WillScot Holdings Corp

Previous wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the operations and present business environment of WillScot Holdings Corporation (“WillScot”) and its subsidiaries (collectively with WillScot, the “Company,” “we,” “us” or “our”). MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes thereto, contained in Part I, Item 1. Financial Statements of this Quarterly Report on Form 10-Q. All references to "Notes" in this MD&A are to the notes to our condensed consolidated financial statements. The discussion of results of operations in this MD&A is presented on a historical basis, as of or for the three and six months ended June 30, 2026 or prior periods.

Current wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the operations and present business environment of WillScot Holdings Corporation (“WillScot”) and its subsidiaries (collectively with WillScot, the “Company,” “we,” “us” or “our”). MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes thereto, contained in Part I, Item 1. Financial Statements of this Quarterly Report on Form 10-Q. All references to "Notes" in this MD&A are to the notes to our condensed consolidated financial statements. The discussion of results of operations in this MD&A is presented on a historical basis, as of or for the three and nine months ended September 30, 2026 or prior periods.

Previous wording

We are a leading business services provider specializing in innovative and flexible turnkey space solutions. We offer our customers an extensive selection of space solutions with over 130,000 modular space units and over 174,000 portable storage units in our fleet. Our diverse product offering includes:

Current wording

We are a leading business services provider specializing in innovative and flexible turnkey space solutions. We offer our customers an extensive selection of space solutions with over 130,000 modular space units and over 173,000 portable storage units in our fleet. Our diverse product offering includes:

Previous wording

We operate a hybrid in-house and outsourced logistics and service infrastructure that provides delivery, sitework, installation, disassembly, removal and other services to our customers for an additional fee as part of our leasing and sales operations. We also provide other services to our customers, including technical expertise and oversight regarding building design and permitting, site preparation, and project management, including expansion or contraction of installed space based on changes in project requirements. We serve diverse end markets across all sectors of the economy throughout the United States ("US"), Canada, and Mexico. As of June 30, 2026, our branch network included approximately 240 branch locations and additional drop lots to service our over 85,000 customers.

Current wording

We operate a hybrid in-house and outsourced logistics and service infrastructure that provides delivery, sitework, installation, disassembly, removal and other services to our customers for an additional fee as part of our leasing and sales operations. We also provide other services to our customers, including technical expertise and oversight regarding building design and permitting, site preparation, and project management, including expansion or contraction of installed space based on changes in project requirements. We serve diverse end markets across all sectors of the economy throughout the United States ("US"), Canada, and Mexico. As of September 30, 2026, our branch network included approximately 230 branch locations and additional drop lots to service our over 85,000 customers.

Previous wording

We primarily lease, rather than sell, our space solutions to customers, which results in a diversified and predictable recurring revenue stream. Over 90% of new lease orders are on our standard lease agreement, pre-negotiated master lease, or enterprise account agreements. Rental contracts with customers are generally based on a 28-day or monthly rate and billing cycle. The initial lease periods vary, and our leases are customarily renewable on a month-to-month basis after their initial term and continue until cancelled by the customer or us. As 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 consolidated lease portfolio, excluding seasonal portable storage units, was approximately 41 months as of June 30, 2026. We believe our lease revenue is predictable due to its recurring nature and the underlying stability and diversification of our lease portfolio. 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.

Current wording

We primarily lease, rather than sell, our space solutions to customers, which results in a diversified and predictable recurring revenue stream. Rental contracts with customers are generally based on a 28-day or monthly rate and billing cycle. The initial lease periods vary, and our leases are customarily renewable on a month-to-month basis after their initial term and continue until cancelled by the customer or us. As 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 consolidated lease portfolio, excluding seasonal portable storage units, was approximately 40 months as of September 30, 2026. We believe our lease revenue is predictable due to its recurring nature and the underlying stability and diversification of our lease portfolio. 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.

Previous wording

Our customers operate in diversified end markets, including construction and infrastructure, commercial and industrial, energy and natural resources, and government and institutions. Core to our operating model is the ability to redeploy standardized assets across end markets. We track several leading market indicators to predict demand, including Gross Domestic Product in North America, the Architecture Billings Index, and non-residential construction square foot starts. These indicators, among others, support our demand forecast for our two largest end markets, the commercial and industrial sector and the construction and infrastructure market, which collectively accounted for approximately 86% of our revenues for the six months ended June 30, 2026.

