Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 05, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2021 | |
Entity File Number | 001-36788 | |
Entity Registrant Name | Exela Technologies, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-1347291 | |
Entity Address, Address Line One | 2701 E. Grauwyler Rd. | |
Entity Address, City or Town | Irving | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75061 | |
City Area Code | 844 | |
Local Phone Number | 935-2832 | |
Title of 12(b) Security | Common Stock, Par Value $0.0001 per share | |
Trading Symbol | XELA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 184,829,179 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001620179 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 146,175 | $ 68,221 |
Restricted cash | 24,814 | 2,088 |
Accounts receivable, net of allowance for doubtful accounts of $6,534 and $5,647, respectively | 187,819 | 206,868 |
Related party receivables and prepaid expenses | 725 | 711 |
Inventories, net | 16,055 | 14,314 |
Prepaid expenses and other current assets | 26,004 | 31,091 |
Total current assets | 401,592 | 323,293 |
Property, plant and equipment, net of accumulated depreciation of $186,389 and $193,760, respectively | 74,653 | 87,851 |
Operating lease right-of-use assets, net | 59,909 | 68,861 |
Goodwill | 358,431 | 359,781 |
Intangible assets, net | 255,998 | 292,664 |
Deferred income tax assets | 6,243 | 6,606 |
Other noncurrent assets | 24,122 | 18,723 |
Total assets | 1,180,948 | 1,157,779 |
Current liabilities | ||
Accounts payable | 59,266 | 76,027 |
Related party payables | 715 | 97 |
Income tax payable | 3,222 | 2,466 |
Accrued liabilities | 109,109 | 126,399 |
Accrued compensation and benefits | 58,041 | 63,467 |
Accrued interest | 22,593 | 48,769 |
Customer deposits | 15,688 | 21,277 |
Deferred revenue | 16,914 | 16,377 |
Obligation for claim payment | 48,376 | 29,328 |
Current portion of finance lease liabilities | 9,147 | 12,231 |
Current portion of operating lease liabilities | 16,630 | 18,349 |
Current portion of long-term debts | 114,346 | 39,952 |
Total current liabilities | 474,047 | 454,739 |
Long-term debt, net of current maturities | 1,326,579 | 1,498,004 |
Finance lease liabilities, net of current portion | 10,351 | 13,287 |
Pension liabilities, net | 33,812 | 35,515 |
Deferred income tax liabilities | 8,963 | 9,569 |
Long-term income tax liabilities | 2,306 | 2,759 |
Operating lease liabilities, net of current portion | 45,768 | 56,814 |
Other long-term liabilities | 11,957 | 13,624 |
Total liabilities | 1,913,783 | 2,084,311 |
Commitments and Contingencies (Note 8) | ||
Stockholders' equity (deficit) | ||
Common stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 168,648,451 shares issued and 166,196,745 shares outstanding at September 30, 2021 and 51,693,931 shares issued and 49,242,225 shares outstanding at December 31, 2020 | 26 | 15 |
Preferred stock, par value of $0.0001 per share; 20,000,000 shares authorized; 2,778,111 shares issued and outstanding at September 30, 2021 and 3,290,050 shares issued and outstanding at December 31, 2020 | 1 | 1 |
Additional paid in capital | 711,893 | 446,739 |
Less: Common Stock held in treasury, at cost; 2,451,706 shares at September 30, 2021 and December 31, 2020 | (10,949) | (10,949) |
Equity-based compensation | 53,511 | 52,183 |
Accumulated deficit | (1,461,819) | (1,390,038) |
Accumulated other comprehensive loss: | ||
Foreign currency translation adjustment | (8,664) | (7,419) |
Unrealized pension actuarial losses, net of tax | (16,834) | (17,064) |
Total accumulated other comprehensive loss | (25,498) | (24,483) |
Total stockholders' deficit | (732,835) | (926,532) |
Total liabilities and stockholders' deficit | $ 1,180,948 | $ 1,157,779 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 6,534 | $ 5,647 |
Accumulated depreciation | $ 186,389 | $ 193,760 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock shares authorized | 1,600,000,000 | 1,600,000,000 |
Common stock, shares issued | 168,648,451 | 51,693,931 |
Common stock, shares outstanding | 166,196,745 | 49,242,225 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 2,778,111 | 3,290,050 |
Preferred stock, shares outstanding | 2,778,111 | 3,290,050 |
Common stock held in treasury at cost (in shares) | 2,451,706 | 2,451,706 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Condensed Consolidated Statements of Operations | ||||
Revenue | $ 279,229 | $ 305,280 | $ 872,294 | $ 978,453 |
Cost of revenue (exclusive of depreciation and amortization) | 211,731 | 234,222 | 653,398 | 768,548 |
Selling, general and administrative expenses (exclusive of depreciation and amortization) | 43,244 | 42,837 | 121,519 | 140,224 |
Depreciation and amortization | 19,094 | 22,095 | 58,113 | 68,127 |
Related party expense | 2,744 | 1,360 | 7,199 | 4,058 |
Operating profit (loss) | 2,416 | 4,766 | 32,065 | (2,504) |
Other expense (income), net: | ||||
Interest expense, net | 41,757 | 43,612 | 127,755 | 129,639 |
Gain on early extinguishment of debt, net | (28,070) | (28,070) | ||
Sundry expense (income), net | 136 | (434) | (438) | (251) |
Other expense (income), net | 366 | (10,414) | 1,169 | (45,655) |
Net loss before income taxes | (11,773) | (27,998) | (68,351) | (86,237) |
Income tax benefit (expense) | (1,441) | (320) | (3,430) | (3,440) |
Net loss | (13,214) | (28,318) | (71,781) | (89,677) |
Cumulative dividends for Series A Preferred Stock | (822) | (976) | (724) | (394) |
Net loss attributable to common stockholders | $ (14,036) | $ (29,294) | $ (72,505) | $ (90,071) |
Basic (in dollars per share) | $ (0.10) | $ (0.60) | $ (0.83) | $ (1.83) |
Diluted (in dollars per share) | $ (0.09) | $ (0.60) | $ (0.82) | $ (1.83) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Condensed Consolidated Statements of Comprehensive Loss | ||||
Net loss | $ (13,214) | $ (28,318) | $ (71,781) | $ (89,677) |
Other comprehensive income (loss), net of tax | ||||
Foreign currency translation adjustments | 99 | 343 | (1,245) | 1,285 |
Unrealized pension actuarial gains (losses), net of tax | 472 | (332) | 230 | 205 |
Total other comprehensive loss, net of tax | $ (12,643) | $ (28,307) | $ (72,796) | $ (88,187) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands | Common StockPrivate Placement | Common StockAt the Market Offering | Common Stock | Preferred Stock | Treasury Stock | Additional Paid in CapitalPrivate Placement | Additional Paid in CapitalAt the Market Offering | Additional Paid in Capital | Equity-Based Compensation | Foreign Currency Translation Adjustment | Unrealized Pension Actuarial Losses, net of tax | Accumulated Deficit | Private Placement | At the Market Offering | Total |
Beginning balance at Dec. 31, 2019 | $ 15 | $ 1 | $ (10,949) | $ 445,452 | $ 49,336 | $ (7,329) | $ (8,059) | $ (1,211,508) | $ (743,041) | ||||||
Beginning balance (in shares) at Dec. 31, 2019 | 50,283,896 | 4,294,233 | 929,049 | ||||||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | |||||||||||||||
Net loss | (12,670) | (12,670) | |||||||||||||
Equity-based compensation | 861 | 861 | |||||||||||||
Foreign currency translation adjustment | 920 | 920 | |||||||||||||
Net realized pension actuarial gains, net of tax | 504 | $ 504 | |||||||||||||
Shares returned in connection with the Appraisal Action following repayment of Margin Loan (in shares) | (1,523,578) | 1,523,578 | 1,523,578 | ||||||||||||
Preferred shares converted to common stock | (1,004,183) | ||||||||||||||
Preferred shares converted to common stock (in shares) | 409,238 | ||||||||||||||
Ending balance at Mar. 31, 2020 | $ 15 | $ 1 | $ (10,949) | 445,452 | 50,197 | (6,409) | (7,555) | (1,224,178) | $ (753,426) | ||||||
Ending balance (in shares) at Mar. 31, 2020 | 49,169,556 | 3,290,050 | 2,452,627 | ||||||||||||
Beginning balance at Dec. 31, 2019 | $ 15 | $ 1 | $ (10,949) | 445,452 | 49,336 | (7,329) | (8,059) | (1,211,508) | (743,041) | ||||||
Beginning balance (in shares) at Dec. 31, 2019 | 50,283,896 | 4,294,233 | 929,049 | ||||||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | |||||||||||||||
Net loss | (89,677) | ||||||||||||||
Foreign currency translation adjustment | 1,285 | ||||||||||||||
Net realized pension actuarial gains, net of tax | 205 | ||||||||||||||
Settlement gain on related party payable to Ex-Sigma 2 | 1,287 | ||||||||||||||
Ending balance at Sep. 30, 2020 | $ 15 | $ 1 | $ (10,949) | 446,739 | 51,816 | (6,044) | (7,854) | (1,301,187) | (827,463) | ||||||
Ending balance (in shares) at Sep. 30, 2020 | 49,170,477 | 3,290,050 | 2,451,706 | ||||||||||||
Beginning balance at Mar. 31, 2020 | $ 15 | $ 1 | $ (10,949) | 445,452 | 50,197 | (6,409) | (7,555) | (1,224,178) | (753,426) | ||||||
Beginning balance (in shares) at Mar. 31, 2020 | 49,169,556 | 3,290,050 | 2,452,627 | ||||||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | |||||||||||||||
Net loss | (48,691) | (48,691) | |||||||||||||
Equity-based compensation | 921 | 921 | |||||||||||||
Foreign currency translation adjustment | 22 | 22 | |||||||||||||
Net realized pension actuarial gains, net of tax | 33 | 33 | |||||||||||||
Settlement gain on related party payable to Ex-Sigma 2 | 1,287 | 1,287 | |||||||||||||
Adjustment to number of shares withheld in lieu of tax obligation of RSU holders in the year 2018 | 921 | (921) | |||||||||||||
Ending balance at Jun. 30, 2020 | $ 15 | $ 1 | $ (10,949) | 446,739 | 51,118 | (6,387) | (7,522) | (1,272,869) | (799,854) | ||||||
Ending balance (in shares) at Jun. 30, 2020 | 49,170,477 | 3,290,050 | 2,451,706 | ||||||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | |||||||||||||||
Net loss | (28,318) | (28,318) | |||||||||||||
Equity-based compensation | 698 | 698 | |||||||||||||
Foreign currency translation adjustment | 343 | 343 | |||||||||||||
Net realized pension actuarial gains, net of tax | (332) | (332) | |||||||||||||
Ending balance at Sep. 30, 2020 | $ 15 | $ 1 | $ (10,949) | 446,739 | 51,816 | (6,044) | (7,854) | (1,301,187) | (827,463) | ||||||
Ending balance (in shares) at Sep. 30, 2020 | 49,170,477 | 3,290,050 | 2,451,706 | ||||||||||||
Beginning balance at Dec. 31, 2020 | $ 15 | $ 1 | $ (10,949) | 446,739 | 52,183 | (7,419) | (17,064) | (1,390,038) | (926,532) | ||||||
Beginning balance (in shares) at Dec. 31, 2020 | 49,242,225 | 3,290,050 | 2,451,706 | ||||||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | |||||||||||||||
Net loss | (39,200) | (39,200) | |||||||||||||
Equity-based compensation | 387 | 387 | |||||||||||||
Foreign currency translation adjustment | 100 | 100 | |||||||||||||
Net realized pension actuarial gains, net of tax | (157) | (157) | |||||||||||||
Preferred shares converted to common stock | (510,681) | ||||||||||||||
Preferred shares converted to common stock (in shares) | 223,413 | ||||||||||||||
Payment for fractional shares on Reverse Stock Split | (14) | (14) | |||||||||||||
Payment for fractional shares on Reverse Stock Split (in shares) | (5,445) | ||||||||||||||
Issuance of Common Stock | $ 1 | $ 25,079 | $ 25,080 | ||||||||||||
Issuance of Common Stock (in shares) | 9,731,819 | ||||||||||||||
Ending balance at Mar. 31, 2021 | $ 16 | $ 1 | $ (10,949) | 471,804 | 52,570 | (7,319) | (17,221) | (1,429,238) | (940,336) | ||||||
Ending balance (in shares) at Mar. 31, 2021 | 59,192,012 | 2,779,369 | 2,451,706 | ||||||||||||
Beginning balance at Dec. 31, 2020 | $ 15 | $ 1 | $ (10,949) | 446,739 | 52,183 | (7,419) | (17,064) | (1,390,038) | (926,532) | ||||||
Beginning balance (in shares) at Dec. 31, 2020 | 49,242,225 | 3,290,050 | 2,451,706 | ||||||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | |||||||||||||||
Net loss | (71,781) | ||||||||||||||
Foreign currency translation adjustment | (1,245) | ||||||||||||||
Net realized pension actuarial gains, net of tax | 230 | ||||||||||||||
Preferred shares converted to common stock (in shares) | 223,977 | ||||||||||||||
Ending balance at Sep. 30, 2021 | $ 26 | $ 1 | $ (10,949) | 711,893 | 53,511 | (8,664) | (16,834) | (1,461,819) | (732,835) | ||||||
Ending balance (in shares) at Sep. 30, 2021 | 166,196,745 | 2,778,111 | 2,451,706 | ||||||||||||
Beginning balance at Mar. 31, 2021 | $ 16 | $ 1 | $ (10,949) | 471,804 | 52,570 | (7,319) | (17,221) | (1,429,238) | (940,336) | ||||||
Beginning balance (in shares) at Mar. 31, 2021 | 59,192,012 | 2,779,369 | 2,451,706 | ||||||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | |||||||||||||||
Net loss | (19,367) | (19,367) | |||||||||||||
Equity-based compensation | 593 | 593 | |||||||||||||
Foreign currency translation adjustment | (1,444) | (1,444) | |||||||||||||
Net realized pension actuarial gains, net of tax | (85) | (85) | |||||||||||||
Preferred shares converted to common stock | (1,258) | ||||||||||||||
Preferred shares converted to common stock (in shares) | 564 | ||||||||||||||
Issuance of Common Stock | $ 1 | $ 17,372 | $ 17,373 | ||||||||||||
Issuance of Common Stock (in shares) | 11,216,706 | ||||||||||||||
Ending balance at Jun. 30, 2021 | $ 17 | $ 1 | $ (10,949) | 489,176 | 53,163 | (8,763) | (17,306) | (1,448,605) | (943,266) | ||||||
Ending balance (in shares) at Jun. 30, 2021 | 70,409,282 | 2,778,111 | 2,451,706 | ||||||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | |||||||||||||||
Net loss | (13,214) | (13,214) | |||||||||||||
Equity-based compensation | 348 | 348 | |||||||||||||
Foreign currency translation adjustment | 99 | 99 | |||||||||||||
Net realized pension actuarial gains, net of tax | 472 | 472 | |||||||||||||
Issuance of Common Stock | $ 9 | $ 222,717 | $ 222,726 | ||||||||||||
Issuance of Common Stock (in shares) | 95,787,463 | ||||||||||||||
Ending balance at Sep. 30, 2021 | $ 26 | $ 1 | $ (10,949) | $ 711,893 | $ 53,511 | $ (8,664) | $ (16,834) | $ (1,461,819) | $ (732,835) | ||||||
Ending balance (in shares) at Sep. 30, 2021 | 166,196,745 | 2,778,111 | 2,451,706 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities | ||
Net loss | $ (71,781) | $ (89,677) |
Adjustments to reconcile net loss | ||
Depreciation and amortization | 58,113 | 68,127 |
Original issue discount and debt issuance cost amortization | 11,684 | 10,979 |
Gain on early extinguishment of debt, net | (28,070) | |
Provision for doubtful accounts | 2,427 | 415 |
Deferred income tax provision | 484 | (417) |
Share-based compensation expense | 1,519 | 2,480 |
Unrealized foreign currency losses | (604) | (499) |
Gain on sale of assets | (112) | (44,868) |
Fair value adjustment for interest rate swap | (125) | 23 |
Change in operating assets and liabilities, net of effect from acquisitions | ||
Accounts receivable | 14,440 | 44,197 |
Prepaid expenses and other assets | (4,329) | (8,012) |
Accounts payable and accrued liabilities | (57,433) | (48,257) |
Related party payables | 604 | (362) |
Additions to outsource contract costs | (405) | (289) |
Net cash used in operating activities | (73,588) | (66,160) |
Cash flows from investing activities | ||
Purchase of property, plant and equipment | (6,950) | (6,893) |
Additions to internally developed software | (951) | (2,988) |
Cash paid for acquisition, net of cash received | (12,500) | |
Proceeds from sale of assets | 4,252 | 50,126 |
Net cash provided by (used in) investing activities | (3,649) | 27,745 |
Cash flows from financing activities | ||
Cash paid for equity issuance costs from at the market offerings | (9,060) | |
Borrowings under factoring arrangement and Securitization Facilities | 102,141 | 166,786 |
Principal repayment on borrowings under factoring arrangement and Securitization Facilities | (105,112) | (84,121) |
Lease terminations | (125) | (331) |
Cash paid for debt issuance costs | (12,708) | |
Principal payments on finance lease obligations | (8,446) | (9,614) |
Borrowings from senior secured revolving facility | 3,000 | 29,750 |
Repayments on senior secured revolving facility | (55) | (14,200) |
Borrowings from other loans | 8,537 | 28,626 |
Cash paid for debt repurchases | (58,607) | |
Principal repayments on senior secured term loans and other loans | (28,512) | (37,283) |
Net cash provided by financing activities | 177,995 | 66,905 |
Effect of exchange rates on cash | (78) | 619 |
Net decrease in cash and cash equivalents | 100,680 | 29,109 |
Cash, restricted cash, and cash equivalents | ||
Beginning of period | 70,309 | 14,099 |
End of period | 170,989 | 43,208 |
Supplemental cash flow data: | ||
Income tax payments, net of refunds received | 2,766 | 2,767 |
Interest paid | 137,862 | 140,751 |
Noncash investing and financing activities: | ||
Assets acquired through right-of-use arrangements | 2,754 | 2,472 |
Leasehold improvements funded by lessor | 125 | |
Settlement gain on related party payable to Ex-Sigma 2 | 1,287 | |
Accrued capital expenditures | 2,495 | $ 1,699 |
Private Placement | ||
Cash flows from financing activities | ||
Proceeds from issuance of stock | 25,065 | |
At the Market Offering | ||
Cash flows from financing activities | ||
Proceeds from issuance of stock | $ 249,169 |
General
General | 9 Months Ended |
Sep. 30, 2021 | |
General | |
