amendment to the ABL Credit Agreement, dated June 30, 2022, by and among Williams Scotsman, Inc., Williams Scotsman Holdings
Corp., the other Loan Parties thereto and Bank of America, N.A. as administrative agent, collateral agent and swingline lender (incorporated
by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed July 1, 2022).
Amended and Restated Employment Agreement with Graeme Parkes dated February 16, 2023 (incorporated by reference to Exhibit 10.18 of
the Company's Annual Report on Form 10-K, filed February 22, 2023).
Employment agreement with Felicia Gorcyca (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q,
filed August 3, 2023).
Form of Performance-Based Restricted Stock Unit Award Agreement
Code of Ethics for the Chief Executive Officer and Senior Financial Officers, effective November 14, 2019 (incorporated by reference to
Exhibit 14.1 of WillScot Corporation’s Current Report on Form 8-K, filed November 15, 2019).
Subsidiaries of the registrant
Consent of Ernst & Young LLP
Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act
Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act
Certification of Chief Executive Officer Pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
Certification of Chief Financial Officer Pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
Compensation Recoupment Policy
Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part II, Item 8, "Financial Statements and
Supplementary Data" of this Annual Report on Form 10-K.
Inline XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline XBRL Document Set.
* Filed herewith
** Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange Act
143
Signatures
Pursuant to the requirements of the Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date:
February 20, 2024
WillScot Mobile Mini Holdings Corp.
By:
/s/ Hezron Timothy Lopez
Name: Hezron Timothy Lopez
Title: Executive Vice President, Chief Legal & Compliance Officer &
ESG
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ BRADLEY L. SOULTZ
Bradley L. Soultz
/s/ TIMOTHY D. BOSWELL
Timothy D. Boswell
/s/ SALLY J. SHANKS
Sally J. Shanks
/s/ ERIK OLSSON
Erik Olsson
/s/ MARK S. BARTLETT
Mark S. Bartlett
/s/ ERIKA DAVIS
Erika Davis
/s/ GERARD E. HOLTHAUS
Gerard E. Holthaus
/s/ NATALIA JOHNSON
Natalia Johnson
/s/ REBECCA L. OWEN
Rebecca L. Owen
/s/ JEFF SAGANSKY
Jeff Sagansky
/s/ MICHAEL W. UPCHURCH
Michael W. Upchurch
Chief Executive Officer and Director (Principal Executive
Officer)
February 20, 2024
President and Chief Financial Officer (Principal Financial
Officer)
February 20, 2024
Chief Accounting Officer
(Principal Accounting Officer)
Chairman of the Board
Director
Director
Director
Director
Director
Director
Director
144
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
Exhibit 4.1
NUMBER SHARES
C-
SEE REVERSE FOR CERTAIN DEFINITIONS CUSIP 971378104
WILLSCOT MOBILE MINI HOLDINGS CORP.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
COMMON STOCK
This Certifies that _______________ is the owner of ______________ fully paid and non-assessable shares of common stock of the par of the par value of
$0.0001 each of WILLSCOT MOBILE MINI HOLDINGS CORP., a Delaware corporation (the “Company”), transferable on the books of the Company in person or by
duly authorized attorney upon surrender of this certificate properly endorsed.
This certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar.
Authorized Signatory
Transfer Agent
1
WILLSCOT MOBILE MINI HOLDINGS CORP.
The Company will furnish without charge to each shareholder who so requests the powers, designations, preferences and relative, participating, optional or other
special rights of each class of shares or series thereof of the Company and the qualifications, limitations, or restrictions of such preferences and/or rights. This
certificate and the shares represented thereby are issued and shall be held subject to all the provisions of the amended and restated certificate of incorporation and
all amendments thereto and resolutions of the Board of Directors providing for the issue of securities (copies of which may be obtained from the secretary of the
Company), to all of which the holder of this certificate by acceptance hereof assents.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to
applicable laws or regulations:
Exhibit 4.1
TEN
COM - as tenants in common
TEN
UNIF GIFT MIN ACT
-
Custodian
(Cust)
(Minor)
ENT -
as tenants by the entireties
Under Uniform Gifts to Minors Act
JT
TEN -
as joint tenants with right of
survivorship and not as
tenants in common
(State)
Additional abbreviations may also be used though not in the above list.
For value received,____________________ hereby sells, assigns and transfers unto ______________
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER(S) OF ASSIGNEE(S))
(PLEASE PRINT OR TYPEWRITE NAME(S) AND ADDRESS(ES), INCLUDING ZIP CODE, OF ASSIGNEE(S))
Shares of the capital stock represented by the Certificate, and hereby irrevocably constitutes and appoints
Attorney to transfer the said stock on the books of the within named Company with full power of substitution in the premises.
Dated
Signature(s) Guaranteed:
Notice:
The signature to this assignment must correspond with the name as
written upon the face of the certificate in every particular, without
alteration or enlargement or any change whatever.
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C.
RULE 17Ad-15 (OR ANY SUCCESSOR RULE) UNDER THE SECURITIES ACT OF1933, AS AMENDED).
2
Exhibit 4.9
DESCRIPTION OF COMMON STOCK AND WARRANTS REGISTERED UNDER SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
As of December 31, 2023, WillScot Mobile Mini Holdings Corp., a Delaware corporation (the “Company,” “we,” “our,” “us”), had one class of securities registered
under Section 12 of the Securities Exchange Act of 1934, as amended: our common stock, par value $0.0001 per share
The following description of our common stock summarizes material terms and provisions that apply to the securities. The summary is subject to and qualified in its
entirety by reference to certain documents, including our amended and restated certificate of incorporation, as amended (“Certificate of Incorporation”), our
amended and restated bylaws (“Bylaws”), and certain other documents pertaining to our capital stock specified below, which are filed as exhibits to the Annual
Report on Form 10-K to which this exhibit is a part, and applicable Delaware law, including the General Corporation Law of the State of Delaware (the “DGCL”). This
description includes not only our common stock, but also our authorized preferred stock, certain terms of which affect the common stock.
Authorized Capital Stock
Our Certificate of Incorporation authorizes the issuance of 501,000,000 shares of capital stock, consisting of: (i) 500,000,000 shares of common stock and (ii)
1,000,000 shares of preferred stock.
Common Stock
This section describes the general terms and provisions of our common stock. For more detailed information, you should refer to our Certificate of Incorporation and
Bylaws, copies of which have been filed with the SEC. These documents are also incorporated by reference into the Annual Report on Form 10-K to which this
exhibit is a part.
The holders of shares of common stock possess all voting power for the election of our directors and all other matters requiring stockholder action and will at all
times vote together as one class on all matters properly submitted to a vote of the stockholders of the Company. Holders of common stock are entitled to one vote
per share on matters to be voted on by stockholders, provided, however that, except as otherwise required by law, holders of common stock shall not be entitled to
vote on any amendment to the Certificate of Incorporation (including any preferred designation) that relates solely to the terms of one or more outstanding series of
preferred stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote
thereon pursuant to the Certificate of Incorporation (including any preferred designation) or pursuant to the DGCL.
Holders of common stock will be entitled to receive dividends if and when declared by our board of directors (the “Board”) out of funds legally available therefor and
shall share equally on a per share basis in such dividends and distributions. The Board may set apart out of any of the funds of the Company available for dividends
a reserve or reserves for any proper purpose and may abolish any such reserve. Upon liquidation, dissolution or winding-up of our Company, the holders of the
common stock will be entitled to receive an equal amount per share of all of our assets available for distribution, after the rights of the holders of any preferred stock
have been satisfied. Our stockholders have no preemptive, subscription, redemption or conversion rights and there are no sinking fund or redemption provisions
applicable to our common stock. Delaware law and our Bylaws permit us to issue uncertificated shares of common stock by resolution of the Board. The rights,
preferences and privileges of holders of common stock are subject to the rights of the holders of any series of preferred stock that the Company may designate and
issue in the future.
As of December 31, 2023, we had 189,967,135 shares of common stock issued and outstanding.
Preferred Stock
This section describes the general terms and provisions of our preferred stock. For more detailed information, you should refer to our Certificate of Incorporation and
Bylaws, copies of which have been filed with the SEC. These documents are also incorporated by reference into the Annual Report on Form 10-K to which this
exhibit is a part.
