SEC Filing | Investor Relations | WillScot Mobile Mini Holdings Corp.

wsc-20230331
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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, 2023
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/3df4c922e0810781e456a3ad41906ba6-WSMM Holdings Corp Logo.jpg
WILLSCOT MOBILE MINI HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
Delaware82-3430194
(State or other jurisdiction of incorporation)(I.R.S. Employer Identification No.)
4646 E Van Buren St., Suite 400
Phoenix, Arizona 85008
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareWSC
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 Common Stock, par value $0.0001 per share, outstanding: 202,317,982 shares at April 24, 2023.





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, 2023 and 2022


2



ITEM 1.    Financial Statements

WillScot Mobile Mini Holdings Corp.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
March 31, 2023 (unaudited)
December 31, 2022
Assets
Cash and cash equivalents$15,918 $7,390 
Trade receivables, net of allowances for credit losses at March 31, 2023 and December 31, 2022 of $61,402 and $57,048, respectively
415,344 409,766 
Inventories42,007 41,030 
Prepaid expenses and other current assets42,684 31,635 
Assets held for sale - current8,924 31,220 
Total current assets524,877 521,041 
Rental equipment, net3,128,061 3,077,287 
Property, plant and equipment, net305,608 304,659 
Operating lease assets219,926 219,405 
Goodwill1,011,513 1,011,429 
Intangible assets, net413,188 419,125 
Other non-current assets6,578 6,683 
Assets held for sale - non-current 268,022 
Total long-term assets5,084,874 5,306,610 
Total assets$5,609,751 $5,827,651 
Liabilities and equity
Accounts payable$92,057 $108,071 
Accrued expenses120,838 110,820 
Accrued employee benefits28,803 56,340 
Deferred revenue and customer deposits199,274 203,793 
Operating lease liabilities - current51,076 50,499 
Current portion of long-term debt13,514 13,324 
Liabilities held for sale - current 19,095 
Total current liabilities505,562 561,942 
Long-term debt2,876,453 3,063,042 
Deferred tax liabilities464,798 401,453 
Operating lease liabilities - non-current169,914 169,618 
Other non-current liabilities29,100 18,537 
Liabilities held for sale - non-current 47,759 
Long-term liabilities3,540,265 3,700,409 
Total liabilities4,045,827 4,262,351 
Preferred Stock: $0.0001 par, 1,000,000 shares authorized and zero shares issued and outstanding at March 31, 2023 and December 31, 2022
  
Common Stock: $0.0001 par, 500,000,000 shares authorized and 203,723,099 and 207,951,682 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively
21 21 
Additional paid-in-capital2,667,424 2,886,951 
Accumulated other comprehensive loss(62,855)(70,122)
Accumulated deficit(1,040,666)(1,251,550)
Total shareholders' equity1,563,924 1,565,300 
Total liabilities and shareholders' equity$5,609,751 $5,827,651 

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)
20232022
Revenues:
Leasing and services revenue:
Leasing$439,951 $351,559 
Delivery and installation106,630 85,539 
Sales revenue:
New units10,657 5,787 
Rental units8,230 8,286 
Total revenues565,468 451,171 
Costs:
Costs of leasing and services:
Leasing97,515 80,334 
Delivery and installation75,007 70,580 
Costs of sales:
New units6,208 3,756 
Rental units4,454 4,892 
Depreciation of rental equipment59,156 57,548 
Gross profit323,128 234,061 
Expenses:
Selling, general and administrative150,892 138,144 
Other depreciation and amortization17,173 15,362 
Currency losses, net6,775 137 
Other income, net(3,359)(1,283)
Operating income151,647 81,701 
Interest expense44,866 30,570 
Income from continuing operations before income tax106,781 51,131 
Income tax expense from continuing operations30,510 12,083 
Income from continuing operations76,271 39,048 
Discontinued operations:
Income from discontinued operations before income tax4,003 15,787 
Gain on sale of discontinued operations176,078  
Income tax expense from discontinued operations45,468 3,664 
Income from discontinued operations134,613 12,123 
Net income$210,884 $51,171 
Earnings per share from continuing operations attributable to WillScot Mobile Mini common shareholders:
Basic$0.37 $0.17 
Diluted$0.36 $0.17 
Earnings per share from discontinued operations attributable to WillScot Mobile Mini common shareholders:
Basic $0.65 $0.06 
Diluted$0.64 $0.05 
Earnings per share attributable to WillScot Mobile Mini common shareholders:
Basic$1.02 $0.23 
Diluted$1.00 $0.22 
Weighted average shares:
Basic206,092,169 223,490,912 
Diluted209,663,985 228,955,504 