General | 1. General These condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements as of and for the year ended December 31, 2020 included in the Exela Technologies, Inc. (the "Company," "Exela," "we," "our" or "us") annual report on Form 10-K for such period (the “2020 Form 10-K”). The accompanying condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America ("GAAP") and with the instructions to Form 10-Q and Rule 10-01 of Securities and Exchange Commission ("SEC") Regulation S-X as they apply to interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These accounting principles require us to use estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from our estimates. The condensed consolidated financial statements are unaudited, but in our opinion include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim period. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year. Substantial doubt regarding the Company’s ability to meet its obligation as they become due within one year after the date of the financial statements are issued which existed prior to second quarter of 2021, no longer exists from second quarter of 2021 onwards. Net Loss per Share Earnings per share (“EPS”) is computed by dividing net loss available to holders of the Company’s common stock, par value $0.0001 per share (“Common Stock”) by the weighted average number of shares of Common Stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock, using the more dilutive of the two-class method and the if-converted method in periods of earnings. The two class method is an earnings allocation method that determines earnings per share (when there are earnings) for Common Stock and participating securities. The if-converted method assumes all convertible securities are converted into Common Stock. Diluted EPS excludes all dilutive potential shares of Common Stock if their effect is anti-dilutive. As the Company experienced net losses for the periods presented, the impact of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”) was calculated using the if-converted method. As of September 30, 2021, the outstanding shares of the Company’s Series A Preferred Stock, if converted would have resulted in an additional 1,276,902 shares of Common Stock outstanding, however, they were not included in the computation of diluted loss per share as their effects were anti-dilutive (i.e., reduces the net loss per share). The Company was originally incorporated as a special purpose acquisition company under the name Quinpario Acquisition Corp 2 (“Quinpario”), which changed its name to Exela Technologies, Inc. in July 2017. The Company also did not include the effect of 35,000,000 warrants sold in the Quinpario Initial Public Offering (“IPO”), the effect of 9,731,819 warrants sold in a private placement of securities on March 18, 2021 or the effect of the aggregate number of shares issuable pursuant to outstanding restricted stock units, performance units and options of 10,639,738 and 1,725,249 as of September 30, 2021 and 2020, respectively, in the calculation of diluted loss per share for the three and nine months ended September 30, 2021 and 2020, because their effects were anti-dilutive. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net loss attributable to common stockholders (A) $ (14,036) $ (29,294) $ (72,505) $ (90,071) Weighted average common shares outstanding - basic and diluted (B) 150,655,012 49,170,477 87,958,170 49,135,159 Loss Per Share: Basic and diluted (A/B) $ (0.09) $ (0.60) $ (0.82) $ (1.83) The weighted average common shares outstanding - basic and diluted, in the table above, exclude in each case the 1,523,578 shares returned to the Company in the first quarter of 2020 in connection with the Appraisal Action which became treasury stock. Sale of Non-Core Assets On March 16, 2020, the Company and its indirect wholly owned subsidiaries, Merco Holdings, LLC and SourceHOV Tax, LLC entered into a Membership Interest Purchase Agreement with Gainline Source Intermediate Holdings LLC at which time Gainline Source Intermediate Holdings LLC acquired all of the outstanding membership interests of SourceHOV Tax, LLC for $40.0 million subject to adjustment as set forth in the purchase agreement. The Company recognized a gain of $35.5 million on the sale of SourceHOV Tax, LLC during the first quarter of 2020. The gain on sale of SourceHOV Tax, LLC is included in Other expense (income), net in the condensed consolidated statements of operations for the nine months ended September 30, 2020. On July 22, 2020, the Company completed the sale of its physical records storage and logistics business for a purchase price of $12.3 million. The Company recognized a gain of $9.8 million on the sale of physical records storage and logistics business during the third quarter of 2020. The gain on sale of physical records storage and logistics business is included in Other expense (income), net in the condensed consolidated statements of operations for the three and nine months ended September 30, 2020. Impact of COVID-19 The coronavirus pandemic (“COVID-19”) continues to expose our global operations to risks. COVID-19 continues to result in challenging operating environments and has affected almost all of the countries and territories in which we operate. Authorities across the world have implemented measures like travel bans, quarantines, curfews, restrictions on public gatherings, shelter in place orders, business shutdowns and closures to control the spread of COVID-19. These measures, alongside the virus itself, have impacted, and we expect will continue to impact, us, our customers, suppliers and other third parties with whom we do business, as well as the global economy, demand for our services and spending across many sectors, as a whole. While some jurisdictions have now started to implement plans for reopening, there are others which have had to return to restrictions due to increased spread of COVID-19. The Company is dependent on its workforce to deliver its solutions and services. While we have developed and implemented health and safety protocols, business continuity plans and crisis management protocols in an effort to try to mitigate the negative impact of COVID-19, restrictions such as shutdowns, social distancing and stay-at-home orders in various jurisdictions have impacted and will continue to impact the Company’s ability to deploy its workforce effectively. Vaccination availability in certain countries is limited and that is resulting in some of our employees not being available. We have been performing and delivering all of our essential services out of our facilities and delivery centers. Most of our customer site employees (onsite) continue to perform the work and take directions from our customers. A part of our non-essential services related workforce has started to operate from offices and delivery centers, but many are still operating in a remote work environment. Currently we are experiencing minor changes in work types, and this may evolve over the remaining year as customer’s priorities are changing and customers are pushing for more automation. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report and the extent to which COVID-19 will ultimately impact the Company’s business depends upon various dynamic factors which are difficult to reliably predict. Management continues to actively monitor the global situation and its impact on the Company’s financial condition, liquidity, operations, suppliers, industry, and workforce. Overall, in light of the changing nature and continuing uncertainty around the COVID-19 pandemic, our ability to fully estimate the impact of COVID-19 on our results of operations, financial condition, or liquidity in future periods remains limited. Shifts in our customers’ priorities and changes to the transaction types offered are still evolving and the dynamic situation hinders reliable forecasting. The effects of the pandemic on our business are unlikely to be fully realized, or reflected in our financial results, until future periods. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2021 | |
New Accounting Pronouncements | |
New Accounting Pronouncements | 2. New Accounting Pronouncements Recently Adopted Accounting Pronouncements Effective January 1, 2021, the Company adopted Accounting Standards Update (“ASU”) no. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Income Taxes, Recently Issued Accounting Pronouncements In July 2021, the FASB issued ASU no. 2021-05, Leases (Topic 842): Lessors — Certain Leases with Variable Lease Payments In May 2021, the FASB issued ASU no. 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the Emerging Issues Task Force) In August 2020, the FASB issued ASU no. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity In June 2016, the FASB issued ASU no. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, Financial Instruments—Credit Losses (Topic 326) Codification Improvements to Topic 326, Financial Instruments—Credit Losses |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Significant Accounting Policies | |
Significant accounting policies | 3. Significant Accounting Policies The information presented below supplements the Significant Accounting Policies information presented in our 2020 Form 10-K. Revenue Recognition We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers Nature of Services Our primary performance obligations are to stand ready to provide various forms of business processing services, consisting of a series of distinct services, but that are substantially the same, and have the same pattern of transfer over time, and accordingly are combined into a single performance obligation. Our promise to our customers is typically to perform an unknown or unspecified quantity of tasks and the consideration received is contingent upon the customers’ use (i.e., number of transactions processed, requests fulfilled, etc.); as such, the total transaction price is variable. We allocate the variable fees to the single performance obligation charged to the distinct service period in which we have the contractual right to bill under the contract. Disaggregation of Revenues The Company is organized into three segments: Information & Transaction Processing Solutions (“ITPS”), Healthcare Solutions (“HS”), and Legal & Loss Prevention Services (“LLPS”) (See Note 13). The following tables disaggregate revenue from contracts by segment and by geographic region for the three and nine months ended September 30, 2021 and 2020: Three Months Ended September 30, 2021 2020 ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 157,207 $ 53,995 $ 16,930 $ 228,132 $ 178,075 $ 54,209 $ 16,706 $ 248,990 EMEA 46,561 — — 46,561 51,232 — — 51,232 Other 4,536 — — 4,536 5,058 — — 5,058 Total $ 208,304 $ 53,995 $ 16,930 $ 279,229 $ 234,365 $ 54,209 $ 16,706 $ 305,280 Nine Months Ended September 30, 2021 2020 ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 492,620 $ 161,292 $ 53,564 $ 707,476 $ 592,238 $ 167,424 $ 49,524 $ 809,186 EMEA 150,662 — — 150,662 152,222 — — 152,222 Other 14,156 — — 14,156 17,045 — — 17,045 Total $ 657,438 $ 161,292 $ 53,564 $ 872,294 $ 761,505 $ 167,424 $ 49,524 $ 978,453 Contract Balances The following table presents contract assets, contract liabilities and contract costs recognized at September 30, 2021 and December 31, 2020: September 30, December 31, 2021 2020 Accounts receivable, net $ 187,819 $ 206,868 Deferred revenues 17,138 16,919 Customer deposits 15,688 21,277 Costs to obtain and fulfill a contract 2,522 3,295 Accounts receivable, net includes $25.6 million and $23.2 million as of September 30, 2021 and December 31, 2020, respectively, representing amounts not yet billed to customers. We have accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers. Deferred revenues relate to payments received in advance of performance under a contract. A significant portion of this balance relates to maintenance contracts or other service contracts where we received payments for upfront conversions or implementation activities which do not transfer a service to the customer but rather are used in fulfilling the related performance obligations that transfer over time. The advance consideration received from customers is deferred over the contract term. We recognized revenue of $15.2 million during the nine months ended September 30, 2021 that had been deferred as of December 31, 2020. Costs incurred to obtain and fulfill contracts are deferred and presented as part of intangible assets, net and expensed on a straight-line basis over the estimated benefit period. We recognized $1.2 million of amortization for these costs for the nine months ended September 30, 2021 within depreciation and amortization expense. These costs represent incremental external costs or certain specific internal costs that are directly related to the contract acquisition or fulfillment and can be separated into two principal categories: contract commissions and fulfillment costs. Applying the practical expedient in ASC 340-40-25-4, we recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period would have been one year or less. These costs are included in Selling, general and administrative expenses. The effect of applying this practical expedient was not material. Customer deposits consist primarily of amounts received from customers in advance for postage. These advanced postage deposits are used to cover the costs associated with postage, with the corresponding postage revenue being recognized as services are performed. Performance Obligations At the inception of each contract, we assess the goods and services promised in our contracts and identify each distinct performance obligation. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts. For the majority of our business and transaction processing service contracts, revenues are recognized as services are provided based on an appropriate input or output method, typically based on the related labor or transactional volumes. A certain number of our contracts have multiple performance obligations, including contracts that combine software implementation services with post-implementation customer support. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we estimate our expected costs of satisfying a performance obligation and add an appropriate margin for that distinct good or service. We also use the adjusted market approach whereby we estimate the price that customers in the market would be willing to pay. In assessing whether to allocate variable consideration to a specific part of the contract, we consider the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract. A certain number of our software implementation performance obligations are satisfied at a point in time, typically when customer acceptance is obtained. When evaluating the transaction price, we analyze, on a contract-by-contract basis, all applicable variable consideration. The nature of our contracts give rise to variable consideration, including volume discounts, contract penalties, and other similar items that generally decrease the transaction price. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We do not anticipate significant changes to our estimates of variable consideration. We include reimbursements from customers, such as postage costs, in revenue, while the related costs are included in cost of revenue. Transaction Price Allocated to the Remaining Performance Obligations In accordance with optional exemptions available under ASC 606, we did not disclose the value of unsatisfied performance obligations for (a) contracts with an original expected length of one year or less, and (b) contracts for which variable consideration relates entirely to an unsatisfied performance obligation, which comprise the majority of our contracts. We have certain non-cancellable contracts where we receive a fixed monthly fee in exchange for a series of distinct services that are substantially the same and have the same pattern of transfer over time, with the corresponding remaining performance obligations as of September 30, 2021 in each of the future periods below: Estimated Remaining Fixed Consideration for Unsatisfied Remainder of 2021 $ 12,123 2022 39,624 2023 33,794 2024 29,611 2025 27,748 2026 and thereafter 302 Total $ 143,202 |
Intangibles Assets and Goodwill
Intangibles Assets and Goodwill | 9 Months Ended |
Sep. 30, 2021 | |
Intangibles Assets and Goodwill | |
Intangibles Assets and Goodwill | 4. Intangibles Assets and Goodwill Intangible Assets Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and consists of the following: September 30, 2021 Gross Carrying Accumulated Intangible Amount (a) Amortization Asset, net Customer relationships $ 508,306 $ (306,646) $ 201,660 Developed technology 88,553 (87,486) 1,067 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 16,690 (14,168) 2,522 Internally developed software 48,094 (25,888) 22,206 Assembled workforce 4,473 (3,075) 1,398 Purchased software 26,749 (4,904) 21,845 Intangibles, net $ 701,265 $ (445,267) $ 255,998 December 31, 2020 Gross Carrying Accumulated Intangible Amount (a) Amortization Asset, net Customer relationships $ 508,485 $ (278,306) $ 230,179 Developed technology 88,553 (87,111) 1,442 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 16,331 (13,036) 3,295 Internally developed software 47,182 (20,152) 27,030 Assembled workforce 4,473 (2,237) 2,236 Purchased software 26,749 (3,567) 23,182 Intangibles, net $ 700,173 $ (407,509) $ 292,664 (a) Amounts include intangible assets acquired in business combinations and asset acquisitions. (b) The carrying amount of trade names for 2021 and 2020 is net of accumulated impairment losses of $44.1 million. Carrying amount of $5.3 million as at September 30, 2021 represents indefinite-lived intangible asset. Goodwill The Company’s operating segments are significant strategic business units that align its products and services with how it manages its business, approach the markets and interacts with its clients. The Company is organized into three segments: ITPS, HS, and LLPS (See Note 13). Goodwill by reporting segment consists of the following: Balances as at January 1, 2020 (a) Additions Deletions Impairments Currency Translation Adjustments Balances as at December 31, 2020 (a) ITPS $ 254,120 $ — $ — $ — $ 10 $ 254,130 HS 86,786 — — — — 86,786 LLPS 18,865 — — — — 18,865 Total $ 359,771 $ — $ — $ — $ 10 $ 359,781 Balances as at January 1, 2021 (a) Additions Deletions Impairments Currency Translation Adjustments Balances as at September 30, 2021 (a) ITPS $ 254,130 $ — $ (825) $ — $ (525) $ 252,780 HS 86,786 — — — — 86,786 LLPS 18,865 — — — — 18,865 Total $ 359,781 $ — $ (825) $ — $ (525) $ 358,431 (a) The goodwill amount for all periods presented is net of accumulated impairment amounts. Accumulated impairment relating to ITPS is $316.5 million as at September 30, 2021; and $317.5 million as at December 31, 2020 and December 31, 2019. Accumulated impairment relating to LLPS is $243.4 million as at September 30, 2021, December 31, 2020 and December 31, 2019. |
Long-Term Debt and Credit Facil
Long-Term Debt and Credit Facilities | 9 Months Ended |
Sep. 30, 2021 | |
Long-Term Debt and Credit Facilities | |
Long-Term Debt and Credit Facilities | 5. Long-Term Debt and Credit Facilities Senior Secured Notes On July 12, 2017, the Company issued $1.0 billion in aggregate principal amount of 10.0% First Priority Senior Secured Notes due 2023 (the “Notes”). The Notes are guaranteed by certain subsidiaries of the Company. The Notes bear interest at a rate of 10.0% per year. The Company pays interest on the Notes on January 15 and July 15 of each year, commencing on January 15, 2018. The Notes will mature on July 15, 2023. Senior Credit Facilities On July 12, 2017, the Company entered into a First Lien Credit Agreement (“Credit Agreement” or “First Lien Credit Agreement”) with Royal Bank of Canada, Credit Suisse AG, Cayman Islands Branch, Natixis, New York Branch and KKR Corporate Lending LLC providing Exela Intermediate LLC, a wholly owned subsidiary of the Company, upon the terms and subject to the conditions set forth in the Credit Agreement, (i) a $350.0 million senior secured term loan maturing July 12, 2023 with an original issue discount of $7.0 million, and (ii) a $100.0 million senior secured revolving facility maturing July 12, 2022. As of September 30, 2021 and December 31, 2020, the Company had outstanding irrevocable letters of credit totaling approximately $15.0 million and $19.5 million, respectively, under the senior secured revolving facility. The Credit Agreement provided for the following interest rates for borrowings under the senior secured term facility and senior secured revolving facility: at the Company’s option, either (1) an adjusted LIBOR, subject to a 1.0% floor in the case of term loans, or (2) a base rate, in each case plus an applicable margin. The initial applicable margin for the senior secured term facility was 7.5% with respect to LIBOR borrowings and 6.5% with respect to base rate borrowings. The initial applicable margin for the senior secured revolving facility was 7.0% with respect to LIBOR borrowings and 6.0% with respect to base rate borrowings. The applicable margin for borrowings under the senior secured revolving facility is subject to step-downs based on leverage ratios. The senior secured term loan is subject to amortization payments, commencing on the last day of the first full fiscal quarter of the Company following the closing date, of 0.6% of the aggregate principal amount for each of the first eight payments and 1.3 % of the aggregate principal amount for payments thereafter, with any balance due at maturity. Term Loan Repricing On July 13, 2018, Exela repriced the $343.4 million of term loans outstanding under its senior secured credit facilities (the “Repricing”). The Repricing was accomplished pursuant to a First Amendment to the First Lien Credit Agreement (the “First Amendment”), dated as of July 13, 2018, by and among the Company’s subsidiaries Exela Intermediate Holdings LLC, Exela Intermediate, LLC, each “Subsidiary Loan Party” listed on the signature pages thereto, Royal Bank of Canada, as administrative agent, and each of the lenders party thereto, whereby the Company borrowed $343.4 million of refinancing term loans (the “Repricing Term Loans”) to refinance the Company’s existing senior secured term loans. In accordance with ASC 470 – Debt – Modifications and Extinguishments, The Repricing Term Loans bear interest at a rate per annum of, at the Company’s option, either (a) a LIBOR rate determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a 1.0% floor, or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus 0.5%, (ii) the prime rate and (iii) the one-month adjusted LIBOR plus 1.0%, in each case plus an applicable margin of 6.5% for LIBOR loans and 5.5% for base rate loans. The interest rates applicable to the Repricing Term Loans are 100 2018 Incremental Term Loans On July 13, 2018, the Company borrowed an additional $30.0 million pursuant to incremental term loans (the “Incremental Term Loans”) under the First Amendment. The proceeds of the Incremental Term Loans were used by the Company for general corporate purposes and to pay fees and expenses in connection with the First Amendment. The interest rates applicable to the Incremental Term Loans are the same as those for the Repricing Term Loans. The Company may voluntarily repay the Repricing Term Loans and the Incremental Term Loans (collectively, the “Term Loans”) at any time, without prepayment premium or penalty, subject to customary “breakage” costs with respect to LIBOR rate loans. The Incremental Term Loans will mature on July 12, 2023, the same maturity date as the Repricing Term Loans and prior senior secured term loans. Other than as described above, the terms, conditions and covenants applicable to the Repricing Term Loans and the Incremental Term Loans are consistent with the terms, conditions and covenants that were applicable to the existing senior secured loans under the Credit Agreement. 