UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ~~March 31,~~June 30, 2020
OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________


Commission File Number:			001-37552

WILLSCOT ~~CORPORATION~~MOBILE MINI HOLDINGS CORP.

(Exact name of registrant as specified in its charter)


Delaware						82-3430194
(State or other jurisdiction of incorporation)						(I.R.S. Employer Identification No.)

~~901 S. Bond Street, #600~~4646 E Van Buren St., Suite 400

~~Baltimore, Maryland 21231~~Phoenix, Arizona 85008

(Address, including zip code, of principal executive offices)

~~(410) 931-6000~~

(480) 894-6311

(Registrant’s telephone number, including area code)

(Former Name or Former Address, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
~~Class A common stock,~~Common Stock, par value $0.0001 per share	WSC	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the 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-accelerated filer ☐			Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Shares of ~~Class A common stock,~~Common Stock, par value $0.0001 per share, outstanding: ~~110,555,295~~227,721,220 shares at ~~May 1,~~July 31, 2020.

~~Shares of Class B common stock, par value $0.0001 per share, outstanding: 8,024,419 shares at May 1, 2020.~~

WILLSCOT CORPORATION

Quarterly Report on Form 10-Q

Table of Contents

PART I Financial Information

Item 1

Financial Statements (unaudited, except as noted below)

Condensed Consolidated Balance Sheets as of ~~March 31~~, June 30, 2020 and December 31, ~~201~~2020 (audited)~~9 (audited)~~

Condensed Consolidated Statements of Operations for the Three and Six Months Ended ~~March 31,~~June 30, 2020 and ~~201~~20199

Condensed Consolidated Statements of Comprehensive ~~Loss~~Income (Loss) for the Three and Six Months Ended ~~March 31, 20~~20 June 30, 2020 and ~~201~~9

2019

Condensed Consolidated Statement of Changes in Equity for the Three and Six Months Ended ~~March 31, 20~~20 June 30, 2020 and ~~201~~20199

Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~ 20 20 June 30, 2020 and ~~201~~20199

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

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3

Defaults Upon Senior Securities

Item 4

Mine Safety Disclosures

PART I

ITEM 1. Financial Statements

WillScot Corporation

Condensed Consolidated Balance Sheets


(in thousands, except share data)	(in thousands, except share data)	March 31, 2020 (unaudited)		December 31, 2019		(in thousands, except share data)	June 30, 2020 (unaudited)		December 31, 2019
											(in thousands, except share data)	June 30, 2020 (unaudited)	December 31, 2019
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	4,642	$	3,045	Cash and cash equivalents	$	9,061	$	3,045
Trade receivables, net of allowances for doubtful accounts at March 31, 2020 and December 31, 2019 of $16,471 and $15,828, respectively		241,142		247,596
Restricted cash						Restricted cash	655,087		—
Trade receivables, net of allowances for credit losses at June 30, 2020 and December 31, 2019 of $19,183 and $15,828, respectively						Trade receivables, net of allowances for credit losses at June 30, 2020 and December 31, 2019 of $19,183 and $15,828, respectively	231,007		247,596
Inventories	Inventories	15,006		15,387		Inventories	14,800		15,387
Prepaid expenses and other current assets	Prepaid expenses and other current assets	20,580		14,621		Prepaid expenses and other current assets	21,392		14,621
Assets held for sale	Assets held for sale	8,543		11,939		Assets held for sale	9,332		11,939
Total current assets	Total current assets	289,913		292,588		Total current assets	940,679		292,588
Rental equipment, net	Rental equipment, net	1,912,995		1,944,436		Rental equipment, net	1,908,299		1,944,436
Property, plant and equipment, net	Property, plant and equipment, net	143,864		147,689		Property, plant and equipment, net	142,454		147,689
Operating lease assets	Operating lease assets	148,152		146,698		Operating lease assets	146,721		146,698
Goodwill	Goodwill	232,796		235,177		Goodwill	233,829		235,177
Intangible assets, net	Intangible assets, net	126,375		126,625		Intangible assets, net	126,125		126,625
Other non-current assets	Other non-current assets	3,642		4,436		Other non-current assets	3,433		4,436
Total long-term assets	Total long-term assets	2,567,824		2,605,061		Total long-term assets	2,560,861		2,605,061
Total assets	Total assets	$	2,857,737	$	2,897,649	Total assets	$	3,501,540	$	2,897,649
Liabilities and equity	Liabilities and equity					Liabilities and equity
Accounts payable	Accounts payable	$	102,570	$	109,926	Accounts payable	$	87,847	$	109,926
Accrued liabilities	Accrued liabilities	82,853		82,355		Accrued liabilities	101,212		82,355
Accrued interest	Accrued interest	12,479		16,020		Accrued interest	16,772		16,020
Deferred revenue and customer deposits	Deferred revenue and customer deposits	85,936		82,978		Deferred revenue and customer deposits	89,258		82,978
Current portion of long-term debt						Current portion of long-term debt	265,398		—
Operating lease liabilities - current	Operating lease liabilities - current	29,446		29,133		Operating lease liabilities - current	30,438		29,133
Total current liabilities	Total current liabilities	313,284		320,412		Total current liabilities	590,925		320,412
Long-term debt	Long-term debt	1,625,772		1,632,589		Long-term debt	1,971,010		1,632,589
Deferred tax liabilities	Deferred tax liabilities	67,017		70,693		Deferred tax liabilities	69,044		70,693
Deferred revenue and customer deposits	Deferred revenue and customer deposits	12,666		12,342		Deferred revenue and customer deposits	12,284		12,342
Operating lease liabilities - non-current	Operating lease liabilities - non-current	119,322		118,429		Operating lease liabilities - non-current	117,159		118,429
Other non-current liabilities	Other non-current liabilities	38,603		34,229		Other non-current liabilities	36,028		34,229
Long-term liabilities	Long-term liabilities	1,863,380		1,868,282		Long-term liabilities	2,205,525		1,868,282
Total liabilities	Total liabilities	2,176,664		2,188,694		Total liabilities	2,796,450		2,188,694
Commitments and contingencies (see Note 15)	Commitments and contingencies (see Note 15)					Commitments and contingencies (see Note 15)
Class A common stock: $0.0001 par, 400,000,000 shares authorized at March 31, 2020 and December 31, 2019; 110,555,295 and 108,818,854 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		11		11
Class B common stock: $0.0001 par, 100,000,000 shares authorized at March 31, 2020 and December 31, 2019; 8,024,419 shares issued and outstanding at March 31, 2020 and December 31, 2019		1		1
Class A common stock: $0.0001 par, 400,000,000 shares authorized at June 30, 2020 and December 31, 2019; 121,233,232 and 108,818,854 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively						Class A common stock: $0.0001 par, 400,000,000 shares authorized at June 30, 2020 and December 31, 2019; 121,233,232 and 108,818,854 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively	12		11
Class B common stock: 0 shares authorized or outstanding at June 30, 2020 and $0.0001 par, 100,000,000 shares authorized at December 31, 2019; 8,024,419 shares issued and outstanding at December 31, 2019						Class B common stock: 0 shares authorized or outstanding at June 30, 2020 and $0.0001 par, 100,000,000 shares authorized at December 31, 2019; 8,024,419 shares issued and outstanding at December 31, 2019	—		1
Additional paid-in-capital	Additional paid-in-capital	2,402,195		2,396,501		Additional paid-in-capital	2,471,312		2,396,501
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(89,974)		(62,775)		Accumulated other comprehensive loss	(84,807)		(62,775)
Accumulated deficit	Accumulated deficit	(1,692,917)		(1,689,373)		Accumulated deficit	(1,681,427)		(1,689,373)
Total shareholders' equity	Total shareholders' equity	619,316		644,365		Total shareholders' equity	705,090		644,365
Non-controlling interest	Non-controlling interest	61,757		64,590		Non-controlling interest	—		64,590
Total equity	Total equity	681,073		708,955		Total equity	705,090		708,955
Total liabilities and equity	Total liabilities and equity	$	2,857,737	$	2,897,649	Total liabilities and equity	$	3,501,540	$	2,897,649

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

WillScot Corporation

Condensed Consolidated Statements of Operations

(Unaudited)


		Three Months Ended March 31,							Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2020		2019		(in thousands, except share and per share data)	2020		2019		2020		2019
Revenues:	Revenues:					Revenues:
Leasing and services revenue:	Leasing and services revenue:					Leasing and services revenue:
Modular leasing	Modular leasing	$	188,352	$	177,292	Modular leasing	$	190,143	$	185,818	$	378,495	$	363,110
Modular delivery and installation	Modular delivery and installation	51,070		50,000		Modular delivery and installation	51,640		55,966		102,710		105,966
Sales revenue:	Sales revenue:					Sales revenue:
New units	New units	9,613		14,841		New units	9,763		11,507		19,376		26,348
Rental units	Rental units	6,786		11,552		Rental units	5,316		10,422		12,102		21,974
Total revenues	Total revenues	255,821		253,685		Total revenues	256,862		263,713		512,683		517,398
Costs:	Costs:					Costs:
Costs of leasing and services:	Costs of leasing and services:					Costs of leasing and services:
Modular leasing	Modular leasing	49,809		47,235		Modular leasing	47,747		55,073		97,556		102,308
Modular delivery and installation	Modular delivery and installation	43,865		43,343		Modular delivery and installation	43,523		48,468		87,388		91,811
Costs of sales:	Costs of sales:					Costs of sales:
New units	New units	6,203		10,878		New units	6,331		7,999		12,534		18,877
Rental units	Rental units	3,806		7,795		Rental units	3,803		6,721		7,609		14,516
Depreciation of rental equipment	Depreciation of rental equipment	45,948		41,103		Depreciation of rental equipment	45,494		43,968		91,442		85,071
Gross Profit	Gross Profit	106,190		103,331		Gross Profit	109,964		101,484		216,154		204,815
Expenses:	Expenses:					Expenses:
Selling, general and administrative	Selling, general and administrative	74,968		73,319		Selling, general and administrative	65,272		70,385		140,240		143,704
Other depreciation and amortization	Other depreciation and amortization	3,074		2,784		Other depreciation and amortization	2,883		2,949		5,957		5,733
Impairment losses on long-lived assets	Impairment losses on long-lived assets	—		2,290		Impairment losses on long-lived assets	—		348		—		2,638
Lease impairment expense and other related charges	Lease impairment expense and other related charges	1,661		3,085		Lease impairment expense and other related charges	1,394		1,520		3,055		4,605
Restructuring costs	Restructuring costs	(60)		1,656		Restructuring costs	749		1,632		689		3,288
Currency losses (gains), net	Currency losses (gains), net	898		(316)		Currency losses (gains), net	(380)		(354)		518		(670)
Other expense (income), net		276		(951)
Other income, net						Other income, net	(1,021)		(1,290)		(745)		(2,241)
Operating income	Operating income	25,373		21,464		Operating income	41,067		26,294		66,440		47,758
Interest expense	Interest expense	28,257		31,115		Interest expense	28,519		31,668		56,776		62,783
Loss from operations before income tax		(2,884)		(9,651)
Income tax expense		790		378
Net loss		(3,674)		(10,029)
Net loss attributable to non-controlling interest, net of tax		(130)		(758)
Net loss attributable to WillScot		$	(3,544)	$	(9,271)
Loss on extinguishment of debt						Loss on extinguishment of debt	—		7,244		—		7,244
Income (loss) from operations before income tax						Income (loss) from operations before income tax	12,548		(12,618)		9,664		(22,269)
Income tax (benefit) expense						Income tax (benefit) expense	(285)		(1,180)		505		(802)
Net Income (loss)						Net Income (loss)	12,833		(11,438)		9,159		(21,467)
Net Income (loss) attributable to non-controlling interest, net of tax						Net Income (loss) attributable to non-controlling interest, net of tax	1,343		(832)		1,213		(1,590)
Net Income (loss) attributable to WillScot						Net Income (loss) attributable to WillScot	$	11,490	$	(10,606)	$	7,946	$	(19,877)

Net loss per share attributable to WillScot - basic and diluted		$	(0.03)	$	(0.09)

Weighted average shares - basic and diluted		109,656,646		108,523,269
Earnings (loss) per share attributable to WillScot						Earnings (loss) per share attributable to WillScot
Basic						Basic	$	0.10	$	(0.10)	$	0.07	$	(0.18)
Diluted						Diluted	$	0.10	$	(0.10)	$	0.07	$	(0.18)
Weighted average shares:						Weighted average shares:
Basic						Basic	110,692,426		108,693,924		110,174,536		108,609,068
Diluted						Diluted	111,432,963		108,693,924		112,209,212		108,609,068

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

WillScot Corporation

Condensed Consolidated Statements of Comprehensive ~~Loss~~Income (Loss)

(Unaudited)

Three Months Ended
March 31,
(in thousands) 2020 2019
Net loss $ (3,674) $ (10,029)
Other comprehensive (loss) income:
Foreign currency translation adjustment, net of income tax expense of $0 for the three months ended March 31, 2020 and 2019 (21,144) 4,115
Net loss on derivatives, net of income tax benefit of $0 and $673 for the three months ended March 31, 2020 and 2019, respectively
(8,758) (2,201)
Comprehensive loss (33,576) (8,115)
Comprehensive loss attributable to non-controlling interest (2,833) (592)
Total comprehensive loss attributable to WillScot $ (30,743) $ (7,523)


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Net income (loss)	$	12,833	$	(11,438)	$	9,159	$	(21,467)
Other comprehensive income (loss):
Foreign currency translation adjustment, net of income tax expense of $0 for the three and six months ended June 30, 2020 and 2019	7,982		4,321		(13,162)		8,436
Net gain (loss) on derivatives, net of income tax benefit of $0, $1,190 for the three months ended June 30, 2020 and 2019, respectively and $0, and $1,863 for the six months ended June 30, 2020 and 2019, respectively	975		(3,887)		(7,783)		(6,088)
Comprehensive income (loss)	21,790		(11,004)		(11,786)		(19,119)
Comprehensive income (loss) attributable to non-controlling interest	2,161		(786)		(672)		(1,378)
Total comprehensive income (loss) attributable to WillScot	$	19,629	$	(10,218)	$	(11,114)	$	(17,741)

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

WillScot Corporation

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


Three Months Ended March 31, 2020
Six Months Ended June 30, 2020																				Six Months Ended June 30, 2020
		Class A Common Stock				Class B Common Stock						Additional Paid-in-Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Shareholders' Equity		Non-Controlling Interest			Total Equity					Class A Common Stock							Class B Common Stock						Additional Paid-in-Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit	Total Shareholders' Equity		Non-Controlling Interest		Total Equity
(in thousands)	(in thousands)	Shares	Amount		Shares	Amount																				(in thousands)		Shares			Amount		Accumulated Deficit		Total Shareholders' Equity		Non-Controlling Interest		Total Equity
Balance at December 31, 2019	Balance at December 31, 2019	108,819	$	11	8,024	$	1	$	2,396,501	$	(62,775)									$	(1,689,373)		$	644,365		$	64,590		$	708,955		Balance at December 31, 2019									108,819		$	11	8,024	$	1	$	2,396,501	$	(62,775)	$	(1,689,373)	$	644,365	$	64,590	$	708,955
Net loss	Net loss	—	—		—	—		—		—		(3,544)		(3,544)		(130)		(3,674)		Net loss		—			—			—			—		—		—		(3,544)		(3,544)		(130)		(3,674)
Other comprehensive loss		—	—		—	—		—		(27,199)		—		(27,199)		(2,703)		(29,902)
Other comprehensive income																				Other comprehensive income		—			—			—			—		—		(27,199)		—		(27,199)		(2,703)		(29,902)
Stock-based compensation	Stock-based compensation	239	—		—	—		1,114		—		—		1,114		—		1,114		Stock-based compensation		239			—			—			—		1,114		—		—		1,114		—		1,114
Common stock issued in warrant exercises and redemptions	Common stock issued in warrant exercises and redemptions	1,497	—		—	—		4,580		—		—		4,580		—		4,580		Common stock issued in warrant exercises and redemptions		1,497			—			—			—		4,580		—		—		4,580		—		4,580
Balance at March 31, 2020	Balance at March 31, 2020	110,555	$	11	8,024	$	1	$	2,402,195	$	(89,974)	$	(1,692,917)	$	619,316	$	61,757	$	681,073	Balance at March 31, 2020		110,555			$	11		8,024			$	1	$	2,402,195	$	(89,974)	$	(1,692,917)	$	619,316	$	61,757	$	681,073
Net income																				Net income		—			—			—			—		—		—		11,490		11,490		1,343		12,833
Other comprehensive income																				Other comprehensive income		—			—			—			—		—		8,139		—		8,139		818		8,957
Stock-based compensation																				Stock-based compensation		—			—			—			—		2,227		—		—		2,227		—		2,227
Sapphire Exchange - see Note 10																				Sapphire Exchange - see Note 10		10,641			1			(8,024)			(1)		66,890		(2,972)		—		63,918		(63,918)		—
Common stock issued in warrant exercises and redemptions																				Common stock issued in warrant exercises and redemptions		37			—			—			—		—		—		—		—		—		—
Balance at June 30, 2020																				Balance at June 30, 2020		121,233			$	12		—			$	—	$	2,471,312	$	(84,807)	$	(1,681,427)	$	705,090	$	—	$	705,090


Three Months Ended March 31, 2019
Six Months Ended June 30, 2019																				Six Months Ended June 30, 2019
		Class A Common Stock				Class B Common Stock						Additional Paid-in-Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Shareholders' Equity		Non-Controlling Interest			Total Equity					Class A Common Stock							Class B Common Stock						Additional Paid-in-Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit	Total Shareholders' Equity		Non-Controlling Interest		Total Equity
(in thousands)	(in thousands)	Shares	Amount		Shares	Amount																				(in thousands)		Shares			Amount		Accumulated Deficit		Total Shareholders' Equity		Non-Controlling Interest		Total Equity
Balance at December 31, 2018	Balance at December 31, 2018	108,509	$	11	8,024	$	1	$	2,389,548	$	(68,026)									$	(1,683,319)		$	638,215		$	63,982		$	702,197		Balance at December 31, 2018									108,509		$	11	8,024	$	1	$	2,389,548	$	(68,026)	$	(1,683,319)	$	638,215	$	63,982	$	702,197
Net loss	Net loss	—	—		—	—		—		—		(9,271)		(9,271)		(758)		(10,029)		Net loss		—			—			—			—		—		—		(9,271)		(9,271)		(758)		(10,029)
Other comprehensive income	Other comprehensive income	—	—		—	—		—		1,748		—		1,748		166		1,914		Other comprehensive income		—			—			—			—		—		1,748		—		1,748		166		1,914
Adoption of ASC 842	Adoption of ASC 842	—	—		—	—		—		—		4,723		4,723		503		5,226		Adoption of ASC 842		—			—			—			—		—		—		4,723		4,723		503		5,226
Adoption of ASC 606	Adoption of ASC 606	—	—		—	—		—		—		345		345		—		345		Adoption of ASC 606		—			—			—			—		—		—		345		345		—		345
Stock-based compensation	Stock-based compensation	184	—		—	—		636		—		—		636		—		636		Stock-based compensation		184			—			—			—		636		—		—		636		—		636
Balance at March 31, 2019	Balance at March 31, 2019	108,693	$	11	8,024	$	1	$	2,390,184	$	(66,278)	$	(1,687,522)	$	636,396	$	63,893	$	700,289	Balance at March 31, 2019		108,693			$	11		8,024			$	1	$	2,390,184	$	(66,278)	$	(1,687,522)	$	636,396	$	63,893	$	700,289
Net loss																				Net loss		—			—			—			—		—		—		(10,606)		(10,606)		(832)		(11,438)
Other comprehensive income																				Other comprehensive income		—			—			—			—		—		388		—		388		46		434
Stock-based compensation																				Stock-based compensation		6			—			—			—		1,901		—		—		1,901		—		1,901
Balance at June 30, 2019																				Balance at June 30, 2019		108,699			$	11		8,024			$	1	$	2,392,085	$	(65,890)	$	(1,698,128)	$	628,079	$	63,107	$	691,186

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

WillScot Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)


		Three Months Ended March 31,							Six Months Ended June 30,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2020		2019
Operating activities:	Operating activities:					Operating activities:
Net loss		$	(3,674)	$	(10,029)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net income (loss)						Net income (loss)	$	9,159	$	(21,467)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:						Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	49,764		44,346		Depreciation and amortization	98,917		91,808
Provision for doubtful accounts	Provision for doubtful accounts	3,392		2,926		Provision for doubtful accounts	9,122		6,297
Impairment losses on long-lived assets	Impairment losses on long-lived assets	—		2,290		Impairment losses on long-lived assets	—		2,638
Impairment on right of use assets	Impairment on right of use assets	—		2,439		Impairment on right of use assets	57		2,439
Gain on sale of rental equipment and other property, plant and equipment	Gain on sale of rental equipment and other property, plant and equipment	(2,980)		(3,888)		Gain on sale of rental equipment and other property, plant and equipment	(4,366)		(5,359)
Amortization of debt discounts and debt issuance costs	Amortization of debt discounts and debt issuance costs	2,896		2,792		Amortization of debt discounts and debt issuance costs	5,899		5,646
Loss on extinguishment of debt						Loss on extinguishment of debt	—		7,244
Stock-based compensation expense	Stock-based compensation expense	1,787		1,290		Stock-based compensation expense	4,014		3,191
Deferred income tax benefit		684		378
Deferred income tax benefit (provision)						Deferred income tax benefit (provision)	608		(1,190)
Unrealized currency (gains) losses	Unrealized currency (gains) losses	891		(292)		Unrealized currency (gains) losses	1,095		(624)
Changes in operating assets and liabilities	Changes in operating assets and liabilities					Changes in operating assets and liabilities
Trade receivables	Trade receivables	636		(26,779)		Trade receivables	5,709		(44,492)
Inventories	Inventories	281		(1,185)		Inventories	520		1,039
Prepaid and other assets	Prepaid and other assets	(5,701)		(171)		Prepaid and other assets	(6,620)		(784)
Operating lease assets and liabilities	Operating lease assets and liabilities	(280)		851		Operating lease assets and liabilities	(64)		935
Accrued interest	Accrued interest	(3,540)		(5,568)		Accrued interest	753		(4,092)
Accounts payable and other accrued liabilities	Accounts payable and other accrued liabilities	(9,760)		1,650		Accounts payable and other accrued liabilities	(17,767)		3,126
Deferred revenue and customer deposits	Deferred revenue and customer deposits	3,952		4,206		Deferred revenue and customer deposits	6,691		13,699
Net cash provided by operating activities	Net cash provided by operating activities	38,348		15,256		Net cash provided by operating activities	113,727		60,054
Investing activities:	Investing activities:					Investing activities:
Proceeds from sale of rental equipment	Proceeds from sale of rental equipment	6,786		11,601		Proceeds from sale of rental equipment	12,102		23,083
Purchase of rental equipment and refurbishments	Purchase of rental equipment and refurbishments	(39,648)		(51,873)		Purchase of rental equipment and refurbishments	(79,682)		(113,088)
Proceeds from the sale of property, plant and equipment	Proceeds from the sale of property, plant and equipment	3,840		87		Proceeds from the sale of property, plant and equipment	3,843		8,891
Purchase of property, plant and equipment	Purchase of property, plant and equipment	(1,518)		(1,629)		Purchase of property, plant and equipment	(3,186)		(3,899)
Net cash used in investing activities	Net cash used in investing activities	(30,540)		(41,814)		Net cash used in investing activities	(66,923)		(85,013)
Financing activities:	Financing activities:					Financing activities:
Receipts from issuance of common stock	Receipts from issuance of common stock	4,580		—		Receipts from issuance of common stock	4,580		—
Receipts from borrowings	Receipts from borrowings	35,793		39,264		Receipts from borrowings	704,293		461,203
Payment of financing costs	Payment of financing costs	—		(83)		Payment of financing costs	(1,225)		(2,686)
Repayment of borrowings	Repayment of borrowings	(45,282)		(8,201)		Repayment of borrowings	(92,282)		(430,260)
Principal payments on capital lease obligations		—		(32)
Withholding taxes paid on behalf of employees on net settled stock-based awards		(673)		(654)
Net cash (used in) provided by financing activities		(5,582)		30,294
Other financing activities						Other financing activities	(673)		(654)
Payment of debt extinguishment premium costs						Payment of debt extinguishment premium costs	—		(6,252)
Net cash provided by financing activities						Net cash provided by financing activities	614,693		21,351
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(629)		85		Effect of exchange rate changes on cash and cash equivalents	(394)		140
Net change in cash and cash equivalents		1,597		3,821
Cash and cash equivalents at the beginning of the period		3,045		8,958
Cash and cash equivalents at the end of the period		$	4,642	$	12,779

Net change in cash, cash equivalents, and restricted cash						Net change in cash, cash equivalents, and restricted cash	661,103		(3,468)
Cash, cash equivalents, and restricted cash at the beginning of the period						Cash, cash equivalents, and restricted cash at the beginning of the period	3,045		8,958
Cash, cash equivalents, and restricted cash at the end of the period						Cash, cash equivalents, and restricted cash at the end of the period	$	664,148	$	5,490
Supplemental cash flow information:	Supplemental cash flow information:					Supplemental cash flow information:
Interest paid	Interest paid	$	27,384	$	33,468	Interest paid	$	46,058	$	63,502
Income taxes paid (refunded), net		$	4	$	(748)
Income taxes (refunded) paid, net						Income taxes (refunded) paid, net	$	(22)	$	355
Capital expenditures accrued or payable	Capital expenditures accrued or payable	$	22,345	$	23,147	Capital expenditures accrued or payable	$	18,742	$	24,348

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

WillScot Corporation

Notes to the Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 - Summary of Significant Accounting Policies

Organization and Nature of Operations

WillScot Corporation (“WillScot” 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 was incorporated as a Cayman Islands exempt company under the name~~On November 29, 2017, Double Eagle Acquisition Corporation ("Double Eagle") on June 26, 2015. Prior to November 29, 2017, Double Eagle was a Nasdaq-listed special purpose acquisition company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination. On November 29, 2017, Double Eagle indirectly acquired Williams Scotsman International, Inc. (“WSII”) from Algeco Scotsman Global S.à r.l. (together with its subsidiaries, the “Algeco Group”), which was majority owned by an investment fund managed by TDR Capital LLP ("TDR Capital"). As part of the transaction, Double Eagle domesticated to Delaware and changed its name to WillScot Corporation.

