UNITED STATES
| (Mark One) | ||
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended June 30, | ||
| OR | ||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
DOUBLE EAGLE ACQUISITION CORP.
| Delaware | 001-37552 | 82-3430194 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer |
| Identification No.) | ||
2121 Avenue of the Stars, Suite 2300
Los Angeles, CA 90067
(310) 209-7280
of registrant’s principal executive offices)
code)
Yesx☒ No¨☐
Yesx☒ No¨☐
Large accelerated filer | Accelerated filer | |
Non‑accelerated filer ☐ | Smaller reporting company ☐ | |
Emerging growth companyx
As
DOUBLE EAGLE ACQUISITION CORP.
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
DOUBLE EAGLE ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| June 30, 2017 | December 31, 2016 | |||||||
| (unaudited) | ||||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 22,490 | $ | 188,063 | ||||
| Prepaid expenses | 21,842 | 73,441 | ||||||
| Total Current Assets | 44,332 | 261,504 | ||||||
| Cash and investments held in Trust Account | 502,663,076 | 501,340,910 | ||||||
| Total assets | $ | 502,707,408 | $ | 501,602,414 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 831,407 | $ | 75,671 | ||||
| Advances from Sponsor | 230,000 | - | ||||||
| Total Current liabilities | 1,061,407 | 75,671 | ||||||
| Deferred underwriting compensation | 19,500,000 | 19,500,000 | ||||||
| Total liabilities | 20,561,407 | 19,575,671 | ||||||
| Class A Ordinary shares subject to possible redemption; 47,714,600 shares and 47,702,674 shares at June 30, 2017 and December 31, 2016, respectively | 477,146,000 | 477,026,740 | ||||||
| Shareholders’ equity: | ||||||||
| Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
| Class A ordinary shares, $0.0001 par value; 380,000,000 Class A ordinary shares authorized, 2,285,400 and 2,297,326 Class A shares issued and outstanding (excluding 47,714,600 and 47,702,674 shares, respectively subject to possible redemption) at June 30, 2017 and December 31, 2016, respectively | 229 | 230 | ||||||
| Class B ordinary shares, $0.0001 par value, 20,000,000 Class B ordinary shares authorized; 12,500,000 Class B shares issued and outstanding at June 30, 2017 and December 31, 2016 | 1,250 | 1,250 | ||||||
| Additional paid-in capital | 4,337,409 | 4,456,671 | ||||||
| Retained earnings | 661,113 | 541,852 | ||||||
| Total shareholders’ equity | 5,000,001 | 5,000,003 | ||||||
| Total liabilities and shareholders’ equity | $ | 502,707,408 | $ | 501,602,414 | ||||
See accompanying notes to condensed financial statements.
DOUBLE EAGLE ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | |||||||||||||
| Revenue | $ | — | $ | — | $ | — | $ | — | ||||||||
| General and administrative expenses | 871,490 | 127,551 | 1,202,906 | 405,025 | ||||||||||||
| Loss from operations | (871,490 | ) | (127,551 | ) | (1,202,906 | ) | (405,025 | ) | ||||||||
| Interest on Trust Account | 796,023 | 268,755 | 1,322,167 | 499,485 | ||||||||||||
| Net income (loss) attributable to ordinary shares | $ | (75,467 | ) | $ | 141,204 | $ | 119,261 | $ | 94,460 | |||||||
| Weighted average ordinary shares outstanding | ||||||||||||||||
| Basic | 14,777,937 | 14,858,112 | 14,787,471 | 14,855,890 | ||||||||||||
| Diluted | 14,777,937 | 62,500,000 | 62,500,000 | 62,500,000 | ||||||||||||
| Net income (loss) per ordinary share | ||||||||||||||||
| Basic | $ | (0.01 | ) | $ | 0.01 | $ | 0.01 | $ | 0.01 | |||||||
| Diluted | $ | (0.01 | ) | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||
See accompanying notes to condensed financial statements.
DOUBLE EAGLE ACQUISITION CORP.CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
For the six months ended June 30, 2017
(unaudited)
| Ordinary shares Class A | Ordinary shares Class B | Total | ||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Additional Paid-in Capital | Retained Earnings | Shareholders’ Equity | ||||||||||||||||||||||
| Balance as of December 31, 2016 | 2,297,326 | $ | 230 | 12,500,000 | $ | 1,250 | $ | 4,456,671 | $ | 541,852 | $ | 5,000,003 | ||||||||||||||||
| Adjustment to ordinary shares subject to redemption | (11,926 | ) | (1 | ) | - | - | (119,262 | ) | - | (119,263 | ) | |||||||||||||||||
| Net income | - | - | - | - | - | 119,261 | 119,261 | |||||||||||||||||||||
| Balance as of June 30, 2017 | 2,285,400 | $ | 229 | 12,500,000 | $ | 1,250 | $ | 4,337,409 | $ | 661,113 | $ | 5,000,001 | ||||||||||||||||
See accompanying notes to condensed financial statements.
DOUBLE EAGLE ACQUISITION CORP.CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
| Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income attributable to ordinary shares | $ | 119,261 | $ | 94,460 | ||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease in prepaid expenses | 51,597 | - | ||||||
| Increase (decrease) in accounts payable | 755,736 | (107,821 | ) | |||||
| Net cash provided by (used in) operating activities | 926,594 | (13,361 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Trust income retained in Trust account | (1,322,167 | ) | (499,485 | ) | ||||
| Net cash used in investing activities | (1,322,167 | ) | (499,485 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Advances from Sponsor | 230,000 | - | ||||||
| Net cash provided by financing activities | 230,000 | - | ||||||
| Decrease in cash during period | (165,573 | ) | (512,846 | ) | ||||
| Cash at beginning of period | 188,063 | 1,007,861 | ||||||
| Cash at end of period | $ | 22,490 | $ | 495,015 | ||||
See accompanying notes to condensed financial statements.
DOUBLE EAGLE ACQUISITION CORP.
Notes to Condensed Financial Statements
| ITEM 1. |
Incorporation
| (in thousands, except share data) | June 30, 2018 (unaudited) | December 31, 2017 | ||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 8,181 | $ | 9,185 | ||||
| Trade receivables, net of allowances for doubtful accounts at June 30, 2018 and December 31, 2017 of $5,631 and $4,845, respectively | 104,013 | 94,820 | ||||||
| Raw materials and consumables | 9,829 | 10,082 | ||||||
| Prepaid expenses and other current assets | 14,137 | 13,696 | ||||||
| Total current assets | 136,160 | 127,783 | ||||||
| Rental equipment, net | 1,075,040 | 1,040,146 | ||||||
| Property, plant and equipment, net | 82,361 | 83,666 | ||||||
| Goodwill | 33,570 | 28,609 | ||||||
| Intangible assets, net | 125,864 | 126,259 | ||||||
| Other non-current assets | 4,038 | 4,279 | ||||||
| Total long-term assets | 1,320,873 | 1,282,959 | ||||||
| Total assets | $ | 1,457,033 | $ | 1,410,742 | ||||
| Liabilities | ||||||||
| Accounts payable | 58,370 | 57,051 | ||||||
| Accrued liabilities | 45,606 | 48,912 | ||||||
| Accrued interest | 1,802 | 2,704 | ||||||
| Deferred revenue and customer deposits | 50,382 | 45,182 | ||||||
| Current portion of long-term debt | 1,883 | 1,881 | ||||||
| Total current liabilities | 158,043 | 155,730 | ||||||
| Long-term debt | 684,641 | 624,865 | ||||||
| Deferred tax liabilities | 111,924 | 120,865 | ||||||
| Deferred revenue and customer deposits | 6,696 | 5,377 | ||||||
| Other non-current liabilities | 19,109 | 19,355 | ||||||
| Long-term liabilities | 822,370 | 770,462 | ||||||
| Total liabilities | 980,413 | 926,192 | ||||||
| Commitments and contingencies (see Note 12) | ||||||||
| Class A common stock: $0.0001 par, 400,000,000 shares authorized at June 30, 2018 and December 31, 2017; 84,644,744 shares issued and outstanding at both June 30, 2018 and December 31, 2017 | 8 | 8 | ||||||
| Class B common stock: $0.0001 par, 100,000,000 shares authorized at June 30, 2018 and December 31, 2017; 8,024,419 shares issued and outstanding at both June 30, 2018 and December 31, 2017 | 1 | 1 | ||||||
| Additional paid-in-capital | 2,123,101 | 2,121,926 | ||||||
| Accumulated other comprehensive loss | (54,417 | ) | (49,497 | ) | ||||
| Accumulated deficit | (1,640,230 | ) | (1,636,819 | ) | ||||
| Total shareholders' equity | 428,463 | 435,619 | ||||||
| Non-controlling interest | 48,157 | 48,931 | ||||||
| Total equity | 476,620 | 484,550 | ||||||
| Total liabilities and equity | $ | 1,457,033 | $ | 1,410,742 | ||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (in thousands, except share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Revenues: | |||||||||||||||
| Leasing and services revenue: | |||||||||||||||
| Modular leasing | $ | 101,249 | $ | 72,954 | $ | 198,511 | $ | 141,941 | |||||||
| Modular delivery and installation | 31,413 | 22,949 | 57,663 | 41,953 | |||||||||||
| Sales: | |||||||||||||||
| New units | 5,236 | 9,396 | 12,664 | 14,882 | |||||||||||
| Rental units | 2,435 | 4,778 | 6,246 | 10,622 | |||||||||||
| Total revenues | 140,333 | 110,077 | 275,084 | 209,398 | |||||||||||
| Costs: | |||||||||||||||
| Costs of leasing and services: | |||||||||||||||
| Modular leasing | 27,129 | 21,340 | 54,291 | 40,442 | |||||||||||
| Modular delivery and installation | 30,127 | 22,339 | 55,648 | 40,472 | |||||||||||
| Costs of sales: | |||||||||||||||
| New units | 3,704 | 6,766 | 8,691 | 10,486 | |||||||||||
| Rental units | 1,263 | 2,575 | 3,578 | 6,283 | |||||||||||
| Depreciation of rental equipment | 23,470 | 17,474 | 47,315 | 34,194 | |||||||||||
| Gross profit | 54,640 | 39,583 | 105,561 | 77,521 | |||||||||||
| Expenses: | |||||||||||||||
| Selling, general and administrative | 47,734 | 31,652 | 92,948 | 64,413 | |||||||||||
| Other depreciation and amortization | 1,570 | 1,890 | 4,006 | 3,831 | |||||||||||
| Restructuring costs | 449 | 684 | 1,077 | 968 | |||||||||||
| Currency losses (gains), net | 572 | (6,497 | ) | 1,596 | (8,499 | ) | |||||||||
| Other (income) expense, net | (1,574 | ) | 461 | (4,419 | ) | 591 | |||||||||
| Operating income | 5,889 | 11,393 | 10,353 | 16,217 | |||||||||||
| Interest expense | 12,155 | 29,907 | 23,874 | 54,568 | |||||||||||
| Interest income | — | (3,509 | ) | — | (6,093 | ) | |||||||||
| Loss from continuing operations before income tax | (6,266 | ) | (15,005 | ) | (13,521 | ) | (32,258 | ) | |||||||
| Income tax benefit | (6,645 | ) | (5,269 | ) | (7,065 | ) | (10,138 | ) | |||||||
| Income (loss) from continuing operations | 379 | (9,736 | ) | (6,456 | ) | (22,120 | ) | ||||||||
| Income from discontinued operations, net of tax | — | 3,840 | — | 6,045 | |||||||||||
| Net income (loss) | 379 | (5,896 | ) | (6,456 | ) | (16,075 | ) | ||||||||
| Net income (loss) attributable to non-controlling interest, net of tax | 143 | — | (505 | ) | — | ||||||||||
| Total income (loss) attributable to WSC | $ | 236 | $ | (5,896 | ) | $ | (5,951 | ) | $ | (16,075 | ) | ||||
| Net income (loss) per share attributable to WSC – basic | |||||||||||||||
| Continuing operations - basic | $ | 0.00 | $ | (0.67 | ) | $ | (0.08 | ) | $ | (1.53 | ) | ||||
| Discontinued operations - basic | $ | 0.00 | $ | 0.26 | $ | 0.00 | $ | 0.42 | |||||||
| Net income (loss) per share - basic | $ | 0.00 | $ | (0.41 | ) | $ | (0.08 | ) | $ | (1.11 | ) | ||||
| Net income (loss) per share attributable to WSC – diluted | |||||||||||||||
| Continuing operations - diluted | $ | 0.00 | $ | (0.67 | ) | $ | (0.08 | ) | $ | (1.53 | ) | ||||
| Discontinued operations - diluted | $ | 0.00 | $ | 0.26 | $ | 0.00 | $ | 0.42 | |||||||
| Net income (loss) per share - diluted | $ | 0.00 | $ | (0.41 | ) | $ | (0.08 | ) | $ | (1.11 | ) | ||||
| Weighted average shares: | |||||||||||||||
| Basic | 78,432,274 | 14,545,833 | 77,814,456 | 14,545,833 | |||||||||||
| Diluted | 82,180,086 | 14,545,833 | 77,814,456 | 14,545,833 | |||||||||||
| Cash dividends declared per share | $ | — | $ | — | $ | — | $ | — | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Net income (loss) | $ | 379 | $ | (5,896 | ) | $ | (6,456 | ) | $ | (16,075 | ) | ||||
| Other comprehensive (loss) income: | |||||||||||||||
| Foreign currency translation adjustment, net of income tax (benefit) expense of ($93), $462, ($241) and $618 for the three and six months ended June 30, 2018 and 2017, respectively | (2,619 | ) | 3,102 | (2,380 | ) | 5,783 | |||||||||
| Comprehensive loss | (2,240 | ) | (2,794 | ) | (8,836 | ) | (10,292 | ) | |||||||
| Comprehensive loss attributable to non-controlling interest | (150 | ) | — | (774 | ) | — | |||||||||
| Total comprehensive loss attributable to WSC | $ | (2,090 | ) | $ | (2,794 | ) | $ | (8,062 | ) | $ | (10,292 | ) | |||
| Six Months Ended June 30, | |||||||
| (in thousands) | 2018 | 2017 | |||||
| Operating Activities: | |||||||
| Net loss | $ | (6,456 | ) | $ | (16,075 | ) | |
| Adjustments for non-cash items: | |||||||
| Depreciation and amortization | 51,941 | 53,075 | |||||
| Provision for doubtful accounts | 2,282 | 2,276 | |||||
| Gain on sale of rental equipment and other property, plant and equipment | (7,429 | ) | (4,237 | ) | |||
| Interest receivable capitalized into notes due from affiliates | — | (3,915 | ) | ||||
| Amortization of debt discounts and debt issuance costs | 2,522 | 7,326 | |||||
| Share based compensation expense | 1,175 | — | |||||
| Deferred income tax benefit | (7,066 | ) | (5,073 | ) | |||
| Unrealized currency losses (gains) | 1,378 | (8,356 | ) | ||||
| Changes in operating assets and liabilities, net of effect of businesses acquired: | |||||||
| Trade receivables | (11,624 | ) | (3,847 | ) | |||
| Inventories | 442 | 610 | |||||
| Prepaid and other assets | (282 | ) | (7,715 | ) | |||
| Accrued interest receivable | — | (3,214 | ) | ||||
| Accrued interest payable | (909 | ) | (1,524 | ) | |||
| Accounts payable and other accrued liabilities | (11,841 | ) | 14,099 | ||||
| Deferred revenue and customer deposits | 4,667 | 694 | |||||
| Net cash provided by operating activities | 18,800 | 24,124 | |||||
| Investing Activities: | |||||||
| Acquisition of a business | (24,006 | ) | — | ||||
| Proceeds from sale of rental equipment | 12,033 | 10,622 | |||||
| Purchase of rental equipment and refurbishments | (64,763 | ) | (54,223 | ) | |||
| Lending on notes due from affiliates | — | (67,939 | ) | ||||
| Repayments on notes due from affiliates | — | 2,151 | |||||
| Proceeds from the sale of property, plant and equipment | 681 | 11 | |||||
| Purchase of property, plant and equipment | (1,616 | ) | (2,015 | ) | |||
| Net cash used in investing activities | (77,671 | ) | (111,393 | ) | |||
| Financing Activities: | |||||||
| Receipts from borrowings | 61,792 | 222,129 | |||||
| Receipts on borrowings from notes due to affiliates | — | 75,000 | |||||
| Payment of financing costs | — | (10,919 | ) | ||||
| Repayment of borrowings | (3,770 | ) | (198,580 | ) | |||
| Principal payments on capital lease obligations | (59 | ) | (785 | ) | |||
| Net cash provided by financing activities | 57,963 | 86,845 | |||||
| Effect of exchange rate changes on cash and cash equivalents | (96 | ) | 254 | ||||
| Net change in cash and cash equivalents | (1,004 | ) | (170 | ) | |||
| Cash and cash equivalents at the beginning of the period | 9,185 | 6,162 | |||||
| Cash and cash equivalents at the end of the period | $ | 8,181 | $ | 5,992 | |||
| Supplemental Cash Flow Information: | |||||||
| Interest paid | $ | 22,004 | $ | 50,404 | |||
| Income taxes paid, net of refunds received | $ | 1,000 | $ | (437 | ) | ||
| Capital expenditures accrued or payable | $ | 16,828 | $ | 8,992 | |||
Sponsor
The Company’s sponsor is Double Eagle Acquisition LLC, a Delaware limited liability company (the “Sponsor”).
Fiscal Year End
The Company's fiscal year end is December 31.
Business Purpose
The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more operating businessesbusinesses. On November 29, 2017, the Company, through its subsidiary, WS Holdings, acquired all of the equity interest of Williams Scotsman International, Inc. (“WSII”), from Algeco Scotsman Global S.à r.l., (together with its subsidiaries, the “Algeco Group”). The Algeco Group is majority owned by an investment fund managed by TDR Capital. As part of the transaction (the “Business Combination”), the Company redomesticated and changed its name to WillScot Corporation. For further information on the organization of the Company, refer to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2017.
Financing
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 registration statementfinancial statements of the subsidiaries are prepared for the Company’s initial public offering (the “Public Offering”same reporting period as the Company. All intercompany balances and transactions are eliminated. The Business Combination was accounted for as a reverse recapitalization in accordance with Accounting Standard Codification (“ASC”) (as described in Note 3)805,
Upon the closing of the Public Offering and the private placement, $500,000,000 was placed in a trust account with Continental Stock Transfer & Trust Company acting as trustee (the “Trust Account”) (discussed below). The closing of the Public Offering included an initial partial exercise (2,000,000 units) of the overallotment option granted to the underwriters.