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)
20232022
Net income$210,884 $51,171 
Other comprehensive income (loss):
Foreign currency translation adjustment, net of income tax expense of $0 for each of the three months ended March 31, 2023 and 2022
7,934 (4,074)
Net (loss) gain on derivatives, net of income tax (benefit) expense of $(222) and $777 for the three months ended March 31, 2023 and 2022, respectively
(667)2,321 
Total other comprehensive income (loss)7,267 (1,753)
Total comprehensive income$218,151 $49,418 

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, 2023
 Common StockAdditional Paid-in-CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Shareholders' Equity
(in thousands)SharesAmount
Balance at December 31, 2022207,952 $21 $2,886,951 $(70,122)$(1,251,550)$1,565,300 
Net income— — — — 210,884 210,884 
Other comprehensive income— — — 7,267 — 7,267 
Withholding taxes on net share settlement of stock-based compensation— — (10,058)— — (10,058)
Stock-based compensation and issuance of Common Stock from vesting355 — 8,150 — — 8,150 
Repurchase and cancellation of Common Stock(4,589)— (217,687)— — (217,687)
Issuance of Common Stock from the exercise of options6 — 68 — — 68 
Balance at March 31, 2023203,723 $21 $2,667,424 $(62,855)$(1,040,666)$1,563,924 

Three Months Ended March 31, 2022
Common StockAdditional Paid-in-CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Shareholders' Equity
(in thousands)SharesAmount
Balance at December 31, 2021223,940 $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)
Withholding taxes on net share settlement of stock-based compensation— — (12,295)— — (12,295)
Stock-based compensation and issuance of Common Stock from vesting498 — 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 warrants800 — 3,313 — — 3,313 
Balance at March 31, 2022223,174 $22 $3,536,906 $(30,824)$(1,539,919)$1,966,185 

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)
20232022
Operating activities:
Net income$210,884 $51,171 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization76,329 81,820 
Provision for credit losses8,803 8,601 
Gain on sale of discontinued operations(176,078) 
Gain on sale of rental equipment and other property, plant and equipment(3,396)(3,232)
Amortization of debt discounts and debt issuance costs2,743 3,489 
Stock-based compensation expense8,150 6,395 
Deferred income tax expense63,699 12,362 
Loss on foreign currency forward contract7,715  
Unrealized currency losses, net(1,042)86 
Other1,087 914 
Changes in operating assets and liabilities:
Trade receivables(10,954)(12,064)
Inventories(350)(7,122)
Prepaid expenses and other assets(3,049)(9,042)
Operating lease assets and liabilities345 268 
Accounts payable and other accrued expenses(32,694)(1,239)
Deferred revenue and customer deposits(3,427)13,120 
Net cash provided by operating activities148,765 145,527 
Investing activities:
Proceeds from sale of discontinued operations403,992  
Acquisitions, net of cash acquired (78,503)(57,457)
Proceeds from sale of rental equipment7,781 14,554 
Purchase of rental equipment and refurbishments(47,128)(95,236)
Payment for settlement of foreign currency forward contract(7,715) 
Proceeds from the sale of property, plant and equipment258 260 
Purchase of property, plant and equipment(6,736)(10,481)
Net cash provided by (used in) investing activities271,949 (148,360)
Financing activities:
Receipts from issuance of Common Stock from the exercise of options68 3,313 
Repurchase and cancellation of Common Stock and warrants(215,098)(77,708)
Receipts from borrowings363,800 152,500 
Repayment of borrowings(558,300)(59,000)
Principal payments on finance lease obligations(3,499)(5,224)
Taxes paid on employee stock awards(10,058)(12,295)
Net cash (used in) provided by financing activities(423,087)1,586 
Effect of exchange rate changes on cash and cash equivalents 517 (131)
Net change in cash and cash equivalents (1,856)(1,378)
Cash and cash equivalents at the beginning of the period17,774 12,699 
Cash and cash equivalents at the end of the period$15,918 $11,321 
Supplemental cash flow information:
Interest paid, net$39,570 $22,197 
Income taxes paid, net$5,653 $2,606 
Assets acquired under capital leases$8,907 $7,011 
Capital expenditures accrued or payable$17,786 $28,433 

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, and Mexico. The Company leases, sells, delivers and installs modular space solutions and portable storage products through an integrated network of branch locations that spans North America.
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 months ended March 31, 2023 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, 2022.
Reclassifications
Certain reclassifications have been made to prior year financial statements to conform to the current year presentation.
Recently Issued and Adopted Accounting Standards
In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 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 FASB Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606"). The Company adopted ASU 2021-08 on January 1, 2023 on a prospective basis. The adoption of this ASU did not have a material impact on the Company's financial statements or related disclosures.