Immediately following the Merger with Mobile Mini Inc. as defined and discussed in Note 2 – Acquisitions and Relating Financing Transactions, on July 1, 2020, WillScot ~~whose~~changed its name to “WillScot Mobile Mini Holdings Corp.” (“WillScot Mobile Mini”) and filed an amended and restated certificate of incorporation, which reclassified all outstanding shares of the Class A common stock and converted such shares ~~are~~into shares of common stock, par value $0.0001 per share, of WillScot Mobile Mini (the “Common Stock”). On June 30, 2020, TDR Capital exercised its right to exchange its shares in Williams Scotsman Holding Corp ("Holdings") for 10.6 million of Class A common stock at which point the Company's Class B common stock were automatically canceled. The WillScot Class A common stock was listed on the Nasdaq Capital Market (Nasdaq: WSC)~~, serves~~ up until the Merger, and the Common Stock has been listed on the Nasdaq Capital Market (Nasdaq: WSC) since the Merger.

As the Merger closed after WillScot’s second quarter 2020, the preparation of financial statements in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) requires that our Condensed Consolidated Financial Statements and most of the disclosure in these Notes be presented on a historical basis, as ~~the holding company~~of or for the ~~Williams Scotsman family of companies. All of~~three and six months ended June 30, 2020 or prior periods. Unless the ~~Company’s assets~~context otherwise requires, the terms “Company” and ~~operations are owned through Williams Scotsman~~“WillScot Mobile Mini” as used in these financial statements mean WillScot Corporation and its subsidiaries when referring to periods prior to July 1, 2020 (prior to the Merger) and to WillScot Mobile Mini Holdings Corp. ~~(“WS Holdings”). WillScot operates and owns 91.0% of WS Holdings, and Sapphire Holding S.à r.l. (“Sapphire”)~~, ~~an affiliate of TDR Capital, owns~~when referring to periods on or after July 1, 2020 (after the ~~remaining 9.0%~~Merger).

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Quarterly Report on Form 10-Q and do not include all the information and notes required by ~~accounting principles generally accepted in the US (“GAAP”)~~GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements comprise the financial statements of WillScot and its subsidiaries that it controls due to ownership of a majority voting interest and contain all adjustments, which are of a normal and recurring nature, necessary to present fairly the financial position, the results of operations and cash flows for the interim periods presented.

On December 31, 2019, the 2019 financial statement amounts were adjusted for the adoption Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) ("ASC 842"), effective retroactively to January 1, 2019, and therefore may not agree to the Quarterly Reports filed on Form 10-Q for the respective periods of 2019.

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 results of operations for the ~~three~~six months ended ~~March 31,~~June 30, 2020 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 WillScot's Annual Report on Form 10-K for the year ended December 31, 2019.

Recently Issued and Adopted Accounting Standards

Recently Issued Accounting Standards

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848), which is elective, and provides for optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The Company is currently evaluating the impact of reference rate reform and potential impact of adoption of these elective practical expedients on its condensed consolidated financial statements and will consider the impact of adoption during its analysis.

Recently Adopted Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) ("ASC 326"), which prescribes that financial assets (or a group of financial assets) should be measured at amortized cost basis to be presented at the net amount expected to be collected based on relevant historical information from historical experience, adjusted for current conditions and reasonable and supportable forecasts that affect ~~collectibility.~~collectability. Credit losses relating to these financial

assets are recorded through an allowance for credit losses. The Company adopted ASC 326 effective January 1, 2020. The effect of this guidance was immaterial to the Company's consolidated results of operations, financial position and cash flows.

Impact of COVID-19

~~In December 2019, a novel strain of coronavirus, COVID-19, was first detected in Wuhan, China, and it has since spread to other regions, including the United States.~~ On ~~March 11,~~January 30, 2020, the World Health Organization declared ~~that the rapidly spreading~~an outbreak of a highly contagious form of an upper respiratory infection caused by COVID-19, ~~outbreak~~a novel coronavirus strain commonly referred to as “coronavirus”. The Company was ~~a global pandemic. In response~~deemed an essential infrastructure business and has continued to the pandemic, many governments around the world are implementing a variety of measures to reduce the spread of COVID-19, including travel restrictions and bans, instructions to residents to practice social distancing, quarantine advisories, shelter-in-place orders and required closures of non-essential businesses.

supply its customers.

There have been significant changes to the global economic situation and to public securities markets as a consequence of the COVID-19 pandemic. ItIf these conditions persist, it is reasonably likely that this could cause changes to estimates as a result of the markets in which the Company operates, the price of the Company’s publicly traded equity and debt in comparison to the Company’s carrying value, and the health of the global economy. Such changes to estimates could potentially result in impacts that would be material to the consolidated financial statements, particularly with respect to the fair value of the Company’s reporting units in relation to potential goodwill impairment, the fair value of long-lived assets in relation to potential impairment and the allowance for doubtful accounts.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act provides several employer and corporate incentives designed to assist businesses with liquidity and support employee retention. The Company continues to assess the implications of the CARES Act to its business and believes that relevant components of the CARES Act are not material to its financial statements as a whole.

NOTE 2 - Acquisitions and ~~Assets Held for Sale~~Related Financing Transactions

~~Pending~~ Mobile Mini Merger

On March 1, 2020, the Company, along with its newly formed subsidiary, Picasso Merger Sub, Inc. (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Mobile Mini, Inc. (“Mobile Mini”), the (“Merger”). The closing of the Merger ~~Agreement provides for the merger of Mobile Mini~~was completed on July 1, 2020 and Merger Sub merged with and into Mobile Mini and the separate corporate existence of Merger Sub ~~(the “Merger”), with~~ceased and Mobile Mini continued its existence, as the surviving ascorporation in the Merger and a wholly-owned subsidiary of ~~the Company. At the effective time~~WillScot.

Upon completion of the Merger, each issued and ~~subject to the terms and conditions set forth in the Merger Agreement, each~~ outstanding share of ~~the~~Mobile Mini common stock, ~~of Mobile Mini shall be~~par value $0.01 per share, converted ~~into~~to the right to receive 2.4050 shares of ~~WillScot~~WillScot’s Class A common ~~stock.~~stock, par value $0.0001 per share, and cash in lieu of any fractional shares.

Approximately 106 million shares of Common Stock were issued to Mobile Mini shareholders following the completion of the Merger and as of July 31, 2020 the Company had 227,721,220 of Common Stock. The trading price of Common Stock was $12.53 per share on the closing date. In addition, Mobile Mini stock options converted into WillScot Mobile Mini stock options. The preliminary purchase price is estimated at $1.4 billion subject to adjustment pending the finalization of preliminary valuation estimates.

The Merger ~~has been approved by~~will be accounted for using the ~~boards~~acquisition method of ~~directors~~accounting, and WillScot will be treated as the accounting acquirer. Under the acquisition method of accounting, we are required to assign the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values at the closing date. The excess of the Company and Mobile Mini. The Merger is subject to customary closing conditions, including receipt of regulatory approval and approval by the stockholders of the Company and Mobile Mini and is expected to close in the third quarter of 2020. Additionally, the transaction has the support of TDR Capital, the Company's largest stockholder, which has entered into a voting agreement in support of the Merger.

~~In connection with the Merger, the Company entered into a commitment letter (the “Commitment Letter”), dated March 1, 2020,~~purchase price over those fair values will be recorded as amended and restated on March 24, 2020, and further amended and restated on May 5, 2020, with the lenders party thereto (the “Lenders”). Pursuant to the Commitment Letter, the Lenders have agreed to provide debt financing to refinance the Company’s existing ABL Facility (as defined in Note 9), Mobile Mini’s existing ABL credit facility and Mobile Mini’s outstanding senior notes due 2024 on the terms and conditions set forth in the Commitment Letter.goodwill.

The Company expensed ~~$9.4~~$1.6 million and $11.0 million in transaction costs related to the Merger within selling, general and administrative ("SG&A") for the three and six months ended ~~March 31,~~June 30, 2020, respectively. The Company expects to expense within SG&A approximately $51 million in transaction expenses related to the Merger in the third quarter of 2020.

~~Assets Held for Sale~~

~~As part~~Restricted Cash and 2025 Secured Notes

In anticipation of the ~~Modular Space Holdings,~~Merger, on June 15, 2020, Picasso Finance Sub, Inc. ~~("ModSpace"~~, a newly-formed indirect finance subsidiary (the “Finance Sub”) ~~acquisition in 2018,~~of the Company, ~~implemented~~completed a ~~plan to right size~~private offering of $650.0 million in aggregate principal amount of its ~~branch network~~6.125% senior secured notes due 2025 (the “2025 Secured Notes”). The 2025 secured notes contained provisions requiring repayment without penalty, in the event the Merger was not consummated.The offering proceeds from the 2025 Secured Notes of $650.0 million and ~~dispose~~$5.1 million of ~~unused properties.~~

Asinterest due through August 1, 2020 were deposited into an escrow account, pending the closing of ~~March 31,~~the Merger. In connection with completion of the Merger on July 1, 2020, the ~~Company had 5 properties totaling $8.5 million included in assets held for sale. During~~offering proceeds were released and the ~~three months ended March 31,~~proceeds were utilized to repay the 2022 Secured Notes (see Note 9 – Debt), repay Mobile Mini secured notes and pay certain fees and expenses related to the Merger and financing transactions. In addition, Finance Sub was merged into WSII on July 1, 2020. At June 30, 2020 the ~~Company recorded 0 impairment~~$655.1 million in the escrow account is reported as restricted cash on the condensed consolidated balance sheet.

New ABL Facility

aggregate principal amount of $2 billion (the “US Facility”), available to WSII and certain of its subsidiaries (collectively, the “US Borrowers”), and (ii) a $400 million senior secured asset-based multicurrency revolving credit facility together with the US Facility, the “New ABL Facility”), available to be drawn in US Dollars, Canadian Dollars, British Pounds Sterling or Euros by the US Borrowers, and certain of WSII’s and Mobile Mini’s wholly-owned subsidiaries organized in Canada and in the United Kingdom. On July 1, 2020, in connection with the completion of the Merger, approximately $1.47 billion of proceeds from the New ABL Facility were used to finance the repayment of both the WillScot ABL facility and the Mobile Mini ABL facility, as well as to pay fees and expenses related to ~~these assets. As of March 31, 2019,~~ the ~~Company had 10 properties totaling $21.0~~Merger and the financing transactions, including $36 million ~~included~~ in ~~assets held for sale. During the three months ended March 31, 2019, the Company recorded an impairment of $2.3 million~~fees related to ~~assets held for sale.~~

the New ABL Facility upfront fees which will be recorded as deferred financing costs in the third quarter of 2020. The ~~fair value~~New ABL Facility matures July 1 2025. Borrowings under the New ABL Facility will initially bear interest at (i) in the case of US Dollars, at WSII’s option, either an adjusted LIBOR rate plus 1.875% or an alternative base rate plus 0.875%, (ii) in the ~~assets held for sale was determined using valuations from third party brokers, which were based on current sales prices for comparable assets,~~case of Canadian Dollars, at WSII’s option, either a ~~Level 2 measurement.~~Canadian BA rate plus 1.875% or Canadian prime rate plus 0.875%, and (iii) in the case of Euros and British Pounds Sterling, an adjusted LIBOR rate plus 1.875%.

NOTE 3 - Revenue

Revenue Disaggregation

Geographic Areas

The Company had total revenue in the following geographic areas for the three and six months ended ~~March 31~~June 30 as follows:

Three Months Ended
March 31,
(in thousands) 2020 2019
US $ 235,328 $ 231,467
Canada 16,706 18,194
Mexico 3,787 4,024
Total revenues $ 255,821 $ 253,685


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
US	$	237,613	$	238,087	$	472,941	$	469,554
Canada	16,279		21,405		32,985		39,599
Mexico	2,970		4,221		6,757		8,245
Total revenues	$	256,862	$	263,713	$	512,683	$	517,398

Major Product and Service Lines

The Company’s revenue by major product and service line for the three and six months ended ~~March 31~~June 30 was as follows:


		Three Months Ended March 31,							Three Months Ended June 30,						Six Months Ended June 30,
		2020		2019			2020		2019		2020		2019
(in thousands)	(in thousands)	Total		Total		(in thousands)	Total		Total		Total		Total
Modular space leasing revenue	Modular space leasing revenue	$	131,398	$	123,550	Modular space leasing revenue	$	132,377	$	129,475	$	263,775	$	253,025
Portable storage leasing revenue	Portable storage leasing revenue	5,849		6,240		Portable storage leasing revenue	5,716		6,021		11,565		12,262
VAPS^(a)	VAPS^(a)	41,002		37,392		VAPS^(a)	42,421		39,669		83,423		77,061
Other leasing-related revenue^(b)	Other leasing-related revenue^(b)	10,103		10,110		Other leasing-related revenue^(b)	9,629		10,653		19,732		20,762
Modular leasing revenue	Modular leasing revenue	188,352		177,292		Modular leasing revenue	190,143		185,818		378,495		363,110
Modular delivery and installation revenue	Modular delivery and installation revenue	51,070		50,000		Modular delivery and installation revenue	51,640		55,966		102,710		105,966
Total leasing and services revenue	Total leasing and services revenue	239,422		227,292		Total leasing and services revenue	241,783		241,784		481,205		469,076
New unit sales revenue	New unit sales revenue	9,613		14,841		New unit sales revenue	9,763		11,507		19,376		26,348
Rental unit sales revenue	Rental unit sales revenue	6,786		11,552		Rental unit sales revenue	5,316		10,422		12,102		21,974
Total revenues	Total revenues	$	255,821	$	253,685	Total revenues	$	256,862	$	263,713	$	512,683	$	517,398

(a) Includes ~~$4.0~~$4.3 million and ~~$3.8~~$4.1 million of value added products and services ("VAPS") service revenue for the three months ended ~~March 31,~~June 30, 2020 and 2019, respectively and $8.3 million and $7.9 million of VAPS service revenue for the six months ended June 30 2020, and 2019, respectively.

(b) Primarily damage billings, delinquent payment charges, and other processing fees.

Modular Leasing and Services Revenue

The majority of revenue ~~(72%~~(72% for the three and ~~three~~six months ended ~~March 31,~~June 30, 2020 and ~~68%~~69% and for the three and six months ended ~~March 31,~~June 30, 2019) is generated by rental income subject to the guidance of ASC 842. The remaining revenue for the three and six months ended ~~March 31,~~June 30, 2020 and 2019 is generated by performance obligations in contracts with customers for services or sale of units subject to the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606").

Receivables, Contract Assets and Liabilities

As reflected above, approximately 72% of the Company's rental revenue is generated by lease revenue subject to the guidance of ASC 842. The customers that are responsible for the remaining revenue ~~that is~~ accounted for under ASC 606 are generally the same customers that rent the Company's equipment. ~~We manage~~The Company manages credit risk associated with ~~our~~its accounts receivables at the customer level. ~~Because~~As the same customers generate the revenues that are accounted for under both ~~Topic~~ASC 606 and ~~Topic 840,~~ASC 842, the discussions below on credit risk and ~~our~~the Company's allowance for doubtful accounts address ~~our~~its total revenues. The Company's top five customers with the largest open receivables balances represented 4.7% of the total receivables balance as of ~~March 31,~~June 30, 2020.

As of December 31, 2019, the Company had approximately $42.6 million of deferred revenue that relates to removal services for lease transactions and advance billings for sale transactions, which are within the scope of ASC 606. As of ~~March 31,~~June 30, 2020, the Company had approximately ~~$44.6~~$47.1 million of deferred revenue relating to these services which are included in deferred revenue and customer deposits in the condensed consolidated balance sheets. During the three months ended ~~March 31,~~June 30, 2020, ~~$7.9~~$9.2 million of previously deferred revenue relating to removal services for lease transactions and advance billings for sale transactions was recognized as revenue.

The Company does not have material contract assets and it did not recognize any material impairments of ~~any~~ contract assets.

The Company's uncompleted contracts with customers have unsatisfied (or partially satisfied) performance obligations. For the future services revenues that are expected to be recognized within twelve months, the Company has elected to utilize the optional disclosure exemption made available regarding transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations. The transaction price for performance obligations that will be completed in greater than twelve months is variable based on the costs ultimately incurred to provide those ~~services and therefore the Company is applying the optional exemption to omit disclosure of such amounts.~~services.

The primary costs to obtain contracts for new and rental unit sales with the Company's customers are ~~commissions.~~commissions paid to our sales force. The Company pays its sales force commissions on the sale of new and rental units. For new and rental unit sales, the period benefited by each commission is less than one ~~year. As a result,~~year, therefore the ~~Company has applied the practical expedient for incremental costs of obtaining a sales contract and will expense~~ commissions are be expensed as incurred.

Credit Losses

The Company is exposed to credit losses from trade receivables generated through its leasing and sales business. The Company assesses each customer’s ability to pay for the products it sells by conducting a credit review. The credit review considers expected billing exposure and timing for payment and the customer’s established credit rating. The Company

performs its credit review of new customers at inception of the customer relationship and for existing customers when ~~they transact~~the customer transacts new leases after a defined period of dormancy. The Company also considers contract terms and conditions, country risk and business strategy in the evaluation.

The Company monitors ongoing credit exposure through an active review of customer balances against contract terms and due dates. The ~~Company's activities include timely account reconciliations, dispute resolution and payment confirmations. The~~ Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. The Company uses a loss-rate method to assess for credit losses. The allowances for credit losses reflect the estimate of the amount of receivables that the Company will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. This estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, the Company may be required to increase or decrease our allowances.


(in thousands)	(in thousands)	Three Months Ended March 31, 2020				Year Ended December 31, 2019		(in thousands)			Six Months Ended June 30, 2020		Year Ended December 31, 2019
Balance at beginning of year	Balance at beginning of year	$	15,828			$	9,340	Balance at beginning of year			$	15,828	$	9,340
Net charges to bad debt expense and revenue	Net charges to bad debt expense and revenue	3,392				14,496		Net charges to bad debt expense and revenue			9,122		14,496
Write-offs	Write-offs			(2,744)				(7,945)		Write-offs			(5,573)		(7,945)
Foreign currency translation and other	Foreign currency translation and other			(5)				(63)		Foreign currency translation and other			(194)		(63)
Balance at end of period	Balance at end of period			$	16,471			$	15,828	Balance at end of period			$	19,183	$	15,828

NOTE 4 - Leases

As of ~~March 31,~~June 30, 2020, the undiscounted future lease payments for operating lease liabilities were as follows:

(in thousands)
2020 $ 28,505
2021 35,174
2022 29,103
2023 23,264
2024 18,202
Thereafter 51,725
Total lease payments 185,973
Less: interest (37,429)
Present value of lease liabilities $ 148,544


	(in thousands)
2020	$	19,748
2021	36,770
2022	30,487
2023	24,353
2024	19,141
Thereafter	53,540
Total lease payments	184,039
Less: interest	(36,442)
Present value of lease liabilities	$	147,597

The Company’s lease activity during the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019 was as follows:


		Three Months Ended March 31,											Six Months Ended June 30,
Financial Statement Line (in thousands)	Financial Statement Line (in thousands)	2020				2019		Financial Statement Line (in thousands)			2020		2019
Operating Lease Expense	Operating Lease Expense							Operating Lease Expense
Fixed lease expense	Fixed lease expense							Fixed lease expense
Cost of leasing and services	Cost of leasing and services			$	1,602			$	1,818	Cost of leasing and services			$	3,074	$	3,559
Selling, general and administrative	Selling, general and administrative			7,885				8,426		Selling, general and administrative			16,866		16,820
Lease impairment expense and other related charges	Lease impairment expense and other related charges			684				317		Lease impairment expense and other related charges			1,359		533
Short-term lease expense	Short-term lease expense							Short-term lease expense
Cost of leasing and services	Cost of leasing and services			7,300				7,688		Cost of leasing and services			13,603		14,708
Selling, general and administrative	Selling, general and administrative			386				813		Selling, general and administrative			851		1,382
Lease impairment expense and other related charges	Lease impairment expense and other related charges			212				—		Lease impairment expense and other related charges			466		—
Variable lease expense	Variable lease expense							Variable lease expense
Cost of leasing and services	Cost of leasing and services			1,832				642		Cost of leasing and services			3,657		1,359
Selling, general and administrative	Selling, general and administrative			867				1,086		Selling, general and administrative			2,131		2,085
Lease impairment expense and other related charges	Lease impairment expense and other related charges			287				—		Lease impairment expense and other related charges			511		—
Total operating lease expense	Total operating lease expense	$	21,055			$	20,790	Total operating lease expense			$	42,518	$	40,446

The Company initiated certain restructuring plans associated with the ModSpace acquisition in order to capture operating synergies as a result of integrating ModSpace into WillScot. The restructuring activities primarily ~~include~~included the termination of leases for duplicative branches, equipment and corporate facilities. As part of these plans, certain of its leased locations were vacated and leases were terminated or impaired.

During the six~~three~~ months ended ~~March 31,~~June 30, 2020, the ~~Company recorded $1.7 million in lease impairment expense and other related charges which are comprised of $0.5 million~~

~~loss on lease exit and $1.2 million in closed location rent expense. During the three months ended March 31, 2019, the~~ Company recorded $3.1 million in lease impairment expense and other related charges which ~~are~~is comprised of $0.8 million loss on lease exit and impairment charges and $2.3 million in closed location rent expense. During the six months ended June 30, 2019, the Company recorded $4.6 million in lease impairment expense and other related charges which is comprised of $2.4 million in right-of-use ("ROU") asset impairment on leased locations no longer used in operations, ~~$0.4~~$1.7 million loss on lease exit and ~~$0.3~~$0.5 million in closed location rent expense.

Supplemental cash flow information related to operating leases for the ~~three~~six months ended ~~March 31,~~June 30, 2020 was as follows:


		Three Months Ended March 31,							Six Months ended June 30,
Supplemental Cash Flow Information (in thousands)	Supplemental Cash Flow Information (in thousands)	2020		2019		Supplemental Cash Flow Information (in thousands)	2020		2019
Cash paid for the amounts included in the measurement of lease liabilities	Cash paid for the amounts included in the measurement of lease liabilities	$	10,108	$	9,826	Cash paid for the amounts included in the measurement of lease liabilities	$	20,271	$	19,692
Right of use assets obtained in exchange for lease obligations	Right of use assets obtained in exchange for lease obligations	$	13,270	$	8,934	Right of use assets obtained in exchange for lease obligations	$	19,242	$	16,160

Weighted-average remaining operating lease terms and the weighted average discount rates as of ~~March 31,~~June 30, 2020 and December 31, 2019 were as follows:

Lease Terms and Discount Rates

March 31,
2020

December 31, 2019

Lease Terms and Discount Rates

June 30,
2020

December 31, 2019

Weighted-average remaining lease term

6.55 years

6.51 years

Weighted-average remaining lease term

6.41 years

6.51 years

Weighted-average discount rate

6.8

7.0

Weighted-average discount rate

6.9

7.0

The Company presents information related to leasing revenues in Note 3.

NOTE 5 - Inventories

Inventories were comprised of raw materials and consumables of ~~$15.0~~$14.8 million and $15.4 million at ~~March 31,~~June 30, 2020 and December 31, 2019, respectively.

