UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JuneSeptember 30, 2018
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________


williamsscotsmanlogocolora01.jpg
Commission File Number: 001-37552 
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WILLSCOT CORPORATION
(formerly known as Double Eagle Acquisition Corp.)
(Exact name of registrant as specified in its charter)
Delaware001-3755282-3430194
(State or other jurisdiction of incorporation)(Commission File Number)(I.R.S. Employer Identification No.)
901 S. Bond Street, #600
Baltimore, Maryland 21231
(Address, including zip code, of principal executive offices)
(410) 931-6000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S‑TS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑acceleratednon-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.
Large accelerated filer ☐
Accelerated filer ☒
Non‑acceleratedNon-accelerated filer ☐
Smaller reporting company ☐
(Do not check if a smaller reporting company)
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Act). Yes ☐ No ☒
Shares of Class A common stock, par value $0.0001 per share, outstanding: 92,644,774outstanding: 100,303,156 shares at AugustNovember 1, 2018.
Shares of Class B common stock, par value $0.0001 per share, outstanding: 8,024,419 sharesshares at AugustNovember 1, 2018.






1




WILLSCOT CORPORATION
Quarterly Report on Form 10-Q
Table of Contents


PART I Financial Information
Item 1
Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of JuneSeptember 30, 2018 and December 31, 2017
Condensed Consolidated Statements of Operations for the Three and SixNine Months Ended JuneSeptember 30, 2018 and 2017
CondensedCondensed Consolidated Statements of Comprehensive Loss for the Three and SixNine Months Ended JuneSeptember 30, 2018 and 2017
Condensed Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2018 
CondensedCondensed Consolidated Statements of Cash Flows for the SixNine Months Ended JuneSeptember 30, 2018 and 2017
Notes to the Condensed Consolidated Financial Statements
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3
Quantitative and Qualitative Disclosures About Market Risk
Item 4
Controls and Procedures
PART II Other Information
Item 1
Legal Proceedings
Item 1A
Risk Factors
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3
Defaults Upon Senior Securities
Item 4
Mine Safety Disclosures
Item 5
Other Information
Item 6
Exhibits
SIGNATURE


2


PART I
ITEM 1.Financial Statements
ITEM 1. Financial Statements
WillScot Corporation
Condensed Consolidated Balance Sheets
 (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, respectively104,013
 94,820
 Raw materials and consumables9,829
 10,082
 Prepaid expenses and other current assets14,137
 13,696
 Total current assets136,160
 127,783
 Rental equipment, net1,075,040
 1,040,146
 Property, plant and equipment, net82,361
 83,666
 Goodwill33,570
 28,609
 Intangible assets, net125,864
 126,259
 Other non-current assets4,038
 4,279
 Total long-term assets1,320,873
 1,282,959
 Total assets$1,457,033
 $1,410,742
 Liabilities   
 Accounts payable58,370
 57,051
 Accrued liabilities45,606
 48,912
 Accrued interest1,802
 2,704
 Deferred revenue and customer deposits50,382
 45,182
 Current portion of long-term debt1,883
 1,881
 Total current liabilities158,043
 155,730
 Long-term debt684,641
 624,865
 Deferred tax liabilities111,924
 120,865
 Deferred revenue and customer deposits6,696
 5,377
 Other non-current liabilities19,109
 19,355
 Long-term liabilities822,370
 770,462
 Total liabilities980,413
 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, 20178
 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, 20171
 1
 Additional paid-in-capital2,123,101
 2,121,926
 Accumulated other comprehensive loss(54,417) (49,497)
 Accumulated deficit(1,640,230) (1,636,819)
 Total shareholders' equity428,463
 435,619
 Non-controlling interest48,157
 48,931
 Total equity476,620
 484,550
 Total liabilities and equity$1,457,033
 $1,410,742
(in thousands, except share data)September 30, 2018 (unaudited) December 31, 2017 
Assets 
Cash and cash equivalents $9,771 $9,185 
Trade receivables, net of allowances for doubtful accounts at September 30, 2018 and December 31, 2017 of $7,913 and $4,845, respectively 199,461 94,820 
Inventories 21,348 10,082 
Prepaid expenses and other current assets 20,075 13,696 
Total current assets 250,655 127,783 
Rental equipment, net 1,949,403 1,040,146 
Property, plant and equipment, net 193,154 83,666 
Goodwill 267,764 28,609 
Intangible assets, net 132,519 126,259 
Other non-current assets 4,200 4,279 
Total long-term assets 2,547,040 1,282,959 
Total assets $2,797,695 $1,410,742 
Liabilities and equity 
Accounts payable $78,638 $57,051 
Accrued liabilities 79,721 48,912 
Accrued interest 15,613 2,704 
Deferred revenue and customer deposits 67,727 45,182 
Current portion of long-term debt 1,915 1,881 
Total current liabilities 243,614 155,730 
Long-term debt 1,651,579 624,865 
Deferred tax liabilities 146,086 120,865 
Deferred revenue and customer deposits 6,673 5,377 
Other non-current liabilities 19,034 19,355 
Long-term liabilities 1,823,372 770,462 
Total liabilities 2,066,986 926,192 
Commitments and contingencies (see Note 13) 
Class A common stock: $0.0001 par, 400,000,000 shares authorized at September 30, 2018 and December 31, 2017; 100,303,003 and 84,644,744 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively 10 8 
Class B common stock: $0.0001 par, 100,000,000 shares authorized at September 30, 2018 and December 31, 2017; 8,024,419 shares issued and outstanding at both September 30, 2018 and December 31, 2017 1 1 
Additional paid-in-capital 2,390,188 2,121,926 
Accumulated other comprehensive loss (52,119)(49,497)
Accumulated deficit (1,673,749)(1,636,819)
Total shareholders' equity 664,331 435,619 
Non-controlling interest 66,378 48,931 
Total equity 730,709 484,550 
Total liabilities and equity $2,797,695 $1,410,742 
See the accompanying notes which are an integral part of these condensed consolidated financial statements.

3


WillScot Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
 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 installation31,413

22,949
 57,663
 41,953
Sales:       
New units5,236

9,396
 12,664
 14,882
Rental units2,435

4,778
 6,246
 10,622
Total revenues140,333

110,077
 275,084
 209,398
Costs:       
Costs of leasing and services:       
Modular leasing27,129

21,340
 54,291
 40,442
Modular delivery and installation30,127

22,339
 55,648
 40,472
Costs of sales:       
New units3,704

6,766
 8,691
 10,486
Rental units1,263

2,575
 3,578
 6,283
Depreciation of rental equipment23,470

17,474
 47,315
 34,194
Gross profit54,640

39,583
 105,561
 77,521
Expenses:       
Selling, general and administrative47,734

31,652
 92,948
 64,413
Other depreciation and amortization1,570

1,890
 4,006
 3,831
Restructuring costs449

684
 1,077
 968
Currency losses (gains), net572

(6,497) 1,596
 (8,499)
Other (income) expense, net(1,574)
461
 (4,419) 591
Operating income5,889

11,393
 10,353
 16,217
Interest expense12,155

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 operations379

(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 tax143

—
 (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:       
Basic78,432,274

14,545,833
 77,814,456
 14,545,833
Diluted82,180,086
 14,545,833
 77,814,456
 14,545,833
        
Cash dividends declared per share$—

$—
 $—
 $—
See the accompanying notes which are an integral part of these condensed consolidated financial statements.

WillScot Corporation
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
 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)
Three Months Ended September 30, Nine Months Ended September 30, 
(in thousands, except share data)2018201720182017
Revenues: 
Leasing and services revenue: 
Modular leasing $141,660 $75,320 $340,171 $217,261 
Modular delivery and installation 46,777 24,627 104,440 66,580 
Sales: 
New units 20,920 9,609 33,584 24,491 
Rental units 9,567 6,606 15,813 17,228 
Total revenues 218,924 116,162 494,008 325,560 
Costs: 
Costs of leasing and services: 
Modular leasing 39,215 21,252 93,506 61,694 
Modular delivery and installation 42,390 23,932 98,038 64,404 
Costs of sales: 
New units 15,089 6,916 23,780 17,402 
Rental units 5,750 3,784 9,328 10,067 
Depreciation of rental equipment 35,534 19,009 82,849 53,203 
Gross profit 80,946 41,269 186,507 118,790 
Expenses: 
Selling, general and administrative 71,897 36,097 164,845 100,510 
Other depreciation and amortization 3,720 1,905 7,726 5,736 
Restructuring costs 6,137 1,156 7,214 2,124 
Currency (gains) losses, net (425)(4,270)1,171 (12,769)
Other (income) expense, net (594)1,001 (5,013)1,592 
Operating income 211 5,380 10,564 21,597 
Interest expense 43,447 30,106 67,321 84,674 
Interest income — (3,659)— (9,752)
Loss from continuing operations before income tax (43,236)(21,067)(56,757)(53,325)
Income tax benefit (6,507)(7,632)(13,572)(17,770)
Loss from continuing operations (36,729)(13,435)(43,185)(35,555)
Income from discontinued operations, net of tax — 5,078 — 11,123 
Net loss (36,729)(8,357)(43,185)(24,432)
Net loss attributable to non-controlling interest, net of tax (3,210)— (3,715)— 
Total loss attributable to WillScot $(33,519)$(8,357)$(39,470)$(24,432)
Net loss per share attributable to WillScot – basic and diluted 
Continuing operations $(0.37)$(0.92)$(0.48)$(2.44)
Discontinued operations $— $0.35 $— $0.76 
Net loss per share $(0.37)$(0.57)$(0.48)$(1.68)
Weighted average shares: 
Basic and diluted 90,726,920 14,545,833 82,165,909 14,545,833 
Cash dividends declared per share $— $— $— $— 
See the accompanying notes which are an integral part of these condensed consolidated financial statements.

4


WillScot Corporation
Condensed Consolidated Statements of Cash FlowsComprehensive Loss
(Unaudited)
 Six Months Ended June 30,
(in thousands)2018 2017
Operating Activities:   
Net loss$(6,456) $(16,075)
Adjustments for non-cash items:   
Depreciation and amortization51,941
 53,075
Provision for doubtful accounts2,282
 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 costs2,522
 7,326
Share based compensation expense1,175
 —
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)
Inventories442
 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 deposits4,667
 694
Net cash provided by operating activities18,800
 24,124
Investing Activities:   
Acquisition of a business(24,006) —
Proceeds from sale of rental equipment12,033
 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 equipment681
 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 borrowings61,792
 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 activities57,963
 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 period9,185
 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
Three Months Ended September 30, Nine Months Ended September 30, 
(in thousands)2018201720182017
Net loss $(36,729)$(8,357)$(43,185)$(24,432)
Other comprehensive income (loss): 
Foreign currency translation adjustment, net of income tax expense (benefit) of $80, $698, $(161) and $1,316 for the three and nine months ended September 30, 2018 and 2017, respectively 2,298 3,131 

(82)8,914 
Comprehensive loss (34,431)(5,226)(43,267)(15,518)
Comprehensive loss attributable to non-controlling interest (2,967)— 

(3,741)— 
Total comprehensive loss attributable to WillScot $(31,464)$(5,226)$(39,526)$(15,518)
See the accompanying notes which are an integral part of these condensed consolidated financial statements.


5


WillScot Corporation
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
Class A Common Stock Class B Common Stock 
Shares Amount Shares Amount Additional Paid in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Shareholders' Equity Non Controlling Interest Total Equity 
Balance at December 31, 201784,645 $8 8,024 $1 $2,121,926 $(49,497)$(1,636,819)$435,619 $48,931 $484,550 
Net loss— — — — — — (39,470)(39,470)(3,715)(43,185)
Other comprehensive loss— — — — — (82)— (82)(26)(108)
Adoption of ASU 2018-02— — — — — (2,540)2,540 — — — 
Stock-based compensation— — — — 2,225 — — 2,225 — 2,225 
Issuance of common stock and contribution of proceeds to WSII9,200 1 — — 131,544 — — 131,545 7,574 139,119 
Acquisition of ModSpace and the effect of the related financing transactions 6,458 1 — — 134,493 — — 134,494 13,614 148,108 
Balance at September 30, 2018100,303 $10 8,024 $1 $2,390,188 $(52,119)$(1,673,749)$664,331 $66,378 $730,709 


6


WillScot Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30, 
(in thousands)20182017
Operating Activities: 
Net loss$(43,185)$(24,432)
Adjustments for non-cash items: 
Depreciation and amortization 91,587 80,897 
Provision for doubtful accounts 5,436 3,381 
Gain on sale of rental equipment and other property, plant and equipment (11,194)(7,700)
Interest receivable capitalized into notes due from affiliates — (3,915)
Amortization of debt discounts and debt issuance costs 4,801 11,213 
Share based compensation expense 2,225 — 
Deferred income tax benefit (14,340)(7,683)
Unrealized currency losses (gains) 773 (12,682)
Changes in operating assets and liabilities, net of effect of businesses acquired: 
Trade receivables (26,229)(19,228)
Inventories (553)748 
Prepaid and other assets 173 (8,809)
Accrued interest receivable — (6,994)
Accrued interest payable 12,902 15,079 
Accounts payable and other accrued liabilities (11,969)28,243 
Deferred revenue and customer deposits 5,153 (1,217)
Net cash provided by operating activities 15,580 46,901 
Investing Activities: 
Acquisition of a business - ModSpace(1,060,140)— 
Acquisition of a business - Tyson (24,006)— 
Proceeds from sale of rental equipment 21,593 18,750 
Purchase of rental equipment and refurbishments (111,505)(82,276)
Lending on notes due from affiliates — (69,939)
Repayments on notes due from affiliates — 2,151 
Proceeds from the sale of property, plant and equipment 681 17 
Purchase of property, plant and equipment (3,091)(2,938)
Net cash used in investing activities (1,176,468)(134,235)
Financing Activities: 
Receipts from issuance of common stock 147,200 — 
Receipts from borrowings 1,184,601 348,609 
Receipts on borrowings from notes due to affiliates — 75,000 
Payment of financing costs (34,770)(10,648)
Repayment of borrowings (135,537)(319,678)
Principal payments on capital lease obligations (88)(1,606)
Net cash provided by financing activities 1,161,406 91,677 
Effect of exchange rate changes on cash and cash equivalents 68 311 
Net change in cash and cash equivalents 586 4,654 
Cash and cash equivalents at the beginning of the period 9,185 6,162 
Cash and cash equivalents at the end of the period $9,771 $10,816 
Supplemental Cash Flow Information: 
Interest paid $28,721 $60,212 
Income taxes paid, net of refunds received $2,339 $(400)
Capital expenditures accrued or payable $17,478 $11,773 
See the accompanying notes which are an integral part of these condensed consolidated financial statements.
7


WillScot Corporation
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1 - Summary of Significant Accounting Policies
Organization and Nature of Operations
WillScot Corporation (“WSC” or alongWillScot” and, together with its subsidiaries, the “Company”), is a leading provider of modular space and portable storage solutions in the United States (“US”), Canada and Mexico. The Company leases, sells, delivers and installs mobile offices, modular buildings and storage products through an integrated network of branch locations that spans North America.
WillScot, whose securitiesClass A common shares are listed on Thethe Nasdaq Capital Market (Nasdaq: WSC), serves as the holding company for the Williams Scotsman family of companies. All of the Company’s assets and operations are owned through Williams Scotsman Holdings Corp. (“WS Holdings”). The CompanyWillScot operates and owns 90%91.0% of WS Holdings, and Sapphire Holding S.à r.l. (“Sapphire”), an affiliate of TDR Capital LLP (“TDR Capital”), owns the remaining 10%9.0%.
The CompanyWillScot was originally incorporated on June 26, 2015as a Cayman Islands exempt company under the name, Double Eagle Acquisition Corporation (“("Double Eagle”Eagle") as, on June 26, 2015. Prior to November 29, 2017, Double Eagle was a Cayman Islands exempt,Nasdaq-listed special purpose acquisition company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.combination. On November 29, 2017, the Company, through its subsidiary, WS Holdings,Double Eagle indirectly 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, which is majority owned by an investment fund managed by TDR Capital. As part of the transaction (the “Business Combination”), the Company redomesticatedDouble Eagle domesticated to Delaware and changed its name to WillScot Corporation. For furtherAdditional information onabout the organization ofBusiness Combination and the Company, refer toCompany's operations prior thereto is contained in the consolidated financial statements and notes included in ourWillScot's Annual Report on Form 10-K for the year ended December 31, 2017.
WSII engages in the leasing and sale of mobile offices, modular buildings and storage products and their delivery and installation throughout North America.
Basis of Presentation
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. The accompanying unaudited condensed consolidated financial statements contain all adjustments, which are of a normal and recurring nature, necessary to present fairly the financial position and the results of operations for the interim periods presented.
The results of consolidated operations for the three and sixnine months ended JuneSeptember 30, 2018 are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and notes included in ourWillScot's Annual Report on Form 10-K for the year ended December 31, 2017.
Principles of Consolidation
The condensed consolidated financial statements comprise the financial statements of the CompanyWillScot and its subsidiaries that it controls due to ownership of a majority voting interest. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as 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”) 805, Business Combinations. Although WSCWillScot was the indirect acquirer of WSII for legal purposes, WSII was considered the acquirer for accounting and financial reporting purposes.
As a result of WSII being the accounting acquirer, the financial reports filed with the US Securities and Exchange Commission (the “SEC”) by the Company subsequent to the Business Combination are prepared “as if” WSII is the predecessor and legal successor to the Company. The historical operations of WSII are deemed to be those of the Company. Thus, the financial statements included in this report reflect (i) the historical operating results of WSII prior to the Business Combination; (ii) the combined results of the CompanyWillScot and WSII following the Business Combination on November 29, 2017; (iii) the assets and liabilities of WSII at their historical cost; and (iv) WSC’sWillScot's equity structure for all periods presented. The recapitalization of the number of shares of common stock attributable to the purchase of WSII in connection with the Business Combination is reflected retroactively to the earliest period presented and will beis 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 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 “Remote Accommodations Business”), was transferred to othermembers of the Algeco Group members on November 28, 2017 in a transaction under common control and was not included as part of the Business Combination. The operating results of the Remote Accommodations Business, net of tax, for the three and six nine
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months ended JuneSeptember 30, 2017 have been reported as discontinued operations in the condensed consolidated financial statements.

Recently Issued and Adopted Accounting Standards
The Company qualifies as an emerging growth company (“EGC”) as defined under the Jumpstart Our Business Startups Act (the “JOBS Act”). Using exemptions provided under the JOBS Act provided to EGCs, the Company has elected to defer compliance with new or revised financial accounting standards until a company that is not an issuer (as defined under section 2(a) of the Sarbanes-Oxley Act of 2002) 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.
Subject to limited exception, WillScot will cease to be EGC on the earlier (i) the last day of the fiscal year in which WillScot’s annual gross revenues exceed $1.07 billion, (ii) the date on which the Company issues more than $1.0 billion in nonconvertible debt securities during the preceding three-year period, and (iii) the date on which WillScot is deemed to be a large accelerated filer under the SEC’s rules. Based on the recent ModSpace (defined below) acquisition described in Note 2, WillScot anticipates that its 2019 annual gross revenues will exceed $1.07 billion. WillScot also anticipates that, due in part to the amount of Class A common stock issued by WillScot to fund the ModSpace acquisition, WillScot will be deemed to be a large accelerated filer at December 31, 2019 based on the value of its Class A common stock held by non-affiliates at June 30, 2019. WillScot currently foresees remaining an EGC until December 31, 2019, but would lose EGC eligibility immediately if it were to issue additional debt and exceed the debt issuance criteria described above.
Recently Issued Accounting Standards
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenuefrom Contracts with Customers (Topic 606), which prescribes a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers. The new guidance will supersede virtually all existing revenue guidance under GAAP and is effective for annual reporting periods beginning after December 15, 2018. Early adoption for non-public entities is permitted starting with annual reporting periods beginning after December 15, 2016. The core principle contemplated by this new standard was that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. In April and May 2016, the FASB also issued clarifying updates to the new standard specifically to address certain core principles including the identification of performance obligations, licensing guidance, the assessment of the collectability criterion, the presentation of taxes collected from customers, non-cash considerations, contract modifications and completed contracts at transition.
The Company is currently finalizing its evaluation of the impact that the updated guidance will have on the Company’s financial statements and related disclosures. As part of the evaluation process, the Company is holdingcontinues to hold regular meetings with key stakeholders from across the organization to discuss the impact of the standard on its existing contracts. The Company plans to adopt Topic 606 using the modified retrospective transition approach.
The Company is utilizing a bottom-up approach to analyze the impact of the standard on its portfolio of contracts by reviewing the Company’s current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to the Company’s existing revenue contracts.

As part of its implementation project, the Company has prepared analysisanalyses with respect to revenue stream scoping, performed contract reviews of a representative sample of customer arrangements, developed an preliminarya gap analysis and evaluated the revised disclosure requirements. The two primary lines of business impacted by the adoption are new and used sales transactions and modular leasing services transactions. The Company intends to determine the preliminary impacthas substantially completed its procedures based on the Company’s financial statementsnew and used sales and modular leasing service transactions that occurred through the second quarter of 2018 and is not aware of any significant changes based on the work performed to date. The Company has incorporated the recently acquired Modular Space Holdings, Inc. (“ModSpace”) into the project during the third quarter of 2018. As described in Note 2, ModSpace was acquired in August 2018 and the Company has commenced workshops with key stakeholders, detailed contract reviews and a financial statement disclosure gap evaluation specific to revenue streams acquired through the acquisition.
After finalizing its procedures during the fourth quarter of 2018, the Company will conclude on the level of impact that the adoption of ASC 606 will have on the consolidated financial statements, including financial statement disclosures. Specific to disclosures, the Company expects to provide additional detail regarding the disaggregation of revenue and contract balances. The Company is required to adopt the standard as of January 1, 2019 and plans to first present financial statements that reflect the adoption in the first quarter of 2019.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This guidance revises existing practice related to accounting for leases under ASC Topic 840, Leases (“ASC 840”) for both lessees and lessors. The new guidance requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes,
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the new standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). While the new standard maintains similar accounting for lessors as under ASC 840, the new standard reflects updates to, among other things, align with certain changes to the lessee model. 
The new standard will beis effective for non-public entities for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities. However, based on WillScot's expectation that it will cease to be an EGC as of December 31, 2019, the Company plans to adopt the new standard in the fourth quarter of 2019. Adoption of the new standard could be required earlier in 2019 if WillScot loses EGC eligibility earlier than anticipated based on other criteria.
The guidance includes a number of practical expedients that the Company is evaluating and may elect to apply. The impact of adopting Topic 842 will depend on the Company’s lease portfolio asadoption of the adoption date.new standard will require the Company to recognize right-of-use assets and lease liabilities that will be significant to our consolidated balance sheet. The Company will continue to evaluate the impacts of this guidance on its financial position, results of operations, and cash flows. The Company is planningplans to update its systems, processes and internal controls to meet the new reporting and disclosure requirements.
Recently Adopted Accounting Standards
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date.
During December 2017, shortly after the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) which provides guidance on accounting for the Tax Act’s impact. SAB 118 provides a measurement period, which in no case should extend beyond one year from the Tax Act enactment date, during which a company acting in good faith may complete the accounting for the impacts of the Tax Act under ASC Topic 740. Per SAB 118, companies must reflect the income tax effects of the Tax Act in the reporting period in which the accounting under ASC Topic 740 is complete. To the extent the accounting for certain income tax effects of the Tax Act is incomplete, companies can determine a reasonable estimate for those effects and record a provisional estimate in the financial statements in the first reporting period in which a reasonable estimate can be determined. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 based on the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted. If a company is unable to provide a reasonable estimate of the impacts of the Tax Act in a reporting period, a provisional amount must be recorded in the first reporting period in which a reasonable estimate can be determined. As a result of the Tax Act, in 2017, the Company

remeasured its net deferred tax liabilities and recognized a provisional net benefit of $28.1 million. In addition, based on information currently available, the Company recorded a provisional income tax expense of $2.4 million in 2017 related to the deemed repatriation of foreign earnings. The Company recorded a minor adjustment in 2018 to the provisional amounts recorded in its financial statements for the year ended December 31, 2017 (see Note 8)9) and continues to evaluate the provisions of the Tax Act including guidance from the Department of Treasury and Internal Revenue Service. Additionally, the Company expects to filefiled its US tax return for 2017 during the fourth quarter of 2018 and any changes to the estimates used to the final tax positions for temporary differences, earnings and profits will result in adjustments of the remeasurement amounts for the Tax Act recorded as of December 31, 2017.
The Company continues to evaluate the impact of the Global Low Taxed Intangible Income (“GILTI”) provision of the Tax Act. The Company is required to make an accounting policy election of either (1) treating GILTI as a current period expense when incurred or (2) factoring such amounts into the Company’s measurement of its deferred taxes. The Company has not completed its analysis and has not made a determination of its accounting policy for GILTI.

