(4) Revenue from Contracts with Customers

Revenue Recognition

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

Rental contracts with our customers may have multiple performance obligations including the direct rental of fleet to our customers, fleet delivery and pickup. Also included in rental revenues are ancillary fees including late charges and charges for damages. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using the contractually stated price as our best estimate of the standalone selling price of each distinct promise in the contract. Our prices are determined using methods and assumptions developed consistently across similar customers and markets.

We enter into contracts with our customers to rent equipment based on a monthly rate for our Storage Solutions fleet and a daily, weekly or monthly rate for our Tank & Pump Solutions fleet. Revenues from renting are recognized ratably over the rental period. The rental continues until cancelled by the customer or the Company. If equipment is returned prior to the end of the contractually obligated period, the excess, if any, between the amount the customer is contractually required to pay, over the cumulative amount of revenue recognized to date, is recognized as incremental revenue upon return. Customers may utilize our equipment delivery and pick-up services in conjunction with the rental of equipment, but it is not required. Revenue pursuant to the delivery or pick up of a rented unit is recognized in rental revenue upon completion of the service.

Sales revenue is primarily generated by the sale of new and used units, and to a lesser extent, parts and supplies sold to Tank & Pump Solutions customers. Sales contracts generally have a single performance obligation that is satisfied at the time of delivery. Sales revenue is measured based on the consideration specified in the contract and recognized when the customer takes possession of the unit or other sale items.

Our Storage Solutions rental customers are generally billed in advance. Additionally, we may bill our customers in advance for fleet pickup. Tank & Pump Solutions rental customers are typically billed in arrears, a minimum of once per month. Sales transactions are generally billed in advance or upon transfer of the sold items. Payments from customers are generally due upon receipt of the invoice. Certain customers have extended terms for payment, but no terms are greater than one year following the invoice date.

Taxes assessed by a governmental authority that are both imposed and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

As disclosed in Note 2, we adopted new guidance related to revenue from contracts with customers. The adoption did not have a significant impact on our revenue, nor did it result in a cumulative effect adjustment as of January 1, 2018. We have consistently applied our accounting policies to all periods presented in these consolidated financial statements.

Contract Costs and Liabilities

We incur commission costs to obtain rental contracts and for sales of fleet inventory. We expect the period benefitted by each commission to be less than one year. As a result, we have applied the practical expedient for incremental costs of obtaining a contract and expense commissions as incurred.

When customers are billed in advance, we defer recognition of revenue and reflect unearned rental revenue at the end of the period. As of September 30, 2018 and December 31, 2017, we had approximately $39.9 million and $38.3 million, respectively, of unearned rental revenue included in accrued liabilities in the condensed consolidated balance sheets for September 30, 2018 and December 31, 2017. We expect to perform the remaining performance obligations and recognize the unearned rental revenue within the next twelve months. Accordingly, we have applied the practical expedient available, under which we do not disclose the amount of consideration allocable to different performance obligations.

Disaggregated Rental Revenue

In the following table, rental revenue is disaggregated by the nature of the underlying service provided and for the periods indicated. The table also includes a reconciliation of the disaggregated rental revenue to our reportable segments.

	For the Three Months Ended September 30, 2018
	Storage Solutions
	North America		United Kingdom		Total		Tank & Pump Solutions		Consolidated
	(In thousands)
Direct rental revenue	$	68,073	$	14,068	$	82,141	$	19,461	$	101,602
Delivery, pickup and similar revenue		21,671		5,118		26,789		8,329		35,118
Ancillary rental revenue		2,497		1,212		3,709		495		4,204
Total rental revenues	$	92,241	$	20,398	$	112,639	$	28,285	$	140,924

	For the Three Months Ended September 30, 2017
	Storage Solutions
	North America		United Kingdom		Total		Tank & Pump Solutions		Consolidated
	(In thousands)
Direct rental revenue	$	61,681	$	14,163	$	75,844	$	16,231	$	92,075
Delivery, pickup and similar revenue		19,686		4,922		24,608		6,341		30,949
Ancillary rental revenue		2,882		1,154		4,036		635		4,671
Total rental revenues	$	84,249	$	20,239	$	104,488	$	23,207	$	127,695

	For the Nine Months Ended September 30, 2018
	Storage Solutions
	North America		United Kingdom		Total		Tank & Pump Solutions		Consolidated
	(In thousands)
Direct rental revenue	$	196,029	$	42,684	$	238,713	$	57,301	$	296,014
Delivery, pickup and similar revenue		59,893		14,822		74,715		21,970		96,685
Ancillary rental revenue		8,305		3,560		11,865		1,585		13,450
Total rental revenues	$	264,227	$	61,066	$	325,293	$	80,856	$	406,149

	For the Nine Months Ended September 30, 2017
	Storage Solutions
	North America		United Kingdom		Total		Tank & Pump Solutions		Consolidated
	(In thousands)
Direct rental revenue	$	176,013	$	39,999	$	216,012	$	47,205	$	263,217
Delivery, pickup and similar revenue		51,712		14,035		65,747		17,699		83,446
Ancillary rental revenue		8,601		3,420		12,021		1,604		13,625
Total rental revenues	$	236,326	$	57,454	$	293,780	$	66,508	$	360,288