NOTE 6 - Rental Equipment, net

Rental equipment, net, at the respective balance sheet dates consisted of the following:


(in thousands)	(in thousands)	March 31, 2020		December 31, 2019		(in thousands)	June 30, 2020		December 31, 2019
Modular units and portable storage	Modular units and portable storage	$	2,446,510	$	2,455,471	Modular units and portable storage	$	2,476,963	$	2,455,471
Value added products	Value added products	125,384		121,855		Value added products	130,886		121,855
Total rental equipment	Total rental equipment	2,571,894		2,577,326		Total rental equipment	2,607,849		2,577,326
Less: accumulated depreciation	Less: accumulated depreciation	(658,899)		(632,890)		Less: accumulated depreciation	(699,550)		(632,890)
Rental equipment, net	Rental equipment, net	$	1,912,995	$	1,944,436	Rental equipment, net	$	1,908,299	$	1,944,436

NOTE 7 - Goodwill

Changes in the carrying amount of goodwill were as follows:


(in thousands)	(in thousands)	Modular – US		Modular – Other North America		Total		(in thousands)	Modular – US		Modular – Other North America		Total
Balance at December 31, 2018	Balance at December 31, 2018	$	213,264	$	33,753	$	247,017	Balance at December 31, 2018	$	213,264	$	33,753	$	247,017
Changes to preliminary purchase price accounting	Changes to preliminary purchase price accounting	(9,331)		(4,148)		(13,479)		Changes to preliminary purchase price accounting	(9,331)		(4,148)		(13,479)
Effects of movements in foreign exchange rates	Effects of movements in foreign exchange rates	—		1,639		1,639		Effects of movements in foreign exchange rates	—		1,639		1,639
Balance at December 31, 2019	Balance at December 31, 2019	203,933		31,244		235,177		Balance at December 31, 2019	203,933		31,244		235,177
Effects of movements in foreign exchange rates	Effects of movements in foreign exchange rates	—		(2,381)		(2,381)		Effects of movements in foreign exchange rates	—		(1,348)		(1,348)
Balance at March 31, 2020		$	203,933	$	28,863	$	232,796
Balance at June 30, 2020								Balance at June 30, 2020	$	203,933	$	29,896	$	233,829

The Company had 0 goodwill impairment during the ~~three~~six months ended ~~March 31,~~June 30, 2020 or the year ended December 31, 2019.

The Company considered the economic environment resulting from the COVID-19 pandemic as part of its review for indicators of potential impairment and reviewed qualitative information currently available in determining if it was more likely than not that the fair values of the Company’s reporting units were less than the carrying amounts as of ~~March 31,~~June 30, 2020. Based on the Company’s current long-term projections and the extent of fair value in excess of carrying value at the Company's October 1, 2019 annual impairment test date, management concluded that it is not more likely than not that the fair value of the Company's reporting units were less than their carrying amount during the three and six months ended ~~March 31,~~June 30, 2020 and ~~therefore~~there were no impairment ~~occurred.~~indicators that would require an interim impairment test.

Due to the uncertain and rapidly evolving nature of the conditions surrounding the COVID-19 pandemic, changes in economic outlook may change our long-term projections.

NOTE 8 - Intangibles

Intangible assets other than goodwill at the respective balance sheet dates consisted of the following:


		March 31, 2020													June 30, 2020
(in thousands)	(in thousands)	Remaining life (in years)	Gross carrying amount		Accumulated amortization		Net book value		(in thousands)	Remaining life (in years)	Gross carrying amount		Accumulated amortization		Net book value
Intangible assets subject to amortization:	Intangible assets subject to amortization:								Intangible assets subject to amortization:
ModSpace trade name	ModSpace trade name	1.4	$	3,000	$	(1,625)	$	1,375	ModSpace trade name	1.2	$	3,000	$	(1,875)	$	1,125

Indefinite-lived intangible assets:	Indefinite-lived intangible assets:								Indefinite-lived intangible assets:
Trade name	Trade name		125,000		—		125,000		Trade name		125,000		—		125,000
Total intangible assets other than goodwill	Total intangible assets other than goodwill		$	128,000	$	(1,625)	$	126,375	Total intangible assets other than goodwill		$	128,000	$	(1,875)	$	126,125


	December 31, 2019
(in thousands)	Remaining life (in years)	Gross carrying amount		Accumulated amortization		Net book value
Intangible assets subject to amortization:
ModSpace trade name	1.7	$	3,000	$	(1,375)	$	1,625

Indefinite-lived intangible assets:
Trade names		125,000		—		125,000
Total intangible assets other than goodwill		$	128,000	$	(1,375)	$	126,625

~~In the ModSpace acquisition, the Company allocated $3.0 million~~ to definite-lived intangible assets related to the ModSpace trade name. The ModSpace trade name has an estimated useful life of three years. These intangibles are non-deductible for income tax purposes.

For both the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019, thethe aggregate amount recorded to other depreciation and amortization expense for the ModSpace trade name was ~~$0.3~~$0.5 million.

NOTE 9 - Debt

The carrying value of debt outstanding at the respective balance sheet dates consisted of the following:


(in thousands, except rates)	(in thousands, except rates)	Interest rate	Year of maturity	March 31, 2020		December 31, 2019		(in thousands, except rates)	Interest rate	Year of maturity	June 30, 2020		December 31, 2019
2022 Secured Notes	2022 Secured Notes	7.875%	2022	$	264,982	$	264,576	2022 Secured Notes	7.875%	2022	265,398		264,576
2023 Secured Notes		6.875%	2023	483,201		482,768
US ABL Facility	US ABL Facility	Varies	2022	877,589		885,245		US ABL Facility	Varies	2022	850,925		885,245
Canadian ABL Facility (a)	Canadian ABL Facility (a)	Varies	2022	—		—		Canadian ABL Facility (a)	Varies	2022	—		—
2023 Secured Notes								2023 Secured Notes	6.875%	2023	483,643		482,768
2025 Senior Notes								2025 Senior Notes	6.125%	2025	636,442		—
Total debt								Total debt			$	2,236,408	$	1,632,589
Less: Current portion								Less: Current portion			265,398		—
Total long-term debt	Total long-term debt			$	1,625,772	$	1,632,589	Total long-term debt			$	1,971,010	$	1,632,589

(a) As of ~~March 31,~~June 30, 2020 and December 31, 2019, the Company had 0 outstanding principal borrowings on the Canadian ABL Facility and ~~$1.8~~$1.6 million and $2.1 million of related debt issuance costs, respectively. As there were 0 principal borrowings outstanding on the Canadian ABL Facility, the ~~$1.8~~$1.6 million and $2.1 million of debt issuance costs related to that facility are included in other non-current assets on the condensed consolidated balance sheet as of ~~March 31,~~June 30, 2020 and December 31, 2019, respectively.

The Company is subject to various covenants and ~~restrictions for the ABL Facility, the 2022 Secured Notes and the 2023 Secured Notes.~~restrictions. The Company was in compliance with all covenants related to debt as of ~~March 31,~~June 30, 2020 and December 31, 2019. Subsequent to June 30, 2020, and in connection with the Merger and related refinancing described in Note 2, the Company repaid the 2022 Secured Notes and the ABL Facility as described below.

ABL Facility

On November 29, 2017, WS Holdings, WSII and certain of its subsidiaries entered into an ABL credit agreement (the “ABL Facility”), as amended in July and August 2018, that provides a senior secured revolving credit facility that matures on May 29, 2022.

The ABL Facility consists of (i) a $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 $140.0 million asset-based revolving credit facility (the “Canadian ABL Facility”) for certain Canadian subsidiaries of WSII (the “Canadian 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 $375.0 million, subject to the satisfaction of customary conditions and lender approval, plus anyany voluntary prepayments that are accompanied by permanent commitment reductions under the ABL Facility.

Borrowing availability under the ABL Facility is equal to the lesser of $1.425 billion and the applicable borrowing bases (the “Line Cap”). The borrowing bases are a function of, among other things, the value of the assets in the relevant collateral pool. At ~~March 31,~~June 30, 2020, the Line Cap is ~~$1.412~~$1.416 billion.

The obligations of the US Borrowers are unconditionally guaranteed by WS Holdings and each existing and subsequently acquired or organized direct or indirect wholly-owned US organized restricted subsidiary of WS Holdings, other than excluded subsidiaries (together with WS Holdings, the "US Guarantors"). The obligations of the Canadian Borrowers are unconditionally guaranteed by the US Borrowers and the US Guarantors, and each existing and subsequently acquired or organized direct or indirect wholly-owned Canadian organized restricted subsidiary of WS Holdings other than certain excluded subsidiaries (together with the US Guarantors, the "ABL Guarantors").

At ~~March 31,~~June 30, 2020, the weighted average interest rate for borrowings under the ABL Facility wa~~s 3.30%~~was 2.70%. The weighted average interest rate on the balance outstanding, as adjusted for the effects of the interest rate swap agreements was ~~4.35%~~4.03%. Refer to Note 1415 for a more detailed discussion on interest rate management.

At ~~March 31,~~June 30, 2020, the Borrowers had ~~$505.8~~$540.5 million of available borrowing capacity under the ABL Facility, including ~~$378.8~~$409.6 million under the US ABL Facility and ~~$127.0~~$130.9 million under the Canadian ABL Facility. At December 31, 2019, the Borrowers had $509.1 million of available borrowing capacity under the ABL Facility, including $369.3 million under the US ABL Facility and $139.8 million under the Canadian ABL Facility.

The Company had ~~issued $12.7~~issued $10.4 million of standby letters of credit under the ABL Facility at ~~March 31,~~June 30, 2020 and December 31, 2019. At ~~March 31,~~June 30, 2020, letters of credit and guarantees carried fees of 2.625%.

The Company hhad ~~ad $893.5~~$865.0 million and and $903.0 million in outstanding principal under the ABL Facility at ~~March 31,~~June 30, 2020 and December 31, 2019, respectively.

Debt issuance costs and discounts o~~f $15.9~~of $14.1 million andand $17.8 million are included in the carrying value of the US ABL Facility at ~~March 31,~~June 30, 2020 and December 31, 2019, respectively.

In connection with the Merger and related financing transactions, on July 1, 2020, the Company entered into the New ABL Facility and repaid the ABL Facility as described in Note 2 – Acquisitions and Related Financings.

2022 Senior Secured Notes

As of June 30, 2020, WSII ~~has~~had $270.0 million aggregate principal amount of 7.875% senior secured notes due December 15, 2022 (the “2022 Secured Notes”) under an indenture dated November 29, 2017, 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.

On December 13, 2019, the Company completed a partial redemption of $30.0 million of the then outstanding $300.0 million of 2022 Secured Notes at a redemption price of 103% using proceeds from its ABL Facility. The Company recorded a loss on extinguishment of debt of $1.5 million, which included $0.9 million of an early redemption premium and $0.6 million related to the write-off of unamortized deferred financing fees..

Unamortized debt issuance costs pertaining to the 2022 Secured Notes were ~~$5.0~~$4.6 million and $5.4 million as of ~~March 31,~~June 30, 2020 and December 31, 2019, respectively.

In connection with the Merger and related financing transactions, on July 1, 2020, the Company redeemed all of its 2022 Secured Notes and paid a make whole premium of $10.6 million which will be included in the loss from extinguishment expenses recorded in July 2020. The 2022 Secured Notes are classified as current at June 30, 2020 as the Company utilized cash in the escrow account classified as Restricted cash on the condensed consolidated balance sheet to repay these notes.

2023 Senior Secured Notes

On August 6, 2018, a ~~special purpose~~finance subsidiary of WSII ~~(the "Issuer")~~ completed a private offering of $300.0 million in aggregate principal amount of its 6.875% senior secured notes due August 15, 2023 (the “Initial 2023 Secured Notes”). The Issuer entered into an indenture dated August 6, 2018 with Deutsche Bank Trust Company Americas, as trustee, which governs the terms of the Initial 2023 Secured Notes. In connection with the ModSpace acquisition, the Issuer merged with and into WSII and WSII assumed the Initial 2023 Secured Notes. Interest is payable semi-annually on February 15 and August 15 of each year, beginning February 15, 2019.

On May 14, 2019, WSII completed a tack-on offering of $190.0 million in aggregate principal amount to the Initial 2023 Secured Notes (the "Tack-on Notes"). The Tack-on Notes were issued as additional securities under an ~~indenture, dated August 6, 2018, by and among the Issuer, the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee and collateral agent.~~original indenture. The Tack-On Notes and the Initial 2023 Secured Notes are treated as a single class of debt securities under the indenture (the "2023 Secured Notes") and together with the 2022 Secured Notes, the "Senior Secured Notes"). The Tack-On Notes have identical terms to the Initial 2023 Secured Notes, other than with respect to the issue date and issue price. WSII incurred a total of $3.0 million in debt issuance costs in connection with the tack-on offering, which were deferred and ~~will be~~are being amortized through the August 15, 2023 maturity date. The Tack-on Notes were issued at a premium of $0.5 million which ~~will be~~is being amortized through the August 15, 2023 maturity date. ~~The proceeds of the Tack-On Notes were used to repay a portion of the US ABL Facility.~~

Unamortized debt issuance costs and discounts, net of premium, pertaining to the 2023 Secured Notes were ~~$6.8~~$6.4 million and $7.2 million as of ~~March 31,~~June 30, 2020 and December 31, 2019, respectively.

2023 Senior Unsecured Notes

~~On August 3, 2018, a special purpose subsidiary of WSII completed a private offering of~~Prior to June 30, 2019, the Company held $200.0 million in aggregate principal amount of ~~its~~ senior unsecured notes due November 15, 2023 (the “Unsecured Notes”). On June 19, 2019 (the "Redemption Date"), WSII used proceeds from ~~its~~the WillScot US ABL Facility to redeem all $200.0 million in aggregate outstanding principal amount of the Unsecured Notes at a redemption price of 102.0%, plus a make-whole premium of 1.126% and any accrued and unpaid interest to, but not including, the Redemption Date. The Company recorded a loss on extinguishment of $7.2 million during the second quarter of 2019, which included $6.2 million of make-whole premiums and $1.0 million related to the write-off of unamortized deferred financing fees.

~~Prior~~

2025 Senior Secured Notes

As more fully described in Note 2 – Acquisitions and Related Financing Transactions, on June 15, 2020, the Company, completed a private offering of $650.0 million in aggregate principal amount of its 6.125% senior secured notes due 2025. The Company recorded $13.6 million in deferred financing fees related to the ~~redemption, the Unsecured Notes bore~~2025 secured notes.

The 2025 secured notes mature on June 15, 2025. They bear interest at a rate of ~~10%~~6.125% per annum. Interest ~~was~~is payable semi-annually on ~~February~~June 15 and ~~August~~December 15 of each year, beginning ~~February~~December 15, ~~2019.~~2020.

NOTE 10 – Equity

Common Stock ~~and Warrants~~

Common Stock

On June 30, 2020, as contemplated by the Merger Agreement, and pursuant to the terms of an exercise notice delivered by Sapphire Holdings, an affiliate of TDR Capital, to WillScot, Sapphire Holdings exchanged each of its shares of common stock, par value $0.0001 per share, of Holdings, pursuant to that certain existing exchange agreement, between WillScot and Sapphire Holdings, for 1.3261 shares of newly issued Class A common stock (the “Sapphire Exchange”). As a result of the Sapphire Exchange, all issued and outstanding shares of WillScot’s Class B common stock, par value $0.0001 per share (the "Class B common stock"), were automatically canceled for no consideration and the existing exchange agreement was automatically terminated. As a result of the Sapphire Exchange, Holdings became a wholly-owned subsidiary of WillScot. Sapphire Holdings received 10,641,182 shares of Class A common stock in the Sapphire Exchange (the “Exchange Shares”).

Prior to the Sapphire Exchange, Sapphire Holdings ownership of Holdings was recorded as a non-controlling interest in the condensed consolidated financial statements. Effective as of June 30, 2020, due to the Sapphire Exchange, the

Company's subsidiaries are each wholly owned and there is no non-controlling interest. As a result of the Sapphire Exchange, non-controlling interest of $63.9 million was reclassified to $66.9 million of additional paid-in-capital and $(3.0) million to accumulated other comprehensive loss, on the condensed consolidated balance sheet.

In connection with the Sapphire Exchange, stock compensation vesting event described in Note 1314 and the warrant exercises described below, the Company issued ~~1,736,441~~12,414,378 shares of ~~common~~Class A common stock during the ~~three~~six months ended ~~March 31,~~June 30, 2020.

~~Warrants~~

~~Double Eagle~~In conjunction with the Merger on July 1, 2020, the Company issued ~~warrants to purchase its common stock as components~~106,428,908 shares of ~~units sold in its initial public offering (the “Public Warrants”). Double Eagle also issued warrants to purchase its~~Class A common stock in ~~a private placement concurrently with its initial public offering (the “Private Warrants,”~~exchange for Mobile Mini common stock outstanding and ~~together with~~subsequently filed an amended and restated certificate of incorporation, which reclassified all outstanding shares of the ~~Public Warrants,~~Class A common stock and converted such shares into shares of common stock, par value $0.0001 per share, of WillScot Mobile Mini. As of July 31, 2020, the ~~"2015 Warrants").~~Company had 227,721,220 shares of Common Stock.

Warrants

On January 24, 2020, the Company delivered a notice (the “Redemption Notice”) to redeem all of its outstanding ~~Public Warrants~~warrants to purchase the Company’s Class A common stock, which were issued under the warrant agreement, dated September 10, 2015, by and between Double Eagle and Continental Stock Transfer & Trust Company, as warrant agent (the “Warrant Agreement”), as part of the units sold in Double Eagle's initial public offering that remained unexercised on February 24, 2020. As further described in the Redemption Notice and permitted under the Warrant Agreement, holders of ~~the Public Warrants~~these warrants who exercised ~~such Public Warrants~~them following the date of the Redemption Notice were required to do so on a cashless basis.

From January 1, 2020 through January 24, 2020, 796,610 ~~Public Warrants~~warrants were exercised for cash, resulting in the Company receiving cash proceeds of $4.6 million inand the ~~aggregate. An aggregate of~~Company issued 398,305 shares of the Company's Class A common ~~stock were issued in connection with these exercises.~~

stock. After January 24, 2020 through February 24, 2020, 5,836,048 ~~Public Warrants~~warrants were exercised on a cashless basis. An aggregate of 1,097,162 shares of the Company's Class A common stock ~~were~~was issued in connection with these exercises. Thereafter, the Company completed the redemption of 38,509 remaining ~~Public Warrants~~warrants under the Redemption Notice for $0.01 per warrant.

~~As part of the ModSpace acquisition purchase price,~~At June 30, 2020, the Company ~~issued~~has 9,782,106 warrants ~~to purchase shares of WillScot’s Class A common stock at~~each, exercisable for 1 share, with an exercise price of $15.50 ~~per~~and 17,561,700 warrants exercisable for one half share ~~(the "2018 Warrants").~~with an exercise price of $5.75 outstanding.

~~At March 31, 2020, 9,966,070 of the 2018 Warrants and 17,561,700 of the Private Warrants were outstanding.~~

Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss ("AOCL"), net of tax, for the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019 were as follows:


(in thousands)	(in thousands)	Foreign Currency Translation		Unrealized losses on hedging activities		Total		(in thousands)	Foreign Currency Translation		Unrealized losses on hedging activities		Total
Balance at December 31, 2019	Balance at December 31, 2019	$	(52,982)	$	(9,793)	$	(62,775)	Balance at December 31, 2019	$	(52,982)	$	(9,793)	$	(62,775)
Total other comprehensive loss prior to reclassifications	Total other comprehensive loss prior to reclassifications	(21,144)		(10,330)		(31,474)		Total other comprehensive loss prior to reclassifications	(21,144)		(10,330)		(31,474)
Reclassifications to the statements of operations	Reclassifications to the statements of operations	—		1,572		1,572		Reclassifications to the statements of operations	—		1,572		1,572
Less other comprehensive loss attributable to non-controlling interest	Less other comprehensive loss attributable to non-controlling interest	1,913		790		2,703		Less other comprehensive loss attributable to non-controlling interest	1,913		790		2,703
Balance at March 31, 2020	Balance at March 31, 2020	$	(72,213)	$	(17,761)	$	(89,974)	Balance at March 31, 2020	(72,213)		(17,761)		(89,974)
Total other comprehensive income (loss) prior to reclassifications								Total other comprehensive income (loss) prior to reclassifications	7,982		(1,642)		6,340
Reclassifications to the statements of operations								Reclassifications to the statements of operations	—		2,617		2,617
Less other comprehensive income attributable to non-controlling interest								Less other comprehensive income attributable to non-controlling interest	(730)		(88)		(818)
Impact of elimination of non-controlling interest on accumulated other comprehensive income								Impact of elimination of non-controlling interest on accumulated other comprehensive income	(1,299)		(1,673)		(2,972)
Balance at June 30, 2020								Balance at June 30, 2020	$	(66,260)	$	(18,547)	$	(84,807)


(in thousands)	Foreign Currency Translation		Unrealized losses on hedging activities		Total
Balance at December 31, 2018	$	(62,608)	$	(5,418)	$	(68,026)
Total other comprehensive income (loss) prior to reclassifications	4,115		(2,636)		1,479
Reclassifications to statements of operations	—		435		435
Less other comprehensive loss (income) attributable to non-controlling interest	(364)		198		(166)
Balance at March 31, 2019	(58,857)		(7,421)		(66,278)
Total other comprehensive income (loss) prior to reclassifications	4,321		(4,500)		(179)
Reclassifications from AOCI to income	—		613		613
Less other comprehensive loss (income) attributable to non-controlling interest	(397)		351		(46)
Balance at June 30, 2019	$	(54,933)	$	(10,957)	$	(65,890)

(in thousands) Foreign Currency Translation Unrealized losses on hedging activities Total
Balance at December 31, 2018 $ (62,608) $ (5,418) $ (68,026)
Total other comprehensive income (loss) prior to reclassifications 4,115 (2,636) 1,479
Reclassifications to statements of operations — 435 435
Less other comprehensive (loss) income attributable to non-controlling interest (364) 198 (166)
Balance at March 31, 2019 $ (58,857) $ (7,421) $ (66,278)

For the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019, ~~$1.6~~$4.2 million ~~and $0.6~~and $1.2 million, respectively, was reclassified from AOCL into the condensed consolidated statement of operations within interest expense related to the interest rate swaps discussed in Note ~~14.~~15. The Company did 0t record a tax benefit for the three and six months ended June 30, 2020, associated with this reclassification. For the three and six months ended ~~March 31, 2020 and~~June 30, 2019, the Company recorded a tax benefit of ~~$0.0~~$1.2 million and ~~$0.1~~$1.9 million, respectively, associated with this reclassification.

NOTE 11 – Income Taxes

The Company recorded ~~$0.8~~$(0.3) million and ~~$0.4~~$0.5 million of income tax (benefit) expense for the three and six months ended ~~March 31,~~June 30, 2020, respectively and $(1.2) million and $(0.8) million for the three and six months ended June 30, 2019 ~~mainly related to accrued interest on uncertain tax positions and legislative changes in the first quarter of 2020, and accrued interest on uncertain tax positions in 2019, discrete to the quarter,~~ respectively.

The Company’s effective tax rate for the three and six months ended ~~March 31,~~June 30, 2020 ~~and 2019~~ was ~~(27.4)~~(2.3)%, and ~~(3.9)%~~5.2%, ~~respectively. The Company did not recognize~~respectively, and 9.4% and 3.6% for the same periods in 2019. The income tax (benefit) expense for the three and six months ended June 30, 2020 is primarily a result of the benefit from reversal of valuation allowance due to pre-tax income offset by net increase in expense for certain discrete items recorded in the respective quarters, mainly driven by legislative enactments. The income tax benefit for ~~loss~~the three and six months ended June 30, 2019 is primarily from ~~operations as of March 31, 2020,~~ ~~as it is not likely that~~discrete items recorded in the ~~benefit is realizable. A~~respective quarters, including state legislative enactments and uncertain tax ~~benefit will be recognized only when there is sufficient income to support realization of a benefit.~~position reversals.

NOTE 12 - 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, restricted cash, trade receivables, trade payables, ~~capital lease and other financing obligations,~~ and other current liabilities approximate their carrying amounts.

