The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understandWillScot Mobile Mini Holdings Corp. ("WillScot Mobile Mini"), formerly known asWillScot Corporation ("WillScot"), our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes thereto, contained in Part I, Item 1 of this report. The discussion of results of operations in this MD&A is presented on a historical basis, as of or for the three months endedMarch 31, 2021 or prior periods. OnJuly 1, 2020 ,WillScot andMobile Mini, Inc. ("Mobile Mini") merged (the "Merger"). As the Merger was completed onJuly 1, 2020 , unless the context otherwise requires, the terms "we", "us", "our" "Company" and "WillScot Mobile Mini" as used in these financial statements meanWillScot Corporation and its subsidiaries when referring to periods prior toJuly 1, 2020 (prior to the Merger) and toWillScot Mobile Mini when referring to periods on or afterJuly 1, 2020 (after the Merger). The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the US ("GAAP"). We use certain non-GAAP financial information that we believe is important for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of our ongoing operations and analyze our business performance and trends. Reconciliations of non-GAAP measures are provided in the Other Non-GAAP Financial Data and Reconciliations section. Executive Summary and Outlook We are a leading business services provider specializing in innovative flexible work space and portable storage solutions. We service diverse end markets across all sectors of the economy throughoutthe United States ("US"),Canada ,Mexico and theUnited Kingdom ("UK"). We are also a leading provider of specialty containment solutions in the US with over 12,600 tank and pump units in our fleet. As ofMarch 31, 2021 , our branch network included approximately 270 branch locations and additional drop lots to service over 85,000 customers. We offer our customers an extensive selection of "Ready to Work" modular space and portable storage solutions with over 157,000 modular space units and over 195,000 portable storage units in our fleet. We primarily lease, rather than sell, our modular and portable storage units to customers, which results in a highly diversified and predictable recurring revenue stream. Over 90% of new lease orders are on our standard lease agreement, pre-negotiated master lease or national account agreements. The initial lease periods vary, and our leases are customarily renewable on a month-to-month basis after their initial term. Our lease revenue is highly predictable due to its recurring nature and the underlying stability and diversification of our lease portfolio. However, given that our customers value flexibility, they consistently extend their leases or renew on a month-to-month basis such that the average effective duration of our lease portfolio excluding seasonal portable storage units is approximately 31 months. We complement our core leasing business by selling both new and used units, allowing us to leverage scale, achieve purchasing benefits and redeploy capital employed in our lease fleet.
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Our customers operate in a diversified set of end markets, including construction, commercial and industrial, retail and wholesale trade, education, energy and natural resources, government, and healthcare. Core to our operating model is the ability to redeploy standardized assets across end markets, and we have recently serviced emerging demand in the healthcare and government sectors related to COVID-19, as well as expanded space requirements related to social distancing. We track several market leading indicators including those related to our two largest end markets, the commercial and industrial segment and the construction segment, which collectively accounted for over 85% of our revenues for the three months endedMarch 31, 2021 . We remain focused on our core priorities of growing leasing revenues by increasing units on rent, both organically and through our consolidation strategy, delivering "Ready to Work" solutions to our customers with value added products and services ("VAPS"), and on continually improving the overall customer experience. Significant Developments MobileMini Merger OnJuly 1, 2020 , we closed the Merger at which time Mobile Mini became a wholly-owned subsidiary of WillScot. Concurrent with the closing of the Merger, we changed our name toWillScot Mobile Mini Holdings Corp. We believe that the Merger is resulting in strategic and financial benefits by combining the two industry leaders in the complementary modular space and portable storage solutions markets. We are executing the integration of the two companies' operating and financial systems, with a significant portion of these efforts being focused currently on the conversion of the combined company onto a single enterprise resource planning system, which is expected to take place in the second quarter of 2021. Reportable Segments Following the Merger, we operate in four reporting segments:NA Modular, NA Storage,UK Storage, and Tank and Pump. Prior to the Merger, WillScot had two reporting segments, US Modular and Other North America Modular. These two segments were combined to create the new NA Modular segment, which represents the legacy WillScot operations. The other segments, NA Storage,UK Storage, and Tank and Pump align to the legacy operations and segments reported by Mobile Mini. The new reporting segments are aligned with how we operate and analyze our business results. Financing Activities OnMarch 26, 2021 , we redeemed$65.0 million of our of 6.125% senior secured notes due 2025 (the "2025 Secured Notes") at a redemption price of 103.0% plus accrued and unpaid interest. This repayment was funded by cash on hand and borrowings under the 2020 ABL facility. Upon redemption in the first quarter of 2021, we recorded a loss on extinguishment of debt in the condensed consolidated statement of operations of$3.2 million comprised of a redemption premium of$1.9 million and write off of unamortized deferred financing fees of$1.3 million . Share Repurchase OnMarch 1, 2021 , we repurchased 2,750,000 shares of our Common Stock directly fromSapphire Holding S .à r.l. ("Sapphire Holdings "), our largest shareholder, which is controlled byTDR Capital LLP ("TDR Capital ") for$73.7 million . AtMarch 31, 2021 , we had$133.9 million remaining of a$250.0 million share repurchase authorization and believe that repurchases will be a reoccurring capital allocation priority given the predictability of our free cash flow. COVID-19 Impact on Business Since the outbreak of COVID19 was designated as a global pandemic by theWorld Health Organization (the "WHO") inMarch 2020 , our operations have generally continued to operate normally with additional safety protocols in place as we have been considered an essential business in most jurisdictions. However, there have been significant changes to the global economic situation as a consequence of the COVID19 pandemic. The global pandemic has resulted in significant global social and business disruption, which has driven significantly lower activity levels in our business and has impacted our financial results. On a pro forma basis, our deliveries were down 25% in the second quarter of 2020 year over year and 13% in the third quarter of 2020 year over year due to reduced demand primarily attributable to the current global economic situation as a consequence of the COVID19 pandemic. This reduced delivery demand slowed the growth of our leasing revenues as well as our delivery and installation revenues, however we implemented significant actions to reduce variable costs and capital spending to help offset the financial impact of these reduced activity levels. Despite this unprecedented demand shock, because of our long lease durations, the majority of our gross profit in any given period is from units already out on rent. This gives us significant forward visibility into our future cash flows, which allows us to plan ahead and adjust our capital expenditures and cost structure for varying demand levels. Activity levels in the fourth quarter of 2020 and the first quarter of 2021 have since stabilized and we expect modest activity growth in the second and third quarter of 2021 as economic activity continues to recover.