Preferred stock may be issued from time to time in one or more series. Our Board can fix the rights, preferences and privileges applicable to the shares of each
series and any of its qualifications, limitations or restrictions, including without limitation authority to fix by resolution or resolutions the dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences of any
such series, and the number of shares constituting any such series and the designation thereof. Our Board is authorized, without stockholder approval, to issue
preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-
takeover effects. The ability of our Board to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of
control of us or the removal of existing management.
As of December 31, 2023, we had no preferred stock outstanding.
Our Board will fix the designations, voting powers, preferences and rights of each series, as well as the qualifications, limitations or restrictions thereof, of the
preferred stock of each series that we offer under any applicable prospectus or prospectus supplements in the certificate of designation relating to that series. We
will file as an exhibit to any applicable registration statement the form of any certificate of designation that describes the terms of the series of preferred stock we are
offering before the issuance of that series of preferred stock. This description will include:
1
Exhibit 4.9
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
the title and stated value;
the number of shares we are offering;
the liquidation preference per share;
the purchase price per share;
the dividend rate per share, dividend period and payment dates and method of calculation for dividends;
whether dividends will be cumulative or non-cumulative and, if cumulative, the date from which dividends will accumulate;
our right, if any, to defer payment of dividends and the maximum length of any such deferral period;
the procedures for any auction and remarketing, if any;
the provisions for a sinking fund, if any;
the provisions for redemption or repurchase, if applicable, and any restrictions on our ability to exercise those redemption and repurchase rights;
any listing of the preferred stock on any securities exchange or market;
whether the preferred stock will be convertible into our common stock or other securities of ours, including depositary shares and warrants, and, if
applicable, the conversion period, the conversion price, or how it will be calculated, and under what circumstances it may be adjusted;
whether the preferred stock will be exchangeable into debt securities, and, if applicable, the exchange period, the exchange price, or how it will be
calculated, and under what circumstances it may be adjusted;
voting rights, if any, of the preferred stock;
preemption rights, if any;
restrictions on transfer, sale or other assignment, if any;
whether interests in the preferred stock will be represented by depositary shares;
a discussion of any material or special United States federal income tax considerations applicable to the preferred stock;
the relative ranking and preferences of the preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs;
any limitations on issuances of any class or series of preferred stock ranking senior to or on a parity with the series of preferred stock being issued as to
dividend rights and rights if we liquidate, dissolve or wind up our affairs; and
any other specific terms, rights, preferences, privileges, qualifications or restrictions of the preferred stock.
The DGCL provides that the holders of preferred stock will have the right to vote separately as a class (or, in some cases, as a series) on an amendment to our
Certificate of Incorporation if the amendment would change the par value or, unless our Certificate of Incorporation provided otherwise, the number of authorized
shares of the class or change the powers, preferences or special rights of the class or series so as to adversely affect the class or series, as the case may be. This
right is in addition to any voting rights that may be provided for in the applicable certificate of designation.
Dividends
We have not declared or paid any cash dividends on our common stock to date. The payment of cash dividends in the future will be dependent upon our results of
operations, capital requirements and general financial condition. The payment of any cash dividends is within the discretion of our Board. In addition, our Board is
not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, our ability to declare dividends is limited by
restrictive covenants contained in the agreements governing the indebtedness of our subsidiaries.
Certain Anti-Takeover Provisions of Delaware Law, Our Certificate of Incorporation and Our Bylaws
We are subject to Section 203 of the DGCL, which we refer to as “Section 203,” regulating corporate takeovers.
Section 203 prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination” with:
•
•
a stockholder who owns fifteen percent (15%) or more of our outstanding voting stock (otherwise known as an “interested stockholder”);
an affiliate of an interested stockholder; or
2
Exhibit 4.9
•
•
•
•
•
an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.
A “business combination” includes a merger or sale of more than ten percent (10%) of our assets. However, the above provisions of Section 203 do not
apply if:
our Board approves the transaction that made the stockholder an “interested stockholder,” prior to the date of the transaction;
after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least eighty-five
percent (85%) of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or
on or subsequent to the date of the transaction, the business combination is approved by our Board and authorized at a meeting of our stockholders, and
not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
Our Certificate of Incorporation, our Bylaws and the DGCL contain provisions that could have the effect of rendering more difficult, delaying or preventing an
acquisition deemed undesirable by our Board. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who
are not nominated by the members of our Board or taking other corporate actions, including effecting changes in our management. For instance, our Certificate of
Incorporation provides that our Board is classified into three classes of directors. As a result, in most circumstances, a person can gain control of our Board only by
successfully engaging in a proxy contest at three or more annual meetings.
In addition, our Certificate of Incorporation does not provide for cumulative voting in the election of directors. Our Board is empowered to elect a director to fill a
vacancy created by the expansion of the Board or the resignation, death, or removal of a director in certain circumstances; and the advance notice provisions of our
Bylaws require that stockholders must comply with certain procedures and meet strict deadlines to nominate candidates to our Board or to propose matters to be
acted upon at a stockholders’ meeting.
Our Bylaws provide that, except as otherwise required by law, special meetings of stockholders for any purpose or purposes may be called at any time only by the
Board, the Chairman of the Board, or the Chief Executive Officer of the Company, to be held at such date and time as shall be designated in the notice or waiver of
notice thereof. Only business within the purposes described in the Corporation’s notice of meeting may be conducted at the special meetings. The ability of the
stockholders to call a special meeting is specifically denied.
Our Bylaws also provide our Board with discretion in postponing stockholder meetings, including, within certain limits, special meetings of stockholders. Additionally,
our chairman or Board (acting by resolution) may adjourn a stockholder meeting at any time prior to the transaction of business at such meeting, within certain limits.
Our Bylaws also include additional procedures that apply to stockholder actions by written consent.
Our authorized but unissued common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of
corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and
unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer,
merger or otherwise.
Stockholders Rights Plan
The Company does not have a stockholder rights plan currently in effect.
Transfer Agent and Warrant Agent
The transfer agent and warrant agent for our common stock and warrants is Continental Stock Transfer & Trust Company.
Listing of Securities
Our common stock is listed on the Nasdaq Capital Market under the symbol “WSC.”
3
Exhibit 10.5
FORM OF PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (this “Agreement”) is made and entered into as of [GRANT_DATE] (the “Grant
Date”) by and between WillScot Mobile Mini Holdings Corp., a Delaware corporation (the “Company”), and
[PARTICIPANT_NAME] (the “Participant”). This Agreement is being entered into pursuant to the WillScot Mobile Mini Holdings
Corp. 2020 Incentive Award Plan (the “Plan”). Capitalized terms used in this Agreement but not defined herein will have the meaning
ascribed to them in the Plan.
1.
Grant of Restricted Stock Units. Pursuant to Section 9 of the Plan, the Company hereby issues to the Participant on the
Grant Date an Award consisting of a target number of [NUMBER] Restricted Stock Units (such target number of Restricted Stock
Units, as may be adjusted, as described in this Agreement, the “Restricted Stock Units”). The actual number of Restricted Stock Units
that shall vest and become unrestricted shall be determined in accordance with Section 3 hereof. Each Restricted Stock Unit represents
the right to receive one Common Share, subject to the terms and conditions set forth in this Agreement and the Plan. The Restricted
Stock Units shall be credited to a separate account maintained for the Participant on the books and records of the Company (the
“Account”). All amounts credited to the Account shall continue for all purposes to be part of the general assets of the Company.
2.
Consideration. The grant of the Restricted Stock Units is made in consideration of the services to be rendered by the
Participant to the Company.
3.
Performance-Based Vesting. Except as otherwise provided herein or in the Plan, provided that the Participant remains in
continuous service through the third anniversary of the Grant Date (the “Vesting Date”), the Restricted Stock Units shall vest and
become unrestricted based on the attainment of the performance conditions set forth in Exhibit A attached hereto. The period during
which restrictions apply, the “Restricted Period.” Once vested, the Restricted Stock Units shall become “Vested Units.”
4.
Termination of Service/Employment. Notwithstanding any provision of this Agreement or the Plan to the contrary, if the
Participant’s employment or service terminates for any reason at any time before the Vesting Date, the Participant’s Restricted Stock
Units shall be automatically forfeited upon such termination of employment or service and neither the Company nor any Affiliate shall
have any further obligations to the Participant under this Agreement; provided, however, that if the Participant experiences a Qualifying
Termination on or within the 12-month period following the consummation of the Change in Control, any Restricted Period in effect on
the date of such Qualifying Termination shall expire as of such date and the Restricted Stock Units shall vest in accordance with the
provisions of Exhibit A attached hereto.