The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy:


		March 31, 2020														December 31, 2019															June 30, 2020								December 31, 2019
		Carrying Amount		Fair Value										Carrying Amount		Fair Value											Carrying Amount		Fair Value								Carrying Amount	Fair Value
(in thousands)	(in thousands)					Level 1		Level 2		Level 3						Level 1		Level 2		Level 3		(in thousands)	Carrying Amount						Level 2		Level 3				Carrying Amount	Level 1		Level 3
US ABL Facility	US ABL Facility	$	877,589	$	—	$	893,500	$	—	$	885,245	$	—	$	903,000	$	—	US ABL Facility	$	850,925	$	—			$	—	$	885,245	$	—	$	903,000	$	—
Canadian ABL Facility	Canadian ABL Facility	—		—		—		—		—		—		—		—		Canadian ABL Facility	—		—		—		—		—		—		—		—
2022 Secured Notes	2022 Secured Notes	264,982		—		262,429		—		264,576		—		282,250		—		2022 Secured Notes	265,398		—		281,003		—		264,576		—		282,250		—
2023 Secured Notes	2023 Secured Notes	483,201		—		473,498		—		482,768		—		517,334		—		2023 Secured Notes	483,643		—		505,754		—		482,768		—		517,334		—
2025 Secured Notes																		2025 Secured Notes	636,442		—		664,788		—		—		—		—		—
Total	Total	$	1,625,772	$	—	$	1,629,427	$	—	$	1,632,589	$	—	$	1,702,584	$	—	Total	$	2,236,408	$	—	$	2,316,545	$	—	$	1,632,589	$	—	$	1,702,584	$	—

The carrying value of the US ABL Facility, the 2022 Secured Notes, ~~and~~ the 2023 Secured Notes, and the 2025 Secured Notes includes ~~$15.9~~ $14.1 million ~~$5.0~~, $4.6 million,$6.4 million, and ~~$6.8~~$13.6 million, respectively, of unamortized debt issuance costs as of ~~March 31,~~June 30, 2020, which are presented as a direct reduction of the corresponding liability. The carrying value of the US ABL Facility, the 2022 Secured Notes and the 2023 Secured Notes includes $17.8 million, $5.4 million and $7.2 million, respectively, of unamortized debt issuance costs ~~for the year ended~~as of December 31, 2019, which are presented as a direct reduction of the corresponding liability.

The carrying value of the US and Canadian ABL ~~Facility,~~Facilities, excluding debt issuance costs, approximates fair value as the interest rates are variable and reflective of market rates. The fair value of the 2022 Secured Notes, the 2023 Secured Notes, and the ~~2023~~2025 Secured Notes is based on their last trading price at the end of each period obtained from a third party. The location and the fair value of derivative assets and liabilities designated as hedges in the condensed consolidated balance sheet are disclosed in Note ~~14.~~15.

NOTE 13 - Restructuring

Restructuring costs include charges associated with exit or disposal activities that meet the definition of restructuring under FASB ASC Topic 420, Exit or Disposal Cost Obligations (“ASC 420”). The Company's restructuring plans are generally country or region specific and are typically completed within a one year period. Restructuring costs incurred under these plans include (i) one-time termination benefits related to employee separations, (ii) contract termination costs, and (iii) non lease costs for consolidating or closing facilities. Costs related to the integration of acquired businesses that do not meet the definition of restructuring under ASC 420, such as employee training costs, duplicate facility costs, and professional services expenses, are included within SG&A expense.

The following is a summary of the activity in the Company’s restructuring accruals for the three and six months ended June 30, 2020 and 2019:

1619


	Three Months Ended June 30,
(in thousands)	2020										2019
	Employee Costs		Facility Exit Costs		Total		Employee Costs		Facility Exit Costs		Total
Balance at beginning of the period - March 31, 2020	$	168	$	—	$	168	$	2,847	$	38	$	2,885
Reclassification of liability to operating lease asset at the adoption of ASC 842(a)	—		—		—		—		(476)		(476)
Charges	743		5		748		123		1,509		1,632
Cash payments	(387)		—		(387)		(1,704)		—		(1,704)
Foreign currency translation	1		—		1		5		—		5
Non-cash movements	—		(5)		(5)		(128)		(1,071)		(1,199)
Balance at end of period	$	525	$	—	$	525	$	1,143	$	—	$	1,143


	Six Months Ended June 30,
(in thousands)	2020										2019
	Employee Costs		Facility Exit Costs		Total		Employee Costs		Facility Exit Costs		Total
Balance at beginning of the period - December 31, 2020	$	447	$	—	$	447	$	4,544	$	972	$	5,516
Reclassification of liability to operating lease asset at the adoption of ASC 842(a)	—		—		—		—		(1,415)		(1,415)
Charges	671		17		688		1,630		1,658		3,288
Cash payments	(594)		—		(594)		(4,932)		—		(4,932)
Foreign currency translation	1		—		1		29		—		29
Non-cash movements	—		(17)		(17)		(128)		(1,215)		(1,343)
Balance at end of period	$	525	$	—	$	525	$	1,143	$	—	$	1,143

The restructuring charges for the three and six months ended June 30, 2020 are primarily driven by termination costs related to reductions in force as a result of COVID-19.

The restructuring charges for the three and six months ended June 30, 2019 primarily relate to employee termination costs in order to capture operating synergies as a result of integrating ModSpace into WillScot. These costs were primarily the termination of employees in connection with the consolidation of overlapping facilities and functions within the existing business.

Segments

The $0.7 million of restructuring charges for the three months ended June 30, 2020 includes $0.6 million of charges related to the Modular - US segment and less than $0.1 million of charges related to the Modular - Other North America segment.

The $1.6 million of restructuring charges for the three months ended June 30, 2019 includes $1.7 million of charges related to the Modular - US segment, offset by a reversal of $(0.1) million of charges related to the Modular - Other North America segment.

The $0.7 million of restructuring charges for the six months ended June 30, 2020 includes $0.6 million of charges pertaining to the Modular - US segment and $0.1 million of charges pertaining to the Modular - Other North America segment.

The $3.3 million of restructuring charges for the six months ended June 30, 2019 include $2.9 million charges pertaining to the Modular - US segment and $0.4 million of charges related to the Modular - Other North America segment.

NOTE 1314 - Stock-Based Compensation

During the ~~three~~six months ended ~~March 31,~~June 30, 2020, 174,020 time-based restricted stock units ("Time-Based RSUs"), 65,959 restricted stock awards ("RSAs"), and 202,923 market-based restricted stock units ("Market-Based RSUs", and together with the Time-Based RSUs, the "RSUs") were granted under the WillScot Corporation 2017 Incentive Award Plan (the "Plan").

During the ~~three~~six months ended ~~March 31,~~June 30, 2020, 323,678 Time-Based RSUs, 52,755 RSAs, and 133,547 stock options vested in accordance with their terms, resulting in the issuance of 238,927 shares of Class A common stock to participants, net

of 84,751 shares withheld to cover taxes. During the ~~three~~six months ended ~~March 31,~~June 30, 2020, 15,106 Time-Based RSUs and 12,700 Market-Based RSUs were forfeited.

At ~~March 31,~~June 30, 2020, ~~52,755~~65,959 RSAs, 900,541 Time-Based RSUs, 478,504 Market-Based RSUs, and 253,328 stock options were unvested, with weighted average grant date fair values of ~~$14.69,~~$11.75, $13.49, $14.71, and $5.51, respectively.

RSAs

Compensation expense for ~~restricted stock awards ("RSAs")~~RSAs recognized in SG&A on the condensed consolidated statements of operations ~~was $0.2~~was $0.3 million and ~~$0.3~~$0.2 million for the three months ended ~~March 31,~~June 30, 2020 and 2019, respectively. Compensation expense for RSAs on the condensed consolidated statements of operations was $0.5 million and $0.5 million for the six months ended June 30, 2020 and 2019, respectively, with associated tax benefits of $0.0 million and $0.1 million. At ~~March 31,~~June 30, 2020, there was ~~$0.2~~$0.7 million of unrecognized compensation cost related to RSAs that is expected to be recognized over the remaining weighted average vesting p~~eriod~~eriod of ~~0.2 years.~~0.9 years.

Time-Based RSUs

Compensation expense for Time-Based RSUs recognized in SG&A on the condensed consolidated statements of operations was ~~$1.0~~$1.2 million and ~~$0.8~~$1.2 million for the three months ended ~~March 31,~~June 30, 2020 and 2019, respectively. Compensation expense for Time-Based RSUs recognized in SG&A on the condensed consolidated statements of operations was $2.2 million and $1.9 million for the six months ended June 30, 2020 and 2019, respectively, with associated tax benefits of $0.0 million and $0.2 million. At ~~March 31,~~June 30, 2020, unrecognized compensation cost related to Time-Based RSUs totaled ~~$12.0~~$10.8 million and is expected to be recognized over the remaining weighted average vesting ~~period~~period of ~~2.7~~2.5 years.

Market-Based RSUs

Compensation expense for Market-Based RSUs recognized in SG&A on the condensed consolidated statements of operations was ~~$0.4~~$0.6 million and ~~$0.1~~$0.3 million for the three months ended ~~March 31,~~June 30, 2020 and 2019, ~~respectively,~~ respectively. Compensation expense for Market-Based RSUs recognized in SG&A on the condensed consolidated statements of operations was $0.9 million and $0.4 million for the six months ended June 30, 2020 and 2019, respectively, with no associated tax ~~benefits.~~benefits of $0.0 million and $0.1 million. At ~~March 31,~~June 30, 2020, unrecognized compensation cost related to Market-Based RSUs totaled ~~$5.7~~$5.1 million and is expected to be recognized over the remaining vesting ~~period~~period of ~~2.4 years.~~2.1 years.

Stock Option Awards

Compensation expense for stock option awards, recognized in SG&A on the condensed consolidated statements of operations, was $0.2 million and ~~$0.2~~$0.2 million for the three months ended ~~March 31,~~June 30, 2020 and 2019, ~~respectively~~respectively. ,Compensation expense for stock option awards, recognized in SG&A on the condensed consolidated statements of operations, was $0.4 million and $0.4 million for the six months ended June 30, 2020 and 2019, respectively, with no associated tax bbenefits of $0.0 million~~enefits.~~

and $0.1 million. At ~~March 31,~~June 30, 2020, unrecognized compensation cost related to stock option awards totaled ~~$1.4~~$1.3 million and is expected to be recognized over the remaining vesting period of 1.7 years.

2020 Incentive Plan

On June 24, 2020, WillScot’s stockholders approved the Company’s 2020 Incentive Award Plan (the “2020 Incentive Plan”), subject to completion of ~~2.0 years.~~the Merger. The plan amends and restates in its entirety the WillScot Corporation 2017 Incentive Award Plan, as amended. As a result, all future incentive awards to the Company’s executive officers, including as contemplated by such officers’ employment agreements, in connection with the completion of the Merger or otherwise as determined by the Company’s compensation committee and the Board, as applicable, will be granted under the 2020 Incentive Plan. On July 2, 2020, the Company issued 122,332 performance based stock units ("PSUs") and 458,841 RSUs under the 2020 Incentive Plan.

NOTE 1415 - Derivatives

On November 6, 2018, WSII entered into an interest rate swap agreement (the “Swap Agreement”) with a financial counterparty that effectively converts $400.0 million in aggregate notional amount of variable-rate debt under the Company’s current and new ABL Facility into fixed-rate debt. The Swap Agreement will terminate on May 29, ~~2022, at the same time the Company’s ABL Facility matures.~~2022. Under the terms of the Swap Agreement, the Company receives a floating rate equal to 1 month LIBOR and makes payments based on a fixed rate of 3.06% on the notional amount. The receive rate under the terms of the Swap Agreement was ~~0.70%~~0.18% and 1.74% at ~~March 31,~~June 30, 2020 and December 31, 2019, respectively.

The Swap Agreement was designated and qualified as a hedge of the Company’s exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility.

The location and the fair value of derivative instruments designated as hedges, at the respective balance sheet dates, were as follows:


(in thousands)	(in thousands)	Balance Sheet Location	March 31, 2020		December 31, 2019		(in thousands)	Balance Sheet Location	June 30, 2020		December 31, 2019
Cash Flow Hedges:	Cash Flow Hedges:						Cash Flow Hedges:
Interest rate swap	Interest rate swap	Accrued liabilities	$	10,072	$	5,348	Interest rate swap	Accrued liabilities	$	11,181	$	5,348
Interest rate swap	Interest rate swap	Other long-term liabilities	$	13,162	$	8,943	Interest rate swap	Other long-term liabilities	$	11,170	$	8,943

The fair value of the interest rate swap is based on dealer quotes of market forward rates, a Level 2 input on the fair value hierarchy, and reflects the amount that the Company would receive or pay as of ~~March 31,~~June 30, 2020 and December 31, 2019, respectively, for contracts involving the same attributes and maturity dates.

The following table discloses the impact of the interest rate swap, excluding the impact of income taxes, on other comprehensive income (“OCI”), AOCI and the Company’s statement of operations for the ~~three~~six months ending ~~March 31:~~June 30:


(in thousands)	(in thousands)	2020		2019		(in thousands)	2020		2019
Loss recognized in OCI	Loss recognized in OCI	$	(8,758)	$	(2,874)	Loss recognized in OCI	$	(7,783)	$	(7,951)
Location of loss recognized in income	Location of loss recognized in income	Interest expense		Interest expense		Location of loss recognized in income	Interest expense		Interest expense
Loss reclassified from AOCI into income (effective portion)	Loss reclassified from AOCI into income (effective portion)	$	(1,572)	$	(568)	Loss reclassified from AOCI into income (effective portion)	$	(4,189)	$	(1,181)

NOTE 1516 - Commitments and Contingencies

Commitments

At ~~March 31,~~June 30, 2020 and December 31, 2019, commitments for the acquisition of rental equipment and property, plant and equipment were ~~$9.9~~$4.7 million and $4.5 million, respectively.

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.

NOTE 1617 - Segment Reporting

The Company operates in 1 principal line of business: modular leasing and sales. Modular leasing and sales is comprised of 2 operating segments: US and Other North America. The US modular operating segment (“Modular - US”) consists of the contiguous 48 states and Hawaii. The Other North America operating segment (“Modular - Other North America”) consists of Alaska, Canada and Mexico. 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 a result of the Merger, the Company will evaluate its operating segments for future reporting.

The Chief Operating Decision Maker ("CODM") evaluates business segment performance onutilizing 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 the 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.

1823

Reportable Segments

The following tables set forth certain information regarding each of the Company’s reportable segments for the three and six months ended ~~March 31,~~June 30, 2020 and 2019, respectively.


		Three Months Ended March 31, 2020											Three Months Ended June 30, 2020
(in thousands)	(in thousands)	Modular - US		Modular - Other North America		Total		(in thousands)	Modular - US		Modular - Other North America		Total
Revenues:	Revenues:							Revenues:
Leasing and services revenue:	Leasing and services revenue:							Leasing and services revenue:
Modular leasing	Modular leasing	$	172,575	$	15,777	$	188,352	Modular leasing	$	175,285	$	14,858	$	190,143
Modular delivery and installation	Modular delivery and installation	47,617		3,453		51,070		Modular delivery and installation	47,213		4,427		51,640
Sales revenue:	Sales revenue:							Sales revenue:
New units	New units	9,267		346		9,613		New units	9,406		357		9,763
Rental units	Rental units	4,405		2,381		6,786		Rental units	4,144		1,172		5,316
Total revenues	Total revenues	233,864		21,957		255,821		Total revenues	236,048		20,814		256,862

Costs:	Costs:							Costs:
Cost of leasing and services:	Cost of leasing and services:							Cost of leasing and services:
Modular leasing	Modular leasing	46,884		2,925		49,809		Modular leasing	44,567		3,180		47,747
Modular delivery and installation	Modular delivery and installation	40,706		3,159		43,865		Modular delivery and installation	39,758		3,765		43,523
Cost of sales:	Cost of sales:							Cost of sales:
New units	New units	6,007		196		6,203		New units	6,160		171		6,331
Rental units	Rental units	2,305		1,501		3,806		Rental units	2,961		842		3,803
Depreciation of rental equipment	Depreciation of rental equipment	41,653		4,295		45,948		Depreciation of rental equipment	41,651		3,843		45,494
Gross profit	Gross profit	$	96,309	$	9,881	$	106,190	Gross profit	$	100,951	$	9,013	$	109,964
Other selected data:	Other selected data:							Other selected data:
Adjusted EBITDA	Adjusted EBITDA	$	81,685	$	7,859	$	89,544	Adjusted EBITDA	$	90,613	$	6,907	$	97,520
Selling, general and administrative expense	Selling, general and administrative expense	$	68,663	$	6,305	$	74,968	Selling, general and administrative expense	$	59,328	$	5,944	$	65,272
Other depreciation and amortization	Other depreciation and amortization	$	2,877	$	197	$	3,074	Other depreciation and amortization	$	2,704	$	179	$	2,883
Purchases of rental equipment and refurbishments	Purchases of rental equipment and refurbishments	$	37,006	$	2,642	$	39,648	Purchases of rental equipment and refurbishments	$	38,065	$	1,969	$	40,034

1924


		Three Months Ended March 31, 2019											Three Months Ended June 30, 2019
(in thousands)	(in thousands)	Modular - US		Modular - Other North America		Total		(in thousands)	Modular - US		Modular - Other North America		Total
Revenues:	Revenues:							Revenues:
Leasing and services revenue:	Leasing and services revenue:							Leasing and services revenue:
Modular leasing	Modular leasing	$	161,885	$	15,407	$	177,292	Modular leasing	$	168,826	$	16,992	$	185,818
Modular delivery and installation	Modular delivery and installation	46,006		3,994		50,000		Modular delivery and installation	52,495		3,471		55,966
Sales revenue:	Sales revenue:							Sales revenue:
New units	New units	13,961		880		14,841		New units	10,293		1,214		11,507
Rental units	Rental units	8,323		3,229		11,552		Rental units	4,888		5,534		10,422
Total revenues	Total revenues	230,175		23,510		253,685		Total revenues	236,502		27,211		263,713

Costs:	Costs:							Costs:
Cost of leasing and services:	Cost of leasing and services:							Cost of leasing and services:
Modular leasing	Modular leasing	43,883		3,352		47,235		Modular leasing	51,083		3,990		55,073
Modular delivery and installation	Modular delivery and installation	39,751		3,592		43,343		Modular delivery and installation	43,949		4,519		48,468
Cost of sales:	Cost of sales:							Cost of sales:
New units	New units	10,250		628		10,878		New units	7,138		861		7,999
Rental units	Rental units	5,869		1,926		7,795		Rental units	2,661		4,060		6,721
Depreciation of rental equipment	Depreciation of rental equipment	36,474		4,629		41,103		Depreciation of rental equipment	39,200		4,768		43,968
Gross profit	Gross profit	$	93,948	$	9,383	$	103,331	Gross profit	$	92,471	$	9,013	$	101,484
Other selected data:	Other selected data:							Other selected data:
Adjusted EBITDA	Adjusted EBITDA	$	75,946	$	7,408	$	83,354	Adjusted EBITDA	$	80,547	$	7,007	$	87,554
Selling, general and administrative expense	Selling, general and administrative expense	$	65,930	$	7,389	$	73,319	Selling, general and administrative expense	$	62,627	$	7,758	$	70,385
Other depreciation and amortization	Other depreciation and amortization	$	2,574	$	210	$	2,784	Other depreciation and amortization	$	2,743	$	206	$	2,949
Purchases of rental equipment and refurbishments	Purchases of rental equipment and refurbishments	$	49,921	$	1,952	$	51,873	Purchases of rental equipment and refurbishments	$	58,241	$	2,974	$	61,215


	Six Months Ended June 30, 2020
(in thousands)	Modular - US		Modular - Other North America		Total
Revenues:
Leasing and services revenue:
Modular leasing	$	347,860	$	30,635	$	378,495
Modular delivery and installation	94,830		7,880		102,710
Sales revenue:
New units	18,673		703		19,376
Rental units	8,549		3,553		12,102
Total revenues	469,912		42,771		512,683

Costs:
Cost of leasing and services:
Modular leasing	91,451		6,105		97,556
Modular delivery and installation	80,464		6,924		87,388
Cost of sales:
New units	12,167		367		12,534
Rental units	5,266		2,343		7,609
Depreciation of rental equipment	83,304		8,138		91,442
Gross profit	$	197,260	$	18,894	$	216,154
Other selected data:
Adjusted EBITDA	$	172,296	$	14,766	$	187,062
Selling, general and administrative expense	$	127,991	$	12,249	$	140,240
Other depreciation and amortization	$	5,581	$	376	$	5,957
Purchase of rental equipment and refurbishments	$	75,071	$	4,611	$	79,682


	Six Months Ended June 30, 2019
(in thousands)	Modular - US		Modular - Other North America		Total
Revenues
Leasing and services revenue:
Modular space leasing	$	330,711	$	32,399	$	363,110
Modular space delivery and installation	98,501		7,465		105,966
Sales:
New units	24,254		2,094		26,348
Rental units	13,211		8,763		21,974
Total Revenues	466,677		50,721		517,398

Costs
Cost of leasing and services:
Modular space leasing	94,966		7,342		102,308
Modular space delivery and installation	83,700		8,111		91,811
Cost of sales:
New units	17,388		1,489		18,877
Rental units	8,530		5,986		14,516
Depreciation of rental equipment	75,674		9,397		85,071
Gross profit	$	186,419	$	18,396	$	204,815
Other selected data:
Adjusted EBITDA	$	156,490	$	14,415	$	170,905
Selling, general and administrative expense	$	128,557	$	15,147	$	143,704
Other depreciation and amortization	$	5,317	$	416	$	5,733
Purchase of rental equipment and refurbishments	$	108,162	$	4,926	$	113,088

The following tables present a reconciliation of the Company’s income (loss) ~~income~~ from operations before income tax to Adjusted EBITDA by segment for the three and ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019, respectively:


		Three Months Ended March 31, 2020											Three Months Ended June 30, 2020
(in thousands)	(in thousands)	Modular - US		Modular - Other North America		Total		(in thousands)	Modular - US		Modular - Other North America		Total
(Loss) income from operations before income taxes		$	(4,273)	$	1,389	$	(2,884)
Income (loss) from operations before income taxes								Income (loss) from operations before income taxes	$	9,950	$	2,598	$	12,548
Interest expense	Interest expense	27,928		329		28,257		Interest expense	28,208		311		28,519
Depreciation and amortization	Depreciation and amortization	44,530		4,492		49,022		Depreciation and amortization	44,355		4,022		48,377
Currency (gains) losses, net	Currency (gains) losses, net	(525)		1,423		898		Currency (gains) losses, net	70		(450)		(380)
Restructuring costs, lease impairment expense and other related charges	Restructuring costs, lease impairment expense and other related charges	1,355		246		1,601		Restructuring costs, lease impairment expense and other related charges	1,711		432		2,143
Transaction costs	Transaction costs	9,431		—		9,431		Transaction costs	1,619		—		1,619
Integration costs	Integration costs	1,696		(11)		1,685		Integration costs	2,159		(6)		2,153
Stock compensation expense	Stock compensation expense	1,787		—		1,787		Stock compensation expense	2,227		—		2,227
Other income	Other income	(244)		(9)		(253)		Other income	314		—		314
Adjusted EBITDA	Adjusted EBITDA	$	81,685	$	7,859	$	89,544	Adjusted EBITDA	$	90,613	$	6,907	$	97,520

2027


		Three Months Ended March 31, 2019											Three Months Ended June 30, 2019
(in thousands)	(in thousands)	Modular - US		Modular - Other North America		Total		(in thousands)	Modular - US		Modular - Other North America		Total
(Loss) income from operations before income taxes		$	(10,044)	$	393	$	(9,651)
Loss (income) from operations before income taxes								Loss (income) from operations before income taxes	(13,473)		855		(12,618)
Loss on extinguishment of debt								Loss on extinguishment of debt	7,244		—		7,244
Interest expense	Interest expense	30,582		533		31,115		Interest expense	31,214		454		31,668
Depreciation and amortization	Depreciation and amortization	39,047		4,840		43,887		Depreciation and amortization	41,943		4,974		46,917
Currency gains, net	Currency gains, net	(130)		(186)		(316)		Currency gains, net	(75)		(279)		(354)
Restructuring costs, lease impairment expense and other related charges	Restructuring costs, lease impairment expense and other related charges	4,177		564		4,741		Restructuring costs, lease impairment expense and other related charges	3,203		(51)		3,152
Goodwill and other impairments	Goodwill and other impairments	1,801		489		2,290		Goodwill and other impairments	268		80		348
Integration costs	Integration costs	9,352		786		10,138		Integration costs	7,260		982		8,242
Stock compensation expense	Stock compensation expense	1,290		—		1,290		Stock compensation expense	1,900		—		1,900
Other income	Other income	(129)		(11)		(140)		Other income	1,063		(8)		1,055
Adjusted EBITDA	Adjusted EBITDA	$	75,946	$	7,408	$	83,354	Adjusted EBITDA	$	80,547	$	7,007	$	87,554


	Six Months Ended June 30, 2020
(in thousands)	Modular - US		Modular - Other North America		Total
Income (loss) from operations before income taxes	$	5,678	$	3,986	$	9,664
Interest expense	56,136		640		56,776
Depreciation and amortization	88,885		8,514		97,399
Currency (gains) losses, net	(455)		973		518
Restructuring costs, lease impairment expense and other related charges	3,066		678		3,744
Transaction costs	11,050		—		11,050
Integration costs	3,855		(16)		3,839
Stock compensation expense	4,014		—		4,014
Other income	67		(9)		58
Adjusted EBITDA	$	172,296	$	14,766	$	187,062


	Six Months Ended June 30, 2019
(in thousands)	Modular - US		Modular - Other North America		Total
Loss (income) from operations before income taxes	$	(23,520)	$	1,251	$	(22,269)
Loss on extinguishment of debt	7,244		—		7,244
Interest expense	61,796		987		62,783
Depreciation and amortization	80,992		9,812		90,804
Currency gains, net	(205)		(465)		(670)
Restructuring costs, lease impairment expense and other related charges	7,381		512		7,893
Goodwill and other impairments	2,069		569		2,638
Integration costs	16,612		1,768		18,380
Stock compensation expense	3,190		—		3,190
Other income	931		(19)		912
Adjusted EBITDA	$	156,490	$	14,415	$	170,905

NOTE 1718 - ~~Loss~~Income (Loss) Per Share

Basic ~~loss~~income (loss) per share (“EPS”) is calculated by dividing net ~~loss~~income/(loss) attributable to WillScot by the weighted average number of shares of Class A common ~~shares~~stock outstanding during the period. The shares of Class A common ~~shares~~stock issued as a result of the vesting of RSUs and for warrants exercised or redeemed during the three and six months ended ~~March 31,~~June 30, 2020, were included in EPS based on the weighted average number of days in which they were vested and outstanding during the period.

