SEC Filing | Investor Relations | Williams Scotsman

Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12396368&doc=15
WILLSCOT CORPORATION
(formerly known as Double Eagle Acquisition Corp.)
(Exact name of registrant as specified in its charter)
Delaware
001-37552
82-3430194
(State or other jurisdiction of incorporation)
(Commission File Number)
(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)
 
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 and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations ST (§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 nonaccelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Nonaccelerated filer
Smaller reporting company
(Do not check if a smaller reporting company)
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b2 of the Act). Yes No
Shares of Class A common stock, par value $0.0001 per share, outstanding: 92,644,774 shares at August 1, 2018.
Shares of Class B common stock, par value $0.0001 per share, outstanding: 8,024,419 shares at August 1, 2018.
 

1


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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2


PART I
ITEM 1.
Financial Statements
WillScot Corporation
Condensed Consolidated Balance Sheets
 
(in thousands, except share data)
June 30, 2018 (unaudited)
 
December 31, 2017
 
 
Assets
 
 
 
 
Cash and cash equivalents
$
8,181

 
$
9,185

 
Trade receivables, net of allowances for doubtful accounts at June 30, 2018 and December 31, 2017 of $5,631 and $4,845, respectively
104,013

 
94,820

 
Raw materials and consumables
9,829

 
10,082

 
Prepaid expenses and other current assets
14,137

 
13,696

 
Total current assets
136,160

 
127,783

 
Rental equipment, net
1,075,040

 
1,040,146

 
Property, plant and equipment, net
82,361

 
83,666

 
Goodwill
33,570

 
28,609

 
Intangible assets, net
125,864

 
126,259

 
Other non-current assets
4,038

 
4,279

 
Total long-term assets
1,320,873

 
1,282,959

 
Total assets
$
1,457,033

 
$
1,410,742

 
Liabilities
 
 
 
 
Accounts payable
58,370

 
57,051

 
Accrued liabilities
45,606

 
48,912

 
Accrued interest
1,802

 
2,704

 
Deferred revenue and customer deposits
50,382

 
45,182

 
Current portion of long-term debt
1,883

 
1,881

 
Total current liabilities
158,043

 
155,730

 
Long-term debt
684,641

 
624,865

 
Deferred tax liabilities
111,924

 
120,865

 
Deferred revenue and customer deposits
6,696

 
5,377

 
Other non-current liabilities
19,109

 
19,355

 
Long-term liabilities
822,370

 
770,462

 
Total liabilities
980,413

 
926,192

 
Commitments and contingencies (see Note 12)


 


 
Class A common stock: $0.0001 par, 400,000,000 shares authorized at June 30, 2018 and December 31, 2017; 84,644,744 shares issued and outstanding at both June 30, 2018 and December 31, 2017
8

 
8

 
Class B common stock: $0.0001 par, 100,000,000 shares authorized at June 30, 2018 and December 31, 2017; 8,024,419 shares issued and outstanding at both June 30, 2018 and December 31, 2017
1

 
1

 
Additional paid-in-capital
2,123,101

 
2,121,926

 
Accumulated other comprehensive loss
(54,417
)
 
(49,497
)
 
Accumulated deficit
(1,640,230
)
 
(1,636,819
)
 
Total shareholders' equity
428,463

 
435,619

 
Non-controlling interest
48,157

 
48,931

 
Total equity
476,620

 
484,550

 
Total liabilities and equity
$
1,457,033

 
$
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 June 30,
 
Six Months Ended June 30,
(in thousands, except share data)
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
Leasing and services revenue:
 
 
 
 
 
 
 
Modular leasing
$
101,249


$
72,954

 
$
198,511

 
$
141,941

Modular delivery and installation
31,413


22,949

 
57,663

 
41,953

Sales:
 
 
 
 
 
 
 
New units
5,236


9,396

 
12,664

 
14,882

Rental units
2,435


4,778

 
6,246

 
10,622

Total revenues
140,333


110,077

 
275,084

 
209,398

Costs:
 
 
 
 
 
 
 
Costs of leasing and services:
 
 
 
 
 
 
 
Modular leasing
27,129


21,340

 
54,291

 
40,442

Modular delivery and installation
30,127


22,339

 
55,648

 
40,472

Costs of sales:
 
 
 
 
 
 
 
New units
3,704


6,766

 
8,691

 
10,486

Rental units
1,263


2,575

 
3,578

 
6,283

Depreciation of rental equipment
23,470


17,474

 
47,315

 
34,194

Gross profit
54,640


39,583

 
105,561

 
77,521

Expenses:
 
 
 
 
 
 
 
Selling, general and administrative
47,734


31,652

 
92,948

 
64,413

Other depreciation and amortization
1,570


1,890

 
4,006

 
3,831

Restructuring costs
449


684

 
1,077

 
968

Currency losses (gains), net
572


(6,497
)
 
1,596

 
(8,499
)
Other (income) expense, net
(1,574
)

461

 
(4,419
)
 
591

Operating income
5,889


11,393

 
10,353

 
16,217

Interest expense
12,155


29,907

 
23,874

 
54,568

Interest income


(3,509
)
 

 
(6,093
)
Loss from continuing operations before income tax
(6,266
)

(15,005
)
 
(13,521
)
 
(32,258
)
Income tax benefit
(6,645
)

(5,269
)
 
(7,065
)
 
(10,138
)
Income (loss) from continuing operations
379


(9,736
)
 
(6,456
)
 
(22,120
)
Income from discontinued operations, net of tax


3,840

 

 
6,045

Net income (loss)
379


(5,896
)
 
(6,456
)
 
(16,075
)
Net income (loss) attributable to non-controlling interest, net of tax
143



 
(505
)
 

Total income (loss) attributable to WSC
$
236


$
(5,896
)
 
$
(5,951
)
 
$
(16,075
)
 
 
 
 
 
 
 
 
Net income (loss) per share attributable to WSC – basic
 
 
 
 
 
 
 
Continuing operations - basic
$
0.00


$
(0.67
)
 
$
(0.08
)
 
$
(1.53
)
Discontinued operations - basic
$
0.00


$
0.26

 
$
0.00

 
$
0.42

Net income (loss) per share - basic
$
0.00


$
(0.41
)
 
$
(0.08
)
 
$
(1.11
)
 
 
 
 
 
 
 