2019 Incremental Term Loan On April 16, 2019, the Company borrowed an additional $30.0 million pursuant to incremental term loans (the “2019 Incremental Term Loans”) under the Second Amendment to First Lien Credit Agreement (the “Second Amendment”). The proceeds of the 2019 Incremental Term Loans were used to replace the cash spent for acquisitions, pay related fees, expenses and related borrowings and for general corporate purposes. The 2019 Incremental Term Loans will mature on July 12, 2023, the same maturity date as the Incremental Term Loans, Repricing Term Loans and prior senior secured term loans under the Credit Agreement. The 2019 Incremental Term Loans bear interest at a rate per annum that is the same as the Company’s Repricing Term Loans under the senior credit facility. The 2019 Incremental Term Loans will mature on July 12, 2023, the same maturity date as the Term Loans. The Company may voluntarily repay the 2019 Incremental Term Loans at any time, without prepayment premium or penalty, subject to customary “breakage” costs with respect to LIBOR rate loans. Other than as described above, the terms, conditions and covenants applicable to the 2019 Incremental Term Loans are consistent with the terms, conditions and covenants that are applicable to the Repricing Term Loans and 2018 Incremental Term Loans under the Credit Agreement. The Repricing and issuance of the 2018 and 2019 Incremental Term Loans resulted in a partial debt extinguishment, for which Exela recognized $1.4 million in debt extinguishment costs during the year ended December 31, 2019. Third Amendment On May 18, 2020, the Company amended the Credit Agreement (the Third Amendment to First Lien Credit Agreement (the “Third Amendment”) to, among other things, extend the time for delivery of its audited financial statements for the year ended December 31, 2019 and its financial statements for the quarter ended March 31, 2020. Upon the Company’s delivery of the annual and quarterly financial statements within the time frames stated therein (which the Company satisfied during the month of June 2020), the Company became in compliance with respect to the financial statement delivery requirements set forth in the Credit Agreement. Pursuant to the Third Amendment, the Company also amended the Credit Agreement to, among other things: restrict the borrower and its subsidiaries’ ability to designate or invest in unrestricted subsidiaries; incur certain debt; create certain liens; make certain investments; pay certain dividends or other distributions on account of its equity interests; make certain asset sales or other dispositions (or utilize the proceeds of certain asset sales to reinvest in the business); or enter into certain affiliate transactions pursuant to the negative covenants under the Credit Agreement. Further, pursuant to the amendment, the borrower under the Credit Agreement is also required to maintain a minimum Liquidity (as defined in the amendment) of $35.0 million. In connection with this amendment, the Company paid a forbearance fee of $5 million to the consenting lenders. The Company concluded that the amendment represents modification of debt under ASC 470-50. Accordingly, the forbearance fee paid was added to unamortized debt issuance cost which shall be amortized using updated effective interest rate based on modified cash flows. Repurchases In July 2021 the Company commenced a debt buyback program to repurchase Notes and senior secured term loan under the Credit Agreement, which is ongoing. During the three and nine months ended September 30, 2021, we repurchased $54.5 million of the outstanding $1.0 billion aggregate principal amount of our Notes for a net cash consideration of $40.2 million through September 30, 2021. The gain on early extinguishment of debt for the Notes during the three and nine months ended September 30, 2021 totaled $13.7 million and is inclusive of $0.5 million and $0.2 million write off of original issue discount and debt issuance costs, respectively. During the three and nine months ended September 30, 2021, we also settled repurchase of $35.1 million of the outstanding $355.1 million aggregate principal amount of our senior secured term loan under the Credit Agreement for a net cash consideration of $19.0 million through September 30, 2021. The gain on early extinguishment of debt for the senior secured term loan during the three and nine months ended September 30, 2021 totaled $14.4 million and is inclusive of $0.4 million and $1.4 million write off of original issue discount and debt issuance costs, respectively. Gain on the early extinguishment of debt during the nine months ended September 30, 2021 is reported within Gain on early extinguishment of debt, net within our condensed consolidated statements of operations. Securitization Facilities On January 10, 2020, certain subsidiaries of the Company entered into the $160.0 million A/R Facility with a five year term. In the A/R Facility, (i) Exela Receivables 1, LLC (the “A/R Borrower”), a wholly-owned indirect subsidiary of the Company, entered into a Loan and Security Agreement (the “A/R Loan Agreement”), dated as of January 10, 2020, with TPG Specialty Lending, Inc., as administrative agent (the “A/R Administrative Agent”), PNC Bank National Association, as LC Bank (the “A/R LC Bank”), the lenders (each, an “A/R Lender” and collectively the “A/R Lenders”) and the Company, as initial servicer, pursuant to which the A/R Lenders made loans (the “A/R Loan”) to the A/R Borrower used to purchase certain receivables and related assets from its sole member, Exela Receivables Holdco, LLC (the “A/R Parent SPE”), a wholly-owned indirect subsidiary of the Company, (ii) sixteen other indirect, wholly-owned U.S. subsidiaries of the Company (collectively, the “A/R Originators”) sold or contributed to the A/R Parent SPE certain receivables and related assets in consideration for a combination of cash, equity in the A/R Parent SPE and/or letters of credit issued by the A/R LC Bank to the A/R Originators; and (iii) the A/R Parent SPE sold or contributed to the Borrower certain receivables and related assets in consideration for a combination of cash, equity in the A/R Borrower and/or letters of credit issued by the LC Bank to the beneficiaries elected by A/R Parent SPE. The Company used the proceeds of the initial borrowings under the A/R Facility to repay outstanding revolving borrowings under the Company’s senior credit facility and to provide additional liquidity and funding for the ongoing business needs of the Company and its subsidiaries. The A/R Borrower and A/R Parent SPE were formed in December 2019, and are identified as variable interest entities (“VIEs”) and consolidated into the Company’s financial statements following variable interest entities (“VIE”) consolidation model under ASC 810. The A/R Borrower and A/R Parent SPE are bankruptcy remote entities and as such their assets are not available to creditors of the Company or any of its subsidiaries. Since January 10, 2020, the parties amended and waived the A/R Facility several times to address contractually, the occurrence of certain events, including among other things, the delay in delivery of annual financial statements for the fiscal year ended 2019, financial statements for the quarter ended March 31, 2020, and the Initial Servicer’s Liquidity (as defined in the A/R Facility) falling below $60.0 million. In connection with these amendments a forbearance fee of $4.8 million was due and added to the outstanding principal balance of the loans. The Company concluded that the amendment represented modification of debt under ASC 470-50. Accordingly, the forbearance fee paid was added to unamortized debt issuance cost and amortized ratably over the remaining term of the A/R facility. Each loan under the A/R Facility originally bore interest on the unpaid principal amount as follows: (1) if a Base Rate Loan, at 3.75% plus a rate equal to the greater of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50%, (c) the Adjusted LIBOR Rate (calculated based upon an Interest Period of one month and determined on a daily basis) plus 1.00%, and (d) 4.50% per annum and (2) if a LIBOR Rate Loan, 4.75% plus a floating LIBOR Rate with a 1.00% LIBOR floor. In connection with the above described amendments to the A/R Facility, the applicable margin of the Base Rate Loans was increased to 5.75% and the LIBOR Rate Loans was increased to 6.75%. On December 17, 2020, the Company repaid in full the loans outstanding under the A/R Facility. The aggregate outstanding principal amount of loans under the A/R Facility as of such date was approximately $83.0 million. The early termination of the A/R Facility triggered an early termination fee of $0.8 million and required repayment of approximately $0.5 million in respect of principal, accrued interest and fees. All obligations under the A/R Facility (other than contingent indemnification obligations that expressly survive termination) terminated upon repayment. The A/R Facility was replaced by the Securitization Facility as described below. Repayment of A/R Facility was treated as an extinguishment of debt under ASC 470-50. Accordingly, the Company wrote off the unamortized balance of $8.2 million of debt issuance costs related to A/R facility. On December 17, 2020, certain subsidiaries of Company closed on the $145.0 million Securitization Facility with a five year term. Borrowings under the Securitization Facility are subject to an improved borrowing base definition over the A/R Facility that consists of receivables and, subject to contribution, further supported by inventory and intellectual property, in each case, subject to certain eligibility criteria, concentration limits and reserves. The Securitization Facility provided for an initial funding of approximately $92.0 million supported by the receivables portion of the borrowing base and, subject to contribution, a further funding of approximately $53.0 million supported by inventory and intellectual property. On December 17, 2020 the Company made the initial borrowing of approximately $92.0 million under the Securitization Facility and used a portion of the proceeds to repay the A/R Facility and used the remaining proceeds for general corporate purposes. On April 11, 2021, the Company amended the Securitization Loan Agreement and agreed to, among other things, extend the option to access further funding of approximately $53.0 million in additional borrowings from April 10, 2021 to September 30, 2021 upon the contribution of inventory and intellectual property to support the borrowing base. The initial documentation for the Securitization Facility includes (i) a Loan and Security Agreement (the “Securitization Loan Agreement”), dated as of December 10, 2020, by and among Exela Receivables 3, LLC (the “Securitization Borrower”), a wholly-owned indirect subsidiary of the Company, the lenders (each, a “Securitization Lender” and collectively the “Securitization Lenders”), Alter Domus (US), LLC, as administrative agent (the “Securitization Administrative Agent”) and the Company, as initial servicer, pursuant to which the Securitization Lenders will make loans to the Securitization Borrower to be used to purchase receivables and related assets from the Securitization Parent SPE (as defined below), (ii) a First Tier Receivables Purchase and Sale Agreement (the, dated as of December 17, 2020, by and among Exela Receivables 3 Holdco, LLC (the “Securitization Parent SPE”), a wholly-owned indirect subsidiary of the Company, and certain other indirect, wholly-owned subsidiaries of the Company listed therein (collectively, the “Securitization Originators”), and the Company, as initial servicer, pursuant to which each Securitization Originator has sold or contributed and will sell or contribute to the Securitization Parent SPE certain receivables and related assets in consideration for a combination of cash and equity in the Securitization Parent SPE, (iii) a Second Tier Receivables Purchase and Sale Agreement, dated as of December 17, 2020, by and among, the Securitization Borrower, the Securitization Parent SPE and the Company, as initial servicer, pursuant to which Securitization Parent SPE has sold or contributed and will sell or contribute to the Securitization Borrower certain receivables and related assets in consideration for a combination of cash and equity in the Securitization Borrower, (iv) the Sub-Servicing Agreement, dated as of December 17, 2020, by and among the Company and each Securitization Originator, (v) the Pledge and Guaranty, dated as of the December 10, 2020, between the Securitization Parent SPE and the Administrative Agent, and (vi) the Performance Guaranty, dated as of December 17, 2020, between the Company, as performance guarantor, and the Securitization Administrative Agent (and together with all other certificates, instruments, UCC financing statements, reports, notices, agreements and documents executed or delivered in connection with the Securitization Loan Agreement, the “Securitization Agreements”). The Securitization Borrower, the Company, the Securitization Parent SPE and the Securitization Originators provide customary representations and covenants under the Securitization Agreements. The Securitization Loan Agreement provides for certain events of default upon the occurrence of which the Securitization Administrative Agent may declare the facility’s termination date to have occurred and declare the outstanding Securitization Loan and all other obligations of the Securitization Borrower to be immediately due and payable, however the Securitization Facility does not include an ongoing liquidity covenant like the A/R Facility and aligns reporting obligations with the Company’s other material indebtedness agreements. The Securitization Borrower and Securitization Parent SPE were formed in December 2020, and are identified as VIEs and consolidated into the Company’s financial statements following VIE consolidation model under ASC 810. The Securitization Borrower and Securitization Parent SPE are bankruptcy remote entities and as such their assets are not available to creditors of the Company or any of its subsidiaries. Each loan under the Securitization Facility bears interest on the unpaid principal amount as follows: (i) if a Base Rate Loan, at a rate per annum equal to (x) the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus Long-Term Debt Outstanding As of September 30, 2021 and December 31, 2020, the following long-term debt instruments were outstanding: September 30, December 31, 2021 2020 Other (a) $ 29,589 37,653 Term loan under first lien credit agreement (b) 301,319 343,597 Senior secured notes (c) 934,582 984,216 Secured borrowings under Securitization Facility 91,947 91,947 Revolver 83,488 80,543 Total debt 1,440,925 1,537,956 Less: Current portion of long-term debt (114,346) (39,952) Long-term debt, net of current maturities $ 1,326,579 $ 1,498,004 (a) Other debt represents outstanding loan balances associated with various hardware, software purchases, maintenance and leasehold improvements along with loans and receivables factoring arrangement entered into by subsidiaries of the Company. (b) Net of unamortized original issue discount and debt issuance costs of $ 3.1 million and $11.0 million as of September 30, 2021 and $4.8 million and $17.1 million as of December 31, 2020. (c) Net of unamortized debt discount and debt issuance costs of $ 7.8 million and $3.1 million as of September 30, 2021 and $11.3 million and $4.5 million as of December 31, 2020 . |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Taxes | |
Income Taxes | 6. Income Taxes The Company applies an estimated annual effective tax rate (“ETR”) approach for calculating a tax provision for interim periods, as required under GAAP. The Company recorded an income tax expense of $1.4 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively. The Company recorded an income tax expense of $3.4 million for each of the nine months ended September 30, 2021 and 2020. The Company's ETR of (12.2%) and (5.0%) for the three and nine months ended September 30, 2021 differed from the expected U.S. statutory tax rate of 21.0% and was primarily impacted by permanent tax adjustments, state and local current expense, foreign operations, and valuation allowances, including valuation allowances on a portion of the Company’s deferred tax assets on U.S. disallowed interest expense carryforwards created by the provisions of The Tax Cuts and Jobs Act (“TCJA”). For the three and nine months ended September 30, 2020, the Company’s ETR of ( 1.1% ) and ( 4.0% ) differed from the expected U.S. statutory tax rate of 21.0% , and was primarily impacted by permanent tax adjustments, state and local current expense, foreign operations, and valuation allowances, including valuation allowances on a portion of the Company’s U.S. disallowed interest expense carryforwards created by the provisions of the TCJA. As of September 30, 2021, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2020. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2021 | |
Employee Benefit Plans | |
