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 | |||||
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: | |||||
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) | |||||||
(Address, including zip code, of principal executive offices)
(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 | ||||||
The | ||||||||
| OTC Markets Group Inc. | ||||||||
(1) Issued in connection with the registrant's acquisition of Modular Space Holding, Inc. in August 2018, which are exercisable for one share of the registrant's common stock at an exercise price of $15.50 per share.
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.
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 Common Stock, par value $0.0001 per share, outstanding: 222,521,576 shares at April 25, 2022.
WILLSCOT MOBILE MINI HOLDINGS CORP.
Quarterly Report on Form 10-Q
Table of Contents
PART I Financial Information | |||||||||||
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 2021 | |||||||||||
2
ITEM 1. Financial Statements
WillScot Mobile Mini Holdings Corp.
Condensed Consolidated Balance Sheets
| (in thousands, except share data) | March 31, 2022 (unaudited) | December 31, 2021 | |||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Trade receivables, net of allowances for credit losses at March 31, 2022 and December 31, 2021 of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Assets held for sale | |||||||||||
| Total current assets | |||||||||||
| Rental equipment, net | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease assets | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other non-current assets | |||||||||||
| Total long-term assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and equity | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses | |||||||||||
| Accrued employee benefits | |||||||||||
| Deferred revenue and customer deposits | |||||||||||
| Operating lease liabilities - current | |||||||||||
| Current portion of long-term debt | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred tax liabilities | |||||||||||
| Operating lease liabilities - non-current | |||||||||||
| Other non-current liabilities | |||||||||||
| Long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (see Note 16) | |||||||||||
Preferred Stock: $ | |||||||||||
Common Stock: $ | |||||||||||
| Additional paid-in-capital | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total shareholders' equity | |||||||||||
| Total liabilities and shareholders' equity | $ | $ | |||||||||
See the accompanying notes which are an integral part of these condensed consolidated financial statements.
3
WillScot Mobile Mini Holdings Corp.
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended March 31, | |||||||||||
(in thousands, except share and per share data) | 2022 | 2021 | |||||||||
| Revenues: | |||||||||||
| Leasing and services revenue: | |||||||||||
| Leasing | $ | $ | |||||||||
| Delivery and installation | |||||||||||
| Sales revenue: | |||||||||||
| New units | |||||||||||
| Rental units | |||||||||||
| Total revenues | |||||||||||
| Costs: | |||||||||||
| Costs of leasing and services: | |||||||||||
| Leasing | |||||||||||
| Delivery and installation | |||||||||||
| Costs of sales: | |||||||||||
| New units | |||||||||||
| Rental units | |||||||||||
| Depreciation of rental equipment | |||||||||||
| Gross profit | |||||||||||
| Expenses: | |||||||||||
| Selling, general and administrative | |||||||||||
| Other depreciation and amortization | |||||||||||
| Lease impairment expense and other related charges | |||||||||||
| Restructuring costs | |||||||||||
| Currency losses, net | |||||||||||
| Other income, net | ( | ( | |||||||||
| Operating income | |||||||||||
| Interest expense | |||||||||||
| Fair value loss on common stock warrant liabilities | |||||||||||
| Loss on extinguishment of debt | |||||||||||
| Income before income tax | |||||||||||
| Income tax expense | |||||||||||
| Net income | $ | $ | |||||||||
| Earnings per share: | |||||||||||
| Basic | $ | $ | |||||||||
| Diluted | $ | $ | |||||||||
| Weighted average shares: | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
See the accompanying notes which are an integral part of these condensed consolidated financial statements.
4
WillScot Mobile Mini Holdings Corp.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
| Three Months Ended March 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
| Net income | $ | $ | |||||||||
| Other comprehensive (loss) income: | |||||||||||
Foreign currency translation adjustment, net of income tax expense of $ | ( | ||||||||||
Net gain on derivatives, net of income tax expense of $ | |||||||||||
| Total other comprehensive (loss) income | ( | ||||||||||
| Total comprehensive income | $ | $ | |||||||||
See the accompanying notes which are an integral part of these condensed consolidated financial statements.
