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 SeptemberJune 30, 20182019
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 
wsc-20190630_g1.jpg
WILLSCOT CORPORATION
(formerly known as Double Eagle Acquisition Corp.)
(Exact name of registrant as specified in its charter)
Delaware 82-3430194 
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.) 
901 S. Bond Street, #600
Baltimore, Maryland 21231
(Address, including zip code, of principal executive offices)
(410) 931-6000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, par value $0.0001 per shareWSCThe Nasdaq Capital Market
Warrants to purchase Class A common stock(1)WSCWWOTC Markets Group Inc.
Warrants to purchase Class A common stock(2)WSCTWOTC Markets Group Inc.
(1) Issued in connection with the initial public offering of Double Eagle Acquisition Corp., the registrant’s legal predecessor company, in September 2015, which are exercisable for one-half of one share of the registrant’s Class A common stock for an exercise price of $5.75.
(2) Issued in connection with the registrant’s acquisition of Modular Space Holdings, Inc. in August 2018, which are exercisable for one share of the registrant’s Class A 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 and posted 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‑212b-2 of the Exchange Act.
Large accelerated filer ☐
Accelerated filer ☒
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☒
1


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 companycompany (as defined in Rule 12b‑212b-2 of the Act). Yes ☐ No ☒
Shares of Class A common stock, par value $0.0001 per share, outstanding: 100,303,156outstanding: 108,699,126 shares at November 1, 2018.July 25, 2019.
Shares of Class B common stock, par value $0.0001 per share, outstanding: 8,024,419 sharesshares at November 1, 2018.July 25, 2019.





12




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

PART I Financial Information
Item 1
Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of SeptemberJune 30, 20182019 and December 31, 20172018
Condensed Consolidated Statements of Operations for the Three and NineSix Months Ended SeptemberJune 30, 20182019 and 20172018
CondensedCondensed Consolidated Statements of Comprehensive Loss for the Three and NineSix Months Ended SeptemberJune 30 2018, 2019 and 20172018
CondensedCondensed Consolidated Statements of Cash Flows for the NineSix Months Ended September June 30 2018, 2019 and 20172018
Notes to the Condensed Consolidated Financial StatementsStatements
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

23


PART I
ITEM 1. Financial Statements
WillScot Corporation
Condensed Consolidated Balance Sheets
(in thousands, except share data)September 30, 2018 (unaudited) December 31, 2017 
Assets 
Cash and cash equivalents $9,771 $9,185 
Trade receivables, net of allowances for doubtful accounts at September 30, 2018 and December 31, 2017 of $7,913 and $4,845, respectively 199,461 94,820 
Inventories 21,348 10,082 
Prepaid expenses and other current assets 20,075 13,696 
Total current assets 250,655 127,783 
Rental equipment, net 1,949,403 1,040,146 
Property, plant and equipment, net 193,154 83,666 
Goodwill 267,764 28,609 
Intangible assets, net 132,519 126,259 
Other non-current assets 4,200 4,279 
Total long-term assets 2,547,040 1,282,959 
Total assets $2,797,695 $1,410,742 
Liabilities and equity 
Accounts payable $78,638 $57,051 
Accrued liabilities 79,721 48,912 
Accrued interest 15,613 2,704 
Deferred revenue and customer deposits 67,727 45,182 
Current portion of long-term debt 1,915 1,881 
Total current liabilities 243,614 155,730 
Long-term debt 1,651,579 624,865 
Deferred tax liabilities 146,086 120,865 
Deferred revenue and customer deposits 6,673 5,377 
Other non-current liabilities 19,034 19,355 
Long-term liabilities 1,823,372 770,462 
Total liabilities 2,066,986 926,192 
Commitments and contingencies (see Note 13) 
Class A common stock: $0.0001 par, 400,000,000 shares authorized at September 30, 2018 and December 31, 2017; 100,303,003 and 84,644,744 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively 10 8 
Class B common stock: $0.0001 par, 100,000,000 shares authorized at September 30, 2018 and December 31, 2017; 8,024,419 shares issued and outstanding at both September 30, 2018 and December 31, 2017 1 1 
Additional paid-in-capital 2,390,188 2,121,926 
Accumulated other comprehensive loss (52,119)(49,497)
Accumulated deficit (1,673,749)(1,636,819)
Total shareholders' equity 664,331 435,619 
Non-controlling interest 66,378 48,931 
Total equity 730,709 484,550 
Total liabilities and equity $2,797,695 $1,410,742 
See the accompanying notes which are an integral part of these condensed consolidated financial statements.
3


WillScot Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30, 
(in thousands, except share data)2018201720182017
Revenues: 
Leasing and services revenue: 
Modular leasing $141,660 $75,320 $340,171 $217,261 
Modular delivery and installation 46,777 24,627 104,440 66,580 
Sales: 
New units 20,920 9,609 33,584 24,491 
Rental units 9,567 6,606 15,813 17,228 
Total revenues 218,924 116,162 494,008 325,560 
Costs: 
Costs of leasing and services: 
Modular leasing 39,215 21,252 93,506 61,694 
Modular delivery and installation 42,390 23,932 98,038 64,404 
Costs of sales: 
New units 15,089 6,916 23,780 17,402 
Rental units 5,750 3,784 9,328 10,067 
Depreciation of rental equipment 35,534 19,009 82,849 53,203 
Gross profit 80,946 41,269 186,507 118,790 
Expenses: 
Selling, general and administrative 71,897 36,097 164,845 100,510 
Other depreciation and amortization 3,720 1,905 7,726 5,736 
Restructuring costs 6,137 1,156 7,214 2,124 
Currency (gains) losses, net (425)(4,270)1,171 (12,769)
Other (income) expense, net (594)1,001 (5,013)1,592 
Operating income 211 5,380 10,564 21,597 
Interest expense 43,447 30,106 67,321 84,674 
Interest income — (3,659)— (9,752)
Loss from continuing operations before income tax (43,236)(21,067)(56,757)(53,325)
Income tax benefit (6,507)(7,632)(13,572)(17,770)
Loss from continuing operations (36,729)(13,435)(43,185)(35,555)
Income from discontinued operations, net of tax — 5,078 — 11,123 
Net loss (36,729)(8,357)(43,185)(24,432)
Net loss attributable to non-controlling interest, net of tax (3,210)— (3,715)— 
Total loss attributable to WillScot $(33,519)$(8,357)$(39,470)$(24,432)
Net loss per share attributable to WillScot – basic and diluted 
Continuing operations $(0.37)$(0.92)$(0.48)$(2.44)
Discontinued operations $— $0.35 $— $0.76 
Net loss per share $(0.37)$(0.57)$(0.48)$(1.68)
Weighted average shares: 
Basic and diluted 90,726,920 14,545,833 82,165,909 14,545,833 
Cash dividends declared per share $— $— $— $— 
(in thousands, except share data)June 30, 2019 (unaudited) December 31, 2018
Assets 
Cash and cash equivalents $5,490 $8,958 
Trade receivables, net of allowances for doubtful accounts at June 30, 2019 and December 31, 2018 of $13,125 and $9,340, respectively242,730 206,502 
Inventories 15,215 16,218 
Prepaid expenses and other current assets 22,678 21,828 
Assets held for sale 12,906 2,841 
Total current assets 299,019 256,347 
Rental equipment, net 1,953,857 1,929,290 
Property, plant and equipment, net 164,759 183,750 
Goodwill 245,828 247,017 
Intangible assets, net 128,456 131,801 
Other non-current assets 4,357 4,280 
Total long-term assets 2,497,257 2,496,138 
Total assets $2,796,276 $2,752,485 
Liabilities and equity 
Accounts payable $96,031 $90,353 
Accrued liabilities 90,612 84,696 
Accrued interest 16,145 20,237 
Deferred revenue and customer deposits 83,081 71,778 
Current portion of long-term debt 2,026 1,959 
Total current liabilities 287,895 269,023 
Long-term debt 1,709,523 1,674,540 
Deferred tax liabilities 66,594 67,384 
Deferred revenue and customer deposits 10,210 7,723 
Other non-current liabilities 37,584 31,618 
Long-term liabilities 1,823,911 1,781,265 
Total liabilities 2,111,806 2,050,288 
Commitments and contingencies (see Note 15) 
Class A common stock: $0.0001 par, 400,000,000 shares authorized at June 30, 2019 and December 31, 2018; 108,699,126 and 108,508,997 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively11 11 
Class B common stock: $0.0001 par, 100,000,000 shares authorized at June 30, 2019 and December 31, 2018; 8,024,419 shares issued and outstanding at June 30, 2019 and December 31, 20181 1 
Additional paid-in-capital 2,392,085 2,389,548 
Accumulated other comprehensive loss (65,910)(68,026)
Accumulated deficit (1,704,188)(1,683,319)
Total shareholders' equity 621,999 638,215 
Non-controlling interest 62,471 63,982 
Total equity 684,470 702,197 
Total liabilities and equity $2,796,276 $2,752,485 
See the accompanying notes which are an integral part of these condensed consolidated financial statements.
4


WillScot Corporation
Condensed Consolidated Statements of Comprehensive Loss
Operations (Unaudited)
Three Months Ended September 30, Nine Months Ended September 30, 
(in thousands)2018201720182017
Net loss $(36,729)$(8,357)$(43,185)$(24,432)
Other comprehensive income (loss): 
Foreign currency translation adjustment, net of income tax expense (benefit) of $80, $698, $(161) and $1,316 for the three and nine months ended September 30, 2018 and 2017, respectively 2,298 3,131 

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

(3,741)— 
Total comprehensive loss attributable to WillScot $(31,464)$(5,226)$(39,526)$(15,518)
Three Months Ended June 30, Six Months Ended June 30, 
(in thousands, except share and per share data)2019201820192018
Revenues: 
Leasing and services revenue: 
Modular leasing $187,509 $101,249 $365,731 $198,511 
Modular delivery and installation 56,479 31,413 106,760 57,663 
Sales revenue: 
New units 11,624 5,236 26,528 12,664 
Rental units 10,513 2,435 22,114 6,246 
Total revenues 266,125 140,333 521,133 275,084 
Costs: 
Costs of leasing and services: 
Modular leasing 55,073 27,129 102,308 54,291 
Modular delivery and installation 48,468 30,127 91,811 55,648 
Costs of sales: 
New units 7,999 3,704 18,877 8,691 
Rental units 6,721 1,263 14,516 3,578 
Depreciation of rental equipment 43,968 23,470 85,071 47,315 
Gross profit 103,896 54,640 208,550 105,561 
Expenses: 
Selling, general and administrative 71,623 47,734 145,108 92,948 
Other depreciation and amortization 3,167 1,570 6,171 4,006 
Impairment losses on long-lived assets 2,786 — 5,076 — 
Restructuring costs 1,150 449 7,103 1,077 
Currency (gains) losses, net (354)572 (670)1,596 
Other income, net (1,289)(1,574)(2,240)(4,419)
Operating income 26,813 5,889 48,002 10,353 
Interest expense 32,524 12,155 64,496 23,874 
Loss on extinguishment of debt 7,244 — 7,244 — 
Loss from operations before income tax (12,955)(6,266)(23,738)(13,521)
Income tax benefit (1,180)(6,645)(802)(7,065)
Net (loss) income (11,775)379 (22,936)(6,456)
Net (loss) income attributable to non-controlling interest, net of tax (862)143 (1,722)(505)
Net (loss) income attributable to WillScot $(10,913)$236 $(21,214)$(5,951)
Net (loss) income per share attributable to WillScot
Basic $(0.10)$0.00 $(0.20)$(0.08)
Diluted $(0.10)$0.00 $(0.20)$(0.08)
Weighted average shares 
Basic 108,693,924 78,432,274 108,609,068 77,814,456 
Diluted 108,693,924 82,180,086 108,609,068 77,814,456 
See the accompanying notes which are an integral part of these condensed consolidated financial statements.

5


WillScot Corporation
Condensed Consolidated Statements of Changes in Equity
Comprehensive Loss (Unaudited)
Class A Common Stock Class B Common Stock 
Shares Amount Shares Amount Additional Paid in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Shareholders' Equity Non Controlling Interest Total Equity 
Balance at December 31, 201784,645 $8 8,024 $1 $2,121,926 $(49,497)$(1,636,819)$435,619 $48,931 $484,550 
Net loss— — — — — — (39,470)(39,470)(3,715)(43,185)
Other comprehensive loss— — — — — (82)— (82)(26)(108)
Adoption of ASU 2018-02— — — — — (2,540)2,540 — — — 
Stock-based compensation— — — — 2,225 — — 2,225 — 2,225 
Issuance of common stock and contribution of proceeds to WSII9,200 1 — — 131,544 — — 131,545 7,574 139,119 
Acquisition of ModSpace and the effect of the related financing transactions 6,458 1 — — 134,493 — — 134,494 13,614 148,108 
Balance at September 30, 2018100,303 $10 8,024 $1 $2,390,188 $(52,119)$(1,673,749)$664,331 $66,378 $730,709 
Three Months Ended June 30, Six Months Ended June 30, 
(in thousands)2019201820192018
Net (loss) income $(11,775)$379 $(22,936)$(6,456)
Other comprehensive income (loss): 
Foreign currency translation adjustment, net of income tax expense (benefit) of $0, $(93), $0 and $(241) for the three and six months ended June 30, 2019 and 2018, respectively4,300 (2,619)

8,415 (2,380)
Net loss on derivatives, net of income tax benefit of $1,190, $0, $1,863 and $0 for the three and six months ended June 30, 2019 and 2018, respectively(3,887)— (6,088)— 
Comprehensive loss (11,362)(2,240)(20,609)(8,836)
Comprehensive loss attributable to non-controlling interest (817)(150)

(1,511)(774)
Total comprehensive loss attributable to WillScot $(10,545)$(2,090)$(19,098)$(8,062)

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

6


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

Six Months Ended June 30, 2019
Class A Common Stock Class B Common Stock Additional Paid-in-CapitalAccumulated Other Comprehensive Income Accumulated Deficit Total Shareholders' Equity Non-Controlling InterestTotal Equity 
(in thousands)Shares Amount Shares Amount 
Balance at December 31, 2018108,509 $11 8,024 $1 $2,389,548 $(68,026)$(1,683,319)$638,215 $63,982 $702,197 
Net loss— — — — — — (10,301)(10,301)(860)(11,161)
Other comprehensive income— — — — — 1,748 — 1,748 166 1,914 
Adoption of ASC 606— — — — — — 345 345 — 345 
Stock-based compensation184 — — — 636 — — 636 — 636 
Balance at March 31, 2019108,693 11 8,024 1 2,390,184 (66,278)(1,693,275)630,643 63,288 693,931 
Net loss— — — — — — (10,913)(10,913)(862)(11,775)
Other comprehensive income— — — — — 368 — 368 45 413 
Stock-based compensation6 — — — 1,901 — — 1,901 — 1,901 
Balance at June 30, 2019108,699 $11 8,024 $1 $2,392,085 $(65,910)$(1,704,188)$621,999 $62,471 $684,470 

Six Months Ended June 30, 2018
Class A Common Stock Class B Common Stock Additional Paid-in-CapitalAccumulated Other Comprehensive Income Accumulated Deficit Total Shareholders' Equity Non-Controlling InterestTotal Equity 
(in thousands)Shares Amount Shares Amount 
Balance at December 31, 201784,645 $8 8,024 $1 $2,121,926 $(49,497)$(1,636,819)$435,619 $48,931 $484,550 
Net loss— — — — — — (6,187)(6,187)(648)(6,835)
Other comprehensive income— — — — — 239 — 239 24 263 
Adoption of ASU 2018-02— — — — — (2,540)2,540 — — — 
Stock-based compensation— — — — 121 — — 121 — 121 
Balance at March 31, 201884,645 8 8,024 1 2,122,047 (51,798)(1,640,466)429,792 48,307 478,099 
Net loss— — — — — — 236 236 143 379 
Other comprehensive loss— — — — — (2,619)— (2,619)(293)(2,912)
Stock-based compensation— — — — 1,054 — — 1,054 — 1,054 
Balance at June 30, 201884,645 $8 8,024 $1 $2,123,101 $(54,417)$(1,640,230)$428,463 $48,157 $476,620 

See the accompanying notes which are an integral part of these condensed consolidated financial statements.
7


WillScot Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30, 
(in thousands)20192018
Operating activities: 
Net loss$(22,936)$(6,456)
Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation and amortization 92,477 51,941 
Provision for doubtful accounts 6,297 2,282 
Impairment losses on long-lived assets 5,076 — 
Gain on sale of rental equipment and other property, plant and equipment (5,359)(7,429)
Amortization of debt discounts and debt issuance costs 5,767 2,522 
Loss on extinguishment of debt 7,244 — 
Stock-based compensation expense 3,191 1,175 
Deferred income tax benefit (1,190)(7,066)
Unrealized currency (gains) losses (624)1,378 
Changes in operating assets and liabilities, net of effect of businesses acquired: 
Trade receivables (44,184)(11,624)
Inventories 1,039 442 
Prepaid and other assets (720)(282)
Accrued interest  (4,092)(909)
Accounts payable and other accrued liabilities 4,369 (11,841)
Deferred revenue and customer deposits 13,699 4,667 
Net cash provided by operating activities 60,054 18,800 
Investing activities: 
Acquisition of a business — (24,006)
Proceeds from sale of rental equipment 23,083 12,033 
Purchase of rental equipment and refurbishments (113,088)(64,763)
Proceeds from the sale of property, plant and equipment 8,891 681 
Purchase of property, plant and equipment (3,899)(1,616)
Net cash used in investing activities (85,013)(77,671)
Financing activities: 
Receipts from borrowings 461,203 61,792 
Payment of financing costs (2,686)— 
Repayment of borrowings (430,199)(3,770)
Principal payments on capital lease obligations (61)(59)
Withholding taxes paid on behalf of employees on net settled stock-based awards (654)— 
Payment of make-whole premium on Unsecured Notes redemption (6,252)— 
Net cash provided by financing activities 21,351 57,963 
Effect of exchange rate changes on cash and cash equivalents 140 (96)
Net change in cash and cash equivalents(3,468)(1,004)
Cash and cash equivalents at the beginning of the period8,958 9,185 
Cash and cash equivalents at the end of the period$5,490 $8,181 
Supplemental cash flow information: 
Interest paid $65,023 $22,004 
Income taxes paid, net $355 $1,000 
Capital expenditures accrued or payable $24,348 $16,828 
See the accompanying notes which are an integral part of these condensed consolidated financial statements.
8


WillScot Corporation
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1 - Summary of Significant Accounting Policies
Organization and Nature of Operations
WillScot Corporation (“WillScot” and, together with its subsidiaries, the “Company”), is a leading provider of modular space and portable storage solutions in the United States (“US”), Canada and Mexico. The Company leases, sells, delivers and installs mobile offices, modular buildings and storage products through an integrated network of branch locations that spans North America.
WillScot, whose Class A common shares are listed on the Nasdaq Capital Market (Nasdaq: WSC), serves as the holding company for the Williams Scotsman family of companies. All of the Company’s assets and operations are owned through Williams Scotsman Holdings Corp. (“WS Holdings”). WillScot operates and ownsowns 91.0% of WS Holdings, and Sapphire Holding S.à r.l. (“Sapphire”), an affiliate of TDR Capital LLP (“TDR Capital”), owns the remaining 9.0%.
WillScot was incorporated as a Cayman Islands exempt company under the name Double Eagle Acquisition Corporation ("Double Eagle"), on June 26, 2015. Prior to November 29, 2017, Double Eagle was a Nasdaq-listed special purpose acquisition company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination. On November 29, 2017 Double Eagle indirectly acquired Williams Scotsman International, Inc. (“WSII”) from Algeco Scotsman Global S.à r.l., (together with its subsidiaries, the “Algeco Group”), which is majority owned by an investment fund managed by TDR Capital. As part of the transaction (the “Business Combination”), Double Eagle domesticated to Delaware and changed its name to WillScot Corporation. Additional information about the Business Combination and the Company's operations prior thereto is contained in the consolidated financial statements and notes included in WillScot's Annual Report on Form 10-K for the year ended December 31, 2017.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by accounting principles generally accepted in the US (“GAAP”) for complete financial statements. The accompanying unaudited condensed consolidated financial statements contain all adjustments, which are of a normal and recurring nature, necessary to present fairly the financial position, the results of operations and cash flows for the interim periods presented.
The results of operations for the interim periods presented.
The results of consolidated operations for the three and ninesix months ended SeptemberJune 30, 20182019 are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and notes included in WillScot's Annual Report on Form 10-K for the year ended December 31, 2017.2018.
Principles of Consolidation
The unaudited condensed consolidated financial statements comprise the financial statements of WillScot and its subsidiaries that it controls due to ownership of a majority voting interest. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. All intercompany balances and transactions are eliminated. The Business Combination was accounted for as a reverse recapitalization in accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations. Although WillScot was the indirect acquirer of WSII for legal purposes, WSII was considered the acquirer for accounting and financial reporting purposes.
As a result of WSII being the accounting acquirer, the financial reports filed with the US Securities and Exchange Commission (the “SEC”) by the Company subsequent to the Business Combination are prepared “as if” WSII is the predecessor and legal successor to the Company. The historical operations of WSII are deemed to be those of the Company. Thus, the financial statements included in this report reflect (i) the historical operating results of WSII prior to the Business Combination; (ii) the combined results of WillScot and WSII following the Business Combination on November 29, 2017; (iii) the assets and liabilities of WSII at their historical cost; and (iv) WillScot's equity structure for all periods presented. The recapitalization of the number of shares of common stock attributable to the purchase of WSII in connection with the Business Combination is reflected retroactively to the earliest period presented and is utilized for calculating earnings per share in all prior periods presented. No step-up basis of intangible assets or goodwill was recorded in the Business Combination transaction consistent with the treatment of the transaction as a reverse capitalization of WSII. WSII’s remote accommodations business, which consisted of Target Logistics Management LLC (“Target Logistics”) and its subsidiaries and Chard Camp Catering Services (“Chard,” and together with Target Logistics, the “Remote Accommodations Business”), was transferred to members of the Algeco Group on November 28, 2017 in a transaction under common control and was not included as part of the Business Combination. The operating results of the Remote Accommodations Business, net of tax, for the three and nine
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months ended September 30, 2017 have been reported as discontinued operations in the condensed consolidated financial statements.
Recently Issued and Adopted Accounting Standards
The Company qualifies as an emerging growth company (“EGC”) as defined under the Jumpstart Our Business Startups Act (the “JOBS Act”). Using exemptions provided under the JOBS Act provided to EGCs, the Company has elected to defer compliance with new or revised financial accounting standards until a company that is not an issuer (as defined under section 2(a) of the Sarbanes-Oxley Act of 2002)it is required to comply with such standards. As such, compliance dates included below pertain to non-issuers, and as permitted, early adoption dates for non-issuers are indicated.
Subject to limited exception, WillScot will cease to be EGC on the earlier (i) the last day of the fiscal year in which WillScot’s annual gross revenues exceed $1.07 billion, (ii) the date on which the Company issues more than $1.0 billion in nonconvertible debt securities during the preceding three-year period, and (iii) the date on which WillScot is deemed to be a large accelerated filer under the SEC’s rules. Based on the recent ModSpace (defined below) acquisition described in Note 2, WillScot anticipates that its 2019 annual gross revenues will exceed $1.07 billion. WillScot also anticipates that, due in part to the amount of Class A common stock issued by WillScot to fund the ModSpace acquisition, WillScot will be deemed to be a large accelerated filer atas of December 31, 2019 based on the value of its Class A common stock held by non-affiliates at June 30, 2019. WillScot currently foresees remaining an EGC until December 31, 2019, but would lose EGC eligibility immediately if it were to issue additional debt and exceed the debt issuance criteria described above.
Recently Issued Accounting Standards
In May 2014,June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09,2016-13, Revenuefrom Contracts with CustomersFinancial Instruments - Credit Losses (Topic 606)326), which prescribes that financial assets (or a single comprehensive modelgroup of financial assets) should be measured at amortized cost basis to be presented at the net amount expected to be collected. Credit losses relating to these financial assets should be recorded through an allowance for entities to use in the accounting for revenue arising from contracts with customers.credit losses. The new guidance will supersede virtually all existing revenue guidance under GAAP andstandard is effective for annual reporting periodsthe Company for fiscal years beginning after December 15, 2018. Early adoption for non-public entities is permitted starting with annual reporting2019, including interim periods beginning after December 15, 2016. The core principle contemplated by this new standard waswithin that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. In April and May 2016, the FASB also issued clarifying updates to the new standard specifically to address certain core principles including the identification of performance obligations, licensing guidance, the assessment of the collectability criterion, the presentation of taxes collected from customers, non-cash considerations, contract modifications and completed contracts at transition.
fiscal year. The Company is currently finalizing its evaluationcontinues to evaluate the impacts of adopting the impact that the updated guidance will havestandard on the Company’s financial statements and related disclosures. As part of the evaluation process, the Company continues to hold regular meetings with key stakeholders from across the organization to discuss the impact of the standard on its existing contracts. The Company plans to adopt Topic 606 using the modified retrospective transition approach.
The Company is utilizing a bottom-up approach to analyze the impact of the standard on its portfolio of contracts by reviewing the Company’s current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to the Company’s existing revenue contracts.

As part of its implementation project, the Company has prepared analyses with respect to revenue stream scoping, performed contract reviews of a representative sample of customer arrangements, developed a gap analysis and evaluated the revised disclosure requirements. The two primary lines of business impacted by the adoption are new and used sales transactions and modular leasing services transactions. The Company has substantially completed its procedures based on the new and used sales and modular leasing service transactions that occurred through the second quarter of 2018 and is not aware of any significant changes based on the work performed to date. The Company has incorporated the recently acquired Modular Space Holdings, Inc. (“ModSpace”) into the project during the third quarter of 2018. As described in Note 2, ModSpace was acquired in August 2018 and the Company has commenced workshops with key stakeholders, detailed contract reviews and a financial statement disclosure gap evaluation specific to revenue streams acquired through the acquisition.
After finalizing its procedures during the fourth quarter of 2018, the Company will conclude on the level of impact that the adoption of ASC 606 will have on the consolidated financial statements, including financial statement disclosures. Specific to disclosures, the Company expects to provide additional detail regarding the disaggregation of revenue and contract balances. The Company is required to adopt the standard as of January 1, 2019 and plans to first present financial statements that reflectwithin the required adoption in the first quarter of 2019.period.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASC 842"). This guidance revises existing practice related to accounting for leases under ASC Topic 840, Leases (“ASC 840”) for both lessees and lessors. The new guidance requires lessees to recognizeestablishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such asbalance sheet for initial direct costs. For income statement purposes,
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the new standard retains a dual model similar to ASC 840, requiringall leases towith terms longer than twelve months. Leases will be classified as either finance or operating, or finance. Operatingwith classification affecting the pattern of expense recognition in the income statement. This guidance also expands the requirements for lessees to record leases will resultembedded in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). Whileother arrangements and the new standard maintains similar accountingrequired quantitative and qualitative disclosures surrounding leases. Accounting guidance for lessors as under ASC 840, the new standard reflects updates to, among other things, align with certain changes to the lessee model. 
The new standardis largely unchanged. This guidance is effective for non-public entities for fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020.those annual periods using a modified retrospective transition approach. Early adoption is permitted for all entities. However, based on WillScot's expectation that it
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will cease to be an EGC as of December 31, 2019, the Company plans to adopt the new standard no later than in the fourth quarter of 2019. Adoption of the new standard could be required earlier in 2019 if WillScot loses EGC eligibility earlier than anticipated based on other criteria.
The guidance includes a number of practical expedients that the Company is evaluating and may elect to apply. The adoption of the new standard will require the Company to recognize right-of-use assets and lease liabilities that will be significant to our consolidated balance sheet. The Company will continue to evaluate the impacts of this guidance on its financial position, results of operations, and cash flows. The Company plans to updatetake advantage of the transition package of practical expedients permitted within ASC 842 which allows the Company not to reassess (i) whether any expired or existing lease contracts are or contain leases, (ii) the historical lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases. The Company is in the process of assessing the potential impact this guidance may have on its systems,financial results, including which of its existing lease arrangements will be impacted by the new guidance and whether other arrangements that are not currently classified as leases may become subject to the guidance. Additionally, the Company is finalizing the implementation of a lease management system to assist in the accounting and is implementing additional changes to its processes and internal controls to meetensure the new reporting and disclosure requirements.requirements are met upon adoption.
Additionally, as discussed in Note 3, most of the Company's equipment rental revenues will be accounted for under the current lease accounting standard, ASC 840, until the adoption of the new lease accounting standard ASC 842. The Company is continuing to evaluate the impact of adopting ASC 842 on the Company's accounting for equipment rental revenue.
Recently Adopted Accounting Standards
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date.
During December 2017, shortly afterIn August 2018 the Tax CutsFASB issued ASU 2018-13, Fair Value Measurement Topic 820 ("ASU 2018-13"). This guidance modifies the disclosure requirements for fair value measurements by removing the requirements to disclose the amount and Jobs Act (the “Tax Act”) was enacted, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implicationsreasons for transfers between Level 1 and Level 2 of the Tax Cutsfair value hierarchy, the policy for the timing of transfers between levels of the fair value hierarchy, and Jobs Act (“SAB 118”) which providesthe valuation processes for Level 3 fair value measurements. ASU 2018-13 also adds requirements to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, as well as requires the range and weighted average of significant unobservable inputs used in developing Level 3 fair value measurements. The guidance is effective for the Company for annual reporting periods and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted for all entities. The Company elected to adopt this guidance on accounting fora retrospective basis with no material impact to the Tax Act’s impact. SAB 118 provides a measurement period, which in no case should extend beyond one year fromfinancial statements as of June 30, 2019.
In August 2018, the Tax Act enactment date, during which a company acting in good faith may completeFASB issued ASU 2018-15, Intangibles—Goodwill and Other - Internal-Use Software (Subtopic 350-40) ("ASU 2018-15"). This guidance clarifies the accounting for implementation costs of a hosting arrangement that is a service contract, to align the impactsrequirements for capitalizing implementation costs for hosting arrangements, regardless of whether they convey a license to the Tax Act under ASC Topic 740. Per SAB 118, companies must reflecthosted software. The guidance is effective for the income tax effects of the Tax ActCompany for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption is permitted, including adoption in the reportingany interim period, in which the accounting under ASC Topic 740 is complete. To the extent the accounting for certain income tax effects of the Tax Act is incomplete, companies can determineall entities. The Company elected to adopt this guidance on a reasonable estimate for those effects and record a provisional estimate inprospective basis with no material impact to the financial statements in the first reporting period in which a reasonable estimate can be determined. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 based on the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted. If a company is unable to provide a reasonable estimate of the impacts of the Tax Act in a reporting period, a provisional amount must be recorded in the first reporting period in which a reasonable estimate can be determined. As a result of the Tax Act, in 2017, the Company remeasured its net deferred tax liabilities and recognized a provisional net benefit of $28.1 million. In addition, based on information currently available, the Company recorded a provisional income tax expense of $2.4 million in 2017 related to the deemed repatriation of foreign earnings. The Company recorded a minor adjustment in 2018 to the provisional amounts recorded in its financial statements for the year ended December 31, 2017 (see Note 9) and continues to evaluate the provisions of the Tax Act including guidance from the Department of Treasury and Internal Revenue Service. Additionally, the Company filed its US tax return for 2017 during the fourth quarter of 2018 and any changes to the estimates used to the final tax positions for temporary differences, earnings and profits will result in adjustments of the remeasurement amounts for the Tax Act recorded as of December 31, 2017.
The Company continues to evaluate the impact of the Global Low Taxed Intangible Income (“GILTI”) provision of the Tax Act. The Company is required to make an accounting policy election of either (1) treating GILTI as a current period expense when incurred or (2) factoring such amounts into the Company’s measurement of its deferred taxes. The Company has not completed its analysis and has not made a determination of its accounting policy for GILTI.June 30, 2019.

