wsc-20220630

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wsc-20220630

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 June 30, 2022
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

https://cdn.kscope.io/bb2d653daa1b4b082700fe6a86f6be41-wsc-20220630_g1.jpg

WILLSCOT 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.)

4646 E Van Buren St., Suite 400

Phoenix, Arizona 85008

(Address of principal executive offices, including zip code)

(480) 894-6311

(Registrant’s telephone number, including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	WSC	The Nasdaq Capital Market
Warrants to purchase Common Stock(1)	WSCTW	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.


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 Common Stock, par value $0.0001 per share, outstanding: 213,700,706 shares at August 1, 2022.

WILLSCOT MOBILE MINI HOLDINGS CORP.

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 June 30 , 2022 and December 31, 2021 (audited)
			Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30 , 2022 and 2021
			Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021
			Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2022 and 2021
			Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30 , 2022 and 2021
			Notes to the Condensed Consolidated Financial Statements
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3	Quantitative and Qualitative Disclosures About Market Risk
	Item 4	Controls and Procedures
PART II Other Information
	Item 1	Legal Proceedings
	Item 1A	Risk Factors
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds
	Item 3	Defaults Upon Senior Securities
	Item 4	Mine Safety Disclosures
	Item 5	Other Information
	Item 6	Exhibits
SIGNATURE

ITEM 1. Financial Statements

WillScot Mobile Mini Holdings Corp.

Condensed Consolidated Balance Sheets


(in thousands, except share data)	June 30, 2022 (unaudited)		December 31, 2021

Assets
Cash and cash equivalents	$	11,706	$	12,699
Trade receivables, net of allowances for credit losses at June 30, 2022 and December 31, 2021 of $53,544 and $47,629, respectively	440,993		399,887
Inventories	41,824		32,739
Prepaid expenses and other current assets	44,245		36,761
Assets held for sale	1,518		954
Total current assets	540,286		483,040
Rental equipment, net	3,257,475		3,080,981
Property, plant and equipment, net	322,707		312,178
Operating lease assets	235,266		247,064
Goodwill	1,171,725		1,178,806
Intangible assets, net	446,578		460,678
Other non-current assets	4,771		10,852
Total long-term assets	5,438,522		5,290,559
Total assets	$	5,978,808	$	5,773,599
Liabilities and equity
Accounts payable	$	155,901	$	118,271
Accrued expenses	115,124		100,195
Accrued employee benefits	63,331		68,414
Deferred revenue and customer deposits	189,333		159,639
Operating lease liabilities - current	52,495		53,005
Current portion of long-term debt	20,663		18,121
Total current liabilities	596,847		517,645
Long-term debt	3,017,678		2,694,319
Deferred tax liabilities	390,092		354,879
Operating lease liabilities - non-current	183,851		194,256

Other non-current liabilities	16,390		15,737
Long-term liabilities	3,608,011		3,259,191
Total liabilities	4,204,858		3,776,836
Commitments and contingencies (see Note 16)
Preferred Stock: $0.0001 par, 1,000,000 shares authorized and zero shares issued and outstanding at June 30, 2022 and December 31, 2021	—		—
Common Stock: $0.0001 par, 500,000,000 shares authorized and 216,090,996 and 223,939,527 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	22		22
Additional paid-in-capital	3,295,747		3,616,902
Accumulated other comprehensive loss	(55,276)		(29,071)
Accumulated deficit	(1,466,543)		(1,591,090)
Total shareholders' equity	1,773,950		1,996,763
Total liabilities and shareholders' equity	$	5,978,808	$	5,773,599

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

WillScot Mobile Mini Holdings Corp.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except share and per share data)	2022		2021		2022		2021
Revenues:
Leasing and services revenue:
Leasing	$	428,620	$	343,179	$	821,812	$	658,841
Delivery and installation	125,403		91,680		225,734		175,184
Sales revenue:
New units	11,094		11,008		17,691		21,963
Rental units	16,525		15,235		25,299		30,437
Total revenues	581,642		461,102		1,090,536		886,425
Costs:
Costs of leasing and services:
Leasing	96,912		83,032		185,790		152,927
Delivery and installation	93,587		77,153		175,102		147,289
Costs of sales:
New units	6,139		7,052		10,465		14,161
Rental units	8,955		8,162		14,099		17,267
Depreciation of rental equipment	67,176		62,893		129,392		118,591
Gross profit	308,873		222,810		575,688		436,190
Expenses:
Selling, general and administrative	162,164		122,387		312,374		239,716

