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

wsc-20200331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________

Commission File Number:001-37552
https://cdn.kscope.io/7dbbde3d6158e8c1a022738cf3ed3be2-wsc-20200331_g1.jpg
WILLSCOT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware82-3430194
(State or other jurisdiction of incorporation)(I.R.S. Employer Identification No.)
901 S. Bond Street, #600
Baltimore, Maryland 21231
(Address, including zip code, of principal executive offices)
(410) 931-6000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, par value $0.0001 per shareWSC
The Nasdaq Capital Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No
Shares of Class A common stock, par value $0.0001 per share, outstanding: 110,555,295 shares at May 1, 2020.
Shares of Class B common stock, par value $0.0001 per share, outstanding: 8,024,419 shares at May 1, 2020.


1



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

PART I Financial Information

PART I
ITEM 1. Financial Statements

2



WillScot Corporation
Condensed Consolidated Balance Sheets
(in thousands, except share data)
March 31, 2020 (unaudited)December 31, 2019
Assets
Cash and cash equivalents$4,642  $3,045  
Trade receivables, net of allowances for doubtful accounts at March 31, 2020 and December 31, 2019 of $16,471 and $15,828, respectively
241,142  247,596  
Inventories15,006  15,387  
Prepaid expenses and other current assets20,580  14,621  
Assets held for sale8,543  11,939  
Total current assets289,913  292,588  
Rental equipment, net1,912,995  1,944,436  
Property, plant and equipment, net143,864  147,689  
Operating lease assets148,152  146,698  
Goodwill232,796  235,177  
Intangible assets, net126,375  126,625  
Other non-current assets3,642  4,436  
Total long-term assets2,567,824  2,605,061  
Total assets$2,857,737  $2,897,649  
Liabilities and equity
Accounts payable$102,570  $109,926  
Accrued liabilities82,853  82,355  
Accrued interest12,479  16,020  
Deferred revenue and customer deposits85,936  82,978  
Operating lease liabilities - current29,446  29,133  
Total current liabilities313,284  320,412  
Long-term debt1,625,772  1,632,589  
Deferred tax liabilities67,017  70,693  
Deferred revenue and customer deposits12,666  12,342  
Operating lease liabilities - non-current119,322  118,429  
Other non-current liabilities38,603  34,229  
Long-term liabilities1,863,380  1,868,282  
Total liabilities2,176,664  2,188,694  
Commitments and contingencies (see Note 15)
Class A common stock: $0.0001 par, 400,000,000 shares authorized at March 31, 2020 and December 31, 2019; 110,555,295 and 108,818,854 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
11  11  
Class B common stock: $0.0001 par, 100,000,000 shares authorized at March 31, 2020 and December 31, 2019; 8,024,419 shares issued and outstanding at March 31, 2020 and December 31, 2019
1  1  
Additional paid-in-capital2,402,195  2,396,501  
Accumulated other comprehensive loss(89,974) (62,775) 
Accumulated deficit(1,692,917) (1,689,373) 
Total shareholders' equity619,316  644,365  
Non-controlling interest61,757  64,590  
Total equity681,073  708,955  
Total liabilities and equity$2,857,737  $2,897,649  
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
March 31,
(in thousands, except share and per share data)
20202019
Revenues:
Leasing and services revenue:
Modular leasing$188,352  $177,292  
Modular delivery and installation51,070  50,000  
Sales revenue:
New units9,613  14,841  
Rental units6,786  11,552  
Total revenues255,821  253,685  
Costs:
Costs of leasing and services:
Modular leasing49,809  47,235  
Modular delivery and installation43,865  43,343  
Costs of sales:
New units6,203  10,878  
Rental units3,806  7,795  
Depreciation of rental equipment45,948  41,103  
Gross Profit106,190  103,331  
Expenses:
Selling, general and administrative74,968  73,319  
Other depreciation and amortization3,074  2,784  
Impairment losses on long-lived assets  2,290  
Lease impairment expense and other related charges1,661  3,085  
Restructuring costs(60) 1,656  
Currency losses (gains), net898  (316) 
Other expense (income), net276  (951) 
Operating income25,373  21,464  
Interest expense28,257  31,115  
Loss from operations before income tax(2,884) (9,651) 
Income tax expense790  378  
Net loss(3,674) (10,029) 
Net loss attributable to non-controlling interest, net of tax(130) (758) 
Net loss attributable to WillScot$(3,544) $(9,271) 
Net loss per share attributable to WillScot - basic and diluted$(0.03) $(0.09) 
Weighted average shares - basic and diluted109,656,646  108,523,269  
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
March 31,
(in thousands)
20202019
Net loss$(3,674) $(10,029) 
Other comprehensive (loss) income:
Foreign currency translation adjustment, net of income tax expense of $0 for the three months ended March 31, 2020 and 2019
(21,144) 4,115  
Net loss on derivatives, net of income tax benefit of $0 and $673 for the three months ended March 31, 2020 and 2019, respectively
(8,758) (2,201) 
Comprehensive loss(33,576) (8,115) 
Comprehensive loss attributable to non-controlling interest(2,833) (592) 
Total comprehensive loss attributable to WillScot$(30,743) $(7,523) 
See the accompanying notes which are an integral part of these condensed consolidated financial statements.
5