Trust Account
The Trust Account can be invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act that invest only in direct U.S. government treasury obligations.
The Company’s amended and restated memorandum and articles of association provide that, other than the withdrawal of interest to pay income taxes, if any, none of the funds held in trust will be released until the earlier of:this report reflect (i) the completionhistorical operating results of WSII prior to the Business Combination; (ii) the redemption of anycombined results of the Class A ordinaryCompany and WSII following the Business Combination on November 29, 2017; (iii) the assets and liabilities of WSII at their historical cost; and (iv) WSC’s equity structure for all periods presented. The recapitalization of the number of shares included inof common stock attributable to the Units sold in the Public Offering properly tenderedpurchase of WSII in connection with a shareholder vote to amend the Company’s amended and restated memorandum and articles of association to modify the substance or timing of the Company’s obligation to redeem 100% of the Class A ordinary shares included in the Units sold in the Public Offering if the Company does not complete the Business Combination within 24 months fromis reflected retroactively to the closingearliest period presented and will be utilized for calculating earnings per share in all prior periods presented. No step-up basis of intangible assets or goodwill was recorded in the Business Combination transaction consistent with the treatment of the Public Offering or (iii)transaction as a reverse capitalization of WSII. WSII’s remote accommodations business, which consisted of Target Logistics Management LLC (“Target Logistics”) and its subsidiaries and Chard Camp Catering Services (“Chard,” and together with Target Logistics, the redemption“Remote Accommodations Business”), was transferred to other Algeco Group members on November 28, 2017 in a transaction under common control and was not included as part of 100% of the Class A ordinary shares included in the Units sold in the Public Offering if the Company is unable to complete a Business Combination within 24 months from the closing of the Public Offering.
Business Combination
A Business Combination is subject to the following size, focus and shareholder approval provisions:
Size/Control —The Company’s Business Combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the Business Combination. The Company will not complete a Business Combination unless it acquires a controlling interest in a target company or is otherwise not required to register as an investment company under the Investment Company Act.
Focus — The Company’s efforts in identifying prospective target businesses will initially be focused on businesses in the media or entertainment industries, including providers of content, but the Company may pursue acquisition opportunities in other sectors.
Tender Offer/Shareholder Approval — The Company, after signing a definitive agreement for a Business Combination, will either (i) seek shareholder approvaloperating results of the Remote Accommodations Business, Combination at a meeting called for such purpose in connection with which shareholders may seek to redeem their Class A ordinary shares, regardlessnet of whether they vote for or against the Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial business combination, including interest but less income taxes payable, or (ii) provide shareholders with the opportunity to sell their Class A ordinary shares to the Company by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to commencement of the tender offer, including interest but less income taxes payable. The decision as to whether the Company will seek shareholder approval of the Business Combination or will allow shareholders to sell their Class A ordinary shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek shareholder approval. If the Company seeks shareholder approval, it will complete its Business Combination only if a majority of the outstanding ordinary shares voted are voted in favor of the Business Combination. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its public shares and the related Business Combination, and instead may search for an alternate Business Combination.
If the Company holds a shareholder vote in connection with a Business Combination, a public shareholder will have the right to redeem its Class A ordinary shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial business combination, including interest but less income taxes payable. As a result, such Class A ordinary shares have been recorded at redemption amount and classified as temporary equity, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.”
Liquidation and Going Concern
The Company has 24 months from the closing of the Public Offering (until September 16, 2017) to complete its initial Business Combination. If the Company does not complete a Business Combination within this period of time, it shall (i) cease all operations excepttax, for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the public shares for a per share pro rata portion of the Trust Account, including interest, but less income taxes payable (less up to $100,000 of such net interest to pay dissolution expenses)three and (iii) as promptly as possible following such redemption, dissolve and liquidate the balance of the Company’s net assets to its remaining shareholders, as part of its plan of dissolution and liquidation. The Sponsor, Harry E. Sloan and the Company’s executive officers and independent directors (the “initial shareholders”) have entered into letter agreements with the Company, pursuant to which they have waived their rights to participate in any redemption with respect to their Founder Shares (as defined below); however, if the initial shareholders or any of the Company’s officers, directors or affiliates acquire Class A ordinary shares in or after the Public Offering, they will be entitled to a pro rata share of the Trust Account upon the Company’s redemption or liquidation in the event the Company does not complete a Business Combination within the required time period. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per Unit in the Public Offering.
This mandatory liquidation and subsequent dissolution raises substantial doubt about the Company's ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after September 16, 2017.
As ofsix months ended June 30, 2017 the Company had approximately $22,500 in cash and a working capital deficit of approximately $1,017,100. It is anticipated that the Company may incur loans from the Sponsor,have been reported as permitteddiscontinued operations in the Initial Public Offering, for additional working capital for Company’s ordinary operationscondensed consolidated financial statements.
Emerging Growth Company
Section 102(b)(1) ofJumpstart Our Business Startups Act (the “JOBS Act”). Using exemptions provided under the JOBS Act exempts emerging growth companies from being requiredprovided to complyEGCs, the Company has elected to defer compliance with new or revised financial accounting standards until private companies (thata company that is those that have not had a Securitiesan issuer (as defined under section 2(a) of the Sarbanes-Oxley Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are2002) is required to comply with such standards. As such, compliance dates included below pertain to non-issuers, and as permitted, early adoption dates for non-issuers are indicated.
Basis of Presentation
The accompanying condensedthis guidance on its financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the SEC, and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for the fair presentation of the financial position, as of June 30, 2017 and the results of operations, and cash flowsflows. The Company is planning to update its systems, processes and internal controls to meet the new reporting and disclosure requirements.
| (in thousands) | Six Months Ended June 30, 2017 | ||
| WSC historic revenues (a) | $ | 209,398 | |
| Acton historic revenues | 47,388 | ||
| Pro-forma revenues | $ | 256,786 | |
| WSC historic pretax loss (a) | $ | (32,258 | ) |
| Acton historic pretax loss | (275 | ) | |
| Pro-forma pretax loss | (32,533 | ) | |
| Pro-forma adjustments to combined pretax loss: | |||
| Impact of fair value mark-ups/useful life changes on depreciation (b) | (1,272 | ) | |
| Intangible asset amortization (c) | (354 | ) | |
| Interest expense (d) | (5,431 | ) | |
| Elimination of historic Acton interest (e) | 2,514 | ||
| Pro-forma pretax loss | (37,076 | ) | |
| Income tax benefit | (11,652 | ) | |
| Pro-forma loss from continuing operations | (25,424 | ) | |
| Income from discontinued operations | 6,045 | ||
| Pro-forma net loss | $ | (19,379 | ) |
Net privately-owned provider of office trailers, portable storage units and modular buildings, and NANOMA LLC, solely in its capacity as the representative of the Holders (as defined therein), pursuant to which Merger Sub will merge with and into ModSpace with ModSpace as the surviving entity and continuing as an indirect subsidiary of the Company (the “ModSpace Acquisition”). Subject to potential adjustment under the Merger Agreement, the aggregate consideration payable to the sellers under the Merger Agreement consists of (i) $1,063,750,000 in cash, (ii) 6,458,500 shares of the Company’s Class A common stock and (iii) warrants to purchase an aggregate of 10,000,000 shares of the Company’s Class A common stock at an exercise price of $15.50 per share.
Basicfrom discontinued operations, net of tax, for the three and six months ended June 30, 2017 was as follows:
| (in thousands) | Three Months Ended June 30, 2017 | Six Months Ended June 30, 2017 | |||||
| Remote accommodations revenue | $ | 31,487 | $ | 58,565 | |||
| Remote accommodations costs of leasing and services | 13,163 | 24,738 | |||||
| Depreciation of rental equipment | 6,119 | 12,542 | |||||
| Gross profit | 12,205 | 21,285 | |||||
| Selling, general and administrative expenses | 3,499 | 6,531 | |||||
| Other depreciation and amortization | 1,257 | 2,508 | |||||
| Restructuring costs | 380 | 770 | |||||
| Other income, net | (37 | ) | (40 | ) | |||
| Operating profit | 7,106 | 11,516 | |||||
| Interest expense | 739 | 1,420 | |||||
| Income from discontinued operations, before income tax | 6,367 | 10,096 | |||||
| Income tax expense | 2,527 | 4,051 | |||||
| Income from discontinued operations, net of tax | $ | 3,840 | $ | 6,045 | |||
| (in thousands) | Three Months Ended June 30, 2017 | Six Months Ended June 30, 2017 | |||||
| Remote accommodations revenue: | |||||||
| Lease revenue | $ | 14,613 | $ | 28,577 | |||
| Service revenue | 16,874 | 29,988 | |||||
| Total remote accommodations revenue | $ | 31,487 | $ | 58,565 | |||
| Remote accommodation costs: | |||||||
| Cost of leases | $ | 2,023 | $ | 4,200 | |||
| Cost of services | 11,140 | 20,538 | |||||
| Total remote accommodations costs | $ | 13,163 | $ | 24,738 | |||
| (in thousands) | June 30, 2017 | ||
| Depreciation and amortization | $ | 15,050 | |
| Capital expenditures | $ | 4,213 | |
| (in thousands) | June 30, 2018 | December 31, 2017 | |||||
| Modular units and portable storage | $ | 1,445,769 | $ | 1,385,901 | |||
| Value added products and services | 66,834 | 59,566 | |||||
| Total rental equipment | 1,512,603 | 1,445,467 | |||||
| Less: accumulated depreciation | (437,563 | ) | (405,321 | ) | |||
| Rental equipment, net | $ | 1,075,040 | $ | 1,040,146 | |||
| (in thousands) | Modular – US | Modular – Other North America | Total | ||||||||
| Balance at January 1, 2017 | $ | — | $ | 56,811 | $ | 56,811 | |||||
| Acquisition of a business | 28,609 | — | 28,609 | ||||||||
| Effects of movements in foreign exchange rates | — | 3,932 | 3,932 | ||||||||
| Impairment losses | — | (60,743 | ) | (60,743 | ) | ||||||
| Balance at December 31, 2017 | 28,609 | — | 28,609 | ||||||||
| Acquisition of a business | 3,406 | — | 3,406 | ||||||||
| Changes to preliminary purchase price allocations | 1,555 | — | 1,555 | ||||||||
| Balance at June 30, 2018 | $ | 33,570 | $ | — | $ | 33,570 | |||||
| (in thousands, except rates) | Interest rate | Year of maturity | June 30, 2018 | December 31, 2017 | |||||||
| Senior secured notes | 7.875% | 2022 | $ | 291,456 | $ | 290,687 | |||||
| US ABL Facility | Varies | 2022 | 356,759 | 297,323 | |||||||
| Canadian ABL Facility (a) | Varies | 2022 | — | — | |||||||
| Capital lease and other financing obligations | 38,309 | 38,736 | |||||||||
| Total debt | 686,524 | 626,746 | |||||||||
| Less: current portion of long-term debt | (1,883 | ) | (1,881 | ) | |||||||
| Total long-term debt | $ | 684,641 | $ | 624,865 | |||||||
| (a) | At June 30, 2018, the Company had no outstanding borrowings on the Canadian ABL Facility and $1.5 million of related debt issuance costs. As there were no principal borrowings outstanding on the Canadian ABL Facility as of December 31, 2017, $1.8 million of debt issuance costs related to that facility are included in other non-current assets on the condensed consolidated balance sheet. |
| Year | Redemption Price | |
| 2019 | 103.938 | % |
| 2020 | 101.969 | % |
| 2021 and thereafter | 100.000 | % |
| (in thousands) | Foreign Currency Translation Adjustment | Total | ||||||
| Balance at December 31, 2017 | $ | (49,497 | ) | $ | (49,497 | ) | ||
| Total other comprehensive loss | (2,380 | ) | (2,380 | ) | ||||
Reclassifications to accumulated deficit(a) | (2,540 | ) | (2,540 | ) | ||||
| Balance at June 30, 2018 | $ | (54,417 | ) | $ | (54,417 | ) | ||
| (in thousands) | Foreign Currency Translation Adjustment | Total | ||||||
| Balance at December 31, 2016 | $ | (56,928 | ) | $ | (56,928 | ) | ||
| Total other comprehensive loss | 5,783 | 5,783 | ||||||
| Balance at June 30, 2017 | $ | (51,145 | ) | $ | (51,145 | ) | ||
| (in thousands) | Total | |||
| Balance at December 31, 2017 | $ | 48,931 | ||
| Net loss attributable to non-controlling interest | (505 | ) | ||
| Other comprehensive loss | (269 | ) | ||
| Balance at June 30, 2018 | $ | 48,157 | ||
| Level 1 - | Observable inputs such as quoted prices in active markets for identical assets or liabilities; |
| Level 2 - | Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and |
| Level 3 - | Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions |
| June 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
| Financial liabilities not measured at fair value | ||||||||||||||||||||||||
| ABL Facility (see Note 6) | $ | 356,759 | $ | — | $ | 368,000 | $ | — | $ | 297,323 | $ | — | $ | 310,000 | $ | — | ||||||||
| Notes (see Note 6) | 291,456 | — | 312,567 | — | 290,687 | — | 310,410 | — | ||||||||||||||||
| Total | $ | 648,215 | $ | — | $ | 680,567 | $ | — | $ | 588,010 | $ | — | $ | 620,410 | $ | — | ||||||||
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which may exceedfair value hierarchy during the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accountsthree and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
six months ended June 30, 2018 and 2017. The fair value of the Company’s assets and liabilities, which qualifyABL Facility is primarily based upon observable market data such as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet with the exception of investments in Trust, as they are carried at amortized cost.
Use of Estimates
market interest rates. The preparation of the condensed financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
Redeemable Ordinary Shares
As discussed in Note 1, all of the 50,000,000 Class A ordinary shares sold as parts of the Units in the Public Offering contain a redemption feature which allows for the redemption of Class A ordinary shares under the Company’s amended and restated memorandum and articles of association. In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of FASB ASC 480. Although the Company has not specified a maximum redemption threshold, its amended and restated memorandum and articles of association provide that in no event will the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001.
The Company recognizes changes in redemption value immediately as they occur and will adjust the carryingfair value of the security to equal the redemption valueCompany’s Notes is based on their last trading price at the end of each reporting period. Increases or decreasesperiod obtained from a third party.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Balance at beginning of the period | $ | 755 | $ | 1,726 | $ | 227 | $ | 1,793 | |||||||
| Charges during the period | 449 | 684 | 1,077 | 968 | |||||||||||
| Cash payments during the period | (234 | ) | (286 | ) | (330 | ) | (639 | ) | |||||||
| Currency | (3 | ) | 6 | (7 | ) | 8 | |||||||||
| Balance at end of period | $ | 967 | $ | 2,130 | $ | 967 | $ | 2,130 | |||||||
Income Taxes
communication of termination to the employee to the actual date of termination. The Company complies withanticipates that the accounting and reporting requirements of FASB ASC 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences betweenremaining actions contemplated under the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.
There were no unrecognized tax benefits$1.0 million accrual as of June 30, 2017. FASB ASC 740 prescribes a recognition threshold and a measurement attribute2018, will be substantially completed by the end of the fourth quarter of 2018.
| Number of Shares | Weighted-Average Grant Date Fair Value | |||||
| Balance, December 31, 2017 | — | $ | — | |||
| Granted | 27,675 | 13.60 | ||||
| Forfeited | — | — | ||||
| Balance, June 30, 2018 | 27,675 | $ | 13.60 | |||
| Number of Shares | Weighted-Average Grant Date Fair Value | |||||
| Balance, December 31, 2017 | — | $ | — | |||
| Granted | 921,730 | 13.60 | ||||
| Forfeited | (35,050 | ) | 13.60 | |||
| Balance, June 30, 2018 | 886,680 | $ | 13.60 | |||
| Number of Options | Weighted-Average Exercise Price per Share ($) | |||||
| Outstanding options, December 31, 2017 | — | $ | — | |||
| Granted | 589,257 | 13.60 | ||||
| Exercised | — | — | ||||
| Forfeited | — | — | ||||
| Outstanding options, June 30, 2018 | 589,257 | $ | 13.60 | |||
| Fully vested and exercisable options, end of period | — | $ | — | |||
| Assumptions | |||
| Expected volatility | 36 | % | |
| Expected dividend yield | — | ||
| Risk-free interest rate | 2.73 | % | |
| Expected term (in years) | 6.25 | ||
| Exercise price | $ | 13.60 | |
| Weighted-average grant date fair value | $ | 5.51 | |
Therebusiness. Management is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman federal income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company's financial statements. The Company's management does not expectopinion that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements,there is no pending claim or lawsuit which, if currently adopted,adversely determined, would have a material effect on the Company’s financial statements.