NOTE 2 - Acquisitions
Tyson Acquisition
On January 3, 2018, the Company acquired all of the issued and outstanding membership interests of Onsite Space LLC (d/b/a Tyson Onsite (“Tyson”)). Tyson provided modular space rental services in the Midwest, primarily in Indiana, Illinois and Missouri. The acquisition date fair value of the consideration transferred consisted of $24.0 million in cash consideration, net of cash acquired. The transaction was funded by borrowings under the ABL Facility (defined in Note 7).
Through September 30, 2018, the Company has recorded adjustments to the Tyson opening balance sheet, which increased rental equipment and accrued liabilities by $0.9 million and $0.1 million, respectively and decreased property, plant and equipment by $0.1 million. The offset of these adjustments was recorded to goodwill as detailed in Note 6. Increases or decreases in the estimated fair values of the net assets acquired may impact the Company’s statements of operations in future periods. The Company expects that the preliminary values assigned to the rental fleet, property, plant and equipment, intangible assets, deferred tax assets and other accrued tax liabilities will be finalized during the fourth quarter of 2018. 
Tyson results were immaterial to the condensed consolidated statements of operationsAssets Held for the three and nine months ended September 30, 2018 and as a result, the Company is not presenting pro-forma information. 
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Acton Acquisition
On December 20, 2017, the Company acquired 100% of the issued and outstanding ownership interests of Acton Mobile Holdings LLC (“Acton”) for a cash purchase price of $237.1 million, subject to certain adjustments. Acton owns all of the issued and outstanding membership interests of New Acton Mobile Industries, which provides modular space and portable storage rental services across the US. The acquisition was funded by cash on hand and borrowings under the ABL Facility.
Through September 30, 2018, the Company recorded adjustments to the Acton opening balance sheet, which increased accrued liabilities, deferred revenue, deferred tax assets and receivables by $0.8 million, $0.6 million, $0.8 million, and $2.4 million, respectively, and decreased rental equipment by $2.1 million. The offset of these adjustments was recorded to goodwill as detailed in Note 6. As a result of the timing of the transaction, the purchase price allocation for the rental equipment, intangible assets, property, plant and equipment, deferred tax assets, receivables, and other accrued liabilities acquired and assumed are based on preliminary valuations and are subject to change as the Company obtains additional information during the acquisition measurement period. Increases or decreases in the estimated fair values of the net assets acquired may impact the Company’s statements of operations in future periods. The Company expects that the preliminary values assigned to the rental equipment, intangible assets, property, plant and equipment, deferred tax assets, non-indemnified liabilities, and other accrued tax liabilities will be finalized during the fourth quarter of 2018.
Pro-forma results are presented in aggregate with the ModSpace acquisition below.Sale
ModSpace Acquisition
On August 15, 2018, (the "Closing Date"), the Company acquired ModSpace,Modular Space Holdings, Inc. ("ModSpace"), a privately-owned national provider of office trailers, portable storage units and modular buildings.buildings (the "Business Combination"). The acquisition was consummated by merging a special purpose subsidiary of the Company with and into ModSpace, with ModSpace surviving the merger as a subsidiary of WSII. The Company acquired ModSpace to create long-term shareholder value driven by, among other things, economies of scale, cost synergies and revenue opportunities unique to a combination of WillScot's and ModSpace's operations, and other benefits associated with being an industry-leading specialty rental services provider.
Purchase Price
The aggregate purchase price for ModSpace was $1.2 billion and consisted of (i) $1.1 billion in cash, (ii) 6,458,229 shares of WillScot's Class A common stock (the "Stock Consideration") with a fair market value of $95.8 million and (iii) warrants to purchase an aggregate of 10,000,000 shares of WillScot’s Class A common stock at an exercise price of $15.50 per share (the "ModSpace"2018 Warrants") with a fair market value of $52.3 million, and (iv) a working capital adjustment of $5.7$4.7 million. Of the cash consideration, $3.0 million was deposited into an escrow account to fund any post-closing adjustments from differences between the estimated working capital and the actual working capital of ModSpace at closing. The final working capital of ModSpace at closing is still being evaluated by the Company and the sellers' representative in accordance with the terms of the purchase agreement. 
The acquisition was funded by the net proceeds of WillScot's issuance of 9,200,000 shares of Class A common stock, (see Note 8), the net proceeds of WSII’s issuance of $300.0 million in senior secured notes and $200.0 million in senior unsecured notes (see(see Note 7)8), and borrowings under the ABL Facility (see Note 7)8).
The purchase price has been determined to be as follows:
Purchase Price 
(in thousands, except for per share amounts) Price 
Cash $1,054,416 
Stock consideration (a) 95,796 
ModSpace warrants (b) 52,310 
Working capital adjustment (c) 5,724 
Total purchase price $1,208,246 
(a) The fair market value of the 6,458,229 shares issued as consideration was determined using the closing price on August 15, 2018, of $15.78 per share less a discount of 6.0%, based on a lock up agreement executed in connection with the acquisition of ModSpace.
(b) Warrants were valued assuming a fair market value of $5.23 as estimated using a Black-Scholes valuation model as of August 15, 2018. 
(c) The estimated working capital adjustment as of the Closing Date was $5.7 million. The working capital amount is subject to post-close adjustments.

The acquisition date fair valueAs of the stock consideration was estimateddate of acquisition, August 15, 2018, the fair market values of the Stock Consideration and 2018 Warrants were $14.83 per share and $5.23 per warrant, respectively, with the warrant values determined using a Black-Scholes valuation model. The estimated fair market value of the Class A shares was determined utilizing the $15.78 per share closing price of the Company's shares on August 15, 2018, discounted by 6.0%, to reflect a lack of marketability based on the lock-up restrictions contemplated by the merger agreement.
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The estimated fair values of the Stock Consideration and 2018 Warrants are a levelLevel 3 fair value measurement.measurements. The fair value of each share isand warrant was estimated using the Black-Scholes option pricing model with the following assumptions: expected dividend yield, expected stock price volatility, weighted-averageweighted average risk-free interest rate, andthe average expected term of the lock up period on the shares.shares, and the weighted average expected term of the warrants. The volatility assumption used in the Black-Scholes option-pricing model is derived from the historical daily change in the market price of the Company's common stock, as well as the historical daily changes in the market price of its peer group, based on weighting, as determined by the Company. The risk-free interest rate used in the Black-Scholes model is based on the implied US
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Treasury bill yield curve at the date of grant withCompany, and over a remaining term equaltime period equivalent to the Company’s expected term assumption. The Company has never declared or paid a cash dividend on common shares.
Expected Volatility 28.6 %
Risk-free rate of interest 2.2 %
Dividend Yield — %
Expected life (years) 0.5 

The acquisition date fair value oflock-up restriction (for the warrants was estimated using a Black-Scholes valuation model. The estimated fair value ofshares) and the warrants is a level 3 fair value measurement. The fair value of each warrant is estimated using the Black-Scholes option-pricing model with the following assumptions: expected dividend yield, expected stock price volatility, weighted-average risk-free interest rate and weighted-average expected term of the warrants. The volatility assumption used in the Black-Scholes option-pricing model is derived from the historical daily change in the market price of the Company's common stock, as well as the historical daily changes in the market price of its peer group, based on weighting, as determined by the Company.term. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a cash dividend on common shares. The following table summarizes the key inputs utilized to determine the fair value of the Stock Consideration and 2018 Warrants included within the purchase price of ModSpace.
Expected Volatility 35.0 %
Risk-free rate of interest 2.7 %
Dividend Yield — %
Expected life (years) 4.3 
Stock Consideration fair value inputs 2018 Warrants fair value inputs 
Expected volatility 28.6 %35.0 %
Risk-free rate of interest 2.2 %2.7 %
Dividend yield — %— %
Expected life (years) 0.5 4.3 
Opening Balance Sheet

The purchase price of ModSpace was assigned to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition, August 15, 2018. The Company estimated the fair values based on independent valuations, discounted cash flow analyses, quoted market prices, contributory asset charges, and estimates made by management.
The final assignment of the fair value of the ModSpace acquisition, including the final assignment of goodwill to the Company's reporting units was not complete as of June 30, 2019, but will be finalized within the allowable one year measurement period. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date, August 15, 2018.2018 and the adjustments made to these balances during the six months ended June 30, 2019.
(in thousands)Balance at December 31, 2018AdjustmentsBalance at June 30, 2019
Trade receivables, net (a)$81,320 $(2,296)$79,024 
Prepaid expenses and other current assets17,342 305 17,647 
Inventories4,757 — 4,757 
Rental equipment853,986 (321)853,665 
Property, plant and equipment110,413 4,388 114,801 
Intangible assets:
 Favorable leases (b)3,976 — 3,976 
Trade name (b)3,000 — 3,000 
Deferred tax assets, net1,855 — 1,855 
Total identifiable assets acquired$1,076,649 $2,076 $1,078,725 
Accrued liabilities$31,551 $(793)$30,758 
Accounts payable37,678 323 38,001 
Deferred revenue and customer deposits15,938 — 15,938 
Total liabilities assumed$85,167 $(470)$84,697 
Total goodwill (c)$215,764 $(2,547)$213,217 
(a) The Company’s estimated fair value of accounts receivable was $79.0 million and the gross contractual amount was $86.5 million. The Company estimated that $7.5 million is uncollectible.
(b) The trade name has an estimated useful life of 3 years. The favorable lease assets have an estimated useful life equivalent to the term of the lease.
(c) The goodwill is reflective of ModSpace’s assets acquiredgoing concern value and liabilities assumedoperational synergies that the Company expects to achieve that would not be available to other market participants. The goodwill represented on the acquisition date are determined based on preliminary valuationsbalance sheet is not deductible for income tax purposes. The goodwill is assigned to the Modular – US and analyses. Accordingly, the Company has made provisional estimates for the assets acquired and liabilities assumed. The valuation of intangible assets acquired is based on certain valuation assumptions yet to be finalized, including cash flow projections, discount rates, contributory asset charges and other valuation model inputs. The valuation of tangible long-lived assets acquired is dependent upon, among other things, refinement of the inputsModular – Other North America segments, defined in Note 16, in the valuation modelamounts of $178.3 million and an analysis of the condition and estimated remaining useful lives of the assets acquired. In addition to finalizing the valuation of acquired assets, the Company is analyzing complex provisions of tax law regarding treatment of tax attributes upon ModSpace's March 2017 emergence from bankruptcy, implications of the Tax Act as well as scheduling the reversal of deferred tax balances thereof. The Company expects its analysis to be substantially complete by the close of the fourth quarter. Due to the provisional nature of the aforementioned items, the Company has not changed its judgment about the realizability of its pre-existing deferred tax assets as a result of the business combination. The provisional amounts reflected are subject to further adjustment, which may affect the fair values ascribed to goodwill, acquired intangible and tangible assets and the related deferred tax balances. Substantial completion of the requisite analyses may result in changes to acquired deferred tax liabilities which thereby may also affect the Company’s judgment about the realizability of its pre-existing deferred tax assets for which any reductions in the valuation allowance will be reflected separate from the business combination as discrete adjustments to income tax expense (benefit) in the period in which it is determined.$34.9 million, respectively.

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

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

ModSpace has generated $65.5 million of revenue since the acquisition date, which is included in the condensed consolidated financial statements of operations for the three and nine months ended September 30, 2018.
The pro-formapro forma information below has been prepared using the purchase method of accounting, giving effect to the Acton and ModSpace acquisitionsacquisition as if theyit had been completed on January 1, 2017.2018. The pro-formapro forma information is not necessarily indicative of the Company’s results of operations had the acquisitionsacquisition been completed on the above dates,date, nor is it necessarily indicative of the Company’s future results. The pro-formapro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions,acquisition and also does not reflect additional revenue opportunities following the acquisitions.acquisition. The tables below present unaudited pro forma consolidated statements of operations information as if ModSpace had been included in the Company’s consolidated results for the six months ended June 30, 2018:
(in thousands) Six Months Ended
June 30, 2018 
WillScot revenues $275,084 
ModSpace revenues 230,917 
Pro forma revenues $506,001 
WillScot pre-tax loss $(13,521)
ModSpace pre-tax income 4,004 
Pre-tax loss before pro forma adjustments (9,517)
Pro forma adjustments to combined pre-tax loss: 
Impact of fair value mark-ups/useful life changes on depreciation (a) (6,579)
Intangible asset amortization (b) (500)
Interest expense (c) (32,871)
Elimination of ModSpace interest (d) 15,933 
Pro forma pre-tax loss (e) (33,534)
Income tax benefit (f) (17,522)
Pro forma net loss  $(16,012)
(a) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups of equipment acquired in the ModSpace acquisition. The useful lives assigned did not change significantly from the useful lives used by ModSpace.
(b) Amortization of the trade name acquired in ModSpace acquisition.
(c) In connection with the ModSpace acquisition, the Company drew an incremental $419.0 million on the ABL Facility, as defined in Note 8, and issued $300.0 million of secured notes and $200.0 million of unsecured notes. The weighted average interest rate for the aforementioned borrowings was 6.54%. Interest expense includes amortization of related deferred financing fees on debt incurred in conjunction with ModSpace acquisition.
(d) Interest on ModSpace historical debt was eliminated.
(e) Pro forma pre-tax loss includes $1.1 million of restructuring expense and $7.4 million of integration costs incurred by WillScot for the six months ended June 30, 2018.
(f) The pro forma tax rate applied to the ModSpace pre-tax loss is the same as the WillScot effective rate for the period.
Transaction and Integration Costs
The Company incurred $8.2 million and $18.4 million in integration costs within selling, general and administrative ("SG&A") expenses for the three and six months ended June 30, 2019, respectively, related to the ModSpace acquisition. The Company incurred $4.8 million and $7.4 million in integration costs for the three and six months ended June 30, 2018, respectively, related to the acquisitions of Acton Mobile Holdings LLC (“Acton”) and Onsite Space LLC (d/b/a Tyson Onsite (“Tyson”)).
The Company incurred no transaction costs for the three and six months ended June 30, 2019. The Company incurred $4.1 million in transaction costs for both the three and six months ended June 30, 2018.
Assets Held for Sale
In connection with the integration of ModSpace, during the six months ended June 30, 2019, the Company reclassified eight legacy ModSpace branch facilities, from property, plant and equipment to held for sale, in addition to the three held for sale properties that were recognized at December 31, 2018. During the six months ended June 30, 2019, an impairment of $2.6 million was recorded related to these properties and two of these properties were sold for net cash proceeds of $8.6 million with no material gain or loss.
The fair value of the assets held for sale was determined using valuations from third party brokers, which were based on current sales prices for comparable assets in the market, a Level 2 measurement.


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NOTE 3 - Revenue
Adoption of ASU 2014-09
On January 1, 2019, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606") as well as subsequent updates using the modified retrospective method applied to those contracts that were not completed as of January 1, 2019. Results for reporting periods beginning after January 1, 2019 are presented under the guidance required by ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting under ASC 605, Revenue Recognition ("ASC 605"). The implementation of ASC 606 did not have a material impact on the Company’s financial results for the period ending June 30, 2019.
Revenue Recognition Policy
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.
Modular Leasing and Services Revenue
The majority of revenue (69% for both the three and six months ended June 30, 2019, and 70% for both the three and six months ending June 30, 2018) is generated by rental income subject to the guidance of ASC 840. The remaining revenue is generated by performance obligations in contracts with customers for services or sale of units subject to the guidance in ASC 606 or ASC 605 for 2019 and 2018, respectively.
Leasing Revenue (ASC 840)
Income from operating leases is recognized on a straight-line basis over the lease term. The Company's lease arrangements typically include multiple lease and non-lease components. Examples of lease components include, but are not limited to, the lease of modular space or portable storage units, and examples of non-lease components include, but are not limited to, the delivery, installation, maintenance, and removal services commonly provided in a bundled transaction with the lease components. Arrangement consideration is allocated between lease deliverables and non-lease components based on the relative estimated selling (leasing) price of each deliverable. Estimated selling (leasing) price of the lease deliverables is based upon the estimated stand-alone selling price of the related performance obligations using an adjusted market approach.
When leases and services are billed in advance, recognition of revenue is deferred until services are rendered. If equipment is returned prior to the contractually obligated period, the excess, if any, between the amount the customer is contractually required to pay over the cumulative amount of revenue recognized to date is recognized as incremental revenue upon return.
Rental equipment is leased primarily under operating leases and, from time to time, under sales-type lease arrangements. Operating lease minimum contractual terms generally range from 1 month to 60 months and averaged approximately 10 months across the Company's rental fleet for the six months ended June 30, 2019.
Services Revenue (ASC 606)
The Company generally has three non-lease service-related performance obligations in its contracts with customers:
•Delivery and installation of the modular or portable storage unit;
•Maintenance and other ad hoc services performed during the lease term; and
•Removal services that occur at the end of the lease term.
Consideration is allocated to each of these performance obligations within the contract based upon their estimated relative standalone selling prices using the estimated cost plus margin approach. Revenue from these activities is recognized as the services are performed.
Sales Revenue (ASC 606)
Sales revenue is generated by the sale of new and used units. Revenue from the sale of new and used units is generally recognized at a point in time upon the transfer of control to the customer, which occurs when the unit is delivered and installed in accordance with the contract. Sales transactions constitute a single performance obligation.
Revenue Disaggregation
Geographic Areas
The Company had total revenue in the following geographic areas for the three and six months ended June 30:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2019201820192018
US $240,447 $127,983 473,214 $251,103 
Canada21,456 8,678 39,673 16,845 
Mexico 4,222 3,672 8,246 7,136 
Total revenues$266,125 $140,333 521,133 $275,084 

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The tables below present unaudited pro-forma consolidated statements of operations information as if ModSpaceMajor Product and Acton had been included inService Lines
Rental equipment leasing is the Company’s consolidated resultscore business, which significantly impacts the nature, timing, and uncertainty of the Company’s revenue and cash flows. This includes rental of both modular space and portable storage 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. Rental equipment leasing is complemented by new product 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 ninesix months ended SeptemberJune 30 is as follows:
Three Months Ended June 30,Six Months Ended June 30,
2019201820192018
(in thousands)TotalTotalTotalTotal
Modular space leasing revenue$129,473 $69,616 $253,025 $136,860 
Portable storage leasing revenue6,022 4,835 12,262 9,767 
VAPS (a)39,669 20,560 77,061 40,009 
Other leasing-related revenue (b)12,345 6,238 23,383 11,875 
Modular leasing revenue187,509 101,249 365,731 198,511 
Modular delivery and installation revenue56,479 31,413 106,760 57,663 
Total leasing and services revenue243,988 132,662 472,491 256,174 
Sale of new units11,624 5,236 26,528 12,664 
Sale of rental units10,513 2,435 22,114 6,246 
Total revenues$266,125 $140,333 $521,133 $275,084 
(a) Includes $4.1 million and $2.6 million of VAPS service revenue for the three months ended June 2019 and 2018, respectively, and $7.9 million and $4.9 million of VAPS service revenue for the six months ended June 30, 2019 and 2018, respectively.
(b) Primarily damage billings, delinquent payment charges, and other processing fees.
Receivables, Contract Assets and Liabilities
As reflected above, approximately 69% of the Company's rental revenue is accounted for under ASC 840 for both the three and six months ended June 30, 2019. The customers that are responsible for the remaining revenue that is accounted for under ASC 606 (and ASC 605 prior to 2019) are generally the same customers that rent the Company's equipment. 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 840, the discussions below on credit risk and the Company's allowance for doubtful accounts 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's top five customers with the largest open receivables balances represented 2.6% of the total receivables balance as of June 30, 2019. The Company manages credit risk through credit approvals, credit limits, and other monitoring procedures.
The Company's allowance for doubtful accounts reflects its estimate of the amount of receivables that it will be unable to collect based on specific customer risk and historical write-off experience. The Company's estimates reflect 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. During the three and six months ended June 30, 2019, the Company recognized bad debt expenses of $3.4 million and $6.3 million, respectively, within SG&A in its condensed consolidated statements of income, which included amounts written-off and changes in its allowances for doubtful accounts. During the three and six months ended June 30, 2018, the Company recognized bad debt expenses of $0.7 million and 2017:$2.3 million, respectively.
(in thousands) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 
WillScot revenues (a) $218,924 $494,008 
ModSpace revenues 81,692 312,609 
Pro-forma revenues $300,616 $806,617 
WillScot pretax loss (a) $(43,236)$(56,757)
ModSpace pretax loss (11,460)(7,456)
Pretax loss before pro-forma adjustments (54,696)(64,213)
Pro-forma adjustments to combined pretax loss: 
Impact of fair value mark-ups/useful life changes on depreciation (b) (132)(395)
Intangible asset amortization (c) (250)(750)
Interest expense (d) (16,495)(49,467)
Elimination of ModSpace interest (e) 4,346 20,279 
Pro-forma pretax loss (f) (67,227)(94,546)
Income tax benefit (10,118)(22,608)
Pro-forma net loss  $(57,109)$(71,938)
When customers are billed in advance, the Company defers recognition of revenue and reflects unearned revenue at the end of the period. As of January 1, 2019, the Company had approximately $32.1 million of deferred revenue that relates to removal services for lease transactions and advance billings for sale transactions, which are within the scope of ASC 606. As of June 30, 2019, the Company had approximately $44.9 million of deferred revenue relating to these services. These items are included in deferred revenue and customer deposits in the condensed consolidated balance sheets. During the six months ended June 30, 2019, $7.2 million of previously deferred revenue relating to removal services for lease transactions and advance billings for sale transactions was recognized as revenue.
(a)Excludes historic revenues and pre-tax income from discontinued operations. Post-acquisition ModSpace revenues and pre-tax income results are reflected in WillScot's historic revenue amounts.
(b)Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups of equipment acquired in the ModSpace acquisition. The useful lives assigned to such equipment is preliminary and did not change significantly from the useful lives used by ModSpace.
(c)Amortization of the trade name acquired in ModSpace acquisition.
(d)In connection with the ModSpace acquisition, the Company drew an incremental $420.0 million on the ABL Facility and issued $300.0 million of secured notes and $200.0 million of unsecured notes. As of September 30, 2018, the weighted-average interest rate for the aforementioned borrowings was 6.54%. Interest expense includes amortization of related deferred financing fees on debt incurred in conjunction with ModSpace acquisition.
(e)Interest on ModSpace historic debt was eliminated.
(f)Pro-forma pretax loss includes $6.1 million and $7.2 million, $7.5 million and $14.9 million, $10.7 million and $14.8 million, of restructuring expense, integration costs, and transactions costs incurred by WillScot for the three and nine months ended September 30, 2018, respectively. Additionally, pro-forma pretax loss for the three and nine month ended September also includes $20.5 million of interest expense associated with bridge financing fees incurred in connection with the acquisition of ModSpace. 
(g)The pro-forma tax rate applied to the ModSpace pretax loss is the same as the William Scotsman effective rate for the period.
The Company does not have material contract assets and it did not recognize any material impairments of any contract assets.
The Company's uncompleted contracts with customers have unsatisfied (or partially satisfied) performance obligations. For the future services revenues that are expected to be recognized within twelve months, the Company has elected to utilize the optional disclosure exemption made available regarding transaction price allocated to unsatisfied (or
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(in thousands)Three Months Ended September 30, 2017 Nine Months Ended
September 30, 2017 
WillScot revenues (a) $116,162 $325,560 
Acton and ModSpace revenues (b) 151,434 407,331 
Pro-forma revenues $267,596 $732,891 
WillScot pretax loss (a) $(21,067)$(53,325)
Acton and ModSpace pretax income (loss) (b) 6,843 (108,295)
Pro-forma pretax loss (14,224)(161,620)
Pro-forma adjustments to combined pretax loss: 
Impact of fair value mark-ups/useful life changes on depreciation (c) (746)(1,959)
Intangible asset amortization (d) (427)(1,281)
Interest expense (e) (19,255)(57,745)
Elimination of Acton and ModSpace interest (f) 8,936 36,702 
Pro-forma pretax loss (25,716)(185,903)
Income tax benefit (g) (9,316)(61,950)
Pro-forma loss from continuing operations (h) (16,400)(123,953)
Income from discontinued operations 5,078 11,123 
Pro-forma net loss $(11,322)$(112,830)
partially unsatisfied) performance obligations. The transaction price for performance obligations that will be completed in greater than twelve months is variable based on the costs ultimately incurred to provide those services and therefore the Company is applying the optional exemption to omit disclosure of such amounts.
The primary costs to obtain contracts 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. As a result, the Company has applied the practical expedient for incremental costs of obtaining a sales contract and will expense commissions as incurred.
Other Matters
The Company's ASC 606 revenues do not include material amounts of variable consideration, other than the variability noted for services arrangements expected to be performed beyond a twelve month period.
The Company's payment terms vary by the type and location of its customer and the product or services offered. The time between invoicing and when payment is due is not significant. While the Company may bill certain customers in advance, its contracts do not contain a significant financing component based on the short length of time between upfront billings and the performance of contracted services. For certain products, services, or customer types, the Company requires payment before the products or services are delivered to the customer.
Revenue is recognized net of taxes collected from customers, which are subsequently remitted to governmental authorities.
The most significant estimates and judgments relating to ASC 606 revenues involve the estimation of relative stand-alone selling prices for the purpose of allocating consideration to the performance obligations in the Company's lease transactions.

(a)Excludes historic revenues and pre-tax income from discontinued operations. Includes historic corporate and other SG&A expenses related to Algeco Group costs, which were $7.6 million and $15.7 million for the three and nine months ended September 30, 2017, respectively. Post-acquisition ModSpace revenues and pre-tax income results are reflected in WillScot's historic revenue amounts.
(b)Historic Acton revenues were $24.5 million and $71.9 million and historic ModSpace revenues were $126.9 million and $335.4 million, respectively, for the three and nine months ended September 30, 2017. Historic Acton pretax income was $0.9 million and $0.6 million and historic ModSpace pretax income was $5.9 million and pretax loss was $108.9 million, respectively, for the three and nine months ended September 30, 2017.
(c)Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups of equipment acquired in the Acton and ModSpace acquisitions. The useful lives assigned to such equipment did not change significantly from the useful lives used by Acton and ModSpace.
(d)Amortization of the trade names acquired in Acton and ModSpace acquisitions.
(e)In connection with the Acton acquisition, the Company drew $237.1 million on the ABL Facility. As of September 30, 2018, the weighted-average interest rate of ABL borrowings was 4.65%. In connection with the ModSpace acquisition, the Company drew an incremental $420.0 million on the ABL Facility and issued $300.0 million of secured notes and $200.0 million of unsecured notes. The weighted-average interest rate of all ModSpace acquisition borrowings was 6.54%. Interest expense includes amortization of related deferred financing fees on debt incurred in conjunction with ModSpace acquisition.
(f)Interest on Acton and ModSpace historic debt was eliminated. Historic Acton interest was $1.4 million and $3.9 million and historic ModSpace interest was $7.5 million and $32.8 million, respectively, for the three and nine months ended, September 30, 2017.
(g)The pro-forma tax rate applied to the Acton and ModSpace pretax income (loss) are the same as the WillScot effective rate for the period.
(h)Pro-forma pretax loss includes $5.2 million and $6.1 million of Business Combination transactions costs incurred by WillScot for the three and nine months ended September 30, 2017, respectively
Transaction and Integration Costs
The Company incurred $7.5 million and $14.9 million in integration costs associated with the Tyson, Acton, and ModSpace acquisitions within selling, general and administrative expenses ("SG&A") for the three and nine months ended September 30, 2018, respectively. The Company incurred $10.7 million and $14.8 million in transaction costs related to the ModSpace acquisition for the three and nine months ended September 30, 2018, respectively.

NOTE 3 - Discontinued Operations
WSII’s Remote Accommodations Business was transferred to another entity included in the Algeco Group prior to the Business Combination. WSII does not expect to have continuing involvement in the Remote Accommodations Business going forward. Historically, the Remote Accommodations Business leased rental equipment from WSII. After the Business
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Combination, several lease agreements for rental equipment still exist between the Company and Target Logistics. The lease revenue associated with these agreements is disclosed in Note 16. The Company also had rental unit sales to Target Logistics during the third quarter which is disclosed in Note 16.
As a result of the transactions discussed above, the Remote Accommodations segment has been reported as discontinued operations in the condensed consolidated statements of operations for the three and nine months ended September 30, 2017 and has no impact on the financial statements in 2018. 
Results from Discontinued Operations
Income from discontinued operations, net of tax, for the three and nine months ended September 30, 2017 was as follows:
(in thousands)Three Months Ended
September 30, 2017 		Nine Months Ended
September 30, 2017 
Remote accommodations revenue$36,767 $95,332 
Rental unit sales 1,522 1,522 
Remote accommodations costs of leasing and services 16,621 41,359 
Rental unit cost of sales 885 885 
Depreciation of rental equipment5,653 18,195 
Gross profit15,130 36,415 
Selling, general and administrative expenses3,307 9,838 
Other depreciation and amortization1,255 3,763 
Restructuring costs803 1,573 
Other income, net(56)(96)
Operating profit9,821 21,337 
Interest expense654 2,074 
Income from discontinued operations, before income tax9,167 19,263 
Income tax expense4,089 8,140 
Income from discontinued operations, net of tax$5,078 $11,123 
Revenues and costs related to the Remote Accommodations Business for the three and nine months ended September 30, 2017 were as follows:
(in thousands)Three Months Ended
September 30, 2017 		Nine Months Ended
September 30, 2017 
Remote accommodations revenue:
Lease revenue$14,979 $43,556 
Service revenue21,788 51,776 
Total remote accommodations revenue$36,767 $95,332 
Remote accommodation costs:
Cost of leases$2,329 $6,529 
Cost of services14,292 34,830 
Total remote accommodations costs of leasing and services$16,621 $41,359 
Cash flows from the Company’s discontinued operations are included in the condensed consolidated statements of cash flows. The significant cash flow items from discontinued operations for the nine months ended September 30, 2017 were as follows:
(in thousands)September 30, 2017 
Depreciation and amortization$21,958 
Capital expenditures$6,855 


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NOTE 4 - Inventories
Inventories at the respective balance sheet dates consisted of the following:
(in thousands) (in thousands) September 30, 2018December 31, 2017(in thousands) June 30, 2019December 31, 2018
Raw materials and consumables Raw materials and consumables $19,107 $10,082 Raw materials and consumables $15,215 $16,022 
Work in process Work in process 2,241 — Work in process — 196 
Total inventories Total inventories $21,348 $10,082 Total inventories $15,215 $16,218 

NOTE 5 - Rental Equipment, net
Rental equipment, net, at the respective balance sheet dates consisted of the following:
(in thousands)(in thousands)September 30, 2018 December 31, 2017 (in thousands)June 30, 2019 December 31, 2018
Modular units and portable storage Modular units and portable storage $2,326,909 $1,385,901 Modular units and portable storage $2,410,291 $2,333,776 
Value added products Value added products 88,642 59,566 Value added products 107,940 90,526 
Total rental equipment Total rental equipment 2,415,551 1,445,467 Total rental equipment 2,518,231 2,424,302 
Less: accumulated depreciation Less: accumulated depreciation (466,148)(405,321)Less: accumulated depreciation (564,374)(495,012)
Rental equipment, net Rental equipment, net $1,949,403 $1,040,146 Rental equipment, net $1,953,857 $1,929,290 
During the three and ninesix months ended SeptemberJune 30, 2018, the Company received $0.0$1.8 million and $9.3 million,, respectively, in insurance proceeds related to assets damaged during Hurricane Harvey. The insurance proceeds exceeded the book value of damaged assets, and the Company recordedrecorded gains of $0.0$1.8 million and $4.8 million whichwhich are reflected in other (income) expense,income, net, on the condensed consolidated statements of operations for the three and ninesix months ended SeptemberJune 30, 2018, respectively. The Company received an additional $1.1 million in insurance proceeds during the three months ended June 30, 2019, which represented the final settlement related to the Hurricane Harvey insurance claim. As the claim was closed during the three months ended June 30, 2019, the Company recognized a final gain of $1.9 million in other income, net.