Current wording

Our customers operate in diversified end markets, including construction and infrastructure, commercial and industrial, energy and natural resources, and government and institutions. Core to our operating model is the ability to redeploy standardized assets across end markets. We track several leading market indicators to predict demand, including Gross Domestic Product in North America, the Architecture Billings Index, and non-residential construction square foot starts. These indicators, among others, support our demand forecast for our two largest end markets, the commercial and industrial sector and the construction and infrastructure market, which collectively accounted for approximately 87% of our revenues for the nine months ended September 30, 2026.

Previous wording

As of June 30, 2026, the Company has disposed of approximately 23,000 portable storage units and 11,000 modular space units related to the Network Optimization Plan. Portable storage units were generally recycled, for which we received proceeds to partially offset the cash paid for the disposal of modular units. For the six months ended June 30, 2026, we recorded restructuring and other related costs for the Network Optimization Plan of $17.8 million, consisting primarily of asset disposal costs. Total cash paid to implement the Network Optimization plan was $14.9 million for the six months ended June 30, 2026, and was partially offset by total cash proceeds of $6.8 million from portable storage unit recycling. As of June 30, 2026, we expect the initiative to result in total future costs of approximately $43 million, consisting of rental equipment disposal costs of approximately $27 million and rental equipment relocation costs of approximately $16 million.

Current wording

As of September 30, 2026, the Company has disposed of approximately 28,000 portable storage units and 12,000 modular space units, and has exited 34 branch and drop lot locations related to the Network Optimization Plan. Portable storage units and ground level offices were generally recycled, for which we received proceeds to partially offset the cash paid for the disposal of other units. For the nine months ended September 30, 2026, we recorded restructuring and other related costs for the Network Optimization Plan of $19.5 million, consisting primarily of asset disposal costs. Total cash paid to implement the Network Optimization plan was $18.0 million for the nine months ended September 30, 2026, and was partially offset by total cash proceeds of $7.5 million from portable storage unit and ground level office recycling. As of September 30, 2026, we expect the initiative to result in total future costs of approximately $41 million, consisting of rental equipment disposal costs of approximately $26 million and rental equipment relocation costs of approximately $15 million.

Previous wording

In February and May 2026, our Board of Directors declared quarterly dividends of $0.07 per share. Dividends paid were $25.4 million for thesix months ended June 30, 2026. We intend to continue our quarterly dividend program, subject to Board approval, the requirements of our debt instruments, and based on available cash flow, capital allocation priorities, and market conditions.

Current wording

In each of February and May of 2026, our Board of Directors declared quarterly dividends of $0.07 per share. In July 2026, the Board of Directors established a dividend committee (the "Dividend Committee") authorized to approve quarterly dividends within parameters approved by the Board of Directors. The Dividend Committee declared a dividend of $0.07 per share in August 2026. Dividends paid were $38.2 million for thenine months ended September 30, 2026. We intend to continue our quarterly dividend program, subject to Board of Directors and Dividend Committee approval, the requirements of our debt instruments, and based on available cash flow, capital allocation priorities, and market conditions.

Previous wording

During the six months ended June 30, 2026, we repurchased 352,900 shares of Common Stock for $7.3 million, excluding excise tax. As of June 30, 2026, $717.1 million of the authorization for future repurchases of the Common Stock remained available. We executed share repurchases as part of our capital allocation strategy to enhance shareholder value and optimize capital deployment in light of current market valuations. Refer to Part II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds included in this Quarterly Report on Form 10-Q for more information on our share repurchase program.

Current wording

During the nine months ended September 30, 2026, we repurchased 352,900 shares of Common Stock for $7.3 million, excluding excise tax. As of September 30, 2026, $717.1 million of the authorization for future repurchases of the Common Stock remained available. We executed share repurchases as part of our capital allocation strategy to enhance shareholder value and optimize capital deployment in light of current market valuations. Refer to Part II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds included in this Quarterly Report on Form 10-Q for more information on our share repurchase program.

Previous wording

•Delivery and installation revenue increased $27.4 million, or 25.3%, driven by an increase in large complex projects and higher overall activity.

Current wording

•Delivery and installation revenue increased $22.3 million, or 22.7%, driven by an increase in large complex projects and higher overall activity.

Previous wording

•Sales revenue: new unit sales revenue decreased $7.0 million, or 32.5%, and rental unit sales revenue decreased $4.1 million, or 25.2%.