 
Net income (loss) per share attributable to WSC – diluted
 
 


 
 
 
 
Continuing operations - diluted
$
0.00

 
$
(0.67
)
 
$
(0.08
)
 
$
(1.53
)
Discontinued operations - diluted
$
0.00

 
$
0.26

 
$
0.00

 
$
0.42

Net income (loss) per share - diluted
$
0.00

 
$
(0.41
)
 
$
(0.08
)
 
$
(1.11
)
 
 
 
 
 
 
 
 
Weighted average shares:
 
 
 
 
 
 
 
Basic
78,432,274


14,545,833

 
77,814,456

 
14,545,833

Diluted
82,180,086

 
14,545,833

 
77,814,456

 
14,545,833

 
 
 
 
 
 
 
 
Cash dividends declared per share
$


$

 
$

 
$

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

4


WillScot Corporation
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands)
2018
 
2017
 
2018
 
2017
Net income (loss)
$
379

 
$
(5,896
)
 
$
(6,456
)
 
$
(16,075
)
Other comprehensive (loss) income:
 
 
 
 
 
 
 
Foreign currency translation adjustment, net of income tax (benefit) expense of ($93), $462, ($241) and $618 for the three and six months ended June 30, 2018 and 2017, respectively
(2,619
)
 
3,102

 
(2,380
)
 
5,783

Comprehensive loss
(2,240
)
 
(2,794
)
 
(8,836
)
 
(10,292
)
Comprehensive loss attributable to non-controlling interest
(150
)
 

 
(774
)
 

Total comprehensive loss attributable to WSC
$
(2,090
)
 
$
(2,794
)
 
$
(8,062
)
 
$
(10,292
)
See the accompanying notes which are an integral part of these condensed consolidated financial statements.

5


WillScot Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Six Months Ended June 30,
(in thousands)
2018
 
2017
Operating Activities:
 
 
 
Net loss
$
(6,456
)
 
$
(16,075
)
Adjustments for non-cash items:
 
 
 
Depreciation and amortization
51,941

 
53,075

Provision for doubtful accounts
2,282

 
2,276

Gain on sale of rental equipment and other property, plant and equipment
(7,429
)
 
(4,237
)
Interest receivable capitalized into notes due from affiliates

 
(3,915
)
Amortization of debt discounts and debt issuance costs
2,522

 
7,326

Share based compensation expense
1,175

 

Deferred income tax benefit
(7,066
)
 
(5,073
)
Unrealized currency losses (gains)
1,378

 
(8,356
)
Changes in operating assets and liabilities, net of effect of businesses acquired:
 
 
 
Trade receivables
(11,624
)
 
(3,847
)
Inventories
442

 
610

Prepaid and other assets
(282
)
 
(7,715
)
Accrued interest receivable

 
(3,214
)
Accrued interest payable
(909
)
 
(1,524
)
Accounts payable and other accrued liabilities
(11,841
)
 
14,099

Deferred revenue and customer deposits
4,667

 
694

Net cash provided by operating activities
18,800

 
24,124

Investing Activities:
 
 
 
Acquisition of a business
(24,006
)
 

Proceeds from sale of rental equipment
12,033

 
10,622

Purchase of rental equipment and refurbishments
(64,763
)
 
(54,223
)
Lending on notes due from affiliates

 
(67,939
)
Repayments on notes due from affiliates

 
2,151

Proceeds from the sale of property, plant and equipment
681

 
11

Purchase of property, plant and equipment
(1,616
)
 
(2,015
)
Net cash used in investing activities
(77,671
)
 
(111,393
)
Financing Activities:
 
 
 
Receipts from borrowings
61,792

 
222,129

Receipts on borrowings from notes due to affiliates

 
75,000

Payment of financing costs

 
(10,919
)
Repayment of borrowings
(3,770
)
 
(198,580
)
Principal payments on capital lease obligations
(59
)
 
(785
)
Net cash provided by financing activities
57,963

 
86,845

Effect of exchange rate changes on cash and cash equivalents
(96
)
 
254

Net change in cash and cash equivalents
(1,004
)
 
(170
)
Cash and cash equivalents at the beginning of the period
9,185

 
6,162

Cash and cash equivalents at the end of the period
$
8,181

 
$
5,992

 
 
 
 
Supplemental Cash Flow Information:
 
 
 
Interest paid
$
22,004

 
$
50,404

Income taxes paid, net of refunds received
$
1,000

 
$
(437
)
Capital expenditures accrued or payable
$
16,828

 
$
8,992

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

6


WillScot Corporation
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1 - Summary of Significant Accounting Policies
Organization and Nature of Operations
WillScot Corporation (“WSC” or along 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, whose securities are listed on The Nasdaq Capital Market, 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”). The Company operates and owns 90% of WS Holdings, and Sapphire Holding S.à r.l. (“Sapphire”), an affiliate of TDR Capital LLP (“TDR Capital”), owns the remaining 10%.
The Company was originally incorporated on June 26, 2015 under the name Double Eagle Acquisition Corporation (“Double Eagle”) as a Cayman Islands exempt, special purpose acquisition company, for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On November 29, 2017, the Company, through its subsidiary, WS Holdings, acquired all of the equity interest of Williams Scotsman International, Inc. (“WSII”), from Algeco Scotsman Global S.à r.l., (together with its subsidiaries, the “Algeco Group”). The Algeco Group is majority owned by an investment fund managed by TDR Capital. As part of the transaction (the “Business Combination”), the Company redomesticated and changed its name to WillScot Corporation. For further information on the organization of the Company, refer to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2017.
WSII engages in the leasing and sale of mobile offices, modular buildings and storage products and their delivery and installation throughout North America.
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 condensed consolidated financial statements contain all adjustments, which are of a normal and recurring nature, necessary to present fairly the financial position and the results of operations for the interim periods presented.
The results of consolidated operations for the three and six months ended June 30, 2018 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 our Annual Report on Form 10-K for the year ended December 31, 2017.
Principles of Consolidation
The condensed consolidated financial statements comprise the financial statements of the Company 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 WSC 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 the Company and WSII following the Business Combination on November 29, 2017; (iii) the assets and liabilities of WSII at their historical cost; and (iv) WSC’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 will be 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 other Algeco Group members 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 six months ended June 30, 2017 have been reported as discontinued operations in the condensed consolidated financial statements.