NOTE 2 - Acquisitions
Tyson Acquisition
On January 3, 2018, the Company acquired all of the issued and outstanding membership interests of Onsite Space LLC (d/b/a Tyson Onsite (“Tyson”)). Tyson provided modular space rental services in the Midwest, primarily in Indiana, Illinois and Missouri. The Company expects to realize synergies and cost savings related to this acquisition as a result of purchasing and procurement economies of scale and general and administrative expense savings, particularly with respect to the consolidation of corporate related functions and elimination of redundancies. The acquisition date fair value of the consideration transferred consisted of $24.0$24.0 million in cash consideration, net of cash acquired. The transaction was fully funded by borrowings under the ABL Facility (defined in Note 6)7).
During the three months ended JuneThrough September 30, 2018, the Company has recorded adjustments to the Tyson opening balance sheet, which increased rental fleet by $0.6 millionequipment and accrued liabilities by $0.2$0.9 million and $0.1 million, respectively and decreased property, plant and equipment by $0.1 million. This increase resulted in an equal increase in The offset of these adjustments was recorded to goodwill as detailed in Note 5.6. Increases or decreases in the estimated fair values of the net assets acquired may impact the Company’s statements of operations in future periods. The Company expects that the preliminary values assigned to the rental fleet, property, plant and equipment, intangible assets, deferred tax assets and other accrued tax liabilities will be finalized during the thirdfourth quarter of 2018.
Tyson results were immaterial to the condensed consolidated statements of operations for the three and sixnine months ended JuneSeptember 30, 2018 and as a result, the Company is not presenting pro-forma information.
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Acton Acquisition
On December 20, 2017, WSIIthe Company acquired 100% of the issued and outstanding ownership interests of Acton Mobile Holdings LLC (“Acton”) for a cash purchase price of $237.1 million, subject to certain adjustments. Acton owns all of the issued and outstanding membership interests of New Acton Mobile Industries, which providedprovides modular space and portable storage rental services across the US. WSIIThe acquisition was funded the acquisition withby cash on hand and borrowings under the ABL Facility (defined in Note 6). The Company incurred $4.8 million and $7.4 million in integration fees associated the Acton acquisition within selling, general, and administrative expenses (“SG&A”) for the three and six months ended JuneFacility.
Through September 30, 2018, respectively.
Through June 2018, the Company recorded adjustments to the Acton opening balance sheet, which increased accrued liabilities, deferred revenue, deferred tax assets and receivables by $2.0$0.8 million, due$0.6 million, $0.8 million, and $2.4 million, respectively, and decreased rental equipment by $2.1 million. The offset of these adjustments was recorded to further evaluation of unindemnified liabilities. This increase resulted in an equal increase in goodwill as detailed in Note 5.6. As a result of the timing of the transaction, the purchase price allocation for thethe rental equipment, intangible assets, property, plant and equipment, deferred tax assets, receivables, and other accrued liabilities acquired and assumed are based on preliminary valuations and are subject to change as the Company obtains additional information during the acquisition measurement period. Increases or decreases in the estimated fair values of the net assets acquired may impact the Company’s statements of operations in future periods. The Company expects that the preliminary values assigned to the rental equipment, intangible assets, property, plant and equipment, deferred tax assets, non-indemnified liabilities, and other accrued tax liabilities will be finalized during the one-year measurementfourth quarter of 2018.
Pro-forma results are presented in aggregate with the ModSpace acquisition below.
ModSpace Acquisition
On August 15, 2018 (the "Closing Date"), the Company acquired ModSpace, a privately-owned provider of office trailers, portable storage units and modular buildings. The acquisition was consummated by merging a special purpose subsidiary of the Company with and into ModSpace, with ModSpace surviving the merger as a subsidiary of WSII. The Company acquired ModSpace to create long-term shareholder value driven by, among other things, economies of scale, cost synergies and revenue opportunities unique to a combination of WillScot's and ModSpace's operations, and other benefits associated with being an industry-leading specialty rental services provider.
The aggregate purchase price for ModSpace was $1.2 billion and consisted of (i) $1.1 billion in cash, (ii) 6,458,229 shares of WillScot's Class A common stock (the "Stock Consideration") with a fair market value of $95.8 million and (iii) warrants to purchase an aggregate of 10,000,000 shares of WillScot’s Class A common stock at an exercise price of $15.50 per share (the "ModSpace Warrants") with a fair market value of $52.3 million, and (iv) a working capital adjustment of $5.7 million. Of the cash consideration, $3.0 million was deposited into an escrow account to fund any post-closing adjustments from differences between the estimated working capital and the actual working capital of ModSpace at closing. The final working capital of ModSpace at closing is still being evaluated by the Company and the sellers' representative in accordance with the terms of the purchase agreement. The acquisition was funded by the net proceeds of WillScot's issuance of 9,200,000 shares of Class A common stock (see Note 8), the net proceeds of WSII’s issuance of $300.0 million in senior secured notes and $200.0 million in senior unsecured notes (see Note 7), and borrowings under the ABL Facility (see Note 7).
The purchase price has been determined to be as follows:
Purchase Price 
(in thousands, except for per share amounts) Price 
Cash $1,054,416 
Stock consideration (a) 95,796 
ModSpace warrants (b) 52,310 
Working capital adjustment (c) 5,724 
Total purchase price $1,208,246 
(a) The fair market value of the 6,458,229 shares issued as consideration was determined using the closing price on August 15, 2018, of $15.78 per share less a discount of 6.0%, based on a lock up agreement executed in connection with the acquisition of ModSpace.
(b) Warrants were valued assuming a fair market value of $5.23 as estimated using a Black-Scholes valuation model as of August 15, 2018. 
(c) The estimated working capital adjustment as of the Closing Date was $5.7 million. The working capital amount is subject to post-close adjustments.

The acquisition date fair value of the stock consideration was estimated using a Black-Scholes valuation model. The estimated fair value of the shares are a level 3 fair value measurement. The fair value of each share is estimated using the Black-Scholes option pricing model with the following assumptions: expected dividend yield, expected stock price volatility, weighted-average risk-free interest rate and average expected term of the lock up period on the shares. The volatility assumption used in the Black-Scholes option-pricing model is derived from the historical daily change in the market price of the Company's common stock, as well as the historical daily changes in the market price of its peer group, based on weighting, as determined by the Company. The risk-free interest rate used in the Black-Scholes model is based on the implied US
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Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a cash dividend on common shares.
Expected Volatility 28.6 %
Risk-free rate of interest 2.2 %
Dividend Yield — %
Expected life (years) 0.5 

The acquisition date fair value of the warrants was estimated using a Black-Scholes valuation model. The estimated fair value of the warrants is a level 3 fair value measurement. The fair value of each warrant is estimated using the Black-Scholes option-pricing model with the following assumptions: expected dividend yield, expected stock price volatility, weighted-average risk-free interest rate and weighted-average expected term of the warrants. The volatility assumption used in the Black-Scholes option-pricing model is derived from the historical daily change in the market price of the Company's common stock, as well as the historical daily changes in the market price of its peer group, based on weighting, as determined by the Company. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a cash dividend on common shares.
Expected Volatility 35.0 %
Risk-free rate of interest 2.7 %
Dividend Yield — %
Expected life (years) 4.3 

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date.date, August 15, 2018. The Company’s estimated fair value of ModSpace’s assets acquired and liabilities assumed on the acquisition date are determined based on preliminary valuations and analyses. Accordingly, the Company has made provisional estimates for the assets acquired and liabilities assumed. The valuation of intangible assets acquired is based on certain valuation assumptions yet to be finalized, including cash flow projections, discount rates, contributory asset charges and other valuation model inputs. The valuation of tangible long-lived assets acquired is dependent upon, among other things, refinement of the inputs in the valuation model and an analysis of the condition and estimated remaining useful lives of the assets acquired. In addition to finalizing the valuation of acquired assets, the Company is analyzing complex provisions of tax law regarding treatment of tax attributes upon ModSpace's March 2017 emergence from bankruptcy, implications of the Tax Act as well as scheduling the reversal of deferred tax balances thereof. The Company expects its analysis to be substantially complete by the close of the fourth quarter. Due to the provisional nature of the aforementioned items, the Company has not changed its judgment about the realizability of its pre-existing deferred tax assets as a result of the business combination. The provisional amounts reflected are subject to further adjustment, which may affect the fair values ascribed to goodwill, acquired intangible and tangible assets and the related deferred tax balances. Substantial completion of the requisite analyses may result in changes to acquired deferred tax liabilities which thereby may also affect the Company’s judgment about the realizability of its pre-existing deferred tax assets for which any reductions in the valuation allowance will be reflected separate from the business combination as discrete adjustments to income tax expense (benefit) in the period in which it is determined.

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Purchase Price
(in thousands) Value 
Trade receivables, net (a) $81,055 
Inventory 10,483 
Prepaid expenses and other current assets 6,063 
Rental equipment 866,801 
Property, plant and equipment 111,681 
Intangible assets 
Favorable leases (b) 3,850 
Trade name (b) 3,000 
Total identifiable assets acquired $1,082,933 
Accounts payable $30,432 
Accrued liabilities 20,877 
Deferred tax liabilities, net 42,531 
Deferred revenue and customer deposits 16,646 
Total liabilities assumed $110,486 
Total goodwill (c) $235,799 

(a) The fair value of accounts receivable was $81.1 million and the gross contractual amount was $89.7 million. The Company estimated that $8.6 million is uncollectable.
(b) The trade name has an estimated useful life of three years. The favorable lease asset has an estimated useful life of six years. 
(c) The goodwill is reflective of ModSpace’s going concern value and operational synergies that the Company expects to achieve that would not be available to other market participants. The goodwill is not deductible for income tax purposes. The goodwill is allocated to the Modular – US and Modular – Other North America segments in the amounts of $203.3 million and $32.5 million, respectively.

ModSpace has generated $65.5 million of revenue since the acquisition date, which is included in the condensed consolidated financial statements of operations for the three and nine months ended September 30, 2018.
The pro-forma information below has been prepared using the purchase method of accounting, giving effect to the Acton acquisitionand ModSpace acquisitions as if itthey had been completed on January 1, 2017 (the “pro-forma acquisition date”).2017. The pro-forma information is not necessarily indicative of the Company’s results of operations had the acquisitionacquisitions been completed on the above date,dates, nor is it necessarily indicative of the Company’s future results. The pro-forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisition,acquisitions, and also does not reflect additional revenue opportunities following the acquisition.acquisitions.


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The tabletables below presentspresent unaudited pro-forma consolidated statements of operations information as if ModSpace and Acton had been included in the Company’s consolidated results for the sixthree and nine months ended June 30, 2017:
(in thousands)Six Months Ended
June 30, 2017
WSC historic revenues (a)$209,398
Acton historic revenues47,388
Pro-forma revenues$256,786
  
WSC historic pretax loss (a)$(32,258)
Acton historic pretax loss(275)
Pro-forma pretax loss(32,533)
Pro-forma adjustments to combined pretax loss: 
Impact of fair value mark-ups/useful life changes on depreciation (b)(1,272)
Intangible asset amortization (c)(354)
Interest expense (d)(5,431)
Elimination of historic Acton interest (e)2,514
Pro-forma pretax loss(37,076)
Income tax benefit(11,652)
Pro-forma loss from continuing operations(25,424)
Income from discontinued operations6,045
Pro-forma net loss$(19,379)
(a) Excludes historic revenues and pre-tax income from discontinued operations
(b) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups of equipment acquired in
the Acton acquisition. The useful lives assigned to such equipment did not change significantly from the useful lives used by Acton.
(c) Amortization of the trade name acquired in Acton acquisition.
(d) In connection with the Acton acquisition, the Company drew $237.1 million on the ABL Facility. As of JuneSeptember 30, 2018 the weighted-and 2017:
average interest rate of ABL borrowings was 4.58%.
(in thousands) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 
WillScot revenues (a) $218,924 $494,008 
ModSpace revenues 81,692 312,609 
Pro-forma revenues $300,616 $806,617 
WillScot pretax loss (a) $(43,236)$(56,757)
ModSpace pretax loss (11,460)(7,456)
Pretax loss before pro-forma adjustments (54,696)(64,213)
Pro-forma adjustments to combined pretax loss: 
Impact of fair value mark-ups/useful life changes on depreciation (b) (132)(395)
Intangible asset amortization (c) (250)(750)
Interest expense (d) (16,495)(49,467)
Elimination of ModSpace interest (e) 4,346 20,279 
Pro-forma pretax loss (f) (67,227)(94,546)
Income tax benefit (10,118)(22,608)
Pro-forma net loss  $(57,109)$(71,938)
(e) Interest on Acton
(a)Excludes historic revenues and pre-tax income from discontinued operations. Post-acquisition ModSpace revenues and pre-tax income results are reflected in WillScot's historic revenue amounts.
(b)Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups of equipment acquired in the ModSpace acquisition. The useful lives assigned to such equipment is preliminary and did not change significantly from the useful lives used by ModSpace.
(c)Amortization of the trade name acquired in ModSpace acquisition.
(d)In connection with the ModSpace acquisition, the Company drew an incremental $420.0 million on the ABL Facility and issued $300.0 million of secured notes and $200.0 million of unsecured notes. As of September 30, 2018, the weighted-average interest rate for the aforementioned borrowings was 6.54%. Interest expense includes amortization of related deferred financing fees on debt incurred in conjunction with ModSpace acquisition.
(e)Interest on ModSpace historic debt was eliminated.
(f)Pro-forma pretax loss includes $6.1 million and $7.2 million, $7.5 million and $14.9 million, $10.7 million and $14.8 million, of restructuring expense, integration costs, and transactions costs incurred by WillScot for the three and nine months ended September 30, 2018, respectively. Additionally, pro-forma pretax loss for the three and nine month ended September also includes $20.5 million of interest expense associated with bridge financing fees incurred in connection with the acquisition of ModSpace. 
(g)The pro-forma tax rate applied to the ModSpace pretax loss is the same as the William Scotsman effective rate for the period.
ModSpace Acquisition
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On June 21, 2018,

(in thousands)Three Months Ended September 30, 2017 Nine Months Ended
September 30, 2017 
WillScot revenues (a) $116,162 $325,560 
Acton and ModSpace revenues (b) 151,434 407,331 
Pro-forma revenues $267,596 $732,891 
WillScot pretax loss (a) $(21,067)$(53,325)
Acton and ModSpace pretax income (loss) (b) 6,843 (108,295)
Pro-forma pretax loss (14,224)(161,620)
Pro-forma adjustments to combined pretax loss: 
Impact of fair value mark-ups/useful life changes on depreciation (c) (746)(1,959)
Intangible asset amortization (d) (427)(1,281)
Interest expense (e) (19,255)(57,745)
Elimination of Acton and ModSpace interest (f) 8,936 36,702 
Pro-forma pretax loss (25,716)(185,903)
Income tax benefit (g) (9,316)(61,950)
Pro-forma loss from continuing operations (h) (16,400)(123,953)
Income from discontinued operations 5,078 11,123 
Pro-forma net loss $(11,322)$(112,830)

(a)Excludes historic revenues and pre-tax income from discontinued operations. Includes historic corporate and other SG&A expenses related to Algeco Group costs, which were $7.6 million and $15.7 million for the three and nine months ended September 30, 2017, respectively. Post-acquisition ModSpace revenues and pre-tax income results are reflected in WillScot's historic revenue amounts.
(b)Historic Acton revenues were $24.5 million and $71.9 million and historic ModSpace revenues were $126.9 million and $335.4 million, respectively, for the three and nine months ended September 30, 2017. Historic Acton pretax income was $0.9 million and $0.6 million and historic ModSpace pretax income was $5.9 million and pretax loss was $108.9 million, respectively, for the three and nine months ended September 30, 2017.
(c)Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups of equipment acquired in the Acton and ModSpace acquisitions. The useful lives assigned to such equipment did not change significantly from the useful lives used by Acton and ModSpace.
(d)Amortization of the trade names acquired in Acton and ModSpace acquisitions.
(e)In connection with the Acton acquisition, the Company drew $237.1 million on the ABL Facility. As of September 30, 2018, the weighted-average interest rate of ABL borrowings was 4.65%. In connection with the ModSpace acquisition, the Company drew an incremental $420.0 million on the ABL Facility and issued $300.0 million of secured notes and $200.0 million of unsecured notes. The weighted-average interest rate of all ModSpace acquisition borrowings was 6.54%. Interest expense includes amortization of related deferred financing fees on debt incurred in conjunction with ModSpace acquisition.
(f)Interest on Acton and ModSpace historic debt was eliminated. Historic Acton interest was $1.4 million and $3.9 million and historic ModSpace interest was $7.5 million and $32.8 million, respectively, for the three and nine months ended, September 30, 2017.
(g)The pro-forma tax rate applied to the Acton and ModSpace pretax income (loss) are the same as the WillScot effective rate for the period.
(h)Pro-forma pretax loss includes $5.2 million and $6.1 million of Business Combination transactions costs incurred by WillScot for the three and nine months ended September 30, 2017, respectively
Transaction and its newly-formed acquisition subsidiary, Mason Merger Sub, Inc. (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Modular Space Holdings Space, Inc. (“ModSpace”), a 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.
The ModSpace sellers who receive Class A common shares and warrants will receive customary registration rights, and will be subject to a six-month lock-up arrangement, under a registration rights agreement to be entered into on the closing date. The warrants issuable to the sellers are not redeemable and will expire on November 29, 2022.
The closing of the merger is subject to certain closing conditions, including a Canadian regulatory approval; the continuing accuracy of each party’s representations and warranties; the performance of certain obligations; and, the satisfaction of other customary conditions. The Merger Agreement may be terminated by the Company or ModSpace under certain circumstances. 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.Integration Costs
The Company incurred $4.1$7.5 million and $14.9 million in integration costs associated with the Tyson, Acton, and ModSpace acquisitions within selling, general and administrative expenses ("SG&A") for the three and nine months ended September 30, 2018, respectively. The Company incurred $10.7 million and $14.8 million in transaction costs related to the ModSpace Acquisitionacquisition for the three and sixnine months ended JuneSeptember 30, 2018.2018, respectively.


NOTE 3 - Discontinued Operations
WSII’s Remote Accommodations Business was transferred to another entity included in the Algeco Group prior to the Business Combination. WSII does not expect to have continuing involvement in the Remote Accommodations Business going forward. Historically, the Remote Accommodations Business leased rental equipment from WSII. After the Business
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Combination, several lease agreements for rental equipment still exist between the Company and Target Logistics. The lease revenue associated with these agreements is disclosed in Note 15.16. The Company also had rental unit sales to Target Logistics during the third quarter which is disclosed in Note 16.
As a result of the transactions discussed above, the Remote Accommodations segment has been reported as discontinued operations in the condensed consolidated statements of operations for the three and sixnine months ended JuneSeptember 30, 2017.2017 and has no impact on the financial statements in 2018. 
Results from Discontinued Operations
Income from discontinued operations, net of tax, for the three and sixnine months ended JuneSeptember 30, 2017 was as follows:
(in thousands)Three Months Ended
June 30, 2017		 Six Months Ended
June 30, 2017		(in thousands)Three Months Ended
September 30, 2017 		Nine Months Ended
September 30, 2017 
Remote accommodations revenue$31,487
 $58,565
Remote accommodations revenue$36,767 $95,332 
Rental unit sales Rental unit sales 1,522 1,522 
Remote accommodations costs of leasing and services13,163
 24,738
Remote accommodations costs of leasing and services 16,621 41,359 
Rental unit cost of sales Rental unit cost of sales 885 885 
Depreciation of rental equipment6,119
 12,542
Depreciation of rental equipment5,653 18,195 
Gross profit12,205
 21,285
Gross profit15,130 36,415 
Selling, general and administrative expenses3,499
 6,531
Selling, general and administrative expenses3,307 9,838 
Other depreciation and amortization1,257
 2,508
Other depreciation and amortization1,255 3,763 
Restructuring costs380
 770
Restructuring costs803 1,573 
Other income, net(37) (40)Other income, net(56)(96)
Operating profit7,106
 11,516
Operating profit9,821 21,337 
Interest expense739
 1,420
Interest expense654 2,074 
Income from discontinued operations, before income tax6,367
 10,096
Income from discontinued operations, before income tax9,167 19,263 
Income tax expense2,527
 4,051
Income tax expense4,089 8,140 
Income from discontinued operations, net of tax$3,840
 $6,045
Income from discontinued operations, net of tax$5,078 $11,123 
Revenues and costs related to the Remote Accommodations Business for the three and sixnine months ended JuneSeptember 30, 2017 were as follows:
(in thousands)Three Months Ended
June 30, 2017		 Six Months Ended
June 30, 2017		(in thousands)Three Months Ended
September 30, 2017 		Nine Months Ended
September 30, 2017 
Remote accommodations revenue:   Remote accommodations revenue:
Lease revenue$14,613
 $28,577
Lease revenue$14,979 $43,556 
Service revenue16,874
 29,988
Service revenue21,788 51,776 
Total remote accommodations revenue$31,487
 $58,565
Total remote accommodations revenue$36,767 $95,332 
   
Remote accommodation costs:   Remote accommodation costs:
Cost of leases$2,023
 $4,200
Cost of leases$2,329 $6,529 
Cost of services11,140
 20,538
Cost of services14,292 34,830 
Total remote accommodations costs$13,163
 $24,738
Total remote accommodations costs of leasing and servicesTotal remote accommodations costs of leasing and services$16,621 $41,359 
Cash flows from the Company’s discontinued operations are included in the condensed consolidated statements of cash flows. The significant cash flow items from discontinued operations for the sixnine months ended JuneSeptember 30, 2017 were as follows:
(in thousands)September 30, 2017 
Depreciation and amortization$21,958 
Capital expenditures$6,855 


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(in thousands)June 30, 2017
Depreciation and amortization$15,050
Capital expenditures$4,213
NOTE 4 - Inventories

Inventories at the respective balance sheet dates consisted of the following:
(in thousands) September 30, 2018December 31, 2017
Raw materials and consumables $19,107 $10,082 
Work in process 2,241 — 
Total inventories $21,348 $10,082 

NOTE 45 - Rental Equipment, net
Rental equipment, net, at the respective balance sheet dates consisted of the following:
(in thousands)September 30, 2018 December 31, 2017 
Modular units and portable storage $2,326,909 $1,385,901 
Value added products 88,642 59,566 
Total rental equipment 2,415,551 1,445,467 
Less: accumulated depreciation (466,148)(405,321)
Rental equipment, net $1,949,403 $1,040,146 
(in thousands)June 30, 2018 December 31, 2017
Modular units and portable storage$1,445,769
 $1,385,901
Value added products and services66,834
 59,566
Total rental equipment1,512,603
 1,445,467
Less: accumulated depreciation(437,563) (405,321)
Rental equipment, net$1,075,040
 $1,040,146
During the three and sixnine months ended JuneSeptember 30, 2018, the Company received $1.8received $0.0 million and $9.3 million, respectively, in insurance proceeds related to assets damaged during Hurricane Harvey. The insurance proceeds exceeded the book value of damaged assets, and the Company recordedrecorded gains of $1.8$0.0 million and $4.8 million whichwhich are reflected in other (income) expense, net, on the condensed consolidated statements of operations for the three and sixnine months ended JuneSeptember 30, 2018, respectively.

NOTE 56 - Goodwill and Intangible Assets
Changes in the carrying amount of goodwill were as follows:
(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 businesses 206,667 32,538 239,205 
Changes to preliminary purchase price allocations (396)— (396)
Effects of movements in foreign exchange rates — 346 346 
Balance at September 30, 2018 $234,880 $32,884 $267,764 
(in thousands)Modular – US Modular – Other
North America		 Total
Balance at January 1, 2017$—
 $56,811
 $56,811
Acquisition of a business28,609
 —
 28,609
Effects of movements in foreign exchange rates—
 3,932
 3,932
Impairment losses—
 (60,743) (60,743)
Balance at December 31, 201728,609
 —
 28,609
Acquisition of a business3,406
 —
 3,406
Changes to preliminary purchase price allocations1,555
 —
 1,555
Balance at June 30, 2018$33,570
 $—
 $33,570
As discussed in further detaildescribed in Note 2, the CompanyCompany acquired ActonModSpace in December 2017.August 2018. A preliminary valuation of the acquired net assets of ActonModSpace resulted in the recognition of $28.6$203.3 million and $32.5 million of goodwill toin the Modular - US segment as defined in Note 13, for the year ended December 31, 2017. During the three and six months ended June 30, 2018, respectively,Modular - Other North America segment, which the Company made a $1.0 million and $2.0 million adjustmentexpects will be non-deductible for income tax purposes. The Company expects to finalize the preliminary valuation of the acquired net assets of Acton includingModSpace within the related goodwill, due to further evaluationone-year measurement period from the date of unindemnified liabilities.acquisition. 
Additionally, as discussed in further detailAs described in Note 2, the Company acquired Tyson in January 2018. A preliminary valuation of the acquired net assets of Tyson resulted in the recognition of $3.4 million of goodwill in the Modular - US segment, which the Company expects will be deductible for tax purposes. During the three and sixnine months ended JuneSeptember 30, 2018, the Company made a $0.4$0.3 million and $0.7 million adjustment to the preliminary valuation of the acquired net assets of Tyson, including the related goodwill, due to further evaluation of rental equipment and property, plant and equipment, and unindemnifiednon-indemnified liabilities.

As discussed in further detail in Note 2, the Company acquired Acton in December 2017. A preliminary valuation of the acquired net assets of Acton resulted in the recognition of $28.6 million of goodwill to the Modular - US segment, as defined in Note 14, for the year ended December 31, 2017. During the three months ended September 30, 2018, the Company made a $1.7 million net adjustment that increased the acquired net assets of Acton, primarily due to further evaluation of insurance related receivables. During the nine months ended September 30, 2018, the Company made net adjustments of
NOTE 6 - Debt
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$0.3 million that decreased the acquired net assets of Acton, due to further evaluation of rental equipment and non-indemnified liabilities partially offset by changes in insurance-related receivables and deferred tax assets.
The gross carrying amount, accumulated amortization and net book value ("NBV") of debt outstanding atthe intangible assets at the respective balance sheet dates consisted of the following:
(in thousands) September 30, 2018December 31, 2017
Gross Carrying Amount Accumulated Amortization NBV Gross Carrying Amount Accumulated Amortization NBV 
Intangible assets subject to amortization: 
Favorable lease rights $4,401 $(60)$4,341 $551 $— $551 
Acton and ModSpace trade names 3,708 (530)3,178 708 — 708 
Total intangible assets subject to amortization $8,109 $(590)$7,519 $1,259 $— $1,259 
Indefinite-lived intangible assets: 
Trade names $125,000 $— $125,000 $125,000 $— $125,000 
Total intangible assets other than goodwill $133,109 $(590)$132,519 $126,259 $— $126,259 
As described in Note 2, the Company acquired ModSpace in August 2018, and preliminarily allocated $3.0 million and $3.9 million to definite-lived intangible assets, related to the ModSpace trade name and favorable lease rights, to the Modular - US segment. The trade name has an estimated useful life of three years and the favorable lease asset has an estimated useful life of six years. The Company expects the intangibles to be non-deductible for income tax purposes. The Company expects to finalize the valuation of the acquired net assets of ModSpace, including the related intangible assets, within the one-year measurement period from the date of acquisition.