On September 16, 2015,condition, results of operations or cash flows.
| Three Months Ended June 30, 2018 | |||||||||||
| (in thousands) | Modular - US | Modular - Other North America | Total | ||||||||
| Revenues: | |||||||||||
| Leasing and services revenue: | |||||||||||
| Modular leasing | $ | 90,965 | $ | 10,284 | $ | 101,249 | |||||
| Modular delivery and installation | 27,390 | 4,023 | 31,413 | ||||||||
| Sales: | |||||||||||
| New units | 4,149 | 1,087 | 5,236 | ||||||||
| Rental units | 2,309 | 126 | 2,435 | ||||||||
| Total Revenues | $ | 124,813 | $ | 15,520 | $ | 140,333 | |||||
| Costs: | |||||||||||
| Cost of leasing and services: | |||||||||||
| Modular leasing | $ | 24,505 | $ | 2,624 | $ | 27,129 | |||||
| Modular delivery and installation | 26,310 | 3,817 | 30,127 | ||||||||
| Cost of sales: | |||||||||||
| New units | 2,876 | 828 | 3,704 | ||||||||
| Rental units | 1,164 | 99 | 1,263 | ||||||||
| Depreciation of rental equipment | 20,217 | 3,253 | 23,470 | ||||||||
| Gross profit | $ | 49,741 | $ | 4,899 | $ | 54,640 | |||||
| Adjusted EBITDA | $ | 38,104 | $ | 3,812 | $ | 41,916 | |||||
| Other selected data: | |||||||||||
| Selling, general and administrative expense | $ | 43,325 | $ | 4,409 | $ | 47,734 | |||||
| Other depreciation and amortization | $ | 1,354 | $ | 216 | $ | 1,570 | |||||
| Capital expenditures for rental fleet | $ | 30,931 | $ | 1,748 | $ | 32,679 | |||||
| Three Months Ended June 30, 2017 | |||||||||||||||
| (in thousands) | Modular - US | Modular - Other North America | Corporate & Other | Total | |||||||||||
| Revenues: | |||||||||||||||
| Leasing and services revenue: | |||||||||||||||
| Modular leasing | $ | 64,854 | $ | 8,242 | $ | (142 | ) | $ | 72,954 | ||||||
| Modular delivery and installation | 20,970 | 1,979 | — | 22,949 | |||||||||||
| Sales: | |||||||||||||||
| New units | 8,550 | 846 | — | 9,396 | |||||||||||
| Rental units | 3,835 | 943 | — | 4,778 | |||||||||||
| Total Revenues | $ | 98,209 | $ | 12,010 | $ | (142 | ) | $ | 110,077 | ||||||
| Costs: | |||||||||||||||
| Cost of leasing and services: | |||||||||||||||
| Modular leasing | $ | 19,338 | $ | 2,002 | $ | — | $ | 21,340 | |||||||
| Modular delivery and installation | 20,393 | 1,946 | — | 22,339 | |||||||||||
| Cost of sales: | |||||||||||||||
| New units | 6,072 | 696 | (2 | ) | 6,766 | ||||||||||
| Rental units | 1,923 | 652 | — | 2,575 | |||||||||||
| Depreciation of rental equipment | 14,529 | 2,945 | — | 17,474 | |||||||||||
| Gross profit (loss) | $ | 35,954 | $ | 3,769 | $ | (140 | ) | $ | 39,583 | ||||||
| Adjusted EBITDA | $ | 26,329 | $ | 2,506 | $ | (2,588 | ) | $ | 26,247 | ||||||
| Other selected data: | |||||||||||||||
| Selling, general and administrative expense | $ | 24,181 | $ | 4,223 | $ | 3,248 | $ | 31,652 | |||||||
| Other depreciation and amortization | $ | 1,301 | $ | 244 | $ | 345 | $ | 1,890 | |||||||
| Capital expenditures for rental fleet | $ | 25,909 | $ | 1,716 | $ | — | $ | 27,625 | |||||||
| Six Months Ended June 30, 2018 | |||||||||||
| (in thousands) | Modular - US | Modular - Other North America | Total | ||||||||
| Revenues: | |||||||||||
| Leasing and services revenue: | |||||||||||
| Modular leasing | $ | 178,913 | $ | 19,598 | $ | 198,511 | |||||
| Modular delivery and installation | 51,360 | 6,303 | 57,663 | ||||||||
| Sales: | |||||||||||
| New units | 10,964 | 1,700 | 12,664 | ||||||||
| Rental units | 5,663 | 583 | 6,246 | ||||||||
| Total Revenues | $ | 246,900 | $ | 28,184 | $ | 275,084 | |||||
| Costs: | |||||||||||
| Cost of leasing and services: | |||||||||||
| Modular leasing | $ | 49,562 | $ | 4,729 | $ | 54,291 | |||||
| Modular delivery and installation | 49,250 | 6,398 | 55,648 | ||||||||
| Cost of sales: | — | ||||||||||
| New units | 7,442 | 1,249 | 8,691 | ||||||||
| Rental units | 3,193 | 385 | 3,578 | ||||||||
| Depreciation of rental equipment | 40,904 | 6,411 | 47,315 | ||||||||
| Gross profit | $ | 96,549 | $ | 9,012 | $ | 105,561 | |||||
| Adjusted EBITDA | $ | 70,716 | $ | 6,692 | $ | 77,408 | |||||
| Other selected data: | |||||||||||
| Selling, general and administrative expense | $ | 84,146 | $ | 8,802 | $ | 92,948 | |||||
| Other depreciation and amortization | $ | 3,559 | $ | 447 | $ | 4,006 | |||||
| Capital expenditures for rental fleet | $ | 61,455 | $ | 3,308 | $ | 64,763 | |||||
| Six Months Ended June 30, 2017 | |||||||||||||||
| (in thousands) | Modular - US | Modular - Other North America | Corporate & Other | Total | |||||||||||
| Revenues: | |||||||||||||||
| Leasing and services revenue: | |||||||||||||||
| Modular leasing | $ | 126,032 | $ | 16,204 | $ | (295 | ) | $ | 141,941 | ||||||
| Modular delivery and installation | 38,324 | 3,629 | — | 41,953 | |||||||||||
| Sales: | |||||||||||||||
| New units | 12,556 | 2,326 | — | 14,882 | |||||||||||
| Rental units | 8,712 | 1,910 | — | 10,622 | |||||||||||
| Total Revenues | $ | 185,624 | $ | 24,069 | $ | (295 | ) | $ | 209,398 | ||||||
| Costs: | |||||||||||||||
| Cost of leasing and services: | |||||||||||||||
| Modular leasing | $ | 36,713 | $ | 3,729 | $ | — | $ | 40,442 | |||||||
| Modular delivery and installation | 37,067 | 3,405 | — | 40,472 | |||||||||||
| Cost of sales: | — | ||||||||||||||
| New units | 8,685 | 1,813 | (12 | ) | 10,486 | ||||||||||
| Rental units | 5,036 | 1,247 | — | 6,283 | |||||||||||
| Depreciation of rental equipment | 28,354 | 5,840 | — | 34,194 | |||||||||||
| Gross profit (loss) | $ | 69,769 | $ | 8,035 | $ | (283 | ) | $ | 77,521 | ||||||
| Adjusted EBITDA | $ | 50,012 | $ | 5,625 | $ | (7,444 | ) | $ | 48,193 | ||||||
| Other selected data: | |||||||||||||||
| Selling, general and administrative expense | $ | 48,127 | $ | 8,277 | $ | 8,009 | $ | 64,413 | |||||||
| Other depreciation and amortization | $ | 2,639 | $ | 491 | $ | 701 | $ | 3,831 | |||||||
| Capital expenditures for rental fleet | $ | 47,958 | $ | 2,344 | $ | — | $ | 50,302 | |||||||
| Three Months Ended June 30, 2018 | |||||||||||
| (in thousands) | Modular - US | Modular - Other North America | Total | ||||||||
| Loss from continuing operations before income taxes | $ | (5,533 | ) | $ | (733 | ) | $ | (6,266 | ) | ||
| Interest expense, net | 11,663 | 492 | 12,155 | ||||||||
| Depreciation and amortization | 21,571 | 3,469 | 25,040 | ||||||||
| Currency losses, net | 114 | 458 | 572 | ||||||||
| Restructuring costs | 449 | — | 449 | ||||||||
| Integration costs | 4,785 | — | 4,785 | ||||||||
| Stock compensation expense | 1,054 | — | 1,054 | ||||||||
| Transaction fees | 4,049 | 69 | 4,118 | ||||||||
| Other (income) expense | (48 | ) | 57 | 9 | |||||||
| Adjusted EBITDA | $ | 38,104 | $ | 3,812 | $ | 41,916 | |||||
| Three Months Ended June 30, 2017 | |||||||||||||||
| (in thousands) | Modular - US | Modular - Other North America | Corporate & Other | Total | |||||||||||
| Loss from continuing operations before income taxes | $ | 320 | $ | (1,442 | ) | $ | (13,883 | ) | $ | (15,005 | ) | ||||
| Interest expense, net | 15,953 | 1,038 | 9,407 | 26,398 | |||||||||||
| Depreciation and amortization | 15,830 | 3,189 | 345 | 19,364 | |||||||||||
| Currency gains, net | (5,800 | ) | (294 | ) | (403 | ) | (6,497 | ) | |||||||
| Restructuring costs | — | — | 684 | 684 | |||||||||||
| Transaction fees | 46 | — | 730 | 776 | |||||||||||
| Other expense | (20 | ) | 15 | 532 | 527 | ||||||||||
| Adjusted EBITDA | $ | 26,329 | $ | 2,506 | $ | (2,588 | ) | $ | 26,247 | ||||||
| Six Months Ended June 30, 2018 | |||||||||||
| (in thousands) | Modular - US | Modular - Other North America | Total | ||||||||
| Loss from continuing operations before income taxes | $ | (10,841 | ) | $ | (2,680 | ) | $ | (13,521 | ) | ||
| Interest expense, net | 22,823 | 1,051 | 23,874 | ||||||||
| Depreciation and amortization | 44,463 | 6,858 | 51,321 | ||||||||
| Currency losses, net | 271 | 1,325 | 1,596 | ||||||||
| Restructuring costs | 1,067 | 10 | 1,077 | ||||||||
| Integration costs | 7,415 | — | 7,415 | ||||||||
| Stock compensation expense | 1,175 | — | 1,175 | ||||||||
| Transaction fees | 4,049 | 69 | 4,118 | ||||||||
| Other expense | 294 | 59 | 353 | ||||||||
| Adjusted EBITDA | $ | 70,716 | $ | 6,692 | $ | 77,408 | |||||
| Six Months Ended June 30, 2017 | |||||||||||||||
| (in thousands) | Modular - US | Modular - Other North America | Corporate & Other | Total | |||||||||||
| Loss from continuing operations before income taxes | $ | (5,210 | ) | $ | (2,458 | ) | $ | (24,590 | ) | $ | (32,258 | ) | |||
| Interest expense, net | 31,512 | 2,216 | 14,747 | 48,475 | |||||||||||
| Depreciation and amortization | 30,993 | 6,331 | 701 | 38,025 | |||||||||||
| Currency gains, net | (7,399 | ) | (481 | ) | (619 | ) | (8,499 | ) | |||||||
| Restructuring costs | — | — | 968 | 968 | |||||||||||
| Transaction fees | 46 | — | 816 | 862 | |||||||||||
| Other expense | 70 | 17 | 533 | 620 | |||||||||||
| Adjusted EBITDA | $ | 50,012 | $ | 5,625 | $ | (7,444 | ) | $ | 48,193 | ||||||
Each Public Warrant entitlesWSC by the holder to purchase one-half of one Class A ordinary share at a price of $5.75 per one-half share ($11.50 per whole share). No fractional shares will be issued upon exercise of the Public Warrants. If, upon exercise of the Public Warrants, a holder would be entitled to receive a fractional interest in a share, the Company will, upon exercise, round down to the nearest whole number theweighted average number of Class A ordinarycommon stock shares outstanding during the period. Concurrently with the Business Combination,12,425,000 of Class A shares were placed into escrow and were not entitled to vote or participate in the economic rewards available to the other Class A shareholders. On January 19, 2018, 6,212,500 shares of WSC Class A common stock were released from the escrow account. The remaining 6,212,500 shares of WSC Class A common stock in escrow are not included in the LPS calculation. In July 2018, certain contingencies were satisfied that under the earnout agreement governing the release of the escrowed shares, will result in the release of the remaining escrowed shares to be issuedDouble Eagle, Harry E. Sloan and Sapphire upon the delivery of release instructions to the Public Warrant holder. Each Public Warrant will become exercisable onescrow agent.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (in thousands, except per share numbers) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Numerator | |||||||||||||||
| Income (loss) from continuing operations | $ | 379 | $ | (9,736 | ) | $ | (6,456 | ) | $ | (22,120 | ) | ||||
| Income from discontinued operations, net of tax | — | 3,840 | — | 6,045 | |||||||||||
| Net income (loss) | 379 | (5,896 | ) | (6,456 | ) | (16,075 | ) | ||||||||
| Net income (loss) attributable to non-controlling interest, net of tax | 143 | — | (505 | ) | — | ||||||||||
| Total income (loss) attributable to WSC | $ | 236 | $ | (5,896 | ) | $ | (5,951 | ) | $ | (16,075 | ) | ||||
| Denominator | |||||||||||||||
| Average shares outstanding - basic | 78,432,274 | 14,545,833 | 77,814,456 | 14,545,833 | |||||||||||
| Average effect of dilutive securities: | |||||||||||||||
| Warrants | 3,745,030 | — | — | — | |||||||||||
| Restricted stock awards | 2,782 | — | — | — | |||||||||||
| Average shares outstanding - diluted | $ | 82,180,086 | $ | 14,545,833 | $ | 77,814,456 | $ | 14,545,833 | |||||||
| Income (loss) per share - basic | |||||||||||||||
| Continuing operations - basic | $ | 0.00 | $ | (0.67 | ) | $ | (0.08 | ) | $ | (1.53 | ) | ||||
| Discontinued operations - basic | $ | 0.00 | $ | 0.26 | $ | 0.00 | $ | 0.42 | |||||||
| Net income (loss) per share - basic | $ | 0.00 | $ | (0.41 | ) | $ | (0.08 | ) | $ | (1.11 | ) | ||||
| Income (loss) per share - diluted | |||||||||||||||
| Continuing operations - basic | $ | 0.00 | $ | (0.67 | ) | $ | (0.08 | ) | $ | (1.53 | ) | ||||
| Discontinued operations - basic | $ | 0.00 | $ | 0.26 | $ | 0.00 | $ | 0.42 | |||||||
| Net income (loss) per share - basic | $ | 0.00 | $ | (0.41 | ) | $ | (0.08 | ) | $ | (1.11 | ) | ||||
| (in thousands) | Financial statement line Item | June 30, 2018 | December 31, 2017 | |||||
| Receivables due from affiliates | Prepaid expenses and other current assets | $ | 180 | $ | 2,863 | |||
| Amounts due to affiliates | Accrued liabilities | (873 | ) | (1,235 | ) | |||
| Total related party liabilities, net | $ | (693 | ) | $ | 1,628 | |||
The Company paid an upfront underwriting discount of $8,000,000 ($0.16 per Unit sold) in the aggregate to the underwriters at the closing of the Public Offering, with an additional fee (the “Deferred Discount”) equal to the difference between (a) the product of the number of Class A ordinary shares sold as part of the Units and $0.55 and (b) the upfront underwriting discounts paid at the closing of $8,000,000, or a total Deferred Discount of $19,500,000 ($0.39 per Unit sold). The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes a Business Combination. The underwriters are not entitled to any interest accrued on the Deferred Discount.
The closing of the Public Offering included an initial partial exercise (2,000,000 units) of the overallotment option granted to the underwriters.
Founder Shares
On July 1, 2015, the Sponsor purchased 12,218,750 Class B ordinary shares (the “Founder Shares”) for $25,000, or approximately $.002 per share. On July 29, 2015, the Sponsor transferred 6,109,375 Founder Shares to Harry E. Sloan for a purchase price of $12,500 (the same per-share purchase price initially paid by the Sponsor). On August 27, 2015, the Sponsor and Mr. Sloan transferred an aggregate of 25,000 Founder Shares on a pro rata basis to each of the Company’s independent directors at their original purchase price. On August 27, 2015, Mr. Sloan transferred 665,500 Founder Shares to the Sponsor. On September 10, 2015, the Company effected a share capitalization of approximately .129 shares for each outstanding Class B ordinary share, resulting in the initial shareholders holding an aggregate of 13,800,000 Founder Shares. The closing of the Public Offering included an initial partial exercise (2,000,000 units) of the overallotment option granted to the underwriters which resulted in the forfeiture of an aggregate of 1,300,000 Founder Shares (the “Forfeited Founder Shares”) by the Sponsor, Harry E. Sloan and the Company’s independent directors (consisting of 1,271,771 Forfeited Founder Shares forfeited by the Sponsor, 18,524 Founder Shares forfeited by Harry E. Sloan and 3,235 Forfeited Founder Shares forfeited by each of the Company’s independent directors) due to the underwriters not exercising their over-allotment option in full and such that the remaining Founders Shares will equal 20% of the equity capital of the Company.
The Founder Shares are identical to the Public Shares except that the Founder Shares are subject to certain transfer restrictions, as described in more detail below.
The initial shareholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion of the Company’s initial Business Combination, or earlier if, subsequent to the Company’s initial Business Combination, the closing price of the Company’s Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s initial Business Combination, and (B) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction after the initial Business Combination that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property (the “Lock Up Period”).
Rights — The Founder Shares are identical to the Public Shares except that (i) the Founder Shares are subject to certain transfer restrictions, as described above, and (ii) the initial shareholders have agreed to waive their redemption rights in connection with the Business Combination with respect to the Founder Shares and any Public Shares they may purchase, and to waive their redemption rights with respect to the Founder Shares if the Company fails to complete a Business Combination within 24six months from the closing of the Public Offering.
Voting — If the Company seeks shareholder approval of a Business Combination, the initial shareholders have agreed to vote their Founder Shares and any Public Shares purchased during or after the Public Offering in favor of the Business Combination.
Liquidation —Although the initial shareholders and their permitted transferees have waived their redemption rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the prescribed time frame, they will be entitled to redemption rights with respect to any Public Shares they may own.
Private Placement Warrants
The Sponsor, Harry E. Sloan and the Company’s independent directors (and/or one or more of their estate planning vehicles) purchased from the Company 19,500,000 warrants in the aggregate at a price of $0.50 per warrant (an aggregate purchase price of $9.75 million) in a private placement that occurred simultaneously with the completion of the Public Offering (the “Private Placement Warrants”). Each Private Placement Warrant entitles the holder to purchase one-half of one Class A ordinary share at $5.75 per one-half share ($11.50 per whole share). The purchase price of the Private Placement Warrants has been added to the proceeds from the Public Offering to be held in the Trust Account pending completion of the Company’s initial Business Combination. The Private Placement Warrants (including the Class A ordinary shares issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of the initial Business Combination, and they will be non-redeemable so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers of the Private Placement Warrants or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. Otherwise, the Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants and have no net cash settlement provisions.
If the Company does not complete a Business Combination, then the proceeds will be part of the liquidating distribution to the public shareholders and the Private Placement Warrants will expire worthless.
Registration Rights
The initial shareholders and holders of the Private Placement Warrants will be entitled to registration rights pursuant to a registration rights agreement signed on September 10, 2015. The initial shareholders and holders of the Private Placement Warrants will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by the Company. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable Lock Up Period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Advances from Sponsor
During the period ended June 30, 2018 and 2017, respectively, consisted of the Sponsor made advances to the Company totaling $230,000. The advances are non-interest bearing and are due on demand.
Administrative Services
following:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (in thousands) | Financial statement line item | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Leasing revenue from related parties | Modular leasing revenue | $ | (233 | ) | $ | — | $ | (525 | ) | $ | — | |||||
| Management fees and recharge income on transactions with affiliates | Selling, general & administrative expenses | — | 1,502 | — | 151 | |||||||||||
| Interest income on notes due from affiliates | Interest income | — | (3,509 | ) | — | (6,093 | ) | |||||||||
| Interest expense on notes due to affiliates | Interest expense | — | 15,990 | — | 30,727 | |||||||||||
| Total related party (income) expense, net | $ | (233 | ) | $ | 13,983 | $ | (525 | ) | $ | 24,785 | ||||||
become effective upon the closing of the ModSpace Acquisition and the satisfaction of other customary closing conditions.