7


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) 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.
Recently Issued Accounting Standards
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which prescribes a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers. The new guidance will supersede virtually all existing revenue guidance under GAAP and is effective for annual reporting periods beginning after December 15, 2018. Early adoption for non-public entities is permitted starting with annual reporting periods beginning after December 15, 2016. The core principle contemplated by this new standard was 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.
The Company is currently finalizing its evaluation of the impact that the updated guidance will have on the Company’s financial statements and related disclosures. As part of the evaluation process, the Company is holding 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 analysis with respect to revenue stream scoping, performed contract reviews, developed an preliminary gap analysis and evaluated the revised disclosure requirements. The Company intends to determine the preliminary impact on the Company’s financial statements during the third quarter of 2018.    
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 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 recognize a right-of-use 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 as for initial direct costs. For income statement purposes, the new standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating or finance. Operating leases will result 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). While the new standard maintains similar accounting 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 standard will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities. The guidance includes a number of practical expedients that the Company may elect to apply. The impact of adopting Topic 842 will depend on the Company’s lease portfolio as of the adoption date. The Company will continue to evaluate the impacts of this guidance on its financial position, results of operations, and cash flows. The Company is planning to update its systems, processes and internal controls to meet the new reporting and disclosure requirements.
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 after the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) which provides guidance on accounting for the Tax Act’s impact. SAB 118 provides a measurement period, which in no case should extend beyond one year from the Tax Act enactment date, during which a company acting in good faith may complete the accounting for the impacts of the Tax Act under ASC Topic 740. Per SAB 118, companies must reflect the income tax effects of the Tax Act in the reporting 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 determine a reasonable estimate for those effects and record a provisional estimate in 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

8


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 8) and continues to evaluate the provisions of the Tax Act including guidance from the Department of Treasury and Internal Revenue Service. Additionally, the Company expects to file 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.
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 Company expects to realize synergies and cost savings related to this acquisition as a result of purchasing and procurement economies of scale and general and administrative expense savings, particularly with respect to the consolidation of corporate related functions and elimination of redundancies. The acquisition date fair value of the consideration transferred consisted of $24.0 million in cash consideration, net of cash acquired. The transaction was fully funded by borrowings under the ABL Facility (defined in Note 6).
During the three months ended June 30, 2018, the Company recorded adjustments to the Tyson opening balance sheet, which increased rental fleet by $0.6 million and accrued liabilities by $0.2 million. This increase resulted in an equal increase in goodwill as detailed in Note 5. 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, intangible assets, deferred tax assets and other accrued tax liabilities will be finalized during the third quarter of 2018.
Tyson results were immaterial to the condensed consolidated statements of operations for the three and six months ended June 30, 2018 and as a result, the Company is not presenting pro-forma information.
Acton Acquisition
On December 20, 2017, WSII 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 provided modular space and portable storage rental services across the US. WSII funded the acquisition with cash on hand and borrowings under the ABL Facility (defined in Note 6). The Company incurred $4.8 million and $7.4 million in integration fees associated the Acton acquisition within selling, general, and administrative expenses (“SG&A”) for the three and six months ended June 30, 2018, respectively.
Through June 2018, the Company recorded adjustments to the Acton opening balance sheet, which increased accrued liabilities by $2.0 million due to further evaluation of unindemnified liabilities. This increase resulted in an equal increase in goodwill as detailed in Note 5. 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, and other accrued tax liabilities will be finalized during the one-year measurement period following the acquisition date.
The pro-forma information below has been prepared using the purchase method of accounting, giving effect to the Acton acquisition as if it had been completed on January 1, 2017 (the “pro-forma acquisition date”). The pro-forma information is not necessarily indicative of the Company’s results of operations had the acquisition been completed on the above date, nor is it necessarily indicative of the Company’s future results. The pro-forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisition, and also does not reflect additional revenue opportunities following the acquisition.
    

9


The table below presents unaudited pro-forma consolidated statements of operations information as if Acton had been included in the Company’s consolidated results for the six months ended June 30, 2017:
(in thousands)
Six Months Ended
June 30, 2017
WSC historic revenues (a)
$
209,398

Acton historic revenues
47,388

Pro-forma revenues
$
256,786

 
 
WSC historic pretax loss (a)
$
(32,258
)
Acton historic pretax loss
(275
)
Pro-forma pretax loss
(32,533
)
Pro-forma adjustments to combined pretax loss:
 
Impact of fair value mark-ups/useful life changes on depreciation (b)
(1,272
)
Intangible asset amortization (c)
(354
)
Interest expense (d)
(5,431
)
Elimination of historic Acton interest (e)
2,514

Pro-forma pretax loss
(37,076
)
Income tax benefit
(11,652
)
Pro-forma loss from continuing operations
(25,424
)
Income from discontinued operations
6,045

Pro-forma net loss
$
(19,379
)
(a) Excludes historic revenues and pre-tax income from discontinued operations
(b) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups of equipment acquired in
the Acton acquisition. The useful lives assigned to such equipment did not change significantly from the useful lives used by Acton.
(c) Amortization of the trade name acquired in Acton acquisition.
(d) In connection with the Acton acquisition, the Company drew $237.1 million on the ABL Facility. As of June 30, 2018, the weighted-
average interest rate of ABL borrowings was 4.58%.
(e) Interest on Acton historic debt was eliminated.
ModSpace Acquisition
On June 21, 2018, the Company and its newly-formed acquisition subsidiary, Mason Merger Sub, Inc. (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Modular Space Holdings Space, Inc. (“ModSpace”), a privately-owned provider of office trailers, portable storage units and modular buildings, and NANOMA LLC, solely in its capacity as the representative of the Holders (as defined therein), pursuant to which Merger Sub will merge with and into ModSpace with ModSpace as the surviving entity and continuing as an indirect subsidiary of the Company (the “ModSpace Acquisition”). Subject to potential adjustment under the Merger Agreement, the aggregate consideration payable to the sellers under the Merger Agreement consists of (i) $1,063,750,000 in cash, (ii) 6,458,500 shares of the Company’s Class A common stock and (iii) warrants to purchase an aggregate of 10,000,000 shares of the Company’s Class A common stock at an exercise price of $15.50 per share.
The ModSpace sellers who receive Class A common shares and warrants will receive customary registration rights, and will be subject to a six-month lock-up arrangement, under a registration rights agreement to be entered into on the closing date. The warrants issuable to the sellers are not redeemable and will expire on November 29, 2022.
The closing of the merger is subject to certain closing conditions, including a Canadian regulatory approval; the continuing accuracy of each party’s representations and warranties; the performance of certain obligations; and, the satisfaction of other customary conditions. The Merger Agreement may be terminated by the Company or ModSpace under certain circumstances. If the ModSpace Acquisition does not close due to the occurrence of certain regulatory events, we may be required to pay to ModSpace a $35.0 million termination fee.
The Company incurred $4.1 million in transaction costs related to the ModSpace Acquisition for the three and six months ended June 30, 2018.

