Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 09, 2019 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Entity Registrant Name | TARGET HOSPITALITY CORP. | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 105,239,599 | |
Entity Central Index Key | 0001712189 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 10,393 | $ 12,194 |
Accounts receivable, less allowance for doubtful accounts of $335 and $39, respectively | 51,679 | 57,106 |
Prepaid expenses and other assets | 3,443 | 3,965 |
Related party receivable | 588 | |
Notes due from affiliates | 638 | |
Notes due from officers | 1,083 | |
Total current assets | 66,103 | 74,986 |
Restricted cash | 257 | 257 |
Specialty rental assets, net | 339,302 | 293,559 |
Other property, plant and equipment, net | 19,372 | 18,882 |
Goodwill | 41,171 | 34,180 |
Other intangible assets, net | 125,328 | 127,383 |
Deferred tax asset | 10,921 | 12,420 |
Deferred financing costs revolver, net | 5,471 | 2,865 |
Notes due from officers | 500 | |
Other non-current assets | 804 | |
Total assets | 608,729 | 565,032 |
Current liabilities: | ||
Accounts payable | 19,156 | 21,597 |
Accrued liabilities | 28,072 | 23,300 |
Deferred revenue and customer deposits | 17,148 | 17,805 |
Current portion of capital lease and other financing obligations (Note 9) | 570 | 2,446 |
Total current liabilities | 64,946 | 65,148 |
Other liabilities: | ||
Principal amount | 340,000 | |
Less: unamortized original issue discount | (3,154) | |
Less: unamortized term loan deferred financing costs | (15,607) | |
Long-term debt, net | 410,570 | |
Long-term capital lease and other financing obligations | 14 | |
Note due to affiliates | 108,047 | |
Deferred revenue and customer deposits | 14,003 | 19,571 |
Asset retirement obligations | 2,713 | 2,610 |
Other non-current liabilities | 101 | |
Total liabilities | 472,901 | 216,041 |
Commitments and contingencies (Note 15) | ||
Shareholders' equity: | ||
Common Stock, $0.0001 par, 380,000,000 authorized, 105,232,933 issued and outstanding as of June 30, 2019 and 74,786,327 issued and outstanding as of December 31, 2018. | 10 | 7 |
Additional paid-in-capital | 110,345 | 319,968 |
Accumulated other comprehensive loss | (2,607) | (2,463) |
Accumulated earnings | 28,080 | 31,479 |
Total shareholders' equity | 135,828 | 348,991 |
Total liabilities and shareholders' equity | 608,729 | 565,032 |
Senior Secured Notes 2024 | ||
Other liabilities: | ||
Principal amount | 340,000 | |
Less: unamortized original issue discount | (3,154) | |
Less: unamortized term loan deferred financing costs | (15,607) | |
Long-term debt, net | 321,239 | |
New ABL facility | ||
Other liabilities: | ||
Less: unamortized term loan deferred financing costs | (4,100) | |
Long-term debt, net | 70,000 | 20,550 |
Revolving credit facility (Note 9) | $ 70,000 | $ 20,550 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 335 | $ 39 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock shares authorized | 380,000,000 | 380,000,000 |
Common stock shares issued | 105,232,933 | 74,786,327 |
Common stock, Number of share outstanding | 105,232,933 | 74,786,327 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue: | ||||
Revenue | $ 81,358 | $ 45,476 | $ 163,340 | $ 84,122 |
Costs: | ||||
Depreciation of specialty rental assets | 9,960 | 6,792 | 19,861 | 13,395 |
Gross profit | 39,172 | 21,742 | 76,926 | 37,845 |
Selling, general and administrative | 10,925 | 7,998 | 55,676 | 18,180 |
Other depreciation and amortization | 3,816 | 1,112 | 7,579 | 2,402 |
Restructuring costs | 0 | 1,158 | 168 | 7,414 |
Currency losses, net | 68 | 68 | ||
Other income, net | (123) | (515) | (161) | (965) |
Operating income | 24,554 | 11,921 | 13,664 | 10,746 |
Loss on extinguishment of debt | 907 | |||
Interest expense, net | 9,853 | 5,670 | 13,884 | 9,615 |
Income (loss) before income tax | 14,701 | 6,251 | (1,127) | 1,131 |
Income tax expense | 4,121 | 1,827 | 2,272 | 901 |
Net income (loss) | 10,580 | 4,424 | (3,399) | 230 |
Other comprehensive income (loss) | ||||
Foreign currency translation | (144) | 616 | (144) | (291) |
Comprehensive income (loss) | $ 10,436 | $ 5,040 | $ (3,543) | $ (61) |
Two Class Method: | ||||
Weighted average number of shares outstanding - basic and diluted (in shares) | 100,217,035 | 25,686,327 | 89,960,451 | 25,686,327 |
Net Income (loss) per share - basic and diluted (in dollars per share) | $ 0.11 | $ 0.17 | $ (0.04) | $ 0.01 |