Current wording

•Sales revenue: new unit sales revenue decreased $4.0 million, or 21.7%, and rental unit sales revenue decreased $1.3 million, or 8.5%.

Previous wording

•Generatednet income of $47.0 million for the three months ended June 30, 2026, representing a decrease of $1.0 million, or 2.0%, as compared to the same period in 2025. Discrete costs during the period included $6.2 million of charges related to the Network Optimization Plan.

Current wording

•Generatednet income of $51.6 million for the three months ended September 30, 2026, representing an increase of $8.2 million, or 19.0%, as compared to the same period in 2025. Discrete costs during the period included $1.7 million of charges related to the Network Optimization Plan and a $1.8 million loss on extinguishment of debt from the redemption of $45.0 million of the 2031 Secured Notes.

Previous wording

•Generated Adjusted EBITDA of $227.9 million for the three months ended June 30, 2026, representing a decrease of $21.0 million, or 8.4%, as compared to the same period in 2025.

Current wording

•Generated Adjusted EBITDA of $233.6 million for the three months ended September 30, 2026, representing a decrease of $9.8 million, or 4.0%, as compared to the same period in 2025, driven by increased upfront variable costs associated with increased modular unit activation demand to support leasing revenue growth.

Previous wording

•Net cash provided by operating activities decreased $43.0 million to $162.3 million for the three months ended June 30, 2026. The decrease in net cash provided by operating activities included $6.1 million of cash outflows related to the execution of our Network Optimization Plan.

Current wording

•Net cash provided by operating activities increased $6.8 million to $198.0 million for the three months ended September 30, 2026, driven by increased modular space activations and average units on rent and positive contributions from working capital during the quarter. Net cash provided by operating activities included $3.1 million of cash outflows related to the execution of our Network Optimization Plan.

Previous wording

•Net cash used in investing activities decreased $95.1 million to $113.0 million. The three months ended June 30, 2025 included $133.8 million in cash used for acquisitions. Capital expenditures for rental equipment increased $36.8 million for the three months ended June 30, 2026. The increase in capital expenditures was driven by increased investments in differentiated fleet to support activations for large complex projects. Net capital expenditures ("Net CAPEX") increased $38.8 million for the three months ended June 30, 2026.

Current wording

•Net cash used in investing activities increased $46.2 million to $122.7 million. Capital expenditures for rental equipment increased $52.9 million for the three months ended September 30, 2026. The increase in capital expenditures was driven by increased investments in differentiated fleet to support activations for large complex projects. Net capital expenditures ("Net CAPEX") increased $54.1 million for the three months ended September 30, 2026.

Previous wording

•Generated Adjusted Free Cash Flow of $55.1 million for the three months ended June 30, 2026 as compared to $130.3 million for the three months ended June 30, 2025. During the three months ended June 30, 2026, we deployed Adjusted Free Cash Flow to:

Current wording

•Generated Adjusted Free Cash Flow of $78.4 million for the three months ended September 30, 2026 as compared to $123.6 million for the three months ended September 30, 2025. During the three months ended September 30, 2026, we deployed Adjusted Free Cash Flow to:

Previous wording

•Pay a $0.07 per share dividend, returning $12.7 million to our shareholders.

Current wording

•Pay a $0.07 per share dividend, returning $12.8 million to our shareholders.

Previous wording

•Reduce outstanding borrowings under the senior secured asset-based revolving credit facility (the “ABL Facility”) by $25.6 million.

Current wording

•Reduce outstanding borrowings under the senior secured asset-based revolving credit facility (the “ABL Facility”) by $11.5 million.

Previous wording

We believe that the predictability of our Adjusted Free Cash Flow allows us to pursue multiple capital allocation priorities opportunistically, including investing in organic opportunities that we see in the market, maintaining appropriate leverage, executing accretive acquisitions, and returning capital to shareholders via share repurchases and dividend distributions. We also believe our strong operating cash flow generation, countercyclical Net CAPEX profile, and $1.5 billion of available borrowing capacity under our ABL Facility, provide ample liquidity to execute our strategy.