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NOTE 6 - Goodwill and Intangible Assets
Changes in the carrying amount of goodwill were as follows:
(in thousands)Modular – US
Modular – Other
North America
Total
Balance at January 1, 2017 $— $56,811 $56,811 
Acquisition of a business 28,609 — 28,609 
Effects of movements in foreign exchange rates — 3,932 3,932 
Impairment losses — (60,743)(60,743)
Balance at December 31, 2017 28,609 — 28,609 
Acquisition of businesses 206,667 32,538 239,205 
Changes to preliminary purchase price allocations (396)— (396)
Effects of movements in foreign exchange rates — 346 346 
Balance at September 30, 2018 $234,880 $32,884 $267,764 
(in thousands)Modular – US
Modular – Other
North America
Total
Balance at January 1, 2018 $28,609 $— $28,609 
Acquisition of a business 183,711 35,128 218,839 
Changes to preliminary purchase price accounting 944 — 944 
Foreign currency translation — (1,375)(1,375)
Balance at December 31, 2018 213,264 33,753 247,017 
Changes to preliminary purchase price accounting (2,306)(241)(2,547)
Foreign currency translation — 1,358 1,358 
Balance at June 30, 2019 $210,958 $34,870 $245,828 
As describeddescribed in Note 2, the CompanyCompany acquired ModSpace in August 2018. A preliminary valuation of the acquired net assets of ModSpace, as adjusted, resulted in the recognition of $203.3$178.3 million and $32.5$34.9 million of goodwill in the Modular - US segment and Modular - Other North America segmensegments, as defined in Note 16. t, which the Company expects will be non-deductible for income tax purposes. The Company expects to finalize the valuation of the acquired net assets of ModSpace within the one-yearone year measurement period from the date of acquisition.
Impairment Indicator Analysis
The Company had no goodwill impairment during the six months ended June 30, 2019. There were no indicators of impairment as of June 30, 2019. There were indicators of impairment as of December 31, 2018, as detailed below.
In December 2018, there was a significant decline in the debt and equity capital markets, including the Company’s stock price, which constituted an indicator of potential impairment in management's judgment. As described in Note 2,a result, the Company acquired Tysonperformed an interim goodwill impairment test as of December 31, 2018. The interim impairment analysis determined that there was no impairment of goodwill for either the US or Canadian reporting units as of December 31, 2018. As of December 31, 2018, the US reporting unit continued to have a fair value in Januaryexcess of carrying value of over 100%. The Canadian reporting unit was determined to have a fair value in excess of carrying value of less than 1% as of December 31, 2018. A preliminary valuation
The fair value of the acquired net assetsreporting units at December 31, 2018 was determined based on the income approach, which requires management to make certain estimates and judgments for estimates of Tyson resultedeconomic and market information in the recognitiondiscounted cash flow analyses.
There are inherent uncertainties and judgments involved when determining the fair value of $3.4 millionthe reporting units because the success of the reporting unit depends on the achievement of key assumptions developed by management including, but not limited to (i) achieving revenue growth through pricing, increased units on rent, increased penetration of value-added products and services, and other commercial strategies, (ii) efficient management of the Company's operations and the Company's fleet through maintenance and capital investment, and (iii) achieving margin expectations, including integration synergies with acquired companies.
In addition, some of the estimates and assumptions used in determining fair value of the reporting units utilize inputs that are outside the control of management and are dependent on market and economic conditions, such as the discount rate, foreign currency rates, and growth rates. These assumptions are inherently uncertain and deterioration of market and economic conditions would adversely impact the Company's ability to meet its projected results and would affect the fair value of the reporting units.
Of the key assumptions that impact the goodwill impairment test, the expected future cash flows, discount rate and foreign exchange rates are among the most sensitive and are considered to be critical assumptions. If any one of the above inputs changes, it could reduce or increase the estimated fair value of the affected reporting unit. A reduction in the fair value of a reporting unit could result in an impairment charge up to the full amount of goodwill in the Modular - US segment, whichreported.
Although the Company expects will be deductiblebelieves that it has sufficient historical and projected information available to test for tax purposes. Duringgoodwill impairment, it is possible that actual results could differ from the three and nine months ended September 30, 2018,estimates used in its impairment tests. As a result, the Company made a $0.3 millioncontinues to monitor actual results versus forecast results and $0.7 million adjustment tointernal and external factors that may impact the preliminary valuationenterprise value of the acquired net assets of Tyson, including the related goodwill, due to further evaluation of rental equipment and property, plant and equipment, and non-indemnified liabilities.reporting unit.
As discussed in further detail in Note 2, the Company acquired Acton in December 2017. A preliminary valuation of the acquired net assets of Acton resulted in the recognition of $28.6 million of goodwill to the Modular - US segment, as defined in Note 14, for the year ended December 31, 2017. During the three months ended September 30, 2018, the Company made a 
$1.7 million net adjustment that increased the acquired net assets of Acton, primarily due to further evaluation of insurance related receivables. 
During the nine months ended September 30, 2018, the Company made net adjustments of
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$0.3 million that decreased the acquired net assets of Acton, due to further evaluation of rental equipment and non-indemnified liabilities partially offset by changes in insurance-related receivables and deferred tax assets.NOTE 7 - Intangibles
  The gross carrying amount, accumulated amortization and net book value ("NBV") of the intangibleIntangible assets at the respective balance sheet dates consisted of the following:
(in thousands) September 30, 2018December 31, 2017
June 30, 2019
(in thousands) (in thousands) Gross Carrying Amount Accumulated Amortization NBV Gross Carrying Amount Accumulated Amortization NBV (in thousands)Weighted average remaining life (in years)Gross carrying amountAccumulated amortizationNet book value
Intangible assets subject to amortization:
Favorable lease rights Favorable lease rights $4,401 $(60)$4,341 $551 $— $551 Favorable lease rights3.4$1,738 $(407)$1,331 
Acton and ModSpace trade names 3,708 (530)3,178 708 — 708 
ModSpace trade nameModSpace trade name2.23,000 (875)2,125 
Total intangible assets subject to amortization Total intangible assets subject to amortization $8,109 $(590)$7,519 $1,259 $— $1,259 Total intangible assets subject to amortization4,738 (1,282)3,456 
Indefinite-lived intangible assets: Indefinite-lived intangible assets: Indefinite-lived intangible assets:
Trade names $125,000 $— $125,000 $125,000 $— $125,000 
Trade nameTrade name125,000 — 125,000 
Total intangible assets other than goodwill Total intangible assets other than goodwill $133,109 $(590)$132,519 $126,259 $— $126,259 Total intangible assets other than goodwill$129,738 $(1,282)$128,456 
As described in Note 2, the
December 31, 2018
(in thousands)Weighted average remaining life (in years)Gross carrying amountAccumulated amortizationNet book value
Intangible assets subject to amortization:
Favorable lease rights6.7$4,523 $(347)$4,176 
ModSpace trade name2.73,000 (375)2,625 
Total intangible assets subject to amortization7,523 (722)6,801 
Indefinite-lived intangible assets:
Trade name125,000 — 125,000 
Total intangible assets other than goodwill$132,523 $(722)$131,801 
The Company acquired ModSpace in August 2018, and preliminarily allocatedassigned $3.0 million and $3.9$4.0 million to definite-lived intangible assets, related to the ModSpace trade name and favorable lease rights, respectively. The Company allocated $3.9 million and $0.1 million of the favorable lease rights to the Modular - US segment.segment and Modular - Other North America segments, as defined in Note 16, respectively. The ModSpace trade name has an estimated useful life of three years and the favorable lease asset has an estimated usefulassets are amortized over the life of six years.the leases. The Company expects the intangibles to be non-deductible for income tax purposes.
The aggregate amortization expense for intangible assets subject to amortization was $0.3 million and $0.8 million for the three and six months ended June 30, 2019, respectively. For the three months ended June 30, 2019, $0.3 million was recorded in other depreciation and amortization expense. For the six months ended June 30, 2019, $0.5 million was recorded in other depreciation and amortization expense and $0.3 million related to the favorable lease rights was recorded in SG&A, respectively. The aggregate amortization expense for intangible assets subject to amortization was $0.2 million and $0.4 million for the three and six months ended June 30, 2018, which was recorded in other depreciation and amortization expense.
The Company expects to finalizerecognized an impairment charge of $2.4 million in impairment losses on long-lived assets during the valuationthree months ended June 30, 2019 as a result of the closure of a branch location with a favorable lease asset which was acquired net assets ofin the ModSpace including the related intangible assets, within the one-year measurement period from the date of acquisition.
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NOTE 78 - Debt
The carrying value of debt outstanding at the respective balance sheet dates consisted of the following:
(in thousands, except rates)(in thousands, except rates)Interest rateYear of maturitySeptember 30, 2018 December 31, 2017 (in thousands, except rates)Interest rateYear of maturityJune 30, 2019 December 31, 2018 
2022 Secured Notes 2022 Secured Notes 7.875%  2022 $291,853 $290,687 2022 Secured Notes 7.875%  2022 $293,097 $292,258 
2023 Secured Notes 2023 Secured Notes 6.875%  2023 293,637 — 2023 Secured Notes 6.875%  2023 481,864 293,918 
Unsecured Notes Unsecured Notes 10.000%  2023 198,882 — Unsecured Notes 10.000%  2023 — 198,931 
US ABL Facility US ABL Facility Varies 2022 830,573 297,323 US ABL Facility Varies 2022 898,081 853,409 
Canadian ABL Facility (a) Canadian ABL Facility (a) Varies 2022 — — Canadian ABL Facility (a) Varies 2022 — — 
Capital lease and other financing obligations Capital lease and other financing obligations 38,549 38,736 Capital lease and other financing obligations 38,507 37,983 
Total debt Total debt 1,653,494 626,746 Total debt 1,711,549 1,676,499 
Less: current portion of long-term debt Less: current portion of long-term debt (1,915)(1,881)Less: current portion of long-term debt (2,026)(1,959)
Total long-term debt Total long-term debt $1,651,579 $624,865 Total long-term debt $1,709,523 $1,674,540 
(a) As of September 30, 2018, the Company had $1.5 million of outstanding principal borrowings on the Canadian ABL Facility and $3.3 million of related debt issuance costs. $1.5 million of the related debt issuance costs are recorded as a direct offset against the principal of the Canadian ABL Facility and the remaining $1.8 million, in excess of the principal, has been included in other non-current assets on the condensed consolidated balance sheet. As there were no principal borrowings outstanding on the Canadian ABL Facility as of December 31, 2017, $1.8 million of debt issuance costs related to that facility are included in other non-current assets on the condensed consolidated balance sheet.


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ABL Facilities
Former Algeco Group Revolver
Prior to(a) As of June 30, 2019, the Business Combination, WSII dependedCompany had $1.0 million outstanding principal borrowings remaining on the Algeco Group for financing, which centrally managed all treasuryCanadian ABL Facility and cash management. In October 2012, the Algeco Group entered into a multi-currency asset-based revolving credit facility (the “Algeco Group Revolver”), which had a maximum aggregate availability$2.5 million of related debt issuance costs. $1.0 million of the equivalentrelated debt issuance costs are recorded as a direct offset against the principal of $1.355 billion. the Canadian ABL Facility and the remaining $1.5 million, in excess of principal, has been included in other non-current assets on the condensed consolidated balance sheet. As of December 31, 2018, the Company had $0.9 million of outstanding principal borrowings on the Canadian ABL Facility and $2.9 million of related debt issuance costs. $0.9 million of the related debt issuance costs are recorded as a direct offset against the principal of the Canadian ABL Facility and the remaining $2.0 million, in excess of principal, has been included in other non-current assets on the condensed consolidated balance sheet.
The maximum borrowing availabilityCompany is subject to WSII in US dollarsvarious covenants and Canadian dollars (“CAD”) was $760.0 millionrestrictions for the ABL Facility, the 2022 Secured Notes and $175.0 million, respectively.
Interest expense of $8.7 millionthe 2023 Secured Notes, as defined below. The Company redeemed the Unsecured Notes on June 19, 2019 and $23.2 millionhas no remaining obligations related to the Algeco Group RevolverUnsecured Notes as of June 30, 2019. The Company was included in interest expense for the threecompliance with all covenants related to debt as of June 30, 2019 and nine months ended September 30, 2017.December 31, 2018, respectively.
ABL Facility
On November 29, 2017, WS Holdings, WSII and certain of its subsidiaries entered into an ABL credit agreement (the “ABL Facility”), as amended in July and August 2018, that providedprovides a senior secured revolving credit facility in the initial aggregate principal amount of up to $600.0 million. The ABL Facilitythat matures on May 29, 2022.
In July and August 2018, the Company entered into three amendments (the "ABL Amendments") to theThe ABL Facility that, among other things, (i) permitted the ModSpace acquisition and the Company’s financing thereof, (ii) increased the ABL Facility limit to $1.425 billion in the aggregate, with an accordion feature allowing up to $1.8 billion of capacity, and (iii) increased certain thresholds, basket sizes and default and notice triggers to account for the Company’s increased scale following the ModSpace acquisition.
After giving effect to the ABL Amendments, the ABL Facility, which matures on May 29, 2022, consists of (i) a $1.285 billion asset-backed revolving credit facility (the “US ABL Facility”) for WSII and certain of its domestic subsidiaries (the “US Borrowers”), (ii) a $140.0 million asset-based revolving credit facility (the “Canadian ABL Facility”) for certain Canadian subsidiaries of WSII (the “Canadian Borrowers,” and together with the US Borrowers, the “Borrowers”), and (iii) an accordion feature that permits the Borrowers to increase the lenders’ commitments in an aggregate amount not to exceed $375.0 million, subject to the satisfaction of customary conditions and lender approval, plus any voluntary prepayments that are accompanied by permanent commitment reductions under the ABL Facility.
Borrowings under the ABL Facility, at the Borrower’s option, bear interest at an adjusted LIBOR or base rate, in each case plus an applicable margin. At inceptionThe obligations of the ABL Facility until March 31, 2018,US Borrowers are unconditionally guaranteed by WS Holdings and each existing and subsequently acquired or organized direct or indirect wholly-owned US organized restricted subsidiary of WS Holdings, other than excluded subsidiaries (together with WS Holdings, the applicable margin was fixed at 2.50% for LIBOR borrowings"US Guarantors"). The obligations of the Canadian Borrowers are unconditionally guaranteed by the US Borrowers and 1.50% for base rate borrowings. Commencing on March 31, 2018, the applicable margins are subject to one step-downUS Guarantors, and each existing and subsequently acquired or organized direct or indirect wholly-owned Canadian organized restricted subsidiary of 0.25% or one step-up of 0.25%, based on excess availability levelsWS Holdings other than certain excluded subsidiaries (together with respect to the ABL Facility. The ABL Facility requiresUS Guarantors, the payment of an annual commitment fee on the unused available borrowings of between 0.375% and 0.5% per annum. "ABL Guarantors").
At SeptemberJune 30, 2018,2019, the weighted average interest rate for borrowings under the ABL Facility was 4.65%4.90%.
Borrowing availability under The weighted average interest rate on the US ABL Facility andbalance outstanding, as adjusted for the Canadian ABL Facility is equal to the lesser of (i) with respect to US Borrowers, $1.285 billion and the US Borrowing Base (defined below) (the “US Line Cap”), and (ii) with respect to the Canadian Borrower, $140.0 million and the Canadian Borrowing Base (defined below) (the “Canadian Line Cap,” together with the US Line Cap, the “Line Cap”).
The US Borrowing Base is, at any time of determination, an amount (net of reserves) equal to the sum of:
◦ 85%effects of the net book value of the US Borrowers’ eligible accounts receivable, plus
◦ the lesser of (i) 95% of the net book value of the US Borrowers’ eligible rental equipment and (ii) 85% of the net orderly liquidation value of the US Borrowers’ eligible rental equipment, minus
◦ customary reserves.
The Canadian Borrowing Base is, at any time of determination, an amount (net of reserves) equalinterest rate swap agreements was 5.18%. Refer to the sum of:
◦ 85% of the net book value of the Canadian Borrowers’ eligible accounts receivable, plus
◦ the lesser of (i) 95% of the net book value of the Canadian Borrowers’ eligible rental equipment and (ii) 85% of the net orderly liquidation value of the Canadian Borrowers’ eligible rental equipment, plus
◦ portions of the US Borrowing Base that have been allocated to the Canadian Borrowing Base, minus
◦ customary reserves.Note 14 for a more detailed discussion on interest rate management.
At SeptemberJune 30, 2018, the Line Cap was $1.425 billion and2019, the Borrowers had $552.9$486.9 million of available borrowing capacity under the ABL Facility, including $414.5$352.5 million under the US ABL Facility and $138.4$134.4 million under the Canadian ABL Facility. At December 31, 2017, prior to the ABL Amendments, the Line Cap was $600.0 million and2018, the Borrowers had $281.1$532.6 million of available borrowing capacity under the ABL Facility, including $211.1$393.5 million under the US ABL Facility and $70.0$139.1 million under the Canadian ABL Facility.
Borrowing capacity under the US ABL Facility is made available for up to $75.0 million of standby letters of credit and up to $75.0 million of swingline loans, and borrowing capacity under the Canadian ABL Facility is made available for up to $60.0 million of standby letters of credit, and $50.0 million of swingline loans. Letters of credit and bank guarantees carried
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fees of 2.625% at September 30, 2018 and December 31, 2017. The Company had issued $13.0 million o$13.0 million and $8.9 million off standby letters of credit under the ABL Facility at SeptemberJune 30, 20182019 and December 31, 2017.2018. At June 30, 2019, letters of credit and guarantees carried fees of 2.625%.
The ABL Facility requires the Borrowers to maintain a (i) minimum interest coverage ratio of 2.00:1.00 and (ii) maximum total net leverage ratio of 5.50:1.00, in each case, at any time when the excess availability under the ABL Facility is less than the greater of (a) $135.0 million and (b) an amount equal to 10% of the Line Cap.
The ABL Facility also contains a number of customary negative covenants. Such covenants, among other things, may limit or restrict the ability of each of the Borrowers, their restricted subsidiaries, and where applicable, WS Holdings, to: incur additional indebtedness, issue disqualified stock and make guarantees; incur liens; engage in mergers or consolidations or fundamental changes; sell assets; pay dividends and repurchase capital stock; make investments, loans and advances, including acquisitions; amend organizational documents and master lease documents; enter into certain agreements that would restrict the ability to pay dividends or incur liens on assets; repay certain junior indebtedness; enter into sale and leaseback transactions; and change the conduct of its business.
The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that grant the Borrowers continued flexibility to operate and develop their businesses. The ABL Facility also contains customary representations and warranties, affirmative covenants and events of default. The Company is in compliance with these covenants and restrictions as of September 30, 2018.
The Company had $859.0$920.5 million and $310.0$879.4 million in outstanding principal under the ABL Facility at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively.
The ABL Amendments were treated as a debt modification to the ABL Facility under ASC 470-50, Debt, Modifications and Extinguishments. All ABL Facility lenders prior to the ABL Amendments are continuing lenders after giving effect to the ABL Amendments. The Company incurred an additional $19.0 million in debt issuance costs and discounts associated with the ABL Amendments that have been deferred and will be amortized through the remaining period until the maturity date of the ABL Facility.  Debt issuance costs and discounts of $28.5$22.4 million and $12.7$26.0 million are included in the carrying value of the ABL Facility at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively.
Interest expense of $7.6 million and $15.8 million related to the ABL Facility was included in interest expense for the three and nine months ended September 30, 2018.
2022 Senior Secured Notes
In connection with the closing of the Business Combination, WSII hasissued $300.0 million aggregate principal amount of 7.875% senior secured notes due December 15, 2022 (the “2022 Secured Notes”) under an indenture dated November 29, 2017, which was entered into by and among WSII, the guarantors named therein (the "Note Guarantors"), and Deutsche Bank Trust
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Company Americas, as trustee and as collateral agent. Interest is payable semi-annually on June 15 and December 15, beginning June 15, 2018.
Before December 15, 2019, WSII may redeem the 2022 Secured Notes at a redemption price equal to 100% of the principal amount, plus a customary make whole premium for the 2022 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date.
The customary make whole premium, with respect to the 2022 Secured Notes on any applicable redemption date, as calculated by the Company, is the greater of (i) 100% of the then outstanding principal amount of the 2022 Secured Notes; and (ii) the excess of (a) the present value at such redemption date of (i) the redemption price set on or after December 15, 2019 plus (ii) all required interest payments due on the 2022 Secured Notes through December 15, 2019, excluding accrued but unpaid interest to the redemption date, in each case, computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the then outstanding principal amount of the 2022 Secured Notes.
Before December 15, 2019, WSII may redeem up to 40% of the aggregate principal amount of the 2022 Secured Notes at a price equal to 107.875% of the principal amount of the 2022 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date with the net proceeds of certain equity offerings. At any time prior to November 29, 2019, WSII may also redeem up to 10% of the aggregate principal amount of the 2022 Secured Notes at a redemption price equal to 103% of the principal amount of the Notes being redeemed during each twelve-month period commencing with the closing date, plus accrued and unpaid interest, if any, to but not including the redemption date. If WSII undergoes a change of control or sells certain of its assets, WSII may be required to offer to repurchase the 2022 Secured Notes.

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On or after December 15, 2019, WSII, may redeem the 2022 Secured Notes, in whole or in part, at the redemption prices expressed as percentages of principal amount set forth below, plus accrued and unpaid interest to, but not including, the applicable redemption date (subject to the holders' right to receive interest due on an interest payment date falling on or prior to the redemption date), if redeemed during the twelve month period beginning on December 15 of each of the years set forth below:
YearRedemption Price
2019103.938 %
2020101.969 %
2021 and thereafter100.000 %
The 2022 Secured Notes contain certain negative covenants, including limitations that may restrict WSII’s ability and the ability of certain of its subsidiaries, to directly or indirectly, create additional financial obligations. With certain specified exceptions, these negative covenants prohibit WSII and certain of its subsidiaries from: creating or incurring additional debt; paying dividends or making any other distributions with respect to its capital stock; making loans or advances to WillScot or any restricted subsidiary of WSII; selling, leasing or transferring any of its property or assets to WillScot or any restricted subsidiary of WSII; directly or indirectly creating, incurring or assuming any lien of any kind securing debt on the collateral; or entering into any sale and leaseback transaction. On August 15, 2018, in conjunction with the ModSpace acquisition and related debt issuances, WSII entered a supplemental indenture to, among other things, join ModSpace and its domestic subsidiaries as guarantors of the 2022 Secured Notes.
The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that grant the US Borrowers continued flexibility to operate and develop their businesses. The Company is in compliance with these covenants and restrictions as of September 30, 2018 and December 31, 2017.
Unamortized debt issuance costs pertaining to the 2022 Secured Notes was $8.1$6.9 million and $9.3$7.7 million as of SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively.
2023 Senior Secured Notes
On August 6, 2018, a special purpose subsidiary of WSII (the "Issuer") completed a private offering of $300.0 million in aggregate principal amount of its 6.875% senior secured notes due August 15, 2023 (“(the “Initial 2023 Secured Notes”). The issuer entered into an indenture dated August 6, 2018 with Deutsche Bank Trust Company Americas, as trustee, (“2023 Secured Notes Indenture”), which governs the terms of the Initial 2023 Secured Notes. In connection with the ModSpace acquisition, the issuer merged with and into WSII and WSII assumed the Initial 2023 Secured Notes. Interest is payable semi-annually on February 15 and August 15 of each year, beginning February 15, 2019.
On May 14, 2019, WSII may redeemcompleted a tack-on offering of $190.0 million in aggregate principal amount to the Initial 2023 Secured Notes at any time before(the "Tack-on Notes"). The Tack-on Notes were issued as additional securities under an indenture, dated August 15, 2020 at a redemption price equal to 100% of6, 2018, by and among the principal amount thereof, plus a customary make whole premium forIssuer, the 2023 Securedguarantors named therein and Deutsche Bank Trust Company Americas, as trustee and collateral agent. The Tack-On Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date. Before August 15, 2020, WSII may redeem up to 40% of the aggregate principal amount of the 2023 Secured Notes at a price equal to 106.875% of the principal amount of the 2023 Secured Notes being redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date with the net proceeds of certain equity offerings. WSII may also redeem up to 10% of the aggregate principal amount of the 2023 Secured Notes at any time prior to the second anniversary of the closing date of this offering at a redemption price equal to 103% of the principal amount of the 2023 Secured Notes being redeemed during each twelve-month period commencing with the issue date, plus accrued and unpaid interest, if any, to but not including the redemption date. If WSII undergoes a change of control or sells certain of its assets, WSII may be required to offer to repurchase the 2023 Secured Notes.
On and after August 15, 2020, WSII may redeem the 2023 Secured Notes, in whole or in part, at the redemption prices expressed as percentages of principal amount set forth below plus accrued and unpaid interest to but not including the applicable redemption date (subject to the holders' right to receive interest due on an interest payment date falling on or prior to the redemption date), if redeemed during the 12 month period beginning on August 15 of each of the years set forth below.
Year Redemption Price 
2020103.938 %
2021101.969 %
2022 and thereafter 100.000 %
TheInitial 2023 Secured Notes are unconditionally guaranteed by eachtreated as a single class of WSII’s direct and indirect domestic subsidiaries and WSII’s parent, WS Holdings (collectively the “Note Guarantors”). WillScot is not a guarantor of the 2023 Secured Notes. The Note Guarantors and certain of the Company's non-US subsidiaries are guarantors or borrowersdebt securities under the ABL Facility. These guarantees are secured by a second priority security interest in substantially all ofindenture (the "2023 Secured Notes") and together with the assets of WSII and2022 Secured Notes, the Note Guarantors (subject to customary exclusions) and are subordinated"Senior Secured Notes"). The Tack-On Notes have identical terms to the Company's obligations under the ABL Facility.
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TheInitial 2023 Secured Notes, contain certain negative covenants, including limitations that may restrict WSII’s ability and the ability of certain of its subsidiaries, to directly or indirectly, create additional financial obligations. With certain specified exceptions, these negative covenants prohibit WSII and certain of its subsidiaries from: creating or incurring additional debt; paying dividends or making any other distributionsthan with respect to its capital stock; making loans or advancesthe issue date and issue price. WSII incurred a total of $3.1 million in debt issuance costs in connection with the tack-on offering, which were deferred and will be amortized through the August 15, 2023 maturity date. The Tack-on Notes were issued at a premium of $0.5 million which will be amortized through the August 15, 2023 maturity date. The proceeds of the Tack-On Notes were used to WillScot or any restricted subsidiaryrepay a portion of WSII; selling, leasing or transferring any of its property or assets to WillScot or any restricted subsidiary of WSII; directly or indirectly creating, incurring or assuming any lien of any kind securing debt on the collateral; or entering into any sale and leaseback transaction.
The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that grant the US Borrowers continued flexibility to operate and develop their businesses. The Company is in compliance with these covenants and restrictions as of September 30, 2018.ABL Facility.
The Company incurredUnamortized debt issuance costs and discounts, net of $6.5 million in connection withpremium, pertaining to the 2023 Secured Notes. Debt issuance costsNotes were $8.1 million and discounts$6.1 million as of $6.4 million are included in the carrying value of the debt at SeptemberJune 30, 2018.2019 and December 31, 2018, respectively.
2023 Senior Unsecured Notes
On August 3, 2018, a special purpose subsidiary of WSII completed a private offering of $200.0 million in aggregate principal amount of its senior unsecured notes due November 15, 2023 (the “Unsecured Notes”). The issuer entered into an indenture with Deutsche Bank Trust Company Americas, as trustee, (the “Unsecured Notes Indenture”), which governs the terms and conditions of the Unsecured Notes. In connection with the ModSpace acquisition, the issuer merged with and into WSII and WSII assumed the Unsecured Notes.
The Unsecured Notes bearbore interest at a rate of 10% per annum if paid in cash (or if paid in kind, 11.5% per annum) for any interest period ending on or before February 15, 2021, and thereafter are payable solely in cash at an increased rate per annum of 12.5%.the six months ended June 30, 2019. Interest iswas payable semi-annually on February 15 and August 15 of each year, beginning February 15, 2019.
The Unsecured Notes are not prepayable until February 15, 2019. From timeOn June 19, 2019 (the "Redemption Date"), WSII used proceeds from its US ABL Facility to time during the period from February 15, 2019 through August 14, 2019, WSII may redeem the Unsecured Notes,all $200.0 million in whole or in part, at a redemption price equal to 100% of theaggregate outstanding principal amount of the Unsecured Notes at a redemption price of 102.0%, plus the Applicable Premium (as defined in the Unsecured Notes Indenture) asa make-whole premium of 1.126% and any accrued and unpaid interest to, but not including, the redemption date (subjectRedemption Date. The Company recorded a loss on extinguishment of $7.2 million, which included $6.2 million of make-whole premiums and $1.0 million related to the holders' right to receive interest due on an interest payment date falling on or prior to the redemption date); provided, that if the Unsecured Notes are being redeemed in part, such redemption will not reduce the aggregate principal amountwrite-off of the Unsecured Notes outstanding below $50.0 million (together with any PIK Interest in respect thereof). If WSII undergoes a change of control or sells certain of its assets, WSII may be required to offer to repurchase the Unsecured Notes.
At any time and from time to time on and after August 15, 2019, WSII, at its option, may redeem the Unsecured Notes, in whole or in part, at the redemption prices expressed as percentages of principal amount set forth below plus accrued and unpaid interest to but not including the applicable redemption date (subject to the right of Holders (as defined therein) on the relevant record date to receive interest due on an interest payment date falling on or prior to the redemption date), if redeemed during the periods referred to below, beginning on August 15, 2019; provided however, that if the Unsecured Notes are being redeemed in part, such redemption will not reduce the aggregate principal amount of the Unsecured Notes outstanding below $50.0 million (together with any PIK Interest in respect thereof).unamortized deferred financing fees.
Year Redemption Price 
August 15, 2019 to February 14, 2020102.000 %
February 15, 2020 to February 14, 2021104.000 %
February 15, 2021 and thereafter 106.000 %
The Unsecured Notes are unconditionally guaranteed by each Note Guarantor. These guarantees are senior, unsecured obligations of the Note Guarantors (except that the guarantee of the Unsecured Notes provided by WillScot Equipment II, LLC, which holds certain of WSII’s uncertificated assets in the United States, are subordinated to its obligations under the ABL Facility).
The Unsecured Notes contain certain negative covenants, including limitations that may restrict WSII’s ability and the ability of certain of its subsidiaries, to directly or indirectly, create additional financial obligations. With certain specified exceptions, these negative covenants prohibit WSII and certain of its subsidiaries from: creating or incurring additional debt; paying dividends or making any other distributions with respect to its capital stock; making loans or advances to WillScot or any restricted subsidiary of WSII; selling, leasing or transferring any of its property or assets to WillScot or any restricted subsidiary of WSII; directly or indirectly creating, incurring or assuming any lien of any kind securing debt on the collateral; or entering into any sale and leaseback transaction.
The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that
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grant the US Borrowers continued flexibility to operate and develop their businesses. The Company is in compliance with these covenants and restrictions as of September 30, 2018.
The Company incurredUnamortized debt issuance costs and discounts of $1.1 million in connection with the issuance of the Unsecured Notes. Debt issuance costs and discounts of $1.1 million are included in the carrying value ofpertaining to the Unsecured Notes at September 30,were $1.1 million as of December 31, 2018.
Bridge Financing Fees
In connection with the ModSpace acquisition, the Company incurred bridge financing fees of $20.5 million, included within interest expense in the condensed consolidated statement of operations, for the three and nine months ended September 30, 2018. 
Capital Lease and Other Financing Obligations
The Company’s capital lease and financing obligations primarily consisted of $38.4$38.5 million and $38.5$37.9 million under sale-leaseback transactions and $0.1$0.0 million and $0.2$0.1 million of capital leases at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively. The Company’s capital lease and financing obligations are presented net of $1.6$1.4 million and $1.8$1.6 million of debt issuance costs at SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively. The Company’s capital leases primarily relate to real estate, equipment and vehicles and have interest rates ranging fromfrom 1.2% to 11.9%.
The Company has entered into several arrangements in which it has sold branch locations and simultaneously leased the associated properties back from the various purchasers. Due to the terms of the lease agreements, these transactions are treated as financing arrangements. These transactions contain non-recourse financing which is a form of continuing involvement and precludes the use of sale-lease back accounting. The terms of the financing arrangements range from approximately eighteen months to ten years. The interest rates implicit in these financing arrangements is approximately 8.0%.
Notes Due To and From Affiliates
In conjunction with the Business Combination, all notes due to and from affiliates were settled, and there is no related interest expense or interest income related to the notes due to or from affiliates for the three and nine months ended September 30, 2018.
Prior to the Business Combination, the Algeco Group distributed borrowings from its third party notes to entities within the Algeco Group, including WSII, through intercompany loans. WSII previously recorded these intercompany loans as notes due to affiliates with maturity dates of June 30, 2018 and October 15, 2019.
Interest expense of $16.7 million and $48.0 million associated with these notes due to affiliates is reflected in interest expense in the consolidated statement of operations for the three and nine months ended September 30, 2017, respectively. Interest on the notes due to affiliates was payable on a semi-annual basis.
Conversely, WSII also distributed borrowings to other entities within the Algeco Group through intercompany loans, and earned interest income on the principal. For the three and nine months ended September 30, 2017, the Company recognized $3.7 million and $9.8 million, respectively, of interest income related to the loans.

NOTE 89 – Equity
Common Stock and Warrants
On July 30, 2018, WillScot closed a public offering of 8,000,000 shares of its Class A common stock at an offering price of $16.00 per share. On August 10, 2018, the underwriters exercised their right to purchase an additional 1,200,000 shares at the public offering price. The net offering proceeds, including the exercise of the over-allotment option, were $139.0 million, after deducting discount and offering expenses of $8.2 million. The Company used the proceeds to fund the ModSpace acquisition and to pay related fees and expenses.Common Stock
As disclosed in Note 2, on August 15, 2018, WillScot issued 6,458,229 unregistered shares of its Class A common stock, par value $0.0001 per share, to former ModSpace shareholders as part of the consideration paid in connection with the ModSpace acquisition. In connection with the issuance, WillScot entered intostock compensation vesting described in Note 13, the Company issued 190,129 shares of common stock during the six months ended June 30, 2019.
Warrants
Double Eagle issued warrants to purchase its common stock as components of units sold in its initial public offering (the “Public Warrants”). Double Eagle also issued warrants to purchase its common stock in a registration rights agreement dated July 26, 2018, under which WillScot granted customary registration rights toprivate placement concurrently with its initial public offering (the “Private Warrants,” and together with the holdersPublic Warrants, the "2015 Warrants").
At June 30, 2019, 24,367,867 of the unregistered common shares. Subject to limited exception, the unregistered shares issued to former ModSpace shareholders may not be sold or otherwise transferred prior to the six-month anniversary2015 Warrants and 9,999,579 of the issuance date. 
On September 21, 2018 the Company filed a registration statement with the SEC under which 10,373,102 of unregistered shares of WillScot’s Class A common stock would be registered under a retail shelf registration statement. On November 2, 2018, the Company filed an amendment to, among other things, increase the number of registered Class A common shares available for sale by the selling shareholders from 10,373,102 to 61,865,946 shares, approximately 5.8 million of which are subject to transfer restrictions until February 15, 2019.Warrants were outstanding.

