SEC Filing | Investor Relations | WillScot Holdings Corporation

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ITEM 1.	Business

•	we deregistered as a Cayman Islands exempted entity, domesticated as a Delaware corporation, and changed our name to WillScot Corporation;

•	our publicly-traded units (Nasdaq: EAGLU) separated into their components (ordinary shares and warrants); our ordinary shares (Nasdaq: EAGL) converted, on a one-for-one basis, into shares of Class A common stock; and our warrants (Nasdaq: EAGLW) became warrants to acquire the corresponding shares of our Class A common stock;

•	Sapphire Holding S.à r.l. (“Sapphire”), which is an investment holding company controlled by TDR Capital, purchased 43,568,901 shares of our Class A common stock at a price of $9.60 per share, for a total purchase price of $418.3 million (the “Private Placement”);

•	Williams Scotsman International, Inc. (“WSII”) issued $300.0 million in aggregate principal amount of 7.875% senior secured notes due 2022 (the “Notes”) and entered into a new $600.0 million asset-based lending revolving credit facility (the “ABL Facility”); and

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with proceeds from the Private Placement and the Notes offerings and borrowings under the ABL Facility, we indirectly acquired all of the issued and outstanding shares of common stock of WSII from affiliates of TDR Capital for an aggregate purchase price of $1.1 billion, of which (i) $1.0215 billion was payable in cash and (ii) $78.5 million was payable in shares of our Class B common stock, par value $0.0001 per share, representing a non-economic voting interest in the Company, and shares of WS Holdings common stock, which are exchangeable into shares of our Class A common stock.

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•	Growing need and demand for space - driven by general economic activity, including gross domestic product growth, industrial production, mining and natural resources activity, non-residential construction, urbanization, public and education spending, and the scale and frequency of special events.

•	Increasing shift from traditional fixed, on-site built space to modular space solutions - driven by several advantages as compared with fixed, on-site built space, including:

•	Quick to install - the pre-fabrication of modular space units allows them to be put in place rapidly, providing potential long-term solutions to needs that may have materialized quickly.

•	Flexibility - flexible assembly design allows modular space units to be built to suit a customer’s needs while offering customers the ability to adjust their space as their needs change.

•	Cost effectiveness - modular space units provide a cost effective solution for temporary and permanent space requirements and allow customers to improve returns on capital in their core business.

•	Quality - the pre-fabrication of modular space units is based on a repeatable process in a controlled environment, resulting in more consistent quality.

•	Mobility - modular space units can easily be disassembled, transported to a new location and re-assembled.

•	Environmentally friendly - relocatable buildings promote the reuse of facilities, on an as-needed basis by the occupants.

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ITEM 1A.	Risk Factors

•	multiple regulatory requirements that are subject to change and that could restrict our ability to assemble, lease or sell products;

•	inflation, recession, fluctuations in foreign currency exchange and interest rates;

•	compliance with applicable export control laws and economic sanctions laws and regulations;

•	trade protection measures, including increased duties and taxes and import or export licensing requirements;

•	price controls;

•	ownership regulations;

•	compliance with applicable antitrust and other regulatory rules and regulations relating to potential future acquisitions;

•	different local product preferences and product requirements;

•	pressures on management time and attention due to the complexities of overseeing global operations;

•	challenges in maintaining, staffing and managing multi-national operations;

•	different labor regulations;

•	potentially adverse consequences from changes in or interpretations of tax laws;

•	political and economic instability;

•	enforcement of remedies in various jurisdictions;

•	the risk that the business partners upon whom we depend for technical assistance or management and acquisition expertise will not perform as expected;

•	the potential impact of collective bargaining;

•	obstacles to the repatriation of earnings and cash;

•	differences in business practices that may result in violation of company policies, including, but not limited to, bribery and collusive practices; and

•	reduced protection for intellectual property in some countries.

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•	difficulties in integrating the operations, technologies, products and personnel of the acquired companies;

•	diversion of management’s attention from normal daily operations of the business;

•	difficulties in entering markets in which we have no or limited direct prior experience and where our competitors in such markets have stronger market positions;

•	difficulties in complying with regulations, such as environmental regulations and managing risks related to an acquired business;

•	an inability to timely complete necessary financing and required amendments, if any, to existing agreements;

•	an inability to implement uniform standards, controls, procedures and policies;

•	undiscovered and unknown problems, defects, liabilities or other issues related to any acquisition that become known to us only after the acquisition, particularly relating to rental equipment on lease that are unavailable for inspection during the diligence process; and

•	potential loss of key customers or employees.