Current wording

We believe that the predictability of our Adjusted Free Cash Flow allows us to pursue multiple capital allocation priorities opportunistically, including investing in organic opportunities that we see in the market, maintaining appropriate leverage, executing accretive acquisitions, and returning capital to shareholders via share repurchases and dividend distributions. We also believe our strong operating cash flow generation, countercyclical Net CAPEX profile, and $1.6 billion of available borrowing capacity under our ABL Facility, provide ample liquidity to execute our strategy.

Previous wording

Modular space average units on rent decreased 450 units, or 0.5%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The average modular space utilization rate during the three months ended June 30, 2026 was 69.2% as compared to 59.6% during the same period in 2025 due to a decrease in the number of modular space units in our fleet as a result of our Network Optimization Plan. The decline in modular space units on rent was primarily driven by weaker non-residential construction starts, partially offset by increased demand for large complex projects.

Current wording

Modular space average units on rent increased 1,051 units, or 1.2%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. The average modular space utilization rate during the three months ended September 30, 2026 was 69.3% as compared to 59.3% during the same period in 2025 due to a decrease in the number of modular space units in our fleet as a result of our Network Optimization Plan and increased modular space units on rent. The increase in modular space units on rent was driven by demand from large complex projects and commercial execution.

Previous wording

Portable storage average units on rent decreased by 7,244 units, or 6.7%, for the three months ended June 30, 2026 driven by lower demand. The average portable storage unit utilization rate during the three months ended June 30, 2026 was 57.3% as compared to 50.8% during the same period in 2025 due to a decrease in the number of portable storage units in our fleet as a result of our Network Optimization Plan.

Current wording

Portable storage average units on rent decreased by 7,051 units, or 6.7%, for the three months ended September 30, 2026 driven by lower demand. The average portable storage unit utilization rate during the three months ended September 30, 2026 was 56.8% as compared to 50.3% during the same period in 2025 due to a decrease in the number of portable storage units in our fleet as a result of our Network Optimization Plan. The decline in demand was driven by reduced non-residential construction project starts and increased economic uncertainty.

Previous wording

Gross profit: Gross profit increased $10.2 million, or 3.4%, to $306.3 million for the three months ended June 30, 2026 from $296.1 million for the three months ended June 30, 2025. The increase in gross profit was a result of a $16.2 million decrease in depreciation of rental equipment resulting from our Network Optimization Plan and increased delivery and installation gross profit of $5.2 million. The increase in gross profit was partially offset by a $6.0 million decrease in leasing gross profit and a $5.2 million decrease in new and rental unit sales gross profit. The decrease in leasing gross profit was primarily driven by a decline in units on rent over the course of 2025, partially offset by a sequential increase in units on rent. The decrease was also driven by an $12.8 million increase in cost of leasing as further described below during the three months ended June 30, 2026.

Current wording

Gross profit: Gross profit increased $23.2 million, or 8.2%, to $304.8 million for the three months ended September 30, 2026 from $281.6 million for the three months ended September 30, 2025. The increase in gross profit was driven by a $12.2 million increase in leasing gross profit, a $8.5 million decrease in depreciation of rental equipment resulting from our Network Optimization Plan, increased delivery and installation gross profit of $1.6 million, and a $0.9 million increase in new and rental unit sales gross profit. The increase in leasing gross profit was primarily driven by a decline in write-offs of aged receivables as described above, partially offset by a $5.3 million increase in cost of leasing.

Previous wording

Cost of leasing and services increased by $34.9 million, or 19.0%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 to support increased activations, including additional large complex project demand, driven primarily by an increase in subcontractor costs of $23.7 million, or 37.4%, and an increase in labor costs of $7.3 million, or 10.5%. These increased costs drove a $15.2 million increase to installation expense and a $12.8 million increase to cost of leasing.

Current wording

Cost of leasing and services increased by $26.1 million, or 14.5%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 to support increased activations, including additional large complex project demand, driven primarily by an increase in subcontractor costs of $24.7 million, or 43.0%, and an increase in labor costs of $4.9 million, or 7.0%. These increased costs drove a $12.1 million increase to delivery and installation expense and a $5.3 million increase to cost of leasing.

Previous wording

Cost of sales decreased by $5.9 million, or 27.8%, primarily driven by lower sales volume. Our resulting gross profit percentage was 50.0% and 50.3% for the three months ended June 30, 2026 and 2025, respectively.

Current wording

Cost of sales decreased by $6.3 million, or 28.4%, primarily driven by lower sales volume. Our resulting gross profit percentage was 50.7% and 49.7% for the three months ended September 30, 2026 and 2025, respectively.