Shares of Class B common ~~shares~~stock have no rights to dividends or ~~distributions~~distributions made by the Company and, in turn, are excluded from the EPS calculation. ~~Pursuant to the exchange agreement entered into~~As contemplated 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. In connection with the pending Merger, Sapphire has agreed to exchange all of its shares of common stock, par value $0.0001 per share, of WS Holdings, immediately prior to the effective time of the Merger ~~for shares of WillScot's Class A common stock, at an exchange ratio of 1.3261 times, without any subsequent adjustment. As a result of such exchange, at~~Agreement on June 30, 2020, the ~~effective time of the Merger,~~Sapphire Exchange was completed and all ~~issued and outstanding shares of the Company's Class B common stock (which are held by Sapphire) will be cancelled. The effect of the cancellation of~~ shares of Class B common stock ~~would be anti-dilutive for the three months ended March 31, 2020~~were cancelled and ~~2019.~~Sapphire Holdings received 10,641,182 shares of Class A common stock.

Diluted EPS is computed similarly to basic EPS, except that it includes the potential dilution that ~~could~~would occur if dilutive securities were exercised. Effects of potentially dilutive securities are presented only in periods in which they are dilutive.

Stock options, Time-Based RSUs, RSAs, and warrants representing 534,188, 900,541, 52,755, and 18,746,920 shares of Class A common stock outstanding for the three months ended March 31, 2020 were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. Market-Based RSUs representing 578,886 shares of Class A common stock outstanding for the three months ended March 31, 2020, which can vest at 0% to 150% of the amount granted, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.

Stock options, Time-Based RSUs, RSAs, and warrants representing 589,257, 1,117,953, 44,378 and 22,183,513 shares of Class A common stock outstanding for the three months ended March 31, 2019, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. Market-Based RSUs representing 302,182 shares of Class A common stock outstanding for the three months ended March 31, 2019, which can vest at 0% to 150% of the amount granted, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.

NOTE 1819 - Related Parties

Related party balances included in the Company’s consolidated balance ~~sheet~~sheets at ~~March 31,~~June 30, 2020 and December 31, 2019, consisted of the following:

(in thousands) Financial statement line Item March 31, 2020 December 31, 2019
Receivables due from affiliates Accounts receivable, net $ 376 $ 26
Amounts due to affiliates^(a)
Accrued liabilities (981) (883)
Total related party liabilities, net $ (605) $ (857)


(in thousands)	Financial statement line Item	June 30, 2020		December 31, 2019
Receivables due from affiliates	Accounts receivable, net	$	20	$	26
Amounts due to affiliates^(a)	Accrued liabilities	(2,174)		(883)
	Total related party liabilities, net	$	(2,154)	$	(857)

(a) The Company had accrued expenses of ~~$0.2~~$0.0 million and $0.6 million at ~~March 31,~~June 30, 2020 and December 31, 2019, respectively, included in amounts due to affiliates, related to rental equipment purchases from an entity within the Algeco Group. ~~Two~~NaN of the Company's directors also serve on the board of directors to a consulting firm with which the Company incurs professional fees.

Related party transactions included in the Company’s condensed consolidated ~~statement~~statements of operations for the three and six months ended ~~March 31,~~June 30, 2020 and 2019, respectively, consisted of the following:


			Three Months Ended March 31,								Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	(in thousands)	Financial statement line item	2020		2019		(in thousands)	Financial statement line item	2020		2019		2020		2019
Leasing revenue from related parties	Leasing revenue from related parties	Modular leasing revenue	$	417	$	74	Leasing revenue from related parties	Modular leasing revenue	$	294	$	76	$	827	$	150
Consulting expense to related party^(a)	Consulting expense to related party^(a)	Selling, general & administrative expenses	(838)		(272)		Consulting expense to related party^(a)	Selling, general & administrative expenses	(2,158)		(229)		(2,996)		(501)
		Total related party expense, net	$	(421)	$	(198)		Total related party expense, net	$	(1,864)	$	(153)	$	(2,169)	$	(351)

(a) ~~Two~~NaN of the Company's directors also serve on the board of directors to a consulting firm with which the Company incurs professional fees.

On August 22, 2018, WillScot’s majority stockholder, Sapphire Holdings, entered into a margin loan (the "Margin Loan") under which all of its WillScot Class A common stock was pledged to secure $125.0 million 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 Holdings 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 Management LLC, an affiliate controlled by Sapphire Holdings, under which, subject to limited exceptions, WSII acquired the exclusive right to supply modular units, portable storage units, and other ancillary products ordered by the affiliate in the US. As of ~~March 31,~~June 30, 2020, ~~the 49,053,740~~the 59,708,536 shares of WillScot Class A common stock pledged by Sapphire Holdings represented ~~approximately 44.4%~~approximately 49% of WillScot’s issued and outstanding Class A shares. As of July 31, 2020, Sapphire Holdings represented approximately 26% of WIllScot Mobile Mini's issued and outstanding common stock.

On June 30, 2020, as contemplated by the Merger Agreement, and pursuant to the terms of an exercise notice delivered by Sapphire Holdings to WillScot, Sapphire Holdings exchanged each of its shares of common stock, par value $0.0001, of Holdings, pursuant to that certain existing exchange agreement, between WillScot and Sapphire Holdings, for 1.3261 shares of newly issued Class A Common Stock (the “Sapphire Exchange”). As a result of the Sapphire Exchange, all issued and outstanding shares of WillScot’s Class B common stock, par value $0.0001 per share (the “Class B Common Stock”), were automatically canceled for no consideration and the existing exchange agreement was automatically terminated.

As a result of the Sapphire Exchange, Holdings became a wholly-owned subsidiary of WillScot. Sapphire Holdings received 10,641,182 shares of Class A Common Stock in the Sapphire Exchange (the “Exchange Shares”).

The Company had capital expenditures of rental equipment purchased from related party affiliates of ~~$0.2~~$1.4 million and ~~$1.5~~$1.7 million for three months ended ~~March 31,~~June 30, 2020 and 2019, respectively. The Company had capital expenditures of rental equipment purchased from related party affiliates of $1.6 million and $3.2 million for six months ended June 30, 2020 and 2019, respectively.

NOTE 20 - Subsequent Events

On July 27, 2020, the Company announced the redemption of $49.0 million of its 2023 Senior Notes. The redemption will take place on August 11, 2020, at a redemption price equal to 103% plus accrued and unpaid interest.

On August 7, 2020, the Board approved a stock repurchase program that authorizes the Company, to deploy up to $250 million of its outstanding shares of common stock. The stock repurchase program does not obligate the Company to purchase any particular number of shares, and the timing and exact amount of any repurchases will depend on various factors, including market pricing and conditions, business, legal, accounting and other considerations.

The Company plans to repurchase its shares in open market transactions from time to time or through privately negotiated transactions in accordance with federal securities laws, at the Company’s discretion. The repurchase program, which has no expiration date, may be increased, suspended or terminated at any time. The program is expected to be implemented over the course of several years and will be conducted subject to the covenants in the agreements governing our indebtedness.

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 ("WillScot"), our operations and our present business environment. ~~Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refers to WillScot and its subsidiaries.~~ 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. The discussion of results of operations in this MD&A is presented on a historical basis, as of or for the three and six months ended June 30, 2020 or prior periods. As the Merger with Mobile Mini (hereinafter defined) was completed on July 1, 2020, unless the context otherwise requires, the terms “we”, “us”, “our” “Company” and “WillScot Mobile Mini” as used in these financial statements mean WillScot Corporation and its subsidiaries when referring to periods prior to July 1, 2020 (prior to the Merger) and to the combined company WillScot Mobile Mini Holdings Corp. when referring to periods on or after July 1, 2020 (after the Merger).

The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the US (“GAAP”). 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 the Other Non-GAAP Financial Data and Reconciliations section.

On December 31, 2019, the 2019 financial statement amounts were adjusted for the adoption ASU 2016-02, Leases (Topic 842) ("ASC 842"), effective retroactively to January 1, 2019, and therefore may not agree to the Quarterly Reports filed on Form 10-Q for the respective periods of 2019.

Executive Summary and Outlook

We are a leading provider of modular space and portable storage solutions in the United States (“US”), Canada and Mexico. As of ~~March 31,~~June 30, 2020, our branch network included approximately 120 locations and additional drop lots to service our more than 50,000 customers across the US, Canada and Mexico. We offer our customers an extensive selection of “Ready to Work” modular space and portable storage solutions with over 125,000 modular space units and over 25,000 portable storage units in our fleet.

Equipment leasing is our core business. Over 90% of new lease orders are on our standard lease agreement, pre-negotiated master lease or national account agreements. The initial lease periods vary, and our leases are customarily renewable on a month-to-month basis after their initial term. Our Modular Lease Revenue is highly predictable due to its reoccurring nature and the underlying stability and diversification of our lease portfolio. Our average minimum contractual lease term at the time of delivery is over 11 months. However, given our customers value flexibility, they consistently extend their leases or renew on a month-to-month basis such that the average effective duration of our lease portfolio is 34 months.

2230

We remain 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 on continually improving the overall customer experience.

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.~~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%~~82% of our revenues infor the three months ended ~~March 31,~~June 30, 2020.

Significant Developments

~~Pending~~ Mobile Mini Merger

On March 2, 2020, we announced that we entered into an Agreement and Plan of Merger (the "Merger") with Mobile Mini, Inc. (“Mobile Mini”). ~~The pending merger with Mobile Mini is subject to customary closing conditions, including receipt of~~During the second quarter, we obtained all required regulatory approvals and stockholder approvals from the Company's and Mobile Mini’s ~~stockholders. We are working collaboratively with our counterparts~~stockholders and we closed the Merger on July 1, 2020 at which time Mobile Mini ~~to satisfy these~~became a wholly-owned subsidiary of WillScot. Concurrent with the closing ~~conditions and plan the integration~~ of the ~~two businesses with the expectation of closing in the third quarter of 2020.~~Merger, WillScot changed its name to WillScot Mobile Mini Holdings Corp ("WillScot Mobile Mini"). We believe that the merger will result in strategic and financial benefits by combining the two industry leaders in the complementary modular space and portable storage solutions markets.

Financing Activities

In anticipation of the Merger, on June 15, 2020, we completed a private offering of $650.0 million in aggregate principal amount of 6.125% senior secured notes due 2025 (the “2025 Secured Notes”). The gross offering proceeds from the 2025 Secured Notes of $650.0 million and $5.1 million of interest due through August 1, 2020 were deposited into an escrow account, pending the closing of the Merger. In connection with completion of the Merger on July 1, 2020, the net offering proceeds were released and the proceeds were utilized to repay the 2022 Secured Notes (see Note 9 – Debt), repay Mobile Mini secured notes and pay certain fees and expenses related to the Merger and financing transactions. At June 30, 2020 the $655.1 million in the escrow account is reported as restricted cash on the condensed consolidated balance sheet.

On July 1, 2020, in connection with the completion of the Merger, Williams Scotsman Holdings Corp. (“Holdings”), WSII, and certain of its subsidiaries, including Mobile Mini and certain of its consolidated subsidiaries (the “Mobile Mini Entities”), entered into a new asset-based credit agreement (the "New ABL Facility"), that provides for revolving credit facilities in the aggregate principal amount of up to $2.4 billion. On July 1, 2020, in connection with the completion of the Merger, approximately $1.47 billion of proceeds from the New ABL Facility were used to finance the repayment of the Willscot ABL facility, the Mobile Mini ABL facility, fees and expenses related to the Merger and the financing transactions, including $36 million related to the New ABL Facility upfront fees which will be recorded as deferred financing costs in the third quarter. The New ABL Facility matures July 1 2025 (see Note 9 – Debt).

Upon completion of the aforementioned transactions, WillScot Mobile Mini Holdings Corp. had approximately $2,683.7 million of gross debt and finance leases outstanding and approximately $915 million of availability under its New ABL Facility, and 227,721,220 shares outstanding as of July 31, 2020. On July 27, 2020 the Company announced an opportunistic redemption of $49 million of its 2023 senior secured notes. The redemption will occur on August 11, 2020 and is expected to further optimize our debt structure and reduce future interest expense.

COVID-19 Impact on Business

During the three and six months ended ~~March 31,~~June 30, 2020, financial results for our operations were ~~not significantly~~ impacted by the COVID-19 outbreak as we began to experience reduced demand as a portion of new project deliveries from our customers were either cancelled or delayed as a result of the COVID-19 pandemic and we expect our financial results may continue to be adversely impacted in the future. During the second quarter of 2020, our modular space deliveries were down 19% year over year due to reduced demand primarily attributable to the current global economic situation as a consequence of the COVID-19 pandemic. The reduced delivery demand has impacted our modular leasing revenues as well as our delivery and installation revenues. As a result, we have taken significant actions to reduce variable costs and capital spending. Due to the long lease durations in our business, the predictability of our cash inflows, and the fact that the majority of our gross profit is from units already out on rent at the beginning of the period, we believe we have forward visibility into our cash flows and are able to plan ahead to adjust for varying demand levels.

Since the outbreak of COVID-19 was designated as a global pandemic by the World Health Organization in March, our operations have generally continued to operate normally, albeit at lower activity levels, with additional safety protocols in place as we have been considered an essential business in most ~~jurisdictions and as such have continued to operate normally with additional safety protocols in place.~~jurisdictions. However, there have been significant changes to the global economic situation as a consequence of the COVID-19 pandemic, and since the declaration by the World Health Organization on March 11, 2020 of COVID-19 as a global pandemic, our operations have been adversely impacted and we expect our financial results may be adversely impacted in the future.pandemic. The global pandemic ~~is resulting~~has resulted in significant global social and business disruption, and in response we ~~are modifying~~have modified the way we communicate and conduct business with our customers, suppliers and employees. The following summarizes many of the key actions we have taken in response to the pandemic.

Employee Safety and Health

The Company has implemented various employee safety measures to contain the spread of COVID-19, including domestic and international travel restrictions, the promotion of social distancing and work-from-home practices, extensive cleaning protocols, daily symptom assessments, and enhanced use of personal protective equipment such as masks. We are closely monitoring all guidance provided by public agencies such as the Centers for Disease Control and Prevention in the US or the Public Health Agency of Canada to ensure the safety of our employees, vendors, and customers as our top priority.

Sales and Leasing Operations

The Company is responding to shelter-in-place and similar government orders, which vary significantly across our geographic markets. As a result of the shelter-in-place orders and increased social distancing measures, some of our markets, such as special events and sports and entertainment, have experienced ~~immediate~~sustained reductions in demand for new projects. Other sectors such as health care have seen increased demand, and other sectors such as construction have remained active but with varying degrees of project ~~disruption.~~disruption, some of which are quite significant. We are also responding to demand across our end markets from customers in need of additional office space to facilitate social distancing. As the Company serves many critical sectors of the economy, the Company will continue to help support customers who remain operational, as well as those who are actively engaged in the COVID-19 response. We believe that our branch locations are considered essential businesses in most jurisdictions and as such have continued to operate normally with the aforementioned safety protocols in place, while our customer service and sales teams are working closely with customers to meet current demand. The impact on future demand for new projects will depend greatly on the degree and duration to which governments restrict business and personal activities going forward and when businesses resume normal operations.

Cost Reductions

InEarly in the second quarter, in anticipation of a potential decline in demand for new projects, the Company ~~has~~ implemented a range of actions aimed at temporarily reducing costs and preserving liquidity. These actions include suspending previously planned compensation increases for its corporate and shared services employees until the third quarter of 2020, included putting a temporary freeze on hiring, significant planned reductions to overtime and external variable labor costs, and significant reductions in other discretionary spending including marketing, travel and entertainment, outside professional fees and other aspects of the business. ~~Reduced~~As we saw reduced demand persist through the second quarter, we also implemented several internal labor cost reductions to right-size our operations for these lower demand levels. Lastly, reduced demand for new projects ~~allows~~has allowed the Company to reduce or delay capital spending, including new fleet purchases, refurbishments of existing equipment, and improvements to branch infrastructure. The Company ~~monitors~~continues to monitor new project demand on a daily basis, and given the flexibility in our ~~cost~~cost structure, can adjust costs and capital spending rapidly to align with demand levels.

~~First~~Second Quarter Highlights

For the three months ended ~~March 31,~~June 30, 2020, key drivers of financial performance included:

•~~Total revenues~~Modular leasing revenue increased by ~~$2.1~~$4.3 million, or ~~0.8%~~2.3%, as compared to the same period in 2019, however total revenues decreased by $6.8 million, or 2.6%, driven by a ~~$12.2~~$5.1 million, or ~~5.4% increase~~49.0% decrease in ~~our core leasing and services revenues primarily due to pricing growth, partially offset by lower units on rent. Increases in our core leasing and services revenues were partially offset by new and~~ rental unit sales ~~which decreased by $5.2~~revenue, a $4.4 million or ~~35.1%~~7.9% decrease in modular delivery and installation revenue primarily driven by ~~$4.8~~reduced demand for new project deliveries since mid-March of 2020 as a result of new project cancellations and delays as a result of the COVID-19 pandemic, and a $1.7 million or ~~41.4%, respectively, driven by higher demand~~14.8% decrease in ~~2019.~~new sale revenue. Key modular leasing revenue drivers include:

–Consolidated modular space average monthly rental rate increased to ~~$653~~$669 representing a ~~13.6%~~9.5% increase year over year.

–Consolidated average modular space units on rentrent decreased ~~5,320~~5,204 or ~~5.7%~~5.6% year over year, driven by lower deliveries, including reduced demand for new project deliveries as a result of the COVID-19 pandemic, and average modular space utilization decreased ~~320~~340 basis points ~~(“bps”)~~ year over year to ~~69.2%~~68.5%.

•Modular - US segment revenues, which represented ~~91.4%~~91.9% of revenue for the three months ended ~~March 31,~~June 30, 2020, ~~increased~~decreased by ~~$3.7~~$0.5 million, or ~~1.6%~~0.2%, as compared to the same period in 2019 driven primarily by reduced delivery and installation revenues due to reduced demand for new project deliveries, however modular leasing revenues increased $6.5 million, or 3.9% through:

–Modular space average monthly rental rate of ~~$659,~~$681, increased ~~14.2%~~11.3% year over year. 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.

–Average modular space units on rent decreased ~~4,961,~~4,780, or a ~~5.9%~~5.7% year over year decrease.

–Average modular space monthly utilization decreased ~~330 bps~~350 basis points to ~~71.5%~~70.6% for the three months ended ~~March 31,~~June 30, 2020, as compared to the three months ended ~~March 31,~~June 30, 2019.

•Modular - Other North America segment revenues which represented ~~8.6%~~8.1% of revenues for the three months ended ~~March 31,~~June 30, 2020, decreased by ~~$1.5~~$6.4 million, or ~~6.4%~~23.5% as compared to the same period in 2019. Decreases were driven primarily by decreased new and rental unit sales ~~and decreased modular delivery and installation revenues~~ which decreased by ~~$1.4~~$5.2 million. Modular space leasing revenues decreased by $2.1 million, or ~~34.1%~~12.4%, ~~and by $0.5 million, or 12.5%, respectively,~~ driven by ~~higher demand~~lower average units on rent

and stronger US dollar in ~~2019.~~Q2 2020 relative to prior year. These decreases were partially offset by net increases in modular ~~leasing~~delivery and installation revenues, ~~through:~~which supported sequential unit on rent growth within the quarter:

–Average modular space monthly rental rate ~~increased 8.7%~~decreased 6.8% to ~~$600.~~$562, which was significantly impacted by unfavorable foreign currency movements. On a constant currency basis, modular space average rental rate was down 0.8% year over year primarily due to major project timing in Alaska.

–Average modular space units on rent decreased by ~~359~~424 units, or ~~4.1%~~4.7% as compared to the same period in ~~2019.~~2019, however increased 2.9% sequentially from March to June 2020.

–Average modular space monthly utilization decreased by ~~230 bps~~260 basis points as compared to the same period in 2019 to ~~52.8%.~~53.7%, however increased 170 basis points from March to June 2020.

•Generated consolidated net ~~loss~~income of ~~$3.7~~$12.8 million for the three months ended ~~March 31,~~June 30, 2020, which included ~~$12.7~~$5.9 million of discrete costs expensed in the period related to acquisition and integration activities, including ~~$9.4~~$1.6 million of transaction costs related to the announced Mobile Mini merger, ~~$1.7~~$2.2 million of integration costs, and ~~$1.6~~$2.1 million of restructuring costs, lease impairment expense and other related ~~charges and restructuring costs.~~charges.

•Generated Adjusted EBITDA of ~~$89.5~~$97.5 million for the three months ended ~~March 31,~~June 30, 2020, representing an increase of ~~$6.1~~$10.0 million, or ~~7.3%~~11.4%, as compared to the same period in 2019, which includes continued realization of commercial and cost synergies associated with the ModSpace ~~acquisition.~~acquisition, and significant cost reductions as a result of actions taken to reduce variable cost in a reduced demand environment as a consequence of the COVID-19 pandemic. Our Adjusted EBITDA ~~for~~Margin of 38.0% in the ~~Modular - US segment and the Modular - Other North America segment, respectively, was $81.7 million and $7.8 million for the three months ended March 31, 2020.~~second quarter increased 480 basis points relative to prior year.

•Generated Free Cash Flow of ~~$7.8~~$39.0 million for the three months ended ~~March 31,~~June 30, 2020, representing an increase of ~~$34.4~~$37.4 million as compared to the same period in 2019, as net cash provided by operating activities of ~~$38.3~~$75.4 million was partially reinvested ~~primarily~~ in value added products and fleet refurbishments ~~to support growth of modular leasing revenues~~ (net cash used in investing activities of ~~$30.5~~$36.4 million).

, however, reinvestment was at lower levels than originally planned as a result of reduced capital spending needs given reduced demand for new project deliveries.