5.
Restrictions. Subject to any exceptions set forth in this Agreement or the Plan, during the Restricted Period and until
such time as the Restricted Stock Units are settled, the Restricted Stock Units or the rights relating thereto may not be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant. Any attempt to assign, alienate, pledge,
attach, sell or otherwise transfer or encumber the Restricted Stock Units or the rights relating thereto shall be wholly ineffective and, if
any such attempt is made, the Restricted Stock Units will be forfeited by the Participant and all of the Participant’s rights to such units
shall immediately terminate without any payment or consideration by the Company.
6.
Rights as Shareholder. The Participant shall not have any rights of a shareholder with respect to the Common Shares
underlying the Restricted Stock Units unless and until the Restricted Stock Units vest and are settled by the issuance of such Common
Shares. Upon and following the settlement of the Restricted Stock Units, the Participant shall be the record owner
1
of the Common Shares underlying the Restricted Stock Units unless and until such shares are sold or otherwise disposed of, and as
record owner shall be entitled to all rights of a shareholder of the Company (including voting rights).
7.
Settlement of Restricted Stock Units. Promptly upon the expiration of the Restricted Period, and in any event no later
than March 15th of the calendar year following the calendar year in which the Restricted Period ends, the Company shall (a) issue and
deliver to the Participant, or his or her beneficiary, without charge, the number of Common Shares equal to the number of Vested Units,
and (b) enter the Participant’s name on the books of the Company as the shareholder of record with respect to the Common Shares
delivered to the Participant; provided, however, that the Committee may, in its sole discretion elect to (i) pay cash or part cash and part
Common Share in lieu of delivering only Common Shares in respect of the Restricted Stock Units or (ii) defer the delivery of Common
Shares (or cash or part Common Shares and part cash, as the case may be) beyond the expiration of the Restricted Period if such
delivery would result in a violation of applicable law until such time as is no longer the case. If a cash payment is made in lieu of
delivering Common Shares, the amount of such payment shall be equal to the Fair Market Value of the Common Shares as of the date
on which the Restricted Period lapsed with respect to the Restricted Stock Units, less an amount equal to any required tax withholdings.
Notwithstanding the foregoing, if the Participant is subject to Canadian income tax, then the Participant’s Vested Units may only be
settled in Common Shares, and neither the Committee nor any other person shall have the discretion to elect to pay any portion of the
Vested Units in cash.
8.
No Rights to Continued Service/Employment. Neither the Plan nor this Agreement shall confer upon the Participant any
right to be retained in any position, as an employee, consultant or director of the Company or any Affiliate. Further, nothing in the Plan
or this Agreement shall be construed to limit the discretion of the Company or an Affiliate to terminate the Participant’s employment or
service with the Company or an Affiliate at any time, with or without Cause.
9.
Adjustments. In the event of any change to the outstanding Common Shares or the capital structure of the Company
(including, without limitation, a Change in Control), if required, the Restricted Stock Units shall be adjusted or terminated in any
manner as contemplated by Section 12 of the Plan.
10.
Beneficiary Designation. The Participant may file with the Committee a written designation of one or more persons as
the beneficiary(ies) who shall be entitled to his or her rights under this Agreement and the Plan, if any, in case of his or her death, in
accordance with Section 16(f) of the Plan.
11.
Tax Liability and Withholding.
11.1
The Participant shall be required to pay to the Company, and the Company shall have the right to deduct from any
compensation paid to the Participant pursuant to the Plan, the amount of any required withholding taxes in respect of the Restricted
Stock Units and to take all such other action as the Committee deems necessary to satisfy all obligations for the payment of such
withholding taxes in accordance with Section 16(c) of the Plan. The Committee may permit the Participant to satisfy any federal, state
or local tax withholding obligation by any of the following means, or by a combination of such means of the Plan, (a) tendering a cash
payment, (b) authorizing the Company to withhold Common Shares from the Common Shares otherwise issuable or deliverable to the
Participant as a result of the vesting of the Restricted Stock Units (provided, however, that no Common Shares shall be withheld with a
value exceeding the maximum amount of tax required to be withheld by law), or (c) delivering to the Company previously owned and
unencumbered Common Shares.
2
11.2 Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or
other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Participant’s
responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in
connection with the grant, vesting or settlement of the Restricted Stock Units or the subsequent sale of any shares; and (b) does not
commit to structure the Restricted Stock Units to reduce or eliminate the Participant’s liability for Tax-Related Items.
12.
Compliance with Law. The issuance and transfer of Common Shares shall be subject to compliance by the Company and
the Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock
exchange on which the Common Shares may be listed. No Common Shares shall be issued pursuant to Restricted Stock Units unless
and until any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the
satisfaction of the Company and its counsel. The Participant understands that the Company is under no obligation to register the
Common Shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such
compliance.
13.
Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to
the Vice President — Human Resources of the Company at its principal corporate offices. Any notice required to be delivered to the
Participant under this Agreement shall be in writing and addressed to the Participant at the Participant’s address as shown in the records
of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time
to time.
14.
Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of New York
without regard to conflict of law principles.
15.
Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Participant or the
Company to the Committee for review. The resolution of such dispute by the Committee shall be final and binding on the Participant
and the Company.
16.
Participant Bound by Plan. This Agreement is subject to all terms and conditions of the Plan as approved by the
Company’s shareholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein
by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the
applicable terms and provisions of the Plan will govern and prevail.
17.
Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be
binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth
herein, this Agreement will be binding upon the Participant and the Participant’s beneficiaries, executors, administrators and the
person(s) to whom the Restricted Stock Units may be transferred by will or the laws of descent or distribution.
18.
Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the
validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall
be severable and enforceable to the extent permitted by law.
19.
Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at
any time, in its discretion. The grant of the Restricted Stock Units in this Agreement does not create any contractual right or other right
to receive any Restricted Stock Units or other Awards in the future. Future Awards, if any, will be at the sole
3
discretion of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the
terms and conditions of the Participant’s employment with the Company.
20.
Amendment. The Committee has the right to amend, alter, suspend, discontinue or cancel Restricted Stock Units,
prospectively or retroactively; provided that no such amendment shall adversely affect the Participant’s material rights under this
Agreement without the Participant’s consent.
21.
Section 409A. This Agreement is intended to comply with Section 409A of the Code or an exemption thereunder and
shall be construed and interpreted in a manner consistent with the requirements for avoiding additional taxes or penalties under Section
409A of the Code. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided
under this Agreement comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any
taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with Section 409A of
the Code.
22.
No Impact on Other Benefits. The value of the Participant’s Restricted Stock Units is not part of his or her normal or
expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.
23.
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile
transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original
graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an
original signature.
24.
Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant has
read and understands the terms and provisions thereof, and accepts Restricted Stock Units subject to all of the terms and conditions of
the Plan and this Agreement. The Participant acknowledges that there may be adverse tax consequences upon the vesting or settlement
of the Restricted Stock Units or disposition of the underlying shares and that the Participant should consult a tax advisor prior to such
vesting, settlement or disposition.
[SIGNATURE PAGE FOLLOWS]
4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
WILLSCOT MOBILE MINI HOLDINGS CORP.
By:
Name: Hezron T. Lopez
Title: Chief Human Resources Officer
By:
Name:
Title:
5
1.
Purpose. In accordance with Section 3 of the Agreement, the number of the Restricted Stock Units that shall be become
vested and unrestricted on the Vesting Date shall be based on the attainment of the Performance Goals during the Performance Period
specified in this Exhibit. Any capitalized terms used herein but not defined in the Agreement or the Plan shall have the meaning
ascribed to them in Section 2 below.
Exhibit A
2.
Definitions.
For purposes of this Exhibit:
2.1
“Performance Goals” shall mean the performance-based vesting conditions applicable to the Restricted Stock Units set
forth in Section 3.1 below.
2.2
“Performance Period” shall mean the three-year period commencing on the Grant Date and ending on the third
Anniversary of the Grant Date.