NOTE 7 - Debt
(in thousands, except rates)Interest rate Year of maturity June 30, 2018 December 31, 2017
Senior secured notes7.875% 2022 $291,456
 $290,687
US ABL FacilityVaries 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
The carrying value of debt outstanding at the respective balance sheet dates consisted of the following:
(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.
(in thousands, except rates)Interest rateYear of maturitySeptember 30, 2018 December 31, 2017 
2022 Secured Notes 7.875%  2022 $291,853 $290,687 
2023 Secured Notes 6.875%  2023 293,637 — 
Unsecured Notes 10.000%  2023 198,882 — 
US ABL Facility Varies 2022 830,573 297,323 
Canadian ABL Facility (a) Varies 2022 — — 
Capital lease and other financing obligations 38,549 38,736 
Total debt 1,653,494 626,746 
Less: current portion of long-term debt (1,915)(1,881)
Total long-term debt $1,651,579 $624,865 
(a) As of September 30, 2018, the Company had $1.5 million of outstanding principal borrowings on the Canadian ABL Facility and $3.3 million of related debt issuance costs. $1.5 million of the related debt issuance costs are recorded as a direct offset against the principal of the Canadian ABL Facility and the remaining $1.8 million, in excess of the principal, has been included in other non-current assets on the condensed consolidated balance sheet. 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.


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ABL Facilities
Former Algeco Group Revolver
Prior to the Business Combination, WSII depended on the Algeco Group for financing, which centrally managed all treasury and cash management. In October 2012, the Algeco Group entered into a multi-currency asset-based revolving credit facility (the “Algeco Group Revolver”), which had a maximum aggregate availability of the equivalent of $1.355 billion. The maximum borrowing availability to WSII in US dollars and Canadian dollars (“CAD”) was $760.0 million and $175.0 million, respectively.
Interest expense of $8.3$8.7 million and $14.5$23.2 million million related to the Algeco Group Revolver was included in interest expense for the three and sixnine months ended JuneSeptember 30, 2017.
ABL Facility
On November 29, 2017, WS Holdings, WSII and certain of its subsidiaries entered into an ABL credit agreement (the “ABL Facility”) that providesprovided a senior secured revolving credit facility in the initial aggregate principal amount of up to $600.0 million. The ABL Facility matures on May 29, 2022.
In July and August 2018, the Company entered into three amendments (the "ABL Amendments") to the ABL Facility that, among other things, (i) permitted the ModSpace acquisition and the Company’s financing thereof, (ii) increased the ABL Facility limit to $1.425 billion in the aggregate, with an accordion feature allowing up to $1.8 billion of capacity, and (iii) increased certain thresholds, basket sizes and default and notice triggers to account for the Company’s increased scale following the ModSpace acquisition.
After giving effect to the ABL Amendments, the ABL Facility, which matures on May 29, 2022, consists of (i) a $530.0 million$1.285 billion asset-backed revolving credit facility (the “US ABL Facility”) for WSII and certain of its domestic subsidiaries (the “US Borrowers”), (ii) a $70.0$140.0 million asset-based revolving credit facility (the “Canadian ABL Facility”) for Williams Scotsmancertain Canadian subsidiaries of Canada, Inc.WSII (the “Canadian Borrower,Borrowers,” and together with the US Borrowers, the “Borrowers”), and (iii) an accordion feature that permits the Borrowers to increase the lenders’ commitments in an aggregate amount not to exceed $300.0$375.0 million, subject to the satisfaction of customary conditions, plus any voluntary prepayments that are accompanied by permanent commitment reductions under the ABL Facility.
Borrowings under the ABL Facility, at the Borrower’s option, bear interest at an adjusted LIBOR or base rate, in each case plus an applicable margin. TheAt inception of the ABL Facility until March 31, 2018, the applicable margin iswas fixed at 2.50% for LIBOR borrowings and 1.50% for base rate borrowings up until March 31, 2018.borrowings. Commencing on March 31, 2018, the applicable margins are subject to one step-down of 0.25% or one step-up of 0.25%, based on excess availability levels with respect to the ABL Facility. 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 JuneSeptember 30, 2018, the weighted average interest rate for borrowings under the ABL Facility was 4.58%4.65%.
Borrowing availability under the US ABL Facility and the Canadian ABL Facility is equal to the lesser of (i) with respect to US Borrowers, $530.0 million$1.285 billion and the US Borrowing Base (defined below) (the “US Line Cap”), and (ii) with respect to the Canadian Borrower, $70.0$140.0 million and the Canadian Borrowing Base (defined below) (the “Canadian Line Cap,” together with the US Line Cap, the “Line Cap”).
The US Borrowing Base is, at any time of determination, an amount (net of reserves) equal to the sum of:
◦ 85% of the net book value of the US Borrowers’ eligible accounts receivable, plus
◦ the lesser of (i) 95% of the net book value of the US Borrowers’ eligible rental equipment and (ii) 85% of the net orderly liquidation value of the US Borrowers’ eligible rental equipment, minus
◦ customary reserves.
The Canadian Borrowing Base is, at any time of determination, an amount (net of reserves) equal to the sum of:
◦ 85% of the net book value of the Canadian Borrowers’ eligible accounts receivable, plus
◦ the lesser of (i) 95% of the net book value of the Canadian Borrowers’ eligible rental equipment and (ii) 85% of the net orderly liquidation value of the Canadian Borrowers’ eligible rental equipment, plus
◦ portions of the US Borrowing Base that have been allocated to the Canadian Borrowing Base, minus
◦ customary reserves.
At JuneSeptember 30, 2018, the Line Cap was $600.0 million$1.425 billion and the Borrowers had $219.6$552.9 million of available borrowing capacity under the ABL Facility, including $153.1$414.5 million under the US ABL Facility and $66.5$138.4 million under the Canadian ABL Facility. At December 31, 2017, prior to the ABL Amendments, the Line Cap was $600.0 million and the Borrowers had $281.1 million of available borrowing capacity under the ABL Facility, including $211.1 million under the US ABL Facility and $70.0 million under the Canadian ABL Facility.

Borrowing capacity under the US ABL Facility is made available for up to $60.0$75.0 million of standby letters of credit and up to $50.0$75.0 million of swingline loans, and borrowing capacity under the Canadian ABL Facility is made available for up to $30.0$60.0 million of standby letters of credit, and $25.0$50.0 million of swingline loans. Letters of credit and bank guarantees carried
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fees of 2.625% at JuneSeptember 30, 2018 and December 31, 2017, respectively.2017. The Company had issued$13.0 million and $8.9 million of standby letters of credit under the ABL Facility at JuneSeptember 30, 2018 and December 31, 2017.
The ABL Facility requires the Borrowers to maintain a (i) minimum fixed chargeinterest coverage ratio of 1.00:2.00:1.00 and (ii) maximum total net leverage ratio of 5.50:1.00, in each case, at any time when the excess availability under the ABL Facility is less than the greater of (a) $50.0$135.0 million and (b) an amount equal to 10% of the Line Cap.
The ABL Facility also contains a number of customary negative covenants. Such covenants, among other things, may limit or restrict the ability of each of the Borrowers, their restricted subsidiaries, and where applicable, WS Holdings, to: incur additional indebtedness, issue disqualified stock and make guarantees; incur liens; engage in mergers or consolidations or fundamental changes; sell assets; pay dividends and repurchase capital stock; make investments, loans and advances, including acquisitions; amend organizational documents and master lease documents; enter into certain agreements that would restrict the ability to pay dividends or incur liens on assets; repay certain junior indebtedness; enter into sale and leaseback transactions; and change the conduct of its business.
The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that grant the Borrowers continued flexibility to operate and develop their businesses. The ABL Facility also contains customary representations and warranties, affirmative covenants and events of default. The Company is in compliance with these covenants and restrictions as of JuneSeptember 30, 2018.
The Company had $368.0$859.0 million and $310.0 million in outstanding principal under the ABL Facility at JuneSeptember 30, 2018 and December 31, 2017, respectively.
The ABL Amendments were treated as a debt modification to the ABL Facility under ASC 470-50, Debt, Modifications and Extinguishments. All ABL Facility lenders prior to the ABL Amendments are continuing lenders after giving effect to the ABL Amendments. The Company incurred an additional $19.0 million in debt issuance costs and discounts associated with the ABL Amendments that have been deferred and will be amortized through the remaining period until the maturity date of the ABL Facility.  Debt issuance costs and discounts of $11.2$28.5 million and $12.7 million are included in the carrying value of debtthe ABL Facility at JuneSeptember 30, 2018 and December 31, 2017, respectively.
In July 2018, the CompanyInterest expense of $7.6 million and certain of its subsidiaries entered into amendments$15.8 million related to the ABL Facility that will, among other things, (i) permit the ModSpace Acquisition (as definedwas included in Note 16) and the financing thereof, (ii) increase the ABL Facility limit to $1.35 billion in the aggregate, and (iii) increase certain thresholds, basket sizes and default and notice triggers set forth in the ABL Facility to accountinterest expense for the increased size of the Company’s business following the ModSpace Acquisition. The amendments will become effective upon the closing of the ModSpace Acquisition. See Note 16 for additional information on the amendments.three and nine months ended September 30, 2018.
2022 Senior Secured Notes
WSII has $300.0 million aggregate principal amount of 7.875% senior secured notes due December 15, 2022 (the “Notes”“2022 Secured Notes”) under an indenture dated November 29, 2017, which was entered into by and among WSII, the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee and as collateral agent. Interest is payable semi-annually on June 15 and December 15, beginning June 15, 2018. For the three and six months ended June 30, 2018, the Company incurred $5.9 million and $11.7 million, respectively, of interest expense related to the Notes.
Before December 15, 2019, WSII may redeem the 2022 Secured Notes at a redemption price equal to 100% of the principal amount, plus a customary make whole premium for the 2022 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date.
The customary make whole premium, with respect to any Notethe 2022 Secured Notes on any applicable redemption date, as calculated by the Company, is the greater of (i) 100% of the then outstanding principal amount of the Note;2022 Secured Notes; and (ii) the excess of (a) the present value at such redemption date of (i) the redemption price set on or after December 15, 2019 plus (ii) all required interest payments due on the Note2022 Secured Notes through December 15, 2019, excluding accrued but unpaid interest to the redemption date, in each case, computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the then outstanding principal amount of the Note.2022 Secured Notes.
Before December 15, 2019, WSII may redeem up to 40% of the aggregate principal amount of the 2022 Secured Notes at a price equal to 107.875% of the principal amount of the 2022 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date with the net proceeds of certain equity offerings. At any time prior to November 29, 2019, WSII may also redeem up to 10% of the aggregate principal amount of the 2022 Secured Notes at a redemption price equal to 103% of the principal amount of the Notes being redeemed during each twelve-month period commencing with the closing date, plus accrued and unpaid interest, if any, to but not including the redemption date. If WSII undergoes a change of control or sells certain of its assets, WSII may be required to offer to repurchase the 2022 Secured Notes.

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On or after December 15, 2019, WSII, at its option, may redeem the 2022 Secured Notes, in whole or in part, at the redemption prices expressed as percentages of principal amount set forth below, plus accrued and unpaid interest to, but not including, the applicable redemption date (subject to the holders' right of Note holders on the relevant record date to receive interest due on an interest payment date falling on or prior to the redemption date), if redeemed during the twelve month period beginning on December 15 of each of the years set forth below:

YearRedemption Price
2019103.938 %
2020101.969 %
2021 and thereafter100.000 %
The 2022 Secured Notes contain certain negative covenants, including limitations that may restrict WSII’s ability and the ability of certain of its subsidiaries, to directly or indirectly, create additional financial obligations. With certain specified exceptions, these negative covenants prohibit WSII and certain of its subsidiaries from: creating or incurring additional debt; paying dividends or making any other distributions with respect to its capital stock; making loans or advances to WSCWillScot or any restricted subsidiary of WSII; selling, leasing or transferring any of its property or assets to WSCWillScot or any restricted subsidiary of WSII; directly or indirectly creating, incurring or assuming any lien of any kind securing debt on the collateral; or entering into any sale and leaseback transaction. On August 15, 2018, in conjunction with the ModSpace acquisition and related debt issuances, WSII entered a supplemental indenture to, among other things, join ModSpace and its domestic subsidiaries as guarantors of the 2022 Secured Notes.
The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that grant the US Borrowers continued flexibility to operate and develop their businesses. The Company is in compliance with these covenants and restrictions as of September 30, 2018 and December 31, 2017.
Unamortized debt issuance costs pertaining to the 2022 Secured Notes was $8.1 million and $9.3 million as of September 30, 2018 and December 31, 2017, respectively.
2023 Senior Secured Notes
On August 6, 2018, a special purpose subsidiary of WSII completed a private offering of $300.0 million in aggregate principal amount of its 6.875% senior secured notes due August 15, 2023 (“2023 Secured Notes”). The issuer entered into an indenture dated August 6, 2018 with Deutsche Bank Trust Company Americas, as trustee (“2023 Secured Notes Indenture”), which governs the terms of the 2023 Secured Notes. In connection with the ModSpace acquisition, the issuer merged with and into WSII and WSII assumed the 2023 Secured Notes. Interest is payable semi-annually on February 15 and August 15 of each year, beginning February 15, 2019.
WSII may redeem the 2023 Secured Notes at any time before August 15, 2020 at a redemption price equal to 100% of the principal amount thereof, plus a customary make whole premium for the 2023 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date. Before August 15, 2020, WSII may redeem up to 40% of the aggregate principal amount of the 2023 Secured Notes at a price equal to 106.875% of the principal amount of the 2023 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date with the net proceeds of certain equity offerings. WSII may also redeem up to 10% of the aggregate principal amount of the 2023 Secured Notes at any time prior to the second anniversary of the closing date of this offering at a redemption price equal to 103% of the principal amount of the 2023 Secured Notes being redeemed during each twelve-month period commencing with the issue date, plus accrued and unpaid interest, if any, to but not including the redemption date. If WSII undergoes a change of control or sells certain of its assets, WSII may be required to offer to repurchase the 2023 Secured Notes.
On and after August 15, 2020, WSII may redeem the 2023 Secured Notes, in whole or in part, at the redemption prices expressed as percentages of principal amount set forth below plus accrued and unpaid interest to but not including the applicable redemption date (subject to the holders' right to receive interest due on an interest payment date falling on or prior to the redemption date), if redeemed during the 12 month period beginning on August 15 of each of the years set forth below.
Year Redemption Price 
2020103.938 %
2021101.969 %
2022 and thereafter 100.000 %
The 2023 Secured Notes are unconditionally guaranteed by each of WSII’s direct and indirect domestic subsidiaries and WSII’s parent, WS Holdings (collectively the “Note Guarantors”). WillScot is not a guarantor of the 2023 Secured Notes. The Note Guarantors and certain of the Company's non-US subsidiaries are guarantors or borrowers under the ABL Facility. These guarantees are secured by a second priority security interest in substantially all of the assets of WSII and the Note Guarantors (subject to customary exclusions) and are subordinated to the Company's obligations under the ABL Facility.
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The 2023 Secured Notes contain certain negative covenants, including limitations that may restrict WSII’s ability and the ability of certain of its subsidiaries, to directly or indirectly, create additional financial obligations. With certain specified exceptions, these negative covenants prohibit WSII and certain of its subsidiaries from: creating or incurring additional debt; paying dividends or making any other distributions with respect to its capital stock; making loans or advances to WillScot or any restricted subsidiary of WSII; selling, leasing or transferring any of its property or assets to WillScot or any restricted subsidiary of WSII; directly or indirectly creating, incurring or assuming any lien of any kind securing debt on the collateral; or entering into any sale and leaseback transaction.
The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that grant the US Borrowers continued flexibility to operate and develop their businesses. The Company is in compliance with these covenants and restrictions as of JuneSeptember 30, 2018 and December 31, 2017.2018.
UnamortizedThe Company incurred debt issuance costs pertainingand discounts of $6.5 million in connection with the 2023 Secured Notes. Debt issuance costs and discounts of $6.4 million are included in the carrying value of the debt at September 30, 2018.
2023 Senior Unsecured Notes
On August 3, 2018, a special purpose subsidiary of WSII completed a private offering of $200.0 million in aggregate principal amount of its senior unsecured notes due November 15, 2023 (the “Unsecured Notes”). The issuer entered into an indenture with Deutsche Bank Trust Company Americas, as trustee (the “Unsecured Notes Indenture”), which governs the terms and conditions of the Unsecured Notes. In connection with the ModSpace acquisition, the issuer merged with and into WSII and WSII assumed the Unsecured Notes.
The Unsecured Notes bear interest at a rate of 10% per annum if paid in cash (or if paid in kind, 11.5% per annum) for any interest period ending on or before February 15, 2021, and thereafter are payable solely in cash at an increased rate per annum of 12.5%. Interest is payable semi-annually on February 15 and August 15 of each year, beginning February 15, 2019.
The Unsecured Notes are not prepayable until February 15, 2019. From time to time during the period from February 15, 2019 through August 14, 2019, WSII may redeem the Unsecured Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Unsecured Notes, plus the Applicable Premium (as defined in the Unsecured Notes Indenture) as of, and accrued and unpaid interest to, but not including the redemption date (subject to the holders' right to receive interest due on an interest payment date falling on or prior to the redemption date); provided, that if the Unsecured Notes was $8.5are being redeemed in part, such redemption will not reduce the aggregate principal amount of the Unsecured Notes outstanding below $50.0 million (together with any PIK Interest in respect thereof). If WSII undergoes a change of control or sells certain of its assets, WSII may be required to offer to repurchase the Unsecured Notes.
At any time and $9.3from time to time on and after August 15, 2019, WSII, at its option, may redeem the Unsecured Notes, in whole or in part, at the redemption prices expressed as percentages of principal amount set forth below plus accrued and unpaid interest to but not including the applicable redemption date (subject to the right of Holders (as defined therein) on the relevant record date to receive interest due on an interest payment date falling on or prior to the redemption date), if redeemed during the periods referred to below, beginning on August 15, 2019; provided however, that if the Unsecured Notes are being redeemed in part, such redemption will not reduce the aggregate principal amount of the Unsecured Notes outstanding below $50.0 million (together with any PIK Interest in respect thereof).
Year Redemption Price 
August 15, 2019 to February 14, 2020102.000 %
February 15, 2020 to February 14, 2021104.000 %
February 15, 2021 and thereafter 106.000 %
The Unsecured Notes are unconditionally guaranteed by each Note Guarantor. These guarantees are senior, unsecured obligations of the Note Guarantors (except that the guarantee of the Unsecured Notes provided by WillScot Equipment II, LLC, which holds certain of WSII’s uncertificated assets in the United States, are subordinated to its obligations under the ABL Facility).
The Unsecured Notes contain certain negative covenants, including limitations that may restrict WSII’s ability and the ability of certain of its subsidiaries, to directly or indirectly, create additional financial obligations. With certain specified exceptions, these negative covenants prohibit WSII and certain of its subsidiaries from: creating or incurring additional debt; paying dividends or making any other distributions with respect to its capital stock; making loans or advances to WillScot or any restricted subsidiary of WSII; selling, leasing or transferring any of its property or assets to WillScot or any restricted subsidiary of WSII; directly or indirectly creating, incurring or assuming any lien of any kind securing debt on the collateral; or entering into any sale and leaseback transaction.
The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that
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grant the US Borrowers continued flexibility to operate and develop their businesses. The Company is in compliance with these covenants and restrictions as of JuneSeptember 30, 20182018.
The Company incurred debt issuance costs and December 31, 2017, respectively.discounts of $1.1 million in connection with the issuance of the Unsecured Notes. Debt issuance costs and discounts of $1.1 million are included in the carrying value of the Unsecured Notes at September 30, 2018. 
Bridge Financing Fees
In connection with the ModSpace acquisition, the Company incurred bridge financing fees of $20.5 million, included within interest expense in the condensed consolidated statement of operations, for the three and nine months ended September 30, 2018. 
Capital Lease and Other Financing Obligations
The Company’s capital lease and financing obligations primarily consisted of $38.1$38.4 million and $38.5 million under sale-leaseback transactions and $0.2$0.1 million and $0.2 million of capital leases at JuneSeptember 30, 2018 and December 31, 2017, respectively. The Company’s capital lease and financing obligations are presented net of $1.7$1.6 million and $1.8 million of debt issuance costs at JuneSeptember 30, 2018 and December 31, 2017, respectively. The Company’s capital leases primarily relate to real estate, equipment and vehicles and have interest rates ranging from 1.2% to 11.9%.
The Company has entered into several arrangements in which it has sold branch locations and simultaneously leased the associated properties back from the various purchasers. Due to the terms of the lease agreements, these transactions are treated as financing arrangements. These transactions contain non-recourse financing which is a form of continuing involvement and precludes the use of sale-lease back accounting. The terms of the financing arrangements range from approximately eighteen months to ten years. The interest rates implicit in these financing arrangements is approximately 8.0%.
Notes Due To and From Affiliates
In conjunction with the Business Combination, all notes due to and from affiliates were settled, and there is no related interest expense or interest income related to the notes due to or from affiliates for the three and nine months ended September 30, 2018.
Prior to the Business Combination, the Algeco Group distributed borrowings from its third party notes to entities within the Algeco Group, including WSII, through intercompany loans. WSII previously recorded these intercompany loans as notes due to affiliates with maturity dates of June 30, 2018 and October 15, 2019.
Interest expense of $16.6$16.7 million and $31.3$48.0 million associated with these notes due to affiliates is reflected in interest expense in the consolidated statement of operations for the three and sixnine months ended JuneSeptember 30, 2017, respectively. Interest on the notes due to affiliates was payable on a semi-annual basis.
Conversely, WSII also distributed borrowings to other entities within the Algeco Group through intercompany loans, and earned interest income on the principal. For the three and sixnine months ended JuneSeptember 30, 2017, the Company recognized $3.5$3.7 million and $6.1$9.8 million, respectively, of interest income related to the loans.
In conjunction
NOTE 8 – Equity
Common Stock
On July 30, 2018, WillScot closed a public offering of 8,000,000 shares of its Class A common stock at an offering price of $16.00 per share. On August 10, 2018, the underwriters exercised their right to purchase an additional 1,200,000 shares at the public offering price. The net offering proceeds, including the exercise of the over-allotment option, were $139.0 million, after deducting discount and offering expenses of $8.2 million. The Company used the proceeds to fund the ModSpace acquisition and to pay related fees and expenses.
As disclosed in Note 2, on August 15, 2018, WillScot issued 6,458,229 unregistered shares of its Class A common stock, par value $0.0001 per share, to former ModSpace shareholders as part of the consideration paid in connection with the Business Combination, all notes due to and from affiliates were settled, and there is no related interest expense or interest income relatedModSpace acquisition. In connection with the issuance, WillScot entered into a registration rights agreement dated July 26, 2018, under which WillScot granted customary registration rights to the notes dueholders of the unregistered common shares. Subject to limited exception, the unregistered shares issued to former ModSpace shareholders may not be sold or otherwise transferred prior to the six-month anniversary of the issuance date. 
On September 21, 2018, the Company filed a registration statement with the SEC under which 10,373,102 of unregistered shares of WillScot’s Class A common stock would be registered under a retail shelf registration statement. On November 2, 2018, the Company filed an amendment to, among other things, increase the number of registered Class A common shares available for sale by the selling shareholders from affiliates for10,373,102 to 61,865,946 shares, approximately 5.8 million of which are subject to transfer restrictions until February 15, 2019.

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Warrants
On July 10, 2018, the threeCompany was notified that its public warrants would be delisted from the Nasdaq Capital Market (“Nasdaq”) based on the Company’s failure to satisfy a minimum holder requirement applicable to the warrants. Trading of the public warrants on Nasdaq was suspended on July 12, 2018, and six months ended June 30,they were removed from Nasdaq listing on October 8, 2018.