Services | ||||
Revenue: | ||||
Revenue | $ 59,832 | $ 28,259 | $ 120,905 | $ 53,175 |
Costs: | ||||
Costs | 29,736 | 14,344 | 61,745 | 27,854 |
Specialty rental | ||||
Revenue: | ||||
Revenue | 15,143 | 17,217 | 28,873 | 30,947 |
Costs: | ||||
Costs | 2,490 | 2,598 | 4,808 | 5,028 |
Construction fee | ||||
Revenue: | ||||
Revenue | $ 6,383 | $ 0 | $ 13,562 | $ 0 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders’ Equity - USD ($) $ in Thousands | Previously reportedEquity (deficit) | Previously reportedAccumulated Other Comprehensive Loss | Previously reportedAccumulated Earnings | Previously reported | Retroactive application of recapitalizationCommon Stock | Retroactive application of recapitalizationAdditional Paid-in Capital | Retroactive application of recapitalizationEquity (deficit) | Retroactive application of recapitalizationAccumulated Earnings | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Earnings | Total |
Beginning Balances (In Shares) at Dec. 31, 2016 | |||||||||||||
Recapitalization transaction | $ 3 | $ 12,606 | $ (12,609) | ||||||||||
Recapitalization transaction (in shares) | 25,686,327 | ||||||||||||
Ending Balances at Dec. 31, 2017 | $ (12,606) | $ (1,622) | $ 39,132 | $ 24,904 | $ 3 | $ (1,622) | $ 26,523 | $ 24,904 | |||||
Ending Balances (In shares) at Dec. 31, 2017 | 25,686,327 | ||||||||||||
Net (loss) income | (4,194) | (4,194) | |||||||||||
Cumulative translation adjustment | (907) | (907) | |||||||||||
Ending Balances at Mar. 31, 2018 | $ 3 | (2,529) | 22,329 | 19,803 | |||||||||
Ending Balances (In shares) at Mar. 31, 2018 | 25,686,327 | ||||||||||||
Beginning Balances at Dec. 31, 2017 | (12,606) | (1,622) | 39,132 | 24,904 | $ 3 | (1,622) | 26,523 | 24,904 | |||||
Beginning Balances (In Shares) at Dec. 31, 2017 | 25,686,327 | ||||||||||||
Net (loss) income | 230 | ||||||||||||
Cumulative translation adjustment | (291) | ||||||||||||
Ending Balances at Jun. 30, 2018 | $ 3 | (1,913) | 26,337 | 24,427 | |||||||||
Ending Balances (In shares) at Jun. 30, 2018 | 25,686,327 | ||||||||||||
Beginning Balances at Dec. 31, 2017 | (12,606) | (1,622) | 39,132 | 24,904 | $ 3 | (1,622) | 26,523 | 24,904 | |||||
Beginning Balances (In Shares) at Dec. 31, 2017 | 25,686,327 | ||||||||||||
Recapitalization transaction | $ 7 | $ 319,968 | $ (307,366) | $ (12,609) | |||||||||
Recapitalization transaction (in shares) | 74,786,327 | ||||||||||||
Ending Balances at Dec. 31, 2018 | 307,366 | (2,463) | 44,088 | 348,991 | $ 7 | $ 319,968 | (2,463) | 31,479 | 348,991 | ||||
Ending Balances (In shares) at Dec. 31, 2018 | 74,786,327 | ||||||||||||
Beginning Balances at Mar. 31, 2018 | $ 3 | (2,529) | 22,329 | 19,803 | |||||||||
Beginning Balances (In Shares) at Mar. 31, 2018 | 25,686,327 | ||||||||||||
Net (loss) income | 4,424 | 4,424 | |||||||||||
Distribution | (416) | (416) | |||||||||||
Cumulative translation adjustment | 616 | 616 | |||||||||||
Ending Balances at Jun. 30, 2018 | $ 3 | (1,913) | 26,337 | 24,427 | |||||||||
Ending Balances (In shares) at Jun. 30, 2018 | 25,686,327 | ||||||||||||
Beginning Balances at Dec. 31, 2018 | 307,366 | (2,463) | 44,088 | 348,991 | $ 7 | 319,968 | (2,463) | 31,479 | 348,991 | ||||
Beginning Balances (In Shares) at Dec. 31, 2018 | 74,786,327 | ||||||||||||
Recapitalization transaction | $ 3 | 314,194 | 314,197 | ||||||||||
Recapitalization transaction (in shares) | 30,446,606 | ||||||||||||
Recapitalization transaction - cash paid to Algeco Seller | (563,134) | (563,134) | |||||||||||
Net (loss) income | (13,979) | (13,979) | |||||||||||
Contribution | 39,107 | 39,107 | |||||||||||
Ending Balances at Mar. 31, 2019 | $ 10 | 110,135 | (2,463) | 17,500 | 125,182 | ||||||||
Ending Balances (In shares) at Mar. 31, 2019 | 105,232,933 | ||||||||||||
Beginning Balances at Dec. 31, 2018 | $ 307,366 | $ (2,463) | $ 44,088 | $ 348,991 | $ 7 | 319,968 | (2,463) | 31,479 | 348,991 | ||||
Beginning Balances (In Shares) at Dec. 31, 2018 | 74,786,327 | ||||||||||||
Net (loss) income | (3,399) | ||||||||||||
Cumulative translation adjustment | (144) | ||||||||||||
Ending Balances at Jun. 30, 2019 | $ 10 | 110,345 | (2,607) | 28,080 | 135,828 | ||||||||
Ending Balances (In shares) at Jun. 30, 2019 | 105,232,933 | ||||||||||||
Beginning Balances at Mar. 31, 2019 | $ 10 | 110,135 | (2,463) | 17,500 | 125,182 | ||||||||
Beginning Balances (In Shares) at Mar. 31, 2019 | 105,232,933 | ||||||||||||