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

As disclosed in Note 2, on August 15, 2018, WillScot issued the ModSpace Warrants to the former shareholders as part of the ModSpace acquisition. Each ModSpace Warrant entitles the holder thereof to purchase one share of WillScot Class A common stock at an exercise price of $15.50 per share, subject to potential adjustment. Subject to limited exception, the ModSpace Warrants are not exercisable or transferable until the six-month anniversary of the issuance date, and the ModSpace Warrants expire on November 29, 2022. Under a registration rights agreement dated July 26, 2018, WillScot agreed to file a registration statement, and to use its reasonable best efforts to cause the registration statement to become effective, by the six-month anniversary of the issuance date.
Accumulated Other Comprehensive Loss 
The changes in accumulated other comprehensive loss ("AOCL"), net of tax, for the ninethree and six months ended SeptemberJune 30, 20182019 and 20172018 were as follows:
(in thousands)Foreign Currency Translation Adjustment
Balance at December 31, 2017 $(49,497)
Total other comprehensive loss (82)
Reclassifications to accumulated deficit(a)
(2,540)
Balance at September 30, 2018 $(52,119)
(in thousands)Foreign Currency TranslationUnrealized losses on hedging activitiesTotal
Balance at December 31, 2018 $(62,608)$(5,418)$(68,026)
Total other comprehensive income (loss) prior to reclassifications4,115 (2,636)1,479 
Reclassifications to the statements of operations— 435 435 
Less other comprehensive (income) loss attributable to non-controlling interest(364)198 (166)
Balance at March 31, 2019 (58,857)(7,421)(66,278)
Total other comprehensive income (loss) prior to reclassifications4,300 (4,500)(200)
Reclassifications to the statements of operations— 613 613 
Less other comprehensive (income) loss attributable to non-controlling interest(396)351 (45)
Reclassifications to accumulated deficit— — — 
Balance at June 30, 2019 $(54,953)$(10,957)$(65,910)

(in thousands)Foreign Currency Translation Adjustment
Balance at December 31, 2016 $(56,928)
Total other comprehensive loss 8,914 
Balance at September 30, 2017 $(48,014)
(in thousands)Foreign Currency TranslationUnrealized losses on hedging activitiesTotal
Balance at December 31, 2017 $(49,497)$— $(49,497)
Total other comprehensive income prior to reclassifications 263 — 263 
Reclassifications to accumulated deficit(a)
(2,540)— (2,540)
Less other comprehensive income attributable to non-controlling interest(24)— (24)
Balance at March 31, 2018 (51,798)— (51,798)
Total other comprehensive loss prior to reclassifications (2,912)— (2,912)
Less other comprehensive loss attributable to non-controlling interest293 — 293 
Balance at June 30, 2018 $(54,417)$— $(54,417)
(a) In thethe first quarter of 2018, the Company elected to early adopt ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which resulted in a discrete reclassification of $2.5 million from accumulated other comprehensive loss to accumulated deficit effective January 1, 2018.
There were no material amounts reclassified from accumulated other comprehensive loss and into consolidated net income (loss) forFor the three and ninesix months ended SeptemberJune 30, 20182019, $0.6 million and September 30, 2017.
Non-Controlling Interest
The changes in$1.2 million was reclassified from AOCL into the non-controllingcondensed consolidated statement of operations within interest for the nine months ended September 30, 2018 were as follows:
(in thousands)Total
Balance at December 31, 2017 $48,931 
Net loss attributable to non-controlling interest (3,715)
Other comprehensive loss (26)
Issuance of common stock and contribution of proceeds to WSII 7,574 
Acquisition of ModSpace and the effect of theexpense related financing transactions 13,614 
Balance at September 30, 2018 $66,378 
As disclosed under Common Stock above, during the three months ended September 30, 2018, WillScot issued 9,200,000 shares of Class A common stock through an underwritten public offering, the proceeds of which were immediately contributed down through WS Holdings to WSII for purposes of funding part of the ModSpace acquisition. Sapphire waived its preemptive right to participate in the public offering and pursuant to the shareholders agreement entered into by WS Holdings' shareholders, Sapphire's ownershipinterest rate swaps discussed in WS Holdings was adjusted from 10% to 9% accordingly. As disclosed in Note 2, the
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14. The Company closed onrecorded a tax benefit of $0.0 million and $0.1 million, for the ModSpace Acquisition that resulted in the contribution of ModSpace's net assets of $972.4 million to WSII. three and six months ended June 30, 2019, respectively, associated with this reclassification.
Non-Controlling Interest
The net impact of the transactions above, resulted in a non-recurring adjustment of $21.2 million to additional paid in capital and non-controlling interest on the condensed consolidated balance sheets. Despite the dilutionchanges in the non-controlling interest ownership in WS Holdings,for the adjustment increases the non-controlling interest equitythree and six months ended June 30, 2019 and 2018 were as a result of the significant increase in net assets from the ModSpace acquisition.follows:
(in thousands)20192018
Balance at January 1, $63,982 $48,931 
Net loss attributable to non-controlling interest (860)(648)
Other comprehensive income 166 24 
Balance at March 31, 63,288 $48,307 
Net (loss) income attributable to non-controlling interest (862)143 
Other comprehensive income (loss) 45 (293)
Balance at June 30, $62,471 $48,157 

NOTE 910 – Income Taxes
The Company recorded an income tax benefit of approximately $6.5$1.2 million and $13.6$0.8 million for the three and ninesix months ended SeptemberJune 30, 2018,2019, respectively, and $7.6$6.6 million and $17.8$7.1 million for the same periods of 2017.three and six months ended June 30, 2018, respectively.
The Company’s effective tax rate (“ETR”) for the three months ended September 30, 2018 and 2017 was 15.0% and 36.2%, respectively, and 23.9% and 33.3% for the nine months ended September 30, 2018 and 2017, respectively.
The Company’s estimated annual ETR ("EAETR") of 14.8% on the forecasted pre-tax loss is lower than the US statutory rate of 21.0% due to certain offsets to the overall tax benefit, namely: (1) a partial valuation allowance, $8.0 million tax expense, due to the limitation on the deductibility of interest expense estimated for the current year partially offset by reduction to the deferred tax liability, $2.3 million tax benefit, established for the book over tax basis difference for the Company's investment in its Canadian subsidiary and (2) a gross permanent disallowance, $6.6 million, of which $5.7 million relates to the non-deductibility of certain transaction costs in relation to the ModSpace acquisition.
The Company’s ETR for the three months ended September 30, 2018 of 15.0% is comparable to its EAETR due to minimal discrete items for the quarter of $0.6 million, which is primarily attributable to adjustments to deferred taxes for legislation enacted in certain state taxing jurisdictions during the quarter, notably, in New Jersey. 
The Company’s ETR for the nine months ended September 30, 2018 of 23.9% is higher than the EAETR due to $5.3 million of discrete tax benefit recorded year to date, of which a $4.3 million tax benefit is attributable to a reduction in our net state deferred tax liability in Maryland due to change in tax law enacted in the second quarter.
In addition, to the foregoing, the Company also recognized tax expense of $0.1 million and tax benefit of $0.3 million for the three and ninesix months ended SeptemberJune 30, 2018,2019 was 9.1% and 3.4%, respectively, relatedand 106.1% and 52.3% for the same periods of 2018. The Company did not recognize a tax benefit for loss from operations for the three or six months ended June 30, 2019 as it is not more likely than not that the benefit is realizable. A tax benefit will be recognized only when there is sufficient income to foreign currency gains and losses. Forsupport realizability. The Company’s effective tax rate for the three and ninesix months ended SeptemberJune 30, 2017,2018 is materially driven by discrete items.
In addition, the Company recognized tax expensebenefit for the three and six months ended June 30, 2019 and 2018 of $1.6$1.2 million and $4.8$0.8 million, and $4.4 million and $4.7 million, respectively, mainly related to foreign currency gains. The Company also adjusted the provisional amounts for the impacts of the Tax Act under SAB 118 reported in its financial statements for the year ended December 31, 2017. As of September 30, 2018, a $0.6 million tax benefit has been recorded in relation to tax reform guidance under SAB 118. As noted above, the Company recorded a discrete benefit of $4.3 millionenacted legislative changes in the second quarter of 2019 and 2018, to reduce its net state deferred tax liability primarily relateddiscrete to the enactment of an apportionment rule change in Maryland.quarter.

NOTE 1011 - Fair Value Measures
The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
The Company utilizes the suggested accounting guidance for the three levels of inputs that may be used to measure fair value:
Level 1 -Observable inputs such as quoted prices in active markets for identical assets or liabilities;
Level 2 -Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and
Level 3 -Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions
The Company has assessed that the fair value of cash and cash equivalents, trade receivables, trade payables, capital lease and other financing obligations, and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
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amounts.
The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy:
September 30, 2018December 31, 2017
Carrying AmountFair ValueCarrying AmountFair Value
(in thousands)Level 1Level 2Level 3Level 1Level 2Level 3
Financial liabilities not measured at fair value
US ABL Facility (a) $830,573 $— $857,500 $— $297,323 $— $310,000 $— 
Canadian ABL Facility (a) — — 1,549 — — — — — 
2022 Secured Notes (a) 291,853 — 310,416 — 290,687 — 310,410 — 
2023 Secured Notes (a) 293,637 — 298,185 — — — — — 
Unsecured Notes (a) 198,882 — 204,210 — — — — — 
Total $1,614,945 $— $1,671,860 $— $588,010 $— $620,410 $— 
(a) See Note 7 - Debt. 
June 30, 2019December 31, 2018
Carrying AmountFair ValueCarrying AmountFair Value
(in thousands)Level 1Level 2Level 3Level 1Level 2Level 3
US ABL Facility $898,081 $— $919,500 $— $853,409 $— $878,500 $— 
Canadian ABL Facility — — 955 — — — 918 — 
2022 Secured Notes 293,097 — 314,205 — 292,258 — 297,027 — 
2023 Secured Notes 481,864 — 509,153 — 293,918 — 288,633 — 
Unsecured Notes — — — — 198,931 — 197,462 — 
Total $1,673,042 $— $1,743,813 $— $1,638,516 $— $1,662,540 $— 
There were no transfers of financial instruments between the three levels of the fair value hierarchy during the three and nine months ended September 30, 2018 and 2017. The faircarrying value of the Company’sUS ABL Facility, is primarily based upon observablethe Canadian ABL Facility, the 2022 Secured Notes and the 2023 Secured Notes includes $21.4 million, $1.0 million, $6.9 million and $8.1 million, respectively, of unamortized debt issuance costs as of June 30, 2019, which are presented as a direct reduction of the corresponding liability. The carrying value of the US ABL
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Facility, the Canadian ABL Facility and the 2022 Secured Notes, the 2023 Secured Notes and the Unsecured Notes includes $25.1 million, $0.9 million, $7.7 million, $6.1 million and $1.1 million, respectively of unamortized debt issuance costs for the year ended December 31, 2018, which are presented as a direct reduction of the corresponding liability.
The carrying value of the US and Canadian ABL Facility, excluding debt issuance costs, approximates fair value as the interest rates are variable and reflective of market data such as market interest rates. The fair value of the Company’s 2022 Secured Notes, the 2023 Secured Notes and the Unsecured Notes is based on their last trading price at the end of each period obtained from a third party. The location and the fair value of derivative assets and liabilities designated as hedges in the condensed consolidated balance sheet are disclosed in Note 14.

NOTE 1112 - Restructuring
Restructuring costs include charges associated with exit or disposal activities that meet the definition of restructuring under FASB ASC Topic 420, “Exit or Disposal Cost Obligations” (“ASC 420”). The Company's restructuring plans are generally country or region specific and are typically completed within a one year period. Restructuring costs incurred under these plans include (i) one-time termination benefits related to employee separations, (ii) contract termination costs, and (iii) other related costs associated with exit or disposal activities including, but not limited to, costs for consolidating or closing facilities. Costs related to the integration of acquired businesses that do not meet the definition of restructuring under ASC 420, such as employee training costs, duplicate facility costs, and professional services expenses, are included within SG&A.
The Company incurred costs associated with restructuring plans designed to streamline operations and reduce costs of $6.1 million and $1.2 million and $7.2$7.1 million, net of reversals, during the three and six months ended June 30, 2019, and $0.4 million and $2.1$1.1 million, net of reversals, during the three and ninesix months ended SeptemberJune 30, 2018, and 2017, respectively.
The following is a summary of the activity in the Company’s restructuring accruals for the three and ninesix months ended SeptemberJune 30, 20182019 and 2017:2018:
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, 
(in thousands)(in thousands)2018 2017 20182017(in thousands)2019 2018 
Employee Costs Facility Exit Costs Total Employee Costs Facility Exit Costs Total 
Balance at beginning of the period Balance at beginning of the period $967 $2,130 $227 $1,793 Balance at beginning of the period $2,847 $4,252 $7,099 $755 $— $755 
Charges during the period6,137 1,156 7,214 2,124 
Cash payments during the period(3,661)(803)(3,991)(1,442)
Effects of movements in foreign exchange rates5 7 (2)15 
ChargesCharges123 1,027 1,150 449 — 449 
Cash paymentsCash payments(1,704)(1,871)(3,575)(234)— (234)
Foreign currency translationForeign currency translation(123)— (123)(3)— (3)
Non-cash movements Non-cash movements — (1,644)(1,644)— — — 
Balance at end of period Balance at end of period $3,448 $2,490 $3,448 $2,490 Balance at end of period $1,143 $1,764 $2,907 $967 $— $967 
Six Months Ended June 30, 
(in thousands)20192018
Employee Costs Facility Exit Costs Total Employee Costs Facility Exit Costs Total 
Balance at beginning of the period $4,544 $971 $5,515 $227 $— $227 
Charges1,630 5,473 7,103 1,077 — 1,077 
Cash payments(4,932)(3,015)(7,947)(330)— (330)
Foreign currency translation(99)— (99)(7)— (7)
Non-cash movements — (1,665)(1,665)— — — 
Balance at end of period $1,143 $1,764 $2,907 $967 $— $967 
The restructuring charges for the three and ninesix months ended SeptemberJune 30, 20182019 relate primarily to employee termination costs and lease exit costs in connection with the integration of Acton,ModSpace. The Company initiated certain restructuring plans associated with the ModSpace acquisition in order to capture operating synergies as a result of integrating ModSpace into WillScot. The restructuring activities primarily include the termination of leases for duplicative branches and corporate facilities and the termination of employees in connection with the consolidation of these overlapping facilities and functions within our existing business. At June 30, 2019, the Company is substantially complete with actions related to employee costs. The Company is still in the process of evaluating and closing acquired facilities and anticipates that all actions will be taken by the first quarter of 2020.
The restructuring charges for the three and six months ended June 30, 2018 primarily relate to employee termination costs in connection with the integration of Tyson and ModSpace.Acton, which the Company acquired in the fourth quarter of 2017 and first quarter of 2018. As part of the restructuring plans,plan, certain employees were required to render future service in order to receive their termination benefits. The termination costs associated with these employees was recognized over the period from the commencement
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date of communication of termination to the restructuring plansemployee to the actual date of termination. The Company anticipates that the remaining actions contemplated under the $3.4 million accrual as of September 30, 2018, will be substantially completed by the end of the third quarter of 2019.
The restructuring charges for the three and nine months ended September 30, 2017 primarily related to corporate employee termination costs incurred as part of the Algeco Group.
Segments
The $6.1 million and $1.2 million ofof restructuring charges for the three months ended SeptemberJune 30, 2018 and 2017 includes: $5.92019 includes $1.3 million and $0.3of charges related to the Modular - US segment, offset by a reversal of $0.1 million related to the Modular - Other North America segment. The $7.1 million of restructuring charges for the six months ended June 30, 2019 includes $6.6 million of charges pertaining to the Modular - US segment; $0.2 millionsegment and $0.0$0.5 million of charges pertaining to the Modular - Other North America segment; and $0.0segment.
The $0.4 million and $0.9 million of charges pertaining to Corporate and other.
The  $7.2 million and  $2.1$1.1 million of restructuring charges for the ninethree and six months ended SeptemberJune 30, 2018 and 2017  includes: $7.0 million and $0.2 million ofinclude charges pertaining to the Modular - US segment; $0.2 million and $0.0 million of charges pertaining to the Modular - Other North America segment; and $0.0 million and $1.9 million of charges pertaining to Corporate and other.segment.


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NOTE 1213 - Stock-Based Compensation
On November 16, 2017,During the Company’s shareholders approved a long-term incentive award plan (the “Plan”six months ended June 30, 2019, 478,400 time-based restricted stock units ("Time-Based RSUs"). The Plan is administered by and 302,182 market-based restricted stock units ("Market-Based RSUs", and together with the Compensation Committee ofTime-Based RSUs, the Company’s Board of Directors. Under the Plan, the Committee may grant an aggregate of 4,000,000 shares of Class A common stock in the form of non-qualified stock options, incentive stock options, stock appreciation rights,"RSUs"), and 52,755 restricted stock awards (“RSAs”("RSAs"), restricted stock units (“RSUs”), performance compensation awards and stock bonus awards. Stock-based payments including the grant of stock options, RSUs, and RSAs are subject to service-based vesting requirements, and expense is recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur. During the three months ended September 30, 2018, no RSAs, RSUs or stock options were granted under the Plan. During the nine months ended September 30, 2018, 27,675 RSAs, 921,730 RSUs and 589,257WillScot Corporation 2017 Incentive Award Plan (the "Plan"). No stock option awards were granted underduring the Plan. period.
During the three and ninesix months ended SeptemberJune 30, 2018, 02019, 33,592 RSAs, 213,180 Time-Based RSUs, and 35,050147,313 stock options vested in accordance with their terms, resulting in the issuance of 190,129 shares of common stock, net of 56,643 shares withheld to cover taxes. No RSAs were forfeited during the six months ended June 30, 2019. During the six months ended June 30, 2019, 34,191 Time-Based RSUs, 7,485 Market-Based RSUs, and 41,302 stock options were forfeited.
Stock-based payments to employees include grants ofAt June 30, 2019, 91,216 RSAs, 1,083,762 Time-Based RSUs, 294,697 Market-Based RSUs, and 400,642 stock options and RSUs, which are recognized in the financial statements based on their fair value.
RSUs and RSAs are valued based on the intrinsic value of the difference between the exercise price, if any, of the award and the fair market value of the Company's common stock on the grant date. RSAs vest over a one-year period and RSUs vest over a four-year period.
Stock options vest in tranches over a period of four years and expire ten years from the grant date. The fair value of each stock option award on thewere unvested, with weighted average grant date is estimated using the Black-Scholes option-pricing model with the following assumptions: expected dividend yield, expected stock price volatility, weighted-average risk-free interest ratefair values of $15.58, $12.77, $13.22, and weighted-average expected term of the options. The volatility assumption used in the Black-Scholes option-pricing model is based on peer group volatility as the Company does not have a sufficient trading history as a stand-alone public company. Additionally, due to an insufficient history with respect to stock option activity and post-vesting cancellations, the expected term assumption is based on the simplified method under GAAP, which is based on the vesting period and contractual term for each tranche of awards. The mid-point between the weighted-average vesting term and the expiration date is used as the expected term under this method. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a cash dividend on common shares.
As of September 30, 2018, none of the granted RSAs, RSUs or stock options had vested.$5.51, respectively.
Restricted Stock Awards
The following table summarizes the Company’s RSA activity for the nine months ended September 30, 2018:
Number of Shares Weighted-Average Grant Date Fair Value 
Balance, December 31, 2017 — $— 
Granted 27,675 13.60 
Forfeited — — 
Balance, September 30, 2018 27,675 $13.60 
Compensation expense for RSAs recognized in SG&A on the condensed consolidated statements of operations was $0.1$0.2 million and $0.2$0.5 million forfor the three and ninesix months ended SeptemberJune 30, 2018,2019, respectively, with associated tax benefits of $0.0 million and $0.1 million for the three and six months ended June 30, 2019, respectively. At September
At June 30, 2018, unrecognized2019, there was $0.9 million of unrecognized compensation cost related to RSAs totaled $0.2 million andthat is expected to be recognized over the remaining six-monthweighted average vesting period.period of 0.6 years.

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Time-Based Restricted Stock Units
The following table summarizes the Company's RSU award activityCompensation expense for the nine months ended September 30, 2018:
Number of SharesWeighted-Average Grant Date Fair Value
Balance, December 31, 2017 — $— 
Granted 921,730 13.60 
Forfeited (35,050)13.60 
Balance, September 30, 2018 886,680 $13.60 
Compensation expense forTime-Based RSUs recognized in SG&A on the condensed consolidated statements of operations was $0.8$1.2 million and $1.6$1.9 million forfor the three and ninesix months ended SeptemberJune 30, 2018,2019, respectively, with associated tax benefits of $0.0 million and $0.2 million and $0.4 million forfor the three and ninesix months ended SeptemberJune 30, 2018,2019 respectively.
At SeptemberJune 30, 2018,2019, unrecognized compensation cost related to Time-Based RSUs totaled $10.5totaled $12.5 million and is expected to be recognized over the remaining weighted average vesting period of 3.2 years.
Market-Based Restricted Stock Units
On March 21, 2019, the Compensation Committee of the Board of Directors granted 302,182 Market-Based RSUs, which vest based on achievement of the relative total stockholder return ("TSR") of The Company's common stock as compared to the TSR of the constituents of the Russell 3000 Index at grant date over the three-year period performance period. The target number of Market-Based RSUs may be adjusted from 0% to 150% based on the TSR attainment levels defined by the Compensation Committee. The 100% target payout is tied to performance at the 50% percentile, with a payout curve ranging from 0% (for performance less than the 25% percentile) to 150% (for performance at or above the 75% percentile). Vesting is also subject to continued service requirements through the vesting date. Each Market-Based RSU represents a contingent right to receive one share upon vesting of the Company’s Class A common stock, or its cash equivalent, as determined by the Compensation Committee.
The Market-Based RSUs were valued based on a Monte Carlo simulation model to reflect the impact of the Market-Based RSU market condition, resulting in a grant-date fair value per Market-Based RSU of $13.22. The probability of satisfying a market condition is considered in the estimation of the grant-date fair value for Market-Based RSUs and the compensation cost is not reversed if the market condition is not achieved, provided the requisite service has been provided.
Compensation expense for Market-Based RSUs recognized in SG&A on the condensed consolidated statements of operations was $0.3 million and $0.4 million for the three and six months ended June 30, 2019, respectively, with an associated tax benefit of $0.0 million and $0.1 million for the three and six months ended June 30, 2019, respectively. At June 30, 2019, unrecognized compensation cost related to Market-Based RSUs totaled $3.5 million and is expected to be recognized over the remaining vesting period of 3.52.7 years.
Stock Option Awards
The following table summarizes the Company's stock option activity for the nine months ended September 30, 2018:
Number of Options Weighted-Average Exercise Price per Share ($) 
Outstanding options, December 31, 2017 — $— 
Granted 589,257 $13.60 
Exercised — — 
Forfeited — — 
Outstanding options, September 30, 2018 589,257 $13.60 
Fully vested and exercisable options, end of period — $— 
Compensation expense for stock option awards, recognized in SG&A on the condensed consolidated statements of operations, was $0.2 million and $0.4 million forfor the three and ninesix months ended SeptemberJune 30, 2018,2019, respectively, with an associated tax benefits obf $0.1enefit of $0.0 million and $0.1 million for the three and ninesix months ended SeptemberJune 30, 2018,2019, respectively.
At SeptemberJune 30, 2018,2019, unrecognized compensation cost related to stock option awards totaled $2.8$2.0 million and is expected to be recognized over athe remaining vesting period of 3.52.7 years.

NOTE 14 - Derivatives
On November 6, 2018, WSII entered into an interest rate swap agreement (the “Swap Agreement”) with a financial counterparty that effectively converts $400.0 million in aggregate notional amount of variable-rate debt under the Company’s ABL Facility into fixed-rate debt. The Swap Agreement will terminate on May 29, 2022, at the same time the Company’s ABL Facility matures. The Swap Agreement contains customary representations, warranties and covenants and may be terminated prior to its expiration.
The Swap Agreement was designated and qualified as a hedge of the Company’s exposure to changes in interest payment cash flows created by fluctuations in variable interest rates on the ABL Facility. Although no significant ineffectiveness
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is expected with this hedging strategy, the effectiveness of the interest rate swaps is evaluated on a quarterly basis. The Company did not have any derivative financial instruments for the three and six months ended June 30, 2018.
The following table summarizes the outstanding interest rate swap arrangement as of June 30, 2019:
Aggregate Notional Amount (in millions)Receive RatePay RateReceive Rate as of June 30, 2019Receive Rate as of December 31, 2018
US ABL Facility$400.0 1 month LIBOR3.06 %2.40 %2.44 %

The location and the fair value of derivative instruments designated as hedges, at the respective balance sheet dates, were as follows:
(in thousands)Balance Sheet LocationJune 30, 2019December 31, 2018
Cash Flow Hedges:
Interest rate swapAccrued liabilities$4,080 $1,709 
Interest rate swapOther long-term liabilities$11,772 $6,192 

The fair value of each option award at grant date was estimated using the Black-Scholes option-pricing model withinterest rate swap is based on dealer quotes of market forward rates, a Level 2 input on the following assumptions:fair value hierarchy, and reflects the amount that the Company would receive or pay as of June 30, 2019 and December 31, 2018, respectively, for contracts involving the same attributes and maturity dates.
Assumptions
Expected volatility 36 %
Expected dividend yield — 
Risk-free interest rate 2.73 %
Expected term (in years) 6.25
Exercise price$13.60 
Weighted-average grant date fair value $5.51 
The interest rate swap, excluding the impact of taxes, resulted in a loss recognized of $5.1 million and $8.0 million in other comprehensive income ("OCI") for the three and six months ended June 30, 2019, respectively. The Company reclassified $0.6 million and $1.2 million from AOCL into interest expense on the condensed consolidated income statement for the three and six months ended June 30, 2019, respectively.
Cash flows from derivative instruments are presented within net cash provided by operating activities in the consolidated statements of cash flows.

NOTE 1315 - Commitments and Contingencies
The Company is involved in various lawsuits or claims in the ordinary course of business. Management is of the opinion that there is no pending claim or lawsuit which, if adversely determined, would have a material effect on the Company’s financial condition, results of operations or cash flows.

NOTE 1416 - Segment Reporting
TheSubsequent to the Business Combination, the Company historically has operated in twoone principal linesline of business;business: modular leasing and sales and remote accommodations, which were managed separately. The Remote Accommodations Business was considered a single operating segment. As part of the Business Combination, the Remote Accommodations segment is no longer owned by the Company and is reported as discontinued operations in the condensed consolidated financial statements. As such, the segment was excluded from the segment information below.
28


sales.
Modular leasing and sales is comprised of two operating segments: US and Other North America. The US modular operating segment (“Modular - US”) consists of the contiguous 48 states and Hawaii. The Other North America operating segment (“Modular - Other North America”) consists of Alaska, Canada and Mexico. Corporate and other includes eliminations of costs and revenue between segments and Algeco Group corporate costs not directly attributable to the underlying segments. Following the Business Combination, no additional Algeco Group corporate costs were incurred and the Company’s ongoing corporate costs are included within the Modular - US segment. Total assets for each reportable segment are not available because the Company utilizes a centralized approach to working capital management. Transactions between reportable segments are not significant.
As discussed in Note 6, the net assets acquired from ModSpace were allocated to both the Modular - US and Modular - Other North America segments. The US operations of ModSpace are included in the Modular - US segment and the Canadian operations of ModSpace are included in the Modular - Other North America segment. The operations and net assets acquired from Acton and Tyson are both included in the Modular - US segment.
The CompanyChief Operating Decision Maker ("CODM") evaluates business segment performance on Adjusted EBITDA, which excludes certain items as shown in the reconciliation of the Company’s consolidated net loss before tax to Adjusted EBITDA below. Management believes that evaluating segment performance excluding such items is meaningful because it provides insight with respect to intrinsic operating results of the Company.
The Company also regularly evaluates gross profit by segment to assist in the assessment of its operational performance. The Company considers Adjusted EBITDA to be the more important metric because it more fully captures the business performance of the segments, inclusive of indirect costs.

25


Reportable Segments
The following tables set forth certain information regarding each of the Company’s reportable segments for the three and six months ended June 30, 2019 and 2018, respectively.
Three Months Ended June 30, 2019 
(in thousands)Modular - US Modular - Other North America Total 
Revenues:
Leasing and services revenue:
Modular leasing$170,480 $17,029 $187,509 
Modular delivery and installation52,997 3,482 56,479 
Sales revenue:
New units10,407 1,217 11,624 
Rental units4,977 5,536 10,513 
Total Revenues238,861 27,264 266,125 
Costs:
Cost of leasing and services:
Modular leasing51,083 3,990 55,073 
Modular delivery and installation43,949 4,519 48,468 
Cost of sales:
New units7,138 861 7,999 
Rental units2,661 4,060 6,721 
Depreciation of rental equipment39,201 4,767 43,968 
Gross profit$94,829 $9,067 $103,896 
Other selected data:
Adjusted EBITDA$81,380 $7,347 $88,727 
Selling, general and administrative expense$64,153 $7,470 $71,623 
Other depreciation and amortization$2,892 $275 $3,167 
Purchase of rental equipment and refurbishments$58,241 $2,974 $61,215 


26


Three Months Ended June 30, 2018 
(in thousands)Modular - US Modular - Other North America Total 
Revenues:
Leasing and services revenue:
Modular leasing$90,965 $10,284 $101,249 
Modular delivery and installation27,390 4,023 31,413 
Sales revenue:
New units4,149 1,087 5,236 
Rental units2,309 126 2,435 
Total Revenues124,813 15,520 140,333 
Costs:
Cost of leasing and services:
Modular leasing24,505 2,624 27,129 
Modular delivery and installation26,310 3,817 30,127 
Cost of sales:
New units2,876 828 3,704 
Rental units1,164 99 1,263 
Depreciation of rental equipment20,217 3,253 23,470 
Gross profit$49,741 $4,899 $54,640 
Other selected data:
Adjusted EBITDA$38,104 $3,812 $41,916 
Selling, general and administrative expense$43,325 $4,409 $47,734 
Other depreciation and amortization$1,354 $216 $1,570 
Purchase of rental equipment and refurbishments$30,931 $1,748 $32,679 



27


Six Months Ended June 30, 2019 
(in thousands)Modular - US Modular - Other North America Total 
Revenues:
Leasing and services revenue:
Modular leasing$333,280 $32,451 $365,731 
Modular delivery and installation99,279 7,481 106,760 
Sales revenue:
New units24,430 2,098 26,528 
Rental units13,348 8,766 22,114 
Total Revenues470,337 50,796 521,133 
Costs:
Cost of leasing and services:
Modular leasing94,966 7,342 102,308 
Modular delivery and installation83,700 8,111 91,811 
Cost of sales:
New units17,388 1,489 18,877 
Rental units8,530 5,986 14,516 
Depreciation of rental equipment75,674 9,397 85,071 
Gross profit$190,079 $18,471 $208,550 
Other selected data:
Adjusted EBITDA$158,148 $15,087 $173,235 
Selling, general and administrative expense$130,558 $14,550 $145,108 
Other depreciation and amortization$5,618 $553 $6,171 
Purchase of rental equipment and refurbishments$108,162 $4,926 $113,088 
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Six Months Ended June 30, 2018 
(in thousands)Modular - USModular - Other North AmericaTotal
Revenues: 
Leasing and services revenue: 
Modular leasing$178,913 $19,598 $198,511 
Modular delivery and installation51,360 6,303 57,663 
Sales revenue: 
New units10,964 1,700 12,664 
Rental units5,663 583 6,246 
Total Revenues246,900 28,184 275,084 
Costs: 
Cost of leasing and services: 
Modular leasing49,562 4,729 54,291 
Modular delivery and installation49,250 6,398 55,648 
Cost of sales: 
New units7,442 1,249 8,691 
Rental units3,193 385 3,578 
Depreciation of rental equipment 40,904 6,411 47,315 
Gross profit$96,549 $9,012 $105,561 
Other selected data: 
Adjusted EBITDA $70,716 $6,692 $77,408 
Selling, general and administrative expense $84,146 $8,802 $92,948 
Other depreciation and amortization $3,559 $447 $4,006 
Purchase of rental equipment and refurbishments $61,455 $3,308 $64,763 

The following tables present a reconciliation of the Company’s (loss) income from operations before income tax to Adjusted EBITDA by segment for the three and ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, respectively:
Three Months Ended September 30, 2018 
(in thousands)Modular - US Modular - Other North America Total 
Revenues:
Leasing and services revenue:
Modular leasing$128,007 $13,653 $141,660 
Modular delivery and installation41,830 4,947 46,777 
Sales:
New units19,193 1,727 20,920 
Rental units8,595 972 9,567 
Total Revenues$197,625 $21,299 $218,924 
Costs:
Cost of leasing and services:
Modular leasing$36,204 $3,011 $39,215 
Modular delivery and installation37,782 4,608 42,390 
Cost of sales:
New units13,905 1,184 15,089 
Rental units5,025 725 5,750 
Depreciation of rental equipment31,702 3,832 35,534 
Gross profit$73,007 $7,939 $80,946 
Adjusted EBITDA$58,454 $6,164 $64,618 
Other selected data:
Selling, general and administrative expense$66,102 $5,795 $71,897 
Other depreciation and amortization$3,403 $317 $3,720 
Capital expenditures for rental fleet$43,007 $3,735 $46,742 
Three Months Ended June 30, 2019 
(in thousands)Modular - USModular - Other North AmericaTotal
(Loss) income from operations before income taxes $(13,976)$1,021 $(12,955)
Loss on extinguishment of debt 7,244 — 7,244 
Interest expense 31,865 659 32,524 
Depreciation and amortization 42,093 5,042 47,135 
Currency gains, net (75)(279)(354)
Goodwill and other impairments 2,706 80 2,786 
Restructuring costs 1,300 (150)1,150 
Integration costs 7,260 982 8,242 
Stock compensation expense 1,900 — 1,900 
Other expense (income) 1,063 (8)1,055 
Adjusted EBITDA $81,380 $7,347 $88,727 