Employee Benefit Plans | 7. Employee Benefit Plans German Pension Plan The Company’s subsidiary in Germany provides pension benefits to certain retirees. Employees eligible for participation include all employees who started working for the Company or its predecessors prior to September 30, 1987 and have finished a qualifying period of at least 10 years. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. The German pension plan is an unfunded plan and therefore has no plan assets. No new employees are registered under this plan and the participants who are already eligible to receive benefits under this plan are no longer employees of the Company. U.K. Pension Plan The Company’s subsidiary in the United Kingdom provides pension benefits to certain retirees and eligible dependents. Employees eligible for participation include all full-time regular employees who were more than three years from retirement prior to October 2001. A retirement pension or a lump-sum payment may be paid dependent upon length of service at the mandatory retirement age. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants as at the earlier of two dates, the participants leaving the Company or December 31, 2015. Norway Pension Plan The Company’s subsidiary in Norway provides pension benefits to eligible retirees and eligible dependents. Employees eligible for participation include all employees who were more than three years from retirement prior to March 2018. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants as at the later of two dates, the participants leaving the Company or April 30, 2018. Asterion Pension Plan In April 2018 through its acquisition of Asterion International Group the Company became obligated to provide pension benefits to eligible retirees and eligible dependents of Asterion. Employees eligible for participation include all full-time regular employees who were more than three years from retirement prior to July 2003. A retirement pension or a lump-sum payment may be paid dependent upon length of service at the mandatory retirement age. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants as at the earlier of two dates, the participants leaving the Company or April 10, 2018. Tax Effect on Accumulated Other Comprehensive Loss As of September 30, 2021 and December 31, 2020 the Company recorded actuarial losses of $16.8 million and $17.1 million in accumulated other comprehensive loss on the condensed consolidated balance sheets, respectively, which is net of a deferred tax benefit of $2.0 million for each period. Pension Expense The components of the net periodic benefit cost are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Service cost $ 19 $ 19 $ 57 $ 57 Interest cost 425 494 1,275 1,482 Expected return on plan assets (606) (639) (1,818) (1,917) Amortization: Amortization of prior service cost 45 25 135 75 Amortization of net loss 840 430 2,520 1,290 Net periodic benefit cost $ 723 $ 329 $ 2,169 $ 987 The Company records pension interest cost within Interest expense, net. Expected return on plan assets, amortization of prior service costs, and amortization of net losses are recorded within Other income, net. Service cost is recorded within Cost of revenue. Employer Contributions The Company’s funding of employer contributions is based on governmental requirements and differs from those methods used to recognize pension expense. The Company made contributions of $2.4 million and $1.8 million to its pension plans during the nine months ended September 30, 2021 and 2020, respectively. The Company has funded the pension plans with the required contributions for 2021 based on current plan provisions. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies Appraisal Action On September 21, 2017, former stockholders of SourceHOV Holdings, Inc. (“SourceHOV”), who owned 10,304 shares of SourceHOV common stock, filed a petition for appraisal pursuant to 8 Del. C. § 262 in the Delaware Court of Chancery (the “Court”), captioned Manichaean Capital, LLC, et al. v. SourceHOV Holdings, Inc., C.A. No. 2017 0673 JRS (the “Appraisal Action”). The Appraisal Action arose out of a preliminary transaction in connection with the acquisition of SourceHOV and Novitex Holdings, Inc., by Quinpario in July 2017 (“Novitex Business Combination”), and the petitioners sought, among other things, a determination of the fair value of their SourceHOV shares at the time of the Novitex Business Combination; an order that SourceHOV pay that value to the petitioners, together with interest at the statutory rate; and an award of costs, attorneys’ fees, and other expenses. During the trial the parties and their experts offered competing valuations of the SourceHOV shares as of the date of the Novitex Business Combination. SourceHOV argued the value was no more than SourceHOV appealed the judgment in the Appraisal Action on September 30, 2020. On January 22, 2021, the Delaware Supreme Court affirmed the judgment of the Delaware Court of Chancery in favor of the petitioners. To date, SourceHOV has paid The petitioners have filed additional actions to recognize the judgment against SourceHOV, an action alleging unjust enrichment and seeking restitution and to pierce the corporate veil and seek alter ego liability against Exela Technologies, Inc. and over 50 alleged subsidiaries and/or affiliates in an attempt to collect the award in the Appraisal Action from entities other than SourceHOV, and an action against SourceHOV and certain of its directors and officers alleging creditor derivative claims relating to the Company’s securitization facilities. In early February 2021, petitioners also filed a motion for a preliminary injunction in the derivative action in which they sought a court order to force Exela to set aside sufficient assets for SourceHOV to pay the potential judgment in the derivative action prior to paying other creditors or, in the alternative, to pay all creditors, including the creditors of SourceHOV, on a pari passu As a result of the Appraisal Action and following repayment of the Margin Loan by Ex-Sigma 2, LLC (“Ex-Sigma 2”) 1,523,578 shares of our Common Stock issued to Ex-Sigma 2, our largest shareholder following the Novitex Business Combination, were returned to the Company during the first quarter of 2020. As of September 30, 2021, the Company has an accrued liability of $62.3 million for the Appraisal Action based on the judgment received on January 30, 2020 plus accrued interest, which is management’s best estimate of the total payment obligation as of such date. Adverse Arbitration Order In April 2020, one of the Company's Nordic subsidiaries commenced an arbitration in Finland against a customer alleging breach of contract and other damages in connection with an outsourcing services agreement and transition services agreement executed in 2017. In September 2020, the customer submitted counterclaims against the Company in an aggregate amount in excess of €10.0 million. Following an expedited arbitration, in late November 2020, the arbitrator awarded the customer approximately $13.0 million in the aggregate for the counterclaimed damages and costs. The Company filed an application to annul the award in late January 2021 with the relevant court asserting, among other bases, that the arbitrator violated due process and procedural rules by disallowing the Company’s witness and expert testimony and maintaining the expedited format following the assertion of significant counterclaims which would ordinarily have required the application of normal rather than expedited rules. On May 28, 2021, the parties entered into a settlement agreement resolving this dispute for a total of $8.8 million including the reimbursement of certain third party charges. The Company had accrued a liability balance of $9.7 million for this matter as of the settlement date. Accordingly, on settlement the Company reversed the additional $0.9 million accrued for the matter. As of September 30, 2021, there was a net outstanding balance of $3.8 million for this matter included in Accrued liabilities on the Condensed Consolidated Balance Sheet. Contract-Related Contingencies The Company has certain contingent obligations that arise in the ordinary course of providing services to its customers. These contingencies are generally the result of contracts that require the Company to comply with certain performance measurements or the delivery of certain services to customers by a specified deadline. The Company believes the adjustments to the transaction price, if any, under these contract provisions will not result in a significant revenue reversal or have a material adverse effect on the Company’s consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Measurement | |
Fair Value Measurement | 9. Fair Value Measurement Assets and Liabilities Measured at Fair Value The carrying amount of assets and liabilities including cash and cash equivalents, accounts receivable, accounts payable and current portion of long-term debt approximated their fair value as of September 30, 2021, and December 31, 2020, due to the relative short maturity of these instruments. Management estimates the fair values of the secured term loan and secured notes at approximately 78.0% and 77.5% respectively, of the respective principal balance outstanding as of September 30, 2021. The fair values of secured borrowings under the Company’s securitization facility and senior secured revolving credit facility are equal to the respective carrying values. Other debt represents the Company's outstanding loan balances associated with various hardware, software purchases, maintenance and leasehold improvements along with loans and receivables factoring arrangement entered into by subsidiaries of the Company and as such, the cost incurred required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering The Company determined the fair value of its long-term debt using Level 2 inputs including the recent issue of the debt, the Company’s credit rating, and the current risk-free rate. The Company’s contingent liabilities related to prior acquisitions are re-measured each period and represent a Level 3 measurement as it is based on the settlement amount based on the settlement agreement terms less amount already paid. The Company determined the fair value of the interest rate swap using Level 2 inputs. The Company used closing prices as provided by a third party institution. The following table provides the carrying amounts and estimated fair values of the Company’s financial instruments as of September 30, 2021, and December 31, 2020: Carrying Fair Fair Value Measurements As of September 30, 2021 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,326,579 $ 1,069,435 $ — $ 1,069,435 $ — Nonrecurring assets and liabilities: Goodwill 358,431 358,431 — — 358,431 Carrying Fair Fair Value Measurements As of December 31, 2020 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,498,004 $ 604,775 $ — $ 604,775 $ — Interest rate swap liability 125 125 — 125 — Acquisition contingent liability 300 300 — — 300 Nonrecurring assets and liabilities: Goodwill 359,781 359,781 — — 359,781 September 30, December 31, 2021 2020 Balance as of Beginning of Period $ 300 $ 721 Earn-out Adjustment — 279 Payments (300) (700) Balance as of End of Period $ — $ 300 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2021 | |
Stock-Based Compensation | |
Stock-Based Compensation | 10. Stock-Based Compensation Exela 2018 Stock Incentive Plan On January 17, 2018, Exela’s 2018 Stock Incentive Plan (the “2018 Plan”) became effective. The 2018 Plan provides for the grant of incentive and nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, and other stock-based compensation to eligible participants. The Company is authorized to issue up to 2,774,588 shares of Common Stock under the 2018 Plan. Restricted Stock Unit Restricted stock unit awards generally vest ratably over a one A summary of restricted stock unit activities under the 2018 Plan for the nine months ended September 30, 2021 is summarized in the following table: Average Weighted Remaining Number Average Grant Contractual Life Aggregate of Units Date Fair Value (Years) Intrinsic Value Outstanding Balance as of December 31, 2020 26,455 $ 3.78 0.91 $ 50 Granted 688,344 2.70 Forfeited (53,334) 2.73 Vested (13,227) 3.78 Outstanding Balance as of September 30, 2021 648,238 $ 2.72 0.39 $ 1,761 Options Under the 2018 Plan, stock options are granted at a price per share not less than 100% of the fair market value per share of the underlying stock at the grant date. The vesting period for each option award is established on the grant date, and the options generally expire 10 years from the grant date. Options granted under the 2018 Plan generally require no less than a two Average Weighted Weighted Remaining Average Grant Average Vesting Period Aggregate Outstanding Date Fair Value Exercise Price (Years) Intrinsic Value (2) Outstanding Balance as of December 31, 2020 1,635,700 $ 5.67 $ 11.89 1.42 $ — Granted — — Exercised — — Forfeited (144,200) 6.17 Expired — — Outstanding Balance as of September 30, 2021 (1) 1,491,500 $ 5.62 $ 11.77 0.86 $ — (1) 569,880 of the outstanding options are exercisable as of September 30, 2021. (2) Exercise prices of all of the outstanding options are higher than the market price of the shares of the Company. Therefore, aggregate intrinsic value is zero. As of September 30, 2021, there was approximately $2.1 million of total unrecognized compensation expense related to non-vested restricted stock unit awards and stock option awards under the 2018 Plan, which will be recognized over the respective service period. Stock-based compensation expense is recorded within Selling, general, and administrative expenses. The Company incurred total compensation expense of $0.4 million and $1.3 million related to restricted stock unit awards and stock option awards under the 2018 Plan for the three and nine months ended September 30, 2021, respectively, and $0.7 million and $2.5 million for the three and nine months ended September 30, 2020, respectively. Market Performance Units On September 14, 2021, the Company granted its Executive Chairman performance units with a market performance condition, which are notional units representing the right to receive one share of common stock of the Company (or the cash value of one share of common stock). Until such time that the Company obtains the approval of the stockholders of the Company regarding an increase to the number of shares authorized for issuance under its 2018 Plan in accordance with NASDAQ Listing Rule 5635(a), these performance units will be settled in cash, and following such shareholder approval, at the election of the compensation committee of the Company, may be settled in cash or in shares of common stock of the Company. Until such time that the increase to the share reserve is approved, the performance units will be subject to the terms and conditions of the 2018 Plan as though granted thereunder, but will not be considered an award that is outstanding under the plan, and following such time that the plan amendment is approved, will constitute an award under the 2018 Plan. Fifty percent of the performance units covered by the award will vest if, at any time during the period commencing September 14, 2021 and ending June 30, 2024, the volume weighted average of the reported closing price of the Company’s common stock is $10 per share or greater on (x) 60 90 60 90 consideration and will no longer be eligible to vest. In addition, if a change in control occurs prior to the applicable expiration date, if the performance units are assumed by the acquirer, the units will remain outstanding and eligible to vest based solely on his continued service to the Company. If in connection with such change in control the performance units are not assumed by an acquirer, a number of performance units will vest based on the per share price paid in the transaction, with 0% vesting if the per share price is equal to or less than $2.00 per share, and 100% of the Tranche 1 vesting if the per share price is equal to or greater than $10 and 100% of the Tranche 2 vesting if the per share price is equal to or greater than $20, and a number of Tranche 1 and Tranche 2 vesting determined based on a straight line interpolation if the share price is between $2.00 and $10.00 or $20.00, respectively. In addition, if there is a change in control that is principally negotiated and approved by, and recommended to the Company’s shareholders by, a special committee of independent directors which committee does not include the Executive Chairman, and neither he nor any of his affiliates is directly or indirectly an equity holder of the acquiring Company, and the Tranche 1 are not assumed by an acquirer in connection with such transaction, all of his then unvested Tranche 1 will vest, and the Tranche 2 would be eligible for the pro rata vesting described above. The Executive Chairman will remain eligible to earn his performance units so long as he remains employed with the Company as Executive Chairman through December 31, 2023 and following such date he remains engaged with the Company in any capacity, including as a non-employee director. The fair value of the awards was determined to be $1.48 and $1.51 for Tranche 1 and Tranche 2, respectively, on the grant date by application of the Monte Carlo simulation model. The following table summarizes the activity for the market performance restricted stock units for the nine months ended September 30, 2021: Weighted Average Weighted Period Over Number Average Grant Which Expected of Units Date Fair Value to be Recognized Outstanding Balance as of December 31, 2020 — $ — — Granted 8,500,000 1.50 Forfeited — — Vested — — Outstanding Balance as of September 30, 2021 8,500,000 $ 1.50 3.2 As of September 30, 2021, there was approximately $12.5 million of total unrecognized compensation expense related to non-vested performance unit awards, which will be recognized over the requisite service period. As of September 30, 2021 the aforesaid 2018 Plan amendment is not approved, therefore at present performance units are cash-settled award and accounted for as a liability classified award. We recognized $0.2 million compensation expense associated with the performance unit award for the three and nine months ended September 30, 2021. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity | |
Stockholders' Equity | 11. Stockholders’ Equity The following description summarizes the material terms and provisions of the securities that the Company has authorized. Common Stock The Company is authorized to issue 1,600,000,000 shares of Common Stock. Except as otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock or as provided for in the Director Nomination Agreement to which the Company is party, the holders of our Common Stock possess all voting power for the election of our board of directors and all other matters requiring stockholder action and will at all times vote together as one class on all matters submitted to a vote of Exela stockholders. Holders of our Common Stock are entitled to one vote per share on matters to be voted on by stockholders. Holders of our Common Stock will be entitled to receive such dividends and other distributions, if any, as may be declared from time to time by the board of directors in its discretion out of funds legally available therefor and shall share equally on a per share basis in such dividends and distributions. The holders of the Common Stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the Common Stock. During the nine months ended September 30, 2021, 511,939 shares of Series A Preferred Stock were converted into 223,977 shares of Common Stock. As of September 30, 2021 and December 31, 2020, there were 166,196,745 and 49,242,225 shares of Common Stock outstanding, respectively. Reverse Stock Split On January 25, 2021, we effected a one issued December 31, 2020 Common Stock At-The-Market Sales Program On May 27, 2021, the Company entered into an At Market Issuance Sales Agreement (“ATM Agreement”) with B. Riley Securities, Inc. (“B. Riley”) and Cantor Fitzgerald & Co. (“Cantor”), as distribution agents (the “Distribution Agents”) under which the Company may offer and sell shares of the Company’s Common Stock from time to time through the Distribution Agents, acting as sales agent or principal. Sales of the shares of Common Stock under the ATM Agreement, will be in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the Nasdaq or on any other existing trading market for the Common Stock, as applicable, or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. Shares of Common Stock sold under the ATM Agreement are offered pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-255707), filed with the Securities and Exchange Commission (the “SEC”) on May 3, 2021, and declared effective on May 12, 2021 (the “2021 Registration Statement”), and the prospectus dated May 12, 2021 included in the 2021 Registration Statement and the related prospectus supplement for sales of shares of Common Stock with an aggregate offering price of up to $100.0 million dated May 27, 2021 (“Common ATM Program–1”), prospectus supplement for sales of shares of Common Stock with an aggregate offering price of up to $150.0 million dated June 30, 2021 (“Common ATM Program–2”) and prospectus supplement for sales of shares of Common Stock with an aggregate offering price of up to $250.0 million dated September 30, 2021 (“Common ATM Program–3”). The Company