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•	specialized disclosure and accounting requirements unique to US government contracts;

•	financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the US government;

•	public disclosures of certain contract and company information; and

•	mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements.

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•	making it more difficult to satisfy our obligations with respect to our various debt (including the Notes offered hereby) and liabilities;

•	requiring us to dedicate a substantial portion of our cash flow from operations to debt payments, thus reducing the availability of cash flow to fund internal growth through working capital and capital expenditures on our existing fleet or a new fleet and for other general corporate purposes;

•	increasing our vulnerability to a downturn in our business or adverse economic or industry conditions;

•	placing us at a competitive disadvantage compared to our competitors that have less debt in relation to cash flow and that, therefore, may be able to take advantage of opportunities that our leverage would prevent us from pursuing;

•	limiting our flexibility in planning for or reacting to changes in our business and industry;

•	restricting us from pursuing strategic acquisitions or exploiting certain business opportunities or causing us to make non-strategic divestitures; and

•	limiting, among other things, our ability to borrow additional funds or raise equity capital in the future and increasing the costs of such additional financings.

•	incur or guarantee additional debt and issue certain types of stock;

•	create or incur certain liens;

•	make certain payments, including dividends or other distributions, with respect to our equity securities;

•	prepay or redeem junior debt;

•	make certain investments or acquisitions, including participating in joint ventures;

•	engage in certain transactions with affiliates;

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•	create unrestricted subsidiaries;

•	create encumbrances or restrictions on the payment of dividends or other distributions, loans or advances to, and on the transfer of, assets to the issuer or any restricted subsidiary;

•	sell assets, consolidate or merge with or into other companies;

•	sell or transfer all or substantially all our assets or those of our subsidiaries on a consolidated basis; and

•	issue or sell share capital of certain subsidiaries.

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ITEM 1B.	Unresolved Staff Comments

ITEM 2.	Properties

ITEM 3.	Legal Proceedings

ITEM 4.	Mine Safety Disclosures

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ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

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ITEM 6.	Selected Financial Data

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(a)

The Company presents Adjusted EBITDA, Adjusted EBITDA less Net CAPEX, Adjusted Gross Profit and Net Capital Expenditures for Rental Equipment, measurements not calculated in accordance with accounting principles generally accepted in the US, (“GAAP”), because they are key metrics used by management to assess financial performance. Our business is capital-intensive and these additional metrics allow management to further evaluate its operating performance. See below for a reconciliation of non-GAAP financial measures.

(b)	Included in corporate & other are selling, general and administrative costs related to the Algeco Group's corporate costs incurred prior to or as part of the Business Combination which are not anticipated to be part of the ongoing costs of WSC.

(c)	The Company makes capital expenditures (“CAPEX”) for purchases and capitalized refurbishments of rental equipment and property, plant and equipment.

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•	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.

•	Change in fair value of contingent consideration related to non-cash changes in fair value of an acquisition related earnout agreement.

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

•	Restructuring costs associated with restructuring plans designed to streamline operations and reduce costs.

•	Other expense includes consulting expenses related to certain one-time projects, financing costs not classified as interest expense, gains and losses on disposals of property, plant, and equipment, and non-cash charges for WSII’s share-based compensation plans.

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

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•	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;

•	effective management of our rental equipment;

•	our ability to acquire and successfully integrate new operations;

•	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;

•	our inability to recognize or use deferred tax assets and tax loss carry forwards;

•	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.”