2.3
“S&P 400 Group” shall mean the companies that comprise the S&P 400 Index on the Grant Date, adjusted to reflect
any such companies which are removed from the S&P 400 Group as of the last day of the Performance Period in accordance with this
Section 2.3. Companies shall be removed from the S&P 400 Group if, during the Performance Period, any such company (i) is acquired
by another company (whether by a peer company or otherwise) or (ii) ceases to be listed on a national stock exchange or other
applicable market system. For the avoidance of doubt, a Company shall not be removed from the S&P 400 Group if, during the
Performance Period, the company (x) leaves the S&P 400 Index but continues to be publicly traded or (y) files for bankruptcy
protection under any chapter of the U.S. Bankruptcy Code; provided, however, that in the event such a company files for bankruptcy, its
rTSR (as defined below) shall be adjusted to negative one hundred percent (-100%).
2.4
“rTSR” shall mean total shareholder return as determined by the Committee for the Performance Period for the
Company and each other company in the S&P 400 Group based on the stock price appreciation from the beginning to the end of the
Performance Period, plus dividends paid or declared (assuming such dividends are reinvested in the common stock of the Company or
any company in the S&P 400 Group). For purposes of computing the rTSR for the Company and each company in the S&P 400 Group,
the stock price at the beginning and the end of the Performance Period shall be based on the 90-day average closing stock price on each
of the 90 consecutive trading days immediately preceding and ending on and including the first day or last day of the Performance
Period, as applicable, adjusted as necessary under Section 2.3.
2.5
“rTSR Percentile Ranking” shall mean the percentile performance of the rTSR of the Company relative to the rTSR for
the companies in the S&P 400 Group determined by the Committee for the Performance Period.
3.
Performance-Based Vesting Conditions.
3.1
The number of the Restricted Stock Units that shall vest shall be determined based on the Company’s rTSR Percentile
Ranking as compared against the rTSR for the companies comprising the S&P 400 Group, measured as of the end of the Performance
Period, based on following Performance Goals:
Company rTSR Percentile Ranking Against S&P 400 Group
6
Company rTSR Percentile Ranking as Compared to S&P 400
Group
>85th Percentile
85th Percentile
50th Percentile
25th Percentile
<25th Percentile
Vesting Percentage
200%
200% (Maximum)
100% (Target)
50% (Threshold)
0%
Payout for performance between goals shall be determined based on linear interpolation. The total number of Restricted Stock Units
eligible to vest, in accordance with the table above, is between 0% - 200% (the minimum number of Restricted Stock Units that may be
earned is zero while the maximum number is 200% of target). No Restricted Stock Units shall be earned if the Company’s rTSR
Percentile Ranking is below the 25th percentile and the maximum number of Restricted Stock Units that may be earned shall be capped
at 200% of the target number even if the Company’s rTSR Percentile Ranking exceeds the 85th percentile; provided, however, that if
the Company’s rTSR Percentile Ranking exceeds the 50th percentile but is negative, the maximum number of Restricted Stock Units
that may be earned shall be capped at 100% of the target number.
3.2
The Committee shall determine, as soon as reasonably practicable, but in any event within sixty (60) days, after the end
of the Performance Period, the attainment level of the Performance Goals and the applicable number of the Restricted Stock Units that
shall become Vested Units. Any Restricted Stock Units that do not become Vested Units as of the Vesting Date shall be forfeited. Any
Vested Units shall be settled in accordance with Section 7 of the Agreement.
4.
Effect of a Change in Control. Notwithstanding any provision of the Agreement or this Exhibit to the contrary, in the
event of a Change in Control during the Performance Period the Restricted Stock Units shall be treated as follows:
4.1
Change in Control during First Year of Performance Period. In the event of a Change in Control (and subject to the
Participant’s being in the employ of the Company, its Subsidiaries or any other affiliate as of the date of the Change in Control) during
the first year of the Performance Period, the target number of the Restricted Stock Units shall automatically convert into, and represent
the right to receive, an equivalent number of time-based Restricted Stock Units which will continue to vest but without regard to the
achievement of any Performance Goals.
4.2
Change in Control after First Year of Performance Period. In the event of a Change in Control (and subject to the
Participant’s being in the employ of the Company, its Subsidiaries or any other affiliate as of the date of the Change in Control) after the
first year of the Performance Period, the number of Restricted Stock Units deemed earned, based on the Company’s actual performance
determined under Section 3.1 as of the Change in Control date, shall automatically convert into, and represent the right to receive, an
equivalent number of time-based Restricted Stock Units which will continue to vest but without regard to the achievement of any
Performance Goals.
4.3
Accelerated Vesting if Awards Not Assumed. In the event of a Change in Control (and subject to the Participant’s being
in the employ of the Company, its Subsidiaries or any
7
other affiliate as of the date of the Change in Control), if the successor company does not equitably assume, continue or substitute
outstanding Awards in connection with the Change in Control, the Restricted Stock Units (for the avoidance of doubt, in the case of
Restricted Stock Units based on Sections 4.1 or 4.2 above) shall become fully vested as of the date of the Change in Control and the
Participant shall be eligible to receive (at the same time and in the same form) the equivalent per share consideration offered to
common shareholders generally.
4.4
“Double-Trigger” Vesting for Assumed Awards. To the extent the successor company does equitably assume, continue or
substitute outstanding Awards, the Restricted Stock Units (for the avoidance of doubt, in the case of Restricted Stock Units based on
Sections 4.1 or 4.2 above) shall continue to vest but without regard to the achievement of any Performance Goals; provided, however,
that if the Participant experiences a Qualifying Termination, such Restricted Stock Units shall become fully vested as of the date of
such Qualifying Termination.
8
Exhibit 10.18
FORM OF PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (this “Agreement”) is made and entered into as of [DATE] (the “Grant Date”)
by and between WillScot Mobile Mini Holdings Corp., a Delaware corporation (the “Company”), and [PARTICIPANT NAME] (the
“Participant”). This Agreement is being entered into pursuant to the WillScot Mobile Mini Holdings Corp. 2020 Incentive Award Plan
(the “Plan”). Capitalized terms used in this Agreement but not defined herein will have the meaning ascribed to them in the Plan.
1.
Grant of Restricted Stock Units. Pursuant to Section 9 of the Plan, the Company hereby issues to the Participant on the
Grant Date an Award consisting of a target number of [NUMBER] Restricted Stock Units (such target number of Restricted Stock
Units, as may be adjusted, as described in this Agreement, the “Restricted Stock Units”). The actual number of Restricted Stock Units
that shall vest and become unrestricted shall be determined in accordance with Section 3 hereof. Each Restricted Stock Unit represents
the right to receive one Common Share, subject to the terms and conditions set forth in this Agreement and the Plan. The Restricted
Stock Units shall be credited to a separate account maintained for the Participant on the books and records of the Company (the
“Account”). All amounts credited to the Account shall continue for all purposes to be part of the general assets of the Company.
2.
Consideration. The grant of the Restricted Stock Units is made in consideration of the services to be rendered by the
Participant to the Company.
3.
Performance-Based Vesting. Except as otherwise provided herein or in the Plan, provided that the Participant remains in
continuous service through the third anniversary of the Grant Date (the “Vesting Date”), the Restricted Stock Units shall vest and
become unrestricted based on the attainment of the performance conditions set forth in Exhibit A attached hereto. The period during
which restrictions apply, the “Restricted Period.” Once vested, the Restricted Stock Units shall become “Vested Units.”
4.
Termination of Service/Employment. Notwithstanding any provision of this Agreement or the Plan to the contrary, if the
Participant’s employment or service terminates for any reason at any time before the Vesting Date, the Participant’s Restricted Stock
Units shall be automatically forfeited upon such termination of employment or service and neither the Company nor any Affiliate shall
have any further obligations to the Participant under this Agreement; provided, however, that if the Participant experiences a Qualifying
Termination on or within the 12-month period following the consummation of the Change in Control, any Restricted Period in effect on
the date of such Qualifying Termination shall expire as of such date and the Restricted Stock Units shall vest in accordance with the
provisions of Exhibit A attached hereto.
5.