Net (loss) income | 10,580 | 10,580 | |||||||||||
Stock-based compensation | 210 | 210 | |||||||||||
Cumulative translation adjustment | (144) | (144) | |||||||||||
Ending Balances at Jun. 30, 2019 | $ 10 | $ 110,345 | $ (2,607) | $ 28,080 | $ 135,828 | ||||||||
Ending Balances (In shares) at Jun. 30, 2019 | 105,232,933 |
Condensed Interim Statement of
Condensed Interim Statement of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (3,399) | $ 230 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation | 20,385 | 13,733 |
Amortization of intangible assets | 7,055 | 2,068 |
Accretion of asset retirement obligation | 103 | 70 |
Amortization of deferred financing costs | 1,250 | |
Amortization of original issue discount | 147 | |
Stock-based compensation expense | 210 | |
Officer loan compensation expense | 1,583 | |
Loss (gain) on involuntary conversion | 11 | (1,250) |
Loss on extinguishment of debt | 907 | |
Deferred income taxes | 1,499 | 564 |
Provision for loss on receivables | 296 | 59 |
Changes in operating assets and liabilities (net of business acquired) | ||
Accounts receivable | 5,131 | (2,632) |
Related party receivable | (588) | |
Prepaid expenses and other assets | 522 | 90 |
Accounts payable and other accrued liabilities | (9,204) | 3,049 |
Deferred revenue and customer deposits | (6,225) | (6,899) |
Other non-current assets and liabilities | (907) | (2,038) |
Net cash provided by operating activities | 18,776 | 7,044 |
Cash flows from investing activities: | ||
Purchase of specialty rental assets | (46,729) | (43,678) |
Purchase of property, plant and equipment | (127) | (469) |
Purchase of business | (30,000) | |
Receipt of insurance proceeds | 362 | 3,015 |
Repayments from affiliates | 638 | 540 |
Net cash used in investing activities | (75,856) | (40,592) |
Cash flows from financing activities: | ||
Proceeds from borrowings on Senior Secured Notes, net of discount | 336,699 | |
Principal payments on finance and capital lease obligations | (1,890) | (7,199) |
Principal payments on borrowings from ABL | (27,790) | (5,075) |
Proceeds from borrowings on ABL | 77,240 | |
Repayment of affiliate note | (3,762) | |
Contributions from affiliate | 39,107 | |
Recapitalization | 218,752 | |
Payment of deferred financing costs | (19,799) | |
Proceeds from borrowings from capital lease | 20,226 | |
Receipt from capital lease | 19,000 | |
Net cash provided by financing activities | 55,423 | 26,952 |
Effect of exchange rate changes on cash and cash equivalents | (144) | (294) |
Net decrease in cash and cash equivalents | (1,801) | (6,890) |
Cash and cash equivalents - beginning of period | 12,194 | 12,533 |
Cash and cash equivalents - end of period | 10,393 | 5,643 |
Non-cash investing and financing activity: | ||
Non-cash change in accrued capital expenditures | (2,126) | (2,011) |
Non-cash contribution from affiliate - forgiveness of affiliate note | 104,285 | |
Non-cash change in accrued deferred financing costs | (570) | |
Non-cash distribution to PEAC - liability transfer from PEAC, net | (8,840) | |
Non-cash deemed distribution to affiliate | $ (312) | |
Algeco Sellers | ||
Cash flows from financing activities: | ||
Recapitalization - cash paid to Algeco Seller | $ (563,134) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Organization and Nature of Operations Target Hospitality Corp. (“Target Hospitality” or the “Company”) was formed on March 15, 2019 and is one of the largest vertically integrated specialty rental and hospitality services companies in the United States. The Company provides vertically integrated specialty rental and comprehensive hospitality services including: catering food services, maintenance, housekeeping, grounds-keeping, on-site security, overall workforce lodge management, and laundry service. Target Hospitality serves clients in oil, gas, mining, alternative energy, government and immigrations sectors principally located in the West Texas, South Texas, Oklahoma and Bakken regions, as well as various large linear-construction (pipeline and infrastructure) projects in the United States. The Company, whose securities are listed on the Nasdaq Capital Market, serves as the holding company for the businesses of Target Logistics Management, LLC and its subsidiaries (“Target”) and RL Signor Holdings, LLC and its subsidiaries (“Signor”). TDR Capital LLP (“TDR Capital” or “TDR”) owns approximately 62% of Target Hospitality and the