As of June 30, 2017 and December 31, 2016, investment securities inwarrants. Trading for the Company’s Trust Account consistedwarrants was suspended at the opening of $502,662,581business on July 12, 2018, and $501,340,048, respectively in United States Treasury Billsa Form 25-NSE will be filed with the Securities and another $495Exchange Commission to remove the warrants from listing and $862, respectively held as cash and cash equivalents. The Company classifies its Treasury Instruments and equivalent securities as held-to-maturity in accordance with FASB ASC 320 “Investments – Debt and Equity Securities”. Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized costregistration on the accompanying balance sheets and adjusted for the amortization or accretion of premiums or discounts. The following table presents fair value information as of June 30, 2017 and December 31, 2016 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In addition, the table presents the carrying value (held to maturity), excluding accrued interest income and gross unrealized holding gain. Since all of the Company’s permitted investments consist of U.S. government treasury bills and cash, fair values of its investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets as follows:
| Carrying Value | Gross Unrealized Holding Gain (Loss) | Quoted prices in Active Markets (Level 1) | ||||||||||
| U.S. Government Treasury Securities as of June 30, 2017(1) | $ | 502,662,581 | $ | 63,767 | $ | 502,726,348 | ||||||
| U.S. Government Treasury Securities as of December 31, 2016(2) | $ | 501,340,048 | $ | (23,491 | ) | $ | 501,316,557 | |||||
Ordinary Shares — The authorized ordinary shares of the Company include up to 400,000,000 shares, including 380,000,000 Class A ordinary shares and 20,000,000 Class B ordinary shares. Holders of the Class A ordinary shares and holders of the Class B ordinary shares vote together as a single class on all matters submitted to a vote of the Company’s shareholders, except as required by law. Each ordinary share has one vote. At June 30, 2017 and December 31, 2016, there were 50,000,000 Class A ordinary shares outstanding, including 47,714,600 and 47,702,674 shares subject to possible redemption, and 12,500,000 Class B ordinary shares outstanding.
Preferred Shares —The Company is authorized to issue 1,000,000 preferred shares. At June 30, 2017 and December 31, 2016, no preferred shares were outstanding.
by law. corrected prior to the issuance of our 2017 financial statements. Factors interests of our other stockholders.ItemITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations.ReferencesOperations (“MD&A”) is intended to help the reader understand WillScot Corporation (“WSC” or the “Company”), our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes thereto, contained in Part I, Item 1 of this report.On November 29, 2017, the Company, through its subsidiary, Williams Scotsman Holdings Corp. (“WS Holdings”), acquired all of the equity interest of Williams Scotsman International, Inc. (“WSII”) via a reverse recapitalization (the “Business Combination”). As a result of the Business Combination, (i) WSC’s consolidated financial results for periods prior to November 29, 2017 reflect the financial results of WSII and its consolidated subsidiaries, as the accounting predecessor to WSC, and (ii) for periods from and after this date, WSC’s financial results reflect those of WSC and its consolidated subsidiaries (including WSII and its subsidiaries) as the successor following the Business Combination.Prior to the “Company,completion of the Business Combination, WSII also provided full-service remote workforce accommodation solutions in their remote accommodations business, which consisted of Target Logistics Management LLC (“Target Logistics”) and its subsidiaries and Chard Camp Catering Services (“Chard,” “our,” “us”and together with Target Logistics, the “Remote Accommodations Business”). A parent company of WSII’s former owners, Algeco Scotsman Global S.à r.l., (together with its subsidiaries, the “Algeco Group”), undertook an internal restructuring (the “Carve-Out Transaction”) whereby certain assets related to WSII’s historical Remote Accommodations Business were transferred from WSII to other entities owned by the Algeco Group. This Remote Accommodations Business segment in its entirety is presented as discontinued operations in the condensed consolidated financial statements.The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by accounting principles generally accepted in the US (“GAAP”) for complete financial statements. We use certain non-GAAP financial information that we believe is important for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of our ongoing operations and analyze our business performance and trends. Reconciliations of non-GAAP measures are provided in this section where presented.Executive Summary and OutlookWe are a leading provider of modular space and portable storage solutions in the United States (“US”), Canada and Mexico. As of June 30, 2018, our branch network included over 100 locations and additional drop lots to better service our more than 35,000 customers across the US, Canada and Mexico. We offer our customers an extensive selection of “Ready to Work” modular space and portable storage solutions with over 77,000 modular space units and nearly 20,000 portable storage units in our fleet.In the second quarter of 2018, the integration of Acton Mobile (“Acton”) continued as planned, achieving full information technology system cut-over to Williams Scotsman’s operating platform. We also executed on cost savings measures in the quarter related to the Acton integration that will provide future savings. As of June 30, 2018, we had ceased production activities and began exit activities at 90% of the locations in overlapping markets. Exit activities for redundant branch locations, such as preparing units and materials for transport to other locations remain on schedule. These activities are expected to continue through the rest of the year and into early 2019 as we execute the established integration plan.On June 22, 2018, we announced our agreement to acquire Modular Space Holdings, Inc. (“ModSpace”), which is the largest privately held provider of office trailers, portable storage units and modular buildings in the US and Canada, with over 80 operating locations. This transformative acquisition will position our company as the clear leader in the special rental services industry, with approximately $1.0 billion of annual revenue and over 160,000 rental units across North America. The Acton integration and ModSpace announcement demonstrate our ongoing commitment and ability to execute on our consolidation strategy while remaining focused on our core priorities of growing modular leasing revenues by increasing modular space units on rent and delivering “Ready to Work” solutions to our customers with value-added products and services (“VAPS”), and focusing on continually improving the overall customer experience. During July, we received a No Action Letter from the Canadian Competition Bureau, the receipt of which was a closing condition for the ModSpace acquisition, and the transaction is now expected to close in mid-August.Prior to the ModSpace announcement, we secured debt commitments from several financial institutions to fund the acquisition. Subsequent to June 30, 2018, the Company entered into or “we” referamended several agreements to Double Eagle Acquisition Corp. fund the cash consideration payable in the ModSpace acquisition on a permanent basis and to pay related fees and expenses:Upsized our revolving credit agreement to $1.35 billion (expandable to $1.8 billion through an accordion feature) and obtained the amendments required to finance the acquisition and to give effect to our greater scale thereafter.Completed $300.0 million private placement of 6.875% senior secured notes due 2023.Completed $200.0 million private placement of senior unsecured notes due 2023.Raised $128.0 million of gross proceeds from an underwritten common stock offering, subject to the underwriters' right to purchase an additional 1.2 million shares (which could raise an additional $19.2 million of gross proceeds).See Note 16 to the condensed consolidated financial statements for further discussion of subsequent events.For the three months ended June 30, 2018, key drivers of financial performance include:Increased total revenues by $30.2 million, or 27.4% as compared to the same period in 2017, driven by a 38.2% increase in our core leasing and services revenues from both organic growth, and due to the impact of the Acton and Tyson acquisitions discussed in Note 2 of our unaudited condensed consolidated financial statements. The increase in our core leasing and services business was partially offset by decreases of 44.7% and 48.9% in our new and rental unit sales.On a pro-forma basis, including results of Williams Scotsman, Acton, and Tyson for all periods presented, core leasing and services revenues increased $12.8 million, or 10.7% in the second quarter as compared to the same period in 2017.Increased the Modular - US segment revenues which represents 89.0% of revenue for the three months ended June 30, 2018, by $26.6 million, or 27.1%, as compared to the same period in 2017, through:– Average modular space monthly rental rate growth of 2.6% to $549 through increases both in the price of our units, as well as increased VAPS pricing and penetration. Organic increases on the Williams Scotsman legacy fleet were partially offset by lower rates on units acquired from Acton and Tyson; and – Increased average modular space units on rent by 13,217 units, or 36.9%, primarily due to the Acton and Tyson acquisitions; and – Average modular space monthly utilization increased 30 basis points (“bps”) to 72.2% for the three months ended June 30, 2018, as compared to the three months ended March 31, 2018, though decreased by 160 bps during the quarter as compared to the three months ended June 30, 2017, as a result of lower utilization on acquired fleet from Acton and Tyson; and– On a pro-forma basis, including results of Williams Scotsman, Acton, and Tyson for all periods presented, core leasing and services revenues in the Modular - US segment increased $8.7 million, or 8.0%, primarily reflecting a 1.6% increase in average modular space units on rent and by a 9.8% increase in average modular space monthly rental rate. Total pro-forma revenues in the Modular - US segment decreased $0.6 million, or 0.5% as compared to the same period in 2017 driven by a $9.3 million, or 58.9% decrease year over year in new and rental unit sales as a result of lower volumes of sales opportunities and increased focus on our higher margin modular leasing business. Increased the Modular - Other North America segment revenues which represented 11.0% of revenues for the three months ended June 30, 2018, by $3.5 million, or 29.2% as compared to the same period in 2017. Increases were driven primarily by:– Average modular space monthly rental rate increased 7.3% to $573– Average modular space units on rent increased by 624 units, or 12.7% as compared to the same period in 2017– Average modular space monthly utilization increased by 710 bps as compared to the same period in 2017 to 57.1% Generated combined Adjusted EBITDA of $41.9 million between the Modular - US Segment and the Modular - Other North America Segment, representing an increase of $13.1 million or 45.5% as compared to the same period in 2017, which includes the impact of the Acton and Tyson acquisitions discussed in Note 2 of the unaudited condensed consolidated financial statements.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. We track several market leading indicators including those related to our two largest end markets, the commercial and industrial segment and the construction segment, which collectively accounted for approximately 83% of our revenues in the three months ended June 30, 2018, including the customer base from the Acton and Tyson acquisitions. Market fundamentals underlying these markets are currently favorable, and we expect continued modest market growth in the next several years. Potential increased capital spending as a result tax reform, discussions of increased infrastructure spending, and rebuilding in areas impacted by natural disasters in 2017 across the US also provide us confidence in continued demand for our products.Although only 11.0% of our revenues for the three months ended June 30, 2018 were from the Modular - Other North America segment, markets in Canada, including Alaska, and Mexico, show continued improvement despite declines experienced over the last several years related to the energy markets. This segment saw significant improvement in average modular space monthly rental rates, average modular space units on rent, and average modular space monthly utilization as compared to the same period in 2017. However, competitive pressures in these markets may continue to depress pricing given current levels of supply in the market until utilization across the industry improves.Consolidated Results of OperationsThree Months Ended June 30, 2018 Compared to the Three Months Ended June 30, 2017Our consolidated statements of operations for the three months ended June 30, 2018 and 2017 are presented below: Three Months Ended June 30, 2018 vs. 2017 $ Change (in thousands) 2018 2017 Revenues: Leasing and services revenue: Modular leasing $ 101,249 $ 72,954 $ 28,295 Modular delivery and installation 31,413 22,949 8,464 Sales: New units 5,236 9,396 (4,160 ) Rental units 2,435 4,778 (2,343 ) Total revenues 140,333 110,077 30,256 Costs: Costs of leasing and services: Modular leasing 27,129 21,340 5,789 Modular delivery and installation 30,127 22,339 7,788 Costs of sales: New units 3,704 6,766 (3,062 ) Rental units 1,263 2,575 (1,312 ) Depreciation of rental equipment 23,470 17,474 5,996 Gross profit 54,640 39,583 15,057 Expenses: Selling, general and administrative 47,734 31,652 16,082 Other depreciation and amortization 1,570 1,890 (320 ) Restructuring costs 449 684 (235 ) Currency losses (gains), net 572 (6,497 ) 7,069 Other (income) expense, net (1,574 ) 461 (2,035 ) Operating income 5,889 11,393 (5,504 ) Interest expense 12,155 29,907 (17,752 ) Interest income — (3,509 ) 3,509 Loss from continuing operations before income tax (6,266 ) (15,005 ) 8,739 Income tax benefit (6,645 ) (5,269 ) (1,376 ) Income (loss) from continuing operations 379 (9,736 ) 10,115 Income from discontinued operations, net of tax — 3,840 (3,840 ) Net income (loss) 379 (5,896 ) 6,275 Net income attributable to non-controlling interest, net of tax 143 — 143 Total income (loss) attributable to WSC $ 236 $ (5,896 ) $ 6,132 Comparison of Three Months Ended June 30, 2018 and 2017Revenue: Total revenue increased $30.2 million, or 27.4%, to $140.3 million for the three months ended June 30, 2018 from $110.1 million for the three months ended June 30, 2017. The increase was primarily the result of a 38.2% increase in leasing and services revenue driven by improved pricing and volumes. Average modular space monthly rental rates increased 3.2% to $551 for the three months ended June 30, 2018, and average modular space units on rent increased 13,841 units, or 34.0%. Improved pricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increased VAPS penetration across our customer base, offset partially by the average modular space monthly rental rates on acquired units. Improved volumes were driven by units acquired as part of the Acton and Tyson acquisitions and organic unit on rent growth, as well as increased modular delivery and installation revenues on the combined rental fleet of 37.1%. The increase in leasing and services revenue was partially offset by decreases of $4.2 million, or 44.7%, and $2.3 million, or 48.9% in new unit and rental unit sales, respectively, as compared to the same period in 2017. The decrease year over year in new and rental unit sales was as a result of lower volumes of sales opportunities and increased focus on our higher margin modular leasing business.On a pro-forma basis, including results of the Company, Acton, and Tyson for all periods presented, total revenues increased $2.8 million, or 2.1%, year-over-year for the three months ended June 30, 2018. Core leasing and services revenues increased $12.8 million, or 10.7%, primarily reflecting a 2.6% increase in average modular space units on rent and a 9.8% increase in average modular space monthly rental rate. The increase in leasing and services revenues was partially offset by a $10.0 million, or 56.5% decrease year over year in new and rental unit sales.Total average units on rent for the three months ended June 30, 2018 and 2017 were 68,017 and 53,019, respectively. The increase was due to units acquired as part of the Acton and Tyson acquisitions and organic improvements in modular space average units on rent, with modular space average units on rent increasing by 13,841 units, or 34.0% for the three months ended June 30, 2018. Modular space average monthly rental rates increased 3.2% for the three months ended June 30, 2018. Portable storage average units on rent increased by 1,157 units, or 9.4% for the three months ended June 30, 2018. Average portable storage monthly rental rates increased 4.4% for the three months ended June 30, 2018. The average modular space unit utilization rate during the three months ended June 30, 2018 was 70.3%, as compared to 69.8% during the same period in 2017. The increase in average modular space utilization rate was driven by improvement in the modular space average units on rent in the Modular - Other North America business segment, slightly offset by declines in the Modular - US business segment as a result of acquired units at lower utilization rates. The average portable storage unit utilization rate during the three months ended June 30, 2018 was 68.1%, as compared to 70.0% during the same period in 2017. The decrease in average portable storage utilization rate was driven by organic declines in the number of portable storage average units on rent in the Modular - US segment.Gross Profit: Our gross profit percentage was 38.9% and 36.0% for the three months ended June 30, 2018 and 2017, respectively. Our gross profit percentage, excluding the effects of depreciation, was 56.0% and 52.0% for the three months ended June 30, 2018 and 2017, respectively.Gross profit increased $15.0 million, or 37.9%, to $54.6 million for the three months ended June 30, 2018 from $39.6 million for the three months ended June 30, 2017. The increase in gross profit is a result of a $23.2 million increase in modular leasing and services gross profit primarily as a result of increased revenues as well as increased margins due to favorable average monthly rental rates on modular space units. These increases were partially offset by increased depreciation of $6.0 million as a result of continued capital investment in rental equipment, including additional depreciation related to the Acton and Tyson acquisitions, and decreased new unit and rental unit gross profit of $2.2 million due to lower revenues.Selling, General and Administrative: Selling, general and administrative expense (“SG&A”) increased $16.0 million, or 50.5%, to $47.7 million for the three months ended June 30, 2018, compared to $31.7 million for the three months ended June 30, 2017. $9.2 million of the SG&A increase was driven by discrete items including increased transaction fees of $3.3 million related to the pending ModSpace acquisition, increased integration costs of $4.8 million related primarily to the Acton integration, and increased stock compensation expense of $1.1 million. The remaining increases of $6.8 million are primarily related to $2.7 million of increased public company costs including outside professional fees, and increased headcount, occupancy, and indirect tax costs all of which are partially driven by the Acton and Tyson acquisitions and our expanded employee base and branch network. Cost synergies related to the Acton integration plan are on track. As of June 30, 2018, we had ceased production activities and began exit activities at 90% of the Acton locations in overlapping markets. Exit activities for redundant branch locations, such as preparing units and materials for transport to other locations remain on schedule. These activities are expected to continue through the rest of the year and into early 2019 and we expect additional cost savings as we execute the established integration plan. These increases were partially offset by a reduction of $3.2 million in corporate & other related to Algeco Group costs no longer included in our operations.Other Depreciation and Amortization: Other depreciation and amortization decreased $0.3 million, or 15.8%, to $1.6 million for the three months ended June 30, 2018, compared to $1.9 million for the three months ended June 30, 2017.Restructuring Costs: Restructuring costs were $0.4 million for the three months ended June 30, 2018 as compared to $0.7 million for the three months ended June 30, 2017. The 2018 restructuring charges relate primarily to employee termination costs related to the Acton acquisition. The 2017 restructuring charges relate primarily to the Algeco Group corporate function and consist of employee termination costs.Currency Losses (Gains), net: Currency losses (gains), net decreased by $7.1 million to a $0.6 million loss for the three months ended June 30, 2018 compared to a $6.5 million gain for the three months ended June 30, 2017. The decrease in currency losses (gains) was primarily attributable to the impact of foreign currency exchange rate changes on loans and borrowings and intercompany receivables and payables denominated in a currency other than the subsidiaries’ functional currency. The majority of the intercompany receivables and payables contributing to these gains and losses were settled concurrently with the Carve-Out Transaction and Business Combination in November 2017.Other (Income) Expense, Net: Other (income) expense, net was $1.6 million of other income for the three months ended June 30, 2018 and $0.5 million of other expense for the three months ended June 30, 2017. The increase in other income was driven by insurance proceeds related to assets damaged during Hurricane Harvey which contributed $1.8 million to other (income) expense, net, for the three months ended June 30, 2018.Interest Expense: Interest expense decreased $17.7 million, or 59.2%, to $12.2 million for the three months ended June 30, 2018 from $29.9 million for the three months ended June 30, 2017. Upon consummation of the Business Combination in November 2017, we issued $300.0 million of 7.875% senior secured notes (the “Notes”) and entered into a new $600.0 million ABL credit