29


Three Months Ended September 30, 2017 
(in thousands)Modular - USModular - Other North AmericaCorporate & OtherTotal
Revenues: 
Leasing and services revenue: 
Modular leasing$66,555 $8,920 $(155)$75,320 
Modular delivery and installation22,127 2,503 (3)24,627 
Sales: 
New units9,074 535 — 9,609 
Rental units5,922 765 (81)6,606 
Total Revenues$103,678 $12,723 $(239)$116,162 
Costs: 
Cost of leasing and services: 
Modular leasing$19,000 $2,252 $— $21,252 
Modular delivery and installation21,545 2,387 — 23,932 
Cost of sales: 
New units6,487 427 2 6,916 
Rental units3,204 580 — 3,784 
Depreciation of rental equipment 15,676 3,333 — 19,009 
Gross profit (loss)$37,766 $3,744 $(241)$41,269 
Adjusted EBITDA $29,177 $2,961 $(2,753)$29,385 
Other selected data: 
Selling, general and administrative expense $24,337 $4,116 $7,644 $36,097 
Other depreciation and amortization $1,298 $264 $343 $1,905 
Capital expenditures for rental fleet $24,147 $1,361 $— $25,508 
Three Months Ended June 30, 2018 
(in thousands)Modular - USModular - Other North AmericaTotal
Loss from operations before income taxes $(5,533)$(733)$(6,266)
Interest expense 11,663 492 12,155 
Depreciation and amortization 21,571 3,469 25,040 
Currency losses, net 114 458 572 
Restructuring costs 449 — 449 
Integration costs 4,785 — 4,785 
Stock compensation expense 1,054 — 1,054 
Transaction costs 4,049 69 4,118 
Other (income) expense (48)57 9 
Adjusted EBITDA $38,104 $3,812 $41,916 

Six Months Ended June 30, 2019 
(in thousands)Modular - USModular - Other North AmericaTotal
(Loss) income from operations before income taxes $(25,098)$1,360 $(23,738)
Loss on extinguishment of debt7,244 — 7,244 
Interest expense 63,101 1,395 64,496 
Depreciation and amortization 81,292 9,950 91,242 
Currency (gains), net (205)(465)(670)
Goodwill and other impairments 4,507 569 5,076 
Restructuring costs 6,574 529 7,103 
Integration costs 16,612 1,768 18,380 
Stock compensation expense 3,190 — 3,190 
Other expense (income) 931 (19)912 
Adjusted EBITDA $158,148 $15,087 $173,235 

Six Months Ended June 30, 2018 
(in thousands)Modular - USModular - Other North AmericaTotal
Loss from operations before income taxes $(10,841)$(2,680)$(13,521)
Interest expense 22,823 1,051 23,874 
Depreciation and amortization 44,463 6,858 51,321 
Currency losses, net 271 1,325 1,596 
Restructuring costs 1,067 10 1,077 
Integration costs 7,415 — 7,415 
Stock compensation expense 1,175 — 1,175 
Transaction costs 4,049 69 4,118 
Other expense 294 59 353 
Adjusted EBITDA $70,716 $6,692 $77,408 


30


Nine Months Ended September 30, 2018 
(in thousands)Modular - US Modular - Other North America Total 
Revenues:
Leasing and services revenue:
Modular leasing$306,920 $33,251 $340,171 
Modular delivery and installation93,190 11,250 104,440 
Sales: 
New units30,157 3,427 33,584 
Rental units14,258 1,555 15,813 
Total Revenues$444,525 $49,483 $494,008 
Costs: 
Cost of leasing and services:
Modular leasing$85,766 $7,740 $93,506 
Modular delivery and installation87,032 11,006 98,038 
Cost of sales: 
New units21,347 2,433 23,780 
Rental units8,218 1,110 9,328 
Depreciation of rental equipment 72,606 10,243 82,849 
Gross profit$169,556 $16,951 $186,507 
Adjusted EBITDA$129,170 $12,856 $142,026 
Other selected data:
Selling, general and administrative expense$150,248 $14,597 $164,845 
Other depreciation and amortization$6,962 $764 $7,726 
Capital expenditures for rental fleet$104,462 $7,043 $111,505 

31


Nine Months Ended September 30, 2017 
(in thousands)Modular - USModular - Other North AmericaCorporate & OtherTotal
Revenues:
Leasing and services revenue:
Modular leasing$192,587 $25,124 $(450)$217,261 
Modular delivery and installation60,451 6,132 (3)66,580 
Sales: 
New units21,630 2,861 — 24,491 
Rental units14,634 2,675 (81)17,228 
Total Revenues$289,302 $36,792 $(534)$325,560 
Costs: 
Cost of leasing and services: 
Modular leasing$55,713 $5,981 $— $61,694 
Modular delivery and installation58,612 5,792 — 64,404 
Cost of sales: — 
New units15,172 2,240 (10)17,402 
Rental units8,240 1,827 — 10,067 
Depreciation of rental equipment 44,030 9,173 — 53,203 
Gross profit (loss)$107,535 $11,779 $(524)$118,790 
Adjusted EBITDA$79,189 $8,586 $(10,197)$77,578 
Other selected data:
Selling, general and administrative expense$72,464 $12,393 $15,653 $100,510 
Other depreciation and amortization$3,937 $755 $1,044 $5,736 
Capital expenditures for rental fleet$72,105 $3,705 $— $75,810 
The following tables present a reconciliation of the Company’s loss from continuing operations before income tax to Adjusted EBITDA by segment for the three and nine months ended September 30, 2018 and 2017, respectively:
Three Months Ended September 30, 2018 
(in thousands)Modular - USModular - Other North AmericaTotal
(Loss) income from continuing operations before income taxes $(44,519)$1,283 $(43,236)
Interest expense, net (a) 42,831 616 43,447 
Depreciation and amortization 35,105 4,149 39,254 
Currency gains, net (112)(313)(425)
Restructuring costs 5,895 242 6,137 
Integration costs 7,443 10 7,453 
Stock compensation expense 1,050 — 1,050 
Transaction costs 10,490 182 10,672 
Other (income) expense 271 (5)266 
Adjusted EBITDA $58,454 $6,164 $64,618 
(a) In connection with the ModSpace acquisition, the Company incurred bridge financing fees and upfront commitment fees of $20.5 million, included within interest expense, during the three months ended September 30, 2018.

32


Three Months Ended September 30, 2017 
(in thousands)Modular - USModular - Other North AmericaCorporate & OtherTotal
Loss from continuing operations before income taxes $(1,070)$(1,684)$(18,313)$(21,067)
Interest expense, net 16,790 1,134 8,523 26,447 
Depreciation and amortization 16,974 3,597 343 20,914 
Currency gains, net (3,834)(104)(332)(4,270)
Restructuring costs 247 17 892 1,156 
Transaction costs 69 — 5,164 5,233 
Other expense 1 1 970 972 
Adjusted EBITDA $29,177 $2,961 $(2,753)$29,385 

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

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


33


NOTE 1517 - Income (Loss)Loss Per Share
Basic income (loss)loss per share (“EPS”LPS”) is calculated by dividing net income (loss)loss attributable to WillScot by the weighted average number of its Class A common shares outstanding during the period. The common shares issued a result of the vesting of RSUs and RSAs as of June 30, 2019, were included in LPS based on the weighted average number of days in which they were vested and outstanding during the period. Concurrently with the Business Combination, 12,425,000 of WillScot's Class A common shares were placed into escrow by shareholders and became ineligible to vote or participate in the economic rewards available to the other Class A shareholders. Escrowed shares were therefore excluded from the EPSLPS calculation while deposited in the escrow account. 6,212,500 of the escrowed shares were released to shareholders on January 19, 2018, and the remaining escrowed shares were released to shareholders on August 21, 2018.
WillScot's Class B common shares have no rights to dividends or distributions made by the Company and, in turn, are excluded from the EPSLPS calculation.
Diluted EPSLPS is computed similarly to basic net income (loss) per share,LPS, except that it includes the potential dilution that could occur if dilutive securities were exercised. Effects of potentially dilutive securities are presented only in periods in which they are dilutive. Stock options, Time-Based RSUs, and RSAs, representing 400,642, 1,083,762, and 91,216 shares of Class A common stock outstanding for the three and six months ended June 30, 2019, respectively, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. Market-based RSUs representing 294,697 shares of Class A common stock outstanding for the three and six months ended June 30, 2019, which can vest at 0% to 150% of the amount granted, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. Warrants representing 22,183,513 shares of Class A shares for the three and six months ended June 30, 2019, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.
Stock options and restricted stock units, and restricted stock awards, representing 589,257 886,680 and 27,675886,680 shares of Class A common stock outstanding for the three and ninesix months ended SeptemberJune 30, 2018, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. Warrants representing 44,750,000 shares of Class A shares for the three and nine months ended September 30, 2018, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.
Pursuant to the exchange agreement entered into by WS Holding's shareholders, Sapphire has the right, but not the obligation, to exchange all, but not less than all, of its shares of WS Holdings into newly issued shares of WillScot’s Class A common stock in a private placement transaction. The impact of this exchange has been excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive.
Three Months Ended June 30, Six Months Ended June 30, 
(in thousands, except per share numbers)2019201820192018
Numerator
Net (loss) income$(11,775)$379 $(22,936)$(6,456)
Net (loss) income attributable to non-controlling interest, net of tax(862)143 (1,722)(505)
Net (loss) income attributable to WSC$(10,913)$236 $(21,214)$(5,951)
Denominator
Average shares outstanding - basic108,693,924 78,432,274 108,609,068 77,814,456 
Average effect of dilutive securities:
Warrants— 3,745,030 — — 
Restricted stock awards— 2,782 — — 
Average shares outstanding - diluted108,693,924 82,180,086 108,609,068 77,814,456 
Loss per share
Net loss per share attributable to WillScot common shareholders - basic$(0.10)$0.00 $(0.20)$(0.08)
Net loss per share attributable to WillScot common shareholders - diluted$(0.10)$0.00 $(0.20)$(0.08)

31


NOTE 1618 - Related Parties
Related party balances included in the Company’s consolidated balance sheet at SeptemberJune 30, 20182019 and December 31, 2017,2018, consisted of the following:
(in thousands)(in thousands)Financial statement line Item September 30, 2018December 31, 2017(in thousands)Financial statement line Item June 30, 2019December 31, 2018
Receivables due from affiliates Receivables due from affiliates Prepaid expenses and other current assets $66 $2,863 Receivables due from affiliates Prepaid expenses and other current assets $24 $122 
Amounts due to affiliates Amounts due to affiliates Accrued liabilities (1,465)(1,235)Amounts due to affiliates Accrued liabilities (982)(1,379)
Total related party liabilities, net $(1,399)$1,628 Total related party liabilities, net $(958)$(1,257)
On November 29, 2017, in connection with the closing of the Business Combination, the Company, WSII, WS Holdings and the Algeco GlobalGroup entered into a transition services agreement (the “TSA”). The purpose of the TSA is to ensure an orderly transition of WSII’s business and effectuate the Business Combination. Pursuant to the TSA, each party will provide or cause to be provided to the other party or its affiliates certain services, use of facilities and other assistance on a transitional basis. The services period under the TSA ranges from six months to three years based on the services, but includes early termination clauses. The Company had $0.2 million in accruals and $2.9 $0.1 million in receivablesreceivables due from affiliates pertaining to the Transition Services AgreementTSA at September 30, 2018 and December 31, 2017, respectively.2018.
The Company was reimbursed $0.4 million by an affiliate for claims paid under an insurance program.
The Company accrued expenses of $0.5$0.8 million and $1.2 million at Septemberat June 30, 20182019 and December 31, 2017,2018, respectively, included in amounts due to affiliates, related to rental equipment purchases from an entity withinaffiliate of the Algeco Group.
34


Related party transactions included in the Company’s consolidated statement of operations for the three and ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, respectively, consisted of the following:
Three Months Ended September 30, Nine Months Ended September 30, 
(in thousands)Financial statement line item 2018201720182017
Leasing revenue from related parties Modular leasing revenue $(104)$— $(629)$— 
Rental unit sales to related parties Rental unit sales (1,548)— (1,548)— 
Management fees and recharge income on transactions with affiliates Selling, general & administrative expenses — (1,693)— (1,542)
Interest income on notes due from affiliates Interest income — (3,659)— (9,752)
Interest expense on notes due to affiliates Interest expense — 17,191 — 47,918 
Remote accommodations revenue and costs, net from affiliates Income from discontinued operations, net of tax — 1,327 — 1,327 
Total related party (income) expense, net $(1,652)$13,166 $(2,177)$37,951 
On August 22, 2018, WillScot’s majority stockholder, Sapphire, entered into a margin loan (the "Margin Loan ") under which all of its WillScot Class A common stock was pledged to secure $125.0 of borrowings under the loan agreement. WillScot is not a party to the loan agreement and has no obligations thereunder, but WillScot delivered an issuer agreement to the lenders under which WillScot has agreed to certain obligations relating to the shares pledged by Sapphire and, subject to applicable law and stock exchange rules, not to take any actions that are intended to materially hinder or delay the exercise of any remedies with respect to the pledged shares. In connection with the Margin Loan, on August 24, 2018, WSII entered into a two-year supply agreement with Target Logistics, an affiliate controlled by Sapphire, under which, subject to limited exception, WSII acquired the exclusive right to supply modular units, portable storage units, and other ancillary products ordered by the affiliate in the United States. WillScot's leasing revenue and rental unit sales associated with Target Logistics for the three and nine months ended September 30, 2018 are disclosed above. As of September 30, 2018, the 49,041,906 shares of WillScot Class A common stock pledged by Sapphire represented approximately 48.9% of WillScot’s issued and outstanding Class A shares.
Three Months Ended June 30, Six Months Ended June 30, 
(in thousands)Financial statement line item 2019201820192018
Leasing revenue from related parties Modular leasing revenue $76 $233 $150 $525 
The Company had capital expenditures of rental equipment purchased from related party affiliates of $1.2$1.7 million and $0.5$0.4 million for three months ended SeptemberJune 30, 20182019 and 2017,2018, respectively, and $3.0$3.2 million and $1.0$1.7 million during the ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, respectively.
The Company paid $0.1$0.0 million and $0.2$0.4 million in professional fees to an entity thatfor which two of the Company’s Directors also served in the same role for that entity, during the three months ended SeptemberJune 30, 20182019 and 2017,2018, respectively, and $1.1$0.6 million and $0.8$1.0 million during the ninesix months ended SeptemberJune 30, 20182019 and 2017,2018, respectively.

NOTE 17 - Subsequent Events
On November 6, 2018, WSII entered into an interest rate swap transaction with a financial counterparty that effectively converts $400.0 million in aggregate notional amount of its variable-rate debt into fixed-rate debt. The fixed rate paid by WSII is 3.06% and the variable rate received resets monthly to a one-month LIBOR rate. The swap transaction, which matures on May 29, 2022, was consummated to mitigate the interest rate risk inherent in WSII’s floating-rate credit agreement, which also matures on May 29, 2022, and not for trading or speculative purposes. The master agreement that governs the interest rate swap contains customary representations, warranties and covenants and may be terminated prior to its expiration.
On November 8, 2018, WillScot announced the commencement of an offer to each holder of its public and private warrants to purchase one-half share of Class A common stock, par value of $0.0001 per share, of WillScot for a purchase price of $5.75 (the “Warrants”) to receive 0.1818 common shares in exchange for each Warrant tendered by the holder and exchanged pursuant to the offer (the “Offer”). The warrants issued in connection with the Company's acquisition of ModSpace, each of which is exercisable for one share of WillScot Class A common stock at an exercise price of $15.50 per share, are not subject to the Offer. The Offer is made solely upon the terms and conditions in a Prospectus/Offer to Exchange and other related offering materials that are being distributed to holders of the Warrants. The Offer will be open until 11:59 p.m., Eastern Standard Time, on December 6, 2018, or such later time and date to which WillScot may extend.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand WillScot Corporation (“WillScot” or the “Company”("WillScot"), our operations and our present business environment. Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refers to WillScot and its subsidiaries. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes thereto, contained in Part I, Item 1 of this report.
On November 29, 2017, the Company, through its subsidiary, Williams Scotsman Holdings Corp. (“WS Holdings”), acquired all of the equity interest of Williams Scotsman International, Inc. (“WSII”) via a reverse recapitalization (the “Business Combination”). As a result of the Business Combination, (i) WillScot’s consolidated financial results for periods prior to November 29, 2017 reflect the financial results of WSII and its consolidated subsidiaries, as the accounting predecessor to WillScot, and (ii) for periods from and after this date, WillScot’s financial results reflect those of WillScot and its consolidated subsidiaries (including WSII and its subsidiaries) as the successor following the Business Combination.
Prior to the completion of the Business Combination, WSII also provided full-service remote workforce accommodation solutions in their remote accommodations business, which consisted of Target Logistics Management LLC (“Target Logistics”) and its subsidiaries and Chard Camp Catering Services (“Chard,” and together with Target Logistics, the “Remote Accommodations Business”). A parent company of WSII’s former owners, Algeco Scotsman Global S.à r.l., (together with its subsidiaries, the “Algeco Group”), undertook an internal restructuring (the “Carve-Out Transaction”) whereby certain assets related to WSII’s historical Remote Accommodations Business were transferred from WSII to other entities owned by the Algeco Group. This Remote Accommodations Business segment in its entirety is presented as discontinued operations in the condensed consolidated financial statements.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by accounting principles generally accepted in the US (“GAAP”) for complete financial statements. We use certain non-GAAP financial information that we believe is important for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of our ongoing operations and analyze our business performance and trends. Reconciliations of non-GAAP measures are provided in this section where presented.

the Other Non-GAAP Financial Data and Reconciliations section.
Executive Summary and Outlook
We are the leading provider of modular space and portable storage solutions in the United States (“US”), Canada and Mexico. In the third quarterAs of 2018, we completed the acquisition of Modular Space Holdings, Inc. (“ModSpace”) for a total purchase price of approximately $1.2 billion. With the addition of ModSpace, as of SeptemberJune 30, 2018,2019, our branch network included over 120 locations and additional storage lots to service more than 50,000 customers across the US, Canada and Mexico. We offer our customers an extensive selection of “Ready to Work” modular space and portable storage solutions and now manage a fleet of over 132,000approximately 130,000 modular space units and over 26,000 portable storage units. We remain focused on our core priorities of growing modular leasing revenues by increasing modular space units on rent, both organically and through our consolidation strategy, delivering “Ready to Work” solutions to our customers with value-addedvalue added products and services (“VAPS”("VAPS"), and on continually improving the overall customer experience.
SubsequentSince the end of 2017, we have complemented our already strong organic growth by acquiring and integrating regional and national competitors in Acton Mobile Holdings LLC (“Acton”) (acquired in December 2017) and Modular Space Holdings, Inc. ("ModSpace") (acquired in August 2018). The remaining integration activities for these acquisitions as of June 30, 2019 primarily consist of continued real estate exits and the related fleet relocations required to exit these properties. As of June 30, 2019, we have completed approximately 65% of our planned real estate exits, and the close ofremaining exits will continue during the ModSpace transaction on August 15, 2018, we began the process to integrate ModSpace's operations into our organizational structure, branch footprint, shared services and information technology platform. These efforts are well underway and effective November 1, 2018, our combined sales organization began writing all new contracts (including those associated with legacy ModSpace assets) from WillScot's operating and information technology platform. We anticipate full information technology cut-over from the ModSpace systems in the first quarterremainder of 2019 and will continue ourinto 2020. Two held for sale properties were also sold during the second quarter for net proceeds of $8.6 million. These exits, along with other integration efforts around real estate consolidation and fleet relocation on both the Acton Mobile ("Acton") and ModSpace acquisitions.  
Before announcing the ModSpace acquisition, we secured debt commitments from several financial institutionsactions to fund the acquisition. In the third quarter, we entered into or amended several agreementsdate, have allowed us to fund the cash consideration paid in the acquisition on a permanent basis and to pay related fees and expenses. In particular we:
• upsized our senior secured revolving credit facility (the "ABL Facility") to $1.425 billion (expandable to $1.8 billion through an accordion feature) and obtained the amendments required to finance the acquisition and to give effect to our greater scale thereafter;
• completed a $300.0 million private placement of 6.875% senior secured notes due 2023 (the "2023 Secured Notes");
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• completed a $200.0 million private placement of senior unsecured notes due 2023 (the "Unsecured Notes"); and
• raised $147.2realize approximately $21.2 million of gross proceeds from an underwritten common stock offering.synergies to date. Approximately 49% of the annualized forecasted cost synergies of $70 million were in our run rate as of June 30, 2019. These acquisitions, coupled with WillScot's innovative "Ready to Work" solutions and commitment to customer service, have solidified WillScot's market leading position.
For the three months ended SeptemberJune 30, 2018,2019, key drivers of financial performance include:
•Increased total revenues by $102.7$125.8 million, or 88.4%89.7%, as compared to the same period in 2017,2018, driven by a 88.4%$111.4 million, or 84.0% increase in our core leasing and services revenues from both organic pricing growth, and due to the impact of the Acton, Tyson, and ModSpace acquisitionsacquisition discussed in Note 2 of our unaudited condensed consolidated financial statements. New and rental unit sales increased 117.7%123.1% and 45.5%337.5%, respectively, also driven by acquisitions. acquisitions, and by several large rental unit sales in the Modular - Other North America segment in the current year.
–Consolidated modular space average monthly rental rate increased to $611 representing a 10.9% increase year over year.
–Consolidated modular space units on rent increased 37,779 or 69.3% year over year, driven by the ModSpace acquisition, and average modular space utilization increased 160 basis points (“bps”) year over year to 71.9%.
•On a pro-formapro forma basis, including results of WillScot Acton, Tyson, and ModSpace for all periods presented, total revenues increased $30.4$4.2 million, or 11.3%1.6%, as compared to the same period in 2018, driven by increases in core leasing revenues as a result of continued rate improvements that drove pro forma modular leasing revenues to increase $15.8 million, or 9.2%. Increases in pro forma modular leasing revenues were partially offset by decreased delivery and due toinstallation revenues of $6.1 million, or 9.7%, reduced new sales, which declined $4.8 million, or 29.4%, and decreased rental unit sales, which declined $0.7 million, or 6.5%.
–Pro forma average monthly rental rates increased new sales.15.1% year over year, pro forma units on rent decreased 4.1% year over year, and pro forma utilization was flat on a consolidated basis.

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•Increased the Modular - US segment revenues, which represents 90.3%represent 89.8% of revenue for the three months ended SeptemberJune 30, 2018,2019, by $93.9$114.1 million, or 90.5%91.4%, as compared to the same period in 2017,2018, through:
- Average modular–Modular space average monthly rental rate growth of 3.1% to $559$612, increased 11.5% year over year including the dilutive impacts of acquisitions primarily through increases in the priceacquisitions. Improved pricing was driven by a combination of our units. Organic increases on unit pricingprice optimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increased VAPS pricingpenetration across our customer base; and penetration on the Williams Scotsman legacy fleet were partially offset by lower rates on units acquired from Acton and Tyson and to a lesser extent, ModSpace, and by lower VAPS pricing and penetration on all acquired fleet; and
- Increased average–Average modular space units on rent by 31,795 units,increased 34,276, or 87.9%,a 70.0% year over year increase, due to of the Acton, Tyson,ModSpace acquisition; and ModSpace acquisitions; and
- –Average modular space monthly utilization increased 160190 basis points (“bps”) to 73.8%74.1% for the three months ended SeptemberJune 30, 20182019 as compared to the three months ended June 30, 2018. This increase was driven by higher utilization on the acquired ModSpace fleet as compared to the overall average includingutilization for the three months ended June 30, 2018, which included the fleet recently acquired from Acton and Tyson. However, utilization decreased by 90 bps during the quarter as compared to the three months ended September 30, 2017, as Onsite Space LLC (d/b/a result of lower utilization on acquired fleet from Acton and Tyson; andTyson Onsite (“Tyson”)).
- –On a pro-formapro forma basis, including results of WillScot Acton, and ModSpace for all periods presented, average modular space monthly rental rate increased 13.4% on consistent average16.1%, which is the seventh consecutive quarter of double digit growth. Average modular space units on rent.rent were down 4.2% versus the prior year, however, the performance of pricing and VAPS revenue have more than offset these declines. Pro forma average modular space monthly utilization increased 20 bps to 74.1% for the three months ended June 30, 2019.
•Increased the Modular - Other North America segment revenues which represented 9.7%10.2% of revenues for the three months ended SeptemberJune 30, 2018,2019, by $8.6$11.8 million, or 67.7%76.1% as compared to the same period in 2017.2018. Increases were driven primarily by:
- –Average modular space monthly rental rate increased 9.5%5.2% to $587;$603; and
- –Average modular space units on rent increased by 2,1543,503 units, or 40.8%63.4% as compared to the same period in 20172018 driven primarily by acquired units from the ModSpace transaction, as well as organic increases at Williams Scotsman;transaction; and
- –Average modular space monthly utilization increaseddecreased by 32080 bps as compared to the same period in 20172018 to 57.3%, and increased 20 bps as compared to the three months ended June 30, 2018.56.3%.
- –On a pro-formapro forma basis, including results of WillScot and ModSpace for all periods presented, Modular - Other North America segment modular space units on rent decreased 3.6%, however average modular space monthly rental rate increased 0.9%5.6% and average modular space units on rent decreased 2.4%. Pro forma average modular space monthly utilization decreased 50 bps to 56.3% for the three months ended June 30, 2019.
•Generated a consolidated net loss of $11.8 million for the three months ended June 30, 2019, which included $19.4 million of discrete costs expensed in the period related to the ModSpace integration and loss on extinguishment of debt related to the redemption of our 10% senior unsecured notes (the "Unsecured Notes"). Discrete costs of $19.4 million in the period included $8.2 million of integration costs, a $7.2 million loss on extinguishment of debt related to the redemption of our senior unsecured notes, $2.8 million of impairment losses on long-lived assets associated with real estate consolidations, and $1.2 million of restructuring cost. This compares to a consolidated net loss of $0.4 million for same period in 2018, which included $0.4 million of restructuring cost and $4.8 million of integration cost related to the Acton and Tysonacquisitions.
•Generated Adjusted EBITDA of $58.5 million and $6.2$88.7 million for the three months ended June 30, 2019, representing an increase of $46.8 million or 111.7% as compared to the same period in 2018, which includes the impact of the ModSpace acquisition, as well as partial realization of commercial and cost synergies associated with the Acton, Tyson, and ModSpace acquisitions. Adjusted EBITDA for the Modular - US Segmentsegment and the Modular - Other North America Segment,segment, respectively, was $81.4 million and $7.3 million for combined Adjusted EBITDAthe three months ended June 30, 2019.
•Continued our efforts to optimize our capital structure by completing a tack-on offering of $64.6$190 million betweenin aggregate principal amount to our 6.875% senior secured notes due 2023 (the "Tack-on Notes"), using the Modular - US Segment and net proceeds to repay a portion of outstanding borrowings under our asset-backed revolving credit facility (the Modular - Other North America Segment, representing an increase“ABL Facility”). Subsequently in the quarter, we redeemed all $200 million in aggregate principal amount of $32.4 million or 100.6% as compared to the same period in 2017, which includes theour outstanding Unsecured Notes. The resulting impact of the Acton, Tyson, and ModSpace acquisitions discussed in Note 2 of the unaudited condensed consolidated financial statements.these actions is expected to reduce our go-forward interest expense by approximately $6.0 million annually.
Our customers operate in a diversified set of end markets,end-markets, including commercial and industrial, construction, education, energy and natural resources, government and other end-markets. We track several market leading indicators including those related to our two largest end markets, the commercial and industrial segment and the construction segment, which collectively accounted for approximately 80%84% of our revenues in the three months ended SeptemberJune 30, 2018, including the customer base from the Acton, Tyson, and ModSpace acquisitions. Market2019. We believe market fundamentals underlying these markets remain favorable, and we expect continued modest market growth in the next several years. PotentialAs a result of the potential for increased capital spending as a resultdue to tax reform in the US, discussions of increased infrastructure spending, and rebuilding in areas impacted by natural disasters in 2017 and 2018 across the US, also provide us confidence in continuedwe are confident that we will continue to see demand for our products.