began selling shares under the Common ATM Program–1 on May 28, 2021, and through July 1, 2021, the Company had issued 49,423,706 shares of Common Stock at a weighted average price of $2.008 per share, generating gross proceeds of $99.3 million and net proceeds of $95.7 million, after offering expenses to culminate the Common ATM Program–1. The Company began selling shares under the Common ATM Program–2 on June 30, 2021, and through September 2, 2021, the Company had issued 57,580,462 shares of Common Stock at a weighted average price of $2.603 per share, generating gross proceeds of $149.9 million and net proceeds of $144.4 million, after offering expenses to culminate the Common ATM Program–2. The Company did not sell any share under the Common ATM Program–3 during the three and nine months ended September 30, 2021. Preferred Stock The Company is authorized to issue 20,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the board of directors. At September 30, 2021 and December 31, 2020, the Company had 2,778,111 shares and 3,290,050 shares of Series A Preferred Stock outstanding, respectively. The par value of the Series A Preferred Stock is $0.0001 per share. Each share of Series A Preferred Stock is convertible at the holder's option, at any time into the number of shares of Common Stock determined as of the date of conversion using a certain conversion formula that takes into account the amount of Liquidation Preference per share as adjusted for accrued but unpaid dividends, as described below. As of September 30, 2021, after taking into account the effect of the Reverse Stock Split, each outstanding share of Series A Preferred Stock was convertible into 0.4596 shares of Common Stock using this conversion formula. Accordingly, as of September 30, 2021, 1,276,902 shares of Common Stock were issuable upon conversion of the remaining 2,778,111 shares of Series A Preferred Stock. Holders of the Series A Preferred Stock are entitled to receive cumulative dividends at a rate per annum of 10% of the dollar amount of per share liquidation preference (plus accumulated but unpaid dividends, the “Liquidation Preference") per share of Series A Preferred Stock, paid or accrued quarterly in arrears. From the issue date through December 31, 2020 the amount of all accrued but unpaid dividends on the Series A Preferred Stock have been added to the Liquidation Preference. The Company shall add the amount of all accrued but unpaid dividends on each quarterly dividend payment date to the Liquidation Preference, except to the extent the Company elects to make all or any portion of such payment in cash on or prior to the applicable dividend payment date, in which case, the amount of the accrued but unpaid dividends that is added to the Liquidation Preference shall be reduced on a dollar-for-dollar basis by the amount of any such cash payment. The Company is not required to make any payment or allowance for unpaid dividends, whether or not in arrears, on converted shares of Series A Preferred Stock or for dividends on the shares of Common Stock issued upon conversion of such shares . The gross dividend accumulation for the three months ended September 30, 2021 was $0.8 million. However, as a result of 511,939 shares of Series A Preferred Stock being converted into 223,977 shares of Common Stock during the nine months ended September 30, 2021, accumulated dividend of $1.8 million was reversed, resulting in a net dividend accumulation of $0.7 million for the nine months ended September 30, 2021. Similarly, the gross dividend accumulation for the three months ended September 30, 2020 was $1.0 million. However, as a result of 1,004,183 shares of Series A Preferred Stock being converted into 409,238 shares of Common Stock during the first quarter of 2020, accumulated dividend of $2.3 million was reversed, resulting in a net dividend accumulation of $0.4 million for the nine months ended September 30, 2020. As of September 30, 2021, the total accumulated but unpaid dividends on the Series A Preferred Stock since inception on July 12, 2017 is $11.5 million. The per share average of cumulative preferred dividends for each of the three and nine months ended September 30, 2021 is $0.3 . The per share average of cumulative preferred dividends for the three and nine months ended September 30, 2020 is $0.3 and $0.1 , respectively. Following the third anniversary of the issue date, dividends on the Series A Preferred Stock will be accrued by adding to the Liquidation Preference or paid in cash, or a combination thereof. In addition, holders of the Series A Preferred Stock will participate in any dividend or distribution of cash or other property paid in respect of the Common Stock pro rata with the holders of the Common Stock (other than certain dividends or distributions that trigger an adjustment to the conversion rate, as described in the Certificate of Designations), as if all shares of Series A Preferred Stock had been converted into Common Stock immediately prior to the date on which such holders of the Common Stock became entitled to such dividend or distribution. Treasury Stock On November 8, 2017, the Company’s board of directors authorized a share buyback program (the “Share Buyback Program”), pursuant to which the Company was permitted to purchase up to 1,666,667 shares of Common Stock. The Share Buyback Program has expired. As of September 30, 2021, 929,049 shares had been repurchased under the Share Buyback Program and they are held as treasury stock. The Company records treasury stock using the cost method. During the first quarter of 2020, 1,523,578 shares of Common Stock were returned to the Company by Ex-Sigma 2 in connection with the Appraisal Action. These shares are also included in treasury stock. Warrants At September 30, 2021, there were warrants outstanding to purchase 15,565,152 shares of our Common Stock, consisting of 35,000,000 warrants to purchase one-sixth IPO Warrants As part of its IPO, Quinpario had issued 35,000,000 units comprising one share of Common Stock and one warrant of which 34,986,302 have been separated from the original unit and 13,698 warrants remain an unseparated part of the originally issued units (the Common Stock included in these originally issued units (adjusted to reflect the Reverse Split) have been accounted for in the number of shares of Common Stock outstanding referred to above). The warrants traded on the OTC Pink under the symbol “XELAW” as of September 30, 2021. Each IPO warrant entitles the holder to purchase one-sixth The Company may call the IPO warrants for redemption at a price of $0.01 per warrant upon a minimum of 30 days ’ prior written notice of redemption, if, and only if, the last sales price of the shares of Common Stock equals or exceeds $72.00 per share for any 20 trading days within a 30 trading day period (the “30-day trading period”) ending three business days before the Company sends the notice of redemption, and if, and only if, there is a current registration statement in effect with respect to the shares of Common Stock underlying such warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of redemption. Private Placement of Unregistered Shares and Warrants On March 15, 2021, the Company, entered into a securities purchase agreement with certain accredited institutional investors pursuant to which the Company issued and sold to the ten accredited institutional investors in a private placement an aggregate of 9,731,819 unregistered shares of the Company’s Common Stock at a price of $2.75 per share and an equal number of warrants, generating gross proceeds to the Company of $26.8 million. Cantor Fitzgerald acted as underwriter in connection with such sale of unregistered securities and received a placement fee of 5.5 % of gross proceeds in connection with such service. In selling the shares without registration, the Company relied on exemptions from registration available under Section 4(a)(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder. The shares of Common Stock sold together with these warrants are included in the Company’s calculation of total shares outstanding. The Company filed a registration statement on Form S-3 on May 3, 2021 that registered these shares and the shares underlying these private placement warrants. Each private placement warrant entitles the holder to purchase one share of Common Stock, at an exercise price of $4.00 per share and will expire on September 19, 2026. The private placement warrants are not traded as of September 30, 2021 and are not subject to redemption by the Company. |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2021 | |
Related-Party Transactions | |
Related-Party Transactions | 12. Related-Party Transactions Relationship with HandsOn Global Management The Company incurred reimbursable travel expenses to HOVS LLC and HandsOn Fund 4 I, LLC (collectively, together with certain affiliated entities controlled by HandsOn Global Management LLC, “HGM”) of less than $0.1 million for each of the three and nine months ended September 30, 2021 and 2020. As of September 30, 2021, HGM beneficially owned approximately 14.7% of the Company’s Common Stock, including shares controlled pursuant to voting agreements (as described below) and shares issuable upon conversion of Series A Preferred Stock. Certain members of our Board of Directors, including our Executive Chairman, are also affiliated with HGM. Pursuant to a master agreement dated January 1, 2015 between Rule 14, LLC and a subsidiary of the Company, the Company incurs marketing fees to Rule 14, LLC, a portfolio company of HGM. Similarly, the Company is party to ten master agreements with entities affiliated with HGM’s managed funds, each of which were entered into during 2015 and 2016. Each master agreement provides the Company with use of certain technology and includes a reseller arrangement pursuant to which the Company is entitled to sell these services to third parties. Any revenue earned by the Company in such third-party sale is shared 75%/25% with each of HGM’s venture affiliates in favor of the Company. The brands Zuma, Athena, Peri, BancMate, Spring, Jet, Teletype, CourtQ and Rewardio are part of the HGM managed funds. The Company has the license to use and resell such brands, as described therein. The Company incurred fees relating to these agreements of $1.5 million and $0.5 million for the three months ended September 30, 2021 and 2020, respectively. The Company incurred fees relating to these agreements of $4.2 million and $1.4 million for the nine months ended September 30, 2021 and 2020, respectively. Certain operating companies lease their operating facilities from HOV RE, LLC and HOV Services Limited, which are affiliates under common control with HGM. The rental expense for these operating leases was $0.1 million for each of the three months ended September 30, 2021 and 2020, and $0.2 million for each of the nine months ended September 30, 2021 and 2020, respectively. In addition, HOV Services, Ltd. provides the Company data capture and technology services. The expense recognized for these services was approximately $0.3 million for each of the three months ended September 30, 2021 and 2020, and $1.0 million for each of the nine months ended September 30, 2021 and 2020. These expenses are included in cost of revenue in the consolidated statements of operations. The Company is obligated to reimburse certain reimbursable expenses incurred by Ex-Sigma 2, the former majority shareholder of the Company, under the terms of the Consent, Waiver and Amendment dated June 15, 2017, by and among the Company, Quinpario Merger Sub I, Inc., Quinpario Merger Sub II, Inc., SourceHOV, Novitex, Novitex Parent, L.P., Ex Sigma LLC (“Ex-Sigma”), HOVS LLC and HandsOn Fund 4 I, LLC, amending the Novitex Business Combination agreement (the “Consent, Waiver and Amendment”). The Company incurred reimbursable expenses to Ex-Sigma 2 of $0.2 million for the nine months ended September 30, 2020 in connection with legal expenses of Ex-Sigma 2. There were no such reimbursable expenses incurred during the nine months ended September 30, 2021. Ex-Sigma 2 distributed the shares held by it during the first quarter of 2020 and is no longer a shareholder of Exela. Many recipients of these shares have entered into voting agreements in respect of those shares with HGM. Separately, the Company determined it was obligated to reimburse premium payments of $6.9 million made by Ex-Sigma 2 on the Margin Loan under the terms of the Consent, Waiver and Amendment. Pursuant to a written settlement agreement entered into in June 2020, Ex-Sigma, SourceHOV and the Company agreed that $5.6 million of payments made during the fourth quarter of 2019 would be accepted to fully discharge the Company’s obligation to reimburse Ex-Sigma 2 for the $6.9 million of premium payments. The Company recorded the difference of $1.3 million between the obligation amount and the settlement amount as an increase to additional paid in capital in the condensed consolidated statements of stockholders’ deficit for the nine months ended September 30, 2020. Consulting Agreement The Company receives services from Oakana Holdings, Inc. The Company and Oakana Holdings, Inc. are related through a family relationship between certain shareholders and the president of Oakana Holdings, Inc. The expense recognized for these services was less than $0.1 million for each of the three months ended September 30, 2021 and 2020, and $0.1 million for each of the nine months ended September 30, 2021 and 2020. Relationship with Apollo Global Management, LLC The Company provides services to and receives services from certain Apollo Global Management, LLC (“Apollo”) affiliated companies. Funds managed by Apollo held the second largest position in our Common Stock following the Novitex Business Combination and had the right to designate two of the Company’s directors pursuant to a director nomination agreement. Apollo has announced that its affiliated funds ceased being shareholders on March 11, 2020. The Company excluded disclosure of transactions related to Apollo after March 31, 2020 as the related party relationship with Apollo ceased during the first quarter of 2020. On November 18, 2014, one of the Company's subsidiaries entered into a master services agreement with an indirect wholly owned subsidiary of Apollo. Pursuant to this master services agreement, the Company provided printer supplies and maintenance services, including toner maintenance, training, quarterly business review and printer procurement. The Company recognized revenue of less than $0.1 million under this agreement for the nine months ended September 30, 2020 in its consolidated statements of operations. In April 2016, one of the Company’s subsidiaries entered into a master services agreement with Presidio Networked Solutions Group, LLC ("Presidio Group"), a wholly owned subsidiary of Presidio, Inc., a portion of which is owned by affiliates of Apollo. Pursuant to this master services agreement, Presidio Group provided the Company with employees, subcontractors, and/or goods and services. For the nine months ended September 30, 2020 there were related party expenses of $0.2 million. On January 18, 2017, one of the Company’s subsidiaries entered into a master purchase and professional services agreement with Caesars Enterprise Services, LLC (‘‘Caesars’’). Caesars is controlled by investment funds affiliated with Apollo. Pursuant to this master purchase and professional services agreement, the Company provided managed print services to Caesars, including general equipment operation, supply management, support services and technical support. The Company recognized revenue of $0.9 million for the nine months ended September 30, 2020 in its consolidated statements of operations. On May 5, 2017, one of the Company’s subsidiaries entered into a master services agreement with ADT LLC. ADT LLC is controlled by investment funds affiliated with Apollo. Pursuant to this master services agreement, the Company provided ADT LLC with mailroom and onsite mail delivery services at an ADT LLC office location and managed print services, including supply management, equipment maintenance and technical support services. The Company recognized revenue of $0.3 million under this master services agreement for the nine months ended September 30, 2020 in its consolidated statements of operations. On July 20, 2017, one of the Company’s subsidiaries entered into a master services agreement with Diamond Resorts Centralized Services Company. Diamond Resorts Centralized Services Company is controlled by investment funds affiliated with Apollo. Pursuant to this master services agreement, the Company provided commercial print and promotional product procurement services to Diamond Resorts Centralized Services Company, including sourcing, inventory management and fulfillment services. The Company recognized revenue of $0.9 million and cost of revenue of less than $0.1 million under this master services agreement for the nine months ended September 30, 2020 in its consolidated statements of operations. Payable and Receivable/Prepayment Balances with Affiliates Payable and receivable/prepayment balances with affiliates as of September 30, 2021 and December 31, 2020 are as follows below. September 30, 2021 December 31, 2020 Receivables and Payables Receivables and Payables HOV Services, Ltd $ 725 $ — $ 711 $ — Rule 14 — 672 — 44 HGM — 42 — 52 Oakana — 1 — 1 $ 725 $ 715 $ 711 $ 97 |
Segment and Geographic Area Inf
Segment and Geographic Area Information | 9 Months Ended |
Sep. 30, 2021 | |
Segment and Geographic Area Information | |
Segment and Geographic Area Information | 13. Segment and Geographic Area Information The Company’s operating segments are significant strategic business units that align its products and services with how it manages its business, approaches the markets and interacts with its clients. The Company is organized into three ITPS: HS: LLPS: The chief operating decision maker reviews segment profit to evaluate operating segment performance and determine how to allocate resources to operating segments. “Segment profit” is defined as revenue less cost of revenue (exclusive of depreciation and amortization). The Company does not allocate Selling, general, and administrative expenses, depreciation and amortization, interest expense and sundry, net. The Company manages assets on a total company basis, not by operating segment, and therefore asset information and capital expenditures by operating segments are not presented. A reconciliation of segment profit to net loss before income taxes is presented below. Three months ended September 30, 2021 ITPS HS LLPS Total Revenue $ 208,304 $ 53,995 $ 16,930 $ 279,229 Cost of revenue (exclusive of depreciation and amortization) 157,721 41,945 12,065 211,731 Segment profit 50,583 12,050 4,865 67,498 Selling, general and administrative expenses (exclusive of depreciation and amortization) 43,244 Depreciation and amortization 19,094 Related party expense 2,744 Interest expense, net 41,757 Gain on early extinguishment of debt, net (28,070) Sundry expense, net 136 Other expense, net 366 Net loss before income taxes $ (11,773) Three months ended September 30, 2020 ITPS HS LLPS Total Revenue $ 234,365 $ 54,209 $ 16,706 $ 305,280 Cost of revenue (exclusive of depreciation and amortization) 183,671 39,444 11,107 234,222 Segment profit 50,694 14,765 5,599 71,058 Selling, general and administrative expenses (exclusive of depreciation and amortization) 42,837 Depreciation and amortization 22,095 Related party expense 1,360 Interest expense, net 43,612 Sundry income, net (434) Other income, net (10,414) Net loss before income taxes $ (27,998) Nine months ended September 30, 2021 ITPS HS LLPS Total Revenue $ 657,438 $ 161,292 $ 53,564 $ 872,294 Cost of revenue (exclusive of depreciation and amortization) 499,892 116,736 36,770 653,398 Segment profit 157,546 44,556 16,794 218,896 Selling, general and administrative expenses (exclusive of depreciation and amortization) 121,519 Depreciation and amortization 58,113 Related party expense 7,199 Interest expense, net 127,755 Gain on early extinguishment of debt, net (28,070) Sundry income, net (438) Other expense, net 1,169 Net loss before income taxes $ (68,351) Nine months ended September 30, 2020 ITPS HS LLPS Total Revenue $ 761,505 $ 167,424 $ 49,524 $ 978,453 Cost of revenue (exclusive of depreciation and amortization) 614,625 120,522 33,401 768,548 Segment profit 146,880 46,902 16,123 209,905 Selling, general and administrative expenses (exclusive of depreciation and amortization) 140,224 Depreciation and amortization 68,127 Related party expense 4,058 Interest expense, net 129,639 Sundry income, net (251) Other income, net (45,655) Net loss before income taxes $ (86,237) |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events. | |