NOTE 2 - Acquisitions
WillScot Mobile Mini is the holding company for the Williams Scotsman and Mobile Mini family of companies, which resulted from the combination of WillScot Corporation (“WillScot”) and Mobile Mini, Inc. (“Mobile Mini”) through a merger that occurred on July 1, 2020 (the "Merger").
Asset Acquisitions
During the first quarter of 2023, the Company acquired certain assets and liabilities of two regional and local storage and modular companies, which consisted primarily of approximately 300 storage units and 500 modular units for $79.6 million in cash. The accompanying consolidated financial statements include $70.4 million of rental equipment and $4.5 million of land held for sale as of March 31, 2023 as a result of these acquisitions. A sale of the acquired land is expected to close before the end of the year.
Integration Costs
The Company recorded $3.9 million and $4.1 million in integration costs related to asset acquisitions and the Merger within selling, general and administrative ("SG&A") expense during the three months ended March 31, 2023 and 2022, respectively.

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NOTE 3 - Discontinued Operations
Tank and Pump Divestiture
On September 30, 2022, the Company sold its former Tank and Pump segment for $321.9 million. Exiting the former Tank and Pump segment represented the Company’s strategic shift to concentrate its operations on its core modular and storage businesses. The criteria for discontinued operations presentation were met during the third quarter of 2022 and results for the former Tank and Pump segment are reported in income from discontinued operations within the consolidated statements of operations for periods presented prior to September 30, 2022.
UK Storage Solutions Divestiture
On December 12, 2022, the Company entered into a stock purchase agreement to sell its former UK Storage Solutions segment. The sale transaction was completed on January 31, 2023. Total cash consideration for the transaction was $418.1 million. Exiting the former UK Storage Solutions segment represented the Company’s strategic shift to concentrate its operations on its core modular and storage businesses in North America. The criteria for discontinued operations presentation were met during the fourth quarter of 2022 and results for the former UK Storage Solutions segment are reported in income from discontinued operations within the consolidated statements of operations for all periods presented. The carrying value of the former UK Storage Solutions segment's assets and liabilities are presented within assets and liabilities held for sale on the consolidated balance sheet as of December 31, 2022.
The following tables present the results of the former Tank and Pump segment and the former UK Storage Solutions segment as reported in income from discontinued operations within the consolidated statements of operations, and the carrying value of the former UK Storage Solutions segment's assets and liabilities as presented within assets and liabilities held for sale on the consolidated balance sheet.
Three Months Ended March 31, 2023
(in thousands)UK Storage Solutions
Revenues:
Leasing and services revenue:
Leasing$6,389 
Delivery and installation1,802 
Sales revenue:
New units54 
Rental units449 
Total revenues8,694 
Costs:
Costs of leasing and services:
Leasing1,407 
Delivery and installation1,213 
Costs of sales:
New units38 
Rental units492 
Gross profit5,544 
Expenses:
Selling, general and administrative1,486 
Other income, net(1)
Operating income4,059 
Interest expense56 
Income from discontinued operations before income tax4,003 
Gain on sale of discontinued operations 175,708 
Income tax expense from discontinued operations45,468 
Income from discontinued operations$134,243 
Other selected data:
Adjusted EBITDA from discontinued operations$4,124 
In January 2023, a $0.4 million adjustment was made to the gain on sale of the former Tank and Pump segment due to the final contractual working capital adjustment. Including this adjustment, the total gain on sale of discontinued operations was $176.1 million for the three months ended March 31, 2023.
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Three Months Ended March 31, 2022
(in thousands)Tank and Pump UK Storage SolutionsTotal
Revenues:
Leasing and services revenue:
Leasing$21,062 $20,571 $41,633 
Delivery and installation8,325 6,467 14,792 
Sales revenue:
New units682 128 810 
Rental units214 274 488 
Total revenues30,283 27,440 57,723 
Costs:
Costs of leasing and services:
Leasing4,307 4,237 8,544 
Delivery and installation7,011 3,924 10,935 
Costs of sales:
New units507 63 570 
Rental units95 157 252 
Depreciation of rental equipment3,530 1,138 4,668 
Gross profit14,833 17,921 32,754 
Expenses:
Selling, general and administrative6,212 6,117 12,329 
Other depreciation and amortization2,416 1,825 4,241 
Currency losses, net 1 1 
Other expense (income), net19 (45)(26)
Operating income6,186 10,023 16,209 
Interest expense178 244 422 
Income from discontinued operations before income tax6,008 9,779 15,787 