NOTE 7 – EquityAs disclosed in Note 2, on August 15, 2018, WillScot issued the ModSpace Warrants to the former shareholders as part of the ModSpace acquisition. Each ModSpace Warrant entitles the holder thereof to purchase one share of WillScot Class A common stock at an exercise price of $15.50 per share, subject to potential adjustment. Subject to limited exception, the ModSpace Warrants are not exercisable or transferable until the six-month anniversary of the issuance date, and the ModSpace Warrants expire on November 29, 2022. Under a registration rights agreement dated July 26, 2018, WillScot agreed to file a registration statement, and to use its reasonable best efforts to cause the registration statement to become effective, by the six-month anniversary of the issuance date.
Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive loss, net of tax, for the sixnine months ended JuneSeptember 30, 2018 and 2017 were as follows:
(in thousands)Foreign Currency Translation Adjustment
Balance at December 31, 2017 $(49,497)
Total other comprehensive loss (82)
Reclassifications to accumulated deficit(a)
(2,540)
Balance at September 30, 2018 $(52,119)
(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
Balance at December 31, 2016 $(56,928)
Total other comprehensive loss 8,914 
Balance at September 30, 2017 $(48,014)
(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)
(a) In the first quarter of 2018, the Company elected to early adopt ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which resulted in a discrete reclassification of $2.5 million from accumulated other comprehensive loss to accumulated deficit effective January 1, 2018.
There were no material amounts reclassified from accumulated other comprehensive loss and into consolidated net income (loss) for the three and sixnine months ended JuneSeptember 30, 2018 and September 30, 2017.
Non-Controlling Interest
The changes in the non-controlling interest for the sixnine months ended JuneSeptember 30, 2018 were as follows:
(in thousands)Total
Balance at December 31, 2017 $48,931 
Net loss attributable to non-controlling interest (3,715)
Other comprehensive loss (26)
Issuance of common stock and contribution of proceeds to WSII 7,574 
Acquisition of ModSpace and the effect of the related financing transactions 13,614 
Balance at September 30, 2018 $66,378 
As disclosed under Common Stock above, during the three months ended September 30, 2018, WillScot issued 9,200,000 shares of Class A common stock through an underwritten public offering, the proceeds of which were immediately contributed down through WS Holdings to WSII for purposes of funding part of the ModSpace acquisition. Sapphire waived its preemptive right to participate in the public offering and pursuant to the shareholders agreement entered into by WS Holdings' shareholders, Sapphire's ownership in WS Holdings was adjusted from 10% to 9% accordingly. As disclosed in Note 2, the
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(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
Company closed on the ModSpace Acquisition that resulted in the contribution of ModSpace's net assets of $972.4 million to WSII. The net impact of the transactions above, resulted in a non-recurring adjustment of $21.2 million to additional paid in capital and non-controlling interest on the condensed consolidated balance sheets. Despite the dilution in the non-controlling interest ownership in WS Holdings, the adjustment increases the non-controlling interest equity as a result of the significant increase in net assets from the ModSpace acquisition.

NOTE 89 – Income Taxes
The Company recorded an income tax benefit of approximately $6.6$6.5 million and $7.1$13.6 million for the three and sixnine months ended JuneSeptember 30, 2018, respectively, and $5.3$7.6 million and $10.1$17.8 million for the same periods of 2017.
The Company’s effective tax rate (“ETR”) for the three months ended JuneSeptember 30, 2018 and 2017 was 106.1%15.0% and 24.3%36.2%, respectively, and 52.3%23.9% and 24.8%33.3% for the sixnine months ended JuneSeptember 30, 2018 and 2017, respectively.
The Company’s estimated annual ETR ("EAETR") of 14.8% on the forecasted pre-tax loss is lower than the US statutory rate of 21.0% due to certain offsets to the overall tax benefit, namely: (1) a partial valuation allowance, $8.0 million tax expense, due to the limitation on the deductibility of interest expense estimated for the current year partially offset by reduction to the deferred tax liability, $2.3 million tax benefit, established for the book over tax basis difference for the Company's investment in its Canadian subsidiary and (2) a gross permanent disallowance, $6.6 million, of which $5.7 million relates to the non-deductibility of certain transaction costs in relation to the ModSpace acquisition.
The Company’s ETR for the three and six months ended JuneSeptember 30, 2018 of 15.0% is materially driven bycomparable to its EAETR due to minimal discrete items for the quarter of $0.6 million, which is primarily attributable to adjustments to deferred taxes for legislation enacted in certain state taxing jurisdictions during the quarter, notably, in New Jersey. 
The Company’s ETR for the nine months ended September 30, 2018 of 23.9% is higher than the EAETR due to $5.3 million of discrete tax benefit recorded year to date, of which a $4.2$4.3 million tax benefit relatesis attributable to a reduction in our net state deferred tax liability driven by thein Maryland apportionment rule that wasdue to change in tax law enacted in the second quarter.
The Company’s annual ETR used to determine the tax benefit for the quarter of approximately 19.8% is lower than the US statutory rate of 21.0% due to: (1) mix of earnings between tax paying components, notably forecasted losses in Canada which result in higher tax benefit due to a higher statutory tax rate, (2) reductionIn addition, to the deferred tax liability established for the book over tax basis difference for our investment in our Canadian subsidiary and offset by (3) a partial valuation allowance due to limitations on the deductibility of interest expense estimated for the current year. Due to the foregoing, changes to our forecast of pre-tax book income and the mix of earnings between tax paying components that may occur due to changes in our business in subsequent periods may have a significant effect on our annual effective tax rate and consequently, tax expense (benefit) recorded in subsequent interim periods.
In addition, the Company also recognized tax expense of $0.1 million and tax benefit of $0.2 million and $0.4$0.3 million for the three and sixnine months ended JuneSeptember 30, 2018, respectively, related to foreign currency gains and losses. For the three and sixnine months ended JuneSeptember 30, 2017, the Company recognized tax expense of $2.5$1.6 million and $3.1$4.8 million, respectively, related to foreign currency gains. The Company also adjusted the provisional amounts

for the impacts of the Tax Act under SAB 118 reported in its financial statements for the year ended December 31, 2017, with an adjustment in the current quarter due to2017. As of September 30, 2018, a change in state law for a$0.6 million tax benefit of $0.3 million which is incremental to the $0.3 million benefithas been recorded in the first quarter.relation to tax reform guidance under SAB 118. As noted above, the Company recorded a discrete benefit of $4.2$4.3 million in the second quarter of 2018 to reduce its net state deferred tax liability primarily related to the enactment of an apportionment rule change in Maryland.

NOTE 910 - Fair Value Measures
The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Company utilizes the suggested accounting guidance for the three levels of inputs that may be used to measure fair value:
Level 1 -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
The Company has assessed that the fair value of cash and cash equivalents, trade receivables, trade payables, capital lease and other financing obligations, and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
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The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy:
June 30, 2018December 31, 2017September 30, 2018December 31, 2017
Carrying AmountFair ValueCarrying AmountFair ValueCarrying AmountFair ValueCarrying AmountFair Value
(in thousands)Level 1Level 2Level 3Level 1Level 2Level 3(in thousands)Level 1Level 2Level 3Level 1Level 2Level 3
Financial liabilities not measured at fair value 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
—
US ABL Facility (a) US ABL Facility (a) $830,573 $— $857,500 $— $297,323 $— $310,000 $— 
Canadian ABL Facility (a) Canadian ABL Facility (a) — 1,549 — 
2022 Secured Notes (a) 2022 Secured Notes (a) 291,853 — 310,416 — 290,687 — 310,410 — 
2023 Secured Notes (a) 2023 Secured Notes (a) 293,637 — 298,185 — 
Unsecured Notes (a) Unsecured Notes (a) 198,882 — 204,210 — — — — 
Total$648,215
$—
$680,567
$—
$588,010
$—
$620,410
$—
Total $1,614,945 $— $1,671,860 $— $588,010 $— $620,410 $— 
(a) See Note 7 - Debt. (a) See Note 7 - Debt.
There were no transfers of financial instruments between the three levels of the fair value hierarchy during the three and sixnine months ended JuneSeptember 30, 2018 and 2017. The fair value of the Company’s ABL Facility is primarily based upon observable market data such as market interest rates. The fair value of the Company’s 2022 Secured Notes, the 2023 Secured Notes and the Unsecured Notes is based on their last trading price at the end of each period obtained from a third party.

NOTE 1011 - Restructuring
The Company incurred costs associated with restructuring plans designed to streamline operations and reduce costs of $0.4$6.1 million and $0.7$1.2 million and $1.1$7.2 million and $1.0$2.1 million net of reversals, during the three and sixnine months ended JuneSeptember 30, 2018 and 2017.2017, respectively. The following is a summary of the activity in the Company’s restructuring accruals for the sixthree and nine months ended JuneSeptember 30, 2018 and 2017:
Three Months Ended September 30, Nine Months Ended September 30, 
(in thousands)2018 2017 20182017
Balance at beginning of the period $967 $2,130 $227 $1,793 
Charges during the period6,137 1,156 7,214 2,124 
Cash payments during the period(3,661)(803)(3,991)(1,442)
Effects of movements in foreign exchange rates5 7 (2)15 
Balance at end of period $3,448 $2,490 $3,448 $2,490 
 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 period449
 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
The restructuring charges for the three and sixnine months ended JuneSeptember 30, 2018 relate primarily to employee termination costs and lease exit costs in connection with the integration of Acton, Tyson, and Tyson.ModSpace. As part of the restructuring plan,plans, certain employees were required to render future service in order to receive their termination benefits. The termination costs associated with these employees was recognized over the period from the datecommencement of communication of termination to the employeerestructuring plans to the actual date of termination. The Company anticipates that the remaining actions contemplated under the $1.0 $3.4 million accrual as of JuneSeptember 30, 2018, will be substantially completed by the end of the fourththird quarter of 2018.

2019.
The restructuring charges for the three and sixnine months ended JuneSeptember 30, 2017 primarily related to corporate employee termination costs incurred as part of the Algeco Group.
Segments
The $0.4 $6.1 million and $1.1$1.2 million of restructuring charges for the three months ended September 30, 2018 and 2017 includes: $5.9 million and $0.3 million of charges pertaining to the Modular - US segment; $0.2 million and $0.0 million of charges pertaining to the Modular - Other North America segment; and $0.0 million and $0.9 million of charges pertaining to Corporate and other.
The  $7.2 million and  $2.1 million of restructuring charges for the three and sixnine months ended JuneSeptember 30, 2018 all pertainand 2017  includes: $7.0 million and $0.2 million of charges pertaining to the Modular - US segment. The $0.7segment; $0.2 million and $1.0$0.0 million of restructuring charges forpertaining to the threeModular - Other North America segment; and six months ended June 30, 2017 all pertain$0.0 million and $1.9 million of charges pertaining to Corporate and other.

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NOTE 1112 - Stock-Based Compensation
On November 16, 2017, the Company’s shareholders approved a long-term incentive award plan (the “Plan”). The Plan is administered by the Compensation Committee of the Company’s Board of Directors. Under the Plan, the Committee may grant an aggregate of 4,000,000 shares of Class A common stock in the form of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance compensation awards and stock bonus awards. Stock-based payments including the grant of stock options, RSUs, and RSAs are subject to service-based vesting requirements, and expense is recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur. During the sixthree months ended JuneSeptember 30, 2018, no RSAs, RSUs or stock options were granted under the Plan. During the nine months ended September 30, 2018, 27,675 RSAs, 921,730 RSUs and 589,257 stock option awards were granted under the Plan, whilePlan. During the three and nine months ended September 30, 2018, 0 and 35,050 RSUs were forfeited during the three and six months ended June 30, 2018.forfeited.
Stock-based payments to employees include grants of stock options and RSUs, which are recognized in the financial statements based on their fair value.
RSUs and RSAs are valued based on the intrinsic value of the difference between the exercise price, if any, of the award and the fair market value of ourthe Company's common stock on the grant date. RSAs vest over a one-year period and RSUs vest over a four-year period.
Stock options vest in tranches over a period of four years and expire ten years from the grant date. The fair value of each stock option award on the grant date is estimated using the Black-Scholes option-pricing model with the following assumptions: expected dividend yield, expected stock price volatility, weighted-average risk-free interest rate and weighted-average expected term of the options. The volatility assumption used in the Black-Scholes option-pricing model is based on peer group volatility as the Company does not have a sufficient trading history as a stand-alone public company. Additionally, due to an insufficient history with respect to stock option activity and post-vesting cancellations, the expected term assumption is based on the simplified method under GAAP, which is based on the vesting period and contractual term for each tranche of awards. The mid-point between the weighted-average vesting term and the expiration date is used as the expected term under this method. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a cash dividend on common shares.
As of JuneSeptember 30, 2018, none of the granted RSAs, RSUs or stock options had vested.
Restricted Stock Awards
The following table summarizes the Company’s RSA activity for the sixnine months ended JuneSeptember 30, 2018:
Number of Shares Weighted-Average Grant Date Fair Value 
Balance, December 31, 2017 — $— 
Granted 27,675 13.60 
Forfeited — — 
Balance, September 30, 2018 27,675 $13.60 
 Number of Shares Weighted-Average Grant Date Fair Value
Balance, December 31, 2017—
 $—
Granted27,675
 13.60
Forfeited—
 —
Balance, June 30, 201827,675
 $13.60
Compensation expense for RSAs recognized in SG&A on the condensed consolidated statements of operations was $0.1$0.1 million and $0.1$0.2 million forfor the three and sixnine months ended JuneSeptember 30, 2018, respectively. At JuneSeptember 30, 2018, unrecognized compensation cost related to RSAs totaled $0.3$0.2 million and is expected to be recognized over the remaining nine-monthsix-month vesting period.

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Restricted Stock Units
The following table summarizes the Company's RSU award activity for the sixnine months ended JuneSeptember 30, 2018:
Number of SharesWeighted-Average Grant Date Fair Value
Balance, December 31, 2017 — $— 
Granted 921,730 13.60 
Forfeited (35,050)13.60 
Balance, September 30, 2018 886,680 $13.60 
 Number of Shares Weighted-Average Grant Date Fair Value
Balance, December 31, 2017—
 $—
Granted921,730
 13.60
Forfeited(35,050) 13.60
Balance, June 30, 2018886,680
 $13.60

CompensationCompensation expense for RSUs recognized in SG&A on the condensed consolidated statements of operations was $0.6$0.8 million and $0.8$1.6 million forfor the three and sixnine months ended JuneSeptember 30, 2018, respectively, with associated tax benefits of $0.2 million and $0.2$0.4 million forfor the three and sixnine months ended JuneSeptember 30, 2018, respectively. At JuneSeptember 30, 2018, unrecognized compensation cost related to RSUs totaled $11.2totaled $10.5 million and is expected to be recognized over a remaining period of 3.753.5 years.
Stock Option Awards
The following table summarizes the Company's stock option activity for the sixnine months ended JuneSeptember 30, 2018:
Number of Options Weighted-Average Exercise Price per Share ($) 
Outstanding options, December 31, 2017 — $— 
Granted 589,257 $13.60 
Exercised — — 
Forfeited — — 
Outstanding options, September 30, 2018 589,257 $13.60 
Fully vested and exercisable options, end of period — $— 
 Number of Options Weighted-Average Exercise Price per Share ($)
Outstanding options, December 31, 2017—
 $—
Granted589,257
 13.60
Exercised—
 —
Forfeited—
 —
Outstanding options, June 30, 2018589,257
 $13.60
Fully vested and exercisable options, end of period—
 $—
Compensation expense for stock option awards, recognized in SG&A on the condensed consolidated statements of operations, was $0.2 million and $0.2$0.4 million forfor the three and sixnine months ended JuneSeptember 30, 2018, respectively, with associated tax benefits of $0.0of $0.1 million and $0.1 million for the three and sixnine months ended JuneSeptember 30, 2018, respectively. At JuneSeptember 30, 2018, unrecognized compensation costcost related to stock option awards totaled $3.0totaled $2.8 million andand is expected to be recognized over a remaining period of 3.753.5 years.
The fair value of each option award at grant date was estimated using the Black-Scholes option-pricing model with the
following assumptions:
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 

 Assumptions
Expected volatility36%
Expected dividend yield—
Risk-free interest rate2.73%
Expected term (in years)6.25
Exercise price$13.60
Weighted-average grant date fair value$5.51
NOTE 1213 - Commitments and Contingencies
The Company is involved in various lawsuits or claims in the ordinary course of business. Management is of the opinion that there is no pending claim or lawsuit which, if adversely determined, would have a material effect on the Company’s financial condition, results of operations or cash flows.
As discussed in more detail in Note 2, the Merger Agreement may be terminated by the Company or ModSpace under certain circumstances. 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.
NOTE 1314 - Segment Reporting
The Company historically has operated in two principal lines of business; modular leasing and sales and remote accommodations, which were managed separately. The Remote Accommodations Business was considered a single operating segment. As part of the Business Combination, the Remote Accommodations segment is no longer owned by the Company and is reported as discontinued operations in the condensed consolidated financial statements. As such, the segment was excluded from the segment information below.
28


Modular leasing and sales is comprised of two operating segments: US and Other North America. The US modular operating segment (“Modular - US”) consists of the the contiguous 48 states and Hawaii. The Other North America operating segment (“Modular - Other North America”) consists of Alaska, Canada and Mexico. Corporate and other includes eliminations of costs and revenue between segments and Algeco Group corporate costs not directly attributable to the underlying segments. Following the Business Combination, no additional Algeco Group corporate costs were incurred and the Company’s ongoing corporate costs are included within the Modular - US segment. Total assets for each reportable segment are not available because the Company utilizes a centralized approach to working capital management. Transactions between reportable segments are not significant.

As discussed in Note 6, the net assets acquired from ModSpace were allocated to both the Modular - US and Modular - Other North America segments. The US operations of ModSpace are included in the Modular - US segment and the Canadian operations of ModSpace are included in the Modular - Other North America segment. The operations and net assets acquired from Acton and Tyson are both included in the Modular - US segment.
The Company evaluates business segment performance on Adjusted EBITDA, which excludes certain items as shown in the reconciliation of the Company’s consolidated net loss before tax to Adjusted EBITDA below. Management believes that evaluating segment performance excluding such items is meaningful because it provides insight with respect to intrinsic operating results of the Company.
The Company also regularly evaluates gross profit by segment to assist in the assessment of its operational performance. The Company considers Adjusted EBITDA to be the more important metric because it more fully captures the business performance of the segments, inclusive of indirect costs.
Reportable Segments
The following tables set forth certain information regarding each of the Company’s reportable segments for the three and sixnine months ended JuneSeptember 30, 2018 and 2017, respectively:
Three Months Ended September 30, 2018 
(in thousands)Modular - US Modular - Other North America Total 
Revenues:
Leasing and services revenue:
Modular leasing$128,007 $13,653 $141,660 
Modular delivery and installation41,830 4,947 46,777 
Sales:
New units19,193 1,727 20,920 
Rental units8,595 972 9,567 
Total Revenues$197,625 $21,299 $218,924 
Costs:
Cost of leasing and services:
Modular leasing$36,204 $3,011 $39,215 
Modular delivery and installation37,782 4,608 42,390 
Cost of sales:
New units13,905 1,184 15,089 
Rental units5,025 725 5,750 
Depreciation of rental equipment31,702 3,832 35,534 
Gross profit$73,007 $7,939 $80,946 
Adjusted EBITDA$58,454 $6,164 $64,618 
Other selected data:
Selling, general and administrative expense$66,102 $5,795 $71,897 
Other depreciation and amortization$3,403 $317 $3,720 
Capital expenditures for rental fleet$43,007 $3,735 $46,742 

29


Three Months Ended June 30, 2018Three Months Ended September 30, 2017 
(in thousands)Modular - US Modular - Other North America Total(in thousands)Modular - USModular - Other North AmericaCorporate & OtherTotal
Revenues:     Revenues:
Leasing and services revenue:     Leasing and services revenue:
Modular leasing$90,965
 $10,284
 $101,249
Modular leasing$66,555 $8,920 $(155)$75,320 
Modular delivery and installation27,390
 4,023
 31,413
Modular delivery and installation22,127 2,503 (3)24,627 
Sales:     Sales:
New units4,149
 1,087
 5,236
New units9,074 535 — 9,609 
Rental units2,309
 126
 2,435
Rental units5,922 765 (81)6,606 
Total Revenues$124,813
 $15,520
 $140,333
Total Revenues$103,678 $12,723 $(239)$116,162 
     
Costs:     Costs:
Cost of leasing and services:     Cost of leasing and services:
Modular leasing$24,505
 $2,624
 $27,129
Modular leasing$19,000 $2,252 $— $21,252 
Modular delivery and installation26,310
 3,817
 30,127
Modular delivery and installation21,545 2,387 — 23,932 
Cost of sales:     Cost of sales:
New units2,876
 828
 3,704
New units6,487 427 2 6,916 
Rental units1,164
 99
 1,263
Rental units3,204 580 — 3,784 
Depreciation of rental equipment20,217
 3,253
 23,470
Depreciation of rental equipment 15,676 3,333 — 19,009 
Gross profit$49,741
 $4,899
 $54,640
Gross profit (loss)Gross profit (loss)$37,766 $3,744 $(241)$41,269 
Adjusted EBITDA$38,104
 $3,812
 $41,916
Adjusted EBITDA $29,177 $2,961 $(2,753)$29,385 
Other selected data:     Other selected data:
Selling, general and administrative expense$43,325
 $4,409
 $47,734
Selling, general and administrative expense $24,337 $4,116 $7,644 $36,097 
Other depreciation and amortization$1,354
 $216
 $1,570
Other depreciation and amortization $1,298 $264 $343 $1,905 
Capital expenditures for rental fleet$30,931
 $1,748
 $32,679
Capital expenditures for rental fleet $24,147 $1,361 $— $25,508 


30


Three Months Ended June 30, 2017Nine Months Ended September 30, 2018 
(in thousands)Modular - US Modular - Other North America Corporate & Other Total(in thousands)Modular - US Modular - Other North America Total 
Revenues:       Revenues:
Leasing and services revenue:       Leasing and services revenue:
Modular leasing$64,854
 $8,242
 $(142) $72,954
Modular leasing$306,920 $33,251 $340,171 
Modular delivery and installation20,970
 1,979
 —
 22,949
Modular delivery and installation93,190 11,250 104,440 
Sales:       Sales:
New units8,550
 846
 —
 9,396
New units30,157 3,427 33,584 
Rental units3,835
 943
 —
 4,778
Rental units14,258 1,555 15,813 
Total Revenues$98,209
 $12,010
 $(142) $110,077
Total Revenues$444,525 $49,483 $494,008 
       
Costs:       Costs:
Cost of leasing and services:       Cost of leasing and services:
Modular leasing$19,338
 $2,002
 $—
 $21,340
Modular leasing$85,766 $7,740 $93,506 
Modular delivery and installation20,393
 1,946
 —
 22,339
Modular delivery and installation87,032 11,006 98,038 
Cost of sales:      
Cost of sales:
New units6,072
 696
 (2) 6,766
New units21,347 2,433 23,780 
Rental units1,923
 652
 —
 2,575
Rental units8,218 1,110 9,328 
Depreciation of rental equipment14,529
 2,945
 —
 17,474
Depreciation of rental equipment 72,606 10,243 82,849 
Gross profit (loss)$35,954
 $3,769
 $(140) $39,583
Gross profitGross profit$169,556 $16,951 $186,507 
Adjusted EBITDA$26,329
 $2,506
 $(2,588) $26,247
Adjusted EBITDA$129,170 $12,856 $142,026 
Other selected data:       Other selected data:
Selling, general and administrative expense$24,181
 $4,223
 $3,248
 $31,652
Selling, general and administrative expense$150,248 $14,597 $164,845 
Other depreciation and amortization$1,301
 $244
 $345
 $1,890
Other depreciation and amortization$6,962 $764 $7,726 
Capital expenditures for rental fleet$25,909
 $1,716
 $—
 $27,625
Capital expenditures for rental fleet$104,462 $7,043 $111,505 


31


 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 installation51,360
 6,303
 57,663
Sales:     
New units10,964
 1,700
 12,664
Rental units5,663
 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 installation49,250
 6,398
 55,648
Cost of sales:    —
New units7,442
 1,249
 8,691
Rental units3,193
 385
 3,578
Depreciation of rental equipment40,904
 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, 2017Nine Months Ended September 30, 2017 
(in thousands)Modular - US Modular - Other North America Corporate & Other Total(in thousands)Modular - USModular - Other North AmericaCorporate & OtherTotal
Revenues:       Revenues:
Leasing and services revenue:       Leasing and services revenue:
Modular leasing$126,032
 $16,204
 $(295) $141,941
Modular leasing$192,587 $25,124 $(450)$217,261 
Modular delivery and installation38,324
 3,629
 —
 41,953
Modular delivery and installation60,451 6,132 (3)66,580 
Sales:       Sales:
New units12,556
 2,326
 —
 14,882
New units21,630 2,861 — 24,491 
Rental units8,712
 1,910
 —
 10,622
Rental units14,634 2,675 (81)17,228 
Total Revenues$185,624
 $24,069
 $(295) $209,398
Total Revenues$289,302 $36,792 $(534)$325,560 
       
Costs:       Costs:
Cost of leasing and services:       Cost of leasing and services:
Modular leasing$36,713
 $3,729
 $—
 $40,442
Modular leasing$55,713 $5,981 $— $61,694 
Modular delivery and installation37,067
 3,405
 —
 40,472
Modular delivery and installation58,612 5,792 — 64,404 
Cost of sales:      —
Cost of sales: — 
New units8,685
 1,813
 (12) 10,486
New units15,172 2,240 (10)17,402 
Rental units5,036
 1,247
 —
 6,283
Rental units8,240 1,827 — 10,067 
Depreciation of rental equipment28,354
 5,840
 —
 34,194
Depreciation of rental equipment 44,030 9,173 — 53,203 
Gross profit (loss)$69,769
 $8,035
 $(283) $77,521
Gross profit (loss)$107,535 $11,779 $(524)$118,790 
Adjusted EBITDA$50,012
 $5,625
 $(7,444) $48,193
Adjusted EBITDA$79,189 $8,586 $(10,197)$77,578 
Other selected data:       Other selected data:
Selling, general and administrative expense$48,127
 $8,277
 $8,009
 $64,413
Selling, general and administrative expense$72,464 $12,393 $15,653 $100,510 
Other depreciation and amortization$2,639
 $491
 $701
 $3,831
Other depreciation and amortization$3,937 $755 $1,044 $5,736 
Capital expenditures for rental fleet$47,958
 $2,344
 $—
 $50,302
Capital expenditures for rental fleet$72,105 $3,705 $— $75,810 
The following tables present a reconciliation of the Company’s loss from continuing operations before income tax to Adjusted EBITDA by segment for the three and sixnine months ended JuneSeptember 30, 2018 and 2017, respectively:
Three Months Ended September 30, 2018 
(in thousands)Modular - USModular - Other North AmericaTotal
(Loss) income from continuing operations before income taxes $(44,519)$1,283 $(43,236)
Interest expense, net (a) 42,831 616 43,447 
Depreciation and amortization 35,105 4,149 39,254 
Currency gains, net (112)(313)(425)
Restructuring costs 5,895 242 6,137 
Integration costs 7,443 10 7,453 
Stock compensation expense 1,050 — 1,050 
Transaction costs 10,490 182 10,672 
Other (income) expense 271 (5)266 
Adjusted EBITDA $58,454 $6,164 $64,618 
(a) In connection with the ModSpace acquisition, the Company incurred bridge financing fees and upfront commitment fees of $20.5 million, included within interest expense, during the three months ended September 30, 2018.