Restrictions. Subject to any exceptions set forth in this Agreement or the Plan, during the Restricted Period and until
such time as the Restricted Stock Units are settled, the Restricted Stock Units or the rights relating thereto may not be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant. Any attempt to assign, alienate, pledge,
attach, sell or otherwise transfer or encumber the Restricted Stock Units or the rights relating thereto shall be wholly ineffective and, if
any such attempt is made, the Restricted Stock Units will be forfeited by the Participant and all of the Participant’s rights to such units
shall immediately terminate without any payment or consideration by the Company.
6.
Rights as Shareholder. The Participant shall not have any rights of a shareholder with respect to the Common Shares
underlying the Restricted Stock Units unless and until the Restricted Stock Units vest and are settled by the issuance of such Common
Shares. Upon and following the settlement of the Restricted Stock Units, the Participant shall be the record owner
1
of the Common Shares underlying the Restricted Stock Units unless and until such shares are sold or otherwise disposed of, and as
record owner shall be entitled to all rights of a shareholder of the Company (including voting rights).
7.
Settlement of Restricted Stock Units. Promptly upon the expiration of the Restricted Period, and in any event no later
than ten (10) calendar days after the Committee certifies whether the performance conditions, the Company shall (a) issue and deliver
to the Participant, or his or her beneficiary, without charge, the number of Common Shares equal to the number of Vested Units, and (b)
enter the Participant’s name on the books of the Company as the shareholder of record with respect to the Common Shares delivered to
the Participant; provided, however, that the Committee may, in its sole discretion elect to (i) pay cash or part cash and part Common
Share in lieu of delivering only Common Shares in respect of the Restricted Stock Units or (ii) defer the delivery of Common Shares
(or cash or part Common Shares and part cash, as the case may be) beyond the expiration of the Restricted Period if such delivery
would result in a violation of applicable law until such time as is no longer the case. If a cash payment is made in lieu of delivering
Common Shares, the amount of such payment shall be equal to the Fair Market Value of the Common Shares as of the date on which
the Restricted Period lapsed with respect to the Restricted Stock Units, less an amount equal to any required tax withholdings.
Notwithstanding the foregoing, if the Participant is subject to Canadian income tax, then the Participant’s Vested Units may only be
settled in Common Shares, and neither the Committee nor any other person shall have the discretion to elect to pay any portion of the
Vested Units in cash.
8.
No Rights to Continued Service/Employment. Neither the Plan nor this Agreement shall confer upon the Participant any
right to be retained in any position, as an employee, consultant or director of the Company or any Affiliate. Further, nothing in the Plan
or this Agreement shall be construed to limit the discretion of the Company or an Affiliate to terminate the Participant’s employment or
service with the Company or an Affiliate at any time, with or without Cause.
9.
Adjustments. In the event of any change to the outstanding Common Shares or the capital structure of the Company
(including, without limitation, a Change in Control), if required, the Restricted Stock Units shall be adjusted or terminated in any
manner as contemplated by Section 12 of the Plan.
10.
Beneficiary Designation. The Participant may file with the Committee a written designation of one or more persons as
the beneficiary(ies) who shall be entitled to his or her rights under this Agreement and the Plan, if any, in case of his or her death, in
accordance with Section 16(f) of the Plan.
11.
Tax Liability and Withholding.
11.1
The Participant shall be required to pay to the Company, and the Company shall have the right to deduct from any
compensation paid to the Participant pursuant to the Plan, the amount of any required withholding taxes in respect of the Restricted
Stock Units and to take all such other action as the Committee deems necessary to satisfy all obligations for the payment of such
withholding taxes in accordance with Section 16(c) of the Plan. The Committee may permit the Participant to satisfy any federal, state
or local tax withholding obligation by any of the following means, or by a combination of such means of the Plan, (a) tendering a cash
payment, (b) authorizing the Company to withhold Common Shares from the Common Shares otherwise issuable or deliverable to the
Participant as a result of the vesting of the Restricted Stock Units (provided, however, that no Common Shares shall be withheld with a
value exceeding the maximum amount of tax required to be withheld by law), or (c) delivering to the Company previously owned and
unencumbered Common Shares.
2
11.2 Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or
other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Participant’s
responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in
connection with the grant, vesting or settlement of the Restricted Stock Units or the subsequent sale of any shares; and (b) does not
commit to structure the Restricted Stock Units to reduce or eliminate the Participant’s liability for Tax-Related Items.
12.
Non-Competition. Participant agrees that during the period twenty four (24) months after the Last Day and within the
Restricted Geographic Area, Participant will not, directly or Indirectly, perform the same or similar responsibilities Participant
performed for the Company in connection with a Competitive Product or Service. Notwithstanding the foregoing, Participant may
accept employment with a Competitor whose business is diversified, provided that: (a) Participant will not be engaged in working on or
providing Competitive Products or Services or otherwise use or disclose Confidential Information; and (b) the Company receives
written assurances from the Competitor and Participant that are satisfactory to the Company that Participant will not work on or provide
Competitive Products or Services, or otherwise use or disclose Confidential Information. In addition, nothing in this Agreement is
intended to prevent Participant from investing Participant’s funds in securities of a person engaged in a business that is directly
competitive with the Company if the securities of such a person are listed for trading on a registered securities exchange or actively
traded in an over-the-counter market and Participant’s holdings represent less than one percent (1%) of the total number of outstanding
shares or principal amount of the securities of such a person. The non-compete covenant set forth in this paragraph 12 shall not apply to
Participant if Participant is or was a resident of the State of California during the period of time this Agreement is in effect.
12.1
“Last Day” means Participant’s last day of employment with the Company regardless of the reason for Participant’s
separation, including voluntary or involuntary.
12.2
“Restricted Geographic Area” means (a) within fifty (50) miles (or if a court of competent jurisdiction determines that
fifty (50) miles is too far, then twenty-five (25) miles) of any Company branch where Participant worked during the twenty-four (24)
months prior to the Last Day and any (b) territory (i.e.: (x) state(s), (y) county(ies), or (z) city(ies)) in which, during the twenty-four
(24) months prior to the Last Day, Participant: (i) provided material services on behalf of the Company (or in which Participant
supervised directly or Indirectly, in whole or in part, the servicing activities) in connection with the Company Business, and/or (ii)
solicited Customers or otherwise sold services on behalf of the Company (or in which Participant supervised directly or Indirectly, in
whole or in part, the solicitation or servicing activities related to such Customers) in connection with the Company Business. “Material”
means the Participant’s primary job duties in connection with the Company Business.
12.3
“Indirectly” means that Participant will not assist others in performing activities in which Participant is directly
prohibited from engaging under this Agreement, including through employees whom Participant supervised.
12.4
“Competitive Product or Service” means any product, process, system or service (in existence or under development)
of any person or organization other than the Company that is the same as or similar to the Company Business (in existence or under
development) and upon which Participant worked or had responsibilities at the Company during the twenty-four (24) months prior to
the Last Day.
12.5
“Confidential Information” means information that is created and used in the Company Business and which is not
generally known by the public, including but not limited to: proprietary or customized software and database (including the Company’s
customer database);
3
research and development; the Company’s confidential records pertaining to its Customers, including key Customer contact
information; contract terms and related information; confidential business opportunities; strategies for advertising and marketing;
confidential business processes and strategies, including training, policies and procedures; product documents and forms; personnel
composition (wages, specialization, etc.); financial data and reports, including pricing, quoting and billing methods; and any other
business information that the Company maintains as confidential or that gives the Company an advantage or opportunity to gain an
advantage over its competitors in the Company Business. Participant specifically understands and agrees that the term Confidential
Information also includes all confidential information of a third party that may be communicated to, acquired by, learned of, or
developed by Participant in the course of or as a result of Participant’s employment with the Company. Confidential Information does
not include information that is or may become known to Participant or to the public from sources outside the Company and through
means other than a breach of this Agreement or disclosed by Participant after written approval from the Company.
13.
Non-Solicitation and Non-Inducement of Customers. During the period twenty-four (24) months after the Participant’s
Last Day and in connection with a Competitive Product or Service, Participant shall not directly or Indirectly: (a) solicit or attempt to
solicit any Customer; or (b) induce or encourage any Customer to terminate a relationship with the Company or otherwise to cease
accepting services or products from the Company.
14.
Non-Solicitation and Non-Inducement of Employees. During the period twenty-four (24) months after the Participant’s
Last Day, Participant shall not directly or Indirectly: (a) solicit, recruit, encourage (or attempt to solicit, recruit or encourage), or by
assisting others in soliciting, recruiting or encouraging, any Company employees; (b) contact or communicate with employees for the
purpose of inducing, assisting, encouraging and/or facilitating them to terminate their employment with the Company; and/or (c) offer
employment or work to any employees.