WillScot Corporation
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
Three Months Ended March 31, 2020
Class A Common StockClass B Common StockAdditional Paid-in-CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Shareholders' EquityNon-Controlling InterestTotal Equity
(in thousands)SharesAmountSharesAmount
Balance at December 31, 2019108,819  $11  8,024  $1  $2,396,501  $(62,775) $(1,689,373) $644,365  $64,590  $708,955  
Net loss—  —  —  —  —  —  (3,544) (3,544) (130) (3,674) 
Other comprehensive loss—  —  —  —  —  (27,199) —  (27,199) (2,703) (29,902) 
Stock-based compensation239  —  —  —  1,114  —  —  1,114  —  1,114  
Common stock issued in warrant exercises and redemptions1,497    —  —  4,580  —  —  4,580  —  4,580  
Balance at March 31, 2020110,555  $11  8,024  $1  $2,402,195  $(89,974) $(1,692,917) $619,316  $61,757  $681,073  

Three Months Ended March 31, 2019
Class A Common StockClass B Common StockAdditional Paid-in-CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Shareholders' EquityNon-Controlling InterestTotal Equity
(in thousands)SharesAmountSharesAmount
Balance at December 31, 2018108,509  $11  8,024  $1  $2,389,548  $(68,026) $(1,683,319) $638,215  $63,982  $702,197  
Net loss—  —  —  —  —  —  (9,271) (9,271) (758) (10,029) 
Other comprehensive income—  —  —  —  —  1,748  —  1,748  166  1,914  
Adoption of ASC 842—  —  —  —  —  —  4,723  4,723  503  5,226  
Adoption of ASC 606—  —  —  —  —  —  345  345  —  345  
Stock-based compensation184  —  —  —  636  —  —  636  —  636  
Balance at March 31, 2019108,693  $11  8,024  $1  $2,390,184  $(66,278) $(1,687,522) $636,396  $63,893  $700,289  

See the accompanying notes which are an integral part of these condensed consolidated financial statements.
6



WillScot Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
(in thousands)
20202019
Operating activities:
Net loss$(3,674) $(10,029) 
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization49,764  44,346  
Provision for doubtful accounts3,392  2,926  
Impairment losses on long-lived assets  2,290  
Impairment on right of use assets  2,439  
Gain on sale of rental equipment and other property, plant and equipment(2,980) (3,888) 
Amortization of debt discounts and debt issuance costs2,896  2,792  
Stock-based compensation expense1,787  1,290  
Deferred income tax benefit684  378  
Unrealized currency (gains) losses891  (292) 
Changes in operating assets and liabilities
Trade receivables636  (26,779) 
Inventories281  (1,185) 
Prepaid and other assets(5,701) (171) 
Operating lease assets and liabilities(280) 851  
Accrued interest (3,540) (5,568) 
Accounts payable and other accrued liabilities(9,760) 1,650  
Deferred revenue and customer deposits3,952  4,206  
Net cash provided by operating activities38,348  15,256  
Investing activities:
Proceeds from sale of rental equipment6,786  11,601  
Purchase of rental equipment and refurbishments(39,648) (51,873) 
Proceeds from the sale of property, plant and equipment3,840  87  
Purchase of property, plant and equipment(1,518) (1,629) 
Net cash used in investing activities(30,540) (41,814) 
Financing activities:
Receipts from issuance of common stock4,580    
Receipts from borrowings35,793  39,264  
Payment of financing costs  (83) 
Repayment of borrowings(45,282) (8,201) 
Principal payments on capital lease obligations  (32) 
Withholding taxes paid on behalf of employees on net settled stock-based awards(673) (654) 
Net cash (used in) provided by financing activities(5,582) 30,294  
Effect of exchange rate changes on cash and cash equivalents(629) 85  
Net change in cash and cash equivalents1,597  3,821  
Cash and cash equivalents at the beginning of the period3,045  8,958  
Cash and cash equivalents at the end of the period$4,642  $12,779  
Supplemental cash flow information:
Interest paid$27,384  $33,468  
Income taxes paid (refunded), net$4  $(748) 
Capital expenditures accrued or payable$22,345  $23,147  
See the accompanying notes which are an integral part of these condensed consolidated financial statements.
7