32


Three Months Ended June 30, 2018Three Months Ended September 30, 2017 
(in thousands)Modular - US Modular - Other North America Total(in thousands)Modular - USModular - Other North AmericaCorporate & OtherTotal
Loss from continuing operations before income taxes$(5,533) $(733) $(6,266)Loss from continuing operations before income taxes $(1,070)$(1,684)$(18,313)$(21,067)
Interest expense, net11,663
 492
 12,155
Interest expense, net 16,790 1,134 8,523 26,447 
Depreciation and amortization21,571
 3,469
 25,040
Depreciation and amortization 16,974 3,597 343 20,914 
Currency losses, net114
 458
 572
Currency gains, net Currency gains, net (3,834)(104)(332)(4,270)
Restructuring costs449
 —
 449
Restructuring costs 247 17 892 1,156 
Integration costs4,785
 —
 4,785
Stock compensation expense1,054
 —
 1,054
Transaction fees4,049
 69
 4,118
Other (income) expense(48) 57
 9
Transaction costs Transaction costs 69 — 5,164 5,233 
Other expense Other expense 1 1 970 972 
Adjusted EBITDA$38,104
 $3,812
 $41,916
Adjusted EBITDA $29,177 $2,961 $(2,753)$29,385 


Nine Months Ended September 30, 2018 
(in thousands)Modular - USModular - Other North AmericaTotal
Loss from continuing operations before income taxes $(55,360)$(1,397)$(56,757)
Interest expense, net (a) 65,654 1,667 67,321 
Depreciation and amortization 79,568 11,007 90,575 
Currency losses, net 159 1,012 1,171 
Restructuring costs 6,962 252 7,214 
Integration costs 14,858 10 14,868 
Stock compensation expense 2,225 — 2,225 
Transaction costs 14,539 251 14,790 
Other expense 565 54 619 
Adjusted EBITDA $129,170 $12,856 $142,026 
(a) In connection with the ModSpace acquisition, the Company incurred bridge financing fees and upfront commitment fees of $20.5 million, included within interest expense, during the nine months ended September 30, 2018.

Nine Months Ended September 30, 2017 
(in thousands)Modular - USModular - Other North AmericaCorporate & OtherTotal
Loss from continuing operations before income taxes $(6,280)$(4,142)$(42,903)$(53,325)
Interest expense, net 48,302 3,350 23,270 74,922 
Depreciation and amortization 47,967 9,928 1,044 58,939 
Currency gains, net (11,233)(585)(951)(12,769)
Restructuring costs 247 17 1,860 2,124 
Transaction costs 115 — 5,980 6,095 
Other expense 71 18 1,503 1,592 
Adjusted EBITDA $79,189 $8,586 $(10,197)$77,578 


33

 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, net15,953
 1,038
 9,407
 26,398
Depreciation and amortization15,830
 3,189
 345
 19,364
Currency gains, net(5,800) (294) (403) (6,497)
Restructuring costs—
 —
 684
 684
Transaction fees46
 —
 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, net22,823
 1,051
 23,874
Depreciation and amortization44,463
 6,858
 51,321
Currency losses, net271
 1,325
 1,596
Restructuring costs1,067
 10
 1,077
Integration costs7,415
 —
 7,415
Stock compensation expense1,175
 —
 1,175
Transaction fees4,049
 69
 4,118
Other expense294
 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, net31,512
 2,216
 14,747
 48,475
Depreciation and amortization30,993
 6,331
 701
 38,025
Currency gains, net(7,399) (481) (619) (8,499)
Restructuring costs—
 —
 968
 968
Transaction fees46
 —
 816
 862
Other expense70
 17
 533
 620
Adjusted EBITDA$50,012
 $5,625
 $(7,444) $48,193
NOTE 1415 - Income (Loss) Per Share
Basic income (loss) per share (“EPS”) is calculated by dividing net income (loss) attributable to WSCWillScot by the weighted average number of its Class A common stock shares outstanding during the period. Concurrently with the Business Combination,12,425,000Combination, 12,425,000 of WillScot's Class A common shares were placed into escrow by shareholders and were not entitledbecame ineligible to vote or participate in the economic rewards available to the other Class A shareholders. On January 19, 2018, 6,212,500Escrowed shares of WSC Class A common stock were releasedtherefore excluded from the EPS calculation while deposited in 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 ofwere released to shareholders on January 19, 2018, and the remaining escrowed shares were released to Double Eagle, Harry E. Sloan and Sapphire upon the delivery of release instructions to the escrow agent.shareholders on August 21, 2018.

WillScot's Class B common shares have no rights to dividends or distributions made by the Company and, in turn, are excluded from the LPSEPS calculation.
Diluted EPS is computed similarly to basic net income (loss) per share, except that it includes the potential dilution that could occur if dilutivedilutive securities were exercised. Effects of potentially dilutive securities are presented only in periods in which they are dilutive. Stock options, restricted stock units and restricted stock units,awards, representing 589,257, 886,680 and 886,68027,675 shares of Class A common stock outstanding for the three and sixnine months ended JuneSeptember 30, 2018, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.
The following table is a reconciliation of net income (loss) and weighted-average Warrants representing 44,750,000 shares of common stock outstanding for purposes of calculating basic and diluted income (loss) per shareClass A shares for the three and sixnine months ended JuneSeptember 30, 2018, and 2017:were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.
Pursuant to the exchange agreement entered into by WS Holding's shareholders, Sapphire has the right, but not the obligation, to exchange all, but not less than all, of its shares of WS Holdings into newly issued shares of WillScot’s Class A common stock in a private placement transaction. The impact of this exchange has been excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive.
 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 tax143
 —
 (505) —
Total income (loss) attributable to WSC$236
 $(5,896) $(5,951) $(16,075)
        
Denominator       
Average shares outstanding - basic78,432,274
 14,545,833
 77,814,456
 14,545,833
Average effect of dilutive securities:
 


 
Warrants3,745,030
 —
 —
 —
Restricted stock awards2,782
 —
 —
 —
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)

NOTE 1516 - Related Parties
Related party balances included in the Company’s consolidated balance sheet at JuneSeptember 30, 2018 and December 31, 2017, consisted of the following:
(in thousands)Financial statement line Item September 30, 2018December 31, 2017
Receivables due from affiliates Prepaid expenses and other current assets $66 $2,863 
Amounts due to affiliates Accrued liabilities (1,465)(1,235)
Total related party liabilities, net $(1,399)$1,628 
(in thousands)Financial statement line ItemJune 30, 2018 December 31, 2017
Receivables due from affiliatesPrepaid expenses and other current assets$180
 $2,863
Amounts due to affiliatesAccrued liabilities(873) (1,235)
 Total related party liabilities, net$(693) $1,628

On November 29, 2017, in connection with the closing of the Business Combination, the Company, WSII, WS Holdings and Algeco Global entered into a transition services agreement (the “TSA”). The purpose of the TSA is to ensure an orderly transition of WSII’s business and effectuate the Business Combination. Pursuant to the TSA, each party will provide or cause to be provided to the other party or its affiliates certain services, use of facilities and other assistance on a transitional basis. The services period under the TSA ranges from six months to three years based on the services, but includes early termination clauses. The Company had $0.1 $0.2 million andin accruals and $2.9 million in receivablesreceivables due from affiliates pertaining to the Transition Services Agreement at JuneSeptember 30, 2018 and December 31, 2017, respectively.
The Company accrued expenses of $0.5 million and $1.2 million at Juneat September 30, 2018 and December 31, 2017, respectively, included in amounts due to affiliates, related to rental equipment purchases from an entity within the Algeco Group.
34


Related party transactions included in the Company’s consolidated statement of operations for the three and sixnine months ended JuneSeptember 30, 2018 and 2017, respectively, consisted of the following:
Three Months Ended September 30, Nine Months Ended September 30, 
(in thousands)Financial statement line item 2018201720182017
Leasing revenue from related parties Modular leasing revenue $(104)$— $(629)$— 
Rental unit sales to related parties Rental unit sales (1,548)— (1,548)— 
Management fees and recharge income on transactions with affiliates Selling, general & administrative expenses — (1,693)— (1,542)
Interest income on notes due from affiliates Interest income — (3,659)— (9,752)
Interest expense on notes due to affiliates Interest expense — 17,191 — 47,918 
Remote accommodations revenue and costs, net from affiliates Income from discontinued operations, net of tax — 1,327 — 1,327 
Total related party (income) expense, net $(1,652)$13,166 $(2,177)$37,951 
  Three Months Ended June 30, Six Months Ended June 30,
(in thousands)Financial statement line item2018 2017 2018 2017
Leasing revenue from related partiesModular leasing revenue$(233) $—
 $(525) $—
Management fees and recharge income on transactions with affiliatesSelling, general & administrative expenses—
 1,502
 —
 151
Interest income on notes due from affiliatesInterest income—
 (3,509) —
 (6,093)
Interest expense on notes due to affiliatesInterest expense—
 15,990
 —
 30,727
 Total related party (income) expense, net$(233) $13,983
 $(525) $24,785
On August 22, 2018, WillScot’s majority stockholder, Sapphire, entered into a margin loan (the "Margin Loan ") under which all of its WillScot Class A common stock was pledged to secure $125.0 of borrowings under the loan agreement. WillScot is not a party to the loan agreement and has no obligations thereunder, but WillScot delivered an issuer agreement to the lenders under which WillScot has agreed to certain obligations relating to the shares pledged by Sapphire and, subject to applicable law and stock exchange rules, not to take any actions that are intended to materially hinder or delay the exercise of any remedies with respect to the pledged shares. In connection with the Margin Loan, on August 24, 2018, WSII entered into a two-year supply agreement with Target Logistics, an affiliate controlled by Sapphire, under which, subject to limited exception, WSII acquired the exclusive right to supply modular units, portable storage units, and other ancillary products ordered by the affiliate in the United States. WillScot's leasing revenue and rental unit sales associated with Target Logistics for the three and nine months ended September 30, 2018 are disclosed above. As of September 30, 2018, the 49,041,906 shares of WillScot Class A common stock pledged by Sapphire represented approximately 48.9% of WillScot’s issued and outstanding Class A shares.
The Company had capital expenditures of rental equipment purchased from related party affiliates of $0.4$1.2 million and $0.2$0.5 million for three months ended JuneSeptember 30, 2018 and 2017, respectively, and $1.7$3.0 million and $0.5$1.0 million during the sixnine months ended JuneSeptember 30, 2018 and 2017, respectively.
The Company paid $0.4$0.1 million and $0.0$0.2 million in professional fees to an entity, that two of the Company’s Directors also served in the same role for that entity, during the three months ended JuneSeptember 30, 2018 and 2017, respectively, and $1.0$1.1 million and $0.6$0.8 million during the sixnine months ended JuneSeptember 30, 2018 and 2017, respectively.

NOTE 1617 - Subsequent Events
ModSpace Acquisition
As described in Note 2, on June 21,On November 6, 2018, the CompanyWSII entered into an interest rate swap transaction with a definitivefinancial counterparty that effectively converts $400.0 million in aggregate notional amount of its variable-rate debt into fixed-rate debt. The fixed rate paid by WSII is 3.06% and the variable rate received resets monthly to a one-month LIBOR rate. The swap transaction, which matures on May 29, 2022, was consummated to mitigate the interest rate risk inherent in WSII’s floating-rate credit agreement, which also matures on May 29, 2022, and not for trading or speculative purposes. The master agreement that governs the interest rate swap contains customary representations, warranties and covenants and may be terminated prior to acquire ModSpace, a privately-owned providerits expiration.
On November 8, 2018, WillScot announced the commencement of office trailers, portable storage unitsan offer to each holder of its public and modular buildings. Subjectprivate warrants to potential adjustment under the Merger Agreement, the aggregate consideration payable by the Company to the sellers includes (i) $1,063,750,000 in cash, (ii) 6,458,500 sharespurchase one-half share of the Company’s Class A common stock, par value of $0.0001 per share, of WillScot for a purchase price of $5.75 (the “Warrants”) to receive 0.1818 common shares in exchange for each Warrant tendered by the holder and (iii)exchanged pursuant to the offer (the “Offer”). The warrants to purchase an aggregateissued in connection with the Company's acquisition of 10,000,000 sharesModSpace, each of the Company’swhich is exercisable for one share of WillScot Class A common stock at an exercise price of $15.50 per share.
On July 16, 2018, the Canadian Competition Bureau issued a no-action letter relatingshare, are not subject to the ModSpace Acquisition.Offer. The no-action letter satisfiedOffer is made solely upon the Company’s obligation under the Merger Agreementterms and conditions in a Prospectus/Offer to clear Competition Bureau review under Canada’s Competition Act.
The Company expectsExchange and other related offering materials that are being distributed to close the acquisition in August 2018.
Amended ABL Facility
In July and August 2018, the Company entered into amendments to the ABL Facility that, among other things, (i) permit the ModSpace Acquisition and the Company’s financing thereof (including, without limitation, incremental borrowings under the ABL Facility and the senior unsecured notes described below), (ii) increase the ABL Facility limit to $1.35 billion in the aggregate, and increase the amountholders of the facility’s accordion feature to $450.0 million, and (iii) increase certain thresholds, basket sizes and default and notice triggers to account for the Company’s increased scale business following the ModSpace Acquisition.Warrants. The amendments, copies of which is filed as an exhibits to this Form 10-Q, will become effective upon the closing of the ModSpace Acquisition and the satisfaction of other customary closing conditions.

Under the amended ABL Facility, (i) the borrowing limits of the US ABL Facility and the Canadian ABL FacilityOffer will be $1,200.0 million and $150.0 million, respectively, (ii) the borrowing capacity for standby letters of credit under the US ABL Facility and the Canadian ABL Facility will be $75.0 million and $60.0 million, respectively, and (iii) the borrowing capacity for swingline loans under the US ABL Facility and the Canadian ABL Facility will be $75.0 million and $50.0 million, respectively. As amended, the US Line Cap will equal the lesser of $1,200.0 million and the US Borrowing Base, and the Canadian Line Cap will equal the lessor of $150.0 million and the Canadian Borrowing Base.
The amended ABL Facility requires the Borrowers to maintain a (i) minimum fixed charge coverage ratio of 1.00:1.00 and (ii) maximum total net leverage ratio of 5.50:1.00, in each case, at any time when the excess availability under the amended ABL Facility is less than the greater of (a) $135.0 million and (b) an amount equal to 10% of the Line Cap.
ModSpace Acquisition Financing
Equity Offering
On July 25, 2018, the Company entered into an underwriting agreement with certain financial institutions under which the Company agreed to sell, and the underwriters agreed to purchase, 8.0 million shares of the Company’s Class A common stock at a public offering price of $16.00 per share. The Company granted to the underwriters an option to purchase up to 1.2 million additional Class A common shares at a public offering price of $16.00 per share less the underwriting discount (which would raise an additional $19.2 million of gross proceeds for the Company).
On July 30, 2018, the Company closed the underwritten public stock offering. The net offering proceeds to the Company were approximately $121.9 million. The Company plans to use the proceeds to fund the ModSpace Acquisition and to pay related fees and expenses or, if the ModSpace Acquisition is not consummated, for general corporate purposes.
2023 Senior Secured Notes
On July 31, 2018, a wholly-owned subsidiary of WSII, Mason Finance Sub, Inc. (“Finance Sub”)open until 11:59 p.m., entered into a purchase agreement with certain financial institutions under which the initial purchasers agreed to purchase $300.0 million in aggregate principal amount of 6.875% senior secured notes due 2023 (the “2023 Secured Notes”) to be issued by Finance Sub. The proceeds are expected to fund the ModSpace Acquisition and to pay related fees and expenses. The 2023 Secured Notes were offered only to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to persons outside the United States pursuant to Regulation S under the Securities Act.
On AugustEastern Standard Time, on December 6, 2018, Finance Sub closed the private placementor such later time and the initial purchasers deposited$300.0 millionof gross offering proceeds into an escrow account. Upon consummation of the ModSpace Acquisition and the satisfaction of other conditions, the escrowed proceeds will be releaseddate to fund a portion of the cash consideration payable by WSII in the ModSpace Acquisition and to pay related fees and expenses. Upon the closing the ModSpace Acquisition, Finance Sub will merge with and into WSII, with WSII continuing as the surviving corporation, and WSII will assume the obligations of Finance Sub under the 2023 Secured Notes and the indenture governing the notes. If the ModSpace Acquisition is not completed by a specified date or certain other events occur, the 2023 Secured Notes will be subject to a special mandatory redemption.which WillScot may extend.
The 2023 Secured Notes mature on August 15, 2023. The notes bear interest at a rate of 6.875% per annum, payable semi-annually on February 15 and August 15 of each year beginning February 15, 2019.
WSII may redeem the 2023 Secured Notes, in whole or in part, at a redemption price equal to (i) prior to August 15, 2020, 100% of the principal amount of the notes to be redeemed plus a make-whole premium; (ii) during the period from August 15, 2020 through August 14, 2021, 103.438% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, (iii) during the period from August 15, 2021 through August 14, 2022, 101.719% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest; and, (iv) from and after August 15, 2022, 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest. WSII may also redeem, prior to August 15, 2020, up to 40% of the principal amount of the 2023 Senior Notes at a redemption price equal to 106.875% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, with the net proceeds of certain equity offerings.
Additional information regarding the 2023 Secured Notes and the indenture governing the notes is contained in the Form 8-K filed by the Company with the SEC on August 7, 2018.
2023 Senior Unsecured Notes
35
On July 28, 2018, the Company entered into a note purchase agreement with certain financial institutions under which the initial purchasers agreed to purchase $200.0 million in aggregate principal amount of senior unsecured notes due 2023 (the “Unsecured Notes”) to be issued by Finance Sub. The proceeds are expected to fund the ModSpace Acquisition and to pay related fees and expenses. The Unsecured Notes were offered only to qualified institutional buyers pursuant to Rule 144A under the Securities Act.
On August 3, 2018, Finance Sub closed the private placement and the initial purchasers deposited $200.0 million of gross offering proceeds into an escrow account. Upon consummation of the ModSpace Acquisition and the satisfaction of other conditions, the escrowed proceeds will be released to fund a portion of the cash consideration payable by WSII in the ModSpace Acquisition and to pay related fees and expenses. Upon the closing the ModSpace Acquisition, Finance Sub will merge with and into WSII, with WSII continuing as the surviving corporation, and WSII will assume the obligations of Finance Sub under the


Unsecured Notes and the indenture governing the notes. If the ModSpace Acquisition is not completed by a specified date or certain other events occur, the Unsecured Notes will be subject to a special mandatory redemption.
The Unsecured Notes, which mature on November 15, 2023, will bear interest at a rate of 10.0% per annum if paid in cash (or if paid in kind, 11.5% per annum) for any interest period ending on or prior to February 15, 2021, increasing thereafter to 12.5% per annum with no paid in kind option, in each case, payable semi-annually on February 15 and August 15 of each year beginning February 15, 2019.
The Unsecured Notes are not redeemable before February 15, 2019. WSII may redeem the Unsecured Notes, in whole or in part, at a redemption price equal to (i) during the period from February 15, 2019 through August 14, 2019, 100% of the principal amount of the notes to be redeemed plus a make-whole premium; (ii) during the period from August 15, 2019 through February 14, 2020, 102% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest; (iii) during the period from February 15, 2020 through February 14, 2021, 104% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, and (iv) thereafter, 106% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest.
Additional information regarding the Unsecured Notes and the indenture governing the notes is contained in the Form 8-K filed by the Company with the SEC on August 7, 2018.
Warrants Delisting
In February 2018, a hearings panel of The Nasdaq Stock Market LLC (“Nasdaq”) established a July 3, 2018 deadline for the Company to comply with the minimum holder requirement applicable to the Company’s warrants. On July 10, 2018, the Company was notified that its warrants would be delisted from The Nasdaq Capital Market based on the Company’s failure to satisfy a minimum holder requirement applicable to the warrants. Trading for the Company’s warrants was suspended at the opening of business on July 12, 2018, and a Form 25-NSE will be filed with the Securities and Exchange Commission to remove the warrants from listing and registration on Nasdaq.

ITEM 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand WillScot Corporation (“WSC”WillScot” 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’sWillScot’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,WillScot, and (ii) for periods from and after this date, WSC’sWillScot’s financial results reflect those of WSCWillScot and its consolidated subsidiaries (including WSII and its subsidiaries) as the successor following the Business Combination.
Prior to the 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,” 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 Outlook
We are athe leading provider of modular space and portable storage solutions in the United States (“US”), Canada and Mexico. AsIn the third quarter of June2018, we completed the acquisition of Modular Space Holdings, Inc. (“ModSpace”) for a total purchase price of approximately $1.2 billion. With the addition of ModSpace, as of September 30, 2018, our branch network included over 100120 locations and additional dropstorage lots to better service our more than 35,00050,000 customers across the US, Canada and Mexico. We offer our customers an extensive selection of “Ready to Work” modular space and portable storage solutions withand now manage a fleet of over 77,000132,000 modular space units and nearly 20,000over 26,000 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.units. 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, both organically and through our consolidation strategy, 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,
Subsequent to the close of the ModSpace transaction on August 15, 2018, we received a No Action Letterbegan the process to integrate ModSpace's operations into our organizational structure, branch footprint, shared services and information technology platform. These efforts are well underway and effective November 1, 2018, our combined sales organization began writing all new contracts (including those associated with legacy ModSpace assets) from WillScot's operating and information technology platform. We anticipate full information technology cut-over from the Canadian Competition Bureau,ModSpace systems in the receiptfirst quarter of which was a closing condition for2019 and will continue our integration efforts around real estate consolidation and fleet relocation on both the Acton Mobile ("Acton") and ModSpace acquisitions.  
Before announcing 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,In the Companythird quarter, we entered into or amended several agreements to fund the cash consideration payablepaid in the ModSpace acquisition on a permanent basis and to pay related fees and expenses:expenses. In particular we:
Upsized• upsized our senior secured revolving credit agreementfacility (the "ABL Facility") to $1.35$1.425 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.thereafter;

Completed• completed a $300.0 million private placement of 6.875% senior secured notes due 2023.2023 (the "2023 Secured Notes");
Completed
36


• completed a $200.0 million private placement of senior unsecured notes due 2023.2023 (the "Unsecured Notes"); and
Raised $128.0• raised $147.2 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.

offering.
For the three months ended JuneSeptember 30, 2018, key drivers of financial performance include:
• Increased total revenues by $30.2$102.7 million, or 27.4%88.4% as compared to the same period in 2017, driven by a 38.2%88.4% increase in our core leasing and services revenues from both organic growth, and due to the impact of the Acton, Tyson, and TysonModSpace 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 newNew and rental unit sales.sales increased 117.7% and 45.5%, respectively, also driven by acquisitions. 
• On a pro-forma basis, including results of Williams Scotsman,WillScot, Acton, Tyson, and TysonModSpace for all periods presented, total revenues increased $30.4 million, or 11.3%, driven by increases in core leasing revenues as a result of rate improvements and services revenuesdue to increased $12.8 million, or 10.7% in the second quarter as compared to the same period in 2017.new sales.
• Increased the Modular - US segment revenues which represents 89.0%90.3% of revenue for the three months ended JuneSeptember 30, 2018, by $26.6$93.9 million, or 27.1%90.5%, 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.
- Average modular space monthly rental rate growth of 3.1% to $559 including the impacts of acquisitions primarily through increases in the price of our units. Organic increases on unit pricing and VAPS pricing and penetration on the Williams Scotsman legacy fleet were partially offset by lower rates on units acquired from Acton and Tyson and to a lesser extent, ModSpace, and by lower VAPS pricing and penetration on all acquired fleet; and
- Increased average modular space units on rent by 31,795 units, or 87.9%, due to of the Acton, Tyson, and ModSpace acquisitions; and
- Average modular space monthly utilization increased 160 basis points (“bps”) to 73.8% for the three months ended September 30, 2018 as compared to the three months ended June 30, 2018. This increase was driven by higher utilization on the acquired ModSpace fleet as compared to the overall average including fleet acquired from Acton and Tyson. However, utilization decreased by 90 bps during the quarter as compared to the three months ended September 30, 2017, as a result of lower utilization on acquired fleet from Acton and Tyson; and
- On a pro-forma basis, including results of WillScot, Acton, and ModSpace for all periods presented, average modular space monthly rental rate increased 13.4% on consistent average modular space units on rent.
• Increased the Modular - Other North America segment revenues which represented 11.0%9.7% of revenues for the three months ended JuneSeptember 30, 2018, by $3.5$8.6 million, or 29.2%67.7% 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%
- Average modular space monthly rental rate increased 9.5% to $587; and 
- Average modular space units on rent increased by 2,154 units, or 40.8% as compared to the same period in 2017 driven primarily by acquired units from the ModSpace transaction, as well as organic increases at Williams Scotsman; and 
- Average modular space monthly utilization increased by 320 bps as compared to the same period in 2017 to 57.3%, and increased 20 bps as compared to the three months ended June 30, 2018.
- On a pro-forma basis, including results of WillScot and ModSpace for all periods presented, Modular - Other North America segment modular space units on rent decreased 3.6%, however average modular space monthly rental rate increased 0.9%.
• Generated Adjusted EBITDA of $58.5 million and $6.2 million for the Modular - US Segment and the Modular - Other North America Segment, respectively, for combined Adjusted EBITDA of $41.9$64.6 million between the Modular - US Segment and the Modular - Other North America Segment, representing an increase of $13.1$32.4 million or 45.5%100.6% as compared to the same period in 2017, which includes the impact of the Acton, Tyson, and TysonModSpace 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%80% of our revenues in the three months ended JuneSeptember 30, 2018, including the customer base from the Acton, Tyson, and TysonModSpace acquisitions. Market fundamentals underlying these markets are currentlyremain 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 and 2018 across the US also provide us confidence in continued demand for our products.