remaining ownership is broken out among the founders of the Company’s legal predecessor, Platinum Eagle Acquisition Corp. (“Platinum Eagle” or “PEAC”), investors in Platinum Eagle’s private placement transaction completed substantially and concurrently with the Business Combination (as defined below) (the “PIPE”), and other public shareholders. On November 13, 2018, PEAC entered into: (i) the agreement and plan of merger, as amended on January 4, 2019 (the “Signor Merger Agreement”), by and among PEAC, Signor Merger Sub LLC, a Delaware limited liability company and wholly-owned subsidiary of Platinum Eagle and sister company to the Holdco Acquiror (defined below as Topaz Holdings LLC) (“Signor Merger Sub”), Arrow Holdings S.a.r.l., a Luxembourg société à responsabilité limitée (the “Arrow Seller”) and Signor Parent (as defined below), and (ii) the agreement and plan of merger, as amended on January 4, 2019 (the “Target Merger Agreement” and, together with the Signor Merger Agreement, the “Merger Agreements”), by and among Platinum Eagle, Topaz Holdings LLC, a Delaware limited liability company (“Topaz”), Arrow Bidco, LLC, a Delaware limited liability company (“Bidco”), Algeco Investments B.V., a Netherlands besloten vennotschap (the “Algeco Seller”) and Target Parent (as defined below), to effect a business combination (the “Business Combination”). Pursuant to the Merger Agreements, on March 15, 2019, Platinum Eagle, through its wholly-owned subsidiary, Topaz, acquired all of the issued and outstanding equity interests of Arrow Parent Corp., a Delaware corporation (“Signor Parent”), the owner of Bidco and the owner of Signor from the Arrow Seller, and all of the issued and outstanding equity interests of Algeco US Holdings LLC, a Delaware limited liability company (“Target Parent”), the owner of Target, from the Algeco Seller, for approximately $1.311 billion. The purchase price was paid in a combination of shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and cash. The Arrow Seller and the Algeco Seller are hereinafter referred to as the “Sellers.” Target Parent, was formed by TDR in September 2017. Prior to the Business Combination, Target Parent was directly owned by Algeco Scotsman Global S.a.r.l. (“ASG”) which is ultimately owned by a group of investment funds managed and controlled by TDR. During 2018, ASG assigned all of its ownership interest in Target Parent to the Algeco Seller, an affiliate of ASG that is also ultimately owned by a group of investment funds managed and controlled by TDR. Target Parent acted as a holding company that included the U.S. corporate employees of ASG and certain of its affiliates and certain related administrative costs and was the owner of Target, its operating company. Target Parent received capital contributions, made distributions, and maintained cash as well as other amounts owed to and from affiliated entities. As discussed above, in connection with the closing of the Business Combination, Target Parent merged with and into Bidco, with Bidco as the surviving entity. Signor Parent owned 100% of Bidco until the closing of the Business Combination in connection with which Signor Parent merged with and into Topaz with Topaz being the surviving entity. Prior to the Business Combination, Signor Parent was owned by the Arrow Seller, which is ultimately owned by a group of investment funds managed and controlled by TDR. Signor Parent was formed in August 2018 and acted as a holding company for Bidco, which was formed in September 2018, also as a holding company. Bidco acquired Signor on September 7, 2018 (see Note 3). Neither Signor Parent nor Bidco had operating activity, but each received capital contributions, made distributions, and maintained cash as well as other amounts owed to and from affiliated entities. Signor Parent was dissolved upon consummation of the Business Combination and merger with Topaz described above on March 15, 2019. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Certain information in footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) has been condensed or omitted pursuant to those rules and regulations. The financial statements included in this report should be read in conjunction with the audited combined financial statements of Target Parent and Signor Parent and accompanying notes thereto for the year ended December 31, 2018 as well as the consolidated financial statements and notes included in the PEAC Annual Report on Form 10-K for the year ended December 31, 2018. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2019 or any future period. Due to the Restructuring discussed in the audited combined financial statements of Target Parent and Signor Parent and accompanying notes thereto for the year ended December 31, 2018, there are approximately $0.4 million and $15.0 million of additional expenses related to the activity of Target Parent included in the unaudited consolidated statements of comprehensive income (loss) for the six months ended June 30, 2019 and 2018, respectively. There are approximately $0 and $3.6 million of additional expenses related to this activity included in the unaudited consolidated statements of comprehensive income (loss) for the three months ended June 30, 2019 and 2018, respectively. Approximately $0.2 million and $7.4 million are reported in restructuring costs for the six months ended June 30, 2019 and 2018, respectively, while $0 and $1.2 million are reported in restructuring costs for the three months ended June 2019 and 2018, respectively. Approximately $0.2 million and $7.6 million of these expenses are reported in selling, general and administrative expenses for the six months ended June 30, 2019 and 2018, respectively, while $0 and $2.4 million are included in selling, general and administrative expenses within the statement of comprehensive income (loss) for the three months ended June 30, 2019 and 2018, respectively. The accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, except for the adjustments described above as part of the Restructuring and the adjustments described as part of the Business Combination discussed in Note 2, necessary for a fair statement of financial position as of June 30, 2019, and results of operations for the three and six months ended June 30, 2019 and 2018, and cash flows for the six months ended June 30, 2019 and 2018. The consolidated balance sheet as of December 31, 2018, was derived from the audited combined financial statements of Target Parent and Signor Parent but does not contain all of the footnote disclosures from those annual financial statements. Reclassifications Certain prior year amounts in these financial statements have been reclassified to conform to the current year presentation with no impact to net income (loss) and comprehensive income (loss), stockholders’ equity or cash flows. Use of Estimates The preparation of financial statements in conformity with US GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. If the underlying estimates and assumptions upon which the financial statements are based change in future periods, actual amounts may differ from those included in the accompanying unaudited consolidated financial statements. Principles of Consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries that it controls due to ownership of a majority voting interest. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. All intercompany balances and transactions are eliminated. The Business Combination was accounted for as a reverse recapitalization in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations . Although Platinum Eagle was the indirect acquirer of Target Parent and Signor Parent for legal purposes, Target Parent and Signor Parent were considered the acquirer for accounting and financial reporting purposes. As a result of Target Parent and Signor Parent being the accounting acquirer in the Business Combination, the financial reports filed with the SEC by the Company subsequent to the Business Combination are prepared “as if” Target Parent and Signor Parent are the accounting predecessor of the Company. The historical operations of Target Parent and Signor Parent are deemed to be those of the Company. Thus, the financial statements included in this report reflect (i) the historical operating results of Target Parent and Signor Parent prior to the Business Combination; (ii) the consolidated results of the Company, Target Parent and Signor Parent following the Business Combination on March 15, 2019; (iii) the assets and liabilities of Target Parent and Signor Parent at their historical cost; and (iv) the Company’s equity structure for all periods presented. The recapitalization of the number of shares of Common Stock attributable to the purchase of Target Parent and Signor Parent in connection with the Business