10


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 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 15.
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 six months ended June 30, 2017.
Results from Discontinued Operations
Income from discontinued operations, net of tax, for the three and six months ended June 30, 2017 was as follows:
(in thousands)
Three Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2017
Remote accommodations revenue
$
31,487

 
$
58,565

Remote accommodations costs of leasing and services
13,163

 
24,738

Depreciation of rental equipment
6,119

 
12,542

Gross profit
12,205

 
21,285

Selling, general and administrative expenses
3,499

 
6,531

Other depreciation and amortization
1,257

 
2,508

Restructuring costs
380

 
770

Other income, net
(37
)
 
(40
)
Operating profit
7,106

 
11,516

Interest expense
739

 
1,420

Income from discontinued operations, before income tax
6,367

 
10,096

Income tax expense
2,527

 
4,051

Income from discontinued operations, net of tax
$
3,840

 
$
6,045

Revenues and costs related to the Remote Accommodations Business for the three and six months ended June 30, 2017 were as follows:
(in thousands)
Three Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2017
Remote accommodations revenue:
 
 
 
Lease revenue
$
14,613

 
$
28,577

Service revenue
16,874

 
29,988

Total remote accommodations revenue
$
31,487

 
$
58,565

 
 
 
 
Remote accommodation costs:
 
 
 
Cost of leases
$
2,023

 
$
4,200

Cost of services
11,140

 
20,538

Total remote accommodations costs
$
13,163

 
$
24,738

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 six months ended June 30, 2017 were as follows:
(in thousands)
June 30, 2017
Depreciation and amortization
$
15,050

Capital expenditures
$
4,213


11


NOTE 4 - Rental Equipment, net
Rental equipment, net, at the respective balance sheet dates consisted of the following:
(in thousands)
June 30, 2018
 
December 31, 2017
Modular units and portable storage
$
1,445,769

 
$
1,385,901

Value added products and services
66,834

 
59,566

Total rental equipment
1,512,603

 
1,445,467

Less: accumulated depreciation
(437,563
)
 
(405,321
)
Rental equipment, net
$
1,075,040

 
$
1,040,146

During the three and six months ended June 30, 2018, the Company received $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 recorded gains of $1.8 million and $4.8 million which are reflected in other (income) expense, net, on the condensed consolidated statements of operations for the three and six months ended June 30, 2018, respectively.
NOTE 5 - Goodwill
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 a business
3,406

 

 
3,406

Changes to preliminary purchase price allocations
1,555

 

 
1,555

Balance at June 30, 2018
$
33,570

 
$

 
$
33,570

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 13, for the year ended December 31, 2017. During the three and six months ended June 30, 2018, respectively, the Company made a $1.0 million and $2.0 million adjustment to the preliminary valuation of the acquired net assets of Acton including the related goodwill, due to further evaluation of unindemnified liabilities.
Additionally, as discussed in further detail in Note 2, the Company acquired Tyson in January 2018. A preliminary valuation of the acquired net assets of Tyson resulted in the recognition of $3.4 million of goodwill in the Modular - US segment, which the Company expects will be deductible for tax purposes. During the three and six months ended June 30, 2018, the Company made a $0.4 million adjustment to the preliminary valuation of the acquired net assets of Tyson, including the related goodwill, due to further evaluation of rental equipment and property, plant and equipment, and unindemnified liabilities.

12


NOTE 6 - Debt
The carrying value of debt outstanding at at the respective balance sheet dates consisted of the following:
(in thousands, except rates)
Interest rate
 
Year of maturity
 
June 30, 2018
 
December 31, 2017
Senior secured notes
7.875%
 
2022
 
$
291,456

 
$
290,687

US ABL Facility
Varies
 
2022
 
356,759

 
297,323

Canadian ABL Facility (a)
Varies
 
2022
 

 

Capital lease and other financing obligations
 
 
 
 
38,309

 
38,736

Total debt
 
 
 
 
686,524

 
626,746

Less: current portion of long-term debt
 
 
 
 
(1,883
)
 
(1,881
)
Total long-term debt
 
 
 
 
$
684,641

 
$
624,865

(a)
At June 30, 2018, the Company had no outstanding borrowings on the Canadian ABL Facility and $1.5 million of related debt issuance costs. 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.
ABL Facilities
Former Algeco Group Revolver
Prior to the Business Combination, WSII depended on the Algeco Group for financing, which centrally managed all treasury 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 of the equivalent of $1.355 billion. The maximum borrowing availability to WSII in US dollars and Canadian dollars (“CAD”) was $760.0 million and $175.0 million, respectively.
Interest expense of $8.3 million and $14.5 million million related to the Algeco Group Revolver was included in interest expense for the three and six months ended June 30, 2017.
ABL Facility
On November 29, 2017, WS Holdings, WSII and certain of its subsidiaries entered into an ABL credit agreement (the “ABL Facility”) that provides a senior secured revolving credit facility in the aggregate principal amount of up to $600.0 million. The ABL Facility, which matures on May 29, 2022, consists of (i) a $530.0 million asset-backed revolving credit facility (the “US ABL Facility”) for WSII and certain of its domestic subsidiaries (the “US Borrowers”), (ii) a $70.0 million asset-based revolving credit facility (the “Canadian ABL Facility”) for Williams Scotsman of Canada, Inc. (the “Canadian Borrower,” 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 $300.0 million, subject to the satisfaction of customary conditions, 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. The applicable margin is fixed at 2.50% for LIBOR borrowings and 1.50% for base rate borrowings up until March 31, 2018. 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 June 30, 2018, the weighted average interest rate for borrowings under the ABL Facility was 4.58%.
Borrowing availability under the US ABL Facility and the Canadian ABL Facility is equal to the lesser of (i) with respect to US Borrowers, $530.0 million and the US Borrowing Base (defined below) (the “US Line Cap”), and (ii) with respect to the Canadian Borrower, $70.0 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% 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) equal 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.
At June 30, 2018, the Line Cap was $600.0 million and the Borrowers had $219.6 million of available borrowing capacity under the ABL Facility, including $153.1 million under the US ABL Facility and $66.5 million under the Canadian ABL Facility. At December 31, 2017, the Line Cap was $600.0 million and the Borrowers had $281.1 million of available borrowing capacity under the ABL Facility, including $211.1 million under the US ABL Facility and $70.0 million under the Canadian ABL Facility.