37


Although only 11.0%9.7% of our revenues for the three months ended JuneSeptember 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 improvementImprovement in average modular space monthly rental rates, average modular space units on rent, and average modular space monthly utilization continued in the third quarter 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 Operations
Three Months Ended JuneSeptember 30, 2018 Compared to the Three Months Ended JuneSeptember 30, 2017
Our consolidated statements of operations for the three months ended JuneSeptember 30, 2018 and 2017 are presented below:
Three Months Ended September 30, 2018 vs. 2017 $ Change
(in thousands)20182017
Revenues: 
Leasing and services revenue: 
Modular leasing $141,660 $75,320 $66,340 
Modular delivery and installation 46,777 24,627 22,150 
Sales: 
New units 20,920 9,609 11,311 
Rental units 9,567 6,606 2,961 
Total revenues 218,924 116,162 102,762 
Costs: 
Costs of leasing and services: 
Modular leasing 39,215 21,252 17,963 
Modular delivery and installation 42,390 23,932 18,458 
Costs of sales: 
New units 15,089 6,916 8,173 
Rental units 5,750 3,784 1,966 
Depreciation of rental equipment 35,534 19,009 16,525 
Gross profit 80,946 41,269 39,677 
Expenses: 
Selling, general and administrative 71,897 36,097 35,800 
Other depreciation and amortization 3,720 1,905 1,815 
Restructuring costs 6,137 1,156 4,981 
Currency gains, net (425)(4,270)3,845 
Other (income) expense, net (594)1,001 (1,595)
Operating income 211 5,380 (5,169)
Interest expense 43,447 30,106 13,341 
Interest income — (3,659)3,659 
Loss from continuing operations before income tax (43,236)(21,067)(22,169)
Income tax benefit (6,507)(7,632)1,125 
Loss from continuing operations (36,729)(13,435)(23,294)
Income from discontinued operations, net of tax — 5,078 (5,078)
Net loss (36,729)(8,357)(28,372)
Net loss attributable to non-controlling interest, net of tax (3,210)— (3,210)
Total loss attributable to WillScot $(33,519)$(8,357)$(25,162)
38
 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 installation31,413
 22,949
 8,464
Sales:     
New units5,236
 9,396
 (4,160)
Rental units2,435
 4,778
 (2,343)
Total revenues140,333
 110,077
 30,256
Costs:     
Costs of leasing and services:     
Modular leasing27,129
 21,340
 5,789
Modular delivery and installation30,127
 22,339
 7,788
Costs of sales:     
New units3,704
 6,766
 (3,062)
Rental units1,263
 2,575
 (1,312)
Depreciation of rental equipment23,470
 17,474
 5,996
Gross profit54,640
 39,583
 15,057
Expenses:     
Selling, general and administrative47,734
 31,652
 16,082
Other depreciation and amortization1,570
 1,890
 (320)
Restructuring costs449
 684
 (235)
Currency losses (gains), net572
 (6,497) 7,069
Other (income) expense, net(1,574) 461
 (2,035)
Operating income5,889
 11,393
 (5,504)
Interest expense12,155
 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 operations379
 (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 tax143
 —
 143
Total income (loss) attributable to WSC$236
 $(5,896) $6,132



Comparison of Three Months Ended JuneSeptember 30, 2018 and 2017
Revenue: Total revenue increased $30.2$102.7 million, or 27.4%88.4%, to $140.3$218.9 million for the three months ended JuneSeptember 30, 2018 from $110.1$116.2 million for the three months ended JuneSeptember 30, 2017. The increase was primarily the result of a 38.2%88.4% increase in leasing and services revenue driven by improved pricing and volumes. Average modular space monthly rental rates increased 3.2%3.7% to $551$561 for the three months ended JuneSeptember 30, 2018, and average modular space units on rent increased 13,84133,949 units, or 34.0%81.9%. 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.units for Acton, Tyson, and ModSpace. Improved volumes were driven by units acquired as part of the Acton, Tyson, and TysonModSpace acquisitions, and organic unit on rent growth, as well as increased modular delivery and installation revenues on the combined rental fleet of 37.1%90.2%. The increase in leasing and services revenue was partially offsetfurther complemented by decreasesincreases of $4.2$11.3 million, or 44.7%117.7%, and $2.3$3.0 million, or 48.9% in45.5% on new unit and rental unit sales, respectively, as compared to the same period in 2017. The decreaseincrease year over year in new andsales was primarily driven by a single large sale project within the US. Increases in rental unit sales was asprimarily a result of lower volumes of sales opportunitiesthe ModSpace acquisition and increased focus on our higher margin modular leasing business.larger post-acquisition fleet size.
On a pro-forma basis, including results of the Company,WillScot, Acton, Tyson, and TysonModSpace for all periods presented, total revenues increased $2.8$30.4 million, or 2.1%11.3%, year-over-year for the three months ended JuneSeptember 30, 2018. CoreIncreases were driven by core leasing and services revenues increased $12.8 million, or 10.7%, primarily reflectingas a 2.6% increase in average modular space units on rent andresult of a 9.8%12.0% increase in average modular space monthly rental rate. The increase in leasingrates, and services revenues was partially offset by a $10.0 million, or 56.5% decrease year over year indue to increased new and rental unit sales.
Total average units on rent for the three months ended JuneSeptember 30, 2018 and 2017 were 68,01791,194 and 53,019,53,705, respectively. The increase was due to units acquired as part of the Acton, Tyson, and TysonModSpace acquisitions, and organic improvements in modular space average units on rent, with modular space average units on rent increasing by 13,84133,949 units, or 34.0%81.9% for the three months ended JuneSeptember 30, 2018. Modular space average monthly rental rates increased 3.2%3.7% for the three months ended JuneSeptember 30, 2018. Portable storage average units on rent increased by 1,1573,540 units, or 9.4%28.9% for the three months ended JuneSeptember 30, 2018. Average portable storage monthly rental rates increased 4.4%2.6% for the three months ended JuneSeptember 30, 2018. The average modular space unit utilization rate during the three months ended JuneSeptember 30, 2018 was 70.3%71.8%, as compared to 69.8%71.3% 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 storagestorage unit utilization rate during the three months ended JuneSeptember 30, 2018 was 68.1%68.0%, as compared to 70.0%69.8% 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%37.0% and 36.0%35.5% for the three months ended JuneSeptember 30, 2018 and 2017, respectively. Our gross profit percentage, excluding the effects of depreciation, was 56.0%53.0% and 52.0% for the three months ended JuneSeptember 30, 2018 and 2017, respectively.
Gross profit increased $15.0$39.6 million, or 37.9%95.9%, to $54.6$80.9 million for the three months ended JuneSeptember 30, 2018 from $39.6$41.3 million for the three months ended JuneSeptember 30, 2017. The increase in gross profitprofit is a result of a $23.2 million$52.0 million increase in modular leasing and services gross profit and increased new unit and rental unit gross profit of $4.1 million. Increases in modular leasing and services gross profit were primarily as a result of increased revenues due to additional units on rent as a result of recent acquisitions 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$16.5 million as a result of additional rental equipment acquired as part of the Acton, Tyson, and ModSpace acquisitions, as well as continued capital investment in our existing rental equipment, 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.equipment.
Selling, General and Administrative: Selling, general and administrative expense (“SG&A”) increased $16.0$35.8 million, or 50.5%99.2%, to $47.7$71.9 million for the three months ended JuneSeptember 30, 2018, compared to $31.7$36.1 million for the three months ended JuneSeptember 30, 2017. $9.2$13.9 million of the SG&A increase was driven by discrete items including increased transaction feescosts of $3.3$5.4 million related to the pending ModSpace acquisition and increased integration costs of $4.8$7.5 million related primarily to the Acton integration, and increasedModSpace integrations. Additionally, stock compensation expense increased $1.1 million due to grants of $1.1 million.stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) to certain employees in the first quarter of 2018. The remaining increases of $6.8$21.9 million are primarily related to $2.7$2.4 million of increased public company costs including outside professional fees, and increased headcount, occupancy, and indirect tax costs allother SG&A cost increases as a result of which are partially driven by the Acton and Tysonoperating a larger operation as a result of our recent acquisitions and our expanded employee base and branch network. Cost synergies of approximately $2.4 million related to the Acton and Tyson acquisitions were realized during the quarter and our integration plan areplans remain on track. As of June 30,Effective November 1, 2018, we had ceased production activitiesour combined sales organization began writing all new contracts (including those associated with legacy ModSpace assets) from WillScot's operating and began exit activities at 90% of the Acton locations in overlapping markets.information technology platform. 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.plans for Acton and ModSpace. These increases were partially offset by a reduction of $3.2$7.6 million in corporate & other related to Algeco Group costs no longer included in our operations.

39


Other Depreciation and Amortization: Other depreciation and amortization decreased $0.3increased $1.8 million, or 15.8%94.7%, to $1.6$3.7 million for the three months ended JuneSeptember 30, 2018, compared to $1.9 million for the three months ended JuneSeptember 30, 2017.  The increase was driven primarily by depreciation on property, plant and equipment acquired as part of the Acton and ModSpace acquisitions in the first and third quarters, respectively.
Restructuring Costs: Restructuring costs were $0.4$6.1 million for the three months ended JuneSeptember 30, 2018 as compared to $0.7$1.2 million for the three months ended JuneSeptember 30, 2017. The 2018 restructuring charges relate primarily to employee termination and lease breakage costs related to the Acton acquisition.and ModSpace acquisitions and integrations. 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$3.9 million to a $0.6 million loss for the three months ended June 30, 2018 compared to a $6.5$0.4 million gain for the three months ended JuneSeptember 30, 2018 compared to a $4.3 million gain for the three months ended September 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$0.6 million of other income for the three months ended JuneSeptember 30, 2018 and $0.5$1.0 million of other expense for the three months ended JuneSeptember 30, 2017. The increase in other income was driven by insurance proceeds related to assets damaged during Hurricane Harveythe receipt of a settlement which contributed $1.8$0.8 million to other (income) expense, net, for the three months ended JuneSeptember 30, 2018.
Interest Expense: Interest expense decreased $17.7increased $13.3 million, or 59.2%44.2%, to $12.2$43.4 million for the three months ended JuneSeptember 30, 2018 from $29.9$30.1 million for the three months ended JuneSeptember 30, 2017. Upon consummation of the Business Combination in November 2017, we issued $300.0 million of 7.875% senior secured notes (the “Notes”“2022 Secured Notes”) and entered into a new $600.0 million ABL credit agreement (the “ABL Facility”)Facility to fund our operations as a stand-alone company. In the third quarter of 2018, as part of financing the ModSpace acquisition, we upsized our ABL Facility to $1.425 billion, issued $300.0 million related to the 2023 Secured Notes, and issued $200.0 million related to the Unsecured Notes. In connection with the ModSpace acquisition, the Company incurred bridge financing fees and upfront commitment fees of $20.5 million in the third quarter, which are not expected to reoccur.
The majority of the interest costs incurred during the three months ended JuneSeptember 30, 2017 relate to the previous debt structure of the Company as part of the Algeco Group. The decreaseincrease in interest expense is driven by our lowerrecent debt balance in 2018 under our new debt structure as compared toissuances including the Algeco Group debt structure in place in 2017.$20.5 million of bridge financing fees and upfront commitment fees. See Note 67 to the condensed consolidated financial statements for further discussion of our debt.debt, and the additional debt incurred during the third quarter as part of financing the ModSpace acquisition.
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 duerelated to the decrease ininterest earned on 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 $1.3decreased $1.1 million to $6.6$6.5 million for the three months ended JuneSeptember 30, 2018 compared to $5.3$7.6 million for the three months ended JuneSeptember 30, 2017. The increasedecrease in income tax benefit was principallymainly due to discrete benefits related to state enacted lawsa lower statutory income tax rate in the three months ended June 30, 2018, which wereUS partially offset by a smaller pre-tax loss. discrete tax benefits recorded at September 30, 2018 as compared to September 30, 2017. 



Six
40


Nine Months Ended JuneSeptember 30, 2018 Compared to the SixNine Months Ended JuneSeptember 30, 2017
Our consolidated statements of net loss for the sixnine months ended JuneSeptember 30, 2018 and 2017 are presented below:
Nine Months Ended September 30, 2018 vs. 2017 $ Change
(in thousands)20182017
Revenues: 
Leasing and services revenue: 
Modular leasing $340,171 $217,261 $122,910 
Modular delivery and installation 104,440 66,580 37,860 
Sales: 
New units 33,584 24,491 9,093 
Rental units 15,813 17,228 (1,415)
Total revenues 494,008 325,560 168,448 
Costs: 
Costs of leasing and services: 
Modular leasing 93,506 61,694 31,812 
Modular delivery and installation 98,038 64,404 33,634 
Costs of sales: 
New units 23,780 17,402 6,378 
Rental units 9,328 10,067 (739)
Depreciation of rental equipment 82,849 53,203 29,646 
Gross profit 186,507 118,790 67,717 
Expenses: 
Selling, general and administrative 164,845 100,510 64,335 
Other depreciation and amortization 7,726 5,736 1,990 
Restructuring costs 7,214 2,124 5,090 
Currency losses (gains), net 1,171 (12,769)13,940 
Other (income) expense, net (5,013)1,592 (6,605)
Operating income 10,564 21,597 (11,033)
Interest expense 67,321 84,674 (17,353)
Interest income — (9,752)9,752 
Loss from continuing operations before income tax (56,757)(53,325)(3,432)
Income tax benefit (13,572)(17,770)4,198 
Loss from continuing operations(43,185)(35,555)(7,630)
Income from discontinued operations, net of tax — 11,123 (11,123)
Net loss(43,185)(24,432)(18,753)
Net loss attributable to non-controlling interest, net of tax(3,715)— (3,715)
Total loss attributable to WillScot $(39,470)$(24,432)$(15,038)
41
 Six Months Ended June 30,2018 vs. 2017 $ Change
(in thousands)2018 2017 
Revenues:     
Leasing and services revenue:     
Modular leasing$198,511
 $141,941
 $56,570
Modular delivery and installation57,663
 41,953
 15,710
Sales:     
New units12,664
 14,882
 (2,218)
Rental units6,246
 10,622
 (4,376)
Total revenues275,084
 209,398
 65,686
Costs:     
Costs of leasing and services:     
Modular leasing54,291
 40,442
 13,849
Modular delivery and installation55,648
 40,472
 15,176
Costs of sales:     
New units8,691
 10,486
 (1,795)
Rental units3,578
 6,283
 (2,705)
Depreciation of rental equipment47,315
 34,194
 13,121
Gross profit105,561
 77,521
 28,040
Expenses:     
Selling, general and administrative92,948
 64,413
 28,535
Other depreciation and amortization4,006
 3,831
 175
Restructuring costs1,077
 968
 109
Currency losses (gains), net1,596
 (8,499) 10,095
Other (income) expense, net(4,419) 591
 (5,010)
Operating income10,353
 16,217
 (5,864)
Interest expense23,874
 54,568
 (30,694)
Interest income—
 (6,093) 6,093
Loss from continuing operations before income tax(13,521) (32,258) 18,737
Income tax benefit(7,065) (10,138) 3,073
Loss from continuing operations(6,456) (22,120) 15,664
Income from discontinued operations, net of tax—
 6,045
 (6,045)
Net loss(6,456) (16,075) 9,619
Net loss attributable to non-controlling interest, net of tax(505) —
 (505)
Total loss attributable to WSC$(5,951) $(16,075) $10,124



Comparison of SixNine Months Ended JuneSeptember 30, 2018 and 2017
Revenue: Total revenue increased $65.7$168.4 million, or 31.4%51.7%, to $275.1$494.0 million for the sixnine months ended JuneSeptember 30, 2018 from $209.4$325.6 million for the sixnine months ended JuneSeptember 30, 2017. The increase was primarily the result of a 39.1%56.4% increase in leasing and services revenue driven by improved pricing and volumes. Average modular space monthly rental rates increased 3.6%4.7% for the sixnine months ended JuneSeptember 30, 2018, and average modular space units on rent increased 14,02220,047 units, or 34.8%49.3%. 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.units for Acton, Tyson, and ModSpace. Improved volumes were driven by units acquired as part of the Acton, Tyson, and TysonModSpace acquisitions and organic unit on rent growth, as well as increased modular delivery and installation revenues on the combined rental fleet of 37.4%56.8%. The increase in leasing and services revenuerevenues was further complemented by an increase of $9.1 million, or 37.1% in new unit sales as compared to the same period in 2017 primarily driven by a single large sale project in the third quarter within the US. These increases were partially offset by decreases of $2.2 million, or 14.8% and $4.4 million, or 41.5%a reduction in new unit and rental unit sales respectively,of $1.4 million, or 8.1% in rental unit sales 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,WillScot, Acton, Tyson, and TysonModSpace for all periods presented, total revenues increased $14.1$67.3 million, or 5.4%9.1%, year-over-year for the sixnine months ended JuneSeptember 30, 2018. CoreIncreases were driven by core leasing and services revenues increased $25.8 million, or 11.2%, primarily reflectingas a 3.5% increase in average modular space units on rent andresult a 9.3%of a 10.6% increase in average modular space monthly rental rate. Therates and a 0.7% increase in leasingaverage modular space units of rent, and services revenues was partially offset by a $11.7 million, or 38.2% decrease year over year indue to increased new and rental unit sales.
Total average units on rent for the sixnine months ended JuneSeptember 30, 2018 and 2017 were 68,12675,079 and 53,055,53,279, respectively. The increase was due to units acquired as part of the Acton, Tyson, and TysonModSpace acquisitions and organic improvements in modular space average units on rent, with modular space average units on rent increased by 14,02220,047 units, or 34.8%49.3% for the sixnine months ended JuneSeptember 30, 2018. Modular space average monthly rental rates increased 3.6%4.7% for the sixnine months ended JuneSeptember 30, 2018. Portable storage average units on rent increasing by 1,0491,753 units, or 8.2%13.9% for the sixnine months ended JuneSeptember 30, 2018. Average portable storage monthly rental rates increased 4.4%7.9% for the sixnine months ended JuneSeptember 30, 2018. The average modular space unit utilization rate during the sixnine months ended JuneSeptember 30, 2018 was 70.3%70.1%, as compared to 69.1%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. The average portable storage unit utilization rate during the sixnine months ended JuneSeptember 30, 2018 was 69.4%68.3%, as compared to 72.1%71.4% 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%38.8% and 38.1%36.4% for the sixnine months ended JuneSeptember 30, 2018 and 2017, respectively. Our gross profit percentage, excluding the effects of depreciation, was 56.0%55.0% and 53.0% for the sixnine months ended JuneSeptember 30, 2018 and 2017, respectively.
Gross profit increased $28.1$67.7 million, or 36.3%57.0%, to $105.6$186.5 million for the sixnine months ended JuneSeptember 30, 2018 from $77.5$118.8 million for the sixnine months ended JuneSeptember 30, 2017. The increase in gross profit is a result of a $43.3$95.3 million increase in modular leasing gross profit and increased new unit and rental unit gross profit of $2.0 million. Increases in modular leasing and services gross profit were primarily as a result of increased revenues due to additional units on rent as a result of recent acquisitions 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$29.6 million as a result of additional rental equipment acquired as part of the Acton, Tyson, and ModSpace acquisitions, as well as continued capital investment in our existing rental equipment, 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.equipment.
Selling, General and Administrative: Selling, general and administrative expense (“SG&A”)&A expenses increased $28.5$64.3 million, or 44.3%64.0%, to $92.9$164.8 million for the sixnine months ended JuneSeptember 30, 2018, compared to $64.4$100.5 million for the sixnine months ended JuneSeptember 30, 2017. $11.8$25.8 million of the SG&A expenses increase was driven by discrete items including increased transaction feescosts of $3.3$8.7 million related to the pending ModSpace acquisition and increased integration costs of $7.4$14.9 million related to the Acton and Tyson integrations, and increasedModSpace integrations. Additionally, stock compensation expense increased by $2.2 million due to grants of $1.2 million.stock options, RSAs and RSUs to certain employees in the first quarter of 2018. The remaining increases of $16.7$38.5 million are primarily related to $6.2$8.6 million of increased public company costs including outside professional fees, and increased headcount, occupancy, and indirect tax costs allother SG&A cost increases as a result of which are partially driven by the Acton and Tysonoperating a larger operation as a result of our recent acquisitions and our expanded employee base and branch network. CostWe estimate cost synergies of approximately $3.9 million related to the Acton and Tyson acquisitions have been realized year to date as of the third quarter and our integration plan areplans remain on track. As of June 30,Effective November 1, 2018, we had ceased production activitiesbegan delivering all units acquired from ModSpace under a combined operating and began exit activities at 90% of the Acton locations in overlapping markets.information technology platform. 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.plans for Acton and ModSpace. These increases were partially offset by a reduction of $8.0$15.7 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$2.0 million, or 5.3%35.1%, to $4.0$7.7 million for the sixnine months ended JuneSeptember 30, 2018, compared to $3.8$5.7 million for the sixnine months ended JuneSeptember 30, 2017. The increase was driven primarily by depreciation on property, plant and equipment acquired as part of the Acton acquisition
42


and ModSpace acquisitions in the first quarter, partially offset by a reduction in total property, plant and equipment for the six months ended June 30, 2018.third quarters, respectively.
Restructuring Costs: Restructuring costs were $1.1$7.2 million for the sixnine months ended JuneSeptember 30, 2018 as compared to $1.0$2.1 million for the sixnine months ended JuneSeptember 30, 2017. The 2018 restructuring charges relate primarily to employee termination and lease breakage costs related to the Acton and Tyson acquisitions.ModSpace acquisitions and integrations. 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$14.0 million to a $1.6$1.2 million loss for the sixnine months ended JuneSeptember 30, 2018 compared to a $8.5$12.8 million gain for the sixnine months ended JuneSeptember 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$5.0 million of income for the sixnine months ended JuneSeptember 30, 2018 and $0.6$1.6 million of other expense for the sixnine months ended JuneSeptember 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 sixnine months ended JuneSeptember 30, 2018.
Interest Expense: Interest expense decreased $30.7$17.4 million, or 56.2%20.5%, to $23.9$67.3 million for the sixnine months ended JuneSeptember 30, 2018 from $54.6$84.7 million for the sixnine months ended JuneSeptember 30, 2017. Upon consummation of the Business Combination in November 2017, we issued the 2022 Secured Notes and entered into the ABL Facility to fund our operations as a stand-alone company. In the third quarter as part of financing the ModSpace acquisition, we upsized our ABL Facility to $1.425 billion, issued the 2023 Secured Notes, and issued the Unsecured Notes. In connection with the ModSpace acquisition, the Company incurred bridge financing fees and upfront commitment fees of $20.5 million in the third quarter, which are not expected to reoccur.
The majority of the interest costs incurred during the sixnine months ended JuneSeptember 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 average debt balance in 2018 under our new debt structure as compared to the Algeco Group debt structure in place in 2017.2017, partially offset by bridge financing and upfront commitment fees of $20.5 million incurred in connection with the ModSpace acquisition. See Note 67 to the condensed consolidated financial statements for further discussion of our debt.debt, and the additional debt incurred during the third quarter as part of financing the ModSpace acquisition, which we expect will increase our interest expense in future periods.
Interest Income: Interest income decreased $6.1$9.8 million, or 100.0%, to zero for the sixnine months ended JuneSeptember 30, 2018 from $6.1$9.8 million for the sixnine months ended JuneSeptember 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$4.2 million to $7.1$13.6 million for the sixnine months ended JuneSeptember 30, 2018 compared to $10.1$17.8 million for the sixnine months ended JuneSeptember 30, 2017. The decrease in income tax benefit was principallymainly due to a smaller pre-tax loss and the reduction to the corporatelower statutory income tax rate from 35%in the US partially offset by discrete tax benefits recorded at September 30, 2018 as compared to 21% under the 2017 Tax Act enacted on December 22,September 30, 2017.

Business Segment Results
Our principal line of business is modular leasing and sales. The Company formerly operated a Remote Accommodations Business, which was considered a single reportable segment, andsegment. The Remote Accommodations Business 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. The Acton and Tyson acquisitions are both included in the Modular - US segment, and ModSpace is included in both Modular segments as ModSpace operated in the United States and Canada. Corporate and other represents primarily SG&A related to the Algeco Group’s corporate costs, which were not incurred by WSCWillScot in 2018.
The following tables and discussion summarize our reportable segment financial information for the three and sixnine months ended JuneSeptember 30, 2018 and 2017. Future changes to our organizational structure may result in changes to the segments disclosed.