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Consolidated Results of Operations
Three Months Ended June 30, 2019 Compared to the Three Months Ended June 30, 2018
Our consolidated statements of operations for the three months ended June 30, 2019 and 2018 are presented below:
Three Months Ended June 30, 2019 vs. 2018 $ Change
(in thousands)20192018
Revenues: 
Leasing and services revenue: 
Modular leasing $187,509 $101,249 $86,260 
Modular delivery and installation 56,479 31,413 25,066 
Sales revenue: 
New units 11,624 5,236 6,388 
Rental units 10,513 2,435 8,078 
Total revenues 266,125 140,333 125,792 
Costs: 
Costs of leasing and services: 
Modular leasing 55,073 27,129 27,944 
Modular delivery and installation 48,468 30,127 18,341 
Costs of sales: 
New units 7,999 3,704 4,295 
Rental units 6,721 1,263 5,458 
Depreciation of rental equipment 43,968 23,470 20,498 
Gross profit 103,896 54,640 49,256 
Expenses: 
Selling, general and administrative 71,623 47,734 23,889 
Other depreciation and amortization 3,167 1,570 1,597 
Impairment losses on long-lived assets 2,786 — 2,786 
Restructuring costs 1,150 449 701 
Currency (gains) losses, net (354)572 (926)
Other income, net (1,289)(1,574)285 
Operating income 26,813 5,889 20,924 
Interest expense 32,524 12,155 20,369 
Loss on extinguishment of debt 7,244 — 7,244 
Loss from operations before income tax (12,955)(6,266)(6,689)
Income tax benefit (1,180)(6,645)5,465 
Net (loss) income (11,775)379 (12,154)
Net (loss) income attributable to non-controlling interest, net of tax (862)143 (1,005)
Net (loss) income attributable to WillScot $(10,913)$236 $(11,149)
Comparison of Three Months Ended June 30, 2019 and 2018
Revenue: Total revenue increased $125.8 million, or 89.7%, to $266.1 million for the three months ended June 30, 2019 from $140.3 million for the three months ended June 30, 2018. The increase was primarily the result of an 84.0% increase in leasing and services revenue driven by increased volumes from acquisitions and improved pricing. Increased volumes were driven by units acquired as part of the ModSpace acquisition, as well as increased modular delivery and installation revenues on the combined rental fleet of 79.9% due to increased transaction volumes and higher revenues per transaction. Average modular space monthly rental rates increased 10.9% to $611 for the three months ended June 30, 2019, and average modular space units on rent increased 37,779 units, or 69.3%. Improved pricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increased VAPS penetration across our customer base, offset partially by lower average modular space monthly rental rates on acquired units for ModSpace. The increase in leasing and services revenue was further complemented by increases of $6.4 million, or 123.1%, and $8.1 million, or 337.5%, on new unit and rental unit sales, respectively, as compared to the same period in 2018. Increases in both new and rental unit sales were primarily a result of our increased scale as a result of the ModSpace acquisition and our larger post-acquisition fleet size and sales teams. The large increase in rental unit sales was driven by the
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Modular - Other North America segment.
On a pro forma basis, including results of WillScot and ModSpace for all periods presented, total revenues increased $4.2 million, or 1.6%, year-over-year for the three months ended June 30, 2019. Increases were driven by core leasing revenues, which increased $15.8 million, or 9.2%, as a result of a 15.1% increase in average modular space monthly rental rates. These increases were partially offset by decreased delivery and installation revenues of $6.1 million, or 9.7%, reduced new sales, which declined $4.8 million, or 29.4%, and decreased rental unit sales, which declined $0.7 million, or 6.5%.
Total average units on rent for the three months ended June 30, 2019 and 2018 were 108,844 and 68,017, respectively. The increase is due to units acquired as part of the ModSpace acquisition, with modular space average units on rent increasing 37,779 units, or 69.3%, for the three months ended June 30, 2019. Modular space average monthly rental rates increased 10.9% for the three months ended June 30, 2019. Portable storage average units on rent increased by 3,048 units, or 22.6%, for the three months ended June 30, 2019. Average portable storage monthly rental rates increased 1.7% for the three months ended June 30, 2019. The average modular space unit utilization rate during the three months ended June 30, 2019 was 71.9%, as compared to 70.3% during the same period in 2018. This increase was driven by higher utilization on the acquired ModSpace fleet as compared to the overall average utilization for the three months ended June 30, 2018, which included the fleet acquired from Acton and Tyson. The average portable storage unit utilization rate during the three months ended June 30, 2019 was 63.3%, as compared to 68.1% during the same period in 2018. The decrease in average portable storage utilization rate was driven by organic declines in the number of portable storage average units on rent.
Gross Profit: Our gross profit percentage was 39.0% and 38.9% for the three months ended June 30, 2019 and 2018, respectively. Our gross profit percentage, excluding the effects of depreciation, was 55.6% and 55.7% for the three months ended June 30, 2019 and 2018, respectively.
Gross profit increased $49.3 million, or 90.3%, to $103.9 million for the three months ended June 30, 2019 from $54.6 million for the three months ended June 30, 2018. The increase in gross profit is a result of a $65.0 million increase in modular leasing and services gross profit and increased new unit and rental unit gross profit of $4.8 million. Increases in modular leasing and services gross profit were primarily as a result of increased revenues due to additional units on rent as a result of recent acquisitions as well as increased margins due to favorable average monthly rental rates on modular space units and increased delivery and installation margins driven primarily by higher pricing per transaction. These increases were partially offset by increased depreciation of $20.5 million as a result of additional rental equipment acquired as part of the ModSpace acquisition, as well as continued capital investment in our existing rental equipment.
SG&A: Selling, general and administrative ("SG&A") increased $23.9 million, or 50.1%, to $71.6 million for the three months ended June 30, 2019, compared to $47.7 million for the three months ended June 30, 2018. The primary drivers of the increases are related to increased employee costs of $10.3 million driven by the increased size of the workforce, net of realized employee cost synergies savings to date achieved as a result of the restructuring activities; and increased occupancy costs of $3.3 million largely due to the expansion of our branch network and storage lots, including a portion of the expected cost savings as we have now exited approximately 65% of redundant real estate locations.
Discrete items with SG&A decreased for the three months ended June 30, 2019, compared to the three months ended June 30, 2018, by $0.3 million as an increase in integration cost of $3.0 million related to the Acton and ModSpace integrations and an increase in stock compensation expense of $0.8 million, were fully offset by a decrease of $4.1 million in transaction costs.
The remaining increases of $10.6 million are related to increased professional fees, insurance, computer, travel, office, bad debt, and other expenses related to operating a larger business as a result of our recent acquisitions and our expanded employee base and branch network.
We estimate cost synergies of approximately $7.5 million related to the Acton and ModSpace acquisitions were realized in the three months ended June 30, 2019, which compares to approximately $1.3 million of synergies realized in three months ended June 30, 2018, bringing cumulative synergies related to the Acton, Tyson, and ModSpace acquisitions as of June 30, 2019 to approximately $21.2 million. This is consistent with our integration plans and we expect these activities to continue through 2019 as we continue our efforts to achieve expected annual recurring cost savings of over $70.0 million once our integration plans are fully executed and in our results.
Other Depreciation and Amortization:Other depreciation and amortization increased $1.6 million, or 100.0%, to $3.2 million for the three months ended June 30, 2019, compared to $1.6 million for the three months ended June 30, 2018. The increase was driven primarily by depreciation on property, plant and equipment and amortization of the trade name acquired as part of the ModSpace acquisition in the third quarter of 2018.
Impairment losses on Long-Lived Assets: Impairment losses on property, plant and equipment were $2.8 million for the three months ended June 30, 2019 as compared to $0.0 million for the three months ended June 30, 2018. In the current period, we reclassified a branch facility that we intend to exit to held for sale and recognized an impairment on the related assets as the carrying value of the assets exceeded the estimated fair value less cost to sell. Additionally, one of the properties exited during the period was acquired as part of the ModSpace acquisition and had a favorable lease intangible. As a result of the exit of this property, the remaining net book value of the favorable lease intangible was deemed impaired, resulting in an impairment charge of $2.4 million.
Restructuring Costs: Restructuring costs were $1.2 million for the three months ended June 30, 2019 as compared to $0.4 million for the three months ended June 30, 2018. The 2019 restructuring charges relate primarily to employee
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termination and lease breakage costs related to the ModSpace acquisition and integration. The 2018 restructuring charges relate primarily to employee termination and lease breakage costs related to the Acton and Tyson acquisitions and integrations.
Currency (Gains) Losses, net: Currency gains, net increased by $1.0 million to a $0.4 million gain for the three months ended June 30, 2019 compared to a $0.6 million loss for the three months ended June 30, 2018. The increase in currency gains in 2019 was primarily attributable to the impact of foreign currency exchange rate changes on loans and borrowings and intercompany receivables and payables denominated in a currency other than the subsidiaries’ functional currency.
Other Income, Net: Other income, net was $1.3 million and $1.6 million for the three months ended June 30, 2019 and 2018, respectively. Other income, net of $1.3 million for the three months ended June 30, 2019 was related to the receipt of $1.1 million of insurance proceeds related to assets damaged during Hurricane Harvey in the second quarter. Other income, net of $1.6 million for the three months ended June 30, 2018 was also driven by the receipt of insurance proceeds related to assets damaged during Hurricane Harvey and contributed $1.8 million to other income, net, for the three months ended June 30, 2018.
Interest Expense: Interest expense increased $20.3 million, or 166.4%, to $32.5 million for the three months ended June 30, 2019 from $12.2 million for the three months ended June 30, 2018. The interest costs incurred during the three months ended June 30, 2018 relate to the change in the debt structure of the Company as a result of the ModSpace acquisition. In the third quarter of 2018, as part of financing the ModSpace acquisition, we upsized our ABL Facility to $1.425 billion, issued $300.0 million of senior secured notes (the "2023 Secured Notes"), and issued the Unsecured Notes. Further, in the second quarter of 2019 we issued $190.0 million of Tack-on Notes in aggregate principal amount to the 2023 Secured Notes and used the proceeds to repay a portion of the ABL Facility. Subsequent to the issuance of the Tack-on Notes, we redeemed all $200.0 million in aggregate outstanding principal amount of the Unsecured Notes using proceeds from the ABL Facility. See Note 8 to the condensed consolidated financial statements for further discussion of our debt.
Loss on Extinguishment of Debt: Loss on extinguishment of debt increased $7.2 million, for the three months ended June 30, 2019 from $0.0 million for the three months ended June 30, 2018. This loss is attributable to the repayment of $200.0 million in aggregate outstanding principal of the Unsecured Notes in the second quarter at a redemption price of 102.0%, plus a make-whole premium of 1.1%, for total premiums of 3.1%. As a result, the Company recorded a loss on extinguishment of $7.2 million, which included $6.2 million of premium and $1.0 million related to the write-off of unamortized deferred financing fees. This redemption was funded from the use of proceeds from the ABL Facility.
Income Tax Benefit: Income tax benefit decreased $5.4 million to $1.2 million for the three months ended June 30, 2019 compared to $6.6 million for the three months ended June 30, 2018. The decrease in income tax benefit was driven by the discrete benefits recorded in the three months ended June 30, 2018 which did not occur in the three months ended June 30, 2019.

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Although only 9.7% of our revenues for the three months ended September 30, 2018 were from the Modular - Other North America segment, markets in Canada, including Alaska, and Mexico, show continued improvement despite declines experienced over the last several years related to the energy markets. Improvement in average modular space monthly rental rates, average modular space units on rent, and average modular space monthly utilization continued in the third quarter as compared to the same period in 2017. However, competitive pressures in these markets may continue to depress pricing given current levels of supply in the market until utilization across the industry improves.

Consolidated Results of Operations
ThreeSix Months Ended SeptemberJune 30, 20182019 Compared to the ThreeSix Months Ended SeptemberJune 30, 2017 2018
Our consolidated statements of operations for the threesix months ended SeptemberJune 30, 20182019 and 20172018 are presented below:
Three Months Ended September 30, 2018 vs. 2017 $ Change
(in thousands)20182017
Revenues: 
Leasing and services revenue: 
Modular leasing $141,660 $75,320 $66,340 
Modular delivery and installation 46,777 24,627 22,150 
Sales: 
New units 20,920 9,609 11,311 
Rental units 9,567 6,606 2,961 
Total revenues 218,924 116,162 102,762 
Costs: 
Costs of leasing and services: 
Modular leasing 39,215 21,252 17,963 
Modular delivery and installation 42,390 23,932 18,458 
Costs of sales: 
New units 15,089 6,916 8,173 
Rental units 5,750 3,784 1,966 
Depreciation of rental equipment 35,534 19,009 16,525 
Gross profit 80,946 41,269 39,677 
Expenses: 
Selling, general and administrative 71,897 36,097 35,800 
Other depreciation and amortization 3,720 1,905 1,815 
Restructuring costs 6,137 1,156 4,981 
Currency gains, net (425)(4,270)3,845 
Other (income) expense, net (594)1,001 (1,595)
Operating income 211 5,380 (5,169)
Interest expense 43,447 30,106 13,341 
Interest income — (3,659)3,659 
Loss from continuing operations before income tax (43,236)(21,067)(22,169)
Income tax benefit (6,507)(7,632)1,125 
Loss from continuing operations (36,729)(13,435)(23,294)
Income from discontinued operations, net of tax — 5,078 (5,078)
Net loss (36,729)(8,357)(28,372)
Net loss attributable to non-controlling interest, net of tax (3,210)— (3,210)
Total loss attributable to WillScot $(33,519)$(8,357)$(25,162)
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Six Months Ended June 30, 2019 vs. 2018 $ Change
(in thousands)20192018
Revenues: 
Leasing and services revenue: 
Modular leasing $365,731 $198,511 $167,220 
Modular delivery and installation 106,760 57,663 49,097 
Sales revenue: 
New units 26,528 12,664 13,864 
Rental units 22,114 6,246 15,868 
Total revenues 521,133 275,084 246,049 
Costs: 
Costs of leasing and services: 
Modular leasing 102,308 54,291 48,017 
Modular delivery and installation 91,811 55,648 36,163 
Costs of sales: 
New units 18,877 8,691 10,186 
Rental units 14,516 3,578 10,938 
Depreciation of rental equipment 85,071 47,315 37,756 
Gross profit 208,550 105,561 102,989 
Expenses: 
Selling, general and administrative 145,108 92,948 52,160 
Other depreciation and amortization 6,171 4,006 2,165 
Impairment losses on long-lived assets 5,076 — 5,076 
Restructuring costs 7,103 1,077 6,026 
Currency (gains) losses, net (670)1,596 (2,266)
Other income, net (2,240)(4,419)2,179 
Operating income 48,002 10,353 37,649 
Interest expense 64,496 23,874 40,622 
Loss on extinguishment of debt 7,244 — 7,244 
Loss from operations before income tax (23,738)(13,521)(10,217)
Income tax benefit (802)(7,065)6,263 
Net loss (22,936)(6,456)(16,480)
Net loss attributable to non-controlling interest, net of tax (1,722)(505)(1,217)
Net loss attributable to WillScot $(21,214)$(5,951)$(15,263)
Comparison of ThreeSix Months Ended SeptemberJune 30, 20182019 and 20172018
Revenue: Total revenue increased $102.7$246.0 million, or 88.4%89.4%, to $218.9$521.1 million for the threesix months ended SeptemberJune 30, 20182019 from $116.2$275.1 million for the threesix months ended SeptemberJune 30, 2017.2018. The increase was primarily the result of a 88.4%an 84.4% increase in leasing and services revenue driven by increased volumes from acquisitions and improved pricingpricing. Increased volumes were driven by units acquired as part of the ModSpace acquisition, as well as increased modular delivery and volumes.installation revenues on the combined rental fleet of 85.1% due to increased transaction volumes and higher revenues per transaction. Average modular space monthly rental rates increased 3.7%9.2% to $561$593 for the threesix months ended SeptemberJune 30, 2018,2019, and average modular space units on rent increased 33,94938,481 units, or 81.9%70.8%. Improved pricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increased VAPS penetration across our customer base, offset partially by the average modular space monthly rental rates on acquired units for Acton, Tyson, and ModSpace. Improved volumes were driven by units acquired as part of the Acton, Tyson, and ModSpace acquisitions, as well as increased modular delivery and installation revenues on the combined rental fleet of 90.2%. The increase in leasing and services revenue was further complemented by increases of $11.3$13.8 million, or 117.7%108.7%, and $3.0$15.9 million, or 45.5%256.5%, on new unit and rental unit sales, respectively, as compared to the same period in 2017. The increase year over year2018. Increases in both new sales was primarily driven by a single large sale project within the US. Increases inand rental unit sales waswere primarily a result of our increased scale as a result of the ModSpace acquisition and our larger post-acquisition fleet size.size and sales teams. The large increase in rental unit sales was driven by the Modular - Other North America segment.
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On a pro-formapro forma basis, including results of WillScot Acton, Tyson, and ModSpace for all periods presented, total revenues increased $30.4$15.1 million, or 11.3%3.0%, year-over-year for the threesix months ended SeptemberJune 30, 2018.2019. Increases were driven by core leasing and services revenues, which increased $30.3 million, or 9.0%, as a result of a 12.0%13.6% increase in average modular space monthly rental rates,rates. These increases were partially offset by decreased delivery and due to increasedinstallation revenues of $6.9 million, or 6.1%, reduced new sales.sales, which declined $7.9 million, or 23.0%, and decreased rental unit sales, which declined $0.4 million, or 1.7%.
Total average units on rent for the threesix months ended SeptemberJune 30, 2019 and 2018 were 109,815 and 2017 were 91,194 and 53,705,68,126, respectively. The increase was due to units acquired as part of the Acton, Tyson, and ModSpace acquisitions,acquisition, with modular space average units on rent increasing by 33,94938,481 units, or 81.9%70.8%, for the threesix months ended SeptemberJune 30, 2018.2019. Modular space average monthly rental rates increased 3.7%9.2% for the threesix months ended SeptemberJune 30, 2018.2019. Portable storage average units on rent increased by 3,5403,208 units, or 28.9%23.2%, for the threesix months ended SeptemberJune 30, 2018.2019. Average portable storage monthly rental rates increased 2.6%1.7% for the threesix months ended SeptemberJune 30, 2018.2019. The average modular space unit utilization rate during the threesix months ended SeptemberJune 30, 20182019 was 71.8%72.2%, as compared to 71.3%70.3% during the same period in 2017. The2018. This increase in average modular space utilization rate was driven by improvement inhigher utilization on the modular spaceacquired ModSpace fleet as compared to the overall average units on rent inutilization for the Modular - Other North America business segment, slightly offset by declines insix months ended June 30, 2018, which included the Modular - US business segment as a result offleet acquired units at lower utilization rates.from Acton and Tyson. The average portable storage unit utilization rate during the threesix months ended SeptemberJune 30, 20182019 was 68.0%65.0%, as compared to 69.8%69.4% during the same period in 2017.2018. The decrease in average portable storage utilization rate was driven by organic declinesan increase in the number of portable storage average units on rent in the Modular - US segment.
Gross Profit: Our gross profit percentage was 37.0%40.0% and 35.5%38.4% for the threesix months ended SeptemberJune 30, 20182019 and 2017,2018, respectively. Our gross profit percentage, excluding the effects of depreciation, was 53.0%56.3% and 52.0%55.6% for the threesix months ended SeptemberJune 30, 20182019 and 2017,2018, respectively.
Gross profit increased $39.6$103.0 million, or 95.9%97.5%, to $80.9$208.6 million for the threesix months ended SeptemberJune 30, 20182019 from $41.3$105.6 million for the threesix months ended SeptemberJune 30, 2017.2018. The increase in gross profit is a result of a $52.0$132.1 million increase in modular leasing and services gross profit and increased new unit and rental unit gross profit of $4.1$8.6 million. Increases in modular leasing and services gross profit were primarily as a result of increased revenues due to additional units on rent as a result of recent acquisitions as well as increased margins due to favorable average monthly rental rates on modular space units.units and increased delivery and installation margins driven primarily by higher pricing per transaction. These increases were partially offset by increased depreciation of $16.5$37.8 million as a result of additional rental equipment acquired as part of the Acton, Tyson, and ModSpace acquisitions,acquisition, as well as continued capital investment in our existing rental equipment.
Selling, General and Administrative:SG&A: Selling, general and administrative expense (“SG&A”)&A increased $35.8$52.2 million, or 99.2%56.2%, to $71.9$145.1 million for the threesix months ended SeptemberJune 30, 2018,2019, compared to $36.1$92.9 million for the threesix months ended SeptemberJune 30, 2017. $13.92018. $8.4 million of the SG&A increase was driven by discrete items including increased transaction costsduring the period as integration cost increases of $5.4 million related to the ModSpace acquisition and increased integration costs of $7.5$10.5 million related to the Acton and ModSpace integrations. Additionally,integrations and stock compensation expense increases of $2.0 million were partially offset by lower transaction costs, which reduced $4.1 million as compared to the prior year. Other drivers of the increase relate to increased $1.1employee costs of $20.2 million driven by the increased size of the workforce, net of realized employee cost synergies savings to date achieved as a result of the restructuring activities; and increased occupancy costs of $7.6 million largely due to grantsthe expansion of stock options, restricted stock awards (“RSAs”)our branch network and restricted stock units (“RSUs”) to certain employees instorage lots, including a portion of the first quarterexpected cost savings as we have now exited approximately 65% of 2018.redundant real estate locations. The remaining increases of $21.9$16.0 million are primarily related to $2.4 million of public company costs including outsideincreased professional fees, and increased headcount, occupancy,insurance, computer, travel, office, bad debt, and other SG&A cost increases as a result ofexpenses related to operating a larger operationbusiness as a result of our recent acquisitions and our expanded employee base and branch network. Cost
We estimate cost synergies of approximately $2.4$14.8 million related to the Acton and TysonModSpace acquisitions were realized duringin the quartersix months ended June 30, 2019, which compares to approximately $1.5 million of synergies realized for the six months ended June 30, 2018, bringing cumulative synergies related to the Acton, Tyson, and ModSpace acquisitions as of June 30, 2019 to approximately $21.2 million. This is consistent with our integration plans remain on track. Effective November 1, 2018, our combined sales organization began writing all new contracts (including those associated with legacy ModSpace assets) from WillScot's operating and information technology platform. Exitwe expect these activities for redundant branch locations, such as preparing units and materials for transport to other locations remain on schedule. These activities are expected to continue through 2019 andas we expect additionalcontinue our efforts to achieve expected annual reoccurring cost savings as we execute the establishedof over $70.0 million once our integration plans for Actonare fully executed and ModSpace. These increases were partially offset by a reduction of $7.6 million in corporate & other related to Algeco Group costs no longer included in our operations.

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results.
Other Depreciation and Amortization: Other depreciation and amortization increased $1.8$2.2 million, or 94.7%55.0%, to $3.7$6.2 million for the threesix months ended SeptemberJune 30, 2018,2019, compared to $1.9$4.0 million for the threesix months ended SeptemberJune 30, 2017.2018. The increase was driven primarily by depreciation on property, plant and equipment and amortization of the trade name acquired as part of the Acton and ModSpace acquisitionsacquisition in the firstthird quarter of 2018.
Impairment losses on Long-Lived Assets: Impairment losses on long-lived assets were $5.1 million for the six months ended June 30, 2019 as compared to $0.0 million for the six months ended June 30, 2018. In the current period, we reclassified certain branch facilities that we intend to exit from property, plant and third quarters, respectively.equipment to held for sale and recognized an impairment on these assets as the estimated fair value less cost to sell was exceeded by the carrying value of the facilities. Additionally, one of the properties exited during the period was acquired as part of the ModSpace acquisition and had a favorable lease intangible. As a result of the exit of this property, the remaining net book value of the favorable lease intangible was deemed impaired, resulting in an impairment charge of $2.4 million.
Restructuring Costs: Restructuring costs were $6.1$7.1 million for the threesix months ended SeptemberJune 30, 20182019 as compared to $1.2$1.1 million for the threesix months ended SeptemberJune 30, 2017.2018. The 2019 restructuring charges relate primarily to employee termination and lease breakage costs related to the ModSpace acquisition and integration. The 2018 restructuring charges relate primarily to employee termination and lease breakage costs related to the Acton and ModSpaceTyson acquisitions and integrations. The 2017 restructuring charges relate primarily to the Algeco Group corporate function and consist of employee termination costs.

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Currency (Gains) Losses, (Gains), net: Currency losses (gains),gains, net decreasedincreased by $3.9$2.3 million to a $0.4$0.7 million gain for the threesix months ended SeptemberJune 30, 20182019 compared to a $4.3$1.6 million gainloss for the threesix months ended SeptemberJune 30, 2017.2018. The decreaseincrease in currency losses (gains)gains, net, in 2019 was primarily attributable to the impact of foreign currency exchange rate changes on loans and borrowings and intercompany receivables and payables denominated in a currency other than the subsidiaries’ functional currency. The majority of the intercompany receivables and payables contributing to these gains and losses were settled concurrently with the Carve-Out Transaction and Business Combination in November 2017.
Other (Income) Expense,Income, Net: Other (income) expense,income, net was $0.6$2.2 million and $4.4 million for the six months ended June 30, 2019 and 2018, respectively. Other income, net of $2.2 million for the six months ended June 30, 2019 was primarily related to the receipt of a $0.9 million settlement in the first quarter and the receipt of $1.1 million of otherinsurance proceeds related to assets damaged during Hurricane Harvey in the second quarter. Other income, net of $4.4 million for the threesix months ended SeptemberJune 30, 2018 and $1.0 million of other expense for the three months ended September 30, 2017. The increase in other income was also driven by the receipt of a settlement whichinsurance proceeds related to assets damaged during Hurricane Harvey and contributed $0.8$4.8 million to other (income) expense,income, net, for the threesix months ended SeptemberJune 30, 2018.
Interest Expense: Interest expense increased $13.3$40.6 million, or 44.2%169.9%, to $43.4$64.5 million for the threesix months ended SeptemberJune 30, 20182019 from $30.1$23.9 million for the threesix months ended SeptemberJune 30, 2017. Upon consummation2018. The interest costs incurred during the six months ended June 30, 2018 relate to the change in the debt structure of the Business Combination in November 2017, we issued $300.0 million of 7.875% senior secured notes (the “2022 Secured Notes”) and entered into a new $600.0 million ABL Facility to fund our operationsCompany as a stand-alone company.result of the ModSpace acquisition. In the third quarter of 2018, as part of financing the ModSpace acquisition, we upsized our ABL Facility to $1.425 billion, issued $300.0 million related to theof 2023 Secured Notes, and issued $200.0 million relatedof Unsecured Notes. Further, in the second quarter of 2019 we issued $190.0 million of Tack-on Notes in aggregate principal amount to the Unsecured Notes. In connection with2023 Secured Notes and used the ModSpace acquisition,proceeds to repay a portion of the Company incurred bridge financing fees and upfront commitment feesABL Facility. Subsequent to the issuance of $20.5the Tack-on Notes, we redeemed all $200.0 million in the third quarter, which are not expected to reoccur.
The majorityaggregate outstanding principal amount of the interest costs incurred duringUnsecured Notes using proceeds from the three months ended September 30, 2017 relate to the previous debt structure of the Company as part of the Algeco Group. The increase in interest expense is driven by our recent debt issuances including the $20.5 million of bridge financing fees and upfront commitment fees.ABL Facility. See Note 78 to the condensed consolidated financial statements for further discussion of our debt, and the additional debt incurred during the third quarter as part of financing the ModSpace acquisition.debt.
Interest Income:Loss on Extinguishment of Debt: Interest incomeLoss on extinguishment of debt increased $7.2 million, for the six months ended June 30, 2019 from $0.0 million for the six months ended June 30, 2018. This Company redeemed of $200.0 million in aggregate outstanding principal amount of the Unsecured Notes in the second quarter at a redemption price of 102.0%, plus a make-whole premium of 1.1%, for total premiums of 3.1%. As a result, the Company recorded a loss on extinguishment of $7.2 million, which included $6.2 million of premium and $1.0 million related to the interest earned onwrite-off of unamortized deferred financing fees. This redemption was funded from the principal balanceuse of notes dueproceeds from affiliates, which were settled upon consummation of the Business Combination in November 2017.ABL Facility.
Income Tax Benefit: Income tax benefit decreased $1.1$6.3 million to $6.5$0.8 million benefit for the threesix months ended SeptemberJune 30, 20182019 compared to $7.6a $7.1 million benefit for the threesix months ended SeptemberJune 30, 2017.2018. The decrease in income tax benefit was mainly due to a lower statutory income tax ratedriven by the discrete benefits recorded in the US partially offset by discrete tax benefits recorded at Septembersix months ended June 30, 2018 as compared to September 30, 2017. 

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Nine Months Ended September 30, 2018 Compared towhich did not occur in the Nine Months Ended September 30, 2017 
Our consolidated statements of net loss for the ninesix months ended SeptemberJune 30, 2018 and 2017 are presented below:
Nine Months Ended September 30, 2018 vs. 2017 $ Change
(in thousands)20182017
Revenues: 
Leasing and services revenue: 
Modular leasing $340,171 $217,261 $122,910 
Modular delivery and installation 104,440 66,580 37,860 
Sales: 
New units 33,584 24,491 9,093 
Rental units 15,813 17,228 (1,415)
Total revenues 494,008 325,560 168,448 
Costs: 
Costs of leasing and services: 
Modular leasing 93,506 61,694 31,812 
Modular delivery and installation 98,038 64,404 33,634 
Costs of sales: 
New units 23,780 17,402 6,378 
Rental units 9,328 10,067 (739)
Depreciation of rental equipment 82,849 53,203 29,646 
Gross profit 186,507 118,790 67,717 
Expenses: 
Selling, general and administrative 164,845 100,510 64,335 
Other depreciation and amortization 7,726 5,736 1,990 
Restructuring costs 7,214 2,124 5,090 
Currency losses (gains), net 1,171 (12,769)13,940 
Other (income) expense, net (5,013)1,592 (6,605)
Operating income 10,564 21,597 (11,033)
Interest expense 67,321 84,674 (17,353)
Interest income — (9,752)9,752 
Loss from continuing operations before income tax (56,757)(53,325)(3,432)
Income tax benefit (13,572)(17,770)4,198 
Loss from continuing operations(43,185)(35,555)(7,630)
Income from discontinued operations, net of tax — 11,123 (11,123)
Net loss(43,185)(24,432)(18,753)
Net loss attributable to non-controlling interest, net of tax(3,715)— (3,715)
Total loss attributable to WillScot $(39,470)$(24,432)$(15,038)
41


Comparison of Nine Months Ended September 30, 2018 and 2017
Revenue: Total revenue increased $168.4 million, or 51.7%, to $494.0 million for the nine months ended September 30, 2018 from $325.6 million for the nine months ended September 30, 2017. The increase was primarily the result of a 56.4% increase in leasing and services revenue driven by improved pricing and volumes. Average modular space monthly rental rates increased 4.7% for the nine months ended September 30, 2018, and average modular space units on rent increased 20,047 units, or 49.3%. Improved pricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increased VAPS penetration across our customer base, offset partially by the average modular space monthly rental rates on acquired units for Acton, Tyson, and ModSpace. Improved volumes were driven by units acquired as part of the Acton, Tyson, and ModSpace acquisitions and organic unit on rent growth, as well as increased modular delivery and installation revenues on the combined rental fleet of 56.8%. The increase in leasing and services revenues was further complemented by an increase of $9.1 million, or 37.1% in new unit sales as compared to the same period in 2017 primarily driven by a single large sale project in the third quarter within the US. These increases were partially offset by a reduction in rental unit sales of $1.4 million, or 8.1% in rental unit sales as compared to the same period in 2017.
On a pro-forma basis, including results of WillScot, Acton, Tyson, and ModSpace for all periods presented, total revenues increased $67.3 million, or 9.1%, year-over-year for the nine months ended September 30, 2018. Increases were driven by core leasing and services revenues as a result a of a 10.6% increase in average modular space monthly rental rates and a 0.7% increase in average modular space units of rent, and due to increased new sales.
Total average units on rent for the nine months ended September 30, 2018 and 2017 were 75,079 and 53,279, respectively. The increase was due to units acquired as part of the Acton, Tyson, and ModSpace acquisitions and organic improvements in modular space average units on rent, with modular space average units on rent increased by 20,047 units, or 49.3% for the nine months ended September 30, 2018. Modular space average monthly rental rates increased 4.7% for the nine months ended September 30, 2018. Portable storage average units on rent increasing by 1,753 units, or 13.9% for the nine months ended September 30, 2018. Average portable storage monthly rental rates increased 7.9% for the nine months ended September 30, 2018. The average modular space unit utilization rate during the nine months ended September 30, 2018 was 70.1%, as compared to 69.8% during the same period in 2017. The increase in average modular space utilization rate was driven by improvement in the modular space average units on rent in the Modular - Other North America business segment. The average portable storage unit utilization rate during the nine months ended September 30, 2018 was 68.3%, as compared to 71.4% during the same period in 2017. The decrease in average portable storage utilization rate was driven by organic declines in the number of portable storage average units on rent in the Modular - US segment.
Gross Profit: Our gross profit percentage was 38.8% and 36.4% for the nine months ended September 30, 2018 and 2017, respectively. Our gross profit percentage, excluding the effects of depreciation, was 55.0% and 53.0% for the nine months ended September 30, 2018 and 2017, respectively.
Gross profit increased $67.7 million, or 57.0%, to $186.5 million for the nine months ended September 30, 2018 from $118.8 million for the nine months ended September 30, 2017. The increase in gross profit is a result of a $95.3 million increase in modular leasing gross profit and increased new unit and rental unit gross profit of $2.0 million. Increases in modular leasing and services gross profit were primarily as a result of increased revenues due to additional units on rent as a result of recent acquisitions as well as increased margins due to favorable average monthly rental rates on modular space units. These increases were partially offset by increased depreciation of $29.6 million as a result of additional rental equipment acquired as part of the Acton, Tyson, and ModSpace acquisitions, as well as continued capital investment in our existing rental equipment.
Selling, General and Administrative: SG&A expenses increased $64.3 million, or 64.0%, to $164.8 million for the nine months ended September 30, 2018, compared to $100.5 million for the nine months ended September 30, 2017. $25.8 million of the SG&A expenses increase was driven by discrete items including increased transaction costs of $8.7 million related to the ModSpace acquisition and increased integration costs of $14.9 million related to the Acton and ModSpace integrations. Additionally, stock compensation expense increased by $2.2 million due to grants of stock options, RSAs and RSUs to certain employees in the first quarter of 2018. The remaining increases of $38.5 million are primarily related to $8.6 million of increased public company costs including outside professional fees, and increased headcount, occupancy, and other SG&A cost increases as a result of operating a larger operation as a result of our recent acquisitions and our expanded employee base and branch network. We estimate cost synergies of approximately $3.9 million related to the Acton and Tyson acquisitions have been realized year to date as of the third quarter and our integration plans remain on track. Effective November 1, 2018, we began delivering all units acquired from ModSpace under a combined operating and information technology platform. Exit activities for redundant branch locations, such as preparing units and materials for transport to other locations remain on schedule. These activities are expected to continue through 2019 and we expect additional cost savings as we execute the established integration plans for Acton and ModSpace. These increases were partially offset by a reduction of $15.7 million in corporate & other related to Algeco Group costs no longer included in our operations. 
Other Depreciation and Amortization: Other depreciation and amortization increased $2.0 million, or 35.1%, to $7.7 million for the nine months ended September 30, 2018, compared to $5.7 million for the nine months ended September 30, 2017. The increase was driven primarily by depreciation on property, plant and equipment acquired as part of the Acton
42


and ModSpace acquisitions in the first and third quarters, respectively.
Restructuring Costs: Restructuring costs were $7.2 million for the nine months ended September 30, 2018 as compared to $2.1 million for the nine months ended September 30, 2017. The 2018 restructuring charges relate primarily to employee termination and lease breakage costs related to the Acton and ModSpace acquisitions and integrations. The 2017 restructuring charges relate primarily to the Algeco Group corporate function and consist of employee termination costs.
Currency Losses (Gains), net: Currency losses (gains), net decreased by $14.0 million to a $1.2 million loss for the nine months ended September 30, 2018 compared to a $12.8 million gain for the nine months ended September 30, 2017. The decrease in currency losses (gains) was primarily attributable to the impact of foreign currency exchange rate changes on loans and borrowings and intercompany receivables and payables denominated in a currency other than the subsidiaries’ functional currency. The majority of the intercompany receivables and payables contributing to these gains and losses were settled concurrently with the Carve-Out Transaction and Business Combination.
Other (Income) Expense, net: Other (income) expense, net was $5.0 million of income for the nine months ended September 30, 2018 and $1.6 million of other expense for the nine months ended September 30, 2017. The decrease in other (income) expense was driven by income from insurance proceeds related to assets damaged during Hurricane Harvey which contributed $4.8 million to other (income) expense, net, for the nine months ended September 30, 2018.
Interest Expense: Interest expense decreased $17.4 million, or 20.5%, to $67.3 million for the nine months ended September 30, 2018 from $84.7 million for the nine months ended September 30, 2017. Upon consummation of the Business Combination in November 2017, we issued the 2022 Secured Notes and entered into the ABL Facility to fund our operations as a stand-alone company. In the third quarter as part of financing the ModSpace acquisition, we upsized our ABL Facility to $1.425 billion, issued the 2023 Secured Notes, and issued the Unsecured Notes. In connection with the ModSpace acquisition, the Company incurred bridge financing fees and upfront commitment fees of $20.5 million in the third quarter, which are not expected to reoccur.
The majority of the interest costs incurred during the nine months ended September 30, 2017 relate to the previous debt structure of the Company as part of the Algeco Group. The decrease in interest expense is driven by our lower average debt balance in 2018 under our new debt structure as compared to the Algeco Group debt structure in place in 2017, partially offset by bridge financing and upfront commitment fees of $20.5 million incurred in connection with the ModSpace acquisition. See Note 7 to the condensed consolidated financial statements for further discussion of our debt, and the additional debt incurred during the third quarter as part of financing the ModSpace acquisition, which we expect will increase our interest expense in future periods.
Interest Income: Interest income decreased $9.8 million, or 100.0%, to zero for the nine months ended September 30, 2018 from $9.8 million for the nine months ended September 30, 2017. This decrease is due to the decrease in the principal balance of notes due from affiliates, which were settled upon consummation of the Business Combination in November 2017.
Income Tax Benefit: Income tax benefit decreased $4.2 million to $13.6 million for the nine months ended September 30, 2018 compared to $17.8 million for the nine months ended September 30, 2017. The decrease in income tax benefit was mainly due to a lower statutory income tax rate in the US partially offset by discrete tax benefits recorded at September 30, 2018 as compared to September 30, 2017.2019.

