| Significant Accounting Policies | (2) Significant Accounting Policies We describe our significant accounting policies in Note 2 of the notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021. During the three and six months ended June 30, 2022, there were no significant changes to those accounting policies. Use of Estimates We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, which requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. These assumptions and estimates could have a material effect on our condensed consolidated financial statements. Actual results may differ materially from those estimates. We review our estimates on an ongoing basis based on information currently available, and changes in facts and circumstances may cause us to revise these estimates. Revenue Recognition We recognize revenue in accordance with two different Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) standards: 1) Topic 606 and 2) Topic 842. Under Topic 606, Revenue from Contracts with Customers, revenue is recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenue is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. Our contracts with customers generally do not include multiple performance obligations. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for such products or services. Under Topic 842, Leases, we account for equipment rental contracts as operating leases. We recognize revenue from equipment rentals in the period earned, regardless of the timing of billing to customers. A rental contract includes rates for daily, weekly or monthly use, and rental revenues are earned on a daily basis as rental contracts remain outstanding. Because the rental contracts can extend across multiple reporting periods, we record unbilled rental revenues and deferred rental revenues at the end of reporting periods so rental revenues earned is appropriately stated for the periods presented. In the table below, revenues as presented in our condensed consolidated statements of income for the three and six months ended June 30, 2022 and 2021 are summarized by type and by the applicable accounting standard.
Three Months Ended June 30,
2022 2021
Topic 842 Topic 606 Total Topic 842 Topic 606 Total
Revenues:
Rental revenues
Owned equipment rentals $ 193,704 $ 77 $ 193,781 $ 147,894 $ 111 $ 148,005
Re-rent revenue 7,462 — 7,462 9,206 — 9,206
Ancillary and other rental revenues:
Delivery and pick-up — 13,899 13,899 — 9,749 9,749
Other 12,435 — 12,435 8,651 — 8,651
Total ancillary rental revenues 12,435 13,899 26,334 8,651 9,749 18,400
Total equipment rental revenues 213,601 13,976 227,577 165,751 9,860 175,611
Used equipment sales — 18,833 18,833 — 35,821 35,821
New equipment sales — 21,486 21,486 — 27,633 27,633
Parts sales — 16,172 16,172 — 16,880 16,880
Service revenues — 8,889 8,889 — 8,059 8,059
Other — 1,714 1,714 — 1,673 1,673
Total revenues $ 213,601 $ 81,070 $ 294,671 $ 165,751 $ 99,926 $ 265,677
Six Months Ended June 30,
2022 2021
Topic 842 Topic 606 Total Topic 842 Topic 606 Total
Revenues:
Rental revenues
Owned equipment rentals $ 364,433 $ 186 $ 364,619 $ 277,359 $ 163 $ 277,522
Re-rent revenue 13,806 — 13,806 16,835 — 16,835
Ancillary and other rental revenues:
Delivery and pick-up — 24,999 24,999 — 17,935 17,935
Other 23,378 — 23,378 16,538 — 16,538
Total ancillary rental revenues 23,378 24,999 48,377 16,538 17,935 34,473
Total equipment rental revenues 401,617 25,185 426,802 310,732 18,098 328,830
Used equipment sales — 40,359 40,359 — 74,675 74,675
New equipment sales — 47,522 47,522 — 50,806 50,806
Parts sales — 32,231 32,231 — 32,436 32,436
Service revenues — 17,023 17,023 — 16,070 16,070
Other — 3,184 3,184 — 3,292 3,292
Total revenues $ 401,617 $ 165,504 $ 567,121 $ 310,732 $ 195,377 $ 506,109 Revenues by reporting segment are presented in Note 11 of our Condensed Consolidated Financial Statements, using the revenue captions reflected in our consolidated statements of income. We believe that the disaggregation of our revenues from contracts to customers as reflected above, coupled with further discussion below and the reporting segments in Note 11, depict how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors. For further information related to our accounting for revenues pursuant to Topic 606 and Topic 842, see Significant Accounting Policies in Note 2 to our Annual Report on Form 10-K for the year ended December 31, 2021. Receivables and contract assets and liabilities We manage credit risk associated with our accounts receivables at the customer level. Because the same customers typically generate the revenues that are accounted for under both Topic 606 and Topic 842, the discussions below on credit risk and our allowance for doubtful accounts address our total revenues from Topic 606 and Topic 842. We believe concentration of credit risk with respect to our receivables is limited because our customer base is comprised of a large number of geographically diverse customers. No single customer accounted for more than 10% of our revenues on an overall or segment basis for any of the periods presented in this Quarterly Report on Form 10-Q. We manage credit risk through credit approvals, credit limits and other monitoring procedures. Pursuant to Topic 842 and Topic 326 for rental and non-rental receivables, respectively, we maintain an allowance for doubtful accounts that reflects our estimate of our expected credit losses. Our allowance is estimated using a loss rate model based on delinquency. The estimated loss rate is based on our historical experience with specific customers, our understanding of our current economic circumstances, reasonable and supportable forecasts, and our own judgment as to the likelihood of ultimate payment based upon available data. Our largest exposure to doubtful accounts is our rental operations, which as discussed above is accounted for under Topic 842 and as of June 30, 2022 represents 75.3 % of our total revenues and an approximate corresponding percentage of our receivables, net and associated allowance for doubtful accounts. We perform credit evaluations of customers and establish credit limits based on reviews of our customers’ current credit information and payment histories. We believe our credit risk is somewhat mitigated by our geographically diverse customer base and our credit evaluation procedures. The actual rate of future credit losses, however, may not be similar to past experience. Our estimate of doubtful accounts could change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase or decrease our allowance for doubtful accounts. Bad debt expense as a percentage of total revenues for six months ended June 30, 2022 and 2021 were approximately 0.3 % and 0.2 %. We do not have material contract assets, impairment losses associated therewith, or material contract liabilities associated with contracts with customers. Our contracts with customers do not generally result in material amounts billed to customers in excess of recognizable revenue. We did not recognize material revenues during the three months ended June 30, 2022 and 2021 that was included in the contract liability balance as of the beginning of such periods. Recent Accounting Pronouncements Pronouncements Not Yet Adopted In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for or recognizing the effects of reference rate reform, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”) on financial reporting. The guidance provides 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 amendments are elective and are effective upon issuance for all entities through December 31, 2022. The amendments of this ASU should be applied on a prospective basis. We intend to continue to monitor the developments with respect to the planned phase-out out of LIBOR and work with our lenders to seek to ensure any transition away from LIBOR will have minimal impact on our financial condition. However, we can provide no assurances regarding the impact of the discontinuation of LIBOR as there can be no assurances as to whether such replacement or alternative base rate will be more or less favorable than LIBOR. Our exposure related to the expected cessation of LIBOR is limited to the interest expense and certain fees we incur on balances outstanding under our Senior Secured Credit Facility (the “Credit Facility”). As certain U.S. dollar LIBOR settings will continue to be published until June 30, 2023, we amended our Credit Facility on September 14, 2021 to include benchmark language for an upcoming transition away from LIBOR. The potential impact from the cessation of LIBOR as a reference rate, as well as the applicability of ASU 2020-04, is not currently estimable. |