Combination is reflected retroactively to the earliest period presented and will be utilized for calculating loss per share in all prior periods presented. No step-up basis of intangible assets or goodwill was recorded in the Business Combination transaction consistent with the treatment of the transaction as a reverse recapitalization of Target Parent and Signor Parent. Revenue Recognition The Company derives revenue from specialty rental and hospitality services, specifically lodging and related ancillary services. Revenue is recognized in the period in which lodging and services are provided pursuant to the terms of contractual relationships with the customers. Certain arrangements contain a lease of lodging facilities to customers. The leases are accounted for as an operating lease under the authoritative guidance for leases and are recognized as income using the straight-line method over the term of the lease agreement. When the Company enters into arrangements with multiple deliverables, arrangement consideration is allocated between the deliverables based on the relative estimated selling price of each deliverable. The estimated price of lodging and service deliverables is based on the price of lodging and services when sold separately, or based upon the best estimate of selling price. When lodging and services are billed and collected in advance, recognition of revenue is deferred until services are rendered. Certain of the Company’s contractual arrangements allow customers the ability to use paid but unused lodging and services for a specified period. The Company recognizes revenue for these paid but unused lodging and services as they are consumed, as it becomes probable the lodging and services will not be used, or upon expiration of the specified term. Cost of services includes labor, food, utilities, supplies, rent and other direct costs associated with operating the lodging units. Cost of rental includes leasing costs and other direct costs of maintaining the lodging units. Incremental direct costs of acquiring contracts includes sales commissions which are expensed as incurred and reflected in selling, general and administrative expenses in the consolidated statements of comprehensive income (loss). The Company originated a contract in 2013 with TransCanada Pipelines (“TCPL”) to construct, deliver, cater and manage all accommodations and hospitality services in conjunction with the planned construction of the Keystone XL pipeline project. During the construction phase of the contract, the Company is currently performing services under limited notices to proceed (“LNTP”) and change orders. The Company recognizes revenue associated with the LNTPs using the percentage of completion method with progress towards completion measured using the cost-to-cost method as the basis to recognize revenue. Billings on the LNTPs in excess of costs incurred and estimated profits are classified as deferred revenue. Costs incurred and estimated profits in excess of billings on these contracts are recognized as unbilled receivables. Management believes this cost-to-cost method is the most appropriate measure of progress to the satisfaction of a performance obligation on the LNTPs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, estimated profitability and final contract settlements may result in revisions to projected costs and revenue and are recognized in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. Factors that may affect future project costs and margins include weather, production efficiencies, availability and costs of labor, materials and subcomponents. These factors can significantly impact the accuracy of our estimates and materially impact our future reported earnings. The Company recognizes revenues associated with change orders during the construction phase as costs are incurred in connection with the project change orders. The revenue recognized on the change orders includes a margin mark-up on costs incurred as allowable under the contract terms. The Company also originated a contract on March 1, 2019 with a customer to construct, deliver, cater and manage all accommodations and hospitality services in conjunction with the construction of an accommodation facility in the Permian Basin. During the construction phase, the Company recognizes revenue using the percentage of completion method similarly to TCPL. The construction is expected