agreement (the “ABL Facility”) to fund our operations as a stand-alone company. The majority of the interest costs incurred during the three months ended June 30, 2017 relate to the previous debt structure of the Company as part of the Algeco Group. The decrease in interest expense is driven by our lower debt balance in 2018 under our new debt structure as compared to the Algeco Group debt structure in place in 2017. See Note 6 to the condensed consolidated financial statements for further discussion of our debt.Interest Income: Interest income decreased $3.5 million, or 100.0%, to $0.0 million for the three months ended June 30, 2018 from $3.5 million for the three months ended June 30, 2017. This decrease is due to the decrease in the principal balance of notes due from affiliates, which were settled upon consummation of the Business Combination in November 2017.Income Tax Benefit: Income tax benefit increased $1.3 million to $6.6 million for the three months ended June 30, 2018 compared to $5.3 million for the three months ended June 30, 2017. The increase in income tax benefit was principally due to discrete benefits related to state enacted laws in the three months ended June 30, 2018, which were partially offset by a smaller pre-tax loss. Six Months Ended June 30, 2018 Compared to the Six Months Ended June 30, 2017Our consolidated statements of net loss for the six months ended June 30, 2018 and 2017 are presented below: Six Months Ended June 30, 2018 vs. 2017 $ Change (in thousands) 2018 2017 Revenues: Leasing and services revenue: Modular leasing $ 198,511 $ 141,941 $ 56,570 Modular delivery and installation 57,663 41,953 15,710 Sales: New units 12,664 14,882 (2,218 ) Rental units 6,246 10,622 (4,376 ) Total revenues 275,084 209,398 65,686 Costs: Costs of leasing and services: Modular leasing 54,291 40,442 13,849 Modular delivery and installation 55,648 40,472 15,176 Costs of sales: New units 8,691 10,486 (1,795 ) Rental units 3,578 6,283 (2,705 ) Depreciation of rental equipment 47,315 34,194 13,121 Gross profit 105,561 77,521 28,040 Expenses: Selling, general and administrative 92,948 64,413 28,535 Other depreciation and amortization 4,006 3,831 175 Restructuring costs 1,077 968 109 Currency losses (gains), net 1,596 (8,499 ) 10,095 Other (income) expense, net (4,419 ) 591 (5,010 ) Operating income 10,353 16,217 (5,864 ) Interest expense 23,874 54,568 (30,694 ) Interest income — (6,093 ) 6,093 Loss from continuing operations before income tax (13,521 ) (32,258 ) 18,737 Income tax benefit (7,065 ) (10,138 ) 3,073 Loss from continuing operations (6,456 ) (22,120 ) 15,664 Income from discontinued operations, net of tax — 6,045 (6,045 ) Net loss (6,456 ) (16,075 ) 9,619 Net loss attributable to non-controlling interest, net of tax (505 ) — (505 ) Total loss attributable to WSC $ (5,951 ) $ (16,075 ) $ 10,124 Comparison of Six Months Ended June 30, 2018 and 2017Revenue: Total revenue increased $65.7 million, or 31.4%, to $275.1 million for the six months ended June 30, 2018 from $209.4 million for the six months ended June 30, 2017. The increase was primarily the result of a 39.1% increase in leasing and services revenue driven by improved pricing and volumes. Average modular space monthly rental rates increased 3.6% for the six months ended June 30, 2018, and average modular space units on rent increased 14,022 units, or 34.8%. Improved pricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increased VAPS penetration across our customer base, offset partially by the average modular space monthly rental rates on acquired units. Improved volumes were driven by units acquired as part of the Acton and Tyson acquisitions and organic unit on rent growth, as well as increased modular delivery and installation revenues on the combined rental fleet of 37.4%. The increase in leasing and services revenue was partially offset by decreases of $2.2 million, or 14.8% and $4.4 million, or 41.5% in new unit and rental unit sales, respectively, as compared to the same period in 2017. The decrease year over year in new and rental unit sales was as a result of lower volumes of sales opportunities and increased focus on our higher margin modular leasing business.On a pro-forma basis, including results of the Company, Acton, and Tyson for all periods presented, total revenues increased $14.1 million, or 5.4%, year-over-year for the six months ended June 30, 2018. Core leasing and services revenues increased $25.8 million, or 11.2%, primarily reflecting a 3.5% increase in average modular space units on rent and a 9.3% increase in average modular space monthly rental rate. The increase in leasing and services revenues was partially offset by a $11.7 million, or 38.2% decrease year over year in new and rental unit sales.Total average units on rent for the six months ended June 30, 2018 and 2017 were 68,126 and 53,055, respectively. The increase was due to units acquired as part of the Acton and Tyson acquisitions and organic improvements in modular space average units on rent, with modular space average units on rent increased by 14,022 units, or 34.8% for the six months ended June 30, 2018. Modular space average monthly rental rates increased 3.6% for the six months ended June 30, 2018. Portable storage average units on rent increasing by 1,049 units, or 8.2% for the six months ended June 30, 2018. Average portable storage monthly rental rates increased 4.4% for the six months ended June 30, 2018. The average modular space unit utilization rate during the six months ended June 30, 2018 was 70.3%, as compared to 69.1% during the same period in 2017. The increase in average modular space utilization rate was driven by improvement in the modular space average units on rent in the Modular - Other North America business segment. The average portable storage unit utilization rate during the six months ended June 30, 2018 was 69.4%, as compared to 72.1% during the same period in 2017. The decrease in average portable storage utilization rate was driven by organic declines in the number of portable storage average units on rent in the Modular - US segment.Gross Profit: Our gross profit percentage was 39.3% and 38.1% for the six months ended June 30, 2018 and 2017, respectively. Our gross profit percentage, excluding the effects of depreciation, was 56.0% and 53.0% for the six months ended June 30, 2018 and 2017, respectively.Gross profit increased $28.1 million, or 36.3%, to $105.6 million for the six months ended June 30, 2018 from $77.5 million for the six months ended June 30, 2017. The increase in gross profit is a result of a $43.3 million increase in modular leasing gross profit primarily as a result of increased revenues as well as increased margins due to favorable average monthly rental rates on modular space units. These increases were partially offset by increased depreciation of $13.1 million as a result of continued capital investment in rental equipment, including additional depreciation related to the Acton and Tyson acquisitions, and decreased new unit and rental unit gross profit of $2.1 million due to lower revenues.Selling, General and Administrative: Selling, general and administrative expense (“SG&A”) increased $28.5 million, or 44.3%, to $92.9 million for the six months ended June 30, 2018, compared to $64.4 million for the six months ended June 30, 2017. $11.8 million of the SG&A increase was driven by discrete items including increased transaction fees of $3.3 million related to the pending ModSpace acquisition, increased integration costs of $7.4 million related to the Acton and Tyson integrations, and increased stock compensation expense of $1.2 million. The remaining increases of $16.7 million are primarily related to $6.2 million of increased public company costs including outside professional fees, and increased headcount, occupancy, and indirect tax costs all of which are partially driven by the Acton and Tyson acquisitions and our expanded employee base and branch network. Cost synergies related to the Acton integration plan are on track. As of June 30, 2018, we had ceased production activities and began exit activities at 90% of the Acton locations in overlapping markets. Exit activities for redundant branch locations, such as preparing units and materials for transport to other locations remain on schedule. These activities are expected to continue through the rest of the year and into early 2019 and we expect additional cost savings as we execute the established integration plan. These increases were partially offset by a reduction of $8.0 million in corporate and other related to Algeco Group costs no longer included in our operations.Other Depreciation and Amortization: Other depreciation and amortization increased $0.2 million, or 5.3%, to $4.0 million for the six months ended June 30, 2018, compared to $3.8 million for the six months ended June 30, 2017. The increase was driven primarily by depreciation on property, plant and equipment acquired as part of the Acton acquisition in the first quarter, partially offset by a reduction in total property, plant and equipment for the six months ended June 30, 2018.Restructuring Costs: Restructuring costs were $1.1 million for the six months ended June 30, 2018 as compared to $1.0 million for the six months ended June 30, 2017. The 2018 restructuring charges relate primarily to employee termination costs related to the Acton and Tyson acquisitions. The 2017 restructuring charges relate primarily to the Algeco Group corporate function and consist of employee termination costs.Currency Losses (Gains), net: Currency losses (gains), net decreased by $10.1 million to a $1.6 million loss for the six months ended June 30, 2018 compared to a $8.5 million gain for the six months ended June 30, 2017. The decrease in currency losses (gains) was primarily attributable to the impact of foreign currency exchange rate changes on loans and borrowings and intercompany receivables and payables denominated in a currency other than the subsidiaries’ functional currency. The majority of the intercompany receivables and payables contributing to these gains and losses were settled concurrently with the Carve-Out Transaction and Business Combination.Other (Income) Expense, net: Other (income) expense, net was $4.4 million of income for the six months ended June 30, 2018 and $0.6 million of other expense for the six months ended June 30, 2017. The decrease in other (income) expense was driven by income from insurance proceeds related to assets damaged during Hurricane Harvey which contributed $4.8 million to other (income) expense, net, for the six months ended June 30, 2018.Interest Expense: Interest expense decreased $30.7 million, or 56.2%, to $23.9 million for the six months ended June 30, 2018 from $54.6 million for the six months ended June 30, 2017. Upon consummation of the Business Combination in November 2017, we issued the Notes and entered into the ABL Facility to fund our operations as a stand-alone company. The majority of the interest costs incurred during the six months ended June 30, 2017 relate to the previous debt structure of the Company as part of the Algeco Group. The decrease in interest expense is driven by our lower debt balance in 2018 under our new debt structure as compared to the Algeco Group debt structure in place in 2017. See Note 6 to the condensed consolidated financial statements for further discussion of our debt.Interest Income: Interest income decreased $6.1 million, or 100.0%, to zero for the six months ended June 30, 2018 from $6.1 million for the six months ended June 30, 2017. This decrease is due to the decrease in the principal balance of notes due from affiliates, which were settled upon consummation of the Business Combination in November 2017.Income Tax Benefit: Income tax benefit decreased $3.0 million to $7.1 million for the six months ended June 30, 2018 compared to $10.1 million for the six months ended June 30, 2017. The decrease in income tax benefit was principally due to a smaller pre-tax loss and the reduction to the corporate tax rate from 35% to 21% under the 2017 Tax Act enacted on December 22, 2017.Business Segment ResultsOur principal line of business is modular leasing and sales. The Company formerly operated a Remote Accommodations Business, which was considered a single reportable segment, and was transferred to another entity included in the Algeco Group in connection with the Business Combination in November 2017 and is no longer a part of our business. Modular leasing and sales comprises two reportable segments: Modular - US and Modular - Other North America. The Modular - US reportable segment includes the contiguous 48 states and Hawaii, and the Modular - Other North America reportable segment includes Alaska, Canada and Mexico. Corporate and other represents primarily SG&A related to the Algeco Group’s corporate costs, which were not incurred by WSC in 2018.The following tables and discussion summarize our reportable segment financial information for the three and six months ended June 30, 2018 and 2017. Future changes to our organizational structure may result in changes to the segments disclosed.Comparison of Three Months Ended June 30, 2018 and 2017 Three Months Ended June 30, 2018 (in thousands, except for units on rent and rates) Modular - US Modular - Other North America Total Revenue $ 124,813 $ 15,520 $ 140,333 Gross profit $ 49,741 $ 4,899 $ 54,640 Adjusted EBITDA $ 38,104 $ 3,812 $ 41,916 Capital expenditures for rental equipment $ 30,931 $ 1,748 $ 32,679 Modular space units on rent (average during the period) 48,997 5,524 54,521 Average modular space utilization rate 72.2 % 57.1 % 70.3 % Average modular space monthly rental rate $ 549 $ 573 $ 551 Portable storage units on rent (average during the period) 13,127 369 13,496 Average portable storage utilization rate 68.5 % 57.4 % 68.1 % Average portable storage monthly rental rate $ 120 $ 116 $ 119 Three Months Ended June 30, 2017 (in thousands, except for units on rent and rates) Modular - US Modular - Other North America Corporate & Other Total Revenue $ 98,209 $ 12,010 $ (142 ) $ 110,077 Gross profit $ 35,954 $ 3,769 $ (140 ) $ 39,583 Adjusted EBITDA $ 26,329 $ 2,506 $ (2,588 ) $ 26,247 Capital expenditures for rental equipment $ 25,909 $ 1,716 $ — $ 27,625 Modular space units on rent (average during the period) 35,780 4,900 — 40,680 Average modular space utilization rate 73.8 % 50.0 % — % 69.8 % Average modular space monthly rental rate $ 535 $ 534 $ — $ 534 Portable storage units on rent (average during the period) 11,988 351 — 12,339 Average portable storage utilization rate 70.7 % 51.8 % — % 70.0 % Average portable storage monthly rental rate $ 114 $ 118 $ — $ 114 Modular - US SegmentRevenue: Total revenue increased $26.6 million, or 27.1%, to $124.8 million for the three months ended June 30, 2018 from $98.2 million for the three months ended June 30, 2017. Modular leasing revenue increased $26.2 million, or 40.4%, driven by improved pricing and volumes. Average modular space monthly rental rates increased 2.6% for the three months ended June 30, 2018, and average modular space units on rent increased 13,217 units, or 36.9%. Improved pricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increased VAPS penetration across our customer base, offset partially by the average modular space monthly rental rates on acquired units. Improved volumes were driven by units acquired as part of the Acton and Tyson acquisitions and organic unit on rent growth, as well as increased modular delivery and installation revenues on the combined rental fleet of 30.5%. The increases in leasing and services revenue were partially offset by decreases in sales revenues. New unit sales revenue decreased $4.5 million, or 52.3% and rental unit sales revenue decreased $1.5 million, or 39.5%. The decrease year over year in new and rental unit sales was as a result of lower volumes of sales opportunities and increased focus on our higher margin modular leasing business.On a pro-forma basis, including results of the Company, Acton, and Tyson for all periods presented, total revenues decreased $0.6 million, or 0.5% year-over-year driven by a $9.3 million or 58.9% decline in new and rental unit sales, offset by an $8.7 million, or 8.0% increase in our core leasing and services revenue. This increase was driven by continued improved pricing and volumes. Pro-forma average modular space monthly rental rates increased $49, or 9.8% for the three months ended June 30, 2018, and pro-forma average modular space units on rent increased 765 units, or 1.6%. Pro-forma utilization for our modular space units increased to 72.2%, up 170 bps from 70.5% for the three months ended June 30, 2017.Gross Profit: Gross profit increased $13.8 million, or 38.4%, to $49.7 million for the three months ended June 30, 2018 from $35.9 million for the three months ended June 30, 2017. The increase in gross profit was driven by higher modular leasing and service revenues driven both by organic growth and through the Acton and Tyson acquisitions. The increase in gross profit from modular leasing and sales revenues was partially offset by an $5.7 million increase in depreciation of rental equipment primarily related to acquired units in the Acton and Tyson acquisitions, as well as decreased gross profit of $2.0 million related to new and rental unit sales for the three months ended June 30, 2018.Adjusted EBITDA: Adjusted EBITDA increased $11.8 million, or 44.9%, to $38.1 million for the three months ended June 30, 2018 from $26.3 million for the three months ended June 30, 2017. The increase was driven by higher modular leasing and services gross profits discussed above, partially offset by increases in SG&A, excluding discrete items, of $9.5 million, of which $2.7 was driven by increased public company costs including outside professional fees. The majority of the remaining increase was driven by increased headcount, occupancy, and indirect tax costs all of which are partially driven by the Acton and Tyson acquisitions and our expanded employee base and branch network. Additionally, a gain recognized from the receipt of insurance proceeds related to assets damaged during Hurricane Harvey contributed $1.8 million to Adjusted EBITDA for the three months ended June 30, 2018.Capital Expenditures for Rental Equipment: Capital expenditures increased $5.1 million, or 19.7%, to $31.0 million for the three months ended June 30, 2018 from $25.9 million for the three months ended June 30, 2017. Net capital expenditures also increased $5.1 million, or 23.1%, to $27.2 million. The increases for both were driven by increased spend for refurbishments, new fleet, and VAPS to drive modular space unit on rent and revenue growth, and maintenance of a larger fleet following our Acton and Tyson acquisitions.Modular - Other North America SegmentRevenue: Total revenue increased $3.5 million, or 29.2%, to $15.5 million for the three months ended June 30, 2018 from $12.0 million for the three months ended June 30, 2017. Modular leasing revenue increased $2.0 million, or 24.1%, driven by improved pricing and volumes in the quarter. Average modular space monthly rental rates increased 7.3% and average modular space units on rent increased by 624 units, or 12.7% for the period, resulting in a higher modular space utilization which increased by 710 bps. Modular delivery and installation revenues increased $2.0 million, or 100.0%, due primarily to a large camp installation during the quarter. New unit sales revenue increased $0.3 million, or 37.5%. Rental unit sales revenue decreased $0.8 million, or 88.9%.Gross Profit: Gross profit increased $1.1 million, or 28.9%, to $4.9 million for the three months ended June 30, 2018 from $3.8 million for the three months ended June 30, 2017. The effects of favorable foreign currency movements increased gross profit by $0.1 million related to changes in the Canadian dollar and Mexican peso in relation to the US dollar. The increase in gross profit, excluding the effects of foreign currency, was driven primarily by increased leasing and services revenues. Higher modular volumes and pricing were complimented by higher modular delivery and installation margins. These were slightly offset by increased deprecation of rental equipment of $0.4 million for three months ended June 30, 2018.Adjusted EBITDA: Adjusted EBITDA increased $1.3 million, or 52.0%, to $3.8 million for the three months ended June 30, 2018 from $2.5 million for the three months ended June 30, 2017. This increase was driven by increased leasing and services gross profit as a result of increased modular space volumes and average monthly rental rates.Capital Expenditures for Rental Equipment: Capital expenditures of $1.7 million for the three months ended June 30, 2018 were flat compared to the three months ended June 30, 2017. Net capital expenditures increased $0.8 million to $1.6 million driven by the decrease of $0.8 million of proceeds from rental unit sales.Corporate and OtherGross Profit: The Corporate and other adjustments to revenue and gross profit pertain to the elimination of intercompany leasing transactions between the business segments.Adjusted EBITDA: Corporate and other costs and eliminations to consolidated Adjusted EBITDA were a loss of $2.6 million for the three months ended June 30, 2017, compared to no costs for the three months ended June 30, 2018. In 2017, Corporate and other represented primarily SG&A costs related to the Algeco Group’s corporate costs, which were not incurred by the Company in 2018.Comparison of Six Months Ended June 30, 2018 and 2017 Six Months Ended June 30, 2018 (in thousands, except for units on rent and rates) Modular - US Modular - Other North America Total Revenue $ 246,900 $ 28,184 $ 275,084 Gross profit $ 96,549 $ 9,012 $ 105,561 Adjusted EBITDA $ 70,716 $ 6,692 $ 77,408 Capital expenditures for rental equipment $ 61,455 $ 3,308 $ 64,763 Modular space units on rent (average during the period) 48,841 5,487 54,328 Average modular space utilization rate 72.2 % 57.0 % 70.3 % Average modular space monthly rental rate $ 541 $ 557 $ 543 Portable storage units on rent (average during the period) 13,434 364 13,798 Average portable storage utilization rate 69.8 % 56.4 % 69.4 % Average portable storage monthly rental rate $ 118 $ 116 $ 118 Six Months Ended June 30, 2017 (in thousands, except for units on rent and rates) Modular - US Modular - Other North America Corporate & Other Total Revenue $ 185,624 $ 24,069 $ (295 ) $ 209,398 Gross profit $ 69,769 $ 8,035 $ (283 ) $ 77,521 Adjusted EBITDA $ 50,012 $ 5,625 $ (7,444 ) $ 48,193 Capital expenditures for rental equipment $ 47,958 $ 2,344 $ — $ 50,302 Modular space units on rent (average during the period) 35,438 4,868 — 40,306 Average modular space utilization rate 73.0 % 49.6 % — % 69.1 % Average