13


Borrowing capacity under the US ABL Facility is made available for up to $60.0 million of standby letters of credit and up to $50.0 million of swingline loans, and borrowing capacity under the Canadian ABL Facility is made available for up to $30.0 million of standby letters of credit, and $25.0 million of swingline loans. Letters of credit and bank guarantees carried fees of 2.625% at June 30, 2018 and December 31, 2017, respectively. The Company had issued $8.9 million of standby letters of credit under the ABL Facility at June 30, 2018 and December 31, 2017.
The ABL Facility requires the Borrowers to maintain a (i) minimum fixed charge coverage ratio of 1.00:1.00 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) $50.0 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 June 30, 2018.
The Company had $368.0 million and $310.0 million in outstanding principal under the ABL Facility at June 30, 2018 and December 31, 2017, respectively. Debt issuance costs and discounts of $11.2 million and $12.7 million are included in the carrying value of debt at June 30, 2018 and December 31, 2017, respectively.
In July 2018, the Company and certain of its subsidiaries entered into amendments to the ABL Facility that will, among other things, (i) permit the ModSpace Acquisition (as defined in Note 16) and the financing thereof, (ii) increase the ABL Facility limit to $1.35 billion in the aggregate, and (iii) increase certain thresholds, basket sizes and default and notice triggers set forth in the ABL Facility to account for the increased size of the Company’s business following the ModSpace Acquisition. The amendments will become effective upon the closing of the ModSpace Acquisition. See Note 16 for additional information on the amendments.
Senior Secured Notes
WSII has $300.0 million aggregate principal amount of 7.875% senior secured notes due December 15, 2022 (the “Notes”) under an indenture dated November 29, 2017, which was entered into by and among WSII, the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee and as collateral agent. Interest is payable semi-annually on June 15 and December 15, beginning June 15, 2018. For the three and six months ended June 30, 2018, the Company incurred $5.9 million and $11.7 million, respectively, of interest expense related to the Notes.
Before December 15, 2019, WSII may redeem the Notes at a redemption price equal to 100% of the principal amount, plus a customary make whole premium for the 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 any Note on any applicable redemption date, as calculated by the Company, is the greater of (i) 100% of the then outstanding principal amount of the Note; 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 Note 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 Note.
Before December 15, 2019, WSII may redeem up to 40% of the aggregate principal amount of the Notes at a price equal to 107.875% of the principal amount of the 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 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 Notes.
On or after December 15, 2019, WSII, at its option, may redeem the 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 Note holders 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 twelve month period beginning on December 15 of each of the years set forth below:

14


Year
Redemption Price
2019
103.938
%
2020
101.969
%
2021 and thereafter
100.000
%
The 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 WSC or any restricted subsidiary of WSII; selling, leasing or transferring any of its property or assets to WSC 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 June 30, 2018 and December 31, 2017.
Unamortized debt issuance costs pertaining to the Notes was $8.5 million and $9.3 million as of June 30, 2018 and December 31, 2017, respectively.
Capital Lease and Other Financing Obligations
The Company’s capital lease and financing obligations primarily consisted of $38.1 million and $38.5 million under sale-leaseback transactions and $0.2 million and $0.2 million of capital leases at June 30, 2018 and December 31, 2017, respectively. The Company’s capital lease and financing obligations are presented net of $1.7 million and $1.8 million of debt issuance costs at June 30, 2018 and December 31, 2017, respectively. The Company’s capital leases primarily relate to real estate, equipment and vehicles and have interest rates ranging from 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
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 $16.6 million and $31.3 million associated with these notes due to affiliates is reflected in interest expense in the consolidated statement of operations for the three and six months ended June 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 six months ended June 30, 2017, the Company recognized $3.5 million and $6.1 million, respectively, of interest income related to the loans.
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 six months ended June 30, 2018.

15


NOTE 7 – Equity
Accumulated Other Comprehensive Loss    
The changes in accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2018 and 2017 were as follows:
(in thousands)
 
Foreign Currency Translation Adjustment
 
Total
Balance at December 31, 2017
 
$
(49,497
)
 
$
(49,497
)
Total other comprehensive loss
 
(2,380
)
 
(2,380
)
Reclassifications to accumulated deficit(a)
 
(2,540
)
 
(2,540
)
Balance at June 30, 2018
 
$
(54,417
)
 
$
(54,417
)
(in thousands)
 
Foreign Currency Translation Adjustment
 
Total
Balance at December 31, 2016
 
$
(56,928
)
 
$
(56,928
)
Total other comprehensive loss
 
5,783

 
5,783

Balance at June 30, 2017
 
$
(51,145
)
 
$
(51,145
)
(a) In the 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) for the three and six months ended June 30, 2018 and 2017.
Non-Controlling Interest    
The changes in the non-controlling interest for the six months ended June 30, 2018 were as follows:
(in thousands)
 