to be completed during 2019. Revenues associated with these contracts are reflected as construction fee income in the consolidated statements of comprehensive income (loss) and amounted to approximately $13.6 million and $0 for the six months ended June 30, 2019 and 2018, respectively, while $6.4 million and $0 are recognized in the consolidated statements of comprehensive income (loss) for the three months ended June 30, 2019 and 2018, respectively. Of the total construction fee income approximately $13.0 million and $0, is a result of projects with TCPL for the six months ended June 30, 2019 and 2018, respectively, while $0.6 million and $0 are related to the Permian Basin project for the six months ended June 30, 2019 and 2018, respectively. For the three months ended June 30, 2019 and 2018, $5.8 million and $0 is a result of projects with TCPL while $0.6 million and $0 are related to the Permian Basin project. Additionally, the Company collects sales, use, occupancy and similar taxes, which the Company presents on a net basis (excluded from revenues) in the consolidated statements of comprehensive income (loss). Stock-Based Compensation The Company sponsors an equity incentive plan (the “Plan”) in which certain employees and non-employee directors participate. The Plan is administered by the compensation committee of the board of directors of the Company (the “Compensation Committee”). The Company measures the cost of services received in exchange for an award of equity instruments (typically restricted stock unit awards (“RSUs”) and stock options) based on the grant-date fair value of the award as the awards issued under the Plan are equity classified. The fair value of the stock options is calculated using the Black-Scholes option-pricing model while the fair value of the RSUs is calculated based on the Company’s share price on the grant-date. The resulting cost is recognized over the period during which an employee or non-employee director is required to provide service in exchange for the awards, usually the vesting period. Forfeitures are accounted for as they occur. Refer to Note 19 for further details of activity related to the Plan. Recently Issued Accounting Standards The Company meets the definition of an emerging growth company (“EGC”) as defined under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). In reliance on exemptions provided under the JOBS Act for EGCs, the Company has elected to defer compliance with new or revised financial accounting standards until a company that is not an issuer (as defined under section 2(a) of the Sarbanes-Oxley Act of 2002) is required to comply with such standards. As such, compliance dates included below pertain to non-issuers, and as permitted, early adoption dates are indicated. In May 2014, the FASB issued ASU 2014‑09, Revenue from Contracts with Customers (Topic 606) , which prescribes a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers. The new guidance will supersede virtually all existing revenue guidance under US GAAP. The new standard becomes effective for the Company’s year ended December 31, 2019 financial statements and interim periods thereafter. Topic 606 allows either full or modified retrospective transition, and the Company currently plans to use the modified retrospective method of adoption. This approach consists of recognizing the cumulative effect of initially applying the standard as an adjustment to opening retained earnings. As part of the modified retrospective approach in the year of adoption, the Company will present the comparative periods under legacy GAAP and disclose the amount by which each financial statement line item was affected as a result of applying the new standard and an explanation of significant changes. The core principle contemplated by this new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. In April and May 2016, the FASB also issued clarifying updates to the new standard specifically to address certain core principles including the identification of performance obligations, licensing guidance, the assessment of the collectability criterion, the presentation of taxes collected from customers, non-cash considerations, contract modifications and completed contracts at transition. The Company is currently evaluating the impact that the updated guidance will have on the Company’s financial statements and related disclosures. As part of the