Income tax expense from discontinued operations1,513 2,151 3,664 
Income from discontinued operations$4,495 $7,628 $12,123 
Other selected data:
Adjusted EBITDA from discontinued operations$11,506 $12,544 $24,050 
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December 31, 2022
(in thousands)UK Storage Solutions
Assets
Cash and cash equivalents$10,384 
Trade receivables, net of allowances for doubtful accounts of $300
15,991 
Inventories3,058 
Prepaid expenses and other current assets1,787 
Rental equipment, net165,853 
Property, plant and equipment, net20,645 
Operating lease assets15,134 
Goodwill58,144 
Intangible assets, net6,414 
Other non-current assets1,832 
Total assets held for sale$299,242 
Liabilities
Accounts payable$4,515 
Accrued expenses3,273 
Accrued employee benefits1,009 
Deferred revenue and customer deposits6,850 
Deferred tax liabilities29,737 
Operating lease liabilities15,192 
Other non-current liabilities6,278 
Total liabilities held for sale$66,854 
For the three months ended March 31, 2022, significant operating and investing items related to the former Tank and Pump segment were as follows:
Three Months Ended March 31,
(in thousands)
2022
Operating activities of discontinued operations:
Depreciation and amortization$5,946 
Investing activities of discontinued operations:
Proceeds from sale of rental equipment$214 
Purchases of rental equipment and refurbishments$(7,873)
Purchases of property, plant and equipment$(82)
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The following table presents a reconciliation of Income from discontinued operations before income tax to Adjusted EBITDA from discontinued operations for the former Tank and Pump segment for the three months ended March 31, 2022. See Note 16 for further information regarding Adjusted EBITDA.
Three Months Ended March 31,
(in thousands)2022
Income from discontinued operations$4,495 
Income tax expense from discontinued operations1,513 
Income from discontinued operations before income tax6,008 
Interest expense178 
Depreciation and amortization5,946 
Stock compensation expense104 
Other(730)
Adjusted EBITDA from discontinued operations$11,506 
For the three months ended March 31, 2023 and 2022, significant operating and investing items related to the former UK Storage Solutions segment were as follows:
Three Months Ended March 31,
(in thousands)
20232022
Operating activities of discontinued operations:
Depreciation and amortization$ $2,963 
Investing activities of discontinued operations:
Proceeds from sale of rental equipment$514 $274 
Purchases of rental equipment and refurbishments$(371)$(9,615)
Proceeds from sale of property, plant and equipment$8 $255 
Purchases of property, plant and equipment$(64)$(2,265)
The following table presents reconciliations of Income from discontinued operations before income tax to Adjusted EBITDA from discontinued operations for the former UK Storage Solutions segment for the three months ended March 31, 2023 and 2022, respectively. See Note 16 for further information regarding Adjusted EBITDA.
Three Months Ended March 31,
(in thousands)20232022
Income from discontinued operations$134,243 $7,628 
Gain on sale of discontinued operations175,708  
Income tax expense from discontinued operations45,468 2,151 
Income from discontinued operations before income tax and gain on sale4,003 9,779 
Interest expense56 244 
Depreciation and amortization 2,963 
Currency losses, net 1 
Stock compensation expense(196)18 
Other261 (461)
Adjusted EBITDA from discontinued operations$4,124 $12,544 
12


NOTE 4 - 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)20232022
US$533,174 $421,684 
Canada26,941 25,273 
Mexico5,353 4,214 
Total revenues$565,468 $451,171 
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 and portable storage units along with value-added products and services ("VAPS"), which include furniture, steps, ramps, basic appliances, internet connectivity devices, integral tool racking, heavy duty capacity shelving, workstations, electrical and lighting products and other items used by customers in connection with the Company's products. The Company also offers its lease customers a damage waiver program that protects them in case the leased unit is damaged. 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)20232022
Modular space leasing revenue$224,470 $190,390 
Portable storage leasing revenue97,315 70,703 
VAPS and third party leasing revenues(a)
94,126 75,305 
Other leasing-related revenue(b)
24,040 15,161 
Leasing revenue439,951 351,559 
Delivery and installation revenue106,630 85,539 
Total leasing and services revenue546,581 437,098 
New unit sales revenue10,657 5,787 
Rental unit sales revenue8,230 8,286 
Total revenues$565,468 $451,171 
(a)
Includes $5.6 million and $5.9 million of service revenue for the three months ended March 31, 2023 and 2022, respectively.
(b)Includes primarily damage billings, delinquent payment charges, and other processing fees.
Leasing and Services Revenue
The majority of revenue (77% for the both the three months ended March 31, 2023 and March 31, 2022) 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
13