Other depreciation and amortization	19,054		21,622		38,658		39,946
Lease impairment expense and other related charges	(9)		474		254		1,727
Restructuring costs	(86)		6,960		(86)		10,102
Currency (gains) losses, net	(127)		33		11		69
Other (income) expense, net	(3,784)		719		(5,093)		(1,269)
Operating income	131,661		70,615		229,570		145,899
Interest expense	33,574		29,212		64,564		59,176
Fair value (gain) loss on common stock warrant liabilities	—		(610)		—		26,597
Loss on extinguishment of debt	—		2,814		—		5,999
Income before income tax	98,087		39,199		165,006		54,127
Income tax expense	24,711		18,828		40,459		29,309
Net Income	$	73,376	$	20,371	$	124,547	$	24,818



Earnings per share
Basic	$	0.33	$	0.09	$	0.56	$	0.11
Diluted	$	0.32	$	0.08	$	0.55	$	0.11
Weighted average shares:
Basic	223,376,276		228,406,812		222,196,986		228,350,318
Diluted	227,484,012		236,536,713		226,983,150		234,898,911

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

WillScot Mobile Mini Holdings Corp.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Net income	$	73,376	$	20,371	$	124,547	$	24,818
Other comprehensive (loss) income:
Foreign currency translation adjustment, net of income tax expense of $0 for both the three and six months ended June 30, 2022 and $60 and $0 for the three and six months ended June 30, 2021, respectively.	(25,628)		3,093		(29,702)		8,127
Net change in derivatives, net of income tax expense of $394 and $656 for the three months ended June 30, 2022 and 2021, respectively, and $1,171 and $1,323 for the six months ended June 30, 2022 and 2021, respectively.	1,176		2,146		3,497		4,323
Total other comprehensive (loss) income	(24,452)		5,239		(26,205)		12,450
Total comprehensive income	$	48,924	$	25,610	$	98,342	$	37,268

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

WillScot Mobile Mini Holdings Corp.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


Six Months Ended June 30, 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	223,940	$	22	$	3,616,902	$	(29,071)	$	(1,591,090)	$	1,996,763
Net income	—	—		—		—		51,171		51,171
Other comprehensive loss	—	—		—		(1,753)		—		(1,753)
Stock-based compensation and issuance of Common Stock from vesting	498	—		6,395		—		—		6,395
Repurchase and cancellation of Common Stock and warrants	(2,064)	—		(77,409)		—		—		(77,409)
Issuance of Common Stock from the exercise of options and warrants	800	—		3,313		—		—		3,313
Withholding taxes on net share settlement of stock-based compensation	—	—		(12,295)		—		—		(12,295)
Balance at March 31, 2022	223,174	$	22	$	3,536,906	$	(30,824)	$	(1,539,919)	$	1,966,185
Net income	—	—		—		—		73,376		73,376
Other comprehensive loss	—	—		—		(24,452)		—		(24,452)
Stock-based compensation and issuance of Common Stock from vesting	70	—		9,292		—		—		9,292
Repurchase and cancellation of Common Stock and warrants	(7,222)	—		(249,515)		—		—		(249,515)
Issuance of Common Stock from the exercise of options and warrants	69	—		139		—		—		139
Withholding taxes on net share settlement of stock-based compensation	—	—		(1,075)		—		—		(1,075)
Balance at June 30, 2022	216,091	$	22	$	3,295,747	$	(55,276)	$	(1,466,543)	$	1,773,950


Six Months Ended June 30, 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	229,038	$	23	$	3,852,291	$	(37,207)	$	(1,751,234)	$	2,063,873
Net income	—	—		—		—		4,447		4,447
Other comprehensive income	—	—		—		7,211		—		7,211
Stock-based compensation and issuance of Common Stock from vesting	229	—		4,951		—		—		4,951
Repurchase and cancellation of Common Stock and warrants	(2,793)	—		(76,788)		—		—		(76,788)
Issuance of Common Stock from the exercise of options and warrants	341	—		5,414		—		—		5,414
Withholding taxes on net share settlement of stock-based compensation	—	—		(3,219)		—		—		(3,219)
Balance at March 31, 2021	226,815	$	23	$	3,782,649	$	(29,996)	$	(1,746,787)	$	2,005,889
Net income	—	—		—		—		20,371		20,371
Other comprehensive income	—	—		—		5,239		—		5,239
Stock-based compensation and issuance of Common Stock from vesting	60	—		9,038		—		—		9,038
Repurchase and cancellation of Common Stock and warrants	(4,100)	—		(35,508)		—		—		(35,508)
Issuance of Common Stock from the exercise of warrants	4,058	—		384		—		—		384
Balance at June 30, 2021	226,833	$	23	$	3,756,563	$	(24,757)	$	(1,726,416)	$	2,005,413

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

WillScot Mobile Mini Holdings Corp.