43


Comparison of Three Months Ended JuneSeptember 30, 2018 and 2017
Three Months Ended September 30, 2018 
(in thousands, except for units on rent and rates)Modular - USModular - Other North AmericaTotal
Revenue $197,625 $21,299 $218,924 
Gross profit $73,007 $7,939 $80,946 
Adjusted EBITDA $58,454 $6,164 $64,618 
Capital expenditures for rental equipment $43,007 $3,735 $46,742 
Modular space units on rent (average during the period) 67,978 7,435 75,413 
Average modular space utilization rate 73.8 %57.3 %71.8 %
Average modular space monthly rental rate $559 $587 $561 
Portable storage units on rent (average during the period) 15,373 408 15,781 
Average portable storage utilization rate 68.3 %56.4 %68.0 %
Average portable storage monthly rental rate $120 $101 $120 
 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 rate72.2% 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 rate68.5% 57.4% 68.1%
Average portable storage monthly rental rate$120
 $116
 $119


Three Months Ended June 30, 2017Three Months Ended September 30, 2017 
(in thousands, except for units on rent and rates)Modular - US Modular - Other North America Corporate & Other Total(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
Revenue $103,678 $12,723 $(239)$116,162 
Gross profit$35,954
 $3,769
 $(140) $39,583
Gross profit $37,766 $3,744 $(241)$41,269 
Adjusted EBITDA$26,329
 $2,506
 $(2,588) $26,247
Adjusted EBITDA $29,177 $2,961 $(2,753)$29,385 
Capital expenditures for rental equipment$25,909
 $1,716
 $—
 $27,625
Capital expenditures for rental equipment $24,147 $1,361 $— $25,508 
Modular space units on rent (average during the period)35,780
 4,900
 —
 40,680
Modular space units on rent (average during the period) 36,183 5,281 — 41,464 
Average modular space utilization rate73.8% 50.0% —% 69.8%Average modular space utilization rate 74.7 %54.1 %— %71.3 %
Average modular space monthly rental rate$535
 $534
 $—
 $534
Average modular space monthly rental rate $542 $536 $— $541 
Portable storage units on rent (average during the period)11,988
 351
 —
 12,339
Portable storage units on rent (average during the period) 11,894 347 — 12,241 
Average portable storage utilization rate70.7% 51.8% —% 70.0%Average portable storage utilization rate 70.6 %51.9 %— %69.8 %
Average portable storage monthly rental rate$114
 $118
 $—
 $114
Average portable storage monthly rental rate $117 $123 $— $117 
Modular - US Segment
Revenue: Total revenue increased $26.6$93.9 million, or 27.1%90.5%, to $124.8$197.6 million for the three months ended JuneSeptember 30, 2018 from $98.2$103.7 million for the three months ended JuneSeptember 30, 2017. Modular leasing revenue increased $26.2$61.4 million, or 40.4%92.2%, driven by improved pricing and volumes. Average modular space monthly rental rates increased 2.6%3.1% for the three months ended JuneSeptember 30, 2018, and average modular space units on rent increased 13,21731,795 units, or 36.9%87.9%. 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, Tyson, and TysonModSpace acquisitions, and organic unit on rent growth, as well as increased modular delivery and installation revenues on the combined rental fleet of 30.5%89.1%. The increases in leasing and services revenue were partially offsetcomplemented by decreasesincreases in sales revenues. New unit sales revenue decreased $4.5increased $10.1 million, or 52.3%111.0% and rental unit sales revenue decreased $1.5increased $2.7 million, or 39.5%45.8%. The decrease year over yearincrease year-over-year in new andsales was primarily driven by a single large sale project. Increases in rental unit sales was asprimarily a result of lower volumes of sales opportunitiesthe ModSpace acquisition and increased focus on our higher margin modular leasing business.larger post-acquisition fleet size.
On a pro-forma basis, including results of the Company,WillScot, Acton, Tyson, and TysonModSpace 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% declinepricing improvement continued in new and rental unit sales, offset by an $8.7 million, or 8.0% increasethe third quarter, with increases in our core leasing and services revenue. This increase was driven by continued improved pricing and volumes. Pro-formapro-forma average modular space monthly rental rates increased $49,of $65, or 9.8%13.4% for the three months ended JuneSeptember 30, 2018, and pro-forma average modular2018. Modular space units on rent increased 765 units, or 1.6%. Pro-forma0.1% on a pro-forma basis to 86,953 and pro-forma utilization for our modular space units increased to 72.2%74.9%, up 170320 bps from 70.5%71.8% for the three months ended JuneSeptember 30, 2017.
Gross Profit: Gross profit increased $13.8$35.2 million, or 38.4%93.1%, to $49.7$73.0 million for the three months ended JuneSeptember 30, 2018 from $35.9$37.8 million for the three months ended JuneSeptember 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, Tyson and TysonModSpace acquisitions. The increase in gross profit from modular leasing and sales revenues was partially offset by an $5.7$16.0 million increase in depreciation of rental equipment primarily related to acquired units in the Acton, Tyson, and TysonModSpace acquisitions as well as decreased gross profit of $2.0 million related to new and rental unit sales for the three months ended JuneSeptember 30, 2018.
44


Adjusted EBITDA: Adjusted EBITDA increased $11.8$29.2 million, or 44.9%100.0%, to $38.1$58.4 million for the three months ended JuneSeptember 30, 2018 from $26.3$29.2 million for the three months ended JuneSeptember 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$15.5 million, of which $2.7 was driven by increased$2.4 million represents public company costs including outside professional fees. The majority of the remaining increase was driven by increased headcount, occupancy, and indirect tax costs allother SG&A cost increases as a result of which are partially driven by the Acton and Tysonoperating a larger operation as a result of our recent 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$18.9 million, or 19.7%78.4%, to $31.0$43.0 million for the three months ended JuneSeptember 30, 2018 from $25.9$24.1 million for the three months ended JuneSeptember 30, 2017. Net capital expenditures also increased $5.1$16.2 million, or 23.1%89.0%, to $27.2$34.4 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 for maintenance of a larger fleet following our Acton, Tyson, and TysonModSpace acquisitions.

Modular - Other North America Segment
Revenue: Total revenue increased $3.5$8.6 million, or 29.2%67.7%, to $15.5$21.3 million for the three months ended JuneSeptember 30, 2018 from $12.0$12.7 million for the three months ended JuneSeptember 30, 2017. Modular leasing revenue increased $2.0$4.8 million, or 24.1%53.9%, driven by improved pricing and volumes in the quarter. Average modular space monthly rental rates increased 7.3%9.5% and average modular space units on rent increased by 6242,154 units, or 12.7%40.8% for the period, resulting in a higher modular space utilization which increased by 710320 bps. 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, further lifted by the average modular space monthly rental rates on acquired ModSpace units in Canada. Improved volumes were driven by units acquired as part of the ModSpace acquisition. Modular delivery and installation revenues increased $2.0$2.4 million, or 100.0%96.0%, due primarily to a large camp installation during the quarter. Newnew unit sales revenue increased $0.3$1.2 million, or 37.5%. Rental240.0%, and rental unit sales revenue decreased $0.8increased $0.2 million, or 88.9%.25.0%, all of which were primarily driven by the ModSpace acquisition.
On a pro-forma basis, including results of the WillScot and ModSpace for all periods presented, pricing improvement continued in the third quarter, with increases in pro-forma average modular space monthly rental rates of $5, or 0.9% for the three months ended September 30, 2018. Modular space units on rent decreased 3.6% on a pro-forma basis however, to 9,607 and pro-forma utilization for our modular space units decreased to 56.8%, down 110 bps from 57.9% for the three months ended September 30, 2017. 
Gross Profit: Gross profit increased $1.1$4.2 million, or 28.9%113.5%, to $4.9$7.9 million for the three months ended JuneSeptember 30, 2018 from $3.8$3.7 million for the three months ended JuneSeptember 30, 2017. The effects of favorable foreign currency movements increased gross profit by $0.1$0.2 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 complimentedcomplemented by higher modular delivery and installation margins. These were slightly offset by increased deprecationdepreciation of rental equipment of $0.4$0.5 million for three months ended JuneSeptember 30, 2018.
Adjusted EBITDA: Adjusted EBITDA increased $1.3$3.2 million, or 52.0%106.7%, to $3.8$6.2 million for the three months ended JuneSeptember 30, 2018 from $2.5$3.0 million for the three months ended JuneSeptember 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.rates, partially offset by increased SG&A of $1.7 million, also driven by the ModSpace acquisition.
Capital Expenditures for Rental Equipment: Capital expenditures of $1.7increased $2.3 million, or 164.3%, to $3.7 million for the three months ended JuneSeptember 30, 2018 were flat compared tofrom $1.4 million for the three months ended JuneSeptember 30, 2017. Net capital expenditures also increased $0.8$2.1 million, or 350.0%, to $1.6 million$2.7 million. The increases for both were driven by increased spend for refurbishments, new fleet, and VAPS to drive revenue growth and for maintenance of a larger fleet following the decrease of $0.8 million of proceeds from rental unit sales.ModSpace acquisitions.
Corporate and Other
Gross 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$2.8 million for the three months ended JuneSeptember 30, 2017, compared to no costs for the three months ended JuneSeptember 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.

45


Comparison of SixNine Months Ended JuneSeptember 30, 2018 and 2017
Nine Months Ended September 30, 2018 
(in thousands, except for units on rent and rates)Modular - USModular - Other North AmericaTotal
Revenue $444,525 $49,483 $494,008 
Gross profit $169,556 $16,951 $186,507 
Adjusted EBITDA $129,170 $12,856 $142,026 
Capital expenditures for rental equipment $104,462 $7,043 $111,505 
Modular space units on rent (average during the period) 54,592 6,144 60,736 
Average modular space utilization rate 71.9 %57.1 %70.1 %
Average modular space monthly rental rate $553 $568 $555 
Portable storage units on rent (average during the period) 13,964 379 14,343 
Average portable storage utilization rate 68.6 %56.5 %68.3 %
Average portable storage monthly rental rate $124 $111 $123 
 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 rate72.2% 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 rate69.8% 56.4% 69.4%
Average portable storage monthly rental rate$118
 $116
 $118


Six Months Ended June 30, 2017Nine Months Ended September 30, 2017 
(in thousands, except for units on rent and rates)Modular - US Modular - Other North America Corporate & Other Total(in thousands, except for units on rent and rates) Modular - USModular - Other North AmericaCorporate & OtherTotal
Revenue$185,624
 $24,069
 $(295) $209,398
Revenue $289,302 $36,792 $(534)$325,560 
Gross profit$69,769
 $8,035
 $(283) $77,521
Gross profit $107,535 $11,779 $(524)$118,790 
Adjusted EBITDA$50,012
 $5,625
 $(7,444) $48,193
Adjusted EBITDA $79,189 $8,586 $(10,197)$77,578 
Capital expenditures for rental equipment$47,958
 $2,344
 $—
 $50,302
Capital expenditures for rental equipment $72,105 $3,705 $— $75,810 
Modular space units on rent (average during the period)35,438
 4,868
 —
 40,306
Modular space units on rent (average during the period) 35,679 5,010 — 40,689 
Average modular space utilization rate73.0% 49.6% —% 69.1%Average modular space utilization rate 73.6 %51.1 %— %69.8 %
Average modular space monthly rental rate$524
 $531
 $—
 $524
Average modular space monthly rental rate $530 $532 $— $530 
Portable storage units on rent (average during the period)12,394
 355
 —
 12,749
Portable storage units on rent (average during the period) 12,238 352 — 12,590 
Average portable storage utilization rate72.9% 52.2% —% 72.1%Average portable storage utilization rate 72.2 %52.1 %— %71.4 %
Average portable storage monthly rental rate$113
 $114
 $—
 $113
Average portable storage monthly rental rate $114 $117 $— $114 
Modular - US Segment
Revenue: Total revenue increased $61.3$155.2 million, or 33.0%53.6%, to $246.9$444.5 million for the sixnine months ended JuneSeptember 30, 2018 from $185.6$289.3 million for the sixnine months ended JuneSeptember 30, 2017. Modular leasing revenue increased $52.8$114.2 million, or 41.9%59.3%, driven by improved pricing and volumes. Average modular space monthly rental rates increased 3.2%4.3% for the sixnine months ended JuneSeptember 30, 2018, and average modular space units on rent increased 13,40318,913 units, or 37.8%53.0%. 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, Tyson, and TysonModSpace acquisitions and organic unit on rent growth, as well as increased modular delivery and installation revenues on the combined rental fleet of 34.2%54.0%. The increases in leasing and services revenue were partially offsetfurther complemented by decreasesincreases in sales revenues. New unit sales revenue decreased $1.6increased $8.6 million, or 12.7%39.8% and rental unit sales revenue decreased $3.0slightly by $0.3 million, or 34.5%2.1%. The decrease year over yearincrease year-over-year in new and rental unit sales was asprimarily driven by a result of lower volumes of sales opportunities and increased focus on our higher margin modular leasing business.single large sale project in the third quarter.
On a pro-forma basis, including results of Williams Scotsman,the WillScot, Acton, Tyson, and TysonModSpace for all periods presented, total revenues increased $10.2 million, or 4.3% year-over-year driven by organic growthpricing improvement continued in leasing and services revenues of $19.8 million, or 9.4%, driven by improved pricing and volumes. Pro-formathe third quarter, with increases in pro-forma average modular space monthly rental rates increased $48,of $56, or 9.7%11.9% for the sixnine months ended JuneSeptember 30, 2018, and pro-forma average modular2018. Modular space units on rent increased 1,195787 units, or 2.5%. Pro-forma0.9% on a pro-forma basis to 85,867 and pro-forma utilization for our modular space units increased to 72.2%74.7%, up 260380 bps from 69.6%70.9% for the sixnine months ended JuneSeptember 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$62.0 million, or 38.4%57.7%, to $96.6$169.5 million for the sixnine months ended JuneSeptember 30, 2018 from $69.8$107.5 million for the sixnine months ended JuneSeptember 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, Tyson, and TysonModSpace acquisitions. The increases in gross profit from modular leasing and service revenues were partially offset by a $12.5$28.6 million increase in depreciation of rental equipment for the sixnine months ended JuneSeptember 30, 2018 as a result of continued capital investment in our fleet, including additional depreciation related to the Acton, Tyson, and TysonModSpace acquisitions.
46


Adjusted EBITDA: Adjusted EBITDA increased $20.7$49.9 million, or 41.4%63.0%, to $70.7$129.1 million for the sixnine months ended JuneSeptember 30, 2018 from $50.0$79.2 million for the sixnine months ended JuneSeptember 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 sixnine months ended JuneSeptember 30, 2018. These increases were partially offset by increases in SG&A, excluding discrete items, of $23.1$24.7 million, of which $6.2$8.6 million was driven by increasedrepresents public company costs including outside professional fees. The majority of the remaining increase was driven by increased headcount, occupancy, and indirect tax costs allother SG&A cost increases as a result of which are partially driven by the Acton and Tysonoperating a larger operation as a result of our recent acquisitions and our expanded employee base and branch network.
Capital Expenditures for Rental Equipment:Equipment: Capital expenditures increased $13.5$32.4 million, or 28.1%44.9%, to $61.5$104.5 million for the sixnine months ended JuneSeptember 30, 2018 from $48.0$72.1 million for the sixnine months ended JuneSeptember 30, 2017. Net capital expenditures increased $10.7$27.0 million, or 27.2%47.0%, to $50.0$84.5 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 Tysonrecent acquisitions.

Modular - Other North America Segment
Revenue: Total revenue increased $4.2$12.8 million, or 17.5%34.8%, to $28.2$49.6 million for the sixnine months ended JuneSeptember 30, 2018 from $24.0$36.8 million for the sixnine months ended JuneSeptember 30, 2017. Modular leasing revenue increased $3.4$8.2 million, or 21.0%32.7%, driven by improved pricing and volumes. Average modular space monthly rental rates increased 4.9%6.8% and average modular space units on rent increased by 6191,134 units, or 12.7%22.6% for the period resultingdriven by organic unit on rent growth as well as due to the ModSpace acquisition in the third quarter. Both of these resulted in a higher modular space utilization which increased by 740600 bps. Modular delivery and installation revenues increased $2.7$5.2 million, or 75.0%85.2%, due primarily to a large camp installation during the second quarter.quarter and due to increased deliveries and returns as a result of the ModSpace acquisition. New unit sales revenue decreased $0.6increased $0.5 million, or 26.1%17.2% and rental unit sales revenue decreased $1.3$1.1 million, or 68.4%40.7% associated with decreased sale opportunities.
On a pro-forma basis, including results of the WillScot and ModSpace for all periods presented, pricing improvement continued, with increases in pro-forma average modular space monthly rental rates of $4, or 0.7% for the nine months ended September 30, 2018, however, pro-forma average modular space units on rent decreased 151 units, or 1.6%. Pro-forma utilization for our modular space units was essentially flat in the period at 56.6%.
Gross Profit: Gross profit increased $1.0$5.2 million, or 12.5%44.1%, to $9.0$17.0 million for the sixnine months ended JuneSeptember 30, 2018 from $8.0$11.8 million for the sixnine months ended JuneSeptember 30, 2017.The effects of favorable foreign currency movements increased gross profit by $0.3 million$0.5million 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$1.0 million, or 10.3%10.9%.
Adjusted EBITDA: Adjusted EBITDA increased $1.1$4.3 million, or 19.6%50.0%, to $6.7$12.9 million for the sixnine months ended JuneSeptember 30, 2018 from $5.6$8.6 million for the sixnine months ended JuneSeptember 30, 2017. This increase was driven by improved leasing and services gross profit, partially offset by increased SG&A of $0.5$2.2 million, or 6.0%17.7%.
Capital Expenditures for Rental Equipment: Capital expenditures increased $1.0$3.3 million, or 43.5%89.2%, to $3.3$7.0 million for the sixnine months ended JuneSeptember 30, 2018 from $2.3$3.7 million for the sixnine months ended JuneSeptember 30, 2017. Net capital expenditures increased $2.3$4.4 million to $2.7$5.4 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 Other
Gross 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$10.2 million for the sixnine months ended JuneSeptember 30, 2017, compared to no costs for the sixnine months ended JuneSeptember 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.


47


Other Non-GAAP Financial Data and Reconciliations
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.
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 EBITDA
We 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 including employee and lease termination costs.
• Costs to integrate acquired companies.
companies, including outside professional fees, fleet relocation expenses, employee training costs, and other costs.
• Non-cash charges for stock compensation plans.
• Other expense includes consulting expenses related to certain one-time projects, financing costs not classified as interest expense and 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’sWillScot’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; and
• other companies in our industry may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.

48


Adjusted EBITDA
Because 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,Three Months Ended September 30, Nine Months Ended September 30, 
(in thousands)2018 2017 2018 2017(in thousands)2018201720182017
Net income (loss)$379
 $(5,896) $(6,456) $(16,075)
Net loss Net loss $(36,729)$(8,357)$(43,185)$(24,432)
Income from discontinued operations, net of tax—
 3,840
 —
 6,045
Income from discontinued operations, net of tax — 5,078 — 11,123 
Income (loss) from continuing operations379
 (9,736) (6,456) (22,120)
Loss from continuing operations Loss from continuing operations (36,729)(13,435)(43,185)(35,555)
Income tax benefit(6,645) (5,269) (7,065) (10,138)Income tax benefit (6,507)(7,632)(13,572)(17,770)
Loss from continuing operations before income tax(6,266) (15,005) (13,521) (32,258)Loss from continuing operations before income tax (43,236)(21,067)(56,757)(53,325)
Interest expense, net12,155
 26,398
 23,874
 48,475
Interest expense, net (a) Interest expense, net (a) 43,447 26,447 67,321 74,922 
Depreciation and amortization25,040
 19,364
 51,321
 38,025
Depreciation and amortization 39,254 20,914 90,575 58,939 
Currency losses (gains), net572
 (6,497) 1,596
 (8,499)
Currency (gains) losses, net Currency (gains) losses, net (425)(4,270)1,171 (12,769)
Restructuring costs449
 684
 1,077
 968
Restructuring costs 6,137 1,156 7,214 2,124 
Transaction fees4,118
 776
 4,118
 862
Transaction costsTransaction costs10,672 5,233 14,790 6,095 
Integration costs4,785
 —
 7,415
 —
Integration costs 7,453 — 14,868 — 
Stock compensation expense1,054
 —
 1,175
 —
Stock compensation expense 1,050 — 2,225 — 
Other expense9
 527
 353
 620
Other expense 266 972 619 1,592 
Adjusted EBITDA$41,916
 $26,247
 $77,408
 $48,193
Adjusted EBITDA $64,618 $29,385 $142,026 $77,578 
(a) Interest expense for the three and nine months ended September 30, 2018 includes $20.5 million of bridge financing fees and commitment fees related to the ModSpace acquisition. (a) Interest expense for the three and nine months ended September 30, 2018 includes $20.5 million of bridge financing fees and commitment fees related to the ModSpace acquisition.
Adjusted Gross Profit
We 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 September 30, Nine Months Ended September 30, 
(in thousands)2018201720182017
Gross profit$80,946 $41,269 $186,507 $118,790 
Depreciation of rental equipment35,534 19,009 82,849 53,203 
Adjusted Gross Profit$116,480 $60,278 $269,356 $171,993 
 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 equipment23,470
 17,474
 47,315
 34,194
Adjusted Gross Profit$78,110
 $57,057
 $152,876
 $111,715


Net Capex for Rental Equipment
We 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.

49


The following table provides an unaudited reconciliation of purchase of rental equipment to Net Capital Expenditures for Rental Equipment:
Three Months Ended September 30, Nine Months Ended September 30, 
(in thousands)2018201720182017
Total purchase of rental equipment and refurbishments$(46,742)$(28,053)$(111,505)$(82,276)
Total purchases of rental equipment from discontinued operations— (2,545)— (6,466)
Total purchases of rental equipment from continuing operations$(46,742)$(25,508)$(111,505)$(75,810)
Total proceeds from sale of rental equipment $9,560 8,128 $21,593 $18,750 
Total proceeds from sale of rental equipment from discontinued operations — (1,522)— (1,522)
Total proceeds from sale of rental equipment from continuing operations $9,560 $6,606 $21,593 $17,228 
Net Capital Expenditures for Rental Equipment$(37,182)$(18,902)$(89,912)$(58,582)
 Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2018 2017 2018 2017
Total purchase of rental equipment and refurbishments$(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 CAPEX
We 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.


50


The following tables provide unaudited reconciliations of Net (loss) income to Adjusted EBITDA less Net CAPEX on a segment basis for the three and sixnine months ended JuneSeptember 30, 2018 and 2017:
Three Months Ended September 30, 2018 
(in thousands)Modular - USModular - Other North AmericaCorporate & OtherConsolidated
Net (loss) income$(44,519)$1,283 $6,507 $(36,729)
Income from discontinued operations, net of tax— — — — 
(Loss) income from continuing operations (44,519)1,283 6,507 (36,729)
Income tax benefit(a)
— — (6,507)(6,507)
(Loss) income from continuing operations before income tax (44,519)1,283 — (43,236)
Interest expense, net42,831 616 — 43,447 
Operating (loss) income (1,688)1,899 — 211 
Depreciation and amortization35,105 4,149 — 39,254 
EBITDA33,417 6,048 — 39,465 
Currency gains, net(112)(313)— (425)
Restructuring costs5,895 242 — 6,137 
Transaction costs 10,490 182 — 10,672 
Integration costs7,443 10 — 7,453 
Stock compensation expense1,050 — — 1,050 
Other expense (income)271 (5)— 266 
Adjusted EBITDA58,454 6,164 — 64,618 
Less:
Rental unit sales8,595 972 — 9,567 
Rental unit cost of sales5,025 725 — 5,750 
Gross profit on rental unit sales3,570 247 — 3,817 
Gain on insurance proceeds— — — — 
Less:
Total capital expenditures44,412 3,804 — 48,216 
Proceeds from rental unit sales8,588 972 — 9,560 
Net Capital Expenditures35,824 2,832 — 38,656 
Adjusted EBITDA less Net CAPEX$19,060 $3,085 $— $22,145 

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Three Months Ended June 30, 2018Three Months Ended September 30, 2017 
(in thousands)Modular - US Modular - Other North America Corporate & Other Consolidated(in thousands)Modular - US Modular - Other North America Corporate & Other Consolidated 
Net (loss) income$(5,533) $(733) $6,645
 $379
Income from discontinued operations, net of tax—
 —
 —
 —
Net lossNet loss$(1,070)$(1,684)$(5,603)$(8,357)
Income from discontinued operations, net of tax(b)
Income from discontinued operations, net of tax(b)
— — 5,078 5,078 
Loss from continuing operations(5,533) (733) 6,645
 379
Loss from continuing operations(1,070)(1,684)(10,681)(13,435)
Income tax benefit(a)
—
 —
 (6,645) (6,645)
Income tax benefit(a)
— — (7,632)(7,632)
Loss from continuing operations before income tax(5,533) (733) —
 (6,266)Loss from continuing operations before income tax(1,070)(1,684)(18,313)(21,067)
Interest expense, net11,663
 492
 —
 12,155
Interest expense, net16,790 1,134 8,523 26,447 
Operating income (loss)6,130
 (241) —
 5,889
Operating income (loss)15,720 (550)(9,790)5,380 
Depreciation and amortization21,571
 3,469
 —
 25,040
Depreciation and amortization16,974 3,597 343 20,914 
EBITDA27,701
 3,228
 —
 30,929
EBITDA32,694 3,047 (9,447)26,294 
Currency losses, net114
 458
 —
 572
Currency gains, netCurrency gains, net(3,834)(104)(332)(4,270)
Restructuring costs449
 —
 —
 449
Restructuring costs247 17 892 1,156 
Transaction Fees4,049