Business Segment Results
Our principal line of business is modular leasing and sales. The Company formerly operated a Remote Accommodations Business, which was considered a single reportable segment. The Remote Accommodations Business was transferred to another entity included in the Algeco Group in connection with the Business Combination in November 2017 and is no longer a part of our business. Modular leasing and sales comprises two reportable segments: Modular - US and Modular - Other North America. The Modular - US reportable segment includes the contiguous 48 states and Hawaii, and the Modular - Other North America reportable segment includes Alaska, Canada and Mexico. The Acton and Tyson acquisitions are both included in the Modular - US segment, and ModSpace is included in both Modular segments as ModSpace operated in the United States and Canada. Corporate and other represents primarily SG&A related to the Algeco Group’s corporate costs, which were not incurred by WillScot in 2018. 
The following tables and discussion summarize our reportable segment financial information for the three and ninesix months ended SeptemberJune 30, 20182019 and 2017.2018. Future changes to our organizational structure may result in changes to the segments disclosed.
Comparison of Three Months Ended June 30, 2019 and 2018
Three Months Ended June 30, 2019 
(in thousands, except for units on rent and rates)Modular - USModular - Other North AmericaTotal
Revenue $238,861 $27,264 $266,125 
Gross profit $94,829 $9,067 $103,896 
Adjusted EBITDA $81,380 $7,347 $88,727 
Capital expenditures for rental equipment $58,241 $2,974 $61,215 
Modular space units on rent (average during the period) 83,273 9,027 92,300 
Average modular space utilization rate 74.1 %56.3 %71.9 %
Average modular space monthly rental rate $612 $603 $611 
Portable storage units on rent (average during the period) 16,146 398 16,544 
Average portable storage utilization rate 63.6 %50.8 %63.3 %
Average portable storage monthly rental rate $121 $121 $121 

4340


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

Three Months Ended September 30, 2017 Three Months Ended June 30, 2018 
(in thousands, except for units on rent and rates) (in thousands, except for units on rent and rates) Modular - US Modular - Other North America Corporate & Other Total (in thousands, except for units on rent and rates) Modular - US Modular - Other North America Total 
Revenue Revenue $103,678 $12,723 $(239)$116,162 Revenue $124,813 $15,520 $140,333 
Gross profit Gross profit $37,766 $3,744 $(241)$41,269 Gross profit $49,741 $4,899 $54,640 
Adjusted EBITDA Adjusted EBITDA $29,177 $2,961 $(2,753)$29,385 Adjusted EBITDA $38,104 $3,812 $41,916 
Capital expenditures for rental equipment Capital expenditures for rental equipment $24,147 $1,361 $— $25,508 Capital expenditures for rental equipment $30,931 $1,748 $32,679 
Modular space units on rent (average during the period) Modular space units on rent (average during the period) 36,183 5,281 — 41,464 Modular space units on rent (average during the period) 48,997 5,524 54,521 
Average modular space utilization rate Average modular space utilization rate 74.7 %54.1 %— %71.3 %Average modular space utilization rate 72.2 %57.1 %70.3 %
Average modular space monthly rental rate Average modular space monthly rental rate $542 $536 $— $541 Average modular space monthly rental rate $549 $573 $551 
Portable storage units on rent (average during the period) Portable storage units on rent (average during the period) 11,894 347 — 12,241 Portable storage units on rent (average during the period) 13,127 369 13,496 
Average portable storage utilization rate Average portable storage utilization rate 70.6 %51.9 %— %69.8 %Average portable storage utilization rate 68.5 %57.4 %68.1 %
Average portable storage monthly rental rate Average portable storage monthly rental rate $117 $123 $— $117 Average portable storage monthly rental rate $120 $116 $119 
Modular - US Segment
Revenue: Total revenue increased $93.9$114.1 million, or 90.5%91.4%, to $197.6$238.9 million for the three months ended SeptemberJune 30, 20182019 from $103.7$124.8 million for the three months ended SeptemberJune 30, 2017.2018. Modular leasing revenue increased $61.4$79.5 million, or 92.2%87.4%, driven by improved pricingvolumes and volumes.pricing. Average modular space units on rent increased 34,276 units, or 70.0%. Average modular space monthly rental rates increased 3.1%11.5% for the three months ended SeptemberJune 30, 2018,2019. Units acquired as part of the ModSpace acquisition helped drive improved volumes as well as increased modular delivery and average modular space unitsinstallation revenues on rent increased 31,795 units, or 87.9%the combined rental fleet of 93.4%. Improved pricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increased VAPS penetration across our customer base, offset partially by the average modular space monthly rental rates on acquired units. Improved volumes were driven by units acquired as part of the Acton, Tyson, and ModSpace acquisitions, as well as increased modular delivery and installation revenues on the combined rental fleet of 89.1%. The increases in leasing and services revenue were complemented by increases in sales revenues. New unit sales revenue increased $10.1$6.3 million, or 111.0%153.7%, and rental unit sales revenue increased $2.7 million, or 45.8%117.4%. The increase year-over-year in new sales was primarily driven by a single large sale project. Increases in rental unit sales waswere primarily a result of the ModSpace acquisition and our larger post-acquisition sales team and fleet size.
On a pro-formapro forma basis, including results of the WillScot Acton, Tyson, and ModSpace for all periods presented, pricing improvement continued in the thirdsecond quarter, with increases in pro-formapro forma average modular space monthly rental rates of $65,$85, or 13.4%16.1%, year over year for the three months ended SeptemberJune 30, 2018.2019. Modular space units on rent increased 0.1%decreased 4.2% on a pro-formapro forma basis to 86,95383,273 and pro-formapro forma utilization for our modular space units increased to 74.9%74.1%, up 32020 bps from 71.8%73.9% for the three months ended SeptemberJune 30, 2017.2018.
Gross Profit: Gross profit increased $35.2$45.1 million, or 93.1%90.7%, to $73.0$94.8 million for the three months ended SeptemberJune 30, 20182019 from $37.8$49.7 million for the three months ended SeptemberJune 30, 2017.2018. The increase in gross profit was driven by higher modular leasing and service revenues driven both by organic growth and through the Acton, TysonModSpace acquisition, as well as due to increased modular space leasing and ModSpace acquisitions.modular space delivery and installation margins. The increase in gross profit from modular leasing and salesservice revenues for the three months ended June 30, 2019 was partially offset by an $16.0a $19.0 million increase in depreciation of rental equipment primarily related to units acquired units in the Acton, Tyson, and ModSpace acquisitions for the three months ended September 30, 2018.acquisition.
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Adjusted EBITDA:Adjusted EBITDA increased $29.2$43.3 million, or 100.0%113.6%, to $58.4$81.4 million for the three months ended SeptemberJune 30, 20182019 from $29.2 million$38.1 for the three months ended SeptemberJune 30, 2017.2018. The increase was driven by higher modular leasing and services gross profits discussed above, partially offset by increases in SG&A, excluding discrete items, of $15.5$21.4 million. Increases in SG&A, excluding discrete items, primarily related to increased employee costs of $9.5 million of which $2.4 million represents public company costs including outside professional fees. The majoritydriven by the increased size of the remaining increase was driven by increased headcount, occupancy, and other SG&Aworkforce, net of realized employee cost increasessynergies savings to date achieved as a result of the restructuring activities; and increased occupancy costs of $2.5 million largely due to the expansion of our branch network and storage lots, including a portion of the expected cost savings as we have now exited approximately 65% of redundant real estate locations. The remaining increases in SG&A of $9.4 million are primarily related to increased professional fees, insurance, computer, travel, office costs, bad debt and other expenses related to operating a larger operationbusiness as a result of our recent acquisitions and our expanded employee base and branch network.
Capital Expenditures for Rental Equipment: Capital expenditures for rental equipment increased $18.9$27.2 million, or 78.4%87.7%, to $43.0$58.2 million for the three months ended SeptemberJune 30, 20182019 from $24.1$31.0 million for the three months ended SeptemberJune 30, 2017.2018. Net capital expenditures for rental equipment also increased $16.2$25.0 million, or 89.0%91.9%, to $34.4$52.2 million. The increases for both were driven by increased spend for refurbishments new fleet, and VAPS to drive revenue growth and for maintenance of a larger fleet following our Acton, Tyson, and ModSpacerecent acquisitions.
Modular - Other North America Segment
Revenue: Total revenue increased $8.6$11.8 million, or 67.7%76.1%, to $21.3$27.3 million for the three months ended SeptemberJune 30, 20182019 from $12.7$15.5 million for the three months ended SeptemberJune 30, 2017.2018. Modular leasing revenue increased $4.8$6.8 million, or 53.9%66.0%, driven by improved pricingvolumes and volumespricing in the quarter. Average modular space monthly rental rates increased 9.5% and average modular space units on rent increased by 2,1543,503 units, or 40.8%63.4%, for the period, resulting in a higherand average modular space utilization whichmonthly rental rates increased 5.2%. Improved volumes were driven by 320 bps. Improved
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units acquired as part of the ModSpace acquisition and improved pricing was driven by a combination of our price optimization tools and processes, as well as byprimarily through continued growth in our “Ready to Work” solutions and increased VAPS penetration across ourthe combined post-acquisition customer base, further lifted by the average modular space monthly rental rates on acquired ModSpace units in Canada. Improved volumes were driven by units acquired as part of the ModSpace acquisition.base. Modular delivery and installation revenues increased $2.4decreased $0.5 million, or 96.0%, new12.5%. New unit sales revenue increasedwere $1.2 million or 240.0%,and $1.1 million, and rental unit sales revenue increased $0.2was $5.5 million or 25.0%, all of whichand $0.1 million for the three months ended June 30, 2019 and 2018, respectively.  The increases in new unit sales and rental unit sales were primarily driven by the ModSpace acquisition.acquisition, a single large rental unit sale project and our larger post-acquisition sales team and fleet size.
On a pro-formapro forma basis, including results of the WillScot and ModSpace for all periods presented, pricing improvement continued in the third quarter, with increases in pro-formapro forma average modular space monthly rental rates of $5,increased $32, or 0.9%5.6%, for the three months ended SeptemberJune 30, 2018.2019. Modular space units on rent decreased 3.6%2.4% on a pro-formapro forma basis however, to 9,6079,027 and pro-formapro forma utilization for our modular space units decreased to 56.8%56.3%, down 11050 bps from 57.9%56.8%, for the three months ended SeptemberJune 30, 2017. 2018.
Gross Profit: Gross profit increased $4.2 million, or 113.5%85.7%, to $7.9$9.1 million for the three months ended SeptemberJune 30, 20182019 from $3.7 million$4.9 for the three months ended SeptemberJune 30, 2017.2018. The effects of favorable foreign currency movements increased gross profit by $0.2less than $0.1 million related to changes in the Canadian dollar and Mexican peso in relation to the US dollar. The increase in gross profit, excluding the effects of foreign currency, was driven primarily by increased leasing and services revenues. Higher modular volumesrevenues and pricing were complemented bymargins as a result of higher modular deliveryspace units on rent and installation margins.average monthly rental rates. Additionally, rental unit sales gross profit increased due to higher volume. These increases were slightly offset by increased depreciation of rental equipment of $0.5$1.5 million for three months ended SeptemberJune 30, 2018.2019.
Adjusted EBITDA: Adjusted EBITDA increased $3.2$3.5 million, or 106.7%92.1%, to $6.2$7.3 million for the three months ended SeptemberJune 30, 20182019 from $3.0$3.8 million for the three months ended SeptemberJune 30, 2017.2018. This increase was driven by increased leasing and services gross profit as a result of increased modular space volumes and average monthly rental rates, increased rental unit sales gross profit, partially offset by increased SG&A, excluding discrete items, of $1.7$2.1 million, also driven by the ModSpace acquisition.acquisition, consisting primarily of increased employee costs of $0.8 million and increased occupancy costs of $0.8 million.
Capital Expenditures for Rental Equipment: Capital expenditures for rental equipment increased $2.3$1.3 million, or 164.3%76.5%, to $3.7$3.0 million for the three months ended SeptemberJune 30, 20182019 from $1.4$1.7 million for the three months ended SeptemberJune 30, 2017. Net capital expenditures also increased $2.1 million, or 350.0%, to $2.7 million.2018. The increases for both wereincrease was driven by increased spend for refurbishments, new fleet and VAPS to drive revenue growth and for maintenance of a larger fleet following the ModSpace acquisitions.acquisition. Net capital expenditures decreased $4.1 million, or 256.3%, to negative $2.5 million as a result of increased rental unit sales in the period that exceeded capital expenditures for rental equipment.
CorporateComparison of Six Months Ended June 30, 2019 and Other2018
Gross Profit: The Corporate and other adjustments to revenue and gross profit pertain to the elimination of intercompany leasing transactions between the business segments.
Adjusted EBITDA: Corporate and other costs and eliminations to consolidated Adjusted EBITDA were a loss of $2.8 million for the three months ended September 30, 2017, compared to no costs for the three months ended September 30, 2018. In 2017, Corporate and other represented primarily SG&A costs related to the Algeco Group’s corporate costs, which were not incurred by the Company in 2018.
Six Months Ended June 30, 2019 
(in thousands, except for units on rent and rates)Modular - USModular - Other North AmericaTotal
Revenue $470,337 $50,796 $521,133 
Gross profit $190,079 $18,471 $208,550 
Adjusted EBITDA $158,148 $15,087 $173,235 
Capital expenditures for rental equipment $108,162 $4,926 $113,088 
Modular space units on rent (average during the period) 83,873 8,936 92,809 
Average modular space utilization rate 74.6 %55.7 %72.2 %
Average modular space monthly rental rate $594 $578 $593 
Portable storage units on rent (average during the period) 16,602 404 17,006 
Average portable storage utilization rate 65.4 %51.6 %65.0 %
Average portable storage monthly rental rate $120 $115 $120 

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

Nine Months Ended September 30, 2017 Six Months Ended June 30, 2018 
(in thousands, except for units on rent and rates) (in thousands, except for units on rent and rates) Modular - USModular - Other North AmericaCorporate & OtherTotal(in thousands, except for units on rent and rates) Modular - US Modular - Other North America Total 
Revenue Revenue $289,302 $36,792 $(534)$325,560 Revenue $246,900 $28,184 $275,084 
Gross profit Gross profit $107,535 $11,779 $(524)$118,790 Gross profit $96,549 $9,012 $105,561 
Adjusted EBITDA Adjusted EBITDA $79,189 $8,586 $(10,197)$77,578 Adjusted EBITDA $70,716 $6,692 $77,408 
Capital expenditures for rental equipment Capital expenditures for rental equipment $72,105 $3,705 $— $75,810 Capital expenditures for rental equipment $61,455 $3,308 $64,763 
Modular space units on rent (average during the period) Modular space units on rent (average during the period) 35,679 5,010 — 40,689 Modular space units on rent (average during the period) 48,841 5,487 54,328 
Average modular space utilization rate Average modular space utilization rate 73.6 %51.1 %— %69.8 %Average modular space utilization rate 72.2 %57.0 %70.3 %
Average modular space monthly rental rate Average modular space monthly rental rate $530 $532 $— $530 Average modular space monthly rental rate $541 $557 $543 
Portable storage units on rent (average during the period) Portable storage units on rent (average during the period) 12,238 352 — 12,590 Portable storage units on rent (average during the period) 13,434 364 13,798 
Average portable storage utilization rate Average portable storage utilization rate 72.2 %52.1 %— %71.4 %Average portable storage utilization rate 69.8 %56.4 %69.4 %
Average portable storage monthly rental rate Average portable storage monthly rental rate $114 $117 $— $114 Average portable storage monthly rental rate $118 $116 $118 
Modular - US Segment
Revenue: Total revenue increased $155.2$223.4 million, or 53.6%90.5%, to $444.5$470.3 million for the ninesix months ended SeptemberJune 30, 20182019 from $289.3$246.9 million for the ninesix months ended SeptemberJune 30, 2017.2018. Modular leasing revenue increased $114.2$154.5 million, or 59.3%86.4%, driven by improved pricingvolumes and volumes.pricing. Average modular space units on rent increased 35,032 units, or 71.7%. Average modular space monthly rental rates increased 4.3%9.8% for the ninesix months ended SeptemberJune 30, 2018,2019. Improved volumes were driven by units acquired as part of the ModSpace acquisition, as well as increased modular delivery and average modular space unitsinstallation revenues on rent increased 18,913 units, or 53.0%the combined rental fleet of 93.2%. Improved pricing was driven by a combination of our price optimization tools and processes, as well as by continued growth in our “Ready to Work” solutions and increased VAPS penetration across our customer base, offset partially by the average modular space monthly rental rates on acquired units. Improved volumes were driven by units acquired as part of the Acton, Tyson, and ModSpace acquisitions and organic unit on rent growth, as well as increased modular delivery and installation revenues on the combined rental fleet of 54.0%. The increases in leasing and services revenue were further complemented by increases in sales revenues. New unit sales revenue increased $8.6$13.4 million, or 39.8%121.8% and rental unit sales revenue decreased slightly by $0.3increased $7.6 million, or 2.1%133.3%. The increase year-over-yearIncreases in new unit sales and rental unit sales was primarily driven by a single large sale project inresult of the third quarter.ModSpace acquisition and our larger post-acquisition sales team and fleet size.
On a pro-formapro forma basis, including results of the WillScot Acton, Tyson, and ModSpace for all periods presented, pricing improvement continued in the thirdsecond quarter, with increases in pro-formapro forma average modular space monthly rental rates of $56,$76, or 11.9%14.7% year over year for the ninesix months ended SeptemberJune 30, 2018.2019. Modular space units on rent increased 787 units, or 0.9%decreased 3.1% on a pro-formapro forma basis to 85,86783,873 and pro-formapro forma utilization for our modular space units increased to 74.7%74.6%, up 380100 bps from 70.9%73.6% for the ninesix months ended SeptemberJune 30, 2018.
Gross Profit: Gross profit increased $62.0$93.5 million, or 57.7%96.8%, to $169.5$190.1 million for the ninesix months ended SeptemberJune 30, 20182019 from $107.5$96.6 million for the ninesix months ended SeptemberJune 30, 2017.2018. The increase in gross profit was driven by higher modular leasing and service revenues driven both by organic growth and through the Acton, Tyson,ModSpace acquisition, as well as due to increased modular space leasing and ModSpace acquisitions.modular space delivery and installation margins. The increasesincrease in gross profit from modular leasing and service revenues werewas partially offset by a $28.6an $34.8 million increase in depreciation of rental equipment primarily related to units acquired in the ModSpace acquisition for the ninesix months ended SeptemberJune 30, 2018 as a result of continued capital investment in our fleet, including additional depreciation related to the Acton, Tyson, and ModSpace acquisitions.2019.
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Adjusted EBITDA:Adjusted EBITDA increased $49.9$87.4 million, or 63.0%123.6%, to $129.1$158.1 million for the ninesix months ended SeptemberJune 30, 20182019 from $79.2$70.7 million for the ninesix months ended SeptemberJune 30, 2017.2018. The increase was driven by higher modular leasing and services gross profits discussed above, as well as a gain recognized from the receipt of insurance proceeds related to assets damaged during Hurricane Harvey of $4.8 million for the nine months ended September 30, 2018. These increases were partially offset by increases in SG&A, excluding discrete items, of $24.7$39.4 million, primarily related to increased employee costs of which $8.6$18.4 million represents public company costs including outside professional fees. The majoritydriven by the increased size of the remaining increase was driven by increased headcount, occupancy, and other SG&Aworkforce, net of realized employee cost increasessynergies savings to date achieved as a result of the restructuring activities; and increased occupancy costs of $6.0 million largely due to the expansion of our branch network and storage lots, including a portion of the expected cost savings as we have now exited approximately 65% of redundant real estate locations. The remaining increases of $15.0 million are primarily related to increased professional fees, insurance, computer, travel, office costs, bad debt and other expenses related to operating a larger operationbusiness as a result of our recent acquisitions and our expanded employee base and branch network.
Capital Expenditures for Rental Equipment:Equipment: Capital expenditures for rental equipment increased $32.4$46.7 million, or 44.9%75.9%, to $104.5$108.2 million for the ninesix months ended SeptemberJune 30, 20182019 from $72.1$61.5 million for the ninesix months ended SeptemberJune 30, 2017.2018. Net capital expenditures for rental equipment also increased $27.0$43.9 million, or 47.0%87.8%, to $84.5$93.9 million. The increases for both were driven by increased spend for refurbishments new fleet, and VAPS to drive modular space unit on rent and revenue growth and for maintenance of a larger fleet following our recent acquisitions.
Modular - Other North America Segment
Revenue: Total revenue increased $12.8$22.6 million, or 34.8%80.1%, to $49.6$50.8 million for the ninesix months ended SeptemberJune 30, 20182019 from $36.8$28.2 million for the ninesix months ended SeptemberJune 30, 2017.2018. Modular leasing revenue increased $8.2$12.8 million, or 32.7%65.3%, driven by improved volumes and pricing and volumes.in the quarter. Average modular space monthly rental rates increased 6.8% and average modular space units on rent increased by 1,1343,449 units, or 22.6%62.9%, for the period, and average modular space monthly rental rates increased 3.8%. Improved volumes were driven by organic unit on rent growthunits acquired as well as due topart of the ModSpace acquisition and improved pricing was driven primarily through continued growth in our “Ready to
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Work” solutions and increased VAPS penetration across the third quarter. Both of these resulted in a higher modular space utilization which increased by 600 bps.combined post-acquisition customer base. Modular delivery and installation revenues increased $5.2$1.2 million, or 85.2%, due primarily to a large camp installation during the second quarter and due to increased deliveries and returns as a result of the ModSpace acquisition.19.0%. New unit sales revenue increased $0.5were $2.1 million or 17.2%and $1.7 million, and rental unit sales revenue decreased $1.1was $8.8 million or 40.7% associated with decreased sale opportunities.and $0.6 million for the six months ended June 30, 2019 and 2018, respectively. The increase in modular delivery and installation revenues, new unit sales, and rental unit sales were primarily driven by the ModSpace acquisition and our larger post-acquisition sales team and fleet size.
On a pro-formapro forma basis, including results of the WillScot and ModSpace for all periods presented, pricing improvement continued, with increases in pro-formapro forma average modular space monthly rental rates of $4,increased $13, or 0.7%2.3%, for the ninesix months ended SeptemberJune 30, 2018, however, pro-forma average modular2019. Modular space units on rent decreased 151 units, or 1.6%. Pro-forma2.9% on a pro forma basis to 8,936 and pro forma utilization for our modular space units was essentially flat indecreased to 55.7%, down 90 bps from 56.6% for the period at 56.6%.six months ended June 30, 2018.
Gross Profit: Gross profit increased $5.2$9.5 million, or 44.1%105.6%, to $17.0$18.5 million for the ninesix months ended SeptemberJune 30, 20182019 from $11.8 million$9.0 for the ninesix months ended SeptemberJune 30, 2017.The effects of favorable foreign currency movements increased gross profit by $0.5million related to changes in the Canadian dollar and Mexican peso in relation to the US dollar.2018. The increase in gross profit, excluding the effects of foreign currency, was driven primarily by higherincreased leasing and services gross profits partially offset by lowerrevenues and margins as a result of higher modular space units on rent and average monthly rental rates. Additionally, rental unit sales as well asgross profit increased due to higher volume. These increases were slightly offset by increased depreciation of rental equipment of $1.0$3.0 million or 10.9%.for six months ended June 30, 2019.
Adjusted EBITDA: Adjusted EBITDA increased $4.3$8.4 million, or 50.0%125.4%, to $12.9$15.1 million for the ninesix months ended SeptemberJune 30, 20182019 from $8.6$6.7 million for the ninesix months ended SeptemberJune 30, 2017.2018. This increase was driven by improvedincreased leasing and services gross profit as a result of increased modular space volumes and average monthly rental rates, increased rental unit sales gross profit, partially offset by increased SG&A, excluding discrete items, of $2.2$4.1 million, or 17.7%.also driven by the ModSpace acquisition, consisting primarily of increased employee costs of $1.8 million and increased occupancy costs of $1.6 million.
Capital Expenditures for Rental Equipment: Capital expenditures for rental equipment increased $3.3$1.6 million, or 89.2%48.5%, to $7.0$4.9 million for the ninesix months ended SeptemberJune 30, 20182019 from $3.7$3.3 million for the ninesix months ended SeptemberJune 30, 2017.2018. The increase was driven by increased spend for new fleet and VAPS to drive revenue growth and for maintenance of a larger fleet following the ModSpace acquisition. Net capital expenditures increased $4.4decreased $6.6 million, or 244.4%, to $5.4 million. The increases for both were driven primarily by investments in refurbishmentsnegative $3.9 million as a result of existing lease fleet and VAPS. A reduction inincreased rental unit sales drovein the remaining increase to netperiod that exceeded capital expenditures.
Corporate and Other
Gross Profit: The Corporate and other adjustments to revenue and gross profit pertain to the elimination of intercompany leasing transactions between the business segments.
Adjusted EBITDA: Corporate and other costs and eliminations to consolidated Adjusted EBITDA were a loss of $10.2 millionexpenditures for the nine months ended September 30, 2017, compared to no costs for the nine months ended September 30, 2018. In 2017, Corporate and other represented primarily SG&A costs related to the Algeco Group’s corporate costs, which were not incurred by the Company in 2018.rental equipment.


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Other Non-GAAP Financial Data and Reconciliations
We use certain non-GAAP financial information that we believe is important for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of our ongoing operations and analyze our business performance and trends.
We evaluate business segment performance on Adjusted EBITDA, a non-GAAP measure that excludes certain items as described in the reconciliation of our consolidated net loss to Adjusted EBITDA reconciliation below. We believe that evaluating segment performance excluding such items is meaningful because it provides insight with respect to intrinsic operating results of the Company.
We also regularly evaluate gross profit by segment to assist in the assessment of the operational performance of each operating segment. We consider Adjusted EBITDA to be the more important metric because it more fully captures the business performance of the segments, inclusive of indirect costs.
Management also evaluates Free Cash Flow as defined in Item 2, Liquidity and Capital Resources, as it provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements.
Adjusted EBITDA
We define EBITDA as net income (loss) plus interest (income) expense, income tax expense (benefit), depreciation and amortization. Our Adjusted EBITDA reflects the following further adjustments to EBITDA to exclude certain non-cash items and the effect of what we consider transactions or events not related to our core business operations:
•Currency (gains) losses, net: on monetary assets and liabilities denominated in foreign currencies other than the subsidiaries’ functional currency. Substantially all such currency gains (losses) are unrealized and attributable to financings due to and from affiliated companies.
• GoodwillNon-cash impairment charges associated with goodwill and other impairment charges related to non-cash costs associated with impairment charges to goodwill, other intangibles, rental fleet and property, plant and equipment.long-lived assets.
•Restructuring costs associated with restructuring plans designed to streamline operations and reduce costs including employee and lease termination costs.
•Transaction costs including legal and professional fees and other transaction specific related costs.
•Costs to integrate acquired companies, including outside professional fees, fleet relocation expenses, employee training costs and other costs.
•Non-cash charges for stock compensation plans.
•Other expense includes consulting expenses related to certain one-time projects, financing costs not classified as interest expense and gains and losses on disposals of property, plant and equipment.

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Adjusted EBITDA has limitations as an analytical tool, and you should not consider the measure in isolation or as a substitute for net income (loss), cash flow from operations or other methods of analyzing WillScot’s results as reported under GAAP. Some of these limitations are:
•Adjusted EBITDA does not reflect changes in, or cash requirements for our working capital needs;
•Adjusted EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;
•Adjusted EBITDA does not reflect our tax expense or the cash requirements to pay our taxes;
•Adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
•Adjusted EBITDA does not reflect the impact on earnings or changes resulting from matters that we consider not to be indicative of our future operations;
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
•other companies in our industry may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.

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Adjusted EBITDA
Because of these limitations, Adjusted EBITDA should not be considered as discretionary cash available to reinvest in the growth of our business or as measures of cash that will be available to meet our obligations. The following table provides an unaudited reconciliation of Net (loss) income (loss) to Adjusted EBITDA:
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30, 
(in thousands)(in thousands)2018201720182017(in thousands)2019201820192018
Net loss $(36,729)$(8,357)$(43,185)$(24,432)
Income from discontinued operations, net of tax — 5,078 — 11,123 
Loss from continuing operations (36,729)(13,435)(43,185)(35,555)
Net (loss) income Net (loss) income $(11,775)$379 $(22,936)$(6,456)
Income tax benefit Income tax benefit (6,507)(7,632)(13,572)(17,770)Income tax benefit (1,180)(6,645)(802)(7,065)
Loss from continuing operations before income tax (43,236)(21,067)(56,757)(53,325)
Interest expense, net (a) 43,447 26,447 67,321 74,922 
Loss on extinguishment of debt Loss on extinguishment of debt 7,244 — 7,244 — 
Interest expense Interest expense 32,524 12,155 64,496 23,874 
Depreciation and amortization Depreciation and amortization 39,254 20,914 90,575 58,939 Depreciation and amortization 47,135 25,040 91,242 51,321 
Currency (gains) losses, net Currency (gains) losses, net (425)(4,270)1,171 (12,769)Currency (gains) losses, net (354)572 (670)1,596 
Goodwill and other impairments Goodwill and other impairments 2,786 — 5,076 — 
Restructuring costs Restructuring costs 6,137 1,156 7,214 2,124 Restructuring costs 1,150 449 7,103 1,077 
Transaction costsTransaction costs10,672 5,233 14,790 6,095 Transaction costs — 4,118 — 4,118 
Integration costs Integration costs 7,453 — 14,868 — Integration costs 8,242 4,785 18,380 7,415 
Stock compensation expense Stock compensation expense 1,050 — 2,225 — Stock compensation expense 1,900 1,054 3,190 1,175 
Other expense Other expense 266 972 619 1,592 Other expense 1,055 9 912 353 
Adjusted EBITDA Adjusted EBITDA $64,618 $29,385 $142,026 $77,578 Adjusted EBITDA $88,727 $41,916 $173,235 $77,408 
(a) Interest expense for the three and nine months ended September 30, 2018 includes $20.5 million of bridge financing fees and commitment fees related to the ModSpace acquisition.
Adjusted Gross Profit and Adjusted Gross Profit Percentage
We define Adjusted Gross Profit as gross profit plus depreciation on rental equipment. Adjusted Gross Profit Percentage is defined as Adjusted Gross Profit divided by revenue. Adjusted Gross Profit and Percentage are not a measurementmeasurements of our financial performance under GAAP and should not be considered as an alternative to gross profit, gross profit percentage, or other performance measure derived in accordance with GAAP. In addition, our measurement of Adjusted Gross Profit and Adjusted Gross Profit Percentage may not be comparable to similarly titled measures of other companies. Management believes that the presentation of Adjusted Gross Profit and Adjusted Gross Profit Percentage provides useful information to investors regarding our results of operations because it assists in analyzing the performance of our business.
The following table provides an unaudited reconciliation of gross profit to Adjusted Gross Profit:Profit and Adjusted Gross Profit Percentage:
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30, 
(in thousands)(in thousands)2018201720182017(in thousands)2019201820192018
Gross profit$80,946 $41,269 $186,507 $118,790 
Revenue (A)Revenue (A)$266,125 $140,333 $521,133 $275,084 
Gross profit (B)Gross profit (B)$103,896 $54,640 $208,550 $105,561 
Depreciation of rental equipmentDepreciation of rental equipment35,534 19,009 82,849 53,203 Depreciation of rental equipment43,968 23,470 85,071 47,315 
Adjusted Gross Profit$116,480 $60,278 $269,356 $171,993 
Adjusted Gross Profit (C)Adjusted Gross Profit (C)$147,864 $78,110 $293,621 $152,876 
Gross Profit Percentage (B/A)Gross Profit Percentage (B/A)39.0 %38.9 %40.0 %38.4 %
Adjusted Gross Profit Percentage (C/A)Adjusted Gross Profit Percentage (C/A)55.6 %55.7 %56.3 %55.6 %

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Net CapexCAPEX and Net CAPEX for Rental Equipment
We define Net Capital Expenditures ("Net CAPEX") and Net CAPEX for Rental Equipment as capital expenditures for purchases and capitalized refurbishments of rental equipment and purchases of property, plant and equipment (collectively "Total Capital Expenditures"), reduced by proceeds from the sale of rental equipment. Net CAPEX for Rental Equipment is defined as capital expenditures for purchases and capitalized refurbishments of rental equipment, reduced by proceeds from the sale of rental equipment. Our management believes that the presentation of Net Capital ExpendituresCAPEX and Net CAPEX for Rental Equipment provides useful information to investors regarding the net capital invested into our rental fleet each year to assist in analyzing the performance of our business.

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

Adjusted EBITDA less Net CAPEX
We define Adjusted EBITDA less Net CAPEX as Adjusted EBITDA less the gross profit on sale of rental units, less Net Capital Expenditures. Adjusted EBITDA less Net CAPEX is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income (loss) or other performance measure derived in accordance with GAAP. In addition, our measurement of Adjusted EBITDA less Net CAPEX may not be comparable to similarly titled measures of other companies. Our management believes that the presentation of Adjusted EBITDA less Net CAPEX provides useful information to investors regarding our results of operations because it assists in analyzing the performance of our business.