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended June 30,
(in thousands)	2022		2021
Operating activities:
Net income	$	124,547	$	24,818
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	168,050		160,480
Provision for credit losses	18,865		16,910

Gain on sale of rental equipment and other property, plant and equipment	(14,195)		(14,793)
Amortization of debt discounts and debt issuance costs	6,975		7,082
Fair value loss on common stock warrant liabilities	—		26,597
Loss on extinguishment of debt	—		5,999
Stock-based compensation expense	15,687		13,989
Deferred income tax expense	31,072		24,389
Unrealized currency gains, net	(71)		(184)
Other	1,916		—
Changes in operating assets and liabilities:
Trade receivables	(60,737)		(50,324)
Inventories	(9,293)		(8,535)
Prepaid expenses and other assets	(13,907)		10,004
Operating lease assets and liabilities	936		(537)

Accounts payable and other accrued expenses	34,756		30,689
Deferred revenue and customer deposits	29,252		15,024
Net cash provided by operating activities	333,853		261,608
Investing activities:
Acquisitions, net of cash acquired	(103,927)		—
Proceeds from sale of rental equipment	35,080		30,437
Purchase of rental equipment and refurbishments	(225,389)		(117,817)
Proceeds from sale of property, plant and equipment	751		16,438
Purchase of property, plant and equipment	(20,253)		(17,450)
Net cash used in investing activities	(313,738)		(88,392)
Financing activities:
Receipts from issuance of Common Stock from the exercise of options	3,452		5,798
Repurchase and cancellation of Common Stock and warrants	(319,225)		(214,299)

Receipts from borrowings	454,322		387,658
Payment of financing costs	(8,021)		—
Repayment of borrowings	(127,607)		(347,225)
Payment of debt extinguishment premium costs	—		(3,705)
Principal payments on finance lease obligations	(10,353)		(7,921)
Taxes paid on employee stock awards	(13,370)		(3,219)

Net cash used in financing activities	(20,802)		(182,913)
Effect of exchange rate changes on cash and cash equivalents	(306)		162
Net change in cash and cash equivalents	(993)		(9,535)
Cash and cash equivalents at the beginning of the period	12,699		24,937
Cash and cash equivalents at the end of the period	$	11,706	$	15,402

Supplemental cash flow information:
Interest paid 1	$	59,980	$	52,053
Income taxes paid, net	$	10,608	$	4,383
Capital expenditures accrued or payable	$	39,949	$	19,099

1 Includes $5,948 of payments related to the interest rate swap for the six months ended June 30, 2021.

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

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 accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by US Generally Accepted Accounting Principles ("GAAP") for complete financial statements. The accompanying unaudited condensed consolidated financial statements comprise the financial statements of WillScot Mobile Mini and its subsidiaries that it controls due to ownership of a majority voting interest and contain all adjustments, which are of a normal and recurring nature, considered necessary by management to present fairly the financial position, results of operations and cash flows for the interim periods presented.

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 and six months ended June 30, 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 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 (“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 Acquisitions

During the second quarter of 2022, the Company acquired certain assets and liabilities of several smaller entities, which consisted primarily of approximately 4,100 storage units and 1,000 modular units for $47.1 million in cash. The accompanying consolidated financial statements include $47.1 million of rental equipment as a result of these acquisitions. During the first quarter of 2022, the Company acquired certain assets and liabilities, which consisted primarily of approximately 400 blast resistant modular units.

Integration Costs

The Company recorded $5.2 million and $7.6 million in integration costs related to acquisitions and the Merger within selling, general and administrative ("SG&A") expense during the three months ended June 30, 2022 and 2021, respectively, and $9.3 million and $15.0 million in integration costs related to acquisitions and the Merger during the six months ended June 30, 2022 and 2021, respectively.

NOTE 3 - Revenue

Revenue Disaggregation

Geographic Areas

The Company had total revenue in the following geographic areas for the three and six months ended June 30, 2022 and 2021 as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
US	$	517,374	$	399,280	$	969,342	$	770,549
Canada	32,901		29,543		58,174		53,127
Mexico	4,703		3,848		8,917		7,311
UK	26,664		28,431		54,103		55,438
Total revenues	$	581,642	$	461,102	$	1,090,536	$	886,425

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 modular space, portable storage and tank and pump units along with value-added products and services ("VAPS"), which include furniture, steps, ramps, basic appliances, internet connectivity devices, security products, shelving systems 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 and six months ended June 30, 2022 and 2021 was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Modular space leasing revenue	$	212,862	$	181,376	$	411,939	$	351,328
Portable storage leasing revenue	88,548		58,848		166,532		113,461
Tank and pump leasing revenue	20,706		17,109		39,937		32,869
VAPS and third party leasing revenues(a)	87,498		70,880		168,424		133,306
Other leasing-related revenue(b)	19,006		14,966		34,980		27,877
Leasing revenue	428,620		343,179		821,812		658,841
Delivery and installation revenue	125,403		91,680		225,734		175,184
Total leasing and services revenue	554,023		434,859		1,047,546		834,025
New unit sales revenue	11,094		11,008		17,691		21,963
Rental unit sales revenue	16,525		15,235		25,299		30,437
Total revenues	$	581,642	$	461,102	$	1,090,536	$	886,425


(a)			Includes $6.8 million and $7.8 million of service revenue for the three months ended June 30, 2022 and 2021, respectively, and $14.3 million and $14.0 million of service revenue for the six months ended June 30, 2022 and 2021, respectively.
(b)			Includes primarily damage billings, delinquent payment charges, and other processing fees.