WillScot Corporation
Notes to the Condensed Consolidated Financial Statements (Unaudited)
NOTE 1 - Summary of Significant Accounting Policies
Organization and Nature of Operations
WillScot Corporation (“WillScot” and, together with its subsidiaries, the “Company”) is a leading provider of modular space and portable storage solutions in the United States (“US”), Canada and Mexico. The Company leases, sells, delivers and installs mobile offices, modular buildings and storage products through an integrated network of branch locations that spans North America.
WillScot was incorporated as a Cayman Islands exempt company under the name Double Eagle Acquisition Corporation ("Double Eagle") on June 26, 2015. Prior to November 29, 2017, Double Eagle was a Nasdaq-listed special purpose acquisition company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination. On November 29, 2017, Double Eagle indirectly acquired Williams Scotsman International, Inc. (“WSII”) from Algeco Scotsman Global S.à r.l. (together with its subsidiaries, the “Algeco Group”), which was majority owned by an investment fund managed by TDR Capital LLP ("TDR Capital"). As part of the transaction, Double Eagle domesticated to Delaware and changed its name to WillScot Corporation.
WillScot, whose Class A common shares are listed on the Nasdaq Capital Market (Nasdaq: WSC), serves as the holding company for the Williams Scotsman family of companies. All of the Company’s assets and operations are owned through Williams Scotsman Holdings Corp. (“WS Holdings”). WillScot operates and owns 91.0% of WS Holdings, and Sapphire Holding S.à r.l. (“Sapphire”), an affiliate of TDR Capital, owns the remaining 9.0%.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Quarterly Report on Form 10-Q and do not include all the information and notes required by accounting principles generally accepted in the US (“GAAP”) for complete financial statements. The accompanying unaudited condensed consolidated financial statements comprise the financial statements of WillScot and its subsidiaries that it controls due to ownership of a majority voting interest and contain all adjustments, which are of a normal and recurring nature, necessary to present fairly the financial position, the results of operations and cash flows for the interim periods presented.
On December 31, 2019, the 2019 financial statement amounts were adjusted for the adoption Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) ("ASC 842"), effective retroactively to January 1, 2019, and therefore may not agree to the Quarterly Reports filed on Form 10-Q for the respective periods of 2019.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. All intercompany balances and transactions are eliminated.
The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and notes included in WillScot's Annual Report on Form 10-K for the year ended December 31, 2019.
Recently Issued and Adopted Accounting Standards
Recently Issued Accounting Standards
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848), which is elective, and provides for optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The Company is currently evaluating the impact of reference rate reform and potential impact of adoption of these elective practical expedients on its condensed consolidated financial statements and will consider the impact of adoption during its analysis.
Recently Adopted Accounting Standards
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) ("ASC 326"), which prescribes that financial assets (or a group of financial assets) should be measured at amortized cost basis to be presented at the net amount expected to be collected based on relevant historical information from historical experience, adjusted for current conditions and reasonable and supportable forecasts that affect collectibility. Credit losses relating to these financial assets are recorded through an allowance for credit losses. The Company adopted ASC 326 effective January 1, 2020. The effect of this guidance was immaterial to the Company's consolidated results of operations, financial position and cash flows.
Impact of COVID-19
In December 2019, a novel strain of coronavirus, COVID-19, was first detected in Wuhan, China, and it has since spread to other regions, including the United States. On March 11, 2020, the World Health Organization declared that the rapidly spreading COVID-19 outbreak was a global pandemic. In response to the pandemic, many governments around the world are implementing a variety of measures to reduce the spread of COVID-19, including travel restrictions and bans, instructions to residents to practice social distancing, quarantine advisories, shelter-in-place orders and required closures of non-essential businesses.
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There have been significant changes to the global economic situation and to public securities markets as a consequence of the COVID-19 pandemic. It is reasonably likely that this could cause changes to estimates as a result of the markets in which the Company operates, the price of the Company’s publicly traded equity and debt in comparison to the Company’s carrying value, and the health of the global economy. Such changes to estimates could potentially result in impacts that would be material to the consolidated financial statements, particularly with respect to the fair value of the Company’s reporting units in relation to potential goodwill impairment, the fair value of long-lived assets in relation to potential impairment and the allowance for doubtful accounts.
On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act provides several employer and corporate incentives designed to assist businesses with liquidity and support employee retention. The Company continues to assess the implications of the CARES Act to its business and believes that relevant components of the CARES Act are not material to its financial statements as a whole.