Subsequent Events | 14. Subsequent Events The Company has evaluated all events that occur after the balance sheet date through the date when these condensed consolidated financial statements were issued to determine if they must be reported. Common Stock At-The-Market Sales Program In October 2021, we issued an aggregate of 18,632,434 shares of Common Stock under the Common ATM Program–3 at a weighted average price of $1.567 per share, generating gross proceeds of $29.2 million and net proceeds of $28.3 million, after offering expenses. Debt Repurchases In October 2021, the Company settled a debt repurchase transaction for $5.0 million principal amount of senior secured loans under the Credit Agreement. On October 1, 2021, the Company entered into a senior secured notes call agreement which provides the Company an option to purchase $10.0 million of its outstanding Notes in exchange for total consideration of $8.5 million, plus accrued and unpaid interest under the Notes. The call option expires on November 12, 2021, and as of the date of issuance of these condensed consolidated financial statements, this call option remains unexercised. Exchange Offers On October 27, 2021, Exela Intermediate LLC and Exela Finance, Inc. wholly owned subsidiaries of the Company, launched offers to exchange (the “Exchange Offers”) up to $225 million in cash and new 11.500% First-Priority Senior Secured Notes due 2026 for the Issuers’ outstanding 10.000% First-Priority Senior Secured Notes due 2023 and first lien term loans, and a solicitation of consents to proposed amendments with respect to the old Notes and the old term loans. The Exchange Offer has not been completed as of the date of issuance of these consolidated financial statements, and there can be no assurance that the Exchange Offer will be consummated. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Significant Accounting Policies | |
Revenue Recognition | Revenue Recognition We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers Nature of Services Our primary performance obligations are to stand ready to provide various forms of business processing services, consisting of a series of distinct services, but that are substantially the same, and have the same pattern of transfer over time, and accordingly are combined into a single performance obligation. Our promise to our customers is typically to perform an unknown or unspecified quantity of tasks and the consideration received is contingent upon the customers’ use (i.e., number of transactions processed, requests fulfilled, etc.); as such, the total transaction price is variable. We allocate the variable fees to the single performance obligation charged to the distinct service period in which we have the contractual right to bill under the contract. Disaggregation of Revenues The Company is organized into three segments: Information & Transaction Processing Solutions (“ITPS”), Healthcare Solutions (“HS”), and Legal & Loss Prevention Services (“LLPS”) (See Note 13). The following tables disaggregate revenue from contracts by segment and by geographic region for the three and nine months ended September 30, 2021 and 2020: Three Months Ended September 30, 2021 2020 ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 157,207 $ 53,995 $ 16,930 $ 228,132 $ 178,075 $ 54,209 $ 16,706 $ 248,990 EMEA 46,561 — — 46,561 51,232 — — 51,232 Other 4,536 — — 4,536 5,058 — — 5,058 Total $ 208,304 $ 53,995 $ 16,930 $ 279,229 $ 234,365 $ 54,209 $ 16,706 $ 305,280 Nine Months Ended September 30, 2021 2020 ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 492,620 $ 161,292 $ 53,564 $ 707,476 $ 592,238 $ 167,424 $ 49,524 $ 809,186 EMEA 150,662 — — 150,662 152,222 — — 152,222 Other 14,156 — — 14,156 17,045 — — 17,045 Total $ 657,438 $ 161,292 $ 53,564 $ 872,294 $ 761,505 $ 167,424 $ 49,524 $ 978,453 Contract Balances The following table presents contract assets, contract liabilities and contract costs recognized at September 30, 2021 and December 31, 2020: September 30, December 31, 2021 2020 Accounts receivable, net $ 187,819 $ 206,868 Deferred revenues 17,138 16,919 Customer deposits 15,688 21,277 Costs to obtain and fulfill a contract 2,522 3,295 Accounts receivable, net includes $25.6 million and $23.2 million as of September 30, 2021 and December 31, 2020, respectively, representing amounts not yet billed to customers. We have accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers. Deferred revenues relate to payments received in advance of performance under a contract. A significant portion of this balance relates to maintenance contracts or other service contracts where we received payments for upfront conversions or implementation activities which do not transfer a service to the customer but rather are used in fulfilling the related performance obligations that transfer over time. The advance consideration received from customers is deferred over the contract term. We recognized revenue of $15.2 million during the nine months ended September 30, 2021 that had been deferred as of December 31, 2020. Costs incurred to obtain and fulfill contracts are deferred and presented as part of intangible assets, net and expensed on a straight-line basis over the estimated benefit period. We recognized $1.2 million of amortization for these costs for the nine months ended September 30, 2021 within depreciation and amortization expense. These costs represent incremental external costs or certain specific internal costs that are directly related to the contract acquisition or fulfillment and can be separated into two principal categories: contract commissions and fulfillment costs. Applying the practical expedient in ASC 340-40-25-4, we recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period would have been one year or less. These costs are included in Selling, general and administrative expenses. The effect of applying this practical expedient was not material. Customer deposits consist primarily of amounts received from customers in advance for postage. These advanced postage deposits are used to cover the costs associated with postage, with the corresponding postage revenue being recognized as services are performed. Performance Obligations At the inception of each contract, we assess the goods and services promised in our contracts and identify each distinct performance obligation. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts. For the majority of our business and transaction processing service contracts, revenues are recognized as services are provided based on an appropriate input or output method, typically based on the related labor or transactional volumes. A certain number of our contracts have multiple performance obligations, including contracts that combine software implementation services with post-implementation customer support. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we estimate our expected costs of satisfying a performance obligation and add an appropriate margin for that distinct good or service. We also use the adjusted market approach whereby we estimate the price that customers in the market would be willing to pay. In assessing whether to allocate variable consideration to a specific part of the contract, we consider the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract. A certain number of our software implementation performance obligations are satisfied at a point in time, typically when customer acceptance is obtained. When evaluating the transaction price, we analyze, on a contract-by-contract basis, all applicable variable consideration. The nature of our contracts give rise to variable consideration, including volume discounts, contract penalties, and other similar items that generally decrease the transaction price. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We do not anticipate significant changes to our estimates of variable consideration. We include reimbursements from customers, such as postage costs, in revenue, while the related costs are included in cost of revenue. Transaction Price Allocated to the Remaining Performance Obligations In accordance with optional exemptions available under ASC 606, we did not disclose the value of unsatisfied performance obligations for (a) contracts with an original expected length of one year or less, and (b) contracts for which variable consideration relates entirely to an unsatisfied performance obligation, which comprise the majority of our contracts. We have certain non-cancellable contracts where we receive a fixed monthly fee in exchange for a series of distinct services that are substantially the same and have the same pattern of transfer over time, with the corresponding remaining performance obligations as of September 30, 2021 in each of the future periods below: Estimated Remaining Fixed Consideration for Unsatisfied Remainder of 2021 $ 12,123 2022 39,624 2023 33,794 2024 29,611 2025 27,748 2026 and thereafter 302 Total $ 143,202 |
General (Tables)
General (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
General | |
Schedule of components of basic and diluted EPS | Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net loss attributable to common stockholders (A) $ (14,036) $ (29,294) $ (72,505) $ (90,071) Weighted average common shares outstanding - basic and diluted (B) 150,655,012 49,170,477 87,958,170 49,135,159 Loss Per Share: Basic and diluted (A/B) $ (0.09) $ (0.60) $ (0.82) $ (1.83) |
Significant Accounting Polici_2
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Significant Accounting Policies | |
Schedule of disaggregated revenue from contracts by geographic region and by segment | Three Months Ended September 30, 2021 2020 ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 157,207 $ 53,995 $ 16,930 $ 228,132 $ 178,075 $ 54,209 $ 16,706 $ 248,990 EMEA 46,561 — — 46,561 51,232 — — 51,232 Other 4,536 — — 4,536 5,058 — — 5,058 Total $ 208,304 $ 53,995 $ 16,930 $ 279,229 $ 234,365 $ 54,209 $ 16,706 $ 305,280 Nine Months Ended September 30, 2021 2020 ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 492,620 $ 161,292 $ 53,564 $ 707,476 $ 592,238 $ 167,424 $ 49,524 $ 809,186 EMEA 150,662 — — 150,662 152,222 — — 152,222 Other 14,156 — — 14,156 17,045 — — 17,045 Total $ 657,438 $ 161,292 $ 53,564 $ 872,294 $ 761,505 $ 167,424 $ 49,524 $ 978,453 |
Schedule of contract balances | September 30, December 31, 2021 2020 Accounts receivable, net $ 187,819 $ 206,868 Deferred revenues 17,138 16,919 Customer deposits 15,688 21,277 Costs to obtain and fulfill a contract 2,522 3,295 |
Schedule of estimated remaining fixed consideration for unsatisfied performance obligations | Estimated Remaining Fixed Consideration for Unsatisfied Remainder of 2021 $ 12,123 2022 39,624 2023 33,794 2024 29,611 2025 27,748 2026 and thereafter 302 Total $ 143,202 |
Intangibles Assets and Goodwi_2
Intangibles Assets and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Intangibles Assets and Goodwill | |
Schedule of intangible assets | September 30, 2021 Gross Carrying Accumulated Intangible Amount (a) Amortization Asset, net Customer relationships $ 508,306 $ (306,646) $ 201,660 Developed technology 88,553 (87,486) 1,067 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 16,690 (14,168) 2,522 Internally developed software 48,094 (25,888) 22,206 Assembled workforce 4,473 (3,075) 1,398 Purchased software 26,749 (4,904) 21,845 Intangibles, net $ 701,265 $ (445,267) $ 255,998 December 31, 2020 Gross Carrying Accumulated Intangible Amount (a) Amortization Asset, net Customer relationships $ 508,485 $ (278,306) $ 230,179 Developed technology 88,553 (87,111) 1,442 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 16,331 (13,036) 3,295 Internally developed software 47,182 (20,152) 27,030 Assembled workforce 4,473 (2,237) 2,236 Purchased software 26,749 (3,567) 23,182 Intangibles, net $ 700,173 $ (407,509) $ 292,664 (a) Amounts include intangible assets acquired in business combinations and asset acquisitions. (b) The carrying amount of trade names for 2021 and 2020 is net of accumulated impairment losses of $44.1 million. Carrying amount of $5.3 million as at September 30, 2021 represents indefinite-lived intangible asset. |
Schedule of goodwill by reporting segment | Balances as at January 1, 2020 (a) Additions Deletions Impairments Currency Translation Adjustments Balances as at December 31, 2020 (a) ITPS $ 254,120 $ — $ — $ — $ 10 $ 254,130 HS 86,786 — — — — 86,786 LLPS 18,865 — — — — 18,865 Total $ 359,771 $ — $ — $ — $ 10 $ 359,781 Balances as at January 1, 2021 (a) Additions Deletions Impairments Currency Translation Adjustments Balances as at September 30, 2021 (a) ITPS $ 254,130 $ — $ (825) $ — $ (525) $ 252,780 HS 86,786 — — — — 86,786 LLPS 18,865 — — — — 18,865 Total $ 359,781 $ — $ (825) $ — $ (525) $ 358,431 (a) The goodwill amount for all periods presented is net of accumulated impairment amounts. Accumulated impairment relating to ITPS is $316.5 million as at September 30, 2021; and $317.5 million as at December 31, 2020 and December 31, 2019. Accumulated impairment relating to LLPS is $243.4 million as at September 30, 2021, December 31, 2020 and December 31, 2019. |
Long-Term Debt and Credit Fac_2
Long-Term Debt and Credit Facilities (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Long-Term Debt and Credit Facilities | |
Schedule of outstanding long-term debt instruments | September 30, December 31, 2021 2020 Other (a) $ 29,589 37,653 Term loan under first lien credit agreement (b) 301,319 343,597 Senior secured notes (c) 934,582 984,216 Secured borrowings under Securitization Facility 91,947 91,947 Revolver 83,488 80,543 Total debt 1,440,925 1,537,956 Less: Current portion of long-term debt (114,346) (39,952) Long-term debt, net of current maturities $ 1,326,579 $ 1,498,004 (a) Other debt represents outstanding loan balances associated with various hardware, software purchases, maintenance and leasehold improvements along with loans and receivables factoring arrangement entered into by subsidiaries of the Company. (b) Net of unamortized original issue discount and debt issuance costs of $ 3.1 million and $11.0 million as of September 30, 2021 and $4.8 million and $17.1 million as of December 31, 2020. (c) Net of unamortized debt discount and debt issuance costs of $ 7.8 million and $3.1 million as of September 30, 2021 and $11.3 million and $4.5 million as of December 31, 2020 . |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Employee Benefit Plans | |
Schedule of components of the net periodic benefit cost | Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Service cost $ 19 $ 19 $ 57 $ 57 Interest cost 425 494 1,275 1,482 Expected return on plan assets (606) (639) (1,818) (1,917) Amortization: Amortization of prior service cost 45 25 135 75 Amortization of net loss 840 430 2,520 1,290 Net periodic benefit cost $ 723 $ 329 $ 2,169 $ 987 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Measurement | |
Schedule of fair value of financial instruments | Carrying Fair Fair Value Measurements As of September 30, 2021 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,326,579 $ 1,069,435 $ — $ 1,069,435 $ — Nonrecurring assets and liabilities: Goodwill 358,431 358,431 — — 358,431 Carrying Fair Fair Value Measurements As of December 31, 2020 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,498,004 $ 604,775 $ — $ 604,775 $ — Interest rate swap liability 125 125 — 125 — Acquisition contingent liability 300 300 — — 300 Nonrecurring assets and liabilities: Goodwill 359,781 359,781 — — 359,781 |
Schedule of net assets and liabilities classified as Level 3 for reconciliation | September 30, December 31, 2021 2020 Balance as of Beginning of Period $ 300 $ 721 Earn-out Adjustment — 279 Payments (300) (700) Balance as of End of Period $ — $ 300 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Stock-Based Compensation | |
Summary of the status of restricted stock units | Average Weighted Remaining Number Average Grant Contractual Life Aggregate of Units Date Fair Value (Years) Intrinsic Value Outstanding Balance as of December 31, 2020 26,455 $ 3.78 0.91 $ 50 Granted 688,344 2.70 Forfeited (53,334) 2.73 Vested (13,227) 3.78 Outstanding Balance as of September 30, 2021 648,238 $ 2.72 0.39 $ 1,761 |
Schedule of stock option activity | Average Weighted Weighted Remaining Average Grant Average Vesting Period Aggregate Outstanding Date Fair Value Exercise Price (Years) Intrinsic Value (2) Outstanding Balance as of December 31, 2020 1,635,700 $ 5.67 $ 11.89 1.42 $ — Granted — — Exercised — — Forfeited (144,200) 6.17 Expired — — Outstanding Balance as of September 30, 2021 (1) 1,491,500 $ 5.62 $ 11.77 0.86 $ — (1) 569,880 of the outstanding options are exercisable as of September 30, 2021. (2) Exercise prices of all of the outstanding options are higher than the market price of the shares of the Company. Therefore, aggregate intrinsic value is zero. |
Summary of activity for the market performances of RSU | Weighted Average Weighted Period Over Number Average Grant Which Expected of Units Date Fair Value to be Recognized Outstanding Balance as of December 31, 2020 — $ — — Granted 8,500,000 1.50 Forfeited — — Vested — — Outstanding Balance as of September 30, 2021 8,500,000 $ 1.50 3.2 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Related-Party Transactions | |
Schedule of payable and receivable balances with affiliates | September 30, 2021 December 31, 2020 Receivables and Payables Receivables and Payables HOV Services, Ltd $ 725 $ — $ 711 $ — Rule 14 — 672 — 44 HGM — 42 — 52 Oakana — 1 — 1 $ 725 $ 715 $ 711 $ 97 |
Segment and Geographic Area I_2
Segment and Geographic Area Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment and Geographic Area Information | |
Schedule of reconciliation of segment profit to net loss before income taxes by segment information | Three months ended September 30, 2021 ITPS HS LLPS Total Revenue $ 208,304 $ 53,995 $ 16,930 $ 279,229 Cost of revenue (exclusive of depreciation and amortization) 157,721 41,945 12,065 211,731 Segment profit 50,583 12,050 4,865 67,498 Selling, general and administrative expenses (exclusive of depreciation and amortization) 43,244 Depreciation and amortization 19,094 Related party expense 2,744 Interest expense, net 41,757 Gain on early extinguishment of debt, net (28,070) Sundry expense, net 136 Other expense, net 366 Net loss before income taxes $ (11,773) Three months ended September 30, 2020 ITPS HS LLPS Total Revenue $ 234,365 $ 54,209 $ 16,706 $ 305,280 Cost of revenue (exclusive of depreciation and amortization) 183,671 39,444 11,107 234,222 Segment profit 50,694 14,765 5,599 71,058 Selling, general and administrative expenses (exclusive of depreciation and amortization) 42,837 Depreciation and amortization 22,095 Related party expense 1,360 Interest expense, net 43,612 Sundry income, net (434) Other income, net (10,414) Net loss before income taxes $ (27,998) Nine months ended September 30, 2021 ITPS HS LLPS Total Revenue $ 657,438 $ 161,292 $ 53,564 $ 872,294 Cost of revenue (exclusive of depreciation and amortization) 499,892 116,736 36,770 653,398 Segment profit 157,546 44,556 16,794 218,896 Selling, general and administrative expenses (exclusive of depreciation and amortization) 121,519 Depreciation and amortization 58,113 Related party expense 7,199 Interest expense, net 127,755 Gain on early extinguishment of debt, net (28,070) Sundry income, net (438) Other expense, net 1,169 Net loss before income taxes $ (68,351) Nine months ended September 30, 2020 ITPS HS LLPS Total Revenue $ 761,505 $ 167,424 $ 49,524 $ 978,453 Cost of revenue (exclusive of depreciation and amortization) 614,625 120,522 33,401 768,548 Segment profit 146,880 46,902 16,123 209,905 Selling, general and administrative expenses (exclusive of depreciation and amortization) 140,224 Depreciation and amortization 68,127 Related party expense 4,058 Interest expense, net 129,639 Sundry income, net (251) Other income, net (45,655) Net loss before income taxes $ (86,237) |