modular space monthly rental rate $ 524 $ 531 $ — $ 524 Portable storage units on rent (average during the period) 12,394 355 — 12,749 Average portable storage utilization rate 72.9 % 52.2 % — % 72.1 % Average portable storage monthly rental rate $ 113 $ 114 $ — $ 113 Modular - US SegmentRevenue: Total revenue increased $61.3 million, or 33.0%, to $246.9 million for the six months ended June 30, 2018 from $185.6 million for the six months ended June 30, 2017. Modular leasing revenue increased $52.8 million, or 41.9%, driven by improved pricing and volumes. Average modular space monthly rental rates increased 3.2% for the six months ended June 30, 2018, and average modular space units on rent increased 13,403 units, or 37.8%. Improved pricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increased VAPS penetration across our customer base, offset partially by the average modular space monthly rental rates on acquired units. Improved volumes were driven by units acquired as part of the Acton and Tyson acquisitions and organic unit on rent growth, as well as increased modular delivery and installation revenues on the combined rental fleet of 34.2%. The increases in leasing and services revenue were partially offset by decreases in sales revenues. New unit sales revenue decreased $1.6 million, or 12.7% and rental unit sales revenue decreased $3.0 million, or 34.5%. The decrease year over year in new and rental unit sales was as a result of lower volumes of sales opportunities and increased focus on our higher margin modular leasing business.On a pro-forma basis, including results of Williams Scotsman, Acton, and Tyson for all periods presented, total revenues increased $10.2 million, or 4.3% year-over-year driven by organic growth in leasing and services revenues of $19.8 million, or 9.4%, driven by improved pricing and volumes. Pro-forma average modular space monthly rental rates increased $48, or 9.7% for the six months ended June 30, 2018, and pro-forma average modular space units on rent increased 1,195 units, or 2.5%. Pro-forma utilization for our modular space units increased to 72.2%, up 260 bps from 69.6% for the six months ended June 30, 2018. These increases were partially offset by an $9.6 million, or 36.5% decrease in our new and rental unit sales.Gross Profit: Gross profit increased $26.8 million, or 38.4%, to $96.6 million for the six months ended June 30, 2018 from $69.8 million for the six months ended June 30, 2017. The increase in gross profit was driven by higher modular leasing and service revenues driven both by organic growth and through the Acton and Tyson acquisitions. The increases in gross profit from modular leasing and service revenues were partially offset by a $12.5 million increase in depreciation of rental equipment for the six months ended June 30, 2018 as a result of continued capital investment in our fleet, including additional depreciation related to the Acton and Tyson acquisitions.Adjusted EBITDA: Adjusted EBITDA increased $20.7 million, or 41.4%, to $70.7 million for the six months ended June 30, 2018 from $50.0 million for the six months ended June 30, 2017. The increase was driven by higher modular leasing and services gross profits discussed above, as well as a gain recognized from the receipt of insurance proceeds related to assets damaged during Hurricane Harvey of $4.8 million for the six months ended June 30, 2018. These increases were partially offset by increases in SG&A, excluding discrete items, of $23.1 million, of which $6.2 million was driven by increased public company costs including outside professional fees. The majority of the remaining increase was driven by increased headcount, occupancy, and indirect tax costs all of which are partially driven by the Acton and Tyson acquisitions and our expanded employee base and branch network.Capital Expenditures for Rental Equipment: Capital expenditures increased $13.5 million, or 28.1%, to $61.5 million for the six months ended June 30, 2018 from $48.0 million for the six months ended June 30, 2017. Net capital expenditures increased $10.7 million, or 27.2%, to $50.0 million. The increases for both were driven by increased spend for refurbishments, new fleet, and VAPS to drive modular space unit on rent and revenue growth, and maintenance of a larger fleet following our Acton and Tyson acquisitions.Modular - Other North America SegmentRevenue: Total revenue increased $4.2 million, or 17.5%, to $28.2 million for the six months ended June 30, 2018 from $24.0 million for the six months ended June 30, 2017. Modular leasing revenue increased $3.4 million, or 21.0%, driven by improved pricing and volumes. Average modular space monthly rental rates increased 4.9% and average modular space units on rent increased by 619 units, or 12.7% for the period, resulting in a higher modular space utilization which increased by 740 bps. Modular delivery and installation revenues increased $2.7 million, or 75.0%, due primarily to a large camp installation during the second quarter. New unit sales revenue decreased $0.6 million, or 26.1% and rental unit sales revenue decreased $1.3 million, or 68.4% associated with decreased sale opportunities.Gross Profit: Gross profit increased $1.0 million, or 12.5%, to $9.0 million for the six months ended June 30, 2018 from $8.0 million for the six months ended June 30, 2017.The effects of favorable foreign currency movements increased gross profit by $0.3 million related to changes in the Canadian dollar and Mexican peso in relation to the US dollar. The increase in gross profit, excluding the effects of foreign currency, was driven primarily by higher leasing and services gross profits partially offset by lower new and rental unit sales as well as increased depreciation of rental equipment of $0.6 million, or 10.3%.Adjusted EBITDA: Adjusted EBITDA increased $1.1 million, or 19.6%, to $6.7 million for the six months ended June 30, 2018 from $5.6 million for the six months ended June 30, 2017. This increase was driven by improved leasing and services gross profit, partially offset by increased SG&A of $0.5 million, or 6.0%.Capital Expenditures for Rental Equipment: Capital expenditures increased $1.0 million, or 43.5%, to $3.3 million for the six months ended June 30, 2018 from $2.3 million for the six months ended June 30, 2017. Net capital expenditures increased $2.3 million to $2.7 million. The increases for both were driven primarily by investments in refurbishments of existing lease fleet and VAPS. A reduction in rental unit sales drove the remaining increase to net capital expenditures.Corporate and OtherGross Profit: The Corporate and other adjustments to revenue and gross profit pertain to the elimination of intercompany leasing transactions between the business segments.Adjusted EBITDA: Corporate and other costs and eliminations to consolidated Adjusted EBITDA were a loss of $7.4 million for the six months ended June 30, 2017, compared to no costs for the six months ended June 30, 2018. In 2017, Corporate and other represented primarily SG&A costs related to the Algeco Group’s corporate costs, which were not incurred by the Company in 2018.Other Non-GAAP Financial Data and ReconciliationsWe use certain non-GAAP financial information that we believe is important for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of our ongoing operations and analyze our business performance and trends.We evaluate business segment performance on Adjusted EBITDA, a non-GAAP measure that excludes certain items as described in the reconciliation of our consolidated net loss to Adjusted EBITDA reconciliation below. We believe that evaluating segment performance excluding such items is meaningful because it provides insight with respect to intrinsic operating results of the Company.We also regularly evaluate gross profit by segment to assist in the assessment of the operational performance of each operating segment. We consider Adjusted EBITDA to be the more important metric because it more fully captures the business performance of the segments, inclusive of indirect costs.Adjusted EBITDAWe define EBITDA as net income (loss) plus interest (income) expense, income tax expense (benefit), depreciation and amortization. Our 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 associated with restructuring plans designed to streamline operations and reduce costs.Costs to integrate acquired companies.Non-cash charges for stock compensation plans.Other expense includes consulting expenses related to certain one-time projects, financing costs not classified as interest expense and gains and losses on disposals of property, plant, and equipment.Adjusted EBITDA has limitations as an analytical tool, and you should not consider the measure in isolation or as a substitute for net income (loss), cash flow from operations or other methods of analyzing WSC’s results as reported under 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; andother companies in our industry may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.Adjusted EBITDABecause of these limitations, Adjusted EBITDA should not be considered as discretionary cash available to reinvest in the growth of our business or as measures of cash that will be available to meet our obligations. The following table provides an unaudited reconciliation of Net income (loss) to Adjusted EBITDA: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2018 2017 2018 2017 Net income (loss) $ 379 $ (5,896 ) $ (6,456 ) $ (16,075 ) Income from discontinued operations, net of tax — 3,840 — 6,045 Income (loss) from continuing operations 379 (9,736 ) (6,456 ) (22,120 ) Income tax benefit (6,645 ) (5,269 ) (7,065 ) (10,138 ) Loss from continuing operations before income tax (6,266 ) (15,005 ) (13,521 ) (32,258 ) Interest expense, net 12,155 26,398 23,874 48,475 Depreciation and amortization 25,040 19,364 51,321 38,025 Currency losses (gains), net 572 (6,497 ) 1,596 (8,499 ) Restructuring costs 449 684 1,077 968 Transaction fees 4,118 776 4,118 862 Integration costs 4,785 — 7,415 — Stock compensation expense 1,054 — 1,175 — Other expense 9 527 353 620 Adjusted EBITDA $ 41,916 $ 26,247 $ 77,408 $ 48,193 Adjusted Gross ProfitWe define Adjusted Gross Profit as gross profit plus depreciation on rental equipment. Adjusted Gross Profit is not a measurement of our financial performance under GAAP and should not be considered as an alternative to gross profit or other performance measure derived in accordance with GAAP. In addition, our measurement of Adjusted Gross Profit may not be comparable to similarly titled measures of other companies. Management believes that the presentation of Adjusted Gross Profit provides useful information to investors regarding our results of operations because it assists in analyzing the performance of our business.The following table provides an unaudited reconciliation of gross profit to Adjusted Gross Profit: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2018 2017 2018 2017 Gross profit $ 54,640 $ 39,583 $ 105,561 $ 77,521 Depreciation of rental equipment 23,470 17,474 47,315 34,194 Adjusted Gross Profit $ 78,110 $ 57,057 $ 152,876 $ 111,715 Net Capex for Rental EquipmentWe define Net Capital Expenditures for Rental Equipment as capital expenditures for purchases and capitalized refurbishments of rental equipment, reduced by proceeds from the sale of rental equipment. Our management believes that the presentation of Net Capital Expenditures for Rental Equipment provides useful information to investors regarding the net capital invested into our rental fleet each year to assist in analyzing the performance of our business.The following table provides an unaudited reconciliation of purchase of rental equipment to Net Capital Expenditures for Rental Equipment: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2018 2017 2018 2017 Total purchase of rental equipment and refurbishments $ (32,679 ) $ (29,326 ) $ (64,763 ) $ (54,223 ) Total purchases of rental equipment from discontinued operations — (1,701 ) — (3,921 ) Total purchases of rental equipment from continuing operations (32,679 ) (27,625 ) (64,763 ) (50,302 ) Proceeds from sale of rental equipment $ 3,905 $ 4,778 $ 12,033 $ 10,622 Net Capital Expenditures for Rental Equipment $ (28,774 ) $ (22,847 ) $ (52,730 ) $ (39,680 ) Adjusted EBITDA less Net CAPEXWe define Adjusted EBITDA less Net CAPEX as Adjusted EBITDA less the gross profit on sale of rental units, less Net Capital Expenditures. Adjusted EBITDA less Net CAPEX is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income (loss) or other performance measure derived in accordance with GAAP. In addition, our measurement of Adjusted EBITDA less Net CAPEX may not be comparable to similarly titled measures of other companies. Our management believes that the presentation of Adjusted EBITDA less Net CAPEX provides useful information to investors regarding our results of operations because it assists in analyzing the performance of our business.The following tables provide unaudited reconciliations of Net (loss) income to Adjusted EBITDA less Net CAPEX on a segment basis for the three and six months ended June 30, 2018 and 2017: Three Months Ended June 30, 2018 (in thousands) Modular - US Modular - Other North America Corporate & Other Consolidated Net (loss) income $ (5,533 ) $ (733 ) $ 6,645 $ 379 Income from discontinued operations, net of tax — — — — Loss from continuing operations (5,533 ) (733 ) 6,645 379 Income tax benefit(a)— — (6,645 ) (6,645 ) Loss from continuing operations before income tax (5,533 ) (733 ) — (6,266 ) Interest expense, net 11,663 492 — 12,155 Operating income (loss) 6,130 (241 ) — 5,889 Depreciation and amortization 21,571 3,469 — 25,040 EBITDA 27,701 3,228 — 30,929 Currency losses, net 114 458 — 572 Restructuring costs 449 — — 449 Transaction Fees 4,049 69 — 4,118 Integration costs 4,785 — — 4,785 Stock compensation expense 1,054 — — 1,054 Other (income) expense (48 ) 57 — 9 Adjusted EBITDA 38,104 3,812 — 41,916 Less: Rental unit sales 2,309 126 — 2,435 Rental unit cost of sales 1,164 99 — 1,263 Gross profit on rental unit sales 1,145 27 — 1,172 Gain on insurance proceeds 1,765 — — 1,765 Less: Total capital expenditures 31,438 1,857 — 33,295 Proceeds from rental unit sales 3,779 126 — 3,905 Net Capital Expenditures 27,659 1,731 — 29,390 Adjusted EBITDA less Net CAPEX $ 7,535 $ 2,054 $ — $ 9,589 Three Months Ended June 30, 2017 (in thousands) Modular - US Modular - Other North America Corporate & Other Consolidated Net loss 320 (1,442 ) (4,774 ) (5,896 ) Income from discontinued operations, net of tax(b)— — 3,840 3,840 Loss from continuing operations 320 (1,442 ) (8,614 ) (9,736 ) Income tax benefit(a)— — (5,269 ) (5,269 ) Loss from continuing operations before income tax 320 (1,442 ) (13,883 ) (15,005 ) Interest expense, net 15,953 1,038 9,407 26,398 Operating income (loss) 16,273 (404 ) (4,476 ) 11,393 Depreciation and amortization 15,830 3,189 345 19,364 EBITDA 32,103 2,785 (4,131 ) 30,757 Currency gains, net (5,800 ) (294 ) (403 ) (6,497 ) Restructuring costs — — 684 684 Transaction fees 46 — 730 776 Other (income) expense (20 ) 15 532 527 Adjusted EBITDA 26,329 2,506 (2,588 ) 26,247 Less: Rental unit sales 3,835 943 — 4,778 Rental unit cost of sales 1,923 652 — 2,575 Gross profit on rental unit sales 1,912 291 — 2,203 Less: Total capital expenditures(b)26,923 1,783 1,992 30,698 Total capital expenditures from discontinued operations — — (1,992 ) (1,992 ) Total capital expenditures from continuing operations 26,923 1,783 — 28,706 Proceeds from rental unit sales 3,835 943 — 4,778 Proceeds from rental unit sales from discontinued operations — — — — Proceeds from rental unit sales from continuing operations 3,835 943 — 4,778 Net Capital Expenditures 23,088 840 — 23,928 Adjusted EBITDA less Net CAPEX $ 1,329 $ 1,375 $ (2,588 ) $ 116 Six Months Ended June 30, 2018 (in thousands) Modular - US Modular - Other North America Corporate & Other Consolidated Net (loss) income $ (10,841 ) $ (2,680 ) $ 7,065 $ (6,456 ) Income from discontinued operations, net of tax — — — — Loss from continuing operations (10,841 ) (2,680 ) 7,065 (6,456 ) Income tax benefit(a)— — (7,065 ) (7,065 ) Loss from continuing operations before income tax (10,841 ) (2,680 ) — (13,521 ) Interest expense, net 22,823 1,051 — 23,874 Operating income (loss) 11,982 (1,629 ) — 10,353 Depreciation and amortization 44,463 6,858 — 51,321 EBITDA 56,445 5,229 — 61,674 Currency losses, net 271 1,325 — 1,596 Restructuring costs 1,067 10 — 1,077 Transaction Fees 4,049 69 — 4,118 Integration costs 7,415 — — 7,415 Stock compensation expense 1,175 — — 1,175 Other expense 294 59 — 353 Adjusted EBITDA 70,716 6,692 — 77,408 Less: Rental unit sales 5,663 583 — 6,246 Rental unit cost of sales 3,193 385 — 3,578 Gross profit on rental unit sales 2,470 198 — 2,668 Gain on insurance proceeds 4,765 — — 4,765 Less: Total capital expenditures 62,947 3,432 — 66,379 Proceeds from rental unit sales 11,450 583 — 12,033 Net Capital Expenditures 51,497 2,849 — 54,346 Adjusted EBITDA less Net CAPEX $ 11,984 $ 3,645 $ — $ 15,629 Six Months Ended June 30, 2017 (in thousands) Modular - US Modular - Other North America Corporate & Other Consolidated Net loss (5,210 ) (2,458 ) (8,407 ) (16,075 ) Income from discontinued operations, net of tax(b)— — 6,045 6,045 Loss from continuing operations (5,210 ) (2,458 ) (14,452 ) (22,120 ) Income tax benefit(a)— — (10,138 ) (10,138 ) Loss from continuing operations before income tax (5,210 ) (2,458 ) (24,590 ) (32,258 ) Interest expense, net 31,512 2,216 14,747 48,475 Operating income (loss) 26,302 (242 ) (9,843 ) 16,217 Depreciation and amortization 30,993 6,331 701 38,025 EBITDA 57,295 6,089 (9,142 ) 54,242 Currency gains, net (7,399 ) (481 ) (619 ) (8,499 ) Restructuring costs — — 968 968 Transaction costs 46 — 816 862 Other expense 70 17 533 620 Adjusted EBITDA 50,012 5,625 (7,444 ) 48,193 Less: Rental unit sales 8,712 1,910 — 10,622 Rental unit cost of sales 5,036 1,247 — 6,283 Gross profit on rental unit sales 3,676 663 — 4,339 Less: Total capital expenditures(b)49,602 2,424 4,212 56,238 Total capital expenditures from discontinued operations — — (4,212 ) (4,212 ) Total capital expenditures from continuing operations 49,602 2,424 — 52,026 Proceeds from rental unit sales 8,712 1,910 — 10,622 Proceeds from rental unit sales from discontinued operations — — — — Proceeds from rental unit sales from continuing operations 8,712 1,910 — 10,622 Net Capital Expenditures 40,890 514 — 41,404 Adjusted EBITDA less Net CAPEX $ 5,446 $ 4,448 $ (7,444 ) $ 2,450 (a) The Company does not allocate expenses on a segment level. As such, we have included tax income benefit in Corporate and other for the purpose of this reconciliation.(b) For the purpose of this reconciliation, the Company has included income and capital expenditures related to discontinued operations in Corporate and other as it all pertained to the Remote Accommodations segment which was discontinued as of November 29, 2017.Liquidity and Capital ResourcesOverviewWSC is a holding company that derives all of its operating cash flow from its operating subsidiaries. Our principal sources of liquidity include cash generated by operating activities from our subsidiaries, credit facilities and sales of equity and debt securities. We believe that our liquidity sources and operating cash flows are sufficient to address our future operating, debt service and capital requirements.We may from time to time seek to retire or purchase our warrants through cash purchases and/or exchanges for equity securities, in open market purchases, privately-negotiated transactions, exchange offers or otherwise. Any such transactions will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.ABL Facility On November 29, 2017, WS Holdings, WSII and certain of its subsidiaries entered into the ABL Facility with an aggregate principal amount of up to $600.0 million. The ABL Facility, which matures on May 29, 2022, comprises (i) a $530 million asset-based revolving credit facility for WSII and certain of its domestic subsidiaries and (ii) a $70 million asset-based revolving credit facility for Williams Scotsman of Canada, Inc.Borrowings under the ABL Facility, at the Borrower’s option, bear interest at either an adjusted LIBOR or a base rate, in each case, plus an applicable margin. The applicable margin is 2.50% for LIBOR borrowings and 1.50% for base rate borrowings. The ABL Facility requires the payment of an annual commitment fee on the unused available borrowings of between 0.375% and 0.5% per annum. At June 30, 2018, the weighted average interest rate for borrowings under the ABL Facility was 4.58%.At June 30, 2018, the Borrowers had $219.6 million of available capacity under the ABL Facility, including $153.1 million of available capacity under the US facility and $66.5 million of available capacity under the Canadian facility.Senior Secured Notes On November, 29, 2017, WSII issued the Notes with a $300.0 million aggregate principal amount that bear interest at 7.875% and mature on December 15, 2022. The net proceeds, along with other funding obtained in connection with the Business Combination, were used to repay $669.5 million outstanding under WSII’s former credit facility, to repay $226.3 million of notes due to affiliates and related accrued interest, and to pay $125.7 million of the cash consideration paid for 100% of the outstanding equity of WSII. Interest on the Notes is payable semi-annually on June 15 and December 15 beginning June 15, 2018.Cash Flow Comparison of the Six Months Ended June 30, 2018 and 2017The following summarizes our cash flows for the periods presented on an actual currency basis: Six Months Ended June 30, (in thousands) 2018 2017 Net cash from operating activities $ 18,800 $ 24,124 Net cash from investing activities (77,671 ) (111,393 ) Net cash from financing activities 57,963 86,845 Effect of exchange rate changes on cash and cash equivalents (96 ) 254 Net change in cash and cash equivalents $ (1,004 ) $ (170 ) The cash flow data for the six months ended June 30, 2017 includes the activity of the Remote Accommodations Business, which is no longer a part of the company following the Carve-out Transaction, and is presented as discontinued operations in the the condensed consolidated financial statements.Cash Flows from Operating ActivitiesCash provided by operating activities for the six months ended June 30, 2018 was $18.8 million as compared to $24.1 million for the six months ended June 30, 2017, a decrease of $5.3 million. The reduction in cash provided by operating activities was predominantly due to higher use of cash to pay down accounts payable and accrued liabilities associated both to transaction expenses incurred for the Business Combination as well as normal operating liabilities. Additionally, the cash flow from operating