5
WillScot Mobile Mini Holdings Corp.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended March 31, 2022 | ||||||||||||||||||||
| Common Stock | Additional Paid-in-Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Shareholders' Equity | ||||||||||||||||
| (in thousands) | Shares | Amount | ||||||||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||
| Net income | — | — | — | — | ||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | ( | ||||||||||||||
| Stock-based compensation and issuance of Common Stock from vesting | — | — | — | |||||||||||||||||
| Repurchase and cancellation of Common Stock and warrants | ( | — | ( | — | — | ( | ||||||||||||||
| Issuance of Common Stock from the exercise of options and warrants | — | — | — | |||||||||||||||||
| Withholding taxes on net share settlement of stock-based compensation | — | — | ( | — | — | ( | ||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||
| Three Months Ended March 31, 2021 | ||||||||||||||||||||
| Common Stock | Additional Paid-in-Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Shareholders' Equity | ||||||||||||||||
| (in thousands) | Shares | Amount | ||||||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||
| Net income | — | — | — | — | ||||||||||||||||
| Other comprehensive income | — | — | — | — | ||||||||||||||||
| Stock-based compensation and issuance of Common Stock from vesting | — | — | — | |||||||||||||||||
| Repurchase and cancellation of Common Stock and warrants | ( | — | ( | — | — | ( | ||||||||||||||
| Issuance of Common Stock from the exercise of options and warrants | — | — | — | |||||||||||||||||
| Withholding taxes on net share settlement of stock-based compensation | — | — | ( | — | — | ( | ||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||
See the accompanying notes which are an integral part of these condensed consolidated financial statements.
6
WillScot Mobile Mini Holdings Corp.
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Three Months Ended March 31, | |||||||||||
(in thousands) | 2022 | 2021 | |||||||||
| Operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Provision for credit losses | |||||||||||
| Gain on sale of rental equipment and other property, plant and equipment | ( | ( | |||||||||
| Amortization of debt discounts and debt issuance costs | |||||||||||
| Fair value loss on common stock warrant liabilities | |||||||||||
| Loss on extinguishment of debt | |||||||||||
| Stock-based compensation expense | |||||||||||
| Deferred income tax expense | |||||||||||
| Unrealized currency losses (gains), net | ( | ||||||||||
| Other | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Trade receivables | ( | ||||||||||
| Inventories | ( | ( | |||||||||
| Prepaid expenses and other assets | ( | ||||||||||
| Operating lease assets and liabilities | |||||||||||
| Accounts payable and other accrued expenses | ( | ( | |||||||||
| Deferred revenue and customer deposits | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Investing activities: | |||||||||||
| Acquisition | ( | ||||||||||
| Proceeds from sale of rental equipment | |||||||||||
| Purchase of rental equipment and refurbishments | ( | ( | |||||||||
| Proceeds from sale of property, plant and equipment | |||||||||||
| Purchase of property, plant and equipment | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Financing activities: | |||||||||||
| Receipts from issuance of Common Stock from the exercise of options | |||||||||||
| Repurchase and cancellation of Common Stock and warrants | ( | ( | |||||||||
| Receipts from borrowings | |||||||||||
| Repayment of borrowings | ( | ( | |||||||||
| Payment of debt extinguishment premium costs | ( | ||||||||||
| Principal payments on finance lease obligations | ( | ( | |||||||||
| Taxes paid on employee stock awards | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
| Net change in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents at the beginning of the period | |||||||||||
| Cash and cash equivalents at the end of the period | $ | $ | |||||||||
| Supplemental cash flow information: | |||||||||||
Interest paid 1 | $ | $ | |||||||||
| Income taxes paid, net | $ | $ | |||||||||
| Capital expenditures accrued or payable | $ | $ | |||||||||
1 Includes $2,961 of payments related to the interest rate swap for the three months ended March 31, 2021.
See the accompanying notes which are an integral part of these condensed consolidated financial statements.
7
WillScot Mobile Mini Holdings Corp.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
NOTE 1 - Summary of Significant Accounting Policies
Organization and Nature of Operations
WillScot Mobile Mini Holdings Corp. (“WillScot Mobile Mini” and, together with its subsidiaries, the “Company”) is a leading business services provider specializing in innovative flexible work space and portable storage solutions in the United States (“US”), Canada, Mexico and the United Kingdom ("UK"). The Company also maintains a fleet of specialty containment products, including liquid and solid containment solutions. The Company leases, sells, delivers and installs mobile solutions and storage products through an integrated network of branch locations that spans North America and the UK.