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ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

•	Increased total revenues by $19.3 million, or 4.5%

•	Increased the Modular - US segment revenues which represents 88.1% of 2017 revenue, by $27.4 million, or 7.5%, through:

–	Average modular space monthly rental rate growth of 7.6% to $538 through increases both in the price of our units, as well as increased VAPS pricing and penetration

–	Increased average modular space units on rent by nearly 800 units, or 2.2%

–	These increases in average units on rent drove average modular space monthly utilization up by 190 basis points (“bps”) during the year to 73.9% with positive momentum exiting the year averaging 75.0% in the fourth quarter

•	Decreased total revenues of $8.3 million, or 13.4% in the The Modular - Other North America segment which represents 12.0% of 2017, driven primarily by a single project that reached completion in July 2016. The completion of this project drove $10.2 million of the revenue decline, and contributed to decreases in the following metrics:

–	Average modular space monthly rental rate declined 22.3% to $532

–	Average modular space units on rent declined by 331 units, or 6.1% for the year, however the segment experienced positive momentum during 2017 with average modular space units on rent in the fourth quarter up 427 units, or 8.6% year over year

–	Average modular space monthly utilization decreased by 260 bps during the year to 52.2%, but had utilization of 55.8% in the fourth quarter

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Generated combined Adjusted EBITDA of $123.9 million between the Modular - US Segment and the Modular - Other North America Segment, which was reduced by $15.1 million to $108.8 million Consolidated Adjusted EBITDA as a result of Corporate & other selling, general and administrative costs related to the Algeco Group’s corporate costs incurred prior to, or in connection with, the Business Combination. These corporate costs are considered discrete costs in 2017.

•	Secured long-term financing that positions us well relative to other US modular space competitors to pursue organic and inorganic growth opportunities, such as the acquisition of Acton Mobile.

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ITEM 7A.	Quantitative and Qualitative Disclosures about Market Risk

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ITEM 8.	Financial Statements and Supplementary Data

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•	WSII’s operations comprise the ongoing operations of the combined entity;

•	The officers of the newly combined company consist of WSII executives, including the Chief Executive Officer, Chief Financial Officer and General Counsel;

•	WSII’s preexisting ultimate parent, TDR Capital, owns a majority voting interest in the combined entity.

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(a)	As there is no carrying value of debt outstanding on the Canadian ABL facility as of December 31, 2017, $1.8 million of debt issuance costs and debt discounts related to that facility are included in other non-current assets on the consolidated balance sheet.

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•	85% 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.

•	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.

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ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

ITEM 9A.	Controls and Procedures

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ITEM 9B.	Other Information

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ITEM 10.	Directors, Executive Officers and Corporate Governance

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ITEM 11.	Executive Compensation

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ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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(1)

Beneficial ownership is determined in accordance with the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options or warrants that are currently exercisable or exercisable within 60 days. Unless otherwise noted, the business address of each of the stockholders listed above is 901 S. Bond Street, Suite 600, Baltimore, Maryland 21231.

(2)

TDR Capital manages TDR Capital II Holdings, L.P. (“TDR Capital II”), the investment fund which is the ultimate beneficial owner of Sapphire. TDR Capital controls all of the TDR Capital II’s voting rights in respect of its investments and no one else has equivalent control over the investments. TDR Capital II’s investors are passive investors (as they are limited partners) and no investor directly or indirectly beneficially owns 20% or more of the shares or voting rights through their investment in the fund. TDR Capital is run by its board and investment committee which consists of the partners of the firm. Mr. Robertson may be deemed to beneficially own the securities held by Sapphire through his ability to either vote or direct the vote of the securities or dispose or direct the disposition of the securities, either through his role at TDR Capital II, contract, understanding or otherwise. Mr. Robertson disclaims beneficial ownership of such securities, except to the extent of his pecuniary interests therein.

(3)

Represents 30,000 Class A shares held by Mr. Sagansky and 4,784,375 Class A shares held by DEAL, over which Mr. Sagansky has voting and investment power. With respect to DEAL’s shares, the reported beneficial ownership (a) assumes 3,231,250 Class A shares deposited by DEAL into escrow pursuant to the Earnout Agreement and Escrow Agreement are released to DEAL and (b) does not include any Class A shares underlying 7,275,000 warrants held by DEAL that are restricted and subject to potential transfer to Sapphire under the Earnout Agreement. Mr. Sagansky disclaims beneficial ownership of the shares held by DEAL except to the extent of his pecuniary interest therein.

(4)

Represents 25,000 Class A shares held by Mr. Rosen, 625,000 Class A shares underlying 1,250,000 warrants held by Mr. Rosen, 10,000 Class A shares underlying 20,000 warrants held by Mr. Rosen’s wife, 100,000 Class A shares underlying 200,000 warrants held by the Sara L. Rosen Trust, and 100,000 Class A shares underlying 200,000 warrants held by the Samuel N. Rosen 2015 Trust. Mr. Rosen is a trustee of the Sara L. Rosen Trust and the Samuel N. Rosen 2015 Trust. Mr. Rosen disclaims beneficial ownership of the securities held by the Sara L. Rosen Trust and the Samuel N. Rosen 2015 Trust.