15.
Compliance with Law. The issuance and transfer of Common Shares shall be subject to compliance by the Company and
the Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock
exchange on which the Common Shares may be listed. No Common Shares shall be issued pursuant to Restricted Stock Units unless
and until any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the
satisfaction of the Company and its counsel. The Participant understands that the Company is under no obligation to register the
Common Shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such
compliance.
16.
Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to
the Chief Human Resources Officer of the Company at its principal corporate offices. Any notice required to be delivered to the
Participant under this Agreement shall be in writing and addressed to the Participant at the Participant’s address as shown in the records
of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time
to time.
17.
Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Delaware
without regard to conflict of law principles.
18.
Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Participant or the
Company to the Committee for review. The resolution of such dispute by the Committee shall be final and binding on the Participant
and the Company.
4
19.
Participant Bound by Plan. This Agreement is subject to all terms and conditions of the Plan as approved by the
Company’s shareholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein
by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the
applicable terms and provisions of the Plan will govern and prevail.
20.
Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be
binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth
herein, this Agreement will be binding upon the Participant and the Participant’s beneficiaries, executors, administrators and the
person(s) to whom the Restricted Stock Units may be transferred by will or the laws of descent or distribution.
21.
Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the
validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall
be severable and enforceable to the extent permitted by law.
22.
Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at
any time, in its discretion. The grant of the Restricted Stock Units in this Agreement does not create any contractual right or other right
to receive any Restricted Stock Units or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Company.
Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the
Participant’s employment with the Company.
23.
Amendment. The Committee has the right to amend, alter, suspend, discontinue or cancel Restricted Stock Units,
prospectively or retroactively; provided that no such amendment shall adversely affect the Participant’s material rights under this
Agreement without the Participant’s consent.
24.
Section 409A. This Agreement is intended to comply with Section 409A of the Code or an exemption thereunder and
shall be construed and interpreted in a manner consistent with the requirements for avoiding additional taxes or penalties under Section
409A of the Code. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided
under this Agreement comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any
taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with Section 409A of
the Code.
25.
No Impact on Other Benefits. The value of the Participant’s Restricted Stock Units is not part of his or her normal or
expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.
26.
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile
transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original
graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an
original signature.
27.
Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant has
read and understands the terms and provisions thereof, and accepts Restricted Stock Units subject to all of the terms and conditions of
the Plan and this
5
Agreement. The Participant acknowledges that there may be adverse tax consequences upon the vesting or settlement of the Restricted
Stock Units or disposition of the underlying shares and that the Participant should consult a tax advisor prior to such vesting, settlement
or disposition.
[SIGNATURE PAGE FOLLOWS]
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
WILLSCOT MOBILE MINI HOLDINGS CORP.
By:
Name: Felicia Gorcyca
Title: Chief Human Resources Officer
By:
Name:
Title:
7
1.
Purpose. In accordance with Section 3 of the Agreement, the number of the Restricted Stock Units that shall be become
vested and unrestricted on the Vesting Date shall be based on the attainment of the Performance Goals during the Performance Period
specified in this Exhibit. Any capitalized terms used herein but not defined in the Agreement or the Plan shall have the meaning
ascribed to them in Section 2 below.
Exhibit A
2.
Definitions.
For purposes of this Exhibit:
2.1
“Performance Goals” shall mean the performance-based vesting conditions applicable to the Restricted Stock Units set
forth in Section 3.1 below.
2.2
“Performance Period” shall mean the three-year period commencing on the Grant Date and ending on the third
Anniversary of the Grant Date.
2.3
“S&P 400 Group” shall mean the companies that comprise the S&P 400 Index on the Grant Date, adjusted to reflect
any such companies which are removed from the S&P 400 Group as of the last day of the Performance Period in accordance with this
Section 2.3. Companies shall be removed from the S&P 400 Group if, during the Performance Period, any such company (i) is acquired
by another company (whether by a peer company or otherwise) or (ii) ceases to be listed on a national stock exchange or other
applicable market system. For the avoidance of doubt, a Company shall not be removed from the S&P 400 Group if, during the
Performance Period, the company (x) leaves the S&P 400 Index but continues to be publicly traded or (y) files for bankruptcy
protection under any chapter of the U.S. Bankruptcy Code; provided, however, that in the event such a company files for bankruptcy, its
TSR (as defined below) shall be adjusted to negative one hundred percent (-100%).
2.4
“rTSR” shall mean total shareholder return as determined by the Committee for the Performance Period for the
Company and each other company in the S&P 400 Group based on the stock price appreciation from the beginning to the end of the
Performance Period, plus dividends paid or declared (assuming such dividends are reinvested in the common stock of the Company or
any company in the S&P 400 Group as of the ex-dividend date). For purposes of computing the rTSR for the Company and each
company in the S&P 400 Group, the stock price at the beginning and the end of the Performance Period shall be based on the 60-day
average closing stock price on each of the 60 consecutive trading days immediately preceding and ending on and including the first day
or last day of the Performance Period, as applicable, adjusted as necessary under Section 2.3.
2.5
“rTSR Percentile Ranking” shall mean the percentile performance of the rTSR of the Company relative to the rTSR for
the companies in the S&P 400 Group determined by the Committee for the Performance Period.
3.
Performance-Based Vesting Conditions.
3.1
The number of the Restricted Stock Units that shall vest shall be determined based on the Company’s rTSR Percentile
Ranking as compared against the rTSR for the companies comprising the S&P 400 Group, measured as of the end of the Performance
Period, based on following Performance Goals:
Company rTSR Percentile Ranking Against S&P 400 Group
8
Company rTSR Percentile Ranking as Compared to S&P 400
Group
>85th Percentile
85th Percentile
50th Percentile
25th Percentile
<25th Percentile
Vesting Percentage
200%
200% (Maximum)
100% (Target)
50% (Threshold)
0%
Payout for performance between goals shall be determined based on linear interpolation. The total number of Restricted Stock Units
eligible to vest, in accordance with the table above, is between 0% - 200% (the minimum number of Restricted Stock Units that may be
earned is zero while the maximum number is 200% of target). No Restricted Stock Units shall be earned if the Company’s rTSR
Percentile Ranking is below the 25th percentile and the maximum number of Restricted Stock Units that may be earned shall be capped
at 200% of the target number even if the Company’s rTSR Percentile Ranking exceeds the 85th percentile; provided, however, that if
the Company’s rTSR Percentile Ranking exceeds the 50th percentile but is negative, the maximum number of Restricted Stock Units
that may be earned shall be capped at 100% of the target number.
3.2
The Committee shall determine, as soon as reasonably practicable, but in any event within sixty (60) calendar days after
the end of the Performance Period, the attainment level of the Performance Goals and the applicable number of the Restricted Stock
Units that shall become Vested Units. Any Restricted Stock Units that do not meet the vesting conditions shall be forfeited. Any Vested
Units shall be settled in accordance with Section 7 of the Agreement.
4.
Effect of a Change in Control. Notwithstanding any provision of the Agreement or this Exhibit to the contrary, in the
event of a Change in Control during the Performance Period the Restricted Stock Units shall be treated as follows:
4.1
Change in Control during First Year of Performance Period. In the event of a Change in Control (and subject to the
Participant’s being in the employ of the Company, its Subsidiaries or any other affiliate as of the date of the Change in Control) during
the first year of the Performance Period, the target number of the Restricted Stock Units shall automatically convert into, and represent
the right to receive, an equivalent number of time-based Restricted Stock Units which will continue to vest but without regard to the
achievement of any Performance Goals.
4.2
Change in Control after First Year of Performance Period. In the event of a Change in Control (and subject to the
Participant’s being in the employ of the Company, its Subsidiaries or any other affiliate as of the date of the Change in Control) after the
first year of the Performance Period, the number of Restricted Stock Units deemed earned, based on the Company’s actual performance
determined under Section 3.1 as of the Change in Control date, shall automatically convert into, and represent the right to receive, an
equivalent number of time-based Restricted Stock Units which will continue to vest but without regard to the achievement of any
Performance Goals.