activities for the six months ended June 30, 2017 include cash generated from the Remote Accommodations Business which is no longer a part of the Company following the Carve-out Transaction that occurred in the fourth quarter of 2017.Cash flows from investing activitiesCash used in investing activities for the six months ended June 30, 2018 was $77.7 million as compared to $111.4 million for the six months ended June 30, 2017, a decrease of $33.7 million. The reduction in cash used in investing activities was principally the result of a $67.9 million decrease in cash used in lending to affiliates, a $1.4 million increase in proceeds from the sale of rental equipment, and a $0.7 million increase in proceeds from the sale of property, plant and equipment, which was partially offset by the $24.0 million purchase of Tyson and an increase of $10.6 million of rental equipment capital expenditures. In 2018, we did not engage in any lending activities as the notes due from affiliates were settled as part of the Business Combination. The increase in proceeds for rental equipment and property, plant and equipment was driven by the receipt of insurance proceeds for assets damaged during Hurricane Harvey. The increase in capital expenditures was driven primarily by strategic investment in refurbishment of existing fleet, purchase of VAPS, and new fleet purchases to maintain and grow units on rent.Cash flows from financing activitiesCash provided by financing activities for the six months ended June 30, 2018 was $58.0 million as compared to $86.8 million for the six months ended June 30, 2017, a decrease of $28.8 million. The reduction in cash provided by financing activities is primarily driven by $75.0 million decrease in borrowings from notes due to affiliates. The notes due from affiliates were settled in connection with the Business Combination in the fourth quarter of 2017 and were driven by a centralized cash management strategy utilized by the Algeco Group. The reduction in cash used in financing activities was partially offset by a $34.5 million increase in borrowings, net of repayments, as a result of drawing on the ABL Facility during 2018 to purchase Tyson and $10.9 million in financing cost payments in the first quarter of 2017 associated with an amendment of the revolving credit facility that WSII was party to as part of the Algeco Group, prior to the Business Combination.Contractual ObligationsOther than changes which occur in the normal course of business, there were no significant changes to the contractual obligations reported in our 2017 Form 10-K as updated in our Form 10-Q for the three and six months ended June 30, 2018.Off-Balance Sheet ArrangementsWe have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.Critical Accounting Policies and EstimatesOur discussion and analysis of our financial condition, results of operations, liquidity and capital resources is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. GAAP requires that we make estimates and judgments that affect the Company’sreported amount of assets, liabilities, revenue, expenses and the related disclosure of contingent assets and liabilities. We base these estimates on historical experience and on various other assumptions that we consider reasonable under the circumstances, and reevaluate our estimates and judgments as appropriate. The actual results experienced by us may differ materially and adversely from our estimates.Our significant accounting policies are described in Note 1 of the audited consolidated financial statements included in our 2017 Form 10-K. The US Securities and Exchange Commission (the “SEC”) suggests companies provide additional disclosure on those accounting policies considered most critical. The SEC considers an accounting policy to be critical if it is important to our financial condition and results of operations should be readand requires significant judgments and estimates on the part of management in conjunction withits application. For the unaudited condensedsix months ended June 30, 2018, we have provided an additional disclosure on our stock-based compensation policies as described in Note 11 of this Form 10-Q. For a complete discussion of our critical accounting policies, see the “Critical Accounting Policies and Estimates” section of the MD&A in our 2017 Form 10-K.Recently Issued Accounting StandardsRefer to Note 1 of the notes to our financial statements and the notes thereto contained elsewhereincluded in this report. Certain information contained in the discussionForm 10-Q for our assessment of recently issued and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
adopted accounting standards.13Cautionary Note Regarding Forward-Looking StatementsThe statements contained in this report that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in thisThis Quarterly Report on Form 10-Q may include, for example, statements about:·our ability to complete our initial business combination;·our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;·our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements;·our potential ability to obtain additional financing to complete our initial business combination;·our pool of prospective target businesses;·the ability of our officers and directors to generate a number of potential investment opportunities;·our public securities’ potential liquidity and trading;·the lack of a market for our securities;·the use of proceeds not held in the Trust Account (as described herein) or available to us from interest income on the Trust Account balance; or·our financial performance.Theincludes forward-looking statements contained in this report are based on our current expectationswithin the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated.Section 21E of the Exchange Act. These forward-looking statements involverelate to expectations for future financial performance, business strategies or expectations for the post-combination business. Specifically, forward-looking statements may include statements relating to:our ability to effectively compete in the modular space and portable storage industry;changes in demand within a number of risks, uncertainties (somekey industry end-markets and geographic regions;effective management of which areour rental equipment;our ability to acquire and successfully integrate new operations;market conditions and economic factors beyond our control) or other assumptions that may cause actualcontrol;our ability to properly design, manufacture, repair and maintain our rental equipment;our operating results or performancefinancial estimates fail to be materially different from those expressedmeet or impliedexceed our expectations;operational, economic, political and regulatory risks;the effect of changes in state building codes on our ability to remarket our buildings;our ability to effectively manage our credit risk, collect on our accounts receivable, or recover our rental equipment;foreign currency exchange rate exposure;increases in raw material and labor costs;our reliance on third party manufacturers and suppliers;risks associated with labor relations, labor costs and labor disruptions;failure to retain key personnel;the effect of impairment charges on our operating results;our inability to recognize or use deferred tax assets and tax loss carry forwards;our obligations under various laws and regulations;the effect of litigation, judgments, orders or regulatory proceedings on our business;unanticipated changes in our tax obligations;any failure of our management information systems;our ability to design, implement and maintain effective internal controls, including disclosure controls and controls over financial reporting;natural disasters and other business disruptions;our exposure to various possible claims and the potential inadequacy of our insurance;our ability to deploy our units effectively, including our ability to close projected unit sales;any failure by these forward-looking statements. These risksour prior owner or its affiliates to perform under or comply with our transition services and uncertainties include, but are not limitedintellectual property agreements;our ability to those factors describedfulfill our public company obligations;our subsidiaries’ ability to meet their debt service requirements and obligations;our subsidiaries’ ability to take certain actions, or to permit us to take certain actions, under the headingagreements governing their indebtedness; andother factors detailed under the section entitled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. 2017.We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.OverviewWe are a blank check company incorporated as a Cayman Islands exempted company on June 26, 2015 and formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (“Business Combination”). We intend to consummate a Business Combination using cash from the proceeds of our initial public offering (the “Public Offering”) that closed on September 16, 2015 (the “Closing Date”) and the private placement of warrants to purchase our Class A ordinary shares (“Private Placement Warrants”) that also occurred on the Closing Date, and from additional issuances of, if any, our equity and our debt, or a combination of cash, equity and debt.The issuance of additional ordinary shares in a business combination:·may significantly dilute the equity interest of investors in the Public Offering, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares;·may subordinate the rights of holders of ordinary shares if preferred shares are issued with rights senior to those afforded our ordinary shares;·could cause a change in control if a substantial number of our ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carryforwards, if any, and could result in the resignation or removal of our present executive officers and directors;14·may have the effect of delaying or preventing a change in control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and·may adversely affect prevailing market prices for our Class A ordinary shares and/or warrants to purchase our Class A ordinary shares.Similarly, if we issue debt securities, it could result in:·default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;·acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;·our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;·our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;·our inability to pay dividends on our ordinary shares;·using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares, if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;·limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;·increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and·limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.At June 30, 2017, we held cash and cash equivalents of $22,490, current liabilities of $1,061,407 and deferred underwriting compensation of $19,500,000. Further, we expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.For the three months ended June 30, 2017 and June 30, 2016, we had losses from operations of ($871,490) and ($127,551), respectively. For the six months ended June 30, 2017 and June 30, 2016, we had losses from operations of ($1,202,906) and ($405,025), respectively. Our business activities from our inception through June 30, 2017 consisted solely of completing our Public Offering, and identifying and evaluating prospective acquisition targets for a Business Combination.Liquidity and Capital ResourcesPrior to our Public Offering, we issued an aggregate of 12,218,750 Class B ordinary shares, or founder shares, to Double Eagle Acquisition LLC, a Delaware limited liability company (our “Sponsor”) for an aggregate purchase price of $25,000 in cash, or approximately $0.002 per share. On July 29, 2015, our Sponsor transferred 6,109,375 founder shares to Harry E. Sloan for a purchase price of $12,500 (the same per-share purchase price initially paid by our Sponsor). On August 27, 2015, our Sponsor and Mr. Sloan transferred an aggregate of 25,000 founder shares on a pro rata basis to each of our independent directors at their original purchase price. On August 27, 2015, Mr. Sloan transferred 665,500 founder shares to our Sponsor. On September 10, 2015, we effected a share capitalization of approximately ..129 shares for each outstanding Class B ordinary share, resulting in our initial shareholders holding an aggregate of 13,800,000 founder shares. The closing of the Public Offering included an initial partial exercise (2,000,000 units) of the overallotment option granted to the underwriters which resulted in the forfeiture of an aggregate of 1,300,000 founder shares (the "Forfeited Founder Shares") by the Sponsor, Harry E. Sloan and the Company’s independent directors (consisting of 1,271,771 Forfeited Founder Shares forfeited by the Sponsor, 18,524 founder shares forfeited by Harry E. Sloan and 3,235 Forfeited Founder Shares forfeited by each of the Company’s independent directors) due to the underwriters not exercising their over-allotment option in full and such that the remaining founders shares will equal 20% of the equity capital of the Company.15On September 16, 2015, we consummated the Public Offering of 50,000,000 units (including the issuance of 2,000,000 units as a result of the underwriters’ partial exercise of their over-allotment option) at a price of $10.00 per unit generating gross proceeds of $500,000,000 before underwriting discounts and expenses. Simultaneously with the consummation of the Public Offering, on the Closing Date, we effected the private sale of an aggregate of 19,500,000 Private Placement Warrants, each exercisable to purchase one-half of one Class A ordinary share at $5.75 per one-half share, to the Sponsor, at a price of $0.50 per Private Placement Warrant.We received gross proceeds from the Public Offering and the sale of the Private Placement Warrants of $500,000,000 and $9,750,000, respectively, for an aggregate of $509,750,000. $500,000,000 of the gross proceeds were deposited in a trust account with Continental Stock Transfer and Trust Company acting as Trustee (the “Trust Account”). At the Closing Date, the remaining $9,750,000 was held outside of the Trust Account, of which $8,000,000 was used to pay underwriting discounts. $20,000 in offering expenses were paid by the Sponsor prior to the Public Offering in exchange for founder shares. In the future, a portion of the interest income on the funds held in the Trust Account may be released to us to pay tax obligations. At June 30, 2017, funds held in the Trust Account consisted solely of investments solely in short term treasury securities and cash deposits.At June 30, 2017, we had cash and cash equivalents held outside of the Trust Account of $22,490, which is available to fund our working capital requirements and accrued offering expenses. It is anticipated that the Company may incur loans from the Sponsor, as permitted in the Initial Public Offering, for additional working capital for Company’s ordinary operations and in pursuit of a business combination. In the event of liquidation, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per unit in the Public Offering.At June 30, 2017, we had current liabilities of $1,061,407, largely due to short term financing of amounts owed to professionals, consultants, advisors and others who performed services or are working on identifying and evaluating a Business Combination. The identification and evaluation of a potential Business Combination is continuing after June 30, 2017 and additional expenses will be incurred. Such expenses may be significant, and we expect some portion of them would be paid upon consummation of a Business Combination. We may request loans from our Sponsor, affiliates of our Sponsor or certain of our executive officers and directors to fund our working capital requirements prior to completing a Business Combination. We may use working capital to repay such loans, but no funds may be withdrawn from the Trust Account for such repayment unless and until we complete an initial business combination. Additional funds could also be raised through a private offering of debt or equity. Our Sponsor, affiliates of our Sponsor, executive officers and directors are not obligated to make loans to us, and we may not be able to raise additional funds from unaffiliated parties. If we are unable to fund future working capital needs, if any, prior to completion of a Business Combination, our ability to continue as a going concern may be impaired.We have 24 months from the Closing Date (or until September 16, 2017) to complete a Business Combination. If we do not complete a Business Combination within this time period, we will (i) cease all operations except for the purposes of winding up, (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses), less income taxes payable, divided by the number of then outstanding public shares, which redemption will completely extinguish the shareholder rights of owners of Class A ordinary shares (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.We intend to use substantially all of the funds held in the Trust Account, including interest, less income taxes payable, to consummate a Business Combination. To the extent that our equity or debt is used, in whole or in part, as consideration to consummate a Business Combination, the remaining proceeds held in the Trust Account after completion of the Business Combination and redemptions of Class A ordinary shares, if any, will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategy.16We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete a Business Combination or because we become obligated to redeem a significant number of our Class A ordinary shares upon completion of a Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.Off-Balance Sheet Financing ArrangementsWe have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets.Contractual ObligationsWe do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities other than an administrative agreement to reimburse the Sponsor for office space, secretarial and administrative services provided to members of the Company’s management team by the Sponsor, members of the Sponsor, and the Company’s management team or their affiliates in an amount not to exceed $15,000 per month in the event such space and/or services are utilized and the Company does not pay a third party directly for such services, from the date of closing of the Public Offering. Upon completion of a Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees.The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:Redeemable Ordinary SharesAll 50,000,000 Class A ordinary shares sold as part of the units in the Public Offering contain a redemption feature under which holders of Class A ordinary shares may, two business days prior to the consummation of a Business Combination, redeem their Class A ordinary shares for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest, less income taxes payable, divided by the number of then outstanding Class A ordinary shares. In accordance with ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), redemption provisions not solely within an entity’s control require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of an entity’s equity instruments, are excluded from the provisions of ASC 480. Although we did not specify a maximum redemption threshold, our charter provides that in no event will we redeem our Class A ordinary shares in an amount that would cause our net tangible assets, or total shareholders’ equity, to fall below $5,000,001. Accordingly, at June 30, 2017 and December 31, 2016, 47,714,600, and 47,702,674, respectively, of our 50,000,000 Class A ordinary shares were classified outside of permanent equity.Net Income (Loss) per Ordinary ShareBasic net income or loss per ordinary share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) per share by the weighted average number of ordinary shares outstanding (including shares subject to redemption), plus, to the extent dilutive, the incremental number of ordinary shares to settle private placement warrants held by the Sponsor, as calculated using the treasury stock method. An aggregate of 47,714,600 shares of Class A ordinary shares subject to possible redemption at June 30, 2017 have been excluded from the calculation of basic income per ordinary shares since such shares, if redeemed, only participate in their pro rata share of the trust earnings. The Company has not considered the effect of warrants sold in the Initial Public Offering in the calculation of diluted income (loss) per share, since their inclusion would be anti-dilutive.17Recent Accounting PronouncementsManagement does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our financial statements.Item 3. Quantitative and Qualitative Disclosures About Market Risk.To date, our effortsITEM 3. Quantitative and Qualitative Disclosures about Market Risk There have been limitedno significant changes to organizational activities and activities relating to the Public Offering and the identification and evaluation of prospective acquisition targets for a Business Combination. We have neither engaged in any operations nor generated any revenues. The net proceeds from our Public Offering and the sale of Private Placement Warrants held in the Trust Account are comprised entirely of cash. We may invest funds held in the Trust Account in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Our only market risk since December 31, 2017. For a discussion of our exposure will relate to fluctuations in interest rates and the resulting impactmarket risk, refer to our Annual Report on the value of investments held in the Trust Account. Due to the short-term nature of such investments, we do not believe that we will be subject to material exposure due to interest rate risk.At June 30, 2017, $502,663,076 was held in the Trust AccountForm 10-K for the purposes of consummating a Business Combination. If we complete a Business Combination within 24 months after the Closing Date, funds in the Trust Account will be used to pay for the Business Combination, redemptions of Class A ordinary shares, if any, the deferred underwriting compensation of $19,500,000 and accrued expenses related to the Business Combination. Any funds remaining will be made available to us to provide working capital to finance our operations.We have not engaged in any hedging activities since our Inception. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.ItemITEM 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures.Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submittedProceduresWe carried out an evaluation, under the Securities Exchange Actsupervision of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2017.2018. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as definedwere not effective as of June 30, 2018, due to the existence of a previously reported material weaknesses in Rules 13a-15(e)our internal control over financial reporting.Notwithstanding a material weakness in internal control over financial reporting, our management concluded that our condensed consolidated financial statements in this quarterly report on Form 10-Q present fairly, in all material respects, the Company’s consolidated financial position, results of operations and 15d-15(e) undercash flows as of the Exchange Act)dates, and for the periods presented, in conformity with generally accepted accounting principles.Description of Material Weakness as of December 31, 2017As disclosed in further detail in “Part II - Item 9A - Controls and Procedures” of the 2017 Annual Report, we and our independent registered public accounting firm identified material weaknesses in our internal control over financial reporting - specifically, ineffective controls over accounting for income taxes and reverse acquisition accounting. These control deficiencies resulted in numerous adjustments and disclosures that were effective.Remediation PlansDuring our second quarter ended June 30, 2018, we continued to implement a remediation plan that addresses the material weaknesses in internal control over financial reporting through the following actions:Increased involvement on a quarterly basis of our third-party consultants dedicated to determining the appropriate accounting for material and complex tax and unique business transactions;Review of the tax accounting process to identify and implement enhanced processes and related internal control review procedures; andAdding additional review controls to approve complex accounting and related calculations.Under the direction of the Audit Committee, management will continue to review and make necessary changes to the overall design of the Company’s internal control environment, as well as policies and procedures to improve the overall effectiveness of internal control over financial reporting.We believe the measures described above will remediate the control deficiencies identified and will strengthen our internal control over financial reporting. As management continues to evaluate and work to improve internal control over financial reporting, we may take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above. These controls must be in place and operating effectively for a sufficient period of time in order to validate the full remediation of the material weaknesses. We expect that the remediation of the material weaknesses will be complete as of December 31, 2018.Changes in Internal ControlsIn December 2017 and January 2018 we acquired Acton and Tyson for $237.1 million and $24.0 million, respectively (see Note 2 to the accompanying financial statements). During the most recently completed fiscalsecond quarter of 2018, we transitioned all the businessprocesses of the acquired companies onto our existing platforms. We are continuing to integrate Acton and Tyson into our existing control procedures, but we do not expect changes to significantly affect our internal control over financial reporting.Other than the items discussed above, there has beenwere no changechanges in our internal control over financial reporting that hasoccurred during during our quarter ended June 30, 2018 that materially affected or isare reasonably likely to materially affect, our internal control over financial reporting.PART II – OTHER INFORMATIONITEM 1. Legal Proceedings We are involved in various lawsuits, claims and legal proceedings that arise in the ordinary course of business. These matters involve, among other things, disputes with vendors or customers, personnel and employment matters, and personal injury. We assess these matters on a case-by-case basis as they arise and establish reserves as required. As of June 30, 2018, there was no material pending legal proceedings in which we or any of our subsidiaries are a party or to which any of our property is subject.ITEM 1A. Risk Factors.Risks related to the ModSpace AcquisitionThe ModSpace Acquisition may not be completed within the expected timeframe, if at all, and the failure to complete the acquisition may negatively affect the price of our common stock and could adversely affect our financial results.The ModSpace 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 acquisition is not completed, or there are significant delays in completing it, 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 acquisition could also result in a negative reaction from the financial markets, particularly if the current market prices reflect market assumptions that the acquisition will be completed, which could cause the value of our actual resultscommon stock to differ materiallydecline. If the ModSpace Acquisition does not close due to the occurrence of certain regulatory events, we may be required to pay to ModSpace a $35.0 million termination fee.We may not realize the anticipated cost synergies from those in this report are anythe ModSpace Acquisition.The anticipated benefits of the risks disclosedModSpace Acquisition, including anticipated annual 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 ModSpace successfully. See "We may fail to realize the anticipated benefits of the ModSpace Acquisition or those benefits may take longer to realize than expected."Even if we integrate ModSpace 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 ModSpace Acquisition may be offset by costs incurred to, or delays in, integrating the businesses.We may fail to realize the anticipated benefits of the ModSpace Acquisition or those benefits may take longer to realize than expected.Our ability to realize the anticipated benefits of the ModSpace Acquisition (including realizing revenue growth opportunities, annual cost savings and certain tax benefits) will depend on our ability to integrate ModSpace's business with our business, which is a complex, costly and time-consuming process. We will be required to devote significant management attention and resources to integrate the business practices and operations of Williams Scotsman and ModSpace. The integration process may disrupt our business and, if implemented ineffectively, could restrict the realization of the forecast benefits. The failure to meet the challenges involved in the integration process and to realize the anticipated benefits of the ModSpace Acquisition could cause an interruption of, or a loss of momentum in, our Annual Report on Form 10-K foroperations and could adversely affect our business, financial condition and results of operations.The integration may also result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customers and other business relationships. Additional integration challenges include:diversion of management's attention to integration matters;difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the year ended December 31, 2016, which was filedacquisition; difficulties in the integration of operations and systems;difficulties in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures; difficulties in the assimilation of employees; duplicate and competing products; difficulties in managing the expanded operations of a significantly larger and more complex company; challenges in keeping existing customers and obtaining new customers, including customers that may not consent to the assignment of their contracts or agree to enter into a new contract with us; challenges in attracting and retaining key personnel; the SEC.impact of potential liabilities we may be inheriting from ModSpace; and coordinating a geographically dispersed organization.Many of these factors will be outside of our control. Any one of them could result in increased costs and decreases in the amount of expected revenues and diversion of management's time and energy (which, in turn, could adversely affect our business, financial condition and results of operations), and they could subject us to litigation. In addition, even if ModSpace is integrated successfully, the anticipated benefits of the acquisition may not be realized, including the sales or growth opportunities that are anticipated. These benefits may not be achieved within the anticipated time frame, if at all. Moreover, additional unanticipated costs may be incurred in the integration process. All of these factors could cause reductions in our earnings per share, decrease or delay the expected accretive effect of the ModSpace Acquisition and negatively impact the price of our common stock. As a result, it cannot be assured that the ModSpace Acquisition will result in the realization of the anticipated benefits, in whole or in part.The ModSpace Acquisition could be subject to review by antitrust authorities in the United States.We believe the ModSpace Acquisition is exempt from notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in the United States. However, we cannot provide assurances that the acquisition will not be subject to antitrust review in the United States. To the extent the acquisition is subject to such antitrust review, we can provide no assurances that (i) the review will not delay or render us unable to complete the acquisition or (ii) we would not be subject to asset divestitures or other remedial measures.The pendency of the ModSpace Acquisition could adversely affect our business, financial results and operations, and the market price of shares of our Class A common stock.The announcement and pendency of the ModSpace Acquisition could cause disruptions and create uncertainty surrounding our business and affect our relationships with our customers and employees. We have also diverted, and will continue to divert, significant management resources to complete the acquisition, which could have a significantnegative impact on our ability to manage existing operations or pursue alternative strategic transactions, which could adversely affect our business, financial condition and results of operations. Until we complete the ModSpace Acquisition, holders of our Class A shares will be exposed to the risks faced by our existing business without any of the potential benefits from the acquisition. As a result of investor perceptions about the terms or benefits of the ModSpace Acquisition, the price of our Class A shares may decline.If the ModSpace Acquisition is completed, ModSpace may underperform relative to our expectations.Following the acquisition, we may not be able to maintain the growth rate, levels of revenue, earnings or operating efficiency that Williams Scotsman and ModSpace have achieved or might achieve separately. The business and financial performance of ModSpace are subject to certain risks and uncertainties. Our failure to do so could have a material adverse effect on our financial condition and results of operations oroperations.Our credit ratings may be impacted by the additional indebtedness we expect to incur in connection with the ModSpace Acquisition and any negative impact on our credit ratings may impact the cost and availability of future borrowings and, accordingly, our cost of capital.Our credit ratings at any time will reflect each rating organization's then opinion of our financial condition. Additional risk factors not presently knownstrength, operating performance and ability to meet our debt obligations. We anticipate that the additional indebtedness we expect to incur in connection with the ModSpace Acquisition may result in a negative change to our credit ratings, including a potential downgrading. Any reduction in our credit ratings may limit our ability to borrow at interest rates consistent with the interest rates that have been available to us prior to the ModSpace Acquisition and the financing thereof. If our credit ratings are further downgraded or put on watch for a potential downgrade, we may not be able to sell additional debt securities or borrow money in the amounts, at the times or interest rates or upon the more favorable terms and conditions that might be available if our current credit ratings were maintained.We expect to incur significant costs and significant indebtedness in connection with the ModSpace Acquisition and the financing thereof, and the integration of ModSpace into our business, including legal, accounting, financial advisory and other costs.We expect to incur significant costs in connection with integrating the operations, products and personnel of ModSpace into our business, and the debt and equity transactions to finance the ModSpace Acquisition. These costs may include costs for, among other things, (i) employee retention, redeployment, relocation or severance; (ii) integration, including of people, technology, operations, marketing, and systems and processes; and (iii) maintenance and management of customers and other assets.We also expect to incur significant non-recurring costs associated with integrating and combining the operations of ModSpace and its subsidiaries, which cannot be estimated accurately at this time. While we currently deem immaterialexpect to incur a significant amount of transaction fees and other one-time costs related to the consummation of the debt and equity transactions undertaken to finance the ModSpace Acquisition. Any expected elimination of duplicative costs, as well as the expected realization of other efficiencies related to the integration of our operations with those of ModSpace, that may also impairoffset incremental transaction and transaction-related costs over time, may not be achieved in the near term, or at all.The ModSpace Acquisition will significantly increase our goodwill and other intangible assets.We have a significant amount, and following the ModSpace Acquisition will have an additional amount, of goodwill and other intangible assets on our consolidated financial statements that are subject to impairment based upon future adverse changes in our business or prospects. The impairment of any goodwill and other intangible assets may have a negative impact on our consolidated results of operations.18Our ability to use ModSpace's net operating loss carryforwards and other tax attributes may be limited.As of June 30, 2018, we had US net operating loss ("NOL") carryforwards of approximately $269.9 million for US federal income tax and state tax purposes available to offset future taxable income, prior to consideration of annual limitations that may be imposed under Section 382 ("Section 382") of the dateInternal Revenue Code of 1986, as amended (the "Code"). The US NOL carryforwards begin to expire in 2028 if not utilized. In addition, we had foreign NOLs of $9.9 million as a result of our operations in Mexico. The Mexico NOL carryforwards begin to expire in 2020 if not utilized.As of September 30, 2017, ModSpace had US NOL carryforwards of approximately $655.0 million, gross, for US federal income tax and state tax purposes available to offset future taxable income, prior to consideration of annual limitations that may be imposed under Section 382. ModSpace's US NOL carryforwards begin to expire in 2022 if not utilized. As of September 30, 2017, ModSpace also recorded a net of tax amount of $104.9 million of a valuation allowance on its US federal and state NOL carryforwards which does not take into account the impacts of Tax Cuts and Jobs Act of 2017, specifically the impacts of the reduced federal rate of 21%.We may be unable to fully use ModSpace's NOL carryforwards, if at all. Under Section 382 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 pre-change US NOLs and other applicable pre-change tax attributes, such as research and development tax credits, to offset its post-change income may be limited. We have not completed a Section 382 analysis and therefore cannot forecast or otherwise determine our ability to derive any benefit from our various federal or state tax attribute carryforwards at this Quarterly Report on Form 10-Q,time. As a result, if we earn net taxable income, our ability to use our pre-change US NOL carryforwards to offset US federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. In addition, at the state level, there may be periods during which the use of US NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.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.Risks Related to Our StructureOur principal stockholder controls a majority of our common stock, and it may take actions or have been no material changesinterests that may be adverse to or conflict with those of our other stockholders.As of August 1, 2018, Sapphire Holding S.à r.l. ("Sapphire"), an entity controlled by TDR Capital, beneficially owned approximately 50.1% of our Class A common stock and 100% of our Class B common stock. Pursuant to earnout and escrow agreements entered into at the time of our Business Combination, Sapphire may receive additional Class A shares upon their release from escrow.Sapphire's ownership of our common stock may adversely affect the trading price for our Class A shares to the risk factors disclosedextent investors perceive disadvantages in owning shares of a company with a majority stockholder, or in the event Sapphire takes any action with its shares that could result in an adverse impact on the price of our Annual Report on Form 10-K forClass A common stock, including any pledge or other use of its share of our stock in connection with a loan. In the year ended December 31, 2016 which was filedcase of any pledge of its shares of our common stock in connection with a loan, in the SEC. However,event of a default, lenders could foreclose upon any or all of the pledged shares. The sale of a significant amount of shares of our common stock at any given time or the perception that such sales could occur, including sales of any pledged shares that are foreclosed upon, could adversely affect the prevailing market price of our Class A shares. Moreover, the occurrence of a foreclosure, and a subsequent sale of all, or substantially all, of the pledged shares could result in a change of control under our financing arrangements (including the indentures governing our notes and credit agreement), and future agreements that may we enter into, even when such a change may disclose changesnot be in the best interest of our stockholders. Such a sale of the pledged shares of our common stock may also result in another shareholder beneficially owning a significant amount of our common stock and being able to such factorsexert a significant degree of influence or disclose additional factorsactual control over our management and affairs. Such shareholder's interests may be different from or conflict with those of our other shareholders.In addition, TDR Capital is in the business of making investments in companies and may, from time to time, acquire interests in businesses that directly or indirectly compete with our future filingsbusiness, as well as businesses that are significant existing or potential customers. TDR Capital may acquire or seek to acquire assets that we seek to acquire and, as a result, those acquisition opportunities may not be available to us or may be more expensive for us to pursue, and as a result, the interests of TDR Capital may not coincide and may even conflict with the SEC.Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.Use of ProceedsProceeds of $500,000,000 from the Public Offering and simultaneous sale of the Private Placement Warrants, including deferred underwriting compensation of $19,500,000, are held in the Trust Account at June 30, 2017. We paid $8,000,000 in underwriting discounts and incurred offering costs of approximately $795,000 related to the Public Offering. In addition, the Underwriters agreed to defer $19,500,000 in underwriting discounts, which amount will be payable when and if a Business Combination is consummated. There has been no material change in the planned use of proceeds from the Public Offering as described in our Prospectus dated September 10, 2015 which was filed with the SEC.ITEM 2. Unregistered Sales of Equity Securities None.ITEM 3. Defaults Upon Senior Securities None.ITEM 4. Mine Safety Disclosures Not applicable.None.The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.ITEM 5. Other Information None.ITEM 6. Exhibits Exhibit Number No. Exhibit Description * Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuantpursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002* Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuantpursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002** Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuantpursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002** Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuantpursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002Underwriting Agreement, dated July 25, 2018, by and among WillScot Corporation, Barclays Capital Inc., Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several underwriters named in Schedule I thereto (incorporated by reference to Exhibit 1.1 to the Company’s Form 8-K filed July 30, 2018) * First Amendment to the ABL Credit Agreement, dated as of July 9, 2018, by and among Williams Scotsman International, Inc. (“WSII”), certain subsidiaries of WSII, Williams Scotsman Holdings Corp. (“Holdings”), the lenders party thereto, and Bank of America, N.A., as administrative agent and collateral agent * Second Amendment to the ABL Agreement, dated as of July 24, 2018, by and among WSII, certain subsidiaries of WSII, Holdings., the lenders party thereto, and Bank of America, N.A., as administrative and collateral agent * Supplemental Indenture dated August 3, 2018, to the Indenture, dated November 29, 2017, by and among WSII, the Guarantors party thereto, and Deutsche Bank Trust Company Americas, as Trustee and Collateral Agent Indenture dated August 3, by and among Mason Finance Sub, Inc., the Guarantors party thereto, and Deutsche Bank Trust Company Americas, as Trustee (incorporated by reference to Exhibit 1.1 to the Company’s Form 8-K filed August 7, 2018) Indenture dated August 6, by and among Mason Finance Sub, Inc., the Guarantors party thereto, and Deutsche Bank Trust Company Americas, as Trustee (incorporated by reference to Exhibit 1.2 to the Company’s Form 8-K filed August 7, 2018) 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 19*Filed herewithSIGNATURES**Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange ActSignaturePursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DOUBLE EAGLE ACQUISITION CORP.WillScot Corporation Date: By: /s/ TIMOTHY D. BOSWELLDated: August 9, 20178, 2018Timothy D. Boswell /s/ Jeff SaganskyName: Jeff SaganskyTitle: President and Chief Executive Officer (principal executive officer)/s/ James A. GrafName: James A. GrafTitle: Vice President, Chief Financial Officer and Treasurer (principal financial officer)20(Principal Financial Officer) 55