Basis of Presentation and Principles of Consolidation
The results of operations for the three months ended March 31, 2022 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 the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
Reclassifications
Certain reclassifications have been made to prior year financial statements to conform to the current year presentation.
Recently Issued Accounting Standards
In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This update was intended to ease the potential burden in accounting for and recognizing the effects of reference rate reform. It provided optional practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. This update became effective on March 12, 2020 and is available for use through December 31, 2022. The Company is currently evaluating the impact of reference rate reform and the potential impact of adoption of these elective practical expedients on its condensed consolidated financial statements and does not expect the impact to be material.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). ASU 2021-08 requires that an acquirer recognize and measure contract assets and liabilities acquired in a business combination in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606"). ASU 2021-08 is effective for annual periods beginning after December 15, 2022, including interim periods therein, with early adoption permitted. The guidance will be applied prospectively to acquisitions occurring on or after the effective date. The Company will continue to evaluate the impact of this guidance, which will depend on the contract assets and liabilities acquired in future business combinations.
NOTE 2 - Acquisitions
On July 1, 2020, WillScot Corporation, a Delaware corporation (“WillScot”), and Mobile Mini, Inc. (“Mobile Mini”) merged (the “Merger”). Immediately following the Merger, WillScot changed its name to “WillScot Mobile Mini Holdings Corp.”
Asset Acquisition
On March 18, 2022, the Company acquired certain assets and liabilities, which consisted primarily of approximately 400 blast resistant modular units.
Integration Costs
The Company recorded $4.1 million and $7.3 million in integration costs related to acquisitions and the Merger within selling, general and administrative ("SG&A") expense during the three months ended March 31, 2022 and 2021, respectively.
8
NOTE 3 - Revenue
Revenue Disaggregation
Geographic Areas
The Company had total revenue in the following geographic areas for the three months ended March 31, as follows:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2022 | 2021 | |||||||||
| US | $ | $ | |||||||||
| Canada | |||||||||||
| Mexico | |||||||||||
| UK | |||||||||||
| Total revenues | $ | $ | |||||||||
Major Product and Service Lines
Equipment leasing is the Company's core business and the primary driver of the Company's revenue and cash flows. This includes rental modular space, portable space and tank and pump units along with value-added products and services ("VAPS"), which include furniture, steps, ramps, basic appliances, internet connectivity devices, and other items used by customers in connection with the Company's products. Leasing is complemented by new unit sales and sales of rental units. In connection with its leasing and sales activities, the Company provides services including delivery and installation, maintenance and ad hoc services and removal services at the end of lease transactions. The Company’s revenue by major product and service line for the three months ended March 31, was as follows:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2022 | 2021 | |||||||||
| Modular space leasing revenue | $ | $ | |||||||||
| Portable storage leasing revenue | |||||||||||
| Tank and pump leasing revenue | |||||||||||
VAPS and third party leasing revenues(a) | |||||||||||
Other leasing-related revenue(b) | |||||||||||
| Leasing revenue | |||||||||||
| Delivery and installation revenue | |||||||||||
| Total leasing and services revenue | |||||||||||
| New unit sales revenue | |||||||||||
| Rental unit sales revenue | |||||||||||
| Total revenues | $ | $ | |||||||||
| (a) | Includes $ | ||||
| (b) | Includes primarily damage billings, delinquent payment charges, and other processing fees. | ||||
Leasing and Services Revenue
The majority of revenue (76 % and 73 % for the three months ended March 31, 2022 and 2021, respectively) was generated by rental income subject to the guidance of ASU 2018-11, Leases (Topic 842) ("ASC 842"). The remaining revenue was generated by performance obligations in contracts with customers for services or sale of units subject to the guidance in ASC 606.
Receivables and Credit Losses
The Company manages credit risk associated with its accounts receivables at the customer level. Because the same customers generate the revenues that are accounted for under both ASC 606 and ASC 842, the discussions below on credit risk and the Company's allowance for credit losses address the Company's total revenues. Concentration of credit risk with respect to the Company's receivables is limited because of a large number of geographically diverse customers who operate in a variety of end user markets.
The Company is exposed to credit losses from trade receivables. The Company assesses each customer’s ability to pay for the products it leases or sells by conducting a credit review. The credit review considers expected billing exposure and
9
timing for payment and the customer’s established credit rating. The Company performs its credit review of new customers at inception of the customer relationship and for existing customers when the customer transacts after a defined period of dormancy. The Company also considers contract terms and conditions, country risk and business strategy in the evaluation.