2433

Consolidated Results of Operations

Three Months Ended ~~March 31,~~June 30, 2020 Compared to the Three Months Ended ~~March 31,~~June 30, 2019

Our consolidated statements of operations for the three months ended ~~March 31,~~June 30, 2020 and 2019 are presented below:


		Three Months Ended March 31,										2020 vs. 2019 $ Change			Three Months Ended June 30,				2020 vs. 2019 $ Change
(in thousands)	(in thousands)	2020		2019				2020 vs. 2019 $ Change		(in thousands)	2020				2019			2020 vs. 2019 $ Change
Revenues:	Revenues:
Leasing and services revenue:	Leasing and services revenue:							Leasing and services revenue:
Modular leasing	Modular leasing	$	188,352	$	177,292	$	11,060	Modular leasing	$	190,143			$	185,818		$	4,325
Modular delivery and installation	Modular delivery and installation	51,070		50,000		1,070		Modular delivery and installation	51,640				55,966			(4,326)
Sales revenue:	Sales revenue:							Sales revenue:
New units	New units	9,613		14,841		(5,228)		New units	9,763				11,507			(1,744)
Rental units	Rental units	6,786		11,552		(4,766)		Rental units	5,316				10,422			(5,106)
Total revenues	Total revenues	255,821		253,685		2,136		Total revenues	256,862				263,713			(6,851)
Costs:	Costs:							Costs:
Costs of leasing and services:	Costs of leasing and services:							Costs of leasing and services:
Modular leasing	Modular leasing	49,809		47,235		2,574		Modular leasing	47,747				55,073			(7,326)
Modular delivery and installation	Modular delivery and installation	43,865		43,343		522		Modular delivery and installation	43,523				48,468			(4,945)
Costs of sales:	Costs of sales:							Costs of sales:
New units	New units	6,203		10,878		(4,675)		New units	6,331				7,999			(1,668)
Rental units	Rental units	3,806		7,795		(3,989)		Rental units	3,803				6,721			(2,918)
Depreciation of rental equipment	Depreciation of rental equipment	45,948		41,103		4,845		Depreciation of rental equipment	45,494				43,968			1,526
Gross Profit	Gross Profit	106,190		103,331		2,859		Gross Profit	109,964				101,484			8,480
Expenses:	Expenses:							Expenses:
Selling, general and administrative	Selling, general and administrative	74,968		73,319		1,649		Selling, general and administrative	65,272				70,385			(5,113)
Other depreciation and amortization	Other depreciation and amortization	3,074		2,784		290		Other depreciation and amortization	2,883				2,949			(66)
Impairment losses on long-lived assets	Impairment losses on long-lived assets	—		2,290		(2,290)		Impairment losses on long-lived assets	—				348			(348)
Lease impairment expense and other related charges	Lease impairment expense and other related charges	1,661		3,085		(1,424)		Lease impairment expense and other related charges	1,394				1,520			(126)
Restructuring costs	Restructuring costs	(60)		1,656		(1,716)		Restructuring costs	749				1,632			(883)
Currency losses (gains), net	Currency losses (gains), net	898		(316)		1,214		Currency losses (gains), net	(380)				(354)			(26)
Other expense (income), net		276		(951)		1,227
Other income, net								Other income, net	(1,021)				(1,290)			269
Operating income	Operating income	25,373		21,464		3,909		Operating income	41,067				26,294			14,773
Interest expense	Interest expense	28,257		31,115		(2,858)		Interest expense	28,519				31,668			(3,149)
Loss from operations before income tax		(2,884)		(9,651)		6,767
Income tax expense		790		378		412
Net loss		(3,674)		(10,029)		6,355
Net loss attributable to non-controlling interest, net of tax		(130)		(758)		628
Net loss attributable to WillScot		$	(3,544)	$	(9,271)	$	5,727
Loss on extinguishment of debt								Loss on extinguishment of debt	—				7,244			(7,244)
Income (loss) from operations before income tax								Income (loss) from operations before income tax	12,548				(12,618)			25,166
Income tax benefit								Income tax benefit	(285)				(1,180)			895
Net income (loss)								Net income (loss)	12,833				(11,438)			24,271
Net income (loss) attributable to non-controlling interest, net of tax								Net income (loss) attributable to non-controlling interest, net of tax	1,343				(832)			2,175
Net income (loss) attributable to WillScot								Net income (loss) attributable to WillScot	$	11,490			$	(10,606)		$	22,096

Comparison of Three Months Ended ~~March 31,~~June 30, 2020 and 2019

Revenue: Total revenue ~~increased $2.1~~decreased $6.8 million, or ~~0.8%~~2.6%, to ~~$255.8~~$256.9 million for the three months ended ~~March 31,~~June 30, 2020 from ~~$253.7~~$263.7 million for the three months ended ~~March 31,~~June 30, 2019. The ~~increase~~decrease was primarily the result of a ~~5.4% increase~~$5.1 million, or 49.0%, decrease in ~~leasing~~rental unit sales, $1.7 million, or 14.8%, decrease in new unit sales, and ~~services revenue driven by improved pricing on modular space units as well as increased~~$4.4 million, or 7.9%, decrease in modular delivery and installation revenues revenue for the three months ended June 30, 2020 as compared to the same period in 2019. The decline in modular delivery and installation revenues was primarily driven by lower delivery volumes during the quarter related to the impact of ~~2.2% due to higher revenues per transaction. The increase in leasing~~new project cancellations and ~~services revenue was~~delays as a result of the COVID-19 pandemic. These decreases were partially offset by ~~decreases~~an increase of ~~$5.2~~$4.3 million, or ~~35.1%~~2.3%, ~~and $4.8 million, or 41.4%, on new unit and rental unit sales, respectively,~~in modular leasing revenue as compared to the same period in 2019 driven by ~~lower sales demand.~~improved pricing and value-added products on modular space units.

Total average units on rent for the three months ended ~~March 31,~~June 30, 2020 and 2019 were ~~104,335~~102,965 and ~~110,728,~~108,844, respectively. The decrease was due primarily to lower ~~units on rent,~~delivery volumes, including reduced demand for new projects since mid-March of 2020 as a result of COVID-19, with modular space average units on rent decreasing ~~5,320~~5,204 units, or ~~5.7%~~5.6%, for the three months ended ~~March 31,~~June 30, 2020 as compared to the three months ended ~~March 31,~~June 30, 2019. Modular space average monthly rental rates increased ~~13.6%~~9.5% to ~~$653~~$669 for the three months ended ~~March 31,~~June 30, 2020. 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. Portable storage average units on rent decreased by 675 units, or 4.1%, for the three months ended June 30, 2020. Average portable storage monthly rental rates decreased 0.8% to $120 for the three months ended June 30, 2020. The average modular space unit utilization rate during the three months ended June 30, 2020 was 68.5%, as compared to 71.9% during the same period in 2019. This decrease was driven by lower average modular space units on rent, partially offset by a lower total modular space unit fleet size. The average portable storage unit utilization rate during the three months ended June 30, 2020 was 62.5%, as compared to 63.3% during the same period in 2019. The decrease in average portable storage utilization rate was driven by declines in the number of portable storage average units on rent.

Gross Profit: Our gross profit percentage was 42.8% and 38.5% for the three months ended June 30, 2020 and 2019, respectively. Our gross profit percentage, excluding the effects of depreciation, was 60.5% and 55.2% for the three months ended June 30, 2020 and 2019, respectively.

Gross profit increased $8.5 million, or 8.4%, to $110.0 million for the three months ended June 30, 2020 from $101.5 million for the three months ended June 30, 2019. The increase in gross profit is a result of an $11.7 million increase in modular leasing gross profit and increased delivery and installation gross profit of $0.6 million. Increases in modular leasing and services gross profit were primarily a result of increased revenues due to favorable average monthly rental rates on modular space units, and modular leasing cost savings due to lower delivery volumes that were achieved as a result of actions taken by the Company to scale back variable labor and material costs in response to lower demand for new project deliveries. Increased delivery and installation margins were driven by higher pricing per transaction, offset partially by lower activity volumes due to reduced delivery demand. These increases were partially offset by increased depreciation of $1.5 million as a result of capital investments made over the past twelve months in our existing rental equipment and decreased new and rental unit sale margins of $2.2 million due to lower demand.

SG&A: Selling, general and administrative ("SG&A") decreased $5.1 million, or 7.2%, to $65.3 million for the three months ended June 30, 2020, compared to $70.4 million for the three months ended June 30, 2019. The primary driver of the decrease is related to lower discrete costs. Discrete items within SG&A decreased for the three months ended June 30, 2020, compared to the three months ended June 30, 2019, by $4.1 million as integration cost savings of $5.6 million as compared to the three months ended June 30, 2019 were only partially offset by transaction costs related to the Merger of $1.6 million. Stock compensation expense increased $0.3 million and other costs decreased $0.4 million as compared to the three months ended June 30, 2019.

Excluding discrete items, SG&A decreased $1.0 million as a result of decreased expenses related to travel and entertainment, which drove a decrease of approximately $1.6 million and professional fees which decreased $1.6 million as compared to the prior year. These decreases were partially offset primarily by increased bad debt expense of $1.7 million compared to the prior year.

Other Depreciation and Amortization: Other depreciation and amortization remained flat at $2.9 million for the three months ended June 30, 2020 and 2019.

Impairment Losses on Long-lived Assets: Impairment losses on long-lived assets were $0.3 million for the three months ended June 30, 2019 related to the valuation of properties classified as assets held for sale as a result of the ModSpace acquisition. No similar impairments occurred during the three months ended June 30, 2020.

Lease Impairment expense and Other Related Charges: Lease impairment expense and other related charges was $1.4 million for the three months ended June 30, 2020 as compared to $1.5 million for the three months ended June 30, 2019.

Restructuring Costs: In the three months ended June 30, 2020, the Company had $0.7 million of restructuring costs primarily due to reductions in force across our branch network in response to COVID-19 economic conditions. In the three months ended June 30, 2019, $1.6 million of restructuring costs was recorded primarily related to employee termination costs as a result of the ModSpace integration.

Currency Losses (Gains), net: Currency losses (gains), net of $0.4 million gain for the three months ended June 30, 2020 was flat compared to the three months ended June 30, 2019.

Other Income, Net: Other income, net was $1.0 million for the three months ended June 30, 2020 compared to income of $1.3 million for the three months ended June 30, 2019. Other income, net of $1.0 million for the three months ended June 30, 2020 reflects the reversal of a non-income tax liability of $1.3 million. Other income, net of $1.3 million for the three months ended June 30, 2019 was primarily driven by the receipt of $1.1 million of insurance proceeds related to assets damaged during Hurricane Harvey.

Interest Expense: Interest expense decreased $3.2 million, or 10.1%, to $28.5 million for the three months ended June 30, 2020 from $31.7 million for the three months ended June 30, 2019. The decrease in interest expense is primarily attributable to the repayment of our 10% senior unsecured notes in the second quarter of 2019, the partial redemption of our 2022 senior secured notes in December 2019, and lower interest rates and average balances outstanding on our ABL facility. See Note 9 to the condensed consolidated financial statements for further discussion of our debt.

million of premium and $1.0 million related to the write-off of unamortized deferred financing fees

Income Tax Benefit: Income tax benefit decreased $0.9 million to $0.3 million for the three months ended June 30, 2020 compared to $1.2 million for the three months ended June 30, 2019. The decrease in income tax benefit was driven by pre-tax income being offset by a tax benefit from a release of valuation allowance and discrete items in the three months ended June 30, 2020 as compared to discrete benefits recorded in the three months ended June 30, 2019 that were not recurring at June 30, 2020.

Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019

Our consolidated statements of operations for the six months ended June 30, 2020 and 2019 are presented below:


	Six Months Ended June 30,						2020 vs. 2019 $ Change
(in thousands)	2020		2019
Revenues:
Leasing and services revenue:
Modular leasing	$	378,495	$	363,110	$	15,385
Modular delivery and installation	102,710		105,966		(3,256)
Sales revenue:
New units	19,376		26,348		(6,972)
Rental units	12,102		21,974		(9,872)
Total revenues	512,683		517,398		(4,715)
Costs:
Costs of leasing and services:
Modular leasing	97,556		102,308		(4,752)
Modular delivery and installation	87,388		91,811		(4,423)
Costs of sales:
New units	12,534		18,877		(6,343)
Rental units	7,609		14,516		(6,907)
Depreciation of rental equipment	91,442		85,071		6,371
Gross Profit	216,154		204,815		11,339
Expenses:
Selling, general and administrative	140,240		143,704		(3,464)
Other depreciation and amortization	5,957		5,733		224
Impairment losses on long-lived assets	—		2,638		(2,638)
Lease impairment expense and other related charges	3,055		4,605		(1,550)
Restructuring costs	689		3,288		(2,599)
Currency (gains) losses, net	518		(670)		1,188
Other income, net	(745)		(2,241)		1,496
Operating income	66,440		47,758		18,682
Interest expense	56,776		62,783		(6,007)
Loss on extinguishment of debt	—		7,244		(7,244)
Income from operations before income tax	9,664		(22,269)		31,933
Income tax expense (benefit)	505		(802)		1,307
Net income (loss)	9,159		(21,467)		30,626
Net income (loss) attributable to non-controlling interest, net of tax	1,213		(1,590)		2,803
Net income (loss) attributable to WillScot	$	7,946	$	(19,877)	$	27,823

Comparison of Six Months Ended June 30, 2020 and 2019

Revenue: Total revenue decreased $4.7 million, or 0.9%, to $512.7 million for the six months ended June 30, 2020 from $517.4 million for the six months ended June 30, 2019. The decrease was primarily the result of a $6.9 million, or 26.2%, and $9.9 million, or 45.0%, decrease in new unit and rental unit sales, respectively and a $3.3 million, or 3.1%, decrease in modular delivery and installation revenue. The decline in modular delivery and installation revenues was primarily driven by lower delivery volumes during the second quarter related to the impact of new project cancellations and delays as a result of the COVID-19 pandemic. These decreases were partially offset by an increase of $15.4 million, or 4.2%, in modular leasing revenue for the six months ended June 30, 2020 driven by improved pricing on modular space units.

Total average units on rent for the six months ended June 30, 2020 and 2019 were 103,656 and 109,815, respectively. The decrease was due primarily to lower delivery volumes, including reduced demand for new projects since mid-March of 2020 as a result of COVID-19, with modular space average units on rent decreasing 5,267 units, or 5.7%, for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. Modular space average monthly rental rates increased 11.5% to $661 for the six months ended June 30, 2020. 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. Portable storage average units on rent decreased by ~~1,073~~892 units, or ~~6.2%~~5.2%, for the ~~three~~six months ended ~~March 31,~~June 30, 2020. Average portable storage monthly rental rates

of $120 were flat ~~for~~compared to the ~~three~~six months ended ~~March 31, 2020.~~June 30, 2019. The average modular space unit utilization rate during the ~~three~~six months ended ~~March 31,~~June 30, 2020 was ~~69.2%~~68.9%, as compared to ~~72.4%~~72.2% during the same period in 2019. This decrease was driven by lower average modular space units on rent, partially offset by a lower total modular space unit fleet size. The average portable storage unit utilization rate during the ~~three~~six months ended ~~March 31,~~June 30, 2020 was ~~64.1%~~63.5%, as compared to ~~66.1%~~65.0% during the same period in 2019. The decrease in average portable storage utilization rate was driven by ~~declines~~a decline in the number of portable storage average units on rent.

Gross Profit: Our gross profit percentage was ~~41.5%~~42.2% and ~~40.7%~~39.6% for the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019, respectively. Our gross profit percentage, excluding the effects of depreciation, was ~~59.5%~~60.0% and ~~56.9%~~56.0% for the ~~three~~six months ended ~~March 31,~~June 30, 2020 and 2019, respectively.

Gross profit increased ~~$2.9~~$11.4 million, or ~~2.8%~~5.6%, to ~~$106.2~~$216.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020 from ~~$103.3~~$204.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019. The increase in gross profit is a result of an ~~$8.5~~a $21.2 million increase in modular leasing and services gross ~~profit and increased delivery and installation gross profit of $0.5 million.~~profit. Increases in modular leasing and services gross profit were primarily as a result of increased revenues due to favorable average monthly rental rates on modular space units, as well as due to modular leasing cost savings during the second quarter due to lower delivery volumes that were achieved as a result of actions taken by the Company to scale back variable labor and ~~increased~~material costs in response to lower demand for new project deliveries. Increased delivery and installation margins were driven primarily by higher pricing per ~~transaction.~~transaction, offset partially by lower activity volumes primarily in the second quarter due to reduced delivery demand. These increases were partially offset by increased depreciation of ~~$4.8~~$6.3 million as a result of ~~continued~~ capital ~~investment~~investments made over the past twelve months in our existing rental equipment and decreased new and rental unit sale margins of ~~$1.3~~$3.5 million due to lower demand.

SG&A: ~~Selling, general and administrative ("~~SG~~&A") increased $1.7~~&A decreased $3.5 million, or ~~2.3%~~2.4%, to ~~$75.0~~$140.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020, ~~compared~~compared to ~~$73.3~~$143.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019. The primary driver of the ~~increase~~decrease is related to ~~increased~~decreased discrete costs. Discrete items within SG&A ~~increased~~decreased for the ~~three~~six months ended ~~March 31,~~June 30, 2020, compared to the ~~three~~six months ended ~~March 31,~~June 30, 2019, by ~~$0.9~~$3.1 million as integration cost savings of $14.1 million as compared to the six months ended June 30, 2019 were only partially offset by transaction costs related to the ~~announced~~ Mobile Mini transaction of ~~$9.4 offset reduced integration cost savings of $8.5~~$11.1 million. Stock compensation expense increased $0.8 million and other costs decreased $0.9 million as compared to the ~~three~~six months ended ~~March 31, 2019. Stock compensation expense increased $0.5 million and other costs decreased $0.5 million as compared to the three months ended March 31,~~June 30, 2019.

Excluding discrete items, SG&A ~~increased $0.6~~decreased $0.4 million as a result of ~~increased~~decreased expenses related to ~~our bi-annual company meeting held in January of 2020,~~occupancy costs, which ~~drove an increase~~decreased $1.2 million, travel and entertainment costs, which decreased $1.3 million, professional fees, which decreased $1.3 million, and tax cost savings of approximately ~~$2.4~~$1.0 million as compared to the prior year. ~~Employee costs also increased $0.5 million driven~~These cost savings were partially offset primarily by ~~the~~ increased employee ~~benefit~~ costs, ~~that more than offset employee salary~~which increased $1.3 million, increased bad debt expense of $1.0 million, and approximately $2.4 million of cost ~~savings of $1.1 million as compared~~incurred related to the prior year. Occupancy costs and computer costs decreased $1.3 million and $1.0 million, respectively, as a result of realized cost savings achieved by exiting redundant real estate locations and consolidating information systems.bi-annual company meeting held in January 2020.

Other Depreciation and Amortization: Other depreciation and amortization ~~was $3.1~~increased $0.3 million, or 5.3%, to $6.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020, ~~and increased $0.3 million as~~ compared to ~~$2.8~~$5.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019.

Impairment Losses on ~~Long-lived~~Long-Lived Assets: Impairment losses on long-lived assets ~~was $2.3~~were $2.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019 related to the valuation of properties classified as assets held for sale as a result of the ModSpace acquisition.No similar impairments occurred during the ~~three~~six months ended ~~March 31,~~June 30, 2020.

Lease Impairment expense and Other Related Charges: Lease impairment expense and other related charges ~~was $1.7~~were $3.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020 as compared to ~~$3.1~~$4.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019.Lease impairment expense and other related charges of $1.7 million for the three months ended March 31, 2020 relates to closed location rent expense and loss on lease exits, compared to the $3.1 million for the three months ended March 31, 2019 which included $2.4 million as a result of right of use asset impairment and $0.7 million related to closed location rent expense and loss on lease exits.

Restructuring Costs: InRestructuring costs were $0.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020 as compared to $3.3 million for the ~~Company had $0.1 million in reversal of restructuring costs attributable to adjustments to previously recorded employee termination accruals. In the three~~six months ended ~~March 31,~~June 30, 2019. The restructuring charges in the six months ended June 30, 2020 were due to reductions in force across our branch network in response to COVID-19 economic conditions. The restructuring charges in the six months ended June 30, 2019 ~~$1.7 million of restructuring costs was recorded~~related primarily ~~related~~ to employee termination costs ~~as a result of~~related to the ModSpace ~~integration.~~and Acton acquisitions and integrations.

Currency (Gains) Losses, ~~(Gains),~~ net: Currency (gains) losses, ~~(gains),~~ net ~~decreased~~fluctuated by $1.2 million to a ~~$0.9~~$0.5 million loss for the ~~three~~six months ended ~~March 31,~~June 30, 2020 compared to a ~~$0.3~~$0.7 million gain for the ~~three~~six months ended ~~March 31,~~June 30, 2019. The ~~decrease~~increase in currency ~~gains~~(gains) losses, net, in 2020 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.

Other Expense (Income), Net: Other ~~expense (income),~~income, net was ~~expense of $0.3~~$0.7 million and $2.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020 ~~compared to income of $1.0 million for the three months ended March 31, 2019.~~and 2019, respectively. Other income, net of ~~$1.0~~$0.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020 was primarily related to the reversal of a non-income tax liability of $1.3 million. Other income, net of $2.2 million for the six months ended June 30, 2019 was driven primarily ~~driven~~ by the receipt of a ~~settlement which contributed~~ $0.9 million settlement in the first quarter of 2019, and the receipt of $1.1 million of insurance proceeds related to ~~other expense (income), net.~~assets damaged during Hurricane Harvey in the second quarter of 2019.

Interest Expense: Interest expense decreased ~~$2.8~~$6.0 million, or ~~9.0%~~9.6%, to ~~$28.3~~$56.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020 from ~~$31.1~~$62.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019. ~~The decrease~~Interest expense for the six months ended June 30, 2020 is lower than the same period in ~~interest expense is primarily attributable~~2019 due to lower rates and average balances outstanding on our ABL facility and the repayment of our 10% senior unsecured notes in the second quarter of 2019, ~~partially~~ offset by an increase in borrowings of $190.0 million in the second quarter of 2019 under our 6.875% senior secured ~~notes. See Note 9~~notes, which are outstanding for all six months in 2020.

Loss on Extinguishment of Debt: We redeemed $200.0 million in aggregate outstanding principal amount of our senior unsecured notes in the second quarter of 2019 at a redemption price of 102.0%, plus a make-whole premium of 1.1%, for total premiums of 3.1%. As a result, we recorded a loss on extinguishment of debt of $7.2 million, which included $6.2 million of premium and $1.0 million related to the ~~condensed consolidated financial statements for further discussion~~write-off of ~~our debt.~~unamortized deferred financing fees

Income Tax Expense: Income tax expense increased ~~$0.4~~$1.3 million to ~~$0.8~~$0.5 million expense for the ~~three~~six months ended ~~March 31,~~June 30, 2020 compared to ~~$0.4~~a $0.8 million benefit for the ~~three~~six months ended ~~March 31,~~June 30, 2019. The increase in income tax expense was driven by legislative enacted discrete benefits recorded in the ~~three~~six months ended ~~March 31,~~June 30, 2019 which did not occur in the ~~three~~six months ended ~~March 31,~~June 30, 2020.

Business Segment Results

Our principal line of business is modular leasing and sales. 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 following tables and discussion summarize our reportable segment financial information for the three and six months ended ~~March 31,~~June 30, 2020 and 2019. Future changes to our organizational structure, including those that will result from our Merger with Mobile Mini, may result in changes to the segments disclosed.

Comparison of Three Months Ended ~~March 31,~~June 30, 2020 and 2019


		Three Months Ended March 31, 2020																Three Months Ended June 30, 2020
(in thousands, except for units on rent and rates)	(in thousands, except for units on rent and rates)	Modular - US			Modular - Other North America			Total			(in thousands, except for units on rent and rates)	Modular - US			Modular - Other North America			Total
Revenue	Revenue	$	233,864		$	21,957		$	255,821		Revenue	$	236,048		$	20,814		$	256,862
Gross profit	Gross profit	$	96,309		$	9,881		$	106,190		Gross profit	$	100,951		$	9,013		$	109,964
Adjusted EBITDA	Adjusted EBITDA	$	81,685		$	7,859		$	89,544		Adjusted EBITDA	$	90,613		$	6,907		$	97,520
Capital expenditures for rental equipment	Capital expenditures for rental equipment	$	37,006		$	2,642		$	39,648		Capital expenditures for rental equipment	$	38,065		$	1,969		$	40,034
Modular space units on rent (average during the period)	Modular space units on rent (average during the period)	79,501			8,488			87,989			Modular space units on rent (average during the period)	78,493			8,603			87,096
Average modular space utilization rate	Average modular space utilization rate	71.5		%	52.8		%	69.2		%	Average modular space utilization rate	70.6		%	53.7		%	68.5		%
Average modular space monthly rental rate	Average modular space monthly rental rate	$	659		$	600		$	653		Average modular space monthly rental rate	$	681		$	562		$	669
Portable storage units on rent (average during the period)	Portable storage units on rent (average during the period)	15,959			387			16,346			Portable storage units on rent (average during the period)	15,505			364			15,869
Average portable storage utilization rate	Average portable storage utilization rate	64.5		%	50.1		%	64.1		%	Average portable storage utilization rate	63.0		%	47.6		%	62.5		%
Average portable storage monthly rental rate	Average portable storage monthly rental rate	$	119		$	113		$	119		Average portable storage monthly rental rate	$	121		$	98		$	120


		Three Months Ended March 31, 2019																Three Months Ended June 30, 2019
(in thousands, except for units on rent and rates)	(in thousands, except for units on rent and rates)	Modular - US			Modular - Other North America			Total			(in thousands, except for units on rent and rates)	Modular - US			Modular - Other North America			Total
Revenue	Revenue	$	230,175		$	23,510		$	253,685		Revenue	$	236,502		$	27,211		$	263,713
Gross profit	Gross profit	$	93,948		$	9,383		$	103,331		Gross profit	$	92,471		$	9,013		$	101,484
Adjusted EBITDA	Adjusted EBITDA	$	75,946		$	7,408		$	83,354		Adjusted EBITDA	$	80,547		$	7,007		$	87,554
Capital expenditures for rental equipment	Capital expenditures for rental equipment	$	49,921		$	1,952		$	51,873		Capital expenditures for rental equipment	$	58,241		$	2,974		$	61,215
Modular space units on rent (average during the period)	Modular space units on rent (average during the period)	84,462			8,847			93,309			Modular space units on rent (average during the period)	83,273			9,027			92,300
Average modular space utilization rate	Average modular space utilization rate	74.8		%	55.1		%	72.4		%	Average modular space utilization rate	74.1		%	56.3		%	71.9		%
Average modular space monthly rental rate	Average modular space monthly rental rate	$	577		$	552		$	575		Average modular space monthly rental rate	$	612		$	603		$	611
Portable storage units on rent (average during the period)	Portable storage units on rent (average during the period)	17,010			409			17,419			Portable storage units on rent (average during the period)	16,146			398			16,544
Average portable storage utilization rate	Average portable storage utilization rate	66.6		%	52.0		%	66.1		%	Average portable storage utilization rate	63.6		%	50.8		%	63.3		%
Average portable storage monthly rental rate	Average portable storage monthly rental rate	$	120		$	109		$	119		Average portable storage monthly rental rate	$	121		$	121		$	121

Modular - US Segment

Revenue: Total revenue ~~increased $3.7~~decreased $0.5 million, or ~~1.6%~~0.2%, to ~~$233.9~~$236.0 million for the three months ended ~~March 31,~~June 30, 2020 from $~~230.2~~236.5 million for the three months ended ~~March 31,~~June 30, 2019. The ~~increase~~decrease was primarily the result of a ~~6.6% increase~~$5.3 million, or 10.1% decrease in ~~leasing revenue driven by improved pricing on modular space units as well as increased~~ modular delivery and installation revenues, $0.9 million, or 8.7%, decrease in new unit sales, and $0.8 million, or 16.3%, decrease in rental unit sales revenue. The decline in modular delivery and installation revenues was primarily driven by lower delivery volumes during the second quarter related to the impact of ~~3.5% due to higher revenues per transaction.~~new project cancellations and delays as a result of the COVID-19 pandemic. The decreases were partially offset by an increase of modular leasing revenue of $6.5 million, or 3.9% driven by improved pricing. Average modular space monthly rental rates increased ~~14.2%~~11.3% for the three months ended ~~March 31,~~June 30, 2020 to ~~$659~~$681 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. Improved pricing was partially offset by lower volumes as average modular space units on rent decreased ~~4,961~~4,780 units, or ~~5.9%~~5.7%. The decrease was ~~due~~driven primarily to units on rent lost over the course 2019. The increases in leasing and services revenue were partially offset by decreases in sales revenues. New unit sales revenue decreased $4.7 million, or 33.6%, and rental unit sales revenue decreased $3.9 million, or 47.0% driven by lower ~~sales demand.~~delivery volumes, including reduced demand for new projects since mid-March of 2020 as a result of COVID-19.