4.3
Accelerated Vesting if Awards Not Assumed. In the event of a Change in Control (and subject to the Participant’s being
in the employ of the Company, its Subsidiaries or any other affiliate as of the date of the Change in Control), if the successor company
does not
9
equitably assume, continue or substitute outstanding Awards in connection with the Change in Control, the Restricted Stock Units (for
the avoidance of doubt, in the case of Restricted Stock Units based on Sections 4.1 or 4.2 above) shall become fully vested as of the
date of the Change in Control and the Participant shall be eligible to receive (at the same time and in the same form) the equivalent per
share consideration offered to common shareholders generally.
4.4
“Double-Trigger” Vesting for Assumed Awards. To the extent the successor company does equitably assume, continue or
substitute outstanding Awards, the Restricted Stock Units (for the avoidance of doubt, in the case of Restricted Stock Units based on
Sections 4.1 or 4.2 above) shall continue to vest but without regard to the achievement of any Performance Goals; provided, however,
that if the Participant experiences a Qualifying Termination, such Restricted Stock Units shall become fully vested as of the date of
such Qualifying Termination.
10
Exhibit 21.1
The following is a listing of Subsidiaries of WillScot Mobile Mini Holdings Corp., including the name under which they do business and their jurisdictions of
incorporation, as of December 31, 2023.
Subsidiaries of WillScot Mobile Mini Holdings Corp.
Company Name
Williams Scotsman Holdings Corp.
WillScot Equipment II, LLC
Williams Scotsman, Inc.
Williams Scotsman Mexico S. de R. L. de C.V.
Williams Scotsman of Canada, Inc.
Williams Scotsman Metis Services, Inc.
Enterprise Risk Solutions, Inc.
Elite Modular Leasing & Sales, Inc.
BRT Structures Ltd.
Hallwood Modular Buildings, LLC
Ares Doors & Safety, LLC
616 GC LLC
Modern Building Systems, LLC
Mescher Holding Co, LLC
A&M Cold Storage, LLC
AMC Container Leasing, LLC
AMC Trailer Leasing, LLC
Jurisdiction of Incorporation
Delaware
Delaware
Maryland
The Federal District (Mexico City)
Ontario, Canada
British Columbia, Canada
Arizona
California
Alberta, Canada
Louisiana
Delaware
Arizona
Delaware
Ohio
Georgia
Ohio
Georgia
Exhibit 23.1
We consent to the incorporation by reference in the following Registration Statements:
Consent of Independent Registered Public Accounting Firm
(1)
(2)
(3)
Registration Statement (Form S-8 No. 333-222870) of WillScot Mobile Mini Holdings Corp.,
Registration Statement (Form S-3 No. 333-227480) of WillScot Mobile Mini Holdings Corp., and
Registration Statement (Form S-8 No. 333-239626) pertaining to the Employees' Savings Plan of WillScot Mobile Mini Holdings Corp.;
of our reports dated February 20, 2024, with respect to the consolidated financial statements of WillScot Mobile Mini Holdings Corp. and the effectiveness of internal
control over financial reporting of WillScot Mobile Mini Holdings Corp. included in this Annual Report (Form 10-K) of WillScot Mobile Mini Holdings Corp. for the year
ended December 31, 2023.
/s/ Ernst & Young LLP
Baltimore, Maryland
February 20, 2024
Exhibit 31.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Bradley L. Soultz, certify that:
1. I have reviewed this annual report on Form 10-K of WillScot Mobile Mini Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's
auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over
financial reporting.
Date: February 20, 2024
/s/ BRADLEY L. SOULTZ
Bradley L. Soultz
Chief Executive Officer and Director
(Principal Executive Officer)
Exhibit 31.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Timothy D. Boswell, certify that:
1. I have reviewed this annual report on Form 10-K of WillScot Mobile Mini Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's
auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over
financial reporting.
Date: February 20, 2024
/s/ TIMOTHY D. BOSWELL
Timothy D. Boswell
President and Chief Financial Officer
(Principal Financial Officer)
Exhibit 32.1
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of WillScot Mobile Mini Corp. (the
“Company”) hereby certifies, to such officer's knowledge, that:
(i) the annual report on Form 10-K of the Company for the period ended December 31, 2023 (the “Report”) fully complies with the requirements of
Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 20, 2024
/s/ BRADLEY L. SOULTZ
Bradley L. Soultz
Chief Executive Officer and Director (Principal Executive
Officer)
Exhibit 32.2
Certification of Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of WillScot Mobile Mini Corp. (the
“Company”) hereby certifies, to such officer's knowledge, that:
(i) the annual report on Form 10-K of the Company for the period ended December 31, 2023 (the “Report”) fully complies with the requirements of
Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 20, 2024
/s/ TIMOTHY D. BOSWELL
Timothy D. Boswell
President and Chief Financial Officer (Principal Financial
Officer)
Exhibit 97.1
Compensation Recoupment Policy
1.
2.
3.
Purpose. The purpose of this Compensation Recoupment Policy (this “Policy”) is to describe the circumstances under which
WillScot Mobile Mini Holdings Corp. (the “Company”) is required to or shall have the right to recover certain compensation paid
to certain employees and independent contractors. Any references in compensation plans, agreements, equity awards or other
policies to the Company’s “recoupment”, “clawback” or similarly named policy shall be deemed to refer to this Policy with
respect to Incentive-Based Compensation or Time-Based Compensation Received on or after the Effective Date. With respect
to Incentive-Based Compensation or Time-Based Compensation Received prior to the Effective Date, such references to the
Company’s “recoupment”, “clawback” or similarly named policy in compensation plans, agreements, equity awards or other
policies shall be deemed to refer to the Company’s “recoupment,” “clawback” or similarly named policy, if any, in effect prior to
the Effective Date.
Mandatory Recovery of Compensation. In the event that the Company is required to prepare an Accounting Restatement, the
Company shall recover reasonably promptly the amount of Erroneously Awarded Compensation.
Discretionary Recovery of Compensation. In the event that, in the Committee’s judgment, a Covered Officer has engaged in
conduct that (a) represents a violation of Company policy or law, is otherwise contrary to the best interests of the Company or
constitutes a failure to appropriately identify, escalate, monitor or manage material risks to the Company, and (b) has caused,
or might reasonably be expected to cause, significant reputational or financial harm to the Company, the Committee may
instruct the Company, and the Company shall be entitled, to require reimbursement of, or reduce or cancel, Incentive-Based
Compensation or Time-Based Compensation paid or awarded to, or earned by, such Covered Officer (whether or not then
serving as a Covered Officer) to the extent permitted by applicable law.
4.
Definitions. For purposes of this Policy, the following terms, when capitalized, shall have the meanings set forth below:
(a)
(b)
(c)
(d)
“Accounting Restatement” shall mean any accounting restatement required due to material noncompliance of the
Company with any financial reporting requirement under the securities laws, including to correct an error in previously
issued financial statements that is material to the previously issued financial statements, or that would result in a
material misstatement if the error were corrected in the current period or left uncorrected in the current period.
“Covered Officer” shall mean the Company’s president; principal financial officer; principal accounting officer (or if there
is no such accounting officer, the controller); any vice-president of the Company in charge of a principal business unit,
division, or function (such as sales, administration, or finance); any other officer who performs a significant policy-
making function; or any other person who performs similar significant policy-making functions for the Company.
“Effective Date” shall mean October 2, 2023.
“Erroneously Awarded Compensation” shall mean the excess of (i) the amount of Incentive-Based Compensation
Received by a person (A) after beginning service as a Covered Officer, (B) who served as a Covered Officer at any time
during the performance period for that Incentive-Based Compensation, (C) while the Company has a class of securities
listed on a national securities exchange or a national securities association and (D) during the Recovery Period; over (ii)
the Recalculated Compensation. For the avoidance of doubt, a person who served as a Covered Officer during the
periods set forth in clauses (A) and (B) of the preceding sentence shall continue to be subject to this Policy even after
such person’s service as a Covered Officer has ended.
Exhibit 97.1
(e)
(f)
(g)
(h)
“Incentive-Based Compensation” shall mean any compensation that is granted, earned, or vested based wholly or in
part upon the attainment of a financial reporting measure. A financial reporting measure is a measure that is determined
and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and
any measures that are derived wholly or in part from such measures, regardless of whether such measure is presented
within the financial statements or included in a filing with the Securities Exchange Commission. Each of stock price and
total shareholder return is a financial reporting measure.