The Company monitors ongoing credit exposure through an active review of customer balances against contract terms and due dates. The Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. The allowance for credit losses reflects the estimate of the amount of receivables that the Company will be unable to collect based on historical collection experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. The Company's estimate reflects changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, the Company may be required to increase or decrease its allowance.
Activity in the allowance for credit losses was as follows:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2022 | 2021 | |||||||||
| Balance at beginning of period | $ | $ | |||||||||
| Provision for credit losses, net of recoveries | |||||||||||
| Write-offs | ( | ( | |||||||||
| Foreign currency translation and other | ( | ||||||||||
| Balance at end of period | $ | $ | |||||||||
Contract Assets and Liabilities
When customers are billed in advance for services, the Company defers recognition of revenue until the related services are performed, which generally occurs at the end of the contract. The balance sheet classification of deferred revenue is determined based on the contractual lease term. For contracts that continue beyond their initial contractual lease term, revenue continues to be deferred until the services are performed. During the three months ended March 31, 2022, $20.3 million of deferred revenue relating to these services was recognized as revenue. As of March 31, 2022 and December 31, 2021, the Company had approximately $84.4 million and $79.4 million, respectively, of deferred revenue related to these services.
The Company does not have material contract assets and it did not recognize any material impairments of 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 expedient to omit disclosure of such amounts.
The primary costs to obtain contracts for new and rental unit sales with the Company's customers are commissions. The Company pays its sales force commissions on the sale of new and rental units. For new and rental unit sales, the period benefited by each commission is less than one year; therefore, the commissions are expensed as incurred.
NOTE 4 - Leases
As of March 31, 2022, the undiscounted future lease payments for operating and finance lease liabilities were as follows:
| (in thousands) | Operating | Finance | |||||||||
| 2022 (remaining) | $ | $ | |||||||||
| 2023 | |||||||||||
| 2024 | |||||||||||
| 2025 | |||||||||||
| 2026 | |||||||||||
| Thereafter | |||||||||||
| Total lease payments | |||||||||||
| Less: interest | ( | ( | |||||||||
| $ | $ | ||||||||||
10
Finance lease liabilities are included within long-term debt and current portion of long-term debt on the condensed consolidated balance sheets.
The Company’s lease activity during the three months ended March 31, 2022 and 2021 was as follows:
| (in thousands) | Three Months Ended March 31, | ||||||||||
| Financial Statement Line | 2022 | 2021 | |||||||||
| Finance Lease Expense | |||||||||||
| Amortization of finance lease assets | $ | $ | |||||||||
| Interest on obligations under finance leases | |||||||||||
| Total finance lease expense | $ | $ | |||||||||
| Operating Lease Expense | |||||||||||
| Fixed lease expense | |||||||||||
| Cost of leasing and services | $ | $ | |||||||||
| Selling, general and administrative | |||||||||||
| Lease impairment expense and other related charges | |||||||||||
| Short-term lease expense | |||||||||||
| Cost of leasing and services | |||||||||||
| Selling, general and administrative | |||||||||||
| Variable lease expense | |||||||||||
| Cost of leasing and services | |||||||||||
| Selling, general and administrative | |||||||||||
| Lease impairment expense and other related charges | |||||||||||
| Total operating lease expense | $ | $ | |||||||||
Lease impairment expense and other related charges relate to closed locations that are no longer used in operations as a result of consolidation activities within the Company. During the three months ended March 31, 2022, the Company recorded $0.3 million in lease impairment expense and other related charges which is comprised of closed location rent expense. During the three months ended March 31, 2021, the Company recorded $1.3 million in lease impairment expense and other related charges which is comprised of $0.5 million loss on lease exit and impairment charges and $0.8 million in closed location rent expense.