Total
Balance at December 31, 2017
 
$
48,931

Net loss attributable to non-controlling interest
 
(505
)
Other comprehensive loss
 
(269
)
Balance at June 30, 2018
 
$
48,157

NOTE 8 – Income Taxes
The Company recorded income tax benefit of approximately $6.6 million and $7.1 million for the three and six months ended June 30, 2018, respectively, and $5.3 million and $10.1 million for the same periods of 2017.
The Company’s effective tax rate (“ETR”) for the three months ended June 30, 2018 and 2017 was 106.1% and 24.3%, respectively and 52.3% and 24.8% for the six months ended June 30, 2018 and 2017, respectively. The Company’s ETR for the three and six months ended June 30, 2018 is materially driven by discrete items, of which a $4.2 million tax benefit relates to a reduction in our net state deferred tax liability driven by the Maryland apportionment rule that was enacted in the second quarter.
The Company’s annual ETR used to determine the tax benefit for the quarter of approximately 19.8% is lower than the US statutory rate of 21.0% due to: (1) mix of earnings between tax paying components, notably forecasted losses in Canada which result in higher tax benefit due to a higher statutory tax rate, (2) reduction to the deferred tax liability established for the book over tax basis difference for our investment in our Canadian subsidiary and offset by (3) a partial valuation allowance due to limitations on the deductibility of interest expense estimated for the current year. Due to the foregoing, changes to our forecast of pre-tax book income and the mix of earnings between tax paying components that may occur due to changes in our business in subsequent periods may have a significant effect on our annual effective tax rate and consequently, tax expense (benefit) recorded in subsequent interim periods.
In addition, the Company also recognized tax benefit of $0.2 million and $0.4 million for the three and six months ended June 30, 2018, related to foreign currency losses. For the three and six months ended June 30, 2017, the Company recognized tax expense of $2.5 million and $3.1 million related to foreign currency gains. The Company also adjusted the provisional amounts

16


for the impacts of the Tax Act under SAB 118 reported in its financial statements for the year ended December 31, 2017, with an adjustment in the current quarter due to a change in state law for a tax benefit of $0.3 million which is incremental to the $0.3 million benefit recorded in the first quarter. As noted above, the Company recorded a discrete benefit of $4.2 million in the second quarter of 2018 to reduce its net state deferred tax liability primarily related to the enactment of an apportionment rule change in Maryland.
NOTE 9 - 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.
The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy:
 
June 30, 2018
December 31, 2017
 
Carrying Amount
Fair Value
Carrying Amount
Fair Value
(in thousands)
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Financial liabilities not measured at fair value
 
 
 
 
 
 
 
 
ABL Facility (see Note 6)
$
356,759

$

$
368,000

$

$
297,323

$

$
310,000

$

Notes (see Note 6)
291,456


312,567


290,687


310,410


Total
$
648,215

$

$
680,567

$

$
588,010

$

$
620,410

$

There were no transfers of financial instruments between the three levels of the fair value hierarchy during the three and six months ended June 30, 2018 and 2017. The fair value of the Company’s ABL Facility is primarily based upon observable market data such as market interest rates. The fair value of the Company’s Notes is based on their last trading price at the end of each period obtained from a third party.
NOTE 10 - Restructuring
The Company incurred costs associated with restructuring plans designed to streamline operations and reduce costs of $0.4 million and $0.7 million and $1.1 million and $1.0 million net of reversals, during the three and six months ended June 30, 2018 and 2017. The following is a summary of the activity in the Company’s restructuring accruals for the six months ended June 30, 2018 and 2017:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands)
2018
 
2017
 
2018
 
2017
Balance at beginning of the period
$
755

 
$
1,726

 
$
227

 
$
1,793

Charges during the period
449

 
684

 
1,077

 
968

Cash payments during the period
(234
)
 
(286
)
 
(330
)
 
(639
)
Currency
(3
)
 
6

 
(7
)
 
8

Balance at end of period
$
967

 
$
2,130

 
$
967

 
$
2,130

The restructuring charges for the three and six months ended June 30, 2018 relate primarily to employee termination costs in connection with the integration of Acton and Tyson. As part of the restructuring 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 date of communication of termination to the employee to the actual date of termination. The Company anticipates that the remaining actions contemplated under the $1.0 million accrual as of June 30, 2018, will be substantially completed by the end of the fourth quarter of 2018.

17


The restructuring charges for the three and six months ended June 30, 2017 related to corporate employee termination costs incurred as part of the Algeco Group.
Segments
The $0.4 million and $1.1 million of restructuring charges for the three and six months ended June 30, 2018 all pertain to the Modular - US segment. The $0.7 million and $1.0 million of restructuring charges for the three and six months ended June 30, 2017 all pertain to Corporate and other.
NOTE 11 - Stock-Based Compensation
On November 16, 2017, the Company’s shareholders approved a long-term incentive award plan (the “Plan”). The Plan is administered by the Compensation Committee of 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, restricted stock awards (“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 six months ended June 30, 2018, 27,675 RSAs, 921,730 RSUs and 589,257 stock option awards were granted under the Plan, while 35,050 RSUs were forfeited during the three and six months ended June 30, 2018.
Stock-based payments to employees include grants of 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 our 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 the 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 rate 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 June 30, 2018, none of the granted RSAs, RSUs or stock options had vested.
Restricted Stock Awards
The following table summarizes the Company’s RSA activity for the six months ended June 30, 2018:
 
Number of Shares
 
Weighted-Average Grant Date Fair Value
Balance, December 31, 2017

 
$

Granted
27,675

 
13.60

Forfeited

 

Balance, June 30, 2018
27,675

 
$
13.60

Compensation expense for RSAs recognized in SG&A on the condensed consolidated statements of operations was $0.1 million and $0.1 million for the three and six months ended June 30, 2018, respectively. At June 30, 2018, unrecognized compensation cost related to RSAs totaled $0.3 million and is expected to be recognized over the remaining nine-month period.
Restricted Stock Units
The following table summarizes the Company's RSU award activity for the six months ended June 30, 2018:
 
Number of Shares
 
Weighted-Average Grant Date Fair Value
Balance, December 31, 2017

 
$

Granted
921,730

 
13.60

Forfeited
(35,050
)
 
13.60

Balance, June 30, 2018
886,680

 
$
13.60


18


Compensation expense for RSUs recognized in SG&A on the condensed consolidated statements of operations was $0.6 million and $0.8 million for the three and six months ended June 30, 2018, respectively, with associated tax benefits of $0.2 million and $0.2 million for the three and six months ended June 30, 2018, respectively. At June 30, 2018, unrecognized compensation cost related to RSUs totaled $11.2 million and is expected to be recognized over a remaining period of 3.75 years.
Stock Option Awards
The following table summarizes the Company's stock option activity for the six months ended June 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, June 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 $0.2 million for the three and six months ended June 30, 2018, respectively, with associated tax benefits of $0.0 million and $0.1 million for the three and six months ended June 30, 2018, respectively. At June 30, 2018, unrecognized compensation cost related to stock option awards totaled $3.0 million and is expected to be recognized over a remaining period of 3.75 years.
The fair value of each option award at grant date was estimated using the Black-Scholes option-pricing model with the
following assumptions:
 
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

NOTE 12 - 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.
As discussed in more detail in Note 2, the Merger Agreement may be terminated by the Company or ModSpace under certain circumstances. If the ModSpace Acquisition does not close due to the occurrence of certain regulatory events, we may be required to pay to ModSpace a $35.0 million termination fee.
NOTE 13 - Segment Reporting
The Company historically has operated in two principal lines of 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.
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 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.