“Recalculated Compensation” shall mean the amount of Incentive-Based Compensation that otherwise would have
been Received had it been determined based on the restated amounts in the Accounting Restatement, computed
without regard to any taxes paid. For Incentive-Based Compensation based on stock price or total shareholder return,
where the amount of the Erroneously Awarded Compensation is not subject to mathematical recalculation directly from
the information in an Accounting Restatement, the amount of the Recalculated Compensation must be based on a
reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return, as the
case may be, on the compensation Received. The Company must maintain documentation of the determination of that
reasonable estimate and provide such documentation to the national securities exchange or association on which its
securities are listed. The Covered Officer shall be entitled to receive a copy of the Recalculated Compensation
documentation and the reasonable estimate thereof within 5 business days of completion.
Incentive-Based Compensation is deemed “Received” in the Company’s fiscal period during which the financial
reporting measure specified in the award of such Incentive-Based Compensation is attained, even if the payment or
grant of the Incentive-Based Compensation occurs after the end of that period. Time-Based Compensation is
“Received” in the year of payment or settlement.
“Recovery Period” shall mean the three completed fiscal years of the Company immediately preceding the date the
Company is required to prepare an Accounting Restatement; provided that the Recovery Period shall not begin before
the Effective Date. For purposes of determining the Recovery Period, the Company is considered to be “required to
prepare an Accounting Restatement” on the earlier to occur of: (i) the date the Company’s Board of Directors, a
committee thereof, or the Company’s authorized officers conclude, or reasonably should have concluded, that the
Company is required to prepare an Accounting Restatement, or (ii) the date a court, regulator, or other legally
authorized body directs the Company to prepare an Accounting Restatement. If the Company changes its fiscal year,
then the transition period within or immediately following such three completed fiscal years also shall be included in the
Recovery Period, provided that if the transition period between the last day of the Company’s prior fiscal year end and
the first day of its new fiscal year comprises a period of nine to 12 months, then such transition period shall instead be
deemed one of the three completed fiscal years and shall not extend the length of the Recovery Period.
(i)
“Time-Based Compensation” shall mean any compensation that is paid pursuant to an equity-based award granted
under the Company’s 2020 Incentive Award Plan (or any successor plan thereto), whether settled in cash, the
Company’s common stock or a combination thereof, and that is not Incentive-Based Compensation.
5.
Exceptions. Notwithstanding anything to the contrary in this Policy, recovery of Erroneously Awarded Compensation will not be
required to the extent the Company’s committee of independent directors responsible for executive compensation decisions (or
a majority of the independent directors on the Company’s board of directors in the absence of such a committee) has made a
determination that such recovery would be impracticable and one of the following conditions have been satisfied:
Exhibit 97.1
(a)
(b)
(c)
The direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered;
provided that, before concluding that it would be impracticable to recover any amount of Erroneously Awarded
Compensation that was Incentive-Based Compensation based on the expense of enforcement, the Company must
make a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable
attempt(s) to recover, and provide that documentation to the national securities exchange or association on which its
securities are listed.
Recovery would violate home country law where, with respect to Incentive-Based Compensation, that law was adopted
prior to November 28, 2022; provided that, before concluding that it would be impracticable to recover any amount of
Erroneously Awarded Compensation that was Incentive-Based Compensation based on violation of home country law,
the Company must obtain an opinion of home country counsel, acceptable to the national securities exchange or
association on which its securities are listed, that recovery would result in such a violation, and must provide such
opinion to the exchange or association.
Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to
employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and
regulations thereunder.
6.
Manner of Recovery. In addition to any other actions permitted by law or contract, the Company may take any or all of the
following actions to recover any Erroneously Awarded Compensation: (a) require the Covered Officer to repay such amount;
(b) offset such amount from any other compensation owed by the Company or any of its affiliates to the Covered Officer,
regardless of whether the contract or other documentation governing such other compensation specifically permits or
specifically prohibits such offsets; and (c) subject to Section 5(c), to the extent the Erroneously Awarded Compensation was
deferred into a plan of deferred compensation, whether or not qualified, forfeit such amount (as well as the earnings on such
amounts) from the Covered Officer’s balance in such plan, regardless of whether the plan specifically permits or specifically
prohibits such forfeiture. If the Erroneously Awarded Compensation consists of shares of the Company’s common stock, and
the Covered Officer still owns such shares, then the Company may satisfy its recovery obligations by requiring the Covered
Officer to transfer such shares back to the Company.
7.
Other.
(a)
(b)
(c)
(d)
The Committee will have sole discretion in making all determinations under this Policy, and the determinations of the
Committee shall be binding on all Covered Officers.
This Policy shall be binding upon and enforceable against the Covered Officers. A Covered Officer will not be entitled to
payment of legal fees or indemnification from the Company with respect to any dispute between the Company and the
Covered Officer under this Policy, or with respect to any loss of Erroneously Awarded Compensation.
The Company shall file all disclosures with respect to this Policy in accordance with the requirements of the Federal
securities laws, including disclosure required by the Securities Exchange Commission filings.
Any Incentive-Based Compensation that has been recovered under one section of this Policy shall not, after such
recovery, be recoverable under another section of this Policy. Any right to recovery under this Policy shall be in addition
to, and not in lieu of, any other rights of recovery that may be available to the Company.
(e)
Each of the Committee and the Company’s Board of Directors, in their discretion, may modify or amend, in whole or in
part, any or all of the provisions of this Policy and may suspend any provision hereof from time to time, and such
modifications or amendments shall apply prospectively to grants and awards that have yet to be awarded, and not
retrospectively, in each case except as otherwise required by law or the rule of the relevant stock exchange.
(f)
This Policy, and all rights and obligations hereunder, shall be governed by, except to the extent preempted by other
applicable laws, the internal laws of the State of Delaware (without reference to conflict of law principles thereof).
Exhibit 97.1
Exhibit 97.1
Compensation Recoupment Parameters
1. A change from one generally accepted accounting principle to another generally accepted accounting principle when the
accounting principle formerly used is no longer generally accepted does not, under current guidance, represent an error
correction.
2. Options, Base Salary and RSUs will not be considered incentive-based compensation because they are neither granted nor
vested based on a financial measure.
3. PSUs granted during the 3-year look back period but for which the performance period does not conclude during such three-
year look back period would not require recalculation because the compensation is not considered “received” during the
applicable look back period for purposes of this policy.
If the incentive-based compensation metric at issue is only dependent upon, for example, Net Income, Adjusted EBITDA,
Revenues or Free Cash Flow and are not materially impacted individually or collectively, then no further calculations are
required; in each case as the capitalized terms are defined by the Company’s description of non-GAAP measures in place
during the lookback period.
4.
5. Company Recalculation
For restatements that impact performance metrics that can be recalculated directly based on updated financial
statements (i.e., Adjusted EBITDA, Sales, Earnings Per Share, etc.) company finance and accounting to
recalculate
Compensation Committee to approve recalculated compensation and clawback amount based on
company finance and accounting calculations.
For restatements that impact performance metrics that cannot be recalculated directly based on updated financial
statements (i.e., TSR, Relative TSR, stock price, etc.) (the “Indirect Metrics”) Impose three-prong approach:
#1: Until and unless a clear market practice develops to the contrary, engage third-party evaluators only
when material
Immaterial restatement, company finance, accounting, and board to assess likely impact to Indirect
Metrics
Material restatement, consider engaging third-party valuation firm to assess likely impact to Indirect
Metrics
#2: If clear market practice develops in favor of third-party evaluators, consider engaging third-party
evaluators for all assessments of Indirect Metrics
#3: Consider change in average share price in the 30-days post disclosure of the restatement with
average share price in 30-days preceding the restatement announcement as an indicator of the change
that likely would have resulted had the restated earnings been known at the time of the PSU vesting
6. Committee Reassessment
Following recalculation of compensation based on financial performance metrics as noted above, Compensation Committee
to reassess any individual metrics and/or discretion imposed on compensation amounts considering the restatement
7. Recoupment Method
Finance to evaluate most cost-effective method of recovery, which shall include direct offset where practicable and consider
credit risk. Compensation committee to review and approve the method for compensation recovery following presentation from
Company Finance
Effective November 1, 2023