Previous wording

Selling, general and administrative expense ("SG&A"): SG&A increased $15.2 million, or 10.5%, to $160.3 million for the three months ended June 30, 2026, as compared to $145.0 million for the three months ended June 30, 2025. The increase was driven by a a $16.4 million increase in the provision for credit losses and a $5.2 million increase in employee SG&A, excluding stock compensation, which was primarily related to variable compensation. These increased costs were partially offset by a $2.3 million decrease in service agreements and professional fees and a $1.4 million decrease in travel and entertainment expense. The $16.4 million increase in the provision for credit losses was partially offset by a decrease in accounts receivable write-offs recorded as a reduction to revenue for a net decrease to income before income tax of $10.5 million for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Current wording

Selling, general and administrative expense ("SG&A"): SG&A increased $16.7 million, or 12.1%, to $154.5 million for the three months ended September 30, 2026, as compared to $137.8 million for the three months ended September 30, 2025. The increase was driven primarily by a $14.2 million increase in the provision for credit losses recorded to bad debt expense and a $4.9 million increase in employee SG&A, excluding stock compensation, which was primarily related to variable compensation. These increased costs were partially offset by a $2.5 million decrease in stock compensation expense. The $14.2 million increase in the provision for credit losses recorded to bad debt expense was more than offset by a $22.7 million decrease in accounts receivable write-offs recorded as a reduction to revenue for a net increase to income before income tax of $8.5 million for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025.

Previous wording

Other depreciation and amortization: Other depreciation and amortization decreased $1.2 million to $23.0 million for the three months ended June 30, 2026 as compared to $24.2 million for the three months ended June 30, 2025.

Current wording

Other depreciation and amortization: Other depreciation and amortization decreased $2.0 million to $22.5 million for the three months ended September 30, 2026 as compared to $24.4 million for the three months ended September 30, 2025.

Previous wording

Restructuring costs: Restructuring costs of $5.4 million for the three months ended June 30, 2026 were primarily due to asset disposal costs as part of the Network Optimization Plan implemented in December 2025.

Current wording

Restructuring costs: Restructuring costs of $1.4 million for the three months ended September 30, 2026 were primarily due to asset disposal costs as part of the Network Optimization Plan implemented in December 2025.

Previous wording

Interest expense, net: Interest expense, net decreased $5.5 million, or 9.3%, to $53.5 million for the three months ended June 30, 2026 from $59.0 million for the three months ended June 30, 2025. The decrease in net interest expense was driven by a decrease in outstanding debt and our overall weighted average interest rate.

Current wording

Interest expense, net: Interest expense, net decreased $5.3 million, or 9.0%, to $53.2 million for the three months ended September 30, 2026 from $58.5 million for the three months ended September 30, 2025. The decrease in net interest expense was driven by a decrease in outstanding debt and a decrease in our overall weighted average interest rate.

Previous wording

Income tax expense: Income tax expense decreased $2.9 million to $17.0 million for the three months ended June 30, 2026 compared to $20.0 million for the three months ended June 30, 2025. The decrease in expense was primarily driven by a decrease in income before income tax for the three months ended June 30, 2026.

Current wording

Income tax expense: Income tax expense increased $2.7 million to $19.7 million for the three months ended September 30, 2026 compared to $17.0 million for the three months ended September 30, 2025. The increase in expense was primarily driven by an increase in income before income tax for the three months ended September 30, 2026.

Previous wording

Capital expenditures for rental equipment: Capital expenditures for rental equipment increased $36.8 million, to $122.0 million for the three months ended June 30, 2026 from $85.3 million for the three months ended June 30, 2025 as a result of new fleet investments in FLEX and complex units and increased investments in refurbishments to provide capacity to deliver on large project demand. Net CAPEX increased $38.8 million, or 43.1%, to $113.7 million for the three months ended June 30, 2026 from $75.0 million for the three months ended June 30, 2025, primarily driven by the increase in capital expenditures for rental equipment.

Current wording

Capital expenditures for rental equipment: Capital expenditures for rental equipment increased $52.9 million, to $133.9 million for the three months ended September 30, 2026 from $81.0 million for the three months ended September 30, 2025 as a result of new fleet investments in FLEX and modular office complexes and increased investments in refurbishments to provide capacity to deliver on large project demand. Net CAPEX increased $54.1 million, or 65.3%, to $123.1 million for the three months ended September 30, 2026 from $69.0 million for the three months ended September 30, 2025, primarily driven by the increase in capital expenditures for rental equipment.