General - Net Loss per Share (D
General - Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 18, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Mar. 31, 2020 |
Net loss per share | |||||||
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 10,639,738 | 1,725,249 | |||||
Anti dilutive shares | 150,655,012 | 49,170,477 | 87,958,170 | 49,135,159 | |||
Net loss attributable to common stockholders | $ (14,036) | $ (29,294) | $ (72,505) | $ (90,071) | |||
Weighted average common shares outstanding - basic | 150,655,012 | 49,170,477 | 87,958,170 | 49,135,159 | |||
Weighted average common shares outstanding - diluted | 150,655,012 | 49,170,477 | 87,958,170 | 49,135,159 | |||
Basic (in dollars per share) | $ (0.10) | $ (0.60) | $ (0.83) | $ (1.83) | |||
Diluted (in dollars per share) | $ (0.09) | $ (0.60) | $ (0.82) | $ (1.83) | |||
Common stock, shares returned | 1,523,578 | ||||||
Series A Preferred Stock | |||||||
Net loss per share | |||||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 1,276,902 | ||||||
Warrants | |||||||
Net loss per share | |||||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 35,000,000 | ||||||
Warrants | Private Placement | |||||||
Net loss per share | |||||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 9,731,819 |
General - Sale of Non-Core Asse
General - Sale of Non-Core Assets (Details) - USD ($) $ in Millions | Jul. 22, 2020 | Mar. 16, 2020 | Sep. 30, 2020 | Mar. 31, 2020 |
SourceHOV | ||||
Membership interests | $ 40 | |||
Gain on sale of investments | $ 35.5 | |||
Physical Records Storage Business | Disposed of by sale not discontinued operations | ||||
Gain on sale of investments | $ 9.8 | |||
Proceeds from sale of business | $ 12.3 |
Significant Accounting Polici_3
Significant Accounting Policies - Disaggregation of Revenues (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)segment | Sep. 30, 2020USD ($) | |
Disaggregation of Revenues | ||||
Number of segments | segment | 3 | |||
Revenue | $ 279,229 | $ 305,280 | $ 872,294 | $ 978,453 |
United States | ||||
Disaggregation of Revenues | ||||
Revenue | 228,132 | 248,990 | 707,476 | 809,186 |
EMEA | ||||
Disaggregation of Revenues | ||||
Revenue | 46,561 | 51,232 | 150,662 | 152,222 |
Other | ||||
Disaggregation of Revenues | ||||
Revenue | 4,536 | 5,058 | 14,156 | 17,045 |
ITPS | ||||
Disaggregation of Revenues | ||||
Revenue | 208,304 | 234,365 | 657,438 | 761,505 |
ITPS | United States | ||||
Disaggregation of Revenues | ||||
Revenue | 157,207 | 178,075 | 492,620 | 592,238 |
ITPS | EMEA | ||||
Disaggregation of Revenues | ||||
Revenue | 46,561 | 51,232 | 150,662 | 152,222 |
ITPS | Other | ||||
Disaggregation of Revenues | ||||
Revenue | 4,536 | 5,058 | 14,156 | 17,045 |
HS | ||||
Disaggregation of Revenues | ||||
Revenue | 53,995 | 54,209 | 161,292 | 167,424 |
HS | United States | ||||
Disaggregation of Revenues | ||||
Revenue | 53,995 | 54,209 | 161,292 | 167,424 |
LLPS | ||||
Disaggregation of Revenues | ||||
Revenue | 16,930 | 16,706 | 53,564 | 49,524 |
LLPS | United States | ||||
Disaggregation of Revenues | ||||
Revenue | $ 16,930 | $ 16,706 | $ 53,564 | $ 49,524 |
Significant Accounting Polici_4
Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Significant Accounting Policies | ||
Accounts receivable, net | $ 187,819 | $ 206,868 |
Deferred revenues | 17,138 | 16,919 |
Customer deposits | 15,688 | 21,277 |
Costs to obtain and fulfill a contract | 2,522 | 3,295 |
Unbilled receivables, net | 25,600 | $ 23,200 |
Revenue recognized from deferred revenue | 15,200 | |
Amortization of contract costs | $ 1,200 | |
Practical expedient on incremental costs of obtaining contracts | true |
Significant Accounting Polici_5
Significant Accounting Policies - Performance Obligations (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Significant Accounting Policies | |
Contracts with an original expected length | true |
Remainder of 2021 | $ 12,123 |
2022 | 39,624 |
2023 | 33,794 |
2024 | 29,611 |
2025 | 27,748 |
2026 and thereafter | 302 |
Total | $ 143,202 |
Intangibles Assets and Goodwi_3
Intangibles Assets and Goodwill - Intangibles (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Intangibles | ||
Gross Carrying Amount | $ 701,265 | $ 700,173 |
Amortization | (445,267) | (407,509) |
Intangible Asset, net | 255,998 | 292,664 |
Carrying amount of indefinite-lived trade names which are not amortizable | 5,300 | |
Customer relationships | ||
Intangibles | ||
Gross Carrying Amount | 508,306 | 508,485 |
Amortization | (306,646) | (278,306) |
Intangible Asset, net | 201,660 | 230,179 |
Developed technology | ||
Intangibles | ||
Gross Carrying Amount | 88,553 | 88,553 |
Amortization | (87,486) | (87,111) |
Intangible Asset, net | 1,067 | 1,442 |
Trade names | ||
Intangibles | ||
Gross Carrying Amount | 8,400 | 8,400 |
Amortization | (3,100) | (3,100) |
Intangible Asset, net | 5,300 | 5,300 |
Accumulated impairment losses | 44,100 | |
Outsource contract costs | ||
Intangibles | ||
Gross Carrying Amount | 16,690 | 16,331 |
Amortization | (14,168) | (13,036) |
Intangible Asset, net | 2,522 | 3,295 |
Internally developed software | ||
Intangibles | ||
Gross Carrying Amount | 48,094 | 47,182 |
Amortization | (25,888) | (20,152) |
Intangible Asset, net | 22,206 | 27,030 |
Assembled workforce | ||
Intangibles | ||
Gross Carrying Amount | 4,473 | 4,473 |
Amortization | (3,075) | (2,237) |
Intangible Asset, net | 1,398 | 2,236 |
Purchased software | ||
Intangibles | ||
Gross Carrying Amount | 26,749 | 26,749 |
Amortization | (4,904) | (3,567) |
Intangible Asset, net | $ 21,845 | $ 23,182 |
Intangibles Assets and Goodwi_4
Intangibles Assets and Goodwill - Goodwill (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2021USD ($)segment | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Goodwill | |||
Number of segments | segment | 3 | ||
Beginning of Year Balance | $ 359,781 | $ 359,771 | |
Deletions | (825) | ||
Currency Translation Adjustments | (525) | 10 | |
End of Year Balance | 358,431 | 359,781 | |
ITPS | |||
Goodwill | |||
Beginning of Year Balance | 254,130 | 254,120 | |
Deletions | (825) | ||
Currency Translation Adjustments | (525) | 10 | |
End of Year Balance | 252,780 | 254,130 | |
Accumulated impairment losses | 316,500 | 317,500 | $ 317,500 |
HS | |||
Goodwill | |||
Beginning of Year Balance | 86,786 | 86,786 | |
End of Year Balance | 86,786 | 86,786 | |
LLPS | |||
Goodwill | |||
Beginning of Year Balance | 18,865 | 18,865 | |
End of Year Balance | 18,865 | 18,865 | |
Accumulated impairment losses | $ 243,400 | $ 243,400 | $ 243,400 |
Long-Term Debt and Credit Fac_3
Long-Term Debt and Credit Facilities - Senior Secured Notes (Details) - Senior secured notes - USD ($) $ in Billions | Sep. 30, 2021 | Jul. 12, 2017 |
Debt instruments | ||
Principal amount | $ 1 | $ 1 |
Interest rate (in percent) | 10.00% |
Long-Term Debt and Credit Fac_4
Long-Term Debt and Credit Facilities - Debt Refinancing (Details) - USD ($) $ in Millions | Jul. 12, 2017 | Sep. 30, 2021 | Dec. 31, 2020 |
Senior secured term loan | |||
Debt instruments | |||
Debt Instrument, Face Amount | $ 350 | $ 355.1 | |
Original issue discount | $ 7 | ||
Principal percentage of each of first eight payments (as a percent) | 0.60% | ||
Principal percentage of each payment thereafter (as a percent) | 1.30% | ||
Senior secured term loan | LIBOR | |||
Debt instruments | |||
Applicable margin rate | 7.50% | ||
Floor interest rate | 1.00% | ||
Senior secured term loan | Base rate | |||
Debt instruments | |||
Principal percentage of each payment thereafter (as a percent) | 6.50% | ||
Senior secured revolving facility | |||
Debt instruments | |||
Maximum borrowing capacity | $ 100 | ||
Letters of credit outstanding | $ 15 | $ 19.5 | |
Senior secured revolving facility | LIBOR | |||
Debt instruments | |||
Principal percentage of each payment thereafter (as a percent) | 7.00% | ||
Senior secured revolving facility | Base rate | |||
Debt instruments | |||
Principal percentage of each payment thereafter (as a percent) | 6.00% |
Long-Term Debt and Credit Fac_5
Long-Term Debt and Credit Facilities - Term Loan Repricing (Details) - USD ($) $ in Thousands | Apr. 16, 2019 | Jul. 13, 2018 | Sep. 30, 2021 | Dec. 31, 2020 |
Debt instruments | ||||
Outstanding amount of term loans | $ 1,440,925 | $ 1,537,956 | ||
Proceeds from refinancing term loans | $ 30,000 | $ 30,000 | ||
First Amendment | ||||
Debt instruments | ||||
Proceeds from refinancing term loans | $ 343,400 | |||
Reduction in interest rate (in percentage) | 1.00% | |||
First Amendment | Federal funds rate | ||||
Debt instruments | ||||
Variable interest rate (as a percent) | 0.50% | |||
First Amendment | LIBOR | ||||
Debt instruments | ||||
Floor interest rate | 1.00% | |||
Variable interest rate (as a percent) | 6.50% | |||
First Amendment | One-month adjusted LIBOR | ||||
Debt instruments | ||||
Variable interest rate (as a percent) | 1.00% | |||
First Amendment | Base rate | ||||
Debt instruments | ||||
Variable interest rate (as a percent) | 5.50% | |||
Senior secured revolving facility | ||||
Debt instruments | ||||
Outstanding amount of term loans | $ 343,400 | |||
Maximum debt issuance costs for new lenders exceeded 10% test | 100 | |||
Senior secured revolving facility | First Amendment | ||||
Debt instruments | ||||
Debt issuance costs | 1,000 | |||
Amortization expense of debt issuance costs | 1,000 | |||
Write off of previously recognized debt issuance costs | $ 100 |
Long-Term Debt and Credit Fac_6
Long-Term Debt and Credit Facilities - Incremental Term Loan (Details) - USD ($) $ in Millions | Apr. 16, 2019 | Jul. 13, 2018 | Dec. 31, 2019 |
Long-Term Debt and Credit Facilities | |||
Proceeds from incremental term loans | $ 30 | $ 30 | |
Debt extinguishment costs | $ 1.4 |
Long-Term Debt and Credit Fac_7
Long-Term Debt and Credit Facilities - Receivables Securitization (Details) - USD ($) $ in Thousands | Dec. 17, 2020 | May 21, 2020 | Jan. 10, 2020 | Dec. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | May 18, 2018 |
Proceeds from initial borrowings | $ 3,000 | $ 29,750 | ||||||
A/R Facility | ||||||||
Accounts Receivable from Securitization | $ 160,000 | |||||||
Accounts Receivable, Securitization, Term | 5 years | |||||||
Minimum liquidity for A/R facility | $ 60,000 | $ 35,000 | ||||||
Forbearance fee | $ 5,000 | |||||||
Forbearance fee payable | $ 4,800 | |||||||
Variable interest rate (as a percent) | 4.50% | |||||||
Outstanding borrowings under the facility | $ 83,000 | |||||||
Early termination fee | 800 | |||||||
Write off of previously recognized debt issuance costs | 8,200 | |||||||
Repayment of principal, accrued interest and fees | $ 500 | |||||||
A/R Facility | Base rate | ||||||||
Variable interest rate (as a percent) | 5.75% | 3.75% | ||||||
A/R Facility | Federal funds rate | ||||||||
Variable interest rate (as a percent) | 0.50% | |||||||
A/R Facility | One-month adjusted LIBOR | ||||||||
Variable interest rate (as a percent) | 1.00% | |||||||
A/R Facility | LIBOR | ||||||||
Variable interest rate (as a percent) | 6.75% | 4.75% | ||||||
Floor interest rate | 1.00% | |||||||
Securitization Facility | ||||||||
Variable interest rate (as a percent) | 8.75% | |||||||
Outstanding borrowings under the facility | $ 91,900 | $ 91,900 | ||||||
Facility term (years) | 5 years | |||||||
Available facility amount | $ 145,000 | |||||||
Initial funding supported by receivables | 92,000 | |||||||
Further funding supported by inventory and intellectual property | 53,000 | |||||||
Proceeds from initial borrowings | $ 92,000 | |||||||
Proceeds from additional borrowings | $ 53,000 | |||||||
Securitization Facility | Federal funds rate | ||||||||
Variable interest rate (as a percent) | 0.50% | |||||||
Securitization Facility | One-month adjusted LIBOR | ||||||||
Variable interest rate (as a percent) | 1.00% | |||||||
Securitization Facility | LIBOR | ||||||||
Variable interest rate (as a percent) | 9.75% |
Long-Term Debt and Credit Fac_8
Long-Term Debt and Credit Facilities - Long-Term Debt Outstanding (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Debt instruments | ||
Total debt | $ 1,440,925 | $ 1,537,956 |
Less: Current portion of long-term debt | (114,346) | (39,952) |
Long-term debt, net of current maturities | 1,326,579 | 1,498,004 |
Senior secured notes | ||
Debt instruments | ||
Total debt | 934,582 | 984,216 |
Other | ||
Debt instruments | ||
Total debt | 29,589 | 37,653 |
First lien credit agreement | ||
Debt instruments | ||
Total debt | 301,319 | 343,597 |
Debt discount | 3,100 | 4,800 |
Unamortized debt issuance costs | 11,000 | 17,100 |
Senior secured notes | ||
Debt instruments | ||
Debt discount | 7,800 | 11,300 |
Unamortized debt issuance costs | 3,100 | 4,500 |
Revolver | ||
Debt instruments | ||
Total debt | 83,488 | 80,543 |
Securitization Facility | ||
Debt instruments | ||
Total debt | $ 91,947 | $ 91,947 |
Long-Term Debt and Credit Fac_9
Long-Term Debt and Credit Facilities - Repurchases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2021 | Jul. 12, 2017 | |
Net cash consideration | $ 58,607 | ||
Gain on early extinguishment of debt, net | $ 28,070 | 28,070 | |
Senior secured notes | |||
Repurchase of principal amount | 54,500 | 54,500 | |
Principal amount | 1,000,000 | 1,000,000 | $ 1,000,000 |
Net cash consideration | 40,200 | 40,200 | |
Gain on early extinguishment of debt, net | 13,700 | 13,700 | |
Original issue discount written off | 500 | 500 | |
Write off of Deferred Debt Issuance Cost | 200 | 200 | |
Senior secured term loan | |||
Repurchase of principal amount | 35,100 | 35,100 | |
Principal amount | 355,100 | 355,100 | $ 350,000 |
Net cash consideration | 19,000 | 19,000 | |
Gain on early extinguishment of debt, net | 14,400 | 14,400 | |
Original issue discount written off | 400 | 400 | |
Write off of Deferred Debt Issuance Cost | $ 1,400 | $ 1,400 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Taxes | ||||
Income tax expense | $ 1,441 | $ 320 | $ 3,430 | $ 3,440 |
Actual effective tax rate | 12.20% | 1.10% | 5.00% | 4.00% |
Statutory tax rate | 21.00% | 21.00% |
Employee Benefit Plans - German
Employee Benefit Plans - Germany & UK (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2021USD ($) | |
German Pension Plan | Unfunded Plan | |
Pension plans | |
Plan assets | $ 0 |
German Pension Plan | Unfunded Plan | Minimum | |
Pension plans | |
Qualifying period | 10 years |
U.K. Pension Plan | Minimum | |
Pension plans | |
Minimum required years prior to retirement for eligibility | 3 years |
Asterion Pension Plan | Minimum | |
Pension plans | |
Minimum required years prior to retirement for eligibility | 3 years |
Norway Pension Plan | Minimum | |
Pension plans | |
Minimum required years prior to retirement for eligibility | 3 years |
Employee Benefit Plans - Tax Ef
Employee Benefit Plans - Tax Effect on Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Amounts in Accumulated Other Comprehensive Loss Expected to be Recognized in Net Periodic Benefit Costs | ||
Net actuarial loss | $ 16.8 | $ 17.1 |
Deferred tax benefit | $ 2 | $ 2 |
Employee Benefit Plans - Pensio
Employee Benefit Plans - Pension Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Net periodic benefit cost | ||||
Service cost | $ 19 | $ 19 | $ 57 | $ 57 |
Interest cost | 425 | 494 | 1,275 | 1,482 |
Expected return on plan assets | (606) | (639) | (1,818) | (1,917) |
Amortization of prior service cost | 45 | 25 | 135 | 75 |
Amortization of net loss | 840 | 430 | 2,520 | 1,290 |
Net periodic benefit cost | $ 723 | $ 329 | 2,169 | 987 |
Employer contributions | $ 2,400 | $ 1,800 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ / shares in Units, € in Millions | May 28, 2021USD ($) | Mar. 26, 2020USD ($) | Jan. 30, 2020$ / shares | Sep. 21, 2017$ / sharesshares | Sep. 30, 2020USD ($) | Sep. 30, 2020EUR (€) | Sep. 30, 2021USD ($) | Mar. 31, 2020shares |
Commitments and Contingencies | ||||||||
Shares returned to company | shares | 1,523,578 | |||||||
Accrued liability | $ 62,300,000 | |||||||
Adverse Arbitration Order | ||||||||
Commitments and Contingencies | ||||||||
Accrued liability | $ 9,700,000 | 3,800,000 | ||||||
Amount awarded to customer | $ 13,000,000 | |||||||
Amount paid towards judgement | 8,800,000 | |||||||
Accrued amount reversed for settlement | $ 900,000 | |||||||
Earnout sought | € | € 10 | |||||||
SourceHOV | ||||||||
Commitments and Contingencies | ||||||||
Amount paid towards judgement | $ 1,800,000 | |||||||
SourceHOV | Petitioners | ||||||||
Commitments and Contingencies | ||||||||
Court determined fair value of stock at time of business combination (per share) | $ / shares | $ 4,591 | |||||||
Amount awarded to petitioners | $ 57,698,426 | |||||||
SourceHOV | Minimum | Petitioners | ||||||||
Commitments and Contingencies | ||||||||
Argued fair value per share | $ / shares | $ 1,633.85 | |||||||
SourceHOV | Maximum | Petitioners | ||||||||
Commitments and Contingencies | ||||||||
Argued fair value per share | $ / shares | $ 5,079.28 | |||||||
SourceHOV | Fair value guarantee | Common Stock | ||||||||
Commitments and Contingencies | ||||||||
Number of shares owned | shares | 10,304 | |||||||
Sigma 2, LLC | Petitioners | ||||||||
Commitments and Contingencies | ||||||||
Shares returned to company | shares | 1,523,578 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Carrying amounts and estimated fair values of financial instruments | |||
Goodwill | $ 358,431 | $ 359,781 | $ 359,771 |
Senior secured term loan | |||
Assets and liabilities measured at fair value | |||
Fair value percentage | 78.00% | ||
Senior secured notes | |||
Assets and liabilities measured at fair value | |||
Fair value percentage | 77.50% | ||
Level 3 | |||
Reconciliation of net assets and liabilities | |||
Balance as of Beginning of Period | $ 300 | 721 | |
Earn-out Adjustments | 279 | ||
Payments | (300) | (700) | |
Balance as of End of Period | 300 | ||
Carrying Amount | Recurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Long-term debt | 1,326,579 | 1,498,004 | |
Interest rate swap liability | 125 | ||
Acquisition contingent liability | 300 | ||
Carrying Amount | Nonrecurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Goodwill | 358,431 | 359,781 | |
Fair Value | Recurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Long-term debt | 1,069,435 | 604,775 | |
Interest rate swap liability | 125 | ||
Acquisition contingent liability | 300 | ||
Fair Value | Recurring assets and liabilities | Level 2 | |||
Carrying amounts and estimated fair values of financial instruments | |||
Long-term debt | 1,069,435 | 604,775 | |
Interest rate swap liability | 125 | ||
Fair Value | Recurring assets and liabilities | Level 3 | |||
Carrying amounts and estimated fair values of financial instruments | |||
Acquisition contingent liability | 300 | ||
Fair Value | Nonrecurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Goodwill | 358,431 | 359,781 | |
Fair Value | Nonrecurring assets and liabilities | Level 3 | |||
Carrying amounts and estimated fair values of financial instruments | |||