Gross Profit: Gross profit increased ~~$2.4~~$8.5 million, or ~~2.6%~~9.2%, to ~~$96.3~~$101.0 million for the three months ended ~~March 31,~~June 30, 2020 from ~~$93.9~~$92.5 million for the three months ended ~~March 31,~~June 30, 2019. The increase in gross profit was driven by higher modular leasing ~~and service revenues~~gross profit, which increased $13.0 million, or 11.0%, driven ~~primarily~~equally from improved pricing including VAPS and ~~VAPS, as well as~~modular leasing cost savings due to ~~increased modular space~~lower delivery volumes that were achieved as a result of actions taken by the Company to scale back variable labor and ~~installation margins. Modular leasing and service gross profit increased $8.4 million, or 6.8%.~~material costs in response to lower demand for new project deliveries. The increase in gross profit

from modular leasing ~~and service revenues~~ for the three months ended ~~March 31,~~June 30, 2020 was partially offset by a ~~$0.7~~$1.1 million decrease in sales gross profit, a $1.2 million decrease in modular delivery and installation gross profit due to lower activity volumes due to reduced delivery demand, and a ~~$5.2~~$2.5 million increase in depreciation of rental equipment related to ~~the impact of continued~~ capital ~~investment~~investments made in our existing rental ~~equipment.~~equipment over the past twelve months.

Adjusted EBITDA:Adjusted EBITDA increased ~~$5.7~~$10.1 million, or ~~7.5%~~12.5%, to ~~$81.7~~$90.6 million for the three months ended ~~March 31,~~June 30, 2020 from ~~$76.0~~$80.5 million for the three months ended ~~March 31,~~June 30, 2019. The increase was driven by higher modular leasing ~~and services~~ gross profit discussed ~~above, partially offset by increases in SG&A, excluding discrete and other items, of $1.8 million.~~above. SG&A, excluding discrete items, ~~increased $0.9~~decreased $0.2 million, or ~~1.7%~~0.3%, for the three months ended ~~March 31,~~June 30, 2020, as compared to the three months ended ~~March 31,~~June 30, 2019. ~~Increases~~Decreases were related ~~primarily~~ to ~~our bi-annual company meeting held~~$1.3 million decrease in ~~January of 2020, which drove an increase of approximately $2.3~~travel and entertainment and $1.6 million asdecrease in professional fees compared to the prior year. ~~Employee~~Decreases were partially offset by employee costs ~~also~~which increased ~~$0.8~~$0.7 million, ~~driven by~~occupancy costs which increased ~~employee benefit costs that more than offset employee salary cost savings~~$0.4 million, and increased bad debt expense of ~~$0.8~~$1.8 million as compared to the prior year. Occupancy costs and computer costs decreased $1.0 million and $1.0 million, respectively, as a result of realized cost savings achieved by exiting redundant real estate locations and consolidating information systems.

Capital Expenditures for Rental Equipment: Purchases of rental equipment and refurbishments decreased ~~$13.0~~$20.1 million, or ~~26.0%~~34.5%, to ~~$37.0~~$38.1 million for the three months ended ~~March 31,~~June 30, 2020 from ~~$50.0 millio~~n$58.2 million for the three months ended ~~March 31,~~June 30, 2019. Net CAPEX, as defined below in Item 2. Other Non-GAAP Financial Data and Reconciliations, also decreased ~~$8.3~~$10.1 million, or ~~19.7%~~22.1%, to ~~$33.9~~$35.5 million. The decreases for both were driven by decreased ~~spend for~~spending on refurbishments and VAPS due to less constrained fleet and reduced demand as a result of the COVID-19 pandemic, and cost improvements experienced over the prior year related to better unit selection and scoping on refurbishments.

Modular - Other North America Segment

Revenue: Total revenue decreased ~~$1.5~~$6.4 million, or ~~6.4%~~23.5%, to ~~$22.0~~$20.8 million for the three months ended ~~March 31,~~June 30, 2020 from ~~$23.5~~$27.2 million for the three months ended ~~March 31,~~June 30, 2019. Decreases were ~~primarily~~ driven by rental unit sale decreases of $4.3 million, or 78.2%, reduced modular ~~delivery and installation~~leasing revenues, which decreased ~~$0.5~~$2.1 million, or ~~12.5%~~12.4%, and new unit sales decreases of ~~$0.6~~$0.9 million, or ~~66.7%, and rental unit sale decreases of $0.8 million, or 25.0%~~75.0% for the three months ended ~~March 31,~~June 30, 2020. These decreases were partially offset by increased modular ~~leasing~~delivery and installation revenue, which increased ~~$0.4~~$0.9 million, or ~~2.6%, driven by improved pricing in the quarter.~~25.7%. Average modular space monthly rental rates ~~increased 8.7% driven by continued growth in our “Ready to Work” solutions~~decreased 6.8% primarily as a result of unfavorable foreign currency movements (decrease of 0.8% at constant currency) and ~~increased VAPS penetration across the combined post-acquisition customer base. This was offset partially by lower~~ average modular space units on rent ~~which~~ decreased by ~~359~~424 units, or ~~4.1%~~4.7%.

Gross Profit: Gross profit ~~increased $0.5 million, or 5.3%, to $9.9~~of $9.0 million for the three months ended ~~March 31,~~June 30, 2020 ~~from $9.4 for~~was flat compared to the three months ended ~~March 31,~~June 30, 2019. The effects of unfavorable foreign currency movements ~~decreased~~decreased gross profit by ~~$0.5~~$0.6 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, of ~~$1.0~~$0.6 million was driven primarily by increased ~~leasing~~modular delivery and ~~services~~installation margins of ~~$1.4~~$1.2 million as a result of ~~increased average monthly rental rates~~ higher pricing per transaction and ~~lower~~lower variable costs, and lower depreciation of ~~$0.1~~$0.7 million for the three months ended ~~March 31,~~June 30, 2020, partially offset by reduced new and rental unit sales gross profit of ~~$0.5~~$0.7 million and lower modular leasing gross profit of $0.6 million for three months ended ~~March 31,~~June 30, 2020.

Adjusted EBITDA: Adjusted EBITDA ~~increased $0.4~~decreased $0.1 million, or ~~5.4%~~1.4%, to ~~$7.8~~$6.9 million for the three months ended ~~March 31,~~June 30, 2020 from ~~$7.4~~$7.0 million for the three months ended ~~March 31,~~June 30, 2019. This ~~increase~~decrease was driven by ~~higher modular leasing and services~~reduced gross ~~profits~~profit discussed above, ~~as well as~~excluding depreciation and including the effects of unfavorable foreign currency movements, partially offset by decreased SG&A, excluding discrete items, which decreased ~~$0.3~~$0.8 million, or ~~4.4%~~12.2%, for the three months ended ~~March 31,~~June 30, 2020, as compared to the three months ended ~~March 31,~~June 30, 2019. Decreases were primarily related ~~primarily~~ to ~~employee salary cost~~travel and entertainment decreases of ~~$0.3~~$0.2 million and occupancy costs decreases of ~~$0.3~~$0.4 million as a result of realized cost savings achieved through restructuring activities and by exiting redundant real estate locations over the past year.

Capital ~~Expenditures~~Expenditures for Rental Equipment: Purchases of rental equipment and refurbishments ~~increased $0.6~~decreased $1.0 million, or ~~30.0%~~33.3%, to ~~$2.6 million for the three months ended March 31, 2020~~ ~~from~~ $2.0 million for the three months ended ~~March 31,~~June 30, 2020 from $3.0 million for the three months ended June 30, 2019. Net CAPEX, as defined below in Item 2. Other Non-GAAP Financial Data and Reconciliations, increased $3.3 million, or 137.5%, to $0.9 million from negative $2.4 million for the three months ended June 30, 2019 due to reduced rental unit sale activity for the three months ended June 30, 2020.

Comparison of Six Months Ended June 30, 2020 and 2019


	Six Months Ended June 30, 2020
(in thousands, except for units on rent and rates)	Modular - US			Modular - Other North America			Total
Revenue	$	469,912		$	42,771		$	512,683
Gross profit	$	197,260		$	18,894		$	216,154
Adjusted EBITDA	$	172,296		$	14,766		$	187,062
Capital expenditures for rental equipment	$	75,071		$	4,611		$	79,682
Modular space units on rent (average during the period)	78,989			8,553			87,542
Average modular space utilization rate	71.1		%	53.4		%	68.9		%
Average modular space monthly rental rate	$	670		$	580		$	661
Portable storage units on rent (average during the period)	15,738			376			16,114
Average portable storage utilization rate	64.0		%	49.3		%	63.5		%
Average portable storage monthly rental rate	$	120		$	105		$	120


	Six Months Ended June 30, 2019
(in thousands, except for units on rent and rates)	Modular - US			Modular - Other North America			Total
Revenue	$	466,677		$	50,721		$	517,398
Gross profit	$	186,419		$	18,396		$	204,815
Adjusted EBITDA	$	156,490		$	14,415		$	170,905
Capital expenditures for rental equipment	$	108,162		$	4,926		$	113,088
Modular space units on rent (average during the period)	83,873			8,936			92,809
Average modular space utilization rate	74.6		%	55.7		%	72.2		%
Average modular space monthly rental rate	$	594		$	578		$	593
Portable storage units on rent (average during the period)	16,602			404			17,006
Average portable storage utilization rate	65.4		%	51.6		%	65.0		%
Average portable storage monthly rental rate	$	120		$	115		$	120

Modular - US Segment

Revenue: Total revenue increased $3.2 million, or 0.7%, to $469.9 million for the six months ended June 30, 2020 from $466.7 million for the six months ended June 30, 2019. The increase was driven by increased ~~refurbishment spend.~~modular leasing revenues, which increased $17.2 million, or 5.2%, driven by improved pricing. Average modular space monthly rental rates increased 12.8% for the six months ended June 30, 2020. 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. Increases in pricing were partially offset by decreased average modular space units on rent, which decreased 4,884 units, or 5.8%. The decrease in units on rent was due primarily to lower delivery volumes, including reduced demand for new projects since mid-March of 2020 as a result of new project cancellations and delays as a result of the COVID-19 pandemic. The increase in leasing revenue was partially offset by decreases in delivery and installation revenues driven by lower delivery volumes during the second quarter and lower sales revenues. Delivery and installation revenue decreased $3.7 million, or 3.8%, new unit sales revenue decreased $5.6 million, or 23.0% and rental unit sales revenue decreased $4.7 million, or 35.6%.

Gross Profit: Gross profit increased $10.9 million, or 5.8%, to $197.3 million for the six months ended June 30, 2020 from $186.4 million for the six months ended June 30, 2019. The increase in gross profit was driven by higher modular leasing revenues driven by improved pricing and VAPS, as well as by lower modular leasing cost due to lower delivery demand in the second quarter and reduced variable costs. The increase in gross profit from modular leasing revenues was partially offset by a $7.6 million increase in depreciation of rental equipment primarily as a result of capital investments made over the past twelve months in our existing rental equipment for the six months ended June 30, 2020.

Adjusted EBITDA: Adjusted EBITDA increased $15.8 million, or 10.1%, to $172.3 million for the six months ended June 30, 2020 from $156.5 million for the six months ended June 30, 2019. The increase was driven by higher modular leasing gross profits discussed above, partially offset by increases in SG&A, excluding discrete and other items, of $0.8 million. Increases in SG&A, excluding discrete items, primarily relate to increased employee costs of $1.5 million, increased bad debt expense of $1.0 million, and approximately $2.3 million of costs related to the bi-annual company meeting held in January. These increases were partially offset by decreased travel and entertainment of $1.1 million, decreased professional fees of $1.2 million, decreased occupancy costs of $0.6 million, and decreased computer costs of $0.7 million.

Capital Expenditures for Rental Equipment: Capital expenditures for rental equipment decreased $33.1 million, or 30.6%, to $75.1 million for the six months ended June 30, 2020 from $108.2 million for the six months ended June 30, 2019. Net CAPEX, as defined below in Item 2. Other Non-GAAP Financial Data and Reconciliations, also decreased $18.4 million, or 21.0%, to $69.4 million. The decreases for both were driven by decreased spend for refurbishments and VAPS due to less constrained fleet and reduced demand as a result of the COVID-19 pandemic, and cost improvements experienced over the prior year related to better unit selection and scoping on refurbishments.

Modular - Other North America Segment

Revenue: Total revenue decreased $7.9 million, or 15.6%, to $42.8 million for the six months ended June 30, 2020 from $50.7 million for the six months ended June 30, 2019. Decreases were driven primarily by declines in new unit and rental unit sales, which decreased $1.4 million, or 66.7% and $5.2 million, or 59.1%, respectively, compared to the six months ended June 30, 2019. Modular leasing revenue decreased $1.8 million, or 5.6%, driven by declined volumes in the period. Average modular space units on rent decreased by 383 units, or 4.3%, for the period, and average modular space monthly rental rates increased 0.3%. Modular delivery and installation revenues increased $0.4 million, or 5.3%.

Gross Profit: Gross profit increased $0.5 million, or 2.7%, to $18.9 million for the six months ended June 30, 2020 from $18.4 million for the six months ended June 30, 2019. The effects of unfavorable foreign currency movements decreased gross profit by $0.7 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, of $1.2 million was driven primarily by increased leasing and services margins of $1.5 million as a result of improved delivery and installation margins and increased average monthly rental rates (increase of 4.3% at constant currency) and lower variable costs, and lower depreciation of $1.0 million for the six months ended June 30, 2020, partially offset by reduced new and rental unit sales gross profit of $1.3 million for the six months ended June 30, 2020.

Adjusted EBITDA: Adjusted EBITDA increased $0.4 million, or 2.8%, to $14.8 million for the six months ended June 30, 2020 from $14.4 million for the six months ended June 30, 2019. This increase was driven by decreased SG&A, excluding discrete items, which decreased $1.1 million for the six months ended June 30, 2020 compared to the six months ended June 30, 2019. Decreases were related primarily to decreased occupancy costs of $0.6 million, decreased employee costs of $0.1 million, and decreased travel and entertainment of $0.1 million, among other cost savings. SG&A savings were partially offset by decreased gross profits as discussed above, excluding depreciation and including the effects of unfavorable foreign currency movements.

Capital Expenditures for Rental Equipment: Capital expenditures for rental equipment decreased $0.3 million, or 6.1%, to $4.6 million for the six months ended June 30, 2020 from $4.9 million for the six months ended June 30, 2019. Net CAPEX, as defined below in Item 2. Other Non-GAAP Financial Data and Reconciliations, increased $0.3 million, or 10.7%, to negative $2.5 million during the six months ended June 30, 2020, as a result of increased rental unit sales in the period that exceeded capital expenditures for rental equipment. This compared to net capital expenditures of negative $2.8 million for the six months ended June 30, 2019.

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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 income (loss) to Adjusted EBITDA reconciliation below. We believe that evaluating segment performance excluding such items is meaningful because it provides insight with respect to the 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 expense, income tax expense (benefit), depreciation and amortization. Our adjusted EBITDA ("Adjusted EBITDA") reflects the following further adjustments to EBITDA to exclude certain non-cash items and the effect of what we consider transactions or events not related to our core business operations:

•Currency losses (gains), net: on monetary assets and liabilities denominated in foreign currencies other than the subsidiaries’ functional currency. Substantially all such currency losses (gains) are unrealized and attributable to financings due to and from affiliated companies.

•Goodwill and other impairment charges related to non-cash costs associated with impairment charges to goodwill, other intangibles, rental fleet and property, plant and equipment.

•Restructuring costs, lease impairment expense, and other related charges associated with restructuring plans designed to streamline operations and reduce costs including employee and lease termination costs.

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

•Costs to integrate acquired companies, including outside professional fees, 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 WillScot’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.

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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 loss to Adjusted EBITDA:


		Three Months Ended March 31,							Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2020		2019		2020		2019
Net loss		$	(3,674)	$	(10,029)
Income tax expense		790		378
Net Income (loss)						Net Income (loss)	$	12,833	$	(11,438)	$	9,159	$	(21,467)
Loss on extinguishment of debt						Loss on extinguishment of debt	—		7,244		—		7,244
Income tax (benefit) expense						Income tax (benefit) expense	(285)		(1,180)		505		(802)
Interest expense	Interest expense	28,257		31,115		Interest expense	28,519		31,668		56,776		62,783
Depreciation and amortization	Depreciation and amortization	49,022		43,887		Depreciation and amortization	48,377		46,917		97,399		90,804
Currency losses (gains), net	Currency losses (gains), net	898		(316)		Currency losses (gains), net	(380)		(354)		518		(670)
Goodwill and other impairments	Goodwill and other impairments	—		2,290		Goodwill and other impairments	—		348		—		2,638
Restructuring costs, lease impairment expense and other related charges	Restructuring costs, lease impairment expense and other related charges	1,601		4,741		Restructuring costs, lease impairment expense and other related charges	2,143		3,152		3,744		7,893
Transaction costs	Transaction costs	9,431		—		Transaction costs	1,619		—		11,050		—
Integration costs	Integration costs	1,685		10,138		Integration costs	2,153		8,242		3,839		18,380
Stock compensation expense	Stock compensation expense	1,787		1,290		Stock compensation expense	2,227		1,900		4,014		3,190
Other income^(a)	Other income^(a)	(253)		(140)		Other income^(a)	314		1,055		58		912
Adjusted EBITDA	Adjusted EBITDA	$	89,544	$	83,354	Adjusted EBITDA	$	97,520	$	87,554	$	187,062	$	170,905

(a) Other ~~expense~~income represents primarily acquisition-related costs such as advisory, legal, valuation and other professional fees in connection with actual or potential business combinations, which are expensed as incurred, but do not reflect ongoing costs of the business.

Adjusted Gross Profit and Adjusted Gross Profit Percentage

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

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


		Three Months Ended March 31,										Three Months Ended June 30,									Six Months Ended June 30,
(in thousands)	(in thousands)	2020			2019			(in thousands)	2020			2019			2020			2019
Revenue (A)	Revenue (A)	$	255,821		$	253,685		Revenue (A)	$	256,862		$	263,713		$	512,683		$	517,398

Gross profit (B)	Gross profit (B)	$	106,190		$	103,331		Gross profit (B)	$	109,964		$	101,484		$	216,154		$	204,815
Depreciation of rental equipment	Depreciation of rental equipment	45,948			41,103			Depreciation of rental equipment	45,494			43,968			91,442			85,071
Adjusted Gross Profit (C)	Adjusted Gross Profit (C)	$	152,138		$	144,434		Adjusted Gross Profit (C)	$	155,458		$	145,452		$	307,596		$	289,886

Gross Profit Percentage (B/A)	Gross Profit Percentage (B/A)	41.5		%	40.7		%	Gross Profit Percentage (B/A)	42.8		%	38.5		%	42.2		%	39.6		%
Adjusted Gross Profit Percentage (C/A)	Adjusted Gross Profit Percentage (C/A)	59.5		%	56.9		%	Adjusted Gross Profit Percentage (C/A)	60.5		%	55.2		%	60.0		%	56.0		%

Net CAPEX

We define Net CAPEX ("Net CAPEX") as purchases of rental equipment and refurbishments and purchases of property, plant and equipment (collectively, "Total Capital Expenditures"), less proceeds from sale of rental equipment and proceeds from the sale of property, plant and equipment (collectively, "Total Proceeds"), which are all included in cash flows from investing activities. Our management believes that the presentation of Net CAPEX provides useful information to investors regarding the net capital invested into our rental fleet and plant, property and equipment each year to assist in analyzing the performance of our business.

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The following table provides unaudited reconciliations of Net CAPEX:


		Three Months Ended March 31,							Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2020		2019		2020		2019
Total Capital Expenditures		$	41,166	$	53,502
Total Proceeds		10,626		11,688
Total purchases of rental equipment and refurbishments						Total purchases of rental equipment and refurbishments	$	(40,034)	$	(61,215)	$	(79,682)	$	(113,088)
Total proceeds from sale of rental equipment						Total proceeds from sale of rental equipment	5,316		11,482		12,102		23,083
Net CAPEX for Rental Equipment						Net CAPEX for Rental Equipment	$	(34,718)	$	(49,733)	$	(67,580)	$	(90,005)
Purchase of property, plant and equipment						Purchase of property, plant and equipment	(1,668)		(2,270)		(3,186)		(3,899)
Proceeds from sale of property, plant and equipment						Proceeds from sale of property, plant and equipment	$	3	$	8,804	$	3,843	$	8,891
Net CAPEX	Net CAPEX	$	30,540	$	41,814	Net CAPEX	$	(36,383)	$	(43,199)	$	(66,923)	$	(85,013)

Liquidity and Capital Resources

Overview

WillScot 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, borrowings under the ABL Facility, and sales of equity and debt securities. We believe that our liquidity sources and operating cash flows are sufficient to address our operating, debt service and capital requirements over the next twelve months.

~~Our consolidation strategy includes~~We have been consistently engaged in both the ~~pursuit~~debt and equity capital markets both opportunistically and as necessary to support the growth of ~~strategic acquisitions that~~our business, desired leverage levels, and other capital allocation priorities. Subsequent to the Merger we believe ~~will add value~~we have ample liquidity in the New ABL Facility to ~~our existing business.~~ support both organic operations and other capital allocation priorities as they arise.

We continue to review available acquisition opportunities with the awareness that any such acquisition may require us to incur additional debt to finance the acquisition and/or to issue shares of our ~~Class A~~ common stock or other equity securities as acquisition consideration or as part of an overall financing plan. In addition, we will continue to evaluate options to improve our liquidity, such as the issuance of additional unsecured and secured debt, equity securities and/or equity-linked securities. There can be no assurance as to the timing of any such issuance. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at ~~all.~~all, including as a result of any disruption the COVID-19 pandemic may have on the debt and capital markets. From time to time we may also seek to streamline our capital structure and improve our financial position through refinancing or restructuring our existing debt or retiring certain of our securities for cash or other consideration.

Post-Merger Long-Term Debt

Subsequent to closing of the Merger and related financing transactions, our Company's long term debt is comprised of the following:


(in thousands, except rates)	Interest Rate		Year of maturity	Principal July 3, 2020 (Post Merger)
2023 Secured Notes	6.875	%	2023	$	490,000
2025 Secured Notes	6.125	%	2025	$	650,000
New ABL Facility	Varies		2025	$	1,467,000
Finance Leases	Varies		2022	$	76,697
Total long-term debt				$	2,683,697

After the Merger, we have over $915 million of available borrowing capacity under the New ABL Facility.

ABL Facility

Borrowing availability under the ABL Facility is equal to the lesser of ~~$1.425~~$1.425 billion and the applicable borrowing bases (the "Line Cap"). At ~~March 31,~~June 30, 2020, the Line ~~Cap~~Cap was ~~$1.412 billion.~~$1.416 billion. The borrowing bases are a function of, among other things, the value of the assets in the relevant collateral pool.