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First Quarter Highlights For the three months endedMarch 31, 2021 , key drivers of our financial performance included: •Total revenues increased by$169.5 million , or 66.3%, driven primarily by the addition of Mobile Mini's revenues to our consolidated results, as well as increased leasing revenues in the NA Modular segment. The Merger closed onJuly 1, 2020 , and drove$159.1 million of the year over year increase. •Leasing revenue increased$127.3 million , or 67.6%, delivery and installation revenue increased$32.4 million , or 63.4%, rental unit sales increased$8.4 million , or 123.5%, and new sales revenue increased$1.3 million , or 13.5%. Key leasing revenue drivers include: -Average modular space units on rent increased 22,360 units, or 25.4%, and average portable storage units on rent increased 129,014 units, or 789.3%. Both increases were driven by the MobileMini Merger . -Average modular space monthly rental rate increased$26 , or 4.0%, to$679 driven by an$84 , or 12.9%, increase in the NA Modular segment, partially offset by the dilutive impact of lower rates due to mix on the Mobile Mini modular space units. -Average portable storage monthly rental rate increased$16 , or 13.4%, to$135 driven by the accretive impact of higher rates from the Mobile Mini portable storage fleet. -Average utilization for modular space units increased 110 basis points ("bps") to 70.3% and utilization for portable storage units increased to 74.4% from 64.1% for the same period in 2020 driven by higher utilization of the Mobile Mini units. •NA Modular segment revenue, which represents the activities of WillScot prior to the Merger with Mobile Mini and represented 62.6% of consolidated revenue for the three months endedMarch 31, 2021 , increased$10.4 million , or 4.1%, to$266.2 million driven by an increase to leasing revenue of$11.3 million , or 6.0%, due to continued growth of pricing and value added products, and an increase in rental unit sales of$3.7 million , or 54.4%. The increase in leasing and rental unit revenues was partially offset by a reduction in delivery and installation revenues of$2.4 million , or 4.7%, driven by reductions in demand for new project deliveries, and a reduction of new unit sales of$2.2 million , or 22.9%. NA Modular revenue drivers for the three months endedMarch 31, 2021 include: -Modular space average monthly rental rate of$737 , increased 12.9% year over year representing a continuation of the long-term price optimization and VAPS penetration opportunities across our portfolio. -Average modular space units on rent decreased 3,194, or 3.6%, year over year driven by lower deliveries, including reduced demand for new project deliveries as a result of the COVID-19 pandemic primarily in the second and third quarter of 2020. -Average modular space monthly utilization decreased 160 bps to 67.6% for the three months endedMarch 31, 2021 , as compared to the three months endedMarch 31, 2020 . •Generated consolidated net income of$4.4 million for the three months endedMarch 31, 2021 , including a$27.2 million loss on the change in fair value of common stock warrant liabilities. Net Income Excluding Gain/Loss from Warrants of$31.7 for the three months endedMarch 31, 2021 represented an increase of$35.4 million , and included a$3.2 million loss on extinguishment of debt related to the partial redemption of the 2025 Secured Notes and$12.5 million of discrete costs expensed in the period related to transaction and integration activities. Discrete costs in the period included$0.8 million of transaction costs,$7.3 million of integration costs, and$4.4 million of restructuring costs, lease impairment expense and other related charges. •Generated Adjusted EBITDA of$163.6 million for the three months endedMarch 31, 2021 , representing an increase of$74.1 million , or 82.8%, as compared to the same period in 2020. Of this increase,$66.2 million was driven by the addition of Mobile Mini to our consolidated results and the remainder was driven by strong organic growth in our NA Modular segment. -Adjusted EBITDA in our NA Modular segment, which represents the activities of WillScot prior to the Merger, increased$7.9 million , or 8.8%, primarily driven by increases in leasing gross profit driven by increased pricing, including VAPS. -Consolidated Adjusted EBITDA Margin was 38.5% in the first quarter and increased 350 bps versus prior year driven by a 160 bps increased in the NA Modular segment, as well as the addition of the higher margin Mobile Mini operations •Generated Free Cash Flow of$91.2 million for the three months endedMarch 31, 2021 , representing an increase of$83.4 million as compared to the same period in 2020. Net cash provided by operating activities increased$83.8 million to$122.1 million . Net cash used in investing activities increased slightly by$0.4 million . Of the$91.2 million of
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free cash flow that we generated during the three months ended
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