Goodwill | $ 358,431 | $ 359,781 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Incentive Plan (Details) - shares | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 20, 2017 |
Exela 2018 Stock Incentive Plan | |||
Common stock shares authorized | 1,600,000,000 | 1,600,000,000 | |
2018 Plan | |||
Exela 2018 Stock Incentive Plan | |||
Common stock shares authorized | 2,774,588 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Unit Grants (Details) - RSU's - 2018 Plan - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Number of Units | ||
Outstanding Balance as of December 31, 2020 | 26,455 | |
Shares granted | 688,344 | |
Shares forfeited | (53,334) | |
Shares vested | (13,227) | |
Outstanding Balance as of September 30, 2021 | 648,238 | 26,455 |
Weighted Average Grant Date Fair Value | ||
Balance at the beginning of the period | $ 3.78 | |
Shares granted | 2.70 | |
Shares forfeited | 2.73 | |
Shares vested | 3.78 | |
Balance at the end of the period | $ 2.72 | $ 3.78 |
Average Remaining Contractual Life (Years) | ||
Weighted average remaining contractual life (in years) | 4 months 20 days | 10 months 28 days |
Aggregate Intrinsic Value | ||
Aggregate intrinsic value outstanding | $ 1,761 | $ 50 |
Minimum | ||
Stock-Based Compensation | ||
Vesting period | 1 year | |
Maximum | ||
Stock-Based Compensation | ||
Vesting period | 2 years |
Stock-Based Compensation - Opti
Stock-Based Compensation - Options (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 18, 2018 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Unrecognized compensation expense | ||||||
Total compensation expense | $ 0.2 | $ 0.2 | ||||
2018 Plan | ||||||
Unrecognized compensation expense | ||||||
Unrecognized compensation expense | 2.1 | 2.1 | ||||
2018 Plan | Selling, general and administrative expense | ||||||
Unrecognized compensation expense | ||||||
Total compensation expense | $ 0.4 | $ 0.7 | $ 1.3 | $ 2.5 | ||
Stock options | ||||||
Outstanding | ||||||
Exercised (in shares) | 569,880 | |||||
Stock options | 2018 Plan | ||||||
Stock-based compensation | ||||||
Minimum fair market value per share of underlying stock used to determine option grant price, as a percent | 100.00% | |||||
Expiration of stock options | 10 years | |||||
Outstanding | ||||||
Outstanding Balance at beginning of the year (in shares) | 1,635,700 | |||||
Forfeited (in shares) | (144,200) | |||||
Outstanding Balance at the end of the year (in shares) | 1,491,500 | 1,491,500 | 1,635,700 | |||
Weighted average Grant Date fair Value | ||||||
Outstanding balance at the beginning of the period | $ 5.67 | |||||
Forfeited | 6.17 | |||||
Outstanding balance at the end of the period | $ 5.62 | 5.62 | $ 5.67 | |||
Weighted Average Exercise Price | ||||||
Outstanding Balance at the beginning of the year | 11.89 | |||||
Outstanding Balance at the end of the year (in shares) | $ 11.77 | $ 11.77 | $ 11.89 | |||
Additional information | ||||||
Average Remaining Vesting Period | 10 months 9 days | 1 year 5 months 1 day | ||||
Aggregate Intrinsic Value | $ 0 | $ 0 | ||||
Stock options | 2018 Plan | Minimum | ||||||
Stock-based compensation | ||||||
Vesting period | 2 years | |||||
Stock options | 2018 Plan | Maximum | ||||||
Stock-based compensation | ||||||
Vesting period | 4 years |
Stock-Based Compensation - Mark
Stock-Based Compensation - Market Performance Units (Details) - USD ($) | Sep. 14, 2021 | Sep. 30, 2021 | Sep. 30, 2021 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | $ 200,000 | $ 200,000 | |
Market Performance Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of securities called by each warrant or right | 1 | ||
Number of securities called by each warrant or right, cash value | $ 1 | ||
Consideration for forfeited unearned shares | $ 0 | ||
Fair value of the awards | $ 1.50 | $ 1.50 | |
Unrecognized compensation expense | $ 12,500,000 | $ 12,500,000 | |
Market Performance Units | Share Price (Less or equal to $2.00 per share) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 0.00% | ||
Share Price | $ 2 | $ 2 | |
Market Performance Units | Tranche 1 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 50.00% | ||
Share Price | $ 10 | ||
Number of consecutive trading days | 60 days | ||
Number of non-consecutive trading days | 90 days | ||
Number of trading days under arrangement | 180 days | ||
Fair value of the awards | 1.48 | 1.48 | |
Market Performance Units | Tranche 1 | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share Price | 2 | 2 | |
Market Performance Units | Tranche 1 | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share Price | 10 | $ 10 | |
Market Performance Units | Tranche 1 | Share Price ( Equal to or Greater than $10.00 per share) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 100.00% | ||
Share Price | 10 | $ 10 | |
Market Performance Units | Tranche 2 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 50.00% | ||
Share Price | $ 20 | ||
Number of consecutive trading days | 60 days | ||
Number of non-consecutive trading days | 90 days | ||
Number of trading days under arrangement | 180 days | ||
Fair value of the awards | 1.51 | 1.51 | |
Market Performance Units | Tranche 2 | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share Price | 2 | 2 | |
Market Performance Units | Tranche 2 | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share Price | 20 | $ 20 | |
Market Performance Units | Tranche 2 | Share Price (Greater or equal to $20.00 per share) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 100.00% | ||
Share Price | $ 20 | $ 20 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of activity for the Market Performance RSUs (Details) - Market Performance Units - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Number of Units | ||
Granted | 8,500,000 | |
Outstanding Balance as of September 30, 2021 | 8,500,000 | |
Weighted Average Grant Date Fair Value | ||
Granted | $ 1.50 | |
Balance at the end of the period | $ 1.50 | |
Weighted Average Period Over Which Expected to be Recognized | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 3 years 2 months 12 days | 0 years |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock (Details) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2021shares | Mar. 31, 2021shares | Mar. 31, 2020shares | Sep. 30, 2021Voteshares | Dec. 31, 2020shares | |
Common Stock | |||||
Common Stock, shares authorized | 1,600,000,000 | 1,600,000,000 | |||
Number of voting rights entitled for each share of Common Stock held | Vote | 1 | ||||
Common stock, shares issued | 168,648,451 | 51,693,931 | |||
Common Stock, shares, outstanding | 166,196,745 | 49,242,225 | |||
Common stock, shares returned | 1,523,578 | ||||
Series A Preferred Stock | |||||
Common Stock | |||||
Preferred shares converted to common stock (in shares) | 1,004,183 | 511,939 | |||
Common Stock | |||||
Common Stock | |||||
Preferred shares converted to common stock (in shares) | 564 | 223,413 | 409,238 | 223,977 |
Stockholders' Equity - Reverse
Stockholders' Equity - Reverse Stock Split (Details) | Jan. 25, 2021 | Sep. 30, 2021shares | Dec. 31, 2020shares |
STOCKHOLDERS' EQUITY | |||
Reverse stock split | 0.3333 | ||
Common stock, shares issued | 168,648,451 | 51,693,931 | |
Common Stock, shares, outstanding | 166,196,745 | 49,242,225 | |
Prior To Stock Split [Member] | |||
STOCKHOLDERS' EQUITY | |||
Common stock, shares issued | 147,511,430 | ||
Common Stock, shares, outstanding | 147,511,430 |
Stockholders' Equity - Common_2
Stockholders' Equity - Common Stock At-The-Market Sales Program (Details) - USD ($) $ / shares in Units, $ in Millions | Sep. 30, 2021 | Jun. 30, 2021 | May 27, 2021 | Jun. 30, 2021 | Sep. 02, 2021 |
Common ATM Program-1 | |||||
Class of Stock [Line Items] | |||||
Shares issued | 49,423,706 | ||||
Weighted average price | $ 2.008 | $ 2.008 | |||
Gross proceeds | $ 99.3 | ||||
Net proceeds | $ 95.7 | ||||
Common ATM Program-1 | Maximum | |||||
Class of Stock [Line Items] | |||||
Issuance of Common Stock | $ 100 | ||||
Common ATM Program-2 | |||||
Class of Stock [Line Items] | |||||
Shares issued | 57,580,462 | ||||
Weighted average price | $ 2.603 | ||||
Gross proceeds | $ 149.9 | ||||
Net proceeds | $ 144.4 | ||||
Common ATM Program-2 | Maximum | |||||
Class of Stock [Line Items] | |||||
Issuance of Common Stock | $ 150 | ||||
Common ATM Program-3 | Maximum | |||||
Class of Stock [Line Items] | |||||
Issuance of Common Stock | $ 250 |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock (Details) $ / shares in Units, $ in Thousands | Jan. 25, 2021 | Sep. 30, 2021USD ($)$ / sharesshares | Jun. 30, 2021shares | Mar. 31, 2021shares | Sep. 30, 2020USD ($)$ / shares | Mar. 31, 2020shares | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2020USD ($)$ / shares | Dec. 31, 2020$ / sharesshares |
Preferred Stock | |||||||||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | ||||||
Preferred stock, shares outstanding | 2,778,111 | 2,778,111 | 3,290,050 | ||||||
Preferred Stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Reverse stock split | 0.3333 | ||||||||
Series A Preferred Stock | |||||||||
Preferred Stock | |||||||||
Preferred stock, shares outstanding | 2,778,111 | 2,778,111 | 3,290,050 | ||||||
Preferred Stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Preferred Stock, cumulative dividends rate (in percentage) | 10.00% | ||||||||
Accumulated preferred stock, Dividends | $ | $ 1,000 | $ 800 | |||||||
Conversion of Series A Preferred stock to common shares | 1,004,183 | 511,939 | |||||||
Additional common stock issuable upon conversion of remaining convertible shares | 1,276,902 | 1,276,902 | |||||||
Cumulative accrued but unpaid dividends | $ | $ 11,500 | $ 11,500 | |||||||
Per share average of cumulative preferred dividends (in dollars per share) | $ / shares | $ 0.3 | $ 0.3 | $ 0.3 | $ 0.1 | |||||
Reverse stock split | 0.4596 | ||||||||
Common Stock | |||||||||
Preferred Stock | |||||||||
Conversion of shares (in shares) | 409,238 | 223,977 | |||||||
Common Stock | |||||||||
Preferred Stock | |||||||||
Conversion of Series A Preferred stock to common shares | 564 | 223,413 | 409,238 | 223,977 | |||||
Common Stock | Series A Preferred Stock | |||||||||
Preferred Stock | |||||||||
Accumulated preferred stock, Dividends | $ | $ (1,800) | $ (2,300) | |||||||
Common Stock | Common Stock | |||||||||
Preferred Stock | |||||||||
Accumulated preferred stock, Dividends | $ | $ 700 | $ 400 |
Stockholders' Equity - Treasury
Stockholders' Equity - Treasury Stock (Details) - shares | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2020 | Sep. 30, 2021 | Nov. 08, 2017 | |
Stockholders' Equity | |||
Treasury stock, shares authorized | 1,666,667 | ||
Share Repurchased (in shares) | 929,049 | ||
Shares returned in connection with the Appraisal Action following repayment of Margin Loan (in shares) | 1,523,578 |
Stockholders' Equity - Warrants
Stockholders' Equity - Warrants (Details) $ / shares in Units, $ in Thousands | Mar. 15, 2021USD ($)$ / sharesshares | Sep. 30, 2021item$ / sharesshares |
Warrants | ||
Warrants outstanding | 15,565,152 | |
Number of Common Stock each warrant may purchase | 0.167 | |
Exercise price of warrant per one sixth of Common Stock | $ / shares | $ 5.75 | |
Exercise price of warrant per one Common Stock (in US$ per share) | $ / shares | $ 34.50 | |
Expiration of warrants from business acquisition date | 5 years | |
Warrant redemption price (in US$ per share) | $ / shares | $ 0.01 | |
Minimum written notice period of redemption | 30 days | |
Minimum common stock sales price for exercise of redemption right (in US$ per share) | $ / shares | $ 72 | |
Minimum trading days within 30-day period at $72 per share for exercise of redemption right | item | 20 | |
Trading day period for exercise of redemption right | 30 days | |
Period of the 30-day period prior to notice of redemption | 3 days | |
Period of current registration effectivity prior to 30-day trading period | 5 days | |
IPO | ||
Warrants | ||
Warrants outstanding | 35,000,000 | |
Number of Common Stock each warrant may purchase | 0.167 | |
Private Placement | ||
Warrants | ||
Warrants outstanding | 9,731,819 | |
Exercise price of warrant per one Common Stock (in US$ per share) | $ / shares | $ 4 | |
Purchase of common stock, share | 9,731,819 | |
Common stock issued price | $ / shares | $ 2.75 | |
Gross proceeds from offering expected | $ | $ 26,800 | |
Warrants | ||
Warrants | ||
Number of warrants separated from the original unit | 34,986,302 | |
Number of warrants not separated from the original unit | 13,698 | |
Warrants | IPO | ||
Warrants | ||
Units issued | 35,000,000 | |
Common stock included in units | 1 | |
Warrants included in units | 1 | |
Warrants | Private Placement | ||
Warrants | ||
Placement fee Percentage on Gross proceeds | 5.50% |
Related-Party Transactions - Re
Related-Party Transactions - Relationship with HandsOn Global Management (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2021USD ($)agreement | Sep. 30, 2020USD ($) | Dec. 31, 2016 | |
Related-Party Transactions | |||||||
Amount of related party transaction | $ 2,744,000 | $ 1,360,000 | $ 7,199,000 | $ 4,058,000 | |||
Related party expense | $ 2,744,000 | 1,360,000 | 7,199,000 | 4,058,000 | |||
Settlement gain on related party payable to Ex-Sigma 2 | $ 1,287,000 | 1,287,000 | |||||
Related Party Transaction, Reimbursement Expenses from Transactions with Related Party | $ 0 | 200,000 | |||||
HGM | |||||||
Related-Party Transactions | |||||||
Ownership percentage | 14.70% | 14.70% | |||||
HGM | Travel Expense | |||||||
Related-Party Transactions | |||||||
Amount of related party transaction | $ 100,000 | 100,000 | $ 100,000 | 100,000 | |||
HGM | Master Service Agreement | |||||||
Related-Party Transactions | |||||||
Number of master agreements | agreement | 10 | ||||||
Entities affiliated with HGM managed funds | Master Service Agreement | |||||||
Related-Party Transactions | |||||||
Revenue share percentage | 25.00% | ||||||
Affiliate of largest stockholder | |||||||
Related-Party Transactions | |||||||
Rental expenses | 100,000 | 100,000 | $ 200,000 | 200,000 | |||
HOV Services, Ltd | Data Capture And Technology Services | Cost of revenue | |||||||
Related-Party Transactions | |||||||
Amount of related party transaction | 300,000 | 300,000 | 1,000,000 | 1,000,000 | |||
Sigma 2, LLC | |||||||
Related-Party Transactions | |||||||
Cash Reimbursed To Related Parties | $ 5,600,000 | ||||||
Sigma 2, LLC | Margin Loan | |||||||
Related-Party Transactions | |||||||
Due to Related Parties | 6,900,000 | 6,900,000 | |||||
Settlement gain on related party payable to Ex-Sigma 2 | 1,300,000 | ||||||
SourceHOV | Master Service Agreement | |||||||
Related-Party Transactions | |||||||
Revenue share percentage | 75.00% | ||||||
SourceHOV | Entities affiliated with HGM managed funds | Master Service Agreement | |||||||
Related-Party Transactions | |||||||
Related party expense | $ 1,500,000 | $ 500,000 | $ 4,200,000 | $ 1,400,000 |
Related-Party Transactions - Co
Related-Party Transactions - Consulting Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Related-Party Transactions | ||||
Related party expense | $ 2,744 | $ 1,360 | $ 7,199 | $ 4,058 |
Consulting Services | Oakana Holdings Inc | Maximum | ||||
Related-Party Transactions | ||||
Related party expense | $ 100 | $ 100 | $ 100 | $ 100 |
Related Party Transactions - Re
Related Party Transactions - Relationship with Apollo Global Management, LLC (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Related-Party Transactions | ||||
Related party expense | $ 2,744 | $ 1,360 | $ 7,199 | $ 4,058 |
Management Holdings | Master Service Agreement | Maximum | ||||
Related-Party Transactions | ||||
Revenue from related parties | 100 | |||
Caesars | Master Service Agreement | ||||
Related-Party Transactions | ||||
Revenue from related parties | 900 | |||
ADT LLC | Master Service Agreement | ||||
Related-Party Transactions | ||||
Revenue from related parties | 300 | |||
Sigma 2, LLC | Margin Loan | ||||
Related-Party Transactions | ||||
Due to Related Parties | $ 6,900 | 6,900 | ||
Diamond Resorts Centralized Services | Master Service Agreement | ||||
Related-Party Transactions | ||||
Revenue from related parties | 900 | |||
Diamond Resorts Centralized Services | Master Service Agreement | Maximum | ||||
Related-Party Transactions | ||||
Related party cost of revenue | 100 | |||
Presidio Group | Master Service Agreement | ||||
Related-Party Transactions | ||||
Related party expense | $ 200 |
Related-Party Transactions - _2
Related-Party Transactions - Receivable and Payable Balance with Affiliates (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Payable and Receivable Balances with Affiliates | ||
Receivables and Prepaid Expenses | $ 725 | $ 711 |
Payables | 715 | 97 |
HOV Services, Ltd | ||
Payable and Receivable Balances with Affiliates | ||
Receivables and Prepaid Expenses | 725 | 711 |
Rule 14, LLC | ||
Payable and Receivable Balances with Affiliates | ||
Payables | 672 | 44 |
HGM | ||
Payable and Receivable Balances with Affiliates | ||
Payables | 42 | 52 |
Oakana Holdings Inc | ||
Payable and Receivable Balances with Affiliates | ||
Payables | $ 1 | $ 1 |
Segment and Geographic Area I_3
Segment and Geographic Area Information - Revenue by segment information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)segment | Sep. 30, 2020USD ($) | |
Segment information | ||||
Number of segments | segment | 3 | |||
Revenue | $ 279,229 | $ 305,280 | $ 872,294 | $ 978,453 |
Cost of revenue (exclusive of depreciation and amortization) | 211,731 | 234,222 | 653,398 | 768,548 |
Segment profit | 67,498 | 71,058 | 218,896 | 209,905 |
Selling, general and administrative expenses (exclusive of depreciation and amortization) | 43,244 | 42,837 | 121,519 | 140,224 |
Depreciation and amortization | 19,094 | 22,095 | 58,113 | 68,127 |
Related party expense | 2,744 | 1,360 | 7,199 | 4,058 |
Interest expense, net | 41,757 | 43,612 | 127,755 | 129,639 |
Gain on early extinguishment of debt, net | (28,070) | (28,070) | ||
Sundry expense (income), net | 136 | (434) | (438) | (251) |
Other expense (income), net | 366 | (10,414) | 1,169 | (45,655) |
Net loss before income taxes | (11,773) | (27,998) | (68,351) | (86,237) |
ITPS | ||||
Segment information | ||||
Revenue | 208,304 | 234,365 | 657,438 | 761,505 |
Cost of revenue (exclusive of depreciation and amortization) | 157,721 | 183,671 | 499,892 | 614,625 |
Segment profit | 50,583 | 50,694 | 157,546 | 146,880 |
HS | ||||
Segment information | ||||
Revenue | 53,995 | 54,209 | 161,292 | 167,424 |
Cost of revenue (exclusive of depreciation and amortization) | 41,945 | 39,444 | 116,736 | 120,522 |
Segment profit | 12,050 | 14,765 | 44,556 | 46,902 |
LLPS | ||||
Segment information | ||||
Revenue | 16,930 | 16,706 | 53,564 | 49,524 |
Cost of revenue (exclusive of depreciation and amortization) | 12,065 | 11,107 | 36,770 | 33,401 |
Segment profit | $ 4,865 | $ 5,599 | $ 16,794 | $ 16,123 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | |||
Oct. 31, 2021 | Oct. 27, 2021 | Oct. 01, 2021 | Sep. 30, 2021 | |
Senior secured term loan | ||||
Subsequent Event [Line Items] | ||||
Repurchase of principal amount | $ 35.1 | |||
Subsequent Events | ||||
Subsequent Event [Line Items] | ||||
Repurchase of principal amount | $ 10 | |||
Aggregate purchase price of debt repurchased | $ 225 | $ 8.5 | ||
Subsequent Events | Senior Secured Notes Due 2026 [Member] | ||||
Subsequent Event [Line Items] | ||||
Interest rate (in percent) | 11.50% | |||
Subsequent Events | Senior Secured Notes Due 2023 [Member] | ||||
Subsequent Event [Line Items] | ||||
Interest rate (in percent) | 10.00% | |||
Subsequent Events | Senior secured term loan | ||||
Subsequent Event [Line Items] | ||||
Repurchase of principal amount | $ 5 | |||
Subsequent Events | Common ATM Program-3 | ||||
Subsequent Event [Line Items] | ||||
Shares issued | 18,632,434 | |||
Weighted average price | $ 1.567 | |||
Gross proceeds | $ 29.2 | |||
Net proceeds | $ 28.3 |