NOTE 2 - Acquisitions and Assets Held for Sale
Pending Mobile Mini Merger
On March 1, 2020, the Company, along with its newly formed subsidiary, Picasso Merger Sub, Inc. (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Mobile Mini, Inc. (“Mobile Mini”). The Merger Agreement provides for the merger of Mobile Mini with and into Merger Sub (the “Merger”), with Mobile Mini surviving as a wholly-owned subsidiary of the Company. At the effective time of the Merger, and subject to the terms and conditions set forth in the Merger Agreement, each outstanding share of the common stock of Mobile Mini shall be converted into the right to receive 2.4050 shares of WillScot Class A common stock.
The Merger has been approved by the boards of directors of the Company and Mobile Mini. The Merger is subject to customary closing conditions, including receipt of regulatory approval and approval by the stockholders of the Company and Mobile Mini and is expected to close in the third quarter of 2020. Additionally, the transaction has the support of TDR Capital, the Company's largest stockholder, which has entered into a voting agreement in support of the Merger.
In connection with the Merger, the Company entered into a commitment letter (the “Commitment Letter”), dated March 1, 2020, as amended and restated on March 24, 2020, and further amended and restated on May 5, 2020, with the lenders party thereto (the “Lenders”). Pursuant to the Commitment Letter, the Lenders have agreed to provide debt financing to refinance the Company’s existing ABL Facility (as defined in Note 9), Mobile Mini’s existing ABL credit facility and Mobile Mini’s outstanding senior notes due 2024 on the terms and conditions set forth in the Commitment Letter.
The Company expensed $9.4 million in transaction costs related to the Merger within selling, general and administrative ("SG&A") for the three months ended March 31, 2020.
Assets Held for Sale
As part of the Modular Space Holdings, Inc. ("ModSpace") acquisition in 2018, the Company implemented a plan to right size its branch network and dispose of unused properties.
As of March 31, 2020, the Company had five properties totaling $8.5 million included in assets held for sale. During the three months ended March 31, 2020, the Company recorded no impairment related to these assets. As of March 31, 2019, the Company had ten properties totaling $21.0 million included in assets held for sale. During the three months ended March 31, 2019, the Company recorded an impairment of $2.3 million related to assets held for sale.
The fair value of the assets held for sale was determined using valuations from third party brokers, which were based on current sales prices for comparable assets, a Level 2 measurement.

NOTE 3 - Revenue
Revenue Disaggregation
Geographic Areas
The Company had total revenue in the following geographic areas for the three months ended March 31 as follows:
Three Months Ended
March 31,
(in thousands)20202019
US  $235,328  $231,467  
Canada16,706  18,194  
Mexico  3,787  4,024  
Total revenues$255,821  $253,685  