Leasing and Services Revenue

The majority of revenue (73% and 74% for the three and six months ended June 30, 2022, respectively, and 73% for both the three and six months ended June 30, 2021) 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 is exposed to credit losses from trade receivables and manages credit risk 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 assesses each customer’s ability to pay for the products it leases or sells by conducting a credit review that considers expected billing exposure, 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 June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Balance at beginning of period	$	49,258	$	31,630	$	47,629	$	29,258
Provision for credit losses, net of recoveries	10,264		8,390		18,865		16,910
Write-offs	(5,900)		(4,058)		(12,910)		(9,872)
Foreign currency translation and other	(78)		823		(40)		489
Balance at end of period	$	53,544	$	36,785	$	53,544	$	36,785

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 June 30, 2022, deferred revenue relating to services billed in advance of $20.7 million was recognized as revenue. As of June 30, 2022 and December 31, 2021, the Company had approximately $95.7 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 June 30, 2022, the undiscounted future lease payments for operating and finance lease liabilities were as follows:


(in thousands)	Operating		Finance
2022 (remaining)	$	32,125	$	11,992
2023	56,620		20,004
2024	47,858		17,092
2025	40,227		17,200
2026	29,457		15,202
Thereafter	69,628		21,304
Total lease payments	275,915		102,794
Less: interest	(39,569)		(7,651)
Present value of lease liabilities	$	236,346	$	95,143

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 six months ended June 30, 2022 and 2021 was as follows:


(in thousands)	Six Months Ended June 30,
Financial Statement Line	2022		2021
Finance Lease Expense
Amortization of finance lease assets	$	10,546	$	9,514
Interest on obligations under finance leases	1,299		1,098
Total finance lease expense	$	11,845	$	10,612

Operating Lease Expense
Fixed lease expense
Cost of leasing and services	$	1,574	$	2,131
Selling, general and administrative	32,430		29,359
Lease impairment expense and other related charges	213		1,107
Short-term lease expense
Cost of leasing and services	17,056		11,575
Selling, general and administrative	1,071		723

Variable lease expense
Cost of leasing and services	2,822		3,373
Selling, general and administrative	4,273		3,792
Lease impairment expense and other related charges	40		335
Total operating lease expense	$	59,479	$	52,395

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 six months ended June 30, 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 six months ended June 30, 2021, the Company recorded $1.7 million in lease impairment expense and other related charges which is comprised of $1.5 million in closed location rent expense and $0.2 million loss on lease exit and impairment charges.

Supplemental cash flow information related to leases for the six months ended June 30, 2022 and 2021 was as follows:


(in thousands)	Six Months Ended June 30,
Supplemental Cash Flow Information	2022		2021
Cash paid for the amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	33,850	$	33,409
Operating cash outflows from finance leases	$	1,297	$	1,095
Financing cash outflows from finance leases	$	10,371	$	6,935

Right of use assets obtained in exchange for lease obligations	$	19,504	$	28,288
Assets obtained in exchange for finance leases	$	17,065	$	11,530

Weighted-average remaining operating lease terms and the weighted average discount rates as of June 30, 2022 and December 31, 2021 were as follows:


Lease Terms and Discount Rates	June 30, 2022		December 31, 2021
Weighted-average remaining lease term - operating leases	6.1 years		6.1 years
Weighted-average discount rate - operating leases	4.9	%	5.0	%
Weighted-average remaining lease term - finance leases	4.8 years		4.5 years
Weighted-average discount rate - finance leases	3.2	%	2.9	%

NOTE 5 - Inventories

Inventories at the respective balance sheet dates consisted of the following:


(in thousands)	June 30, 2022		December 31, 2021
Raw materials	$	35,411	$	26,854
Finished units	6,413		5,885
Inventories	$	41,824	$	32,739

NOTE 6 - Rental Equipment, net

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


(in thousands)	June 30, 2022		December 31, 2021
Modular space units	$	3,185,153	$	3,005,195
Portable storage units	821,582		758,619
Tank and pump products	167,854		156,112
Value added products	189,534		168,419
Total rental equipment	4,364,123		4,088,345
Less: accumulated depreciation	(

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