19


The Company 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.
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, 2018 and 2017, respectively:
 
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 installation
27,390

 
4,023

 
31,413

Sales:
 
 
 
 
 
New units
4,149

 
1,087

 
5,236

Rental units
2,309

 
126

 
2,435

Total Revenues
$
124,813

 
$
15,520

 
$
140,333

 
 
 
 
 
 
Costs:
 
 
 
 
 
Cost of leasing and services:
 
 
 
 
 
Modular leasing
$
24,505

 
$
2,624

 
$
27,129

Modular delivery and installation
26,310

 
3,817

 
30,127

Cost of sales:
 
 
 
 
 
New units
2,876

 
828

 
3,704

Rental units
1,164

 
99

 
1,263

Depreciation of rental equipment
20,217

 
3,253

 
23,470

Gross profit
$
49,741

 
$
4,899

 
$
54,640

Adjusted EBITDA
$
38,104

 
$
3,812

 
$
41,916

Other selected data:
 
 
 
 
 
Selling, general and administrative expense
$
43,325

 
$
4,409

 
$
47,734

Other depreciation and amortization
$
1,354

 
$
216

 
$
1,570

Capital expenditures for rental fleet
$
30,931

 
$
1,748

 
$
32,679


20


 
Three Months Ended June 30, 2017
(in thousands)
Modular - US
 
Modular - Other North America
 
Corporate & Other
 
Total
Revenues:
 
 
 
 
 
 
 
Leasing and services revenue:
 
 
 
 
 
 
 
Modular leasing
$
64,854

 
$
8,242

 
$
(142
)
 
$
72,954

Modular delivery and installation
20,970

 
1,979

 

 
22,949

Sales:
 
 
 
 
 
 
 
New units
8,550

 
846

 

 
9,396

Rental units
3,835

 
943

 

 
4,778

Total Revenues
$
98,209

 
$
12,010

 
$
(142
)
 
$
110,077

 
 
 
 
 
 
 
 
Costs:
 
 
 
 
 
 
 
Cost of leasing and services:
 
 
 
 
 
 
 
Modular leasing
$
19,338

 
$
2,002

 
$

 
$
21,340

Modular delivery and installation
20,393

 
1,946

 

 
22,339

Cost of sales:
 
 
 
 
 
 

New units
6,072

 
696

 
(2
)
 
6,766

Rental units
1,923

 
652

 

 
2,575

Depreciation of rental equipment
14,529

 
2,945

 

 
17,474

Gross profit (loss)
$
35,954

 
$
3,769

 
$
(140
)
 
$
39,583

Adjusted EBITDA
$
26,329

 
$
2,506

 
$
(2,588
)
 
$
26,247

Other selected data:
 
 
 
 
 
 
 
Selling, general and administrative expense
$
24,181

 
$
4,223

 
$
3,248

 
$
31,652

Other depreciation and amortization
$
1,301

 
$
244

 
$
345

 
$
1,890

Capital expenditures for rental fleet
$
25,909

 
$
1,716

 
$

 
$
27,625


21


 
Six Months Ended June 30, 2018
(in thousands)
Modular - US
 
Modular - Other North America
 
Total
Revenues:
 
 
 
 
 
Leasing and services revenue:
 
 
 
 
 
Modular leasing
$
178,913

 
$
19,598

 
$
198,511

Modular delivery and installation
51,360

 
6,303

 
57,663

Sales:
 
 
 
 
 
New units
10,964

 
1,700

 
12,664

Rental units
5,663

 
583

 
6,246

Total Revenues
$
246,900

 
$
28,184

 
$
275,084

 
 
 
 
 
 
Costs:
 
 
 
 
 
Cost of leasing and services:
 
 
 
 
 
Modular leasing
$
49,562

 
$
4,729

 
$
54,291

Modular delivery and installation
49,250

 
6,398

 
55,648

Cost of sales:
 
 
 
 

New units
7,442

 
1,249

 
8,691

Rental units
3,193

 
385

 
3,578

Depreciation of rental equipment
40,904

 
6,411

 
47,315

Gross profit
$
96,549

 
$
9,012

 
$
105,561

Adjusted EBITDA
$
70,716

 
$
6,692

 
$
77,408

Other selected data:
 
 
 
 
 
Selling, general and administrative expense
$
84,146

 
$
8,802

 
$
92,948

Other depreciation and amortization
$
3,559

 
$
447

 
$
4,006

Capital expenditures for rental fleet
$
61,455

 
$
3,308

 
$
64,763


22


 
Six Months Ended June 30, 2017
(in thousands)
Modular - US
 
Modular - Other North America
 
Corporate & Other
 
Total
Revenues:
 
 
 
 
 
 
 
Leasing and services revenue:
 
 
 
 
 
 
 
Modular leasing
$
126,032

 
$
16,204

 
$
(295
)
 
$
141,941

Modular delivery and installation
38,324

 
3,629

 

 
41,953

Sales:
 
 
 
 
 
 
 
New units
12,556

 
2,326

 

 
14,882

Rental units
8,712

 
1,910

 

 
10,622

Total Revenues
$
185,624

 
$
24,069

 
$
(295
)
 
$
209,398

 
 
 
 
 
 
 
 
Costs:
 
 
 
 
 
 
 
Cost of leasing and services:
 
 
 
 
 
 
 
Modular leasing
$
36,713

 
$
3,729

 
$

 
$
40,442

Modular delivery and installation
37,067

 
3,405

 

 
40,472

Cost of sales:
 
 
 
 
 
 

New units
8,685

 
1,813

 
(12
)
 
10,486

Rental units
5,036

 
1,247

 

 
6,283

Depreciation of rental equipment
28,354

 
5,840

 