69

—

4,118
Integration costs4,785
 —
 —
 4,785
Stock compensation expense1,054
 —
 —
 1,054
Other (income) expense(48) 57
 —
 9
Transaction costsTransaction costs69 — 5,164 5,233 
Other expenseOther expense1 1 970 972 
Adjusted EBITDA38,104
 3,812
 —
 41,916
Adjusted EBITDA29,177 2,961 (2,753)29,385 
Less:       Less:
Rental unit sales2,309
 126
 —
 2,435
Rental unit sales5,922 765 (81)6,606 
Rental unit cost of sales1,164
 99
 —
 1,263
Rental unit cost of sales3,204 580 — 3,784 
Gross profit on rental unit sales1,145
 27
 —
 1,172
Gain on insurance proceeds1,765
 —
 —
 1,765
Gross profit (loss) on rental unit salesGross profit (loss) on rental unit sales2,718 185 (81)2,822 
Less:       Less:
Total capital expenditures31,438
 1,857
 —
 33,295
Total capital expenditures(b)
Total capital expenditures(b)
24,896 1,437 2,643 28,976 
Total capital expenditures from discontinued operationsTotal capital expenditures from discontinued operations— — (2,643)(2,643)
Total capital expenditures from continuing operationsTotal capital expenditures from continuing operations24,896 1,437 — 26,333 
Proceeds from rental unit sales3,779
 126
 —
 3,905
Proceeds from rental unit sales5,922 765 1,441 8,128 
Proceeds from rental unit sales from discontinued operationsProceeds from rental unit sales from discontinued operations— — 1,522 1,522 
Proceeds from rental unit sales from continuing operationsProceeds from rental unit sales from continuing operations5,922 765 (81)6,606 
Net Capital Expenditures27,659
 1,731
 —
 29,390
Net Capital Expenditures18,974 672 81 19,727 
Adjusted EBITDA less Net CAPEX$7,535
 $2,054
 $—
 $9,589
Adjusted EBITDA less Net CAPEX$7,485 $2,104 $(2,753)$6,836 


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Three Months Ended June 30, 2017Nine Months Ended September 30, 2018 
(in thousands)Modular - US Modular - Other North America Corporate & Other Consolidated(in thousands)Modular - USModular - Other North AmericaCorporate & OtherConsolidated
Net loss320
 (1,442) (4,774) (5,896)
Income from discontinued operations, net of tax(b)
—
 —
 3,840
 3,840
Loss from continuing operations320
 (1,442) (8,614) (9,736)
Net (loss) incomeNet (loss) income$(55,360)$(1,397)$13,572 $(43,185)
Income from discontinued operations, net of taxIncome from discontinued operations, net of tax— — — — 
(Loss) income from continuing operations (Loss) income from continuing operations (55,360)(1,397)13,572 (43,185)
Income tax benefit(a)
—
 —
 (5,269) (5,269)
Income tax benefit(a)
— — (13,572)(13,572)
Loss from continuing operations before income tax320
 (1,442) (13,883) (15,005)Loss from continuing operations before income tax(55,360)(1,397)— (56,757)
Interest expense, net15,953
 1,038
 9,407
 26,398
Interest expense, net65,654 1,667 — 67,321 
Operating income (loss)16,273
 (404) (4,476) 11,393
Operating income Operating income 10,294 270 — 10,564 
Depreciation and amortization15,830
 3,189
 345
 19,364
Depreciation and amortization79,568 11,007 — 90,575 
EBITDA32,103
 2,785
 (4,131) 30,757
EBITDA89,862 11,277 — 101,139 
Currency gains, net(5,800) (294) (403) (6,497)
Currency losses, netCurrency losses, net159 1,012 — 1,171 
Restructuring costs—
 —
 684
 684
Restructuring costs6,962 252 — 7,214 
Transaction fees46
 —
 730
 776
Other (income) expense(20) 15
 532
 527
Transaction costs Transaction costs 14,539 251 — 14,790 
Integration costsIntegration costs14,858 10 — 14,868 
Stock compensation expenseStock compensation expense2,225 — — 2,225 
Other expenseOther expense565 54 — 619 
Adjusted EBITDA26,329
 2,506
 (2,588) 26,247
Adjusted EBITDA129,170 12,856 — 142,026 
Less:       Less:
Rental unit sales3,835
 943
 —
 4,778
Rental unit sales14,258 1,555 — 15,813 
Rental unit cost of sales1,923
 652
 —
 2,575
Rental unit cost of sales8,218 1,110 — 9,328 
Gross profit on rental unit sales1,912
 291
 —
 2,203
Gross profit on rental unit sales6,040 445 — 6,485 
Gain on insurance proceedsGain on insurance proceeds4,765 — — 4,765 
Less:       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 operations26,923
 1,783
 —
 28,706
Total capital expendituresTotal capital expenditures107,359 7,236 — 114,595 
Proceeds from rental unit sales3,835
 943
 —
 4,778
Proceeds from rental unit sales20,038 1,555 — 21,593 
Proceeds from rental unit sales from discontinued operations—
 —
 —
 —
Proceeds from rental unit sales from continuing operations3,835
 943
 —
 4,778
Net Capital Expenditures23,088
 840
 —
 23,928
Net Capital Expenditures87,321 5,681 — 93,002 
Adjusted EBITDA less Net CAPEX$1,329
 $1,375
 $(2,588) $116
Adjusted EBITDA less Net CAPEX$31,044 $6,730 $— $37,774 


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Six Months Ended June 30, 2018Nine Months Ended September 30, 2017 
(in thousands)Modular - US Modular - Other North America Corporate & Other Consolidated(in thousands)Modular - USModular - Other North AmericaCorporate & OtherConsolidated
Net (loss) income$(10,841) $(2,680) $7,065
 $(6,456)
Income from discontinued operations, net of tax—
 —
 —
 —
Net lossNet loss$(6,280)$(4,142)$(14,010)$(24,432)
Income from discontinued operations, net of tax(b)
Income from discontinued operations, net of tax(b)
— — 11,123 11,123 
Loss from continuing operations(10,841) (2,680) 7,065
 (6,456)Loss from continuing operations(6,280)(4,142)(25,133)(35,555)
Income tax benefit(a)
—
 —
 (7,065) (7,065)
Income tax benefit(a)
— — (17,770)(17,770)
Loss from continuing operations before income tax(10,841) (2,680) —
 (13,521)Loss from continuing operations before income tax(6,280)(4,142)(42,903)(53,325)
Interest expense, net22,823
 1,051
 —
 23,874
Interest expense, net48,302 3,350 23,270 74,922 
Operating income (loss)11,982
 (1,629) —
 10,353
Operating income (loss)42,022 (792)(19,633)21,597 
Depreciation and amortization44,463
 6,858
 —
 51,321
Depreciation and amortization47,967 9,928 1,044 58,939 
EBITDA56,445
 5,229
 —
 61,674
EBITDA89,989 9,136 (18,589)80,536 
Currency losses, net271
 1,325
 —
 1,596
Currency gains, netCurrency gains, net(11,233)(585)(951)(12,769)
Restructuring costs1,067
 10
 —
 1,077
Restructuring costs247 17 1,860 2,124 
Transaction Fees4,049
 69
 —
 4,118
Integration costs7,415
 —
 —
 7,415
Stock compensation expense1,175
 —
 —
 1,175
Transaction costsTransaction costs115 — 5,980 6,095 
Other expense294
 59
 —
 353
Other expense71 18 1,503 1,592 
Adjusted EBITDA70,716
 6,692
 —
 77,408
Adjusted EBITDA79,189 8,586 (10,197)77,578 
Less:       Less:
Rental unit sales5,663
 583
 —
 6,246
Rental unit sales14,634 2,675 (81)17,228 
Rental unit cost of sales3,193
 385
 —
 3,578
Rental unit cost of sales8,240 1,827 — 10,067 
Gross profit on rental unit sales2,470
 198
 —
 2,668
Gross profit on rental unit sales6,394 848 (81)7,161 
Gain on insurance proceeds4,765
 —
 —
 4,765
Less:       Less:
Total capital expenditures62,947
 3,432
 —
 66,379
Total capital expenditures(b)
Total capital expenditures(b)
74,498 3,860 6,856 85,214 
Total capital expenditures from discontinued operationsTotal capital expenditures from discontinued operations— — (6,855)(6,855)
Total capital expenditures from continuing operationsTotal capital expenditures from continuing operations74,498 3,860 1 78,359 
Proceeds from rental unit sales11,450
 583
 —
 12,033
Proceeds from rental unit sales14,634 2,675 1,441 18,750 
Proceeds from rental unit sales from discontinued operationsProceeds from rental unit sales from discontinued operations— — 1,522 1,522 
Proceeds from rental unit sales from continuing operationsProceeds from rental unit sales from continuing operations14,634 2,675 (81)17,228 
Net Capital Expenditures51,497
 2,849
 —
 54,346
Net Capital Expenditures59,864 1,185 82 61,131 
Adjusted EBITDA less Net CAPEX$11,984
 $3,645
 $—
 $15,629
Adjusted EBITDA less Net CAPEX$12,931 $6,553 $(10,198)$9,286 
(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.(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. (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.


 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, net31,512
 2,216
 14,747
 48,475
Operating income (loss)26,302
 (242) (9,843) 16,217
Depreciation and amortization30,993
 6,331
 701
 38,025
EBITDA57,295
 6,089
 (9,142) 54,242
Currency gains, net(7,399) (481) (619) (8,499)
Restructuring costs—
 —
 968
 968
Transaction costs46
 —
 816
 862
Other expense70
 17
 533
 620
Adjusted EBITDA50,012
 5,625
 (7,444) 48,193
Less:       
Rental unit sales8,712
 1,910
 —
 10,622
Rental unit cost of sales5,036
 1,247
 —
 6,283
Gross profit on rental unit sales3,676
 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 operations49,602
 2,424
 —
 52,026
Proceeds from rental unit sales8,712
 1,910
 —
 10,622
Proceeds from rental unit sales from discontinued operations—
 —
 —
 —
Proceeds from rental unit sales from continuing operations8,712
 1,910
 —
 10,622
Net Capital Expenditures40,890
 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 Resources
Overview
WSCWillScot 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
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In July and August 2018, the Company entered into three amendments (the "ABL Amendments") to the ABL Facility which matures on May 29, 2022, comprisesthat, among other things, (i) a $530 million asset-

based revolving credit facilitypermitted the ModSpace acquisition and the Company’s financing thereof, (ii) increased the ABL Facility limit to $1.425 billion in the aggregate, with an accordion feature allowing up to $1.8 billion of capacity, and (iii) increased certain thresholds, basket sizes and default and notice triggers to account for WSII and certain of its domestic subsidiaries and (ii) a $70 million asset-based revolving credit facility for Williams Scotsman of Canada, Inc.the Company’s increased scale following the ModSpace Acquisition.
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. TheAt inception of the ABL Facility until March 31, 2018, the applicable margin iswas fixed at 2.50% for LIBOR borrowings and 1.50% for base rate borrowings. Commencing on March 31, 2018, the applicable margins are subject to one step-down of 0.25% or one step-up of 0.25%, based on excess availability levels with respect to the ABL Facility. 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 JuneSeptember 30, 2018, the weighted average interest rate for borrowings under the ABL Facility was 4.58%4.65%.
The ABL Facility requires the Borrowers to maintain a (i) minimum interest coverage ratio of 2.00:1.00 and (ii) maximum total net leverage ratio of 5.50:1.00, in each case, at any time when the excess availability under the amended ABL Facility is less than the greater of (a) $135.0 million and (b) an amount equal to 10% of the Line Cap.
At JuneSeptember 30, 2018, the Borrowers had $219.6$552.9 million of available borrowing capacity under the ABL Facility, including $153.1$414.5 million of available capacity under the US facilityABL Facility and $66.5$138.4 million of available capacity under the Canadian facility.ABL Facility.
2022 Senior Secured Notes 
On November, 29, 2017, WSII issued the 2022 Secured 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 2022 Secured Notes is payable semi-annually on June 15 and December 15 beginning June 15, 2018.
2023 Senior Secured Notes
On August 6, 2018, a special purpose subsidiary of WSII completed a private offering of $300.0 million in aggregate principal amount of its 6.875% senior secured notes due August 15, 2023. The issuer entered into an indenture dated August 6, 2018 with Deutsche Bank Trust Company Americas, as trustee, which governs the terms of the 2023 Secured Notes. In connection with the ModSpace acquisition, the issuer merged with and into WSII and WSII assumed the 2023 Secured Notes. Interest is payable semi-annually on February 15 and August 15 of each year, beginning February 15, 2019. The net proceeds were used to fund the ModSpace acquisition.
2023 Senior Unsecured Notes
On August 3, 2018, a special purpose subsidiary of WSII completed a private offering of $200.0 million in aggregate principal amount of its senior unsecured notes due November 15, 2023 (the “Unsecured Notes”). The issuer entered into an indenture with Deutsche Bank Trust Company Americas, as trustee (the “Unsecured Notes Indenture”), which governs the terms and conditions of the Unsecured Notes. In connection with the ModSpace acquisition, the issuer merged with and into WSII and WSII assumed the Unsecured Notes.
The Unsecured Notes bear interest at a rate of 10% per annum if paid in cash (or if paid in kind, 11.5% per annum) for any interest period ending on or before February 15, 2021, and thereafter are payable solely in cash at an increased rate per annum of 12.5%. Interest is payable semi-annually on February 15 and August 15 of each year, beginning February 15, 2019. The net proceeds were used to fund the ModSpace acquisition.
Cash Flow Comparison of the SixNine Months Ended JuneSeptember 30, 2018 and 2017
The following summarizes our cash flows for the periods presented on an actual currency basis:
Nine Months Ended September 30, 
(in thousands)2018 2017 
Net cash from operating activities$15,580 $46,901 
Net cash from investing activities(1,176,468)(134,235)
Net cash from financing activities1,161,406 91,677 
Effect of exchange rate changes on cash and cash equivalents68 311 
Net change in cash and cash equivalents$586 $4,654 
 Six Months Ended June 30,
(in thousands)2018 2017
Net cash from operating activities$18,800
 $24,124
Net cash from investing activities(77,671) (111,393)
Net cash from financing activities57,963
 86,845
Effect of exchange rate changes on cash and cash equivalents(96) 254
Net change in cash and cash equivalents$(1,004) $(170)
The cash flow data for the sixnine months ended JuneSeptember 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.
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Cash Flows from Operating Activities
Cash provided by operating activities for the sixnine months ended JuneSeptember 30, 2018 was $18.8$15.6 million as compared to $24.1$46.9 million for the sixnine months ended JuneSeptember 30, 2017, a decrease of $5.3$31.3 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 sixnine months ended JuneSeptember 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 activities
Cash used in investing activities for the sixnine months ended JuneSeptember 30, 2018 was $77.7$1,176.5 million as compared to $111.4$134.2 million for the sixnine months ended JuneSeptember 30, 2017, a decreasean increase of $33.7$1,042.3 million. The reductionincrease in cash used in investing activities was principally the result of the acquisitions of Tyson and ModSpace for cash consideration of $24.0 million and $1,060.1 million during 2018. Additionally, cash used for rental equipment expenditures increased $29.2 million driven primarily by strategic investment in refurbishment of existing fleet, purchase of VAPS, and new fleet purchases to maintain and grow units on rent. The increase in cash used was partially offset by a $67.9$69.9 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.affiliates. 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 activities
Cash provided by financing activities for the sixnine months ended JuneSeptember 30, 2018 was $58.0$1,161.4 million as compared to $86.8$91.7 million for the sixnine months ended JuneSeptember 30, 2017, a decreasean increase of $28.8$1,069.7 million. The reductionincrease is primarily driven by the increased borrowings of $300.0 million, $200.0 million, and $579.1 million related to issuance of the 2023 Secured Notes, the issuance of the Unsecured Notes, and additional borrowings on the up-sized ABL Facility to finance the acquisition of ModSpace in the third quarter of 2018. We also received proceeds from the issuance of the Company's Class A common stock of $147.2 million during the third quarter of 2018. 
The increase in cash provided by financing activities is primarily drivenwas partially offset by $75.0 million decrease in borrowings from notes due to affiliates.affiliates and a $24.2 million increase in the payment of financing costs. 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 reductionPayments of financing costs increased in cash used in financing activities was partially offset by a $34.5 million increase in borrowings, netconnection with the issuance of repayments, as a result of drawing onthe 2023 Secured Notes, the Unsecured Notes, the amendments to the ABL Facility, during 2018 to purchase Tyson and $10.9 million in financing cost payments in the first quarterissuance 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.common stock.


Contractual Obligations
Other than changes which occur inSince the normal courseissuance of business, there were no significant changes to the contractual obligations reported in our 2017 Form 10-K, as updated in our Form 10-Qcontractual obligations increased significantly for the three and sixnine months ended JuneSeptember 30, 2018. Our contractual obligations have increased in conjunction with the financing transactions related to the ModSpace acquisition. In addition to the existing debt at the acquisition date, the Company incurred $300.0 million of debt for the 2023 Secured Notes, $200.0 million of debt for the Unsecured Notes, and an increase in the ABL balance of $579.1 million as of the date of the ModSpace acquisition, August 15, 2018.

Off-Balance Sheet Arrangements
We 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 Estimates
Our 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 reported 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 and requires significant judgments and estimates on the part of management in its application.application. For the sixnine months ended JuneSeptember 30, 2018, we have provided an additional disclosure on
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our stock-based compensation policies as described in Note 1112 of this Form 10-Q.10-Q and regarding our goodwill policy and estimates below. 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.
Goodwill
We perform our annual goodwill impairment test on October 1. In addition, we perform qualitative impairment tests during any reporting period in which events or changes in circumstances quantitatively indicate that impairment may have occurred. Management judgment is a significant factor in the goodwill impairment evaluation process. The computations require management to make estimates and assumptions. Actual values may differ significantly from these assumptions, particularly if there are significant adverse changes in the operating environment of our reporting units.
In assessing the fair value of reporting units, we consider the market approach, the income approach, or a combination of both. Under the market approach, the fair value of the reporting unit is based on quoted market prices of companies comparable to the reporting unit being valued. While the market prices are not an assumption, a presumption that they provide an indicator of the value of the reporting unit is inherent in the valuation. The initial determination of the comparable companies also involves a degree of judgment.
Under the income approach, the fair value of the reporting unit is based on the present value of estimated cash flows. The income approach relies on the timing and estimates of future cash flows, which are based on management’s estimates of economic and market conditions over the projected period, including growth rates in revenue, operating margins, capital expenditures and tax rates. The cash flows are based on our most recent business operating plans and various growth rates have been assumed for years beyond the current business plan period. The income approach also relies upon the selection of an appropriate discount rate, which is based on a weighted-average cost of capital analysis. The discount rate is affected by changes in short-term interest rates and long-term yield, as well as by variances in the typical capital structure of marketplace participants. Given current economic conditions, it is possible that the discount rate will fluctuate in the near term.
On August 15, 2018 the Company completed its acquisition of ModSpace. The Company has performed a preliminary allocation of assets acquired and liabilities assumed as well an allocation of net assets, including goodwill, amongst its reporting units. As of September 30, 2018 the Company has allocated $203.3 million and $32.5 million of goodwill to the US and Canadian reporting units, respectively. For the quarter ended September 30, 2018 the Company completed its interim review for impairment indicators for all reporting units, identifying no events or changes in circumstances that indicate an impairment may have occurred. The Company will perform its annual goodwill impairment test on October 1, 2018. While no indicators of impairment are currently present, due to Company’s historical impairment activity associated with its Canadian reporting unit, it is possible that the annual impairment test may indicate a need to write down the preliminary goodwill balance allocated to the Canadian reporting unit.

Recently Issued Accounting Standards
Refer to Note 1 of the notes to our financial statements included in this Form 10-Q for our assessment of recently issued and adopted accounting standards.

Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act. These forward-looking statements relate 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 key industry end-markets and geographic regions;
• effective management of our rental equipment;
• our ability to acquire and successfully integrate new operations;
• market conditions and economic factors beyond our control;
• our ability to properly design, manufacture, repair and maintain our rental equipment;
• our operating results or financial estimates fail to meet or exceed 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;
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• 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 our prior owner or its affiliates to perform under or comply with our transition services and intellectual property agreements;
• our ability to fulfill 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 agreements governing their indebtedness; and
• other 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, 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 by law.

ITEM 3.Quantitative and Qualitative Disclosures about Market Risk
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no significant changes to our market risk since December 31, 2017. For a discussion of our exposure to market risk, refer to our Annual Report on Form 10-K for the year ended December 31, 2017.

ITEM 4.Controls and Procedures
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision of our Chief Executive Officer and Chief Financial Officer, 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 JuneSeptember 30, 2018. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of JuneSeptember 30, 2018, due to the existence of a previously reported material weaknesses in 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 cash flows as of the dates, and for the periods presented, in conformity with generally accepted accounting principles.
Description of Material Weakness as of December 31, 2017
As 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 corrected prior to the issuance of our 2017 financial statements.
Remediation Plans
During our secondthird quarter ended JuneSeptember 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; and
• Adding additional review controls to approve complex accounting and related calculations.
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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 Controls
In December 2017 and January 2018 we acquired Acton and Tyson for $237.1 million and $24.0 million, respectively (seeAs discussed in Note 2 to the accompanyingcondensed consolidated financial statements).statements included in this quarterly report on Form 10-Q, the Company completed its acquisitions in December 2017, January 2018 and August 2018, respectively. During the first and second quarterquarters of 2018, we transitioned all of the business

processes of the acquired companiesTyson and Acton, respectively, 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. As permitted by interpretive guidance for newly acquired businesses issued by the SEC Staff, management has excluded the internal control over financial reporting of ModSpace from the evaluation of the Company's effectiveness of its disclosure controls and procedures as of September 30, 2018. Since the date of acquisition on August 15, 2018, ModSpace's financial results are included in the Company's condensed consolidated financial statements and constituted approximately $1.3 billion and $1.2 billion of total and net assets, respectively, as of September 30, 2018, and $65.5 million and $4.2 million of net revenues and net income, respectively, for the three months ended September 30, 2018. As part of our post-closing integration activities, we are engaged in the process of assessing the internal controls of ModSpace. The Company has begun to integrate policies, processes, people, technology and operations for the post-acquisition combined company, and it will continue to evaluate the impact of any related changes to internal control over financial reporting.
Other than the items discussed above, there were no changes in our internal control over financial reporting that occurred during during our quarter ended JuneSeptember 30, 2018 that materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II
ITEM 1.Legal Proceedings
ITEM 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 JuneSeptember 30, 2018, there waswere 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.
ITEM 1A. Risk Factors
Risks related to the ModSpace Acquisition
The 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 common stock to decline. 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 the ModSpace Acquisition.
The anticipated benefits of the ModSpace 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 operations 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 acquisition; 
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 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 negative 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.
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 strength, 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 expect 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 offset 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.
Our 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 Internal 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 available2018, there have been no material updates 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 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 shiftsrisk factors since those described in our stock ownership, some of which may be outside ofRisk Factor in 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 Structure
Our principal stockholder controls a majority of our common stock, and it may take actions or have interests that may be adverse to or conflict with those of our other stockholders.
As of August 1,Form 10-Q for the period ended June 30, 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 extent 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 Class A common stock, including any pledge or other use of its share of our stock in connection with a loan. In the case of any pledge of its shares of our common stock in connection with a loan, in the 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 not 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 exert a significant degree of influence or actual 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 business, 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 conflictfiled with the interests of our other stockholders.SEC.


ITEM 2.Unregistered Sales of Equity Securities
ITEM 2. Unregistered Sales of Equity Securities
None.

ITEM 3.Defaults Upon Senior Securities
ITEM 3. Defaults Upon Senior Securities
None.

ITEM 4.Mine Safety Disclosures
ITEM 4. Mine Safety Disclosures
Not applicable.

ITEM 5.Other Information
ITEM 5. Other Information
None.


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ITEM 6. Exhibits
ITEM 6.Exhibits
Exhibit No.Exhibit Description
31.1
*Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
*Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
**Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
**Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
1.14.1
UnderwritingWarrant Agreement dated July 25, 2018, by and amongbetween WillScot Corporation Barclays Capital Inc., Deutsche Bank Securities Inc., Morgan Stanleyand Continental Stock Transfer & Co. LLC, and Merrill Lynch, Pierce, Fenner & Smith Incorporated,Trust Company, dated as representatives of the several underwriters named in Schedule I theretoAugust 15, 2018 (incorporated by reference to Exhibit 1.14.1 to the Company's Current Report on Form 8-K, filed August 16, 2018). 
10.1
Registration Rights Agreement between WillScot Corporation and each of the ModSpace Investors defined therein (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed July 30,August 16, 2018)
10.110.2
*FirstThird 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 (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed August 16, 2018) 
10.210.3
*Second AmendmentSupplemental Indenture to be delivered in connection with the ABL Agreement,escrow merger dated as of July 24,August 15, 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
10.3
*Supplemental Indenture dated August 3, 2018, to the Indenture, dated November 29, 2017, by and among WSII, the Guarantors party thereto,between William Scotsman International, Inc. and Deutsche Bank Trust Company Americas as Trustee and Collateral Agenttrustee (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed August 16, 2018) 
10.4
Supplemental Indenture to the 6.875% Senior Secured Notes due 2023 dated as of August 3, by and among Mason Finance Sub,15, 2018 between William Scotsman International, Inc., the Guarantors party thereto, and Deutsche Bank Trust Company Americas as Trusteetrustee and collateral agent (incorporated by reference to Exhibit 1.110.4 to the Company’s Form 8-K filed August 7,16, 2018)
10.5
Supplemental Indenture to the 7.875% Senior Secured Notes due 2022 dated as of August 6, by and among Mason Finance Sub,15, 2018 between William Scotsman International, Inc., the Guarantors party thereto, and Deutsche Bank Trust Company Americas as Trusteetrustee and collateral agent (incorporated by reference to Exhibit 1.210.5 to the Company’s Form 8-K filed August 7,16, 2018)
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
*Filed herewith
**Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange Act



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Signature
Pursuant 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.
WillScot Corporation
WillScot Corporation
By:
/s/ TIMOTHY D. BOSWELL
Dated:August 8,November 9, 2018Timothy D. Boswell
Chief Financial Officer (Principal Financial Officer)







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