Previous wording

Certain consolidated results of operations for the six months ended June 30, 2026 and 2025 are presented below.

Current wording

Certain consolidated results of operations for the nine months ended September 30, 2026 and 2025 are presented below.

Previous wording

Modular space average units on rent decreased 1,614 units, or 1.8%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The decline in modular space units on rent was primarily driven by weaker non-residential construction starts, partially offset by increased demand for large complex projects. The average modular space utilization rate during the six months ended June 30, 2026 was 68.6% as compared to 59.5% during the same period in 2025 due to a decrease in the number of modular space units in our fleet as a result of our Network Optimization Plan.

Current wording

Modular space average units on rent decreased 794 units, or 0.9%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The decline in modular space units on rent was primarily driven by lower non-residential construction starts, partially offset by increased demand from large complex projects. Demand and commercial execution improved through the course of 2026 year-to-date, with average modular space units on rent up 1,051 units, or 1.2%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. The average modular space utilization rate during the nine months ended September 30, 2026 was 68.8% as compared to 59.4% during the same period in 2025 due to a decrease in the number of modular space units in our fleet as a result of our Network Optimization Plan.

Previous wording

Portable storage average units on rent decreased by 9,761 units, or 8.9%, for the six months ended June 30, 2026 driven by lower demand in 2026. The average portable storage utilization rate during the six months ended June 30, 2026 was 56.6% as compared to 53.4% during the same period in 2025 due to a decrease in the number of portable storage space units in our fleet as a result of our Network Optimization Plan.

Current wording

Portable storage average units on rent decreased by 9,001 units, or 8.3%, for the nine months ended September 30, 2026 driven by lower demand in 2026. The average portable storage utilization rate during the nine months ended September 30, 2026 was 56.5% as compared to 52.9% during the same period in 2025 due to a decrease in the number of portable storage containers in our fleet as a result of our Network Optimization Plan. The decline in demand was driven by reduced non-residential construction project starts and increased economic uncertainty.

Previous wording

Modular space average monthly rental rates increased 2.8% year over year to $1,272 for the three months ended June 30, 2026, driven by our long-term price optimization strategies and VAPS penetration opportunities. Average portable storage monthly rental rates increased 1.8% year over year to $287 for the three months ended June 30, 2026 as a result of the mix effects from higher rates on climate-controlled containers and trailers. Total VAPS revenues, which are included in leasing revenue, increased to $103.4 million for the three months ended June 30, 2026 from $100.0 million for the three months ended June 30, 2025.

Current wording

Modular space average monthly rental rates increased 2.6% to $1,264 for the nine months ended September 30, 2026, driven by our long-term price optimization strategies and VAPS penetration opportunities. Average monthly rental rates were adversely impacted by an increased mix of smaller-footprint units, including our FLEX product, which reduced the year-over-year growth rate by approximately 15 basis points. Average portable storage monthly rental rates increased 2.9% to $287 for the nine months ended September 30, 2026, as a result of the mix effects from higher rates on climate-controlled containers and trailers, partially offset by declines in average rental rate for portable storage containers.

Previous wording

Gross profit: Gross profit decreased $4.5 million, or 0.8%, to $591.9 million for the six months ended June 30, 2026 from $596.4 million for the six months ended June 30, 2025. The decrease in gross profit was primarily a result of a $22.8 million decrease in leasing gross profit and a $9.7 million decrease in new and rental unit sales gross profit. The decrease was partially offset by a $21.4 million decrease in depreciation of rental equipment from our Network Optimization Plan and increased delivery and installation gross profit of $6.6 million. The decrease in leasing gross profit was due to the decline in units on rent, as well as an increase in variable costs to support increased activations during the quarter.

Current wording

Gross profit: Gross profit increased $18.7 million, or 2.1%, to $896.7 million for the nine months ended September 30, 2026 from $878.1 million for the nine months ended September 30, 2025. The increase in gross profit was primarily a result of a $29.9 million decrease in depreciation of rental equipment from our Network Optimization Plan and increased delivery and installation gross profit of $8.2 million. The increase was partially offset by a $10.6 million decrease in leasing gross profit and a $8.8 million decrease in new and rental unit sales gross profit. The decrease in leasing gross profit was due to an increase in variable costs to support increased activations and leasing revenue growth.