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

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Three Months Ended September 30, 2017 
(in thousands)Modular - US Modular - Other North America Corporate & Other Consolidated 
Net loss$(1,070)$(1,684)$(5,603)$(8,357)
Income from discontinued operations, net of tax(b)
— — 5,078 5,078 
Loss from continuing operations(1,070)(1,684)(10,681)(13,435)
Income tax benefit(a)
— — (7,632)(7,632)
Loss from continuing operations before income tax(1,070)(1,684)(18,313)(21,067)
Interest expense, net16,790 1,134 8,523 26,447 
Operating income (loss)15,720 (550)(9,790)5,380 
Depreciation and amortization16,974 3,597 343 20,914 
EBITDA32,694 3,047 (9,447)26,294 
Currency gains, net(3,834)(104)(332)(4,270)
Restructuring costs247 17 892 1,156 
Transaction costs69 — 5,164 5,233 
Other expense1 1 970 972 
Adjusted EBITDA29,177 2,961 (2,753)29,385 
Less:
Rental unit sales5,922 765 (81)6,606 
Rental unit cost of sales3,204 580 — 3,784 
Gross profit (loss) on rental unit sales2,718 185 (81)2,822 
Less:
Total capital expenditures(b)
24,896 1,437 2,643 28,976 
Total capital expenditures from discontinued operations— — (2,643)(2,643)
Total capital expenditures from continuing operations24,896 1,437 — 26,333 
Proceeds from rental unit sales5,922 765 1,441 8,128 
Proceeds from rental unit sales from discontinued operations— — 1,522 1,522 
Proceeds from rental unit sales from continuing operations5,922 765 (81)6,606 
Net Capital Expenditures18,974 672 81 19,727 
Adjusted EBITDA less Net CAPEX$7,485 $2,104 $(2,753)$6,836 

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Nine Months Ended September 30, 2018 
(in thousands)Modular - USModular - Other North AmericaCorporate & OtherConsolidated
Net (loss) income$(55,360)$(1,397)$13,572 $(43,185)
Income from discontinued operations, net of tax— — — — 
(Loss) income from continuing operations (55,360)(1,397)13,572 (43,185)
Income tax benefit(a)
— — (13,572)(13,572)
Loss from continuing operations before income tax(55,360)(1,397)— (56,757)
Interest expense, net65,654 1,667 — 67,321 
Operating income 10,294 270 — 10,564 
Depreciation and amortization79,568 11,007 — 90,575 
EBITDA89,862 11,277 — 101,139 
Currency losses, net159 1,012 — 1,171 
Restructuring costs6,962 252 — 7,214 
Transaction costs 14,539 251 — 14,790 
Integration costs14,858 10 — 14,868 
Stock compensation expense2,225 — — 2,225 
Other expense565 54 — 619 
Adjusted EBITDA129,170 12,856 — 142,026 
Less:
Rental unit sales14,258 1,555 — 15,813 
Rental unit cost of sales8,218 1,110 — 9,328 
Gross profit on rental unit sales6,040 445 — 6,485 
Gain on insurance proceeds4,765 — — 4,765 
Less:
Total capital expenditures107,359 7,236 — 114,595 
Proceeds from rental unit sales20,038 1,555 — 21,593 
Net Capital Expenditures87,321 5,681 — 93,002 
Adjusted EBITDA less Net CAPEX$31,044 $6,730 $— $37,774 

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Nine Months Ended September 30, 2017 
(in thousands)Modular - USModular - Other North AmericaCorporate & OtherConsolidated
Net loss$(6,280)$(4,142)$(14,010)$(24,432)
Income from discontinued operations, net of tax(b)
— — 11,123 11,123 
Loss from continuing operations(6,280)(4,142)(25,133)(35,555)
Income tax benefit(a)
— — (17,770)(17,770)
Loss from continuing operations before income tax(6,280)(4,142)(42,903)(53,325)
Interest expense, net48,302 3,350 23,270 74,922 
Operating income (loss)42,022 (792)(19,633)21,597 
Depreciation and amortization47,967 9,928 1,044 58,939 
EBITDA89,989 9,136 (18,589)80,536 
Currency gains, net(11,233)(585)(951)(12,769)
Restructuring costs247 17 1,860 2,124 
Transaction costs115 — 5,980 6,095 
Other expense71 18 1,503 1,592 
Adjusted EBITDA79,189 8,586 (10,197)77,578 
Less:
Rental unit sales14,634 2,675 (81)17,228 
Rental unit cost of sales8,240 1,827 — 10,067 
Gross profit on rental unit sales6,394 848 (81)7,161 
Less:
Total capital expenditures(b)
74,498 3,860 6,856 85,214 
Total capital expenditures from discontinued operations— — (6,855)(6,855)
Total capital expenditures from continuing operations74,498 3,860 1 78,359 
Proceeds from rental unit sales14,634 2,675 1,441 18,750 
Proceeds from rental unit sales from discontinued operations— — 1,522 1,522 
Proceeds from rental unit sales from continuing operations14,634 2,675 (81)17,228 
Net Capital Expenditures59,864 1,185 82 61,131 
Adjusted EBITDA less Net CAPEX$12,931 $6,553 $(10,198)$9,286 
(a) The Company does not allocate expenses on a segment level. As such, we have included tax income benefit in Corporate and other for the purpose of this reconciliation.
(b) For the purpose of this reconciliation, the Company has included income and capital expenditures related to discontinued operations in Corporate and other as it all pertained to the Remote Accommodations segment which was discontinued as of November 29, 2017. 
Three Months Ended June 30, Six Months Ended June 30, 
(in thousands)2019201820192018
Total purchases of rental equipment and refurbishments$(61,215)$(32,679)$(113,088)$(64,763)
Total proceeds from sale of rental equipment  11,482 3,905 23,083 12,033 
Net Capital Expenditures for Rental Equipment(49,733)(28,774)(90,005)(52,730)
Purchase of property, plant and equipment (2,270)(616)(3,899)(1,616)
Net Capital Expenditures$(52,003)$(29,390)$(93,904)$(54,346)

Liquidity and Capital Resources
Overview
WillScot is a holding company that derives all of its operating cash flow from its operating subsidiaries. Our principal sources of liquidity include cash generated by operating activities from our subsidiaries, credit facilitiesborrowings under the ABL Facility, and sales of equity and debt securities. We believe that our liquidity sources and operating cash flows are sufficient to address our future operating, debt service and capital requirements.
We may from time to time seek to retire or purchase our warrants through cash purchases and/or exchanges for equity securities, in open market purchases, privately-negotiated transactions, exchange offers or otherwise. Any such transactions will depend on prevailing market conditions, our liquidity requirements contractual restrictions and other factors.over the next twelve months.
ABL Facility 
On November 29, 2017, WS Holdings, WSII and certain of its subsidiaries entered into the ABL Facility with an aggregate principal amount of up to $600.0 million.
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In July and August 2018, the Company entered into three amendments (the "ABL Amendments") to the ABL Facility that, among other things, (i) permitted the ModSpace acquisition and the Company’s financing thereof, (ii) increased the ABL Facility limit to $1.425 billion in the aggregate, with an accordion feature allowing up to $1.8 billion of capacity, and (iii) increased certain thresholds, basket sizes and default and notice triggers to account for the Company’s increased scale following the ModSpace Acquisition.
Borrowings under the ABL Facility, at the Borrower’s option, bear interest at either an adjusted LIBOR or a base rate, in each case, plus an applicable margin. At inception of the ABL Facility until March 31, 2018, the applicable margin was fixed at 2.50% for LIBOR borrowings and 1.50% for base rate borrowings. Commencing on March 31, 2018, the applicable margins are subject to one step-down of 0.25% or one step-up of 0.25%, based on excess availability levels with respect to the ABL Facility. The ABL Facility requires the payment of an annual commitment fee on the unused available borrowings of between 0.375% and 0.5% per annum. At SeptemberJune 30, 2018, the weighted average interest rate for borrowings under the ABL Facility was 4.65%.
The ABL Facility requires the Borrowers to maintain a (i) minimum interest coverage ratio of 2.00:1.00 and (ii) maximum total net leverage ratio of 5.50:1.00, in each case, at any time when the excess availability under the amended ABL Facility is less than the greater of (a) $135.0 million and (b) an amount equal to 10% of the Line Cap.
At September 30, 2018,2019, the Borrowers had $552.9$486.9 million of available borrowing capacity under the ABL Facility, including $414.5$352.5 million under the US ABL Facility and $138.4$134.4 million under the Canadian ABL Facility.
2022 Senior Secured Notes 
On November, 29, 2017, WSII issued the 2022 Secured Notes with a $300.0 million aggregate principal amount that bear interest at 7.875% and mature on December 15, 2022. The net proceeds, along with other funding obtained in connection with the Business Combination, were used to repay $669.5 million outstanding under WSII’s former credit facility, to repay $226.3 million of notes due to affiliates and related accrued interest, and to pay $125.7 million of the cash consideration paid for 100% of the outstanding equity of WSII. Interest on the 2022 Secured Notes is payable semi-annually on June 15 and December 15 beginning June 15, 2018.
2023 Senior Secured Notes
On August 6, 2018, a special purpose subsidiary of WSII completed a private offering of $300.0 million in aggregate principal amount of its 6.875% senior secured notes due August 15, 2023. The issuer entered into an indenture dated August 6, 2018 with Deutsche Bank Trust Company Americas, as trustee, which governs the terms of the 2023 Secured Notes. In connection with the ModSpace acquisition, the issuer merged with and into WSII and WSII assumed the 2023 Secured Notes. Interest is payable semi-annually on February 15 and August 15 of each year, beginning February 15, 2019. The net proceeds were used to fund the ModSpace acquisition.
2023 Senior Unsecured Notes
On August 3, 2018, a special purpose subsidiary of WSII completed a private offering of $200.0 million in aggregate principal amount of its senior unsecured notes due November 15, 2023 (the “Unsecured Notes”). The issuer entered into an indenture with Deutsche Bank Trust Company Americas, as trustee (the “Unsecured Notes Indenture”), which governs the terms and conditions of the Unsecured Notes. In connection with the ModSpace acquisition, the issuer merged with and into WSII and WSII assumed the Unsecured Notes.
The Unsecured Notes bear interest at a rate of 10% per annum if paid in cash (or if paid in kind, 11.5% per annum) for any interest period ending on or before February 15, 2021, and thereafter are payable solely in cash at an increased rate per annum of 12.5%. Interest is payable semi-annually on February 15 and August 15 of each year, beginning February 15, 2019. The net proceeds were used to fund the ModSpace acquisition.
Cash Flow Comparison of the NineSix Months Ended SeptemberJune 30, 20182019 and 2017 2018
Significant factors driving our liquidity position include cash flows generated from operating activities and capital expenditures. Our ability to fund our capital needs will be affected by our ongoing ability to generate cash from operations and access to capital markets.
The following summarizes our change in cash flowsand cash equivalents for the periods presented on an actual currency basis:presented:
Nine Months Ended September 30, 
(in thousands)2018 2017 
Net cash from operating activities$15,580 $46,901 
Net cash from investing activities(1,176,468)(134,235)
Net cash from financing activities1,161,406 91,677 
Effect of exchange rate changes on cash and cash equivalents68 311 
Net change in cash and cash equivalents$586 $4,654 
The cash flow data for the nine months ended September 30, 2017 includes the activity of the Remote Accommodations Business, which is no longer a part of the company following the Carve-out Transaction, and is presented as discontinued operations in the condensed consolidated financial statements.
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Six Months Ended June 30, 
(in thousands)2019 2018 
Net cash from operating activities$60,054 $18,800 
Net cash from investing activities(85,013)(77,671)
Net cash from financing activities21,351 57,963 
Effect of exchange rate changes on cash and cash equivalents140 (96)
Net change in cash and cash equivalents$(3,468)$(1,004)
Cash Flows from Operating Activities
Cash provided by operating activities for the ninesix months ended SeptemberJune 30, 20182019 was $15.6$60.1 million as compared to $46.9$18.8 million for the ninesix months ended SeptemberJune 30, 2017,2018, an increase of $41.3 million. The increase was primarily due to an increase of $51.6 million of net income, adjusted for non-cash items, during 2019 compared to 2018 due to the impact of the ModSpace acquisition on revenue and gross profit, which is reflected in the first half of 2019, but is not included in 2018. The increase in net income, adjusted for non-cash items, was partially offset by a decrease of $31.3 million.$10.3 million in the net movements
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of the operating assets and liabilities. The reductiondecrease related to the operating assets and liabilities was attributable to an increase in accounts receivable and an increase in cash providedinterest payments in the first six months of 2019, partially offset by operating activities was predominantly due to higher use of cash to pay downan increase in accounts payable and accrued liabilities associated both to transaction expenses incurred for the Business Combination as well as normal operating liabilities. Additionally, the cash flow from operating activities for the nine months ended September 30, 2017 include cash generated from the Remote Accommodations Business which is no longer a part of the Company following the Carve-out Transaction that occurred in the fourth quarter of 2017.deferred revenue.
Cash flowsFlows from investing activitiesInvesting Activities
Cash used in investing activities for the ninesix months ended SeptemberJune 30, 2018 was $1,176.52019 was $85.0 million as compared to $134.2$77.7 million for the ninesix months ended SeptemberJune 30, 2017,2018, an increase of $1,042.3$7.3 million. The overall increase in cash used in investing activities was driven by an increase in capital expenditures of $50.6 million in 2019 that was primarily a result of increased refurbishments of existing fleet, following our recent acquisitions, and purchases of VAPS to drive revenue growth. The increase in cash used in investing activities was principally the result of the acquisitions of Tyson and ModSpace for cash consideration of $24.0 million and $1,060.1 million during 2018. Additionally, cash used for rental equipment expenditures increased $29.2 million driven primarily by strategic investment in refurbishment of existing fleet, purchase of VAPS, and new fleet purchases to maintain and grow units on rent. The increase in cash used was partially offset by a $69.9$24.0 million decrease in cash used for business acquisitions, an $11.1 million increase in lendingproceeds from the sale of rental equipment, and an $8.2 million increase in proceeds from the sale of property, plant, and equipment. The decrease in cash used in business acquisitions is due to affiliates. Inthe acquisition of Tyson in the first half of 2018 we did not engage in any lending activitieswith no business acquisitions during the first half 2019. Proceeds from the sale of rental equipment increased due to increased sales volume as a result of the notes dueacquisition of ModSpace. Proceeds from affiliates were settledthe sale of property, plant and equipment increased primarily as a result of the sale of two held for sale properties during the second quarter of 2019 as part of the Business Combination.ongoing integration and consolidation process following the acquisition of ModSpace.
Cash flowsFlows from financing activitiesFinancing Activities
Cash provided by financing activities forfor the ninesix months ended SeptemberJune 30, 20182019 was $1,161.4$21.4 million as compared to $91.7$58.0 million for the ninesix months ended SeptemberJune 30, 2017, an increase2018, a decrease of $1,069.7$36.6 million. The increasedecrease is primarily driven by the increased borrowings of $300.0 million, $200.0 million, and $579.1 million related to issuancerepayment of the 2023 Secured Notes, the issuance of the$200.0 million Unsecured Notes and additionalthe corresponding $6.2 million of premium payments, $17.0 million of decreased borrowings, net of repayments, on the Company's ABL Facility during 2019, and $2.7 million of payments of financing costs, net of premiums received, related to the Tack-on Notes. We borrowed $24.0 million on the ABL Facility to purchase Tyson in the first quarter of 2018, and did not have any acquisitions in 2019, which drove the overall decrease in borrowings on the up-sized ABL Facility to finance the acquisition of ModSpace in the third quarter of 2018. We also received proceeds from the issuance of the Company's Class A common stock of $147.2 million during the third quarter of 2018. 
Facility. The increasedecrease in cash provided by financing activities was partially offset by $75.0the issuance of $190.0 million decreaseof Tack-On Notes in borrowingsthe second quarter of 2019.
Free Cash Flow
Free Cash Flow is a non-GAAP measure. Free Cash Flow is defined as net cash provided by operating activities, less purchases of, and proceeds from, notesrental equipment and property, plant and equipment, which are all included in cash flows from investing activities. Management believes that the presentation of Free Cash Flow provides useful information to investors regarding our results of operations because it provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements. The following table provides a reconciliation of Net cash provided by operating activities to Free Cash Flow.
Six Months Ended June 30, 
(in thousands)20192018
Net cash provided by operating activities$60,054 $18,800 
Purchase of rental equipment and refurbishments(113,088)(64,763)
Proceeds from sale of rental equipment23,083 12,033 
Purchase of property, plant and equipment(3,899)(1,616)
Proceeds from the sale of property, plant and equipment8,891 681 
Free Cash Flow$(24,959)$(34,865)
Free Cash Flow for the six months ended June 30, 2019 was an outflow of $25.0 million as compared to an outflow of $34.9 million for the six months ended June 30, 2018, an increase in Free Cash Flow of $9.9 million. Free Cash Flow increased year over year principally driven by increases in Adjusted EBITDA of $95.8 million, or 123.8%, for the six months ended June 30, 2018 and an increase of $8.2 million in proceeds from the sale of property, plant, and equipment as a result of the sale of surplus real estate in the period. These increases were partially offset by an increase in integration, restructuring, and transaction costs incurred of $12.9 million primarily related to the ModSpace integration, increased interest paid during the period of $43.0 million due to affiliatesincreased debt on the US ABL Facility and as a $24.2 million increase in the paymentresult of financing costs. The notes due from affiliates were settled in connection with the Business Combination in the fourth quarter of 2017 and were driven by a centralized cash management strategy utilized by the Algeco Group. Payments of financing costs increased in connection with the issuance of the 2023 Secured Notes and the Unsecured Notes which were not in place during the amendments tosix months ended June 30, 2018, and a Net CAPEX increase of $39.6 million as a result of the ABL Facility,increased fleet size and the issuanceour investment in refurbishments of common stock.rental equipment and VAPS.

Contractual Obligations
SinceOther than changes which occur in the issuancenormal course of business, there were no significant changes to the contractual obligations reported in our 20172018 Form 10-K as updated in our contractual obligations increased significantlyForm 10-Q for the three and ninesix months ended SeptemberJune 30, 2018. Our contractual obligations have increased in conjunction with the financing transactions related to the ModSpace acquisition. In addition to the existing debt at the acquisition date, the Company incurred $300.0 million of debt for the 2023 Secured Notes, $200.0 million of debt for the Unsecured Notes, and an increase in the ABL balance of $579.1 million as of the date of the ModSpace acquisition, August 15, 2018.2019.


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Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. GAAP requires that we make estimates and judgments that affect the reported amount of assets, liabilities, revenue, expenses and the related disclosure of contingent assets and liabilities. We base these estimates on historical experience and on various other assumptions that we consider reasonable under the circumstances, and reevaluate our estimates and judgments as appropriate. The actual results experienced by us may differ materially and adversely from our estimates.
Our significant accounting policies are described in Note 1 of the audited consolidated financial statements included in our 2017 Form 10-K. The US Securities and Exchange Commission (the “SEC”) suggests companies provide additional disclosure on those accounting policies considered most critical. The SEC considers an accounting policy to be critical if it is important to our financial condition and results of operations and requires significant judgments and estimates on the part of management in its application. For the nine months ended September 30, 2018, we have provided an additional disclosure on
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our stock-based compensation policies as described in Note 12 of this Form 10-Q and regarding our goodwill policy and estimates below. For a complete discussion of our significant critical accounting policies, see the “Critical Accounting Policies and Estimates” section of the MD&A in our 2017 Form 10-K.
Goodwill
We perform our annual goodwill impairment test on October 1. In addition, we perform qualitative impairment tests during any reporting period in which events or changes in circumstances quantitatively indicate that impairment may have occurred. Management judgment is a significant factor in the goodwill impairment evaluation process. The computations require management to make estimates and assumptions. Actual values may differ significantly from these assumptions, particularly if there are significant adverse changes in the operating environmentPart II, Item 7 of our reporting units.Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
In assessing the fair valueOther than adoption of reporting units, we consider the market approach, the income approach, or a combination of both. Under the market approach, the fair value of the reporting unit is based on quoted market prices of companies comparablerecent accounting standards as discussed in Note 1 to the reporting unit being valued. Whilenotes to our unaudited condensed consolidated financial statements, there were no significant changes to our critical accounting policies during the market prices are not an assumption, a presumption that they provide an indicator of the value of the reporting unit is inherent in the valuation. The initial determination of the comparable companies also involves a degree of judgment.
Under the income approach, the fair value of the reporting unit is based on the present value of estimated cash flows. The income approach relies on the timing and estimates of future cash flows, which are based on management’s estimates of economic and market conditions over the projected period, including growth rates in revenue, operating margins, capital expenditures and tax rates. The cash flows are based on our most recent business operating plans and various growth rates have been assumed for years beyond the current business plan period. The income approach also relies upon the selection of an appropriate discount rate, which is based on a weighted-average cost of capital analysis. The discount rate is affected by changes in short-term interest rates and long-term yield, as well as by variances in the typical capital structure of marketplace participants. Given current economic conditions, it is possible that the discount rate will fluctuate in the near term.
On August 15, 2018 the Company completed its acquisition of ModSpace. The Company has performed a preliminary allocation of assets acquired and liabilities assumed as well an allocation of net assets, including goodwill, amongst its reporting units. As of Septembersix months ended June 30, 2018 the Company has allocated $203.3 million and $32.5 million of goodwill to the US and Canadian reporting units, respectively. For the quarter ended September 30, 2018 the Company completed its interim review for impairment indicators for all reporting units, identifying no events or changes in circumstances that indicate an impairment may have occurred. The Company will perform its annual goodwill impairment test on October 1, 2018. While no indicators of impairment are currently present, due to Company’s historical impairment activity associated with its Canadian reporting unit, it is possible that the annual impairment test may indicate a need to write down the preliminary goodwill balance allocated to the Canadian reporting unit.2019.

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

Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includescontains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 27A21E of the Securities Act of 1933,1934, as amended (the “Securities Act”),amended. The words “estimates,” “expects,” “anticipates,” “believes,” “forecasts,” “plans,” “intends,” “may,” “will,” “should,” “shall,” “outlook,” “guidance” and Section 21Evariations of the Exchange Act. Thesethese words and similar expressions identify forward-looking statements, which are generally not historical in nature and relate to expectations for future financial performance or business strategies or expectations forobjectives.
Forward-looking statements are subject to a number of risks, uncertainties, assumptions and other important factors, many of which are outside our control, which could cause actual results or outcomes to differ materially from those discussed in the post-combination business. Specifically,forward-looking statements. Although WillScot believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance that any such forward-looking statement will materialize.
Important factors that may affect actual results or outcomes include, statements relating to:among others:
•our ability to effectively compete in the modular space and portable storage industry;
•changes in demand within a number of key industry end-markets and geographic regions;
•our ability to manage growth and execute our business plan;
•rising costs adversely affecting our profitability (including cost increases resulting from tariffs);
•effective management of our rental equipment;
•our ability to acquire and successfully integrate new operations;operations and achieve desired synergies;
• market conditions and economic factors beyond our control;
• our ability to properly design, manufacture, repair and maintain our rental equipment;
• our operating results or financial estimates fail to meet or exceed our expectations;
• operational, economic, political and regulatory risks;
• the effect of changes in state building codes on our ability to remarket our buildings;
•our ability to effectively manage our credit risk, collect on our accounts receivable, or recover our rental equipment;
•foreign currency exchange rate exposure;
• increases in raw material and labor costs;
• our reliance on third party manufacturers and suppliers;
•risks associated with labor relations, labor costs and labor disruptions;
•failure to retain key personnel;
• the effect of impairment charges on our operating results;
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•

• our inabilityand such other risks and uncertainties described in the periodic reports we file with the SEC from time to recognize or use deferred tax assets and tax loss carry forwards;
•time (including our obligations under various laws and regulations;
• the effect of litigation, judgments, orders or regulatory proceedings on our business;
• unanticipated changes in our tax obligations;
• any failure of our management information systems;
• our ability to design, implement and maintain effective internal controls, including disclosure controls and controls over financial reporting;
• natural disasters and other business disruptions;
• our exposure to various possible claims and the potential inadequacy of our insurance;
• our ability to deploy our units effectively, including our ability to close projected unit sales;
• any failure by our prior owner or its affiliates to perform under or comply with our transition services and intellectual property agreements;
• our ability to fulfill our public company obligations;
• our subsidiaries’ ability to meet their debt service requirements and obligations;
• our subsidiaries’ ability to take certain actions, or to permit us to take certain actions, under the agreements governing their indebtedness; and
• other factors detailed under the section entitled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year endedending December 31, 2017.2018), which are available through the SEC’s EDGAR system at www.sec.gov and on our website.
We undertakeAny forward-looking statement speaks only at the date which it is made, and WillScot undertakes no obligation, and disclaims any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.


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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no significantWe are exposed to certain market risks from changes in foreign currency exchange rates and interest rates. Changes in these factors cause fluctuations in our earnings and cash flows. We evaluate and manage exposure to these market risks as follows:
Interest Rate Risk
We are primarily exposed to interest rate risk through our marketABL Facility, which bears interest at variable rates based on LIBOR. We had $920.5 million in outstanding principal under the ABL Facility at June 30, 2019.
In order to manage this risk, since December 31, 2017. ForOn November 6, 2018, WSII entered into an interest rate swap agreement that effectively converts $400.0 million in aggregate notional amount of variable-rate debt under our ABL Facility into fixed-rate debt. The swap agreement provides for WillScot to pay a discussionfixed rate of 3.06% per annum on the outstanding debt in exchange for receiving a variable interest rate based on 1-month LIBOR. The effect is a synthetically fixed rate of 5.56% on the $400.0 million notional amount, when including the current applicable margin.
An increase in interest rates by 100 basis points on our ABL Facility, inclusive of the impact of our exposureinterest rate swaps, would increase our quarter to market risk, referdate interest expense by approximately $2.3 million.
Foreign Currency Risk
We currently generate the majority of our consolidated net revenues in the US, and the reporting currency for our consolidated financial statements is the US dollar. As our net revenues and expenses generated outside of the US increase, our results of operations could be adversely impacted by changes in foreign currency exchange rates. Since we recognize foreign revenues in local foreign currencies, if the US dollar strengthens, it could have a negative impact on our foreign revenues upon translation of those results into the US dollar for consolidation into our financial statements.
In addition, we are exposed to gains and losses resulting from fluctuations in foreign currency exchange rates on transactions generated by our Annual Reportforeign subsidiaries in currencies other than their local currencies. These gains and losses are primarily driven by intercompany transactions and rental equipment purchases denominated in currencies other than the functional currency of the purchasing entity. These exposures are included in currency (gains) losses, net, on Form 10-K for the year ended December 31, 2017.condensed consolidated statements of operations.
To date, we have not entered into any hedging arrangements with respect to foreign currency risk.

ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervisionOur management, with participation of our Chief Executive Officer and Chief Financial Officer, ofhas evaluated the effectiveness of the design and operation of our disclosure controls and procedures (asas defined in RulesRule 13a-15(e) and 15d-15(e) under the Exchange Act)Act, as of SeptemberJune 30, 2018.2019. Based upon theirthat evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of SeptemberJune 30, 2018, due to the existence of previously reported material weaknesses in our internal control over financial reporting.
Notwithstanding a material weakness in internal control over financial reporting, our management concluded that our condensed consolidated financial statements in this quarterly report on Form 10-Q present fairly, in all material respects, the Company’s consolidated financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with generally accepted accounting principles.
Description of Material Weakness as of December 31, 2017
As disclosed in further detail in “Part II - Item 9A - Controls and Procedures” of the 2017 Annual Report, we and our independent registered public accounting firm identified material weaknesses in our internal control over financial reporting - specifically, ineffective controls over accounting for income taxes and reverse acquisition accounting. These control deficiencies resulted in numerous adjustments and disclosures that were corrected prior to the issuance of our 2017 financial statements.
Remediation Plans
During our third quarter ended September 30, 2018, we continued to implement a remediation plan that addresses the material weaknesses in internal control over financial reporting through the following actions:
• Increased involvement on a quarterly basis of our third-party consultants dedicated to determining the appropriate accounting for material and complex tax and unique business transactions;
• Review of the tax accounting process to identify and implement enhanced processes and related internal control review procedures; and
• Adding additional review controls to approve complex accounting and related calculations.
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Under the direction of the Audit Committee, management will continue to review and make necessary changes to the overall design of the Company’s internal control environment, as well as policies and procedures to improve the overall effectiveness of internal control over financial reporting.
We believe the measures described above will remediate the control deficiencies identified and will strengthen our internal control over financial reporting. As management continues to evaluate and work to improve internal control over financial reporting, we may take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above. These controls must be in place and operating effectively for a sufficient period of time in order to validate the full remediation of the material weaknesses. We expect that the remediation of the material weaknesses will be complete as of December 31, 2018.2019.
Changes in Internal Controls
As discussed in Note 2 to the condensed consolidated financial statements included in this quarterly report on Form 10-Q, the Company completed its acquisitions in December 2017, January 2018 and August 2018, respectively. During the first and second quarters of 2018, we transitioned all of the business processes of Tyson and Acton, respectively, onto our existing platforms. We are continuing to integrate Acton and Tyson into our existing control procedures, but we do not expect changes to significantly affect our internal control over financial reporting. As permitted by interpretive guidance for newly acquired businesses issued by the SEC Staff, management has excluded the internal control over financial reporting of ModSpace from the evaluation of the Company's effectiveness of its disclosure controls and procedures as of September 30, 2018. Since the date of acquisition on August 15, 2018, ModSpace's financial results are included in the Company's condensed consolidated financial statements and constituted approximately $1.3 billion and $1.2 billion of total and net assets, respectively, as of September 30, 2018, and $65.5 million and $4.2 million of net revenues and net income, respectively, for the three months ended September 30, 2018. As part of our post-closing integration activities, we are engaged in the process of assessing the internal controls of ModSpace. The Company has begun to integrate policies, processes, people, technology and operations for the post-acquisition combined company, and it will continue to evaluate the impact of any related changes to internal control over financial reporting.
Other than the items discussed above, thereThere were no changes in our internal control over financial reporting that occurred during our quarter ended SeptemberJune 30, 20182019, that materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II
ITEM 1. Legal Proceedings
We are involved in various lawsuits, claims and legal proceedings that arise in the ordinary course of business. These matters involve, among other things, disputes with vendors or customers, personnel and employment matters, and personal injury. We assess these matters on a case-by-case basis as they arise and establish reserves as required. 
As of SeptemberJune 30, 2018,2019, there were no material pending legal proceedings in which we or any of our subsidiaries are a party or to which any of our property is subject.

ITEM 1A. Risk Factors
AsThe Company’s financial position, results of September 30,operations and cash flows are subject to various risks, many of which are not exclusively within the Company’s control, which may cause actual performance to differ materially from historical or projected future performance. In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2018, therewhich have been nonot materially changed other than as reflected below.
Trade policies and changes in trade policies, including the imposition of tariffs, their enforcement and downstream consequences, may have a material updatesadverse impact on our business, results of operations, and outlook.
Tariffs and/or other developments with respect to trade policies, trade agreements, and government regulations could have a material adverse impact on the Company's business, financial condition and results of operations. For example, the United States government has imposed tariffs on steel, aluminum and lumber imports from certain countries, which could result in increased costs to the Company for these materials. Without limitation, (i) tariffs currently in place and (ii) the imposition by the federal government of new tariffs on imports to the United States could materially increase (a) the cost of our products that we are offering for sale or lease, (b) the cost of certain products that we source from foreign manufacturers, and (c) the cost of certain raw materials or products that we utilize. We may not be able to pass such increased costs on to our risk factors since those described incustomers, and we may not be able to secure sources of certain products and materials that are not subject to tariffs on a timely basis. Although we actively monitor our Risk Factor inprocurement policies and practices to avoid undue reliance on foreign-sourced goods subject to tariffs, when practicable, such developments could have a material adverse impact on our Form 10-Q for the period ended June 30, 2018 as filed with the SEC.business, financial condition and results of operations.

ITEM 2. Unregistered Sales of Equity Securities
None.

ITEM 3. Defaults Upon Senior Securities
None.

ITEM 4. Mine Safety Disclosures
Not applicable.

ITEM 5. Other Information
None.


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ITEM 6. Exhibits
Exhibit No.Exhibit Description
31.1
*
31.2
*
32.1
**
32.2
**
4.1
Warrant Agreement between WillScot Corporation and Continental Stock Transfer & Trust Company, dated as of August 15, 2018 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, filed August 16, 2018). 
10.1
10.2
10.3
10.4
Supplemental Indenture to the 6.875% Senior Secured Notes due 2023 dated as of August 15, 2018 between William Scotsman International, Inc. and Deutsche Bank Trust Company Americas as trustee and collateral agent
10.5101.INS
Supplemental Indenture to the 7.875% Senior Secured Notes due 2022 dated as of August 15, 2018 between William Scotsman International, Inc. and Deutsche Bank Trust Company Americas as trustee and collateral agent (incorporated by reference to Exhibit 10.5 to the Company’s Form 8-K filed August 16, 2018)
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
*Filed herewith
**Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange Act

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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
WillScot Corporation
By:
/s/ TIMOTHY D. BOSWELL
Dated:November 9, 2018August 2, 2019 Timothy D. Boswell
Chief Financial Officer (Principal Financial Officer)



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