Supplemental cash flow information related to leases for the three months ended March 31, 2022 and 2021 was as follows:
| (in thousands) | Three Months Ended March 31, | ||||||||||
| Supplemental Cash Flow Information | 2022 | 2021 | |||||||||
| Cash paid for the amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash outflows from operating leases | $ | $ | |||||||||
| Operating cash outflows from finance leases | $ | $ | |||||||||
| Financing cash outflows from finance leases | $ | $ | |||||||||
| Right of use assets obtained in exchange for lease obligations | $ | $ | |||||||||
| Assets obtained in exchange for finance leases | $ | $ | |||||||||
11
Weighted-average remaining operating lease terms and the weighted average discount rates as of March 31, 2022 and December 31, 2021 were as follows:
| Lease Terms and Discount Rates | March 31, 2022 | December 31, 2021 | |||||||||
| Weighted-average remaining lease term - operating leases | |||||||||||
| Weighted-average discount rate - operating leases | % | % | |||||||||
| Weighted-average remaining lease term - finance leases | |||||||||||
| Weighted-average discount rate - finance leases | % | % | |||||||||
NOTE 5 - Inventories
Inventories at the respective balance sheet dates consisted of the following:
(in thousands) | March 31, 2022 | December 31, 2021 | |||||||||
| Raw materials | $ | $ | |||||||||
| Finished units | |||||||||||
| Inventories | $ | $ | |||||||||
NOTE 6 - Rental Equipment, net
Rental equipment, net at the respective balance sheet dates consisted of the following:
(in thousands) | March 31, 2022 | December 31, 2021 | |||||||||
| Modular space units | $ | $ | |||||||||
| Portable storage units | |||||||||||
| Tank and pump products | |||||||||||
| Value added products | |||||||||||
| Total rental equipment | |||||||||||
| Less: accumulated depreciation | ( | ( | |||||||||
| Rental equipment, net | $ | $ | |||||||||
NOTE 7 - Goodwill
Changes in the carrying amount of goodwill were as follows:
| (in thousands) | NA Modular | NA Storage | UK Storage | Tank and Pump | Total | ||||||||||||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Changes to Mobile Mini purchase accounting | ( | ( | |||||||||||||||||||||||||||
| Effects of movements in foreign exchange rates | ( | ( | ( | ||||||||||||||||||||||||||
| Balance at December 31, 2021 | |||||||||||||||||||||||||||||
| Effects of movements in foreign exchange rates | ( | ( | ( | ||||||||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
12
NOTE 8 - Intangibles
Intangible assets other than goodwill at the respective balance sheet dates consisted of the following:
| March 31, 2022 | |||||||||||||||||||||||
| (in thousands) | Weighted average remaining life (in years) | Gross carrying amount | Accumulated amortization | Net book value | |||||||||||||||||||
| Intangible assets subject to amortization: | |||||||||||||||||||||||
Mobile Mini customer relationships | $ | $ | ( | $ | |||||||||||||||||||
| Technology | ( | ||||||||||||||||||||||
| Indefinite-lived intangible assets: | |||||||||||||||||||||||
| Trade name - Mobile Mini | — | ||||||||||||||||||||||
| Trade name - WillScot | — | ||||||||||||||||||||||
| Total intangible assets other than goodwill | $ | $ | ( | $ | |||||||||||||||||||
| December 31, 2021 | |||||||||||||||||||||||
| (in thousands) | Weighted average remaining life (in years) | Gross carrying amount | Accumulated amortization | Net book value | |||||||||||||||||||
| Intangible assets subject to amortization: | |||||||||||||||||||||||
Mobile Mini customer relationships | $ | $ | ( | $ | |||||||||||||||||||
| Technology | ( | ||||||||||||||||||||||
| Indefinite-lived intangible assets: | |||||||||||||||||||||||
| Trade name - Mobile Mini | — | ||||||||||||||||||||||
| Trade name - WillScot | — | ||||||||||||||||||||||
| Total intangible assets other than goodwill | $ | $ | ( | $ | |||||||||||||||||||
Amortization expense related to intangible assets was $6.6 million and $7.0 million for the three months ended March 31, 2022 and 2021, respectively.