9



Major Product and Service Lines
The Company’s revenue by major product and service line for the three months ended March 31 was as follows:
Three Months Ended
March 31,
20202019
(in thousands)TotalTotal
Modular space leasing revenue$131,398  $123,550  
Portable storage leasing revenue5,849  6,240  
VAPS(a)
41,002  37,392  
Other leasing-related revenue(b)
10,103  10,110  
Modular leasing revenue188,352  177,292  
Modular delivery and installation revenue51,070  50,000  
Total leasing and services revenue239,422  227,292  
New unit sales revenue9,613  14,841  
Rental unit sales revenue6,786  11,552  
Total revenues$255,821  $253,685  
(a) Includes $4.0 million and $3.8 million of value added products and services ("VAPS") service revenue for the three months ended March 31, 2020 and 2019, respectively.
(b) Primarily damage billings, delinquent payment charges, and other processing fees.
Modular Leasing and Services Revenue
The majority of revenue (72% for the three months ended March 31, 2020 and 68% for the three months ended March 31, 2019) is generated by rental income subject to the guidance of ASC 842. The remaining revenue for the three months ended March 31, 2020 and 2019 is generated by performance obligations in contracts with customers for services or sale of units subject to the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606").
Receivables, Contract Assets and Liabilities
As reflected above, approximately 72% of the Company's rental revenue is generated by lease revenue subject to the guidance of ASC 842. The customers that are responsible for the remaining revenue that is accounted for under ASC 606 are generally the same customers that rent the Company's equipment. We manage credit risk associated with our accounts receivables at the customer level. Because the same customers generate the revenues that are accounted for under both Topic 606 and Topic 840, the discussions below on credit risk and our allowance for doubtful accounts address our total revenues. The Company's top five customers with the largest open receivables balances represented 4.7% of the total receivables balance as of March 31, 2020.
As of December 31, 2019, the Company had approximately $42.6 million of deferred revenue that relates to removal services for lease transactions and advance billings for sale transactions, which are within the scope of ASC 606. As of March 31, 2020, the Company had approximately $44.6 million of deferred revenue relating to these services which are included in deferred revenue and customer deposits in the condensed consolidated balance sheets. During the three months ended March 31, 2020, $7.9 million of previously deferred revenue relating to removal services for lease transactions and advance billings for sale transactions was recognized as revenue.
The Company does not have material contract assets and it did not recognize any material impairments of any contract assets.
The Company's uncompleted contracts with customers have unsatisfied (or partially satisfied) performance obligations. For the future services revenues that are expected to be recognized within twelve months, the Company has elected to utilize the optional disclosure exemption made available regarding transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations. The transaction price for performance obligations that will be completed in greater than twelve months is variable based on the costs ultimately incurred to provide those services and therefore the Company is applying the optional exemption to omit disclosure of such amounts.
The primary costs to obtain contracts for new and rental unit sales with the Company's customers are commissions. The Company pays its sales force commissions on the sale of new and rental units. For new and rental unit sales, the period benefited by each commission is less than one year. As a result, the Company has applied the practical expedient for incremental costs of obtaining a sales contract and will expense commissions as incurred.
Credit Losses
The Company is exposed to credit losses from trade receivables generated through its leasing and sales business. The Company assesses each customer’s ability to pay for the products it sells by conducting a credit review. The credit review considers expected billing exposure and timing for payment and the customer’s established credit rating. The Company
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performs its credit review of new customers at inception and for existing customers when they transact new leases after a period of dormancy. The Company also considers contract terms and conditions, country risk and business strategy in the evaluation.
The Company monitors ongoing credit exposure through an active review of customer balances against contract terms and due dates. The Company's activities include timely account reconciliations, dispute resolution and payment confirmations. The Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. The Company uses a loss-rate method to assess for credit losses.
(in thousands)Three Months Ended
March 31, 2020
Year Ended December 31, 2019
Balance at beginning of year$15,828  $9,340  
Net charges to bad debt expense and revenue3,392  14,496  
Write-offs(2,744) (7,945) 
Foreign currency translation and other(5) (63) 
Balance at end of period$16,471  $15,828  

NOTE 4 - Leases
As of March 31, 2020, the undiscounted future lease payments for operating lease liabilities were as follows:
(in thousands)
2020$28,505  
202135,174  
202229,103  
202323,264  
202418,202  
Thereafter51,725  
Total lease payments185,973  
Less: interest(37,429) 
Present value of lease liabilities$148,544  
The Company’s lease activity during the three months ended March 31, 2020 and 2019 was as follows:
Three Months Ended March 31,
Financial Statement Line (in thousands)
20202019
Operating Lease Expense
Fixed lease expense
Cost of leasing and services$1,602  $1,818  
Selling, general and administrative7,8858,426
Lease impairment expense and other related charges684317
Short-term lease expense
Cost of leasing and services7,3007,688
Selling, general and administrative386813
Lease impairment expense and other related charges212  
Variable lease expense
Cost of leasing and services1,832642
Selling, general and administrative8671,086
Lease impairment expense and other related charges287    
Total operating lease expense$21,055  $20,790  
The Company initiated certain restructuring plans associated with the ModSpace acquisition in order to capture operating synergies as a result of integrating ModSpace into WillScot. The restructuring activities primarily include the termination of leases for duplicative branches, equipment and corporate facilities. As part of these plans, certain of its leased locations were vacated and leases were terminated or impaired. During the three months ended March 31, 2020, the Company recorded $1.7 million in lease impairment expense and other related charges which are comprised of $0.5 million
11