 
34,194

Gross profit (loss)
$
69,769

 
$
8,035

 
$
(283
)
 
$
77,521

Adjusted EBITDA
$
50,012

 
$
5,625

 
$
(7,444
)
 
$
48,193

Other selected data:
 
 
 
 
 
 
 
Selling, general and administrative expense
$
48,127

 
$
8,277

 
$
8,009

 
$
64,413

Other depreciation and amortization
$
2,639

 
$
491

 
$
701

 
$
3,831

Capital expenditures for rental fleet
$
47,958

 
$
2,344

 
$

 
$
50,302

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 six months ended June 30, 2018 and 2017, respectively:
 
Three Months Ended June 30, 2018
(in thousands)
Modular - US
 
Modular - Other North America
 
Total
Loss from continuing operations before income taxes
$
(5,533
)
 
$
(733
)
 
$
(6,266
)
Interest expense, net
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 fees
4,049

 
69

 
4,118

Other (income) expense
(48
)
 
57

 
9

Adjusted EBITDA
$
38,104

 
$
3,812

 
$
41,916


23


 
Three Months Ended June 30, 2017
(in thousands)
Modular - US
 
Modular - Other North America
 
Corporate & Other
 
Total
Loss from continuing operations before income taxes
$
320

 
$
(1,442
)
 
$
(13,883
)
 
$
(15,005
)
Interest expense, net
15,953

 
1,038

 
9,407

 
26,398

Depreciation and amortization
15,830

 
3,189

 
345

 
19,364

Currency gains, net
(5,800
)
 
(294
)
 
(403
)
 
(6,497
)
Restructuring costs

 

 
684

 
684

Transaction fees
46

 

 
730

 
776

Other expense
(20
)
 
15

 
532

 
527

Adjusted EBITDA
$
26,329

 
$
2,506

 
$
(2,588
)
 
$
26,247

 
Six Months Ended June 30, 2018
(in thousands)
Modular - US
 
Modular - Other North America
 
Total
Loss from continuing operations before income taxes
$
(10,841
)
 
$
(2,680
)
 
$
(13,521
)
Interest expense, net
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 fees
4,049

 
69

 
4,118

Other expense
294

 
59

 
353

Adjusted EBITDA
$
70,716

 
$
6,692

 
$
77,408

 
Six Months Ended June 30, 2017
(in thousands)
Modular - US
 
Modular - Other North America
 
Corporate & Other
 
Total
Loss from continuing operations before income taxes
$
(5,210
)
 
$
(2,458
)
 
$
(24,590
)
 
$
(32,258
)
Interest expense, net
31,512

 
2,216

 
14,747

 
48,475

Depreciation and amortization
30,993

 
6,331

 
701

 
38,025

Currency gains, net
(7,399
)
 
(481
)
 
(619
)
 
(8,499
)
Restructuring costs

 

 
968

 
968

Transaction fees
46

 

 
816

 
862

Other expense
70

 
17

 
533

 
620

Adjusted EBITDA
$
50,012

 
$
5,625

 
$
(7,444
)
 
$
48,193

NOTE 14 - Income (Loss) Per Share
Basic income (loss) per share (“EPS”) is calculated by dividing net income (loss) attributable to WSC by the weighted average number of Class A common stock shares outstanding during the period. Concurrently with the Business Combination,12,425,000 of Class A shares were placed into escrow and were not entitled to vote or participate in the economic rewards available to the other Class A shareholders. On January 19, 2018, 6,212,500 shares of WSC Class A common stock were released from the escrow account. The remaining 6,212,500 shares of WSC Class A common stock in escrow are not included in the LPS calculation. In July 2018, certain contingencies were satisfied that under the earnout agreement governing the release of the escrowed shares, will result in the release of the remaining escrowed shares to Double Eagle, Harry E. Sloan and Sapphire upon the delivery of release instructions to the escrow agent.

24


Class B common shares have no rights to dividends or distributions made by the Company and, in turn, are excluded from the LPS calculation.
Diluted EPS is computed similarly to basic net income (loss) per share, 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 and restricted stock units, representing 589,257 and 886,680 shares of Class A common stock outstanding for the three and six months ended June 30, 2018, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.
The following table is a reconciliation of net income (loss) and weighted-average shares of common stock outstanding for purposes of calculating basic and diluted income (loss) per share for the three and six months ended June 30, 2018 and 2017:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands, except per share numbers)
2018
 
2017
 
2018
 
2017
Numerator
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
379

 
$
(9,736
)
 
$
(6,456
)
 
$
(22,120
)
Income from discontinued operations, net of tax

 
3,840

 

 
6,045

Net income (loss)
379

 
(5,896
)
 
(6,456
)
 
(16,075
)
Net income (loss) attributable to non-controlling interest, net of tax
143

 

 
(505
)
 

Total income (loss) attributable to WSC
$
236

 
$
(5,896
)
 
$
(5,951
)
 
$
(16,075
)
 
 
 
 
 
 
 
 
Denominator
 
 
 
 
 
 
 
Average shares outstanding - basic
78,432,274

 
14,545,833

 
77,814,456

 
14,545,833

Average effect of dilutive securities:

 



 

Warrants
3,745,030

 

 

 

Restricted stock awards
2,782

 

 

 

Average shares outstanding - diluted
$
82,180,086

 
$
14,545,833

 
$
77,814,456

 
$
14,545,833

 
 
 
 
 
 
 
 
Income (loss) per share - basic
 
 
 
 
 
 
 
Continuing operations - basic
$
0.00

 
$
(0.67
)
 
$
(0.08
)
 
$
(1.53
)
Discontinued operations - basic
$
0.00

 
$
0.26

 
$
0.00

 
$
0.42

Net income (loss) per share - basic
$
0.00

 
$
(0.41
)
 
$
(0.08
)
 
$
(1.11
)
 
 
 
 
 
 
 
 
Income (loss) per share - diluted
 
 
 
 
 
 
 
Continuing operations - basic
$
0.00

 
$
(0.67
)

$
(0.08
)
 
$
(1.53
)
Discontinued operations - basic
$
0.00

 
$
0.26


$
0.00

 
$
0.42

Net income (loss) per share - basic
$
0.00

 
$
(0.41
)

$
(0.08
)
 
$
(1.11
)
NOTE 15