Based on the carrying value at March 31, 2022, future amortization of intangible assets is expected to be as follows for the years ended December 31:
| (in thousands) | |||||
| 2022 (remaining) | $ | ||||
| 2023 | |||||
| 2024 | |||||
| 2025 | |||||
| 2026 | |||||
| Thereafter | |||||
| Total | $ | ||||
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NOTE 9 - Debt
The carrying value of debt outstanding at the respective balance sheet dates consisted of the following:
| (in thousands, except rates) | Interest rate | Year of maturity | March 31, 2022 | December 31, 2021 | |||||||||||||||||||
| 2025 Secured Notes | 2025 | $ | $ | ||||||||||||||||||||
ABL Facility(a) | Varies | 2025 | |||||||||||||||||||||
| 2028 Secured Notes | 2028 | ||||||||||||||||||||||
| Finance Leases | Varies | Varies | |||||||||||||||||||||
| Total debt | |||||||||||||||||||||||
| Less: current portion of long-term debt | |||||||||||||||||||||||
| Total long-term debt | $ | $ | |||||||||||||||||||||
(a) As of both March 31, 2022 and December 31, 2021, the Company had no 5.7 million and $6.2 million, respectively, of related debt issuance costs. No related debt issuance costs were recorded as a direct offset against the principal borrowings on the Multicurrency Facility, and the $5.7 million and $6.2 million in excess of principal was included in other non-current assets on the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively.
Asset Backed Lending Facility
On July 1, 2020, certain subsidiaries of the Company entered into an asset-based credit agreement that provides for revolving credit facilities in the aggregate principal amount of up to $2.4 billion, consisting of: (i) a senior secured asset-based US dollar revolving credit facility in the aggregate principal amount of $2.0 billion (the “US Facility”) and (ii) a $400.0 million senior secured asset-based multicurrency revolving credit facility (the "Multicurrency Facility" together with the US Facility, the “ABL Facility”), available to be drawn in US Dollars, Canadian Dollars, British Pounds Sterling or Euros. The ABL Facility matures July 1, 2025.
Borrowings under the ABL Facility bear interest at a base rate plus an applicable margin determined quarterly by reference to the Company's excess availability for the most recently completed quarter. Effective January 7, 2022, borrowings under the ABL Facility are subject to the highest applicable margin and bear interest at (i) in the case of US Dollars, at the borrower's option, either an adjusted LIBOR rate plus 2.125 % or an alternative base rate plus 1.125 %, (ii) in the case of Canadian Dollars, at the borrower's option, either a Canadian BA rate plus 2.125 % or Canadian prime rate plus 1.125 %, (iii) in the case of Euros, the EURIBOR rate plus 2.125 %, and (iv) in the case of British Pounds Sterling, the SONIA rate plus 2.125 %.
At March 31, 2022, the weighted average interest rate for borrowings under the ABL Facility was 2.54 %. The weighted average interest rate on the balance outstanding at March 31, 2022, as adjusted for the effects of the interest rate swap agreements was 3.16 %. Refer to Note 15 for a more detailed discussion on interest rate management.
Borrowing availability under the US Facility and the Multicurrency Facility is equal to the lesser of (i) the aggregate Revolver Commitments and (ii) the Line Cap. At March 31, 2022, the Line Cap was $2.4 billion and the Company had $646.9 million of available borrowing capacity under the ABL Facility, including $246.9 million under the US Facility and $400.0 million under the Multicurrency Facility. At March 31, 2022, borrowing capacity under the ABL Facility allowed for up to $204.9 million of letters of credit and up to $170.0 million of swingline loans. At March 31, 2022, letters of credit and bank guarantees carried fees of 2.25 %. The Company had issued $15.1 million of standby letters of credit under the ABL Facility at March 31, 2022.
The Company had $1.7 billion outstanding principal under the ABL Facility at March 31, 2022. Debt issuance costs of $29.5 million were included in the carrying value of the ABL Facility at March 31, 2022.
Finance Leases
The Company maintains finance leases primarily related to transportation equipment. At March 31, 2022 and December 31, 2021, obligations under finance leases for certain real property and transportation related equipment were $90.7 million and $89.1 million, respectively. Refer to Note 4 for further information.
The Company is in compliance with all debt covenants and restrictions for the aforementioned debt instruments as of March 31, 2022.
NOTE 10 – Equity
Common Stock
In connection with the stock compensation vesting events and stock option exercises described in Note 14, and the warrant exercises described in Note 11, the Company issued 1,298,799 shares of Common Stock during the three months ended March 31, 2022.
14
Stock Repurchase Program
A share repurchase program authorizes the Company to repurchase up to $1.0 billion of its outstanding shares of Common Stock and equivalents. The stock repurchase program does not obligate the Company to purchase any particular number of shares, and the timing and exact amount of any repurchases will depend on various factors, including market pricing and conditions, business, legal, accounting, and other considerations. During the three months ended March 31, 2022, the Company repurchased 2,070,054 shares of Common Stock and stock equivalents for $77.4 million. As of March 31, 2022, $879.3 million of the approved repurchase pool remained available.
Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive income (loss) ("AOCI"), net of tax, for the three months ended March 31, 2022 and 2021 were as follows:
| Three Months Ended March 31, 2022 | |||||||||||||||||
| (in thousands) | Foreign currency translation | Unrealized losses on hedging activities | Total | ||||||||||||||
| Balance at December 31, 2021 | $ | ( | $ | ( | $ | ( | |||||||||||
| Other comprehensive loss before reclassifications | ( | ( | ( | ||||||||||||||
| Reclassifications from AOCI to income | |||||||||||||||||
| Balance at March 31, 2022 | $ | ( | $ | ( | $ | ( | |||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||
| (in thousands) | Foreign currency translation | Unrealized losses on hedging activities | Total | ||||||||||||||
| Balance at December 31, 2020 | $ | ( | $ | ( | $ | ( | |||||||||||
| Other comprehensive loss before reclassifications | ( | ||||||||||||||||
| Reclassifications from AOCI to income | |||||||||||||||||
| Balance at March 31, 2021 | $ | ( | $ | ( | $ | ( | |||||||||||
For both the three months ended March 31, 2022 and 2021, $2.9 0.7
NOTE 11 – Warrants
2015 Warrants
WillScot was incorporated under the name Double Eagle Acquisition Corporation ("DEAC") on June 26, 2015. As part of its initial public offering, DEAC issued warrants (the “2015 Public Warrants”) each of which entitled the holder to purchase one-half of one share of Common Stock. As of March 31, 2022, no 2015 Public Warrants remain outstanding.
DEAC also issued warrants to purchase its Common Stock in a private placement concurrently with its initial public offering (the “2015 Private Warrants”) each of which entitled the holder to purchase one-half of one share of Common Stock. During the three months ended March 31, 2021, 630,000 of the 2015 Private Warrants were repurchased for $4.8 million and cancelled. As of March 31, 2022, no 2015 Private Warrants remain outstanding.
2018 Warrants
In connection with the Modular Space Holdings ("ModSpace") acquisition in 2018, WillScot issued warrants to purchase approximately 10.0 million shares of Common Stock (the "2018 Warrants") to former shareholders of ModSpace. Each 2018 Warrant entitles the holder to purchase one share of Common Stock at an exercise price of $15.50 per share, subject to adjustment. The 2018 Warrants expire on November 29, 2022. During the three months ended March 31, 2022, 11,032 of the 2018 Warrants were repurchased for $0.2 million and cancelled. In addition, during the three months ended March 31, 2022, 929,379 of the 2018 Warrants were exercised on a cashless basis, resulting in the issuance of 573,483 shares of common stock. At March 31, 2022, 3,137,762 of the 2018 Warrants were outstanding.
15
NOTE 12 – Income Taxes
The Company recorded $15.7 million and $10.5 million of income tax expense for the three months ended March 31, 2022 and 2021, respectively. The Company’s effective tax rate for the three months ended March 31, 2022 and 2021 was 23.5 % and 70.2 %, respectively.
The effective tax rate for the three months ended March 31, 2022 differed from the US federal statutory rate of 21% primarily due to state and provincial taxes offset by a discrete tax benefit related to employee stock vesting. The effective tax rate for the three months ended March 31, 2021 differed from the US statutory rate of 21% due to the permanent add-back related to the mark to market accounting on the Company's warrants.
NOTE 13 - Fair Value Measures
The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The Company utilizes the suggested accounting guidance for the three levels of inputs that may be used to measure fair value:
| Level 1 - | Observable inputs such as quoted prices in active markets for identical assets or liabilities; | ||||
| Level 2 - | Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and | ||||
| Level 3 - | Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions | ||||
The Company has assessed that the fair value of cash and cash equivalents, trade receivables, trade payables, and other current liabilities approximate their carrying amounts. Based on the borrowing rates currently available for bank loans with similar terms and average maturities, the fair value of finance leases at March 31, 2022 approximate their respective book values.
The following table shows the carrying amounts and fair values of financial liabilities which are disclosed, but not measured, at fair value, including their levels in the fair value hierarchy:
| March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| ABL Facility | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| 2025 Secured Notes | ||||||||||||||||||||||||||