At ~~March 31,~~June 30, 2020, we had ~~$505.8~~$540.5 million of available borrowing capacity under the ABL Facility, including ~~$378.8~~$409.6 million under the US ABL Facility and ~~$127.0~~$130.9 million under the Canadian ABL Facility.

COVID-19 Impact on Liquidity

Although there is uncertainty related to the anticipated impact of the COVID-19 outbreak on the Company’s future results, we believe our predictable lease revenue streams underpinned by long lease durations combined with recent steps we have taken to reduce costs and capital spending will result in a near-term increase in internally generated free cash flow. Further, the ~~$505.8~~approximately $915 million of availability onunder our New ABL Facility subsequent to the Merger and related financing transactions, provides additional liquidity if internally generated free cash flow becomes insufficient to meet our operating needs. We continue to manage all aspects of our business including, but not limited to, monitoring the financial health of our customers, suppliers and other third-party relationships, actively managing our cost structure, reducing or delaying capital spending, and developing new opportunities for growth. We believe that the actions we have taken in recent years to increase our scale and competitive position and strengthen our balance sheet have positioned us well to manage through this crisis as it continues to unfold.

Cash Flow Comparison of the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2020 and 2019

Significant factors driving our liquidity position include cash flows generated from operating activities and capital expenditures. Our ability to fund our capital needs will be affected by our ongoing ability to generate cash from operations and access to capital markets.

The following summarizes our change in cash and cash equivalents for the periods presented:

Three Months Ended
March 31,
(in thousands) 2020 2019
Net cash from operating activities $ 38,348 $ 15,256
Net cash from investing activities (30,540) (41,814)
Net cash from financing activities (5,582) 30,294
Effect of exchange rate changes on cash and cash equivalents (629) 85
Net change in cash and cash equivalents $ 1,597 $ 3,821


	Six Months Ended June 30,
(in thousands)	2020		2019
Net cash from operating activities	$	113,727	$	60,054
Net cash from investing activities	(66,923)		(85,013)
Net cash from financing activities	614,693		21,351
Effect of exchange rate changes on cash and cash equivalents	(394)		140
Net change in cash and cash equivalents	$	661,103	$	(3,468)

Cash Flows from Operating Activities

Cash provided by operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2020 was ~~$38.3~~$113.7 million as compared to ~~$15.3~~$60.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019, an increase of ~~$23.0~~$53.6 million. The increase was due to an increase of ~~$10.5~~$33.9 million of net income, adjusted for non-cash items, in addition to an increase of ~~$12.6~~$19.8 million in the net movements of the operating assets and liabilities. The increase related to the net movements of operating assets and liabilities was attributable to ~~a decrease~~an increase in accounts receivable in the first three months of 2020, partially offset by an increase in accounts payable and ~~prepaid and~~ other ~~assets.~~accrued liabilities.

Cash Flows from Investing Activities

Cash used in investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2020 was ~~$30.5~~$66.9 million as compared to ~~$41.8~~$85.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019, a decrease of ~~$11.3~~$18.1 million. The decrease in cash used in ~~investing~~investing activities was driven by a ~~$12.3~~$33.4 million decrease in cash used for purchase of rental equipment and refurbishments and a ~~$3.7~~$5.1 million increase in proceeds from sale of property, plant and equipment, offset by ~~a $4.8~~an $11.0 million decrease in proceeds from the sale of rental equipment. Cash used for purchase ofof rental equipment and refurbishments decreased in the ~~three~~six months ended ~~March 31,~~June 30, 2020 compared to 2019 as fleet was less constrained due to reduced utilization and reduced demand for new project deliveries as a result of the COVID-19 pandemic and the current period impact of prior year spend. Proceeds from sale of rental equipment decreased compared to the prior ~~year~~year due to lower sales demand.

Cash Flows from Financing Activities

Cash ~~used in~~provided by financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2020 was ~~$5.6~~$614.7 million as compared to ~~$30.3~~$21.4 million of cash provided by financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2019, an increase of ~~$35.9~~$593.3 million. The increase is primarily due to ~~an increase in $37.1~~a decrease of $338.0 million in repayment of borrowings, a decrease in receipts from borrowings of ~~$3.5~~$243.1 million, partially offset by an increase of $4.6 million in receipts from issuance of common stock.

Free Cash Flow

Free Cash Flow is a non-GAAP measure. We define Free Cash Flow as net cash provided by operating activities, less purchases of, and proceeds from, rental equipment and property, plant and equipment, which are all included in cash flows from investing activities. Management believes that the presentation of Free Cash Flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements. The following table provides a reconciliation of net cash provided by operating activities to Free Cash Flow.

Three Months Ended
March 31,
(in thousands) 2020 2019
Net cash provided by operating activities $ 38,348 $ 15,256
Purchase of rental equipment and refurbishments $ (39,648) (51,873)
Proceeds from sale of rental equipment $ 6,786 11,601
Purchase of property, plant and equipment $ (1,518) (1,629)
Proceeds from the sale of property, plant and equipment $ 3,840 87
Free Cash Flow $ 7,808 $ (26,558)


	Six Months Ended June 30,
(in thousands)	2020		2019
Net cash provided by operating activities	$	113,727	$	60,054
Purchase of rental equipment and refurbishments	(79,682)		(113,088)
Proceeds from sale of rental equipment	12,102		23,083
Purchase of property, plant and equipment	(3,186)		(3,899)
Proceeds from the sale of property, plant and equipment	3,843		8,891
Free Cash Flow	$	46,804	$	(24,959)

Free Cash Flow for the ~~three~~six months ended ~~March 31,~~June 30, 2020 was an inflow of ~~$7.8~~$46.8 million as compared to an outflow of ~~$26.6~~$25.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019, an increase in Free Cash Flow of ~~$34.4~~$71.8 million. Free Cash Flow increased year over year principally as a result of reinvesting the ~~$23.0~~$53.6 million increase in cash provided by operating activities and ~~$12.3~~$33.4 million decrease in cash used in the purchase of rental equipment and refurbishments. The ~~$38.3~~$75.4 million in cash provided by operating activities for the three months ended June 30, 2020 was reinvested into the business to support the purchase of rental equipment, including VAPS, and refurbishments, partially offset by the proceeds from the sale of rental equipment and property, plant and equipment.

Contractual Obligations

Other than changes which occur in the normal course of business and those associated with the ~~Mobile Mini merger,~~Merger, there were no significant changes to the contractual obligations reported in our 2019 Form 10-K for the ~~three~~six months ended ~~March 31,~~June 30, 2020.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements other than ~~those associated with~~ the ~~Mobile Mini merger~~completion of the Merger 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.

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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.

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. For a complete discussion of our significant critical accounting policies, see the “Critical Accounting Policies and Estimates” section in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

There were no significant changes to our critical accounting policies during the ~~three~~six months ended ~~March 31,~~June 30, 2020.

Recently Issued Accounting Standards

Refer to Part I, Item 1, Note 1 of the notes to our financial statements included in this Quarterly Report on 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 contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Act of 1934, as amended. The words “estimates,” “expects,” “anticipates,” “believes,” “forecasts,” “plans,” “intends,” “may,” “will,” “should,” “shall,” “outlook,” “guidance” and variations of these words and similar expressions identify forward-looking statements, which are generally not historical in nature and relate to expectations for future financial performance or business strategies or objectives.

Forward-looking statements are subject to a number of risks, uncertainties, assumptions and other important factors, many of which are outside our control, which could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Although WillScot believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance that any such forward-looking statement will materialize.

Important factors that may affect actual results or outcomes include, among others:

•our ability to effectively compete in the modular space and portable storage industry;

•changes in demand within a number of key industry end-markets and geographic regions;

•the effect of economic conditions in the industries and markets in which the Company operates and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction, the impact of weather conditions and natural disasters, the impact of the global pandemic related to COVID-19 and the financial condition of the Company’s customers and suppliers;

•our ability to manage growth and execute our business plan;

•rising costs adversely affecting our profitability (including cost increases resulting from tariffs);

•effective management of our rental equipment;

•our ability to acquire and successfully integrate new operations including Mobile Mini, and achieve desired synergies;

•the effect of changes in state building codes on our ability to remarket our buildings;

•our ability to effectively manage our credit risk, collect on our accounts receivable, or recover our rental equipment;

•foreign currency exchange rate exposure;

•our reliance on third party manufacturers and suppliers;

•our ability to realize anticipated synergies from the Merger with Mobile Mini;

•risks associated with labor relations, labor costs and labor disruptions;

•failure to retain key personnel; and

•such other risks and uncertainties described in the periodic reports we file with the SEC from time to time (including our Annual Report on Form 10-K for the year ending December 31, 2019), which are available through the SEC’s EDGAR system at www.sec.gov and on our website.

Any forward-looking statement speaks only at the date which it is made, and WillScot undertakes no obligation, and disclaims any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to certain market risks from changes in foreign currency exchange rates and interest rates. Changes in these factors cause fluctuations in our earnings and cash flows. We evaluate and manage exposure to these market risks as follows:

Interest Rate Risk

We are primarily exposed to interest rate risk through our ABL Facility, which bears interest at variable rates based on LIBOR. We had $~~893.5~~865.0 million in outstanding principal under the ABL Facility at ~~March 31,~~June 30, 2020.

In order to manage this risk, Onon November 6, 2018, WSII entered into an interest rate swap agreement that effectively converts $400.0 million in aggregate notional amount of variable-rate debt under our ABL Facility into fixed-rate debt. The swap agreement provides for WillScot to pay a fixed rate of 3.06% per annum on the outstanding debt in exchange for receiving a variable interest rate based on 1-month LIBOR. The effect is a synthetically fixed rate of 5.56%on the $400.0 million notional amount, when including the current applicable margin.

An increase in interest rates by 100 basis points on our ABL Facility, inclusive of the impact of our interest rate swaps, would increase our quarter to date interest expense by approximately ~~$0.8 million.~~$1.0 million based on current outstanding borrowings.

Foreign Currency Risk

We currently generate the majority of our consolidated net revenues in the US, and the reporting currency for our consolidated financial statements is the US dollar. As our net revenues and expenses generated outside of the US increase, our results of operations could be adversely impacted by changes in foreign currency exchange rates. Since we recognize foreign revenues in local foreign currencies, if the US dollar strengthens, it could have a negative impact on our foreign revenues upon translation of those results into the US dollar for consolidation into our financial statements.

In addition, we are exposed to gains and losses resulting from fluctuations in foreign currency exchange rates on transactions generated by our foreign subsidiaries in currencies other than their local currencies. These gains and losses are primarily driven by intercompany transactions and rental equipment purchases denominated in currencies other than the functional currency of the purchasing entity. These exposures are included in currency (gains) losses, net, on the condensed consolidated statements of operations.

To date, we have not entered into any hedging arrangements with respect to foreign currency risk.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 as amended (the "Exchange Act"), as of ~~March 31,~~June 30, 2020. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~March 31,~~June 30, 2020.

Changes in Internal Controls

There were no changes in our internal control over financial reporting that occurred during our quarter ended ~~March 31,~~June 30, 2020, that materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. Legal Proceedings

As of ~~March 31,~~June 30, 2020, there were 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.

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ITEM 1A. Risk Factors

The Company’s financial position, results of operations and cash flows are subject to various risks, many of which are not exclusively within the Company’s control, which may cause actual performance to differ materially from historical or projected future performance. In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2019, and Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, which have not materially changed, except as noted ~~below.~~

~~Our operations may be adversely impacted~~below, including certain risks applicable to the Company, after giving effect to the completion of the Merger on July 1, 2020, as ~~a result of COVID-19.~~discussed in Note 2 – Acquisitions and Related Financing Transactions.

~~On March 11, 2020,~~

Fluctuations in fuel costs or oil prices, a reduction in fuel supplies, or a sustained decline in oil prices may have a material adverse effect on our business and results of operations.

In connection with our business, to better serve our customers and limit its capital expenditures, we often move our fleet from branch to branch. In addition, the ~~World Health Organization designated~~majority of our customers arrange for delivery and pickup of our units through us. Accordingly, we could be materially adversely affected by significant increases in fuel prices that result in higher costs to us for transporting equipment. In the ~~outbreak~~event of ~~COVID-19 as a global pandemic. Governments around the world have implemented quarantines~~fuel and trucking cost increases, we may not be able to promptly raise our prices to make up for increased costs. A significant ~~restrictions on travel as well as work restrictions that prohibit many employees from going to work. As millions~~or prolonged price fluctuation or disruption of ~~cases of COVID-19 have been confirmed around the world, we expect COVID-19 to interfere with general commercial activity related to our supply chain and customer base, which~~fuel supplies could have a material adverse effect on our ~~business,~~ financial condition orand results of operations. To

Additionally, oil prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors that are beyond our control. If oil prices remain volatile for an extended period of time or there is a sustained decline in demand for oil, demand for our Tank & Pump Solutions products from refineries and companies engaged in the ~~extent that COVID-19 continues~~exploration and production of oil and natural gas could be adversely impacted, which would in turn have an adverse effect on our results of operations and financial condition.

As Department of Transportation regulations change, our operations could be negatively impacted and competition for qualified drivers could increase.

We operate in the United States pursuant to operating authority granted by the U.S. Department of Transportation (the “DOT”). Our drivers must comply with the safety and fitness regulations of the DOT, including those relating to drug and alcohol testing and hours-of-service. Such matters as equipment weight and dimensions are also subject to government regulations. Our safety record could be ranked poorly compared to its peer firms. A poor safety ranking may result in the loss of customers or ~~worsens, governments may impose~~difficulty attracting and retaining qualified drivers which could affect our results of operations. Should additional ~~restrictions or additional governments may impose restrictions. COVID-19 and those restrictions~~rules be enacted in the future, compliance with such rules could result in additional ~~businesses being shut down, additional work restrictions and supply chains being interrupted, slowed, or rendered inoperable. As~~costs.

Our customer base includes customers operating in a variety of industries which may be subject to changes in their competitive environment as a result ~~it may be challenging~~of the global, national or local economic climate in which they operate and/or economic or financial disruptions to ~~obtain~~their industry.

Our customer base includes customers operating in a variety of industries, including commercial and ~~process raw materials~~industrial, construction, education, energy and natural resources, government, retail and other end markets. Many of these customers, across this wide range of industries, are facing economic and/or financial pressure from changes to ~~support our business needs, we may need~~their industry resulting from the global, national and local economic climate in which they operate and industry-specific economic and financial disruptions, including, in some cases, consolidation and lower sales revenue from physical locations, resulting from the impact of the COVID-19 pandemic and the related changes in political, social and economic conditions. These and any future changes to ~~recognize material charges in future periods for impairments~~any of our rental equipment, property, plant, and equipment and/or intangible assets, and employees, suppliers or customers could become ill, quarantined or otherwise unable to work and/or travel due to health reasons or governmental restrictions. The COVID-19 global pandemic has affected, and may continue to affect, our industry and the industries in which our customers ~~operate. There~~operate could cause them to rent fewer units from us or otherwise be unable to satisfy their obligations to us. In addition, certain of our customers are facing financial pressure and such pressure, from COVID-19 or other factors, may result in consolidation in some industries and/or an increase in bankruptcy filings by certain customers. Each of these facts and industry impacts, individually or in the aggregate, could have a materially adverse effect on our operating results.

We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business.

Our ability to compete effectively depends in part upon protection of our rights in trademarks, copyrights and other intellectual property rights we own or license, including patents to the Mobile Mini locking system. Our use of contractual provisions, confidentiality procedures and agreements, and trademark, copyright, unfair competition, trade secret and other laws to protect our intellectual property and other proprietary rights may not be adequate. Litigation may be ~~an adverse impact on~~necessary to enforce our ~~customer demand for~~intellectual property rights and protect our ~~rentals,~~proprietary information and patents, or to defend against claims by third parties that our services or our use of intellectual property infringe their intellectual property rights. Any litigation or claims brought by or against us could result in ~~particular in industries that are currently shut down~~substantial costs and ~~for special events.We also, have been, and will be adversely impacted by project delays, early returns~~diversion of ~~equipment currently on rent with customers and payment delay,~~its resources. A successful claim of trademark, copyright or ~~non-payment, by customers who are significantly impacted by COVID-19. If our customers' businesses continue to be affected, they might delay or reduce purchases~~other intellectual property infringement against us could prevent us from ~~or payments to us,~~providing services, which could ~~adversely affect our results of~~harm our business, financial condition or results of operations.

In addition, ~~increased volatility~~a breakdown in our internal policies and ~~diminished expectations for the global economy, coupled with the prospect~~procedures may lead to an unintentional disclosure of ~~decreased business and consumer confidence and increased unemployment resulting from the COVID-19 pandemic, may precipitate an economic slowdown and recession. If the economic climate deteriorates,~~ our ~~ability to continue to grow~~proprietary, confidential or material non-public information, which could in turn harm our business organically or through additional acquisitions and integration of acquired businesses, as well as the financial condition of customers, suppliers and lenders, could be adversely affected, resulting in a negative impact on the business, financial condition or results of ~~operations~~operations.

Our largest stockholder may have the ability to influence our business and ~~cash flows~~matters requiring approval by our stockholders.

Sapphire Holding S.à r.l. (“Sapphire Holding”), which is controlled by TDR Capital LLP (“TDR Capital”), beneficially owns approximately 26% of ~~each~~the issued and outstanding shares of our ~~company. Additionally, concerns over~~Common Stock and warrants giving it the ~~economic impact~~right to buy 2,425,000 additional shares of our Common Stock. Pursuant to a stockholders agreement entered into on July 1, 2020, by and among us and TDR Capital and certain of its affiliates, including Sapphire Holding, TDR Capital has the right to nominate two directors to our board of directors, for so long as TDR Capital beneficially owns at least 15% of our Common Stock and one director for so long as TDR Capital beneficially owns at least 5% of our Common Stock. Two directors nominated by Sapphire Holding currently serve on our board of directors. Sapphire Holding may have the ability to influence matters requiring approval by our stockholders, including the election and removal of directors, amendments to our certificate of incorporation and bylaws, any proposed merger, consolidation or sale of all or substantially all of our assets and certain other corporate transactions. Sapphire Holding may have interests that are different from those of other stockholders.

In August 2018, Sapphire Holding pledged all of the ~~COVID-19 pandemic have caused extreme volatility~~shares of WillScot’s Class A Common Stock that it owned as security for a margin loan under which Sapphire Holding borrowed $125.0 million. An event of default under the margin loan could result in ~~financial~~the foreclosure on the pledged securities and ~~capital markets, which has adversely impacted and may materially adversely impact our stock price and our ability to access capital markets.~~

~~The potential effects of COVID-19 also could impact many~~another stockholder beneficially owning a significant amount of our ~~risk factors, discussed in Item 1A. of our Annual Report~~Common Stock. The margin loan matures on ~~Form 10-K for~~August 23, 2020, and there can be no assurance that Sapphire will be able to extend, repay or refinance the ~~year ended December 31, 2019 and in certain of our current and periodic reports filed with the SEC, including, but not limited~~loan on terms acceptable to ~~our exposure to operational, economic, political and regulator risks; risks related to global~~it or local economic movements; changes in trade policies; and, labor disruptions. However, given the evolving health, economic, social, and governmental environments, the potential impact that COVID-19 could have on our risk factors that are further described in our 2019 Form 10-K and in certain of our current and periodic reports filed with the SEC, remains uncertain.at all.

ITEM 2. Unregistered Sales of Equity Securities

~~None.~~On June 30, 2020, as contemplated by the Merger Agreement, and pursuant to the terms of an exercise notice delivered by Sapphire Holdings to WillScot, Sapphire Holdings exchanged each of its shares of common stock, par value $0.0001, of Holdings, pursuant to that certain existing exchange agreement, between WillScot and Sapphire Holdings, for 1.3261 shares of newly issued Class A Common Stock (the “Sapphire Exchange”). As a result of the Sapphire Exchange, all issued and outstanding shares of WillScot’s Class B common stock, par value $0.0001 per share (the “Class B Common Stock”), were automatically canceled for no consideration and the existing exchange agreement was automatically terminated. As a result of the Sapphire Exchange, Holdings became a wholly-owned subsidiary of WillScot. Sapphire Holdings received 10,641,182 shares of Class A Common Stock in the Sapphire Exchange (the “Exchange Shares”). The Exchange Shares were issued in reliance on an exemption from the registration requirements of the Securities Act, by virtue of Section 4(a)(2) and/or other exemptions therefrom, as promulgated by the SEC under the Securities Act.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

ITEM 6. Exhibits


Exhibit No.		Exhibit Description
2.1	*	Agreement and Plan of Merger, dated as of March 1, 2020, by and among WillScot Corporation, Picasso Merger Sub, Inc. and Mobile Mini, Inc. (incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K, filed March 5, 2020).
~~10.1~~2.2		~~Employment~~Amendment to Agreement and Plan of Merger, dated as of ~~March 1,~~May 28, 2020, by and ~~between~~among WillScot Corporation, Picasso Merger Sub, Inc. and ~~Bradley Soultz~~Mobile Mini, Inc. (incorporated by reference to Exhibit ~~10.1~~2.1 of the Company's Current Report on Form 8-K, filed ~~March 5,~~June 2, 2020).
~~10.2~~3.1(a)		~~Employment~~Amendment to Agreement and Plan of Merger, dated as of ~~March 1,~~May 28, 2020, by and ~~between~~among WillScot Corporation, Picasso Merger Sub, Inc. and ~~Kelly Williams~~Mobile Mini, Inc. (incorporated by reference to Exhibit ~~10.2~~2.1 of the Company's Current Report on Form 8-K, filed ~~March 5,~~June 2, 2020).
~~10.3~~3.1(b)		~~Employment Agreement, dated as~~Amended and Restated Certificate of ~~March 1, 2020, by and between~~Incorporation of WillScot ~~Corporation and Timothy Boswell~~Mobile Mini Holdings Corp. (incorporated by reference to Exhibit ~~10.3~~3.1(b) of the Company's Current Report on Form 8-K, filed ~~March 5,~~July 1, 2020).
~~10.4~~3.2		~~Employment Agreement, dated as~~Amended and Restated Bylaws of ~~March 1, 2020, by and between~~ WillScot ~~Corporation and Christopher Miner~~Mobile Mini Holdings Corp. (incorporated by reference to Exhibit ~~10.4~~3.2 of the Company's Current Report on Form 8-K, filed ~~March 5,~~July 1, 2020).
~~10.5~~4.1		~~Employment Agreement,~~Indenture, dated as of ~~March 1,~~June 15, 2020, by and between ~~WillScot Corporation~~Picasso Finance Sub, Inc., and ~~Hezron Lopez~~Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit ~~10.5~~4.1 of the Company's Current Report on Form 8-K, filed ~~March 5,~~June 16, 2020).
~~10.6~~4.2		Supplemental Indenture, dated July 1, 2020, to the Indenture dated June 15, 2020, by and among Williams Scotsman International, Inc. (“WSII”) (as successor to Picasso Finance Sub, Inc.), the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K, filed July 1, 2020).
~~Second~~4.3		Supplemental Indenture, dated July 1, 2020, to the Indenture dated August 6, 2018, as supplemented by the First Supplemental Indenture dated August 15, 2018, by and among WSII (as successor to Mason Finance Sub, Inc.), the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K, filed July 1, 2020).
10.1		Sixth Amended and Restated Commitment Letter, dated as of May 5,26, 2020, by and among WillScot Corporation, Bank of America, N.A., BofA Securities, Inc., Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., ING Capital LLC, BBVA USA, Bank of the West, PNC Bank, National Association, PNC Capital Markets LLC, MUFG Union Bank, N.A., Bank of Montreal, BMO Capital Markets Corp. and ~~BBVA Securities Inc.~~M&T Bank
10.2		Shareholders Agreement, dated July 1, 2020, by and among WillScot Mobile Mini Holdings Corp., Sapphire Holdings, S.á r.l., TDR Capital Holdings L.P. and TDR Capital LLP (incorporated by reference to Exhibit 1.1 of the Company's Current Report on Form 8-K, filed July 1, 2020).
10.3		ABL Credit Agreement, dated July 1, 2020, by and among Williams Scotsman Holdings Corp., WSII, the guarantors party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed July 1, 2020).
10.4		WillScot Mobile Mini Holdings Corp. 2020 Incentive Award Plan (incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K, filed July 1, 2020).
10.5		Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K, filed July 1, 2020).
10.6		Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.4 of the Company's Current Report on Form 8-K, filed July 1, 2020).
10.7		Form of Performance-Based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.5 of the Company's Current Report on Form 8-K, filed July 1, 2020).
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
101.INS		XBRL 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.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*Filed herewith

**Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange Act

3753

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

By:

/s/ TIMOTHY D. BOSWELL

Dated:

~~May 6,~~August 10, 2020

Timothy D. Boswell

Chief Financial Officer (Principal Financial Officer)

3854


	(in thousands)
2020	$	28,505
2021	35,174
2022	29,103
2023	23,264
2024	18,202
Thereafter	51,725
Total lease payments	185,973
Less: interest	(37,429)
Present value of lease liabilities	$	148,544