Previous wording

Cost of leasing and services increased by $52.3 million, or 15.2%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 to support increased activations, including additional large complex project demand, driven primarily by an increase in subcontractor costs of $33.4 million, or 29.0%, and an increase in labor cost of $10.1 million, or 7.5%. These increased costs drove a $24.2 million increase to installation expense and an $20.7 million increase to cost of leasing.

Current wording

Cost of leasing and services increased by $78.4 million, or 14.9%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 to support increased activations, including additional large complex project demand, driven primarily by an increase in subcontractor costs of $58.2 million, or 33.7%, and an increase in labor cost of $15.0 million, or 7.3%. These increased costs drove a $36.3 million increase to installation expense, a $16.1 million increase to delivery expense, and a $26.0 million increase to cost of leasing.

Previous wording

Cost of sales decreased by $14.3 million, or 32.2%, primarily driven by lower sales volume. Our resulting gross profit percentage was 51.0% and 51.9% for the six months ended June 30, 2026 and 2025, respectively.

Current wording

Cost of sales decreased by $20.6 million, or 31.0%, primarily driven by lower sales volume. Our resulting gross profit percentage was 50.9% and 51.2% for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Selling, general and administrative expense: SG&A increased $12.5 million, or 4.1%, to $314.3 million for the six months ended June 30, 2026, as compared to $301.8 million for the six months ended June 30, 2025. The increase was primarily driven by a $19.1 million, or 198.3%, increase in the provision for credit losses and a $8.7 million increase in employee SG&A, excluding stock compensation, which was primarily related to variable compensation. These increased costs were partially offset by a $6.7 million, or 38.8%, decrease in travel and entertainment expense and a $5.6 million, or 13.7%, decrease in service agreements and professional fees. The $19.1 million increase in the provision for credit losses was partially offset by a decrease in accounts receivable write-offs recorded as a reduction to revenue for a net decrease to income before income tax of $16.5 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Current wording

Selling, general and administrative expense: SG&A increased $29.2 million, or 6.6%, to $468.7 million for the nine months ended September 30, 2026, as compared to $439.6 million for the nine months ended September 30, 2025. The increase was primarily driven by a $33.3 million, or 142.2%, increase in the provision for credit losses recorded to bad debt expense and a $13.6 million increase in employee SG&A, excluding stock compensation, which was primarily related to variable compensation. These increased costs were partially offset by a $6.3 million, or 10.6%, decrease in service agreements and professional fees, a $5.4 million, or 24.6%, decrease in travel and entertainment expense, and a $4.2 million decrease in stock compensation expense. The $33.3 million increase in the provision for credit losses recorded to bad debt expense was partially offset by a $25.3 million decrease in accounts receivable write-offs recorded as a reduction to revenue for a net decrease to income before income tax of $8.0 million for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.

Previous wording

Other depreciation and amortization: Other depreciation and amortization decreased $0.6 million to $46.7 million for the six months ended June 30, 2026 as compared to $47.3 million for the six months ended June 30, 2025.

Current wording

Other depreciation and amortization: Other depreciation and amortization decreased $2.6 million to $69.1 million for the nine months ended September 30, 2026 as compared to $71.8 million for the nine months ended September 30, 2025.

Previous wording

Interest expense, net: Interest expense decreased $10.4 million to $107.1 million for the six months ended June 30, 2026 from $117.4 million for the six months ended June 30, 2025. The decrease in net interest expense was driven by a decrease in outstanding debt and our overall weighted average interest rate.

Current wording

Interest expense, net: Interest expense decreased $15.6 million to $160.3 million for the nine months ended September 30, 2026 from $175.9 million for the nine months ended September 30, 2025. The decrease in net interest expense was driven by a decrease in outstanding debt and a decrease in our overall weighted average interest rate.

Previous wording

Income tax expense: Income tax expense decreased $5.9 million to $32.0 million for the six months ended June 30, 2026 from $37.9 million for the six months ended June 30, 2025. The decrease in expense was driven by a decrease in income before income tax for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Current wording

Income tax expense: Income tax expense decreased $3.2 million to $51.7 million for the nine months ended September 30, 2026 from $54.9 million for the nine months ended September 30, 2025. The decrease in expense was driven by a decrease in income before income tax for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.