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 and 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)20232022
Balance at beginning of period$57,048 $45,773 
Provision for credit losses, net of recoveries8,803 8,311 
Write-offs(4,537)(7,010)
Foreign currency translation and other88 50 
Balance at end of period$61,402 $47,124 
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, 2023, deferred revenue relating to services billed in advance of $27.7 million was recognized as revenue. As of March 31, 2023 and December 31, 2022, the Company had approximately $99.0 million and $102.2 million, respectively, of deferred revenue related to these services.
The Company does not have material contract assets, and 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 market rate in place at the time those services are provided, 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 5 - Leases
As of March 31, 2023, the undiscounted future lease payments for operating and finance lease liabilities were as follows:
(in thousands)OperatingFinance
2023 (remaining)$46,323 $12,694 
202454,591 15,259 
202545,588 14,932 
202633,680 14,618 
202722,750 11,372 
Thereafter57,028 20,080 
Total lease payments259,960 88,955 
Less: interest(38,970)(9,090)
Present value of lease liabilities$220,990 $79,865 
Finance lease liabilities are included within long-term debt and current portion of long-term debt on the condensed consolidated balance sheets.
14


The Company’s lease activity during the three months ended March 31, 2023 and 2022 was as follows:
(in thousands)Three Months Ended March 31,
Financial Statement Line20232022
Finance Lease Expense
Amortization of finance lease assets$3,761 $3,333 
Interest on obligations under finance leases 759 429 
Total finance lease expense $4,520 $3,762 
Operating Lease Expense
Fixed lease expense
Cost of leasing and services$420 $825 
Selling, general and administrative15,717 14,930 
Short-term lease expense
Cost of leasing and services6,654 8,862 
Selling, general and administrative462 668 
Variable lease expense
Cost of leasing and services1,026 1,287 
Selling, general and administrative2,474 1,767 
Total operating lease expense$26,753 $28,339 
Supplemental cash flow information related to leases for the three months ended March 31, 2023 and 2022 was as follows:
(in thousands)Three Months Ended March 31,
Supplemental Cash Flow Information20232022
Cash paid for the amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases$16,693 $15,753 
Operating cash outflows from finance leases$728 $412 
Financing cash outflows from finance leases$3,446 $3,848 
Right of use assets obtained in exchange for lease obligations$8,741 $8,794 
Assets obtained in exchange for finance leases $8,913 $5,411 
Weighted average remaining operating lease terms and the weighted average discount rates as of March 31, 2023 and December 31, 2022 were as follows:
Lease Terms and Discount RatesMarch 31, 2023December 31, 2022
Weighted average remaining lease term - operating leases5.7 years5.8 years
Weighted average discount rate - operating leases5.5 %5.4 %
Weighted average remaining lease term - finance leases5.0 years5.1 years
Weighted average discount rate - finance leases3.5 %3.4 %
The Company presents information related to leasing revenues in Note 4.

NOTE 6 - Inventories
Inventories at the respective balance sheet dates consisted of the following:
(in thousands)
March 31, 2023December 31, 2022
Raw materials$38,827 $38,611 
Finished units3,180 2,419 
Inventories$42,007 $41,030 
15



NOTE 7 - Rental Equipment, net
Rental equipment, net at the respective balance sheet dates consisted of the following:
(in thousands)
March 31, 2023December 31, 2022
Modular space units$3,292,264 $3,197,779 
Portable storage units848,982 849,193 
Value added products202,358 203,444 
Total rental equipment4,343,604 4,250,416 
Less: accumulated depreciation(1,215,543)(1,173,129)
Rental equipment, net$3,128,061 $3,077,287 

NOTE 8 - Goodwill and Intangibles
Goodwill
Changes in the carrying amount of goodwill were as follows:
(in thousands)ModularStorageTotal
Balance at December 31, 2021$521,049