(5)

According to a Schedule 13D/A filed with the SEC on January 23, 2018 on behalf of Sapphire, TDR Capital II, TDR Capital, Manjit Dale, and Mr. Robertson (the “TDR Group”), the TDR Group has beneficial ownership over the reported shares. TDR Capital II is the sole equity holder of Sapphire, TDR Capital manages TDR Capital II, and Messrs. Dale and Robertson are founding partners of TDR Capital. The reported beneficial ownership does not assume (a) an exchange of 8,024,419 shares of WS Holdings' common stock, par value $0.0001 per share, into any Class A shares pursuant to the Exchange Agreement, and (b) a corresponding reduction of our Class B shares upon an exchange of WS Holdings' common stock into Class A shares. The mailing address of this stockholder is c/o TDR Capital, 20 Bentinick Street, London, UK W1U 2EU.

(6)

According to a Schedule 13G/A filed with the SEC on February 8, 2018 on behalf of Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP (collectively, “Wellington”), Wellington has beneficial ownership over the shares reported. The business address of this stockholder is 280 Congress Street, Boston, MA 02210.

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ITEM 13.	Certain Relationships and Related Transactions, and Director Independence

•	any person who is, or at any time during the applicable period was, one of our executive officers, directors or director nominees;

•	any person who is known by us to be the beneficial owner of more than five percent (5%) of our voting stock;

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any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, officer or a beneficial owner of more than five percent (5%) of our voting stock, and any person (other than a tenant or employee) sharing the household of such director, officer or beneficial owner of more than five percent (5%) of our voting stock; and

•	any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a ten percent (10%) or greater beneficial ownership interest.

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ITEM 14.	Principal Accounting Fees and Services

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ITEM 15.	Exhibits, Financial Statement Schedules

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TITLE:	Vice President, Principal Accounting Officer & Controller. Upon listing on a public stock exchange, your title will be Chief Accounting Officer and Treasurer.

START DATE:	To be mutually agreed, preferably no later than September 25th, 2017

INCENTIVES:	You will be eligible for the Short-Term Incentive Plan at a target of 30%. Your eligibility for 2017 will be 66% multiplied by your target of 30%, multiplied by your Base Salary, multiplied by the North America-level Attainment percentage in the plan.

AUTO:	You will be eligible for a monthly auto-allowance of $1250, less applicable taxes.

BENEFITS:	You will have the opportunity to use up to twenty (20) days of vacation time per calendar year with the amount pro-rated for the remainder of this year.

SEVERANCE:

If your employment is terminated by the company without cause, you will be eligible for nine months base salary plus the pro rata value of accrued STIP. You will also be eligible for continuation of healthcare benefits for a period not to exceed one year from your termination date. As soon as you are eligible for coverage under another employer’s plan, the health care continuation benefit will cease.

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1.	Your ability to satisfy all requirements of a pre-employment physical and/or drug-screening test prior to your first day of employment.

2.	Your ability to provide proper documentation to establish your identity and eligibility for employment as required under the Immigration Reform and Control Act of 1986. On your first day you will need to bring the required I-9 documentation that you designated during your on-boarding session.

3.	If your job requires driving, a driving record report will be requested. Your driving record must meet company standards for safe driving.

4.	You shall be required to authorize the Company to conduct a background check.  Employment is contingent upon satisfactory results from our background screen process.

5.	We require that all new hire forms are completed as outlined in our Onboarding process by the first day of employment.

6.	Please be advised that you will not be permitted to start work until the company has received satisfactory results of the background check, pre-employment drug screen and, as applicable, the driving record and pre-employment physical results.

7.	Your first ninety (90) days of employment is considered an orientation and training period during which time your performance is evaluated.

(1)	Registration Statement (Form S-8 No. 333-222870) pertaining to the WillScot Corporation 2017 Incentive Award Plan, and

(2)	Registration Statement (Form S-3 No. 333-222210) of WillScot Corporation;