loss on lease exit and $1.2 million in closed location rent expense. During the three months ended March 31, 2019, the Company recorded $3.1 million in lease impairment expense and other related charges which are comprised of $2.4 million in right-of-use ("ROU") asset impairment on leased locations no longer used in operations, $0.4 million loss on lease exit and $0.3 million in closed location rent expense.
Supplemental cash flow information related to operating leases for the three months ended March 31, 2020 was as follows:
Three Months Ended March 31,
Supplemental Cash Flow Information (in thousands)
20202019
Cash paid for the amounts included in the measurement of lease liabilities$10,108  $9,826  
Right of use assets obtained in exchange for lease obligations$13,270  $8,934  
Weighted-average remaining operating lease terms and the weighted average discount rates as of March 31, 2020 and December 31, 2019 were as follows:
Lease Terms and Discount RatesMarch 31,
2020
December 31, 2019
Weighted-average remaining lease term6.55 years6.51 years
Weighted-average discount rate6.8 %7.0 %
The Company presents information related to leasing revenues in Note 3.

NOTE 5 - Inventories
Inventories were comprised of raw materials and consumables of $15.0 million and $15.4 million at March 31, 2020 and December 31, 2019, respectively.

NOTE 6 - Rental Equipment, net
Rental equipment, net, at the respective balance sheet dates consisted of the following:
(in thousands)
March 31, 2020December 31, 2019
Modular units and portable storage$2,446,510  $2,455,471  
Value added products125,384  121,855  
Total rental equipment2,571,894  2,577,326  
Less: accumulated depreciation(658,899) (632,890) 
Rental equipment, net$1,912,995  $1,944,436  

NOTE 7 - Goodwill
Changes in the carrying amount of goodwill were as follows:
(in thousands)
Modular – US
Modular – Other
North America
Total
Balance at December 31, 2018$213,264  $33,753  $247,017  
Changes to preliminary purchase price accounting(9,331) (4,148) (13,479) 
Effects of movements in foreign exchange rates  1,639  1,639  
Balance at December 31, 2019203,933  31,244  235,177  
Effects of movements in foreign exchange rates  (2,381) (2,381) 
Balance at March 31, 2020$203,933  $28,863  $232,796  
The Company had no goodwill impairment during the three months ended March 31, 2020 or the year ended December 31, 2019.
The Company considered the economic environment resulting from the COVID-19 pandemic as part of its review for indicators of potential impairment and reviewed qualitative information currently available in determining if it was more likely than not that the fair values of the Company’s reporting units were less than the carrying amounts as of March 31, 2020. Based on the Company’s current long-term projections and the extent of fair value in excess of carrying value at the Company's October 1, 2019 annual impairment test date, management concluded that it is not more likely than not that the fair value of the Company's reporting units were less than their carrying amount during the three months ended March 31, 2020 and therefore no impairment occurred.
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Due to the uncertain and rapidly evolving nature of the conditions surrounding the COVID-19 pandemic, changes in economic outlook may change our long-term projections.

NOTE 8 - Intangibles
Intangible assets other than goodwill at the respective balance sheet dates consisted of the following:
March 31, 2020
(in thousands)Remaining life (in years)Gross carrying amountAccumulated amortizationNet book value
Intangible assets subject to amortization:
ModSpace trade name1.4$3,000  $(1,625) $1,375  
Indefinite-lived intangible assets:
Trade name125,000  —  125,000  
Total intangible assets other than goodwill$128,000  $(1,625) $126,375  

December 31, 2019
(in thousands)Remaining life (in years)Gross carrying amountAccumulated amortizationNet book value
Intangible assets subject to amortization:
ModSpace trade name1.7$3,000  $(1,375) $1,625  
Indefinite-lived intangible assets:
Trade names125,000  —  125,000  
Total intangible assets other than goodwill$128,000