evaluation process, the Company is holding regular meetings with key stakeholders from across the organization to discuss the impact of the standard on its existing contracts. The Company is utilizing a bottom-up approach to analyze the impact of the standard on its portfolio of contracts by reviewing the Company’s current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to the Company’s existing revenue contracts. In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842) . This guidance revises existing practice related to accounting for leases under ASC Topic 840 Leases (ASC 840) for both lessees and lessors. The new guidance requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes, the new standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). While the new standard maintains similar accounting for lessors as under ASC 840, the new standard reflects updates to, among other things, align with certain changes to the lessee model. The new standard will be effective for the Company during the year ended December 31, 2020 and interim periods thereafter. Topic 842 allows an entity to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach or to adopt under the new optional transition method that allows an entity to recognize a cumulative-effect adjustment to the opening balance of retained earnings as of the adoption date. The Company is currently evaluating the impact of the pronouncement on its consolidated financial statements. In June 2016, the FASB issued ASU 2016‑13, Financial Instruments - Credit Losses ( ASU 2016‑13 or Topic 326 ). This new standard changes how companies account for credit impairment for trade and other receivables as well as changing the measurement of credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 will replace the current "incurred loss" model with an "expected loss" model. Under the "incurred loss" model, a loss (or allowance) is recognized only when an event has occurred (such as a payment delinquency) that causes the entity to believe that a loss is probable (i.e., that it has been "incurred"). Under the "expected loss" model, a loss (or allowance) is recognized upon initial recognition of the asset that reflects all future events that leads to a loss being realized, regardless of whether it is probable that the future event will occur. The "incurred loss" model considers past events and current conditions, while the "expected loss" model includes expectations for the future which have yet to occur. ASU Codification Improvements to Topic 326, Financial Instruments - Credit Losses , was issued in November 2018 and excludes operating leases from the new guidance and also extends the effective date of ASU 2016-13 for non-public business entities. The ASU is effective for financial statements issued for reporting periods beginning after December 15, 2021 and interim periods within those reporting periods. The Company is currently evaluating the impact of this new standard on its consolidated financial statements. In October 2016, the FASB issued ASU 2016‑16, Income Taxes (Topic 740): Intra-entity Transfers of Assets other than Inventory . This guidance requires an entity to recognize the income tax consequences of intra-entity sale or transfers of assets, other than inventory, at the time of transfer. The new standard requires the Company to recognize the income tax effects of intercompany sales or transfers of assets, other than inventory, in the income statement as income tax expense (or benefit) in the period the sale or transfer occurs. The exception to recognizing the income tax effects of intercompany sales or transfers of assets remains in place for intercompany inventory sales and transfers. The new standard will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted for all entities as long as entities adopt at the beginning of an annual reporting period. The Company adopted the pronouncement on January 1, 2019 and determined that it had no impact on its consolidated financial statements. In November 2016, the FASB issued ASU No. 2016‑18, Statement of cash flows (Topic 230): Restricted cash . The amendments in this update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. This update addresses stakeholder concerns around the diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The provisions of ASU No. 2016‑18 are effective for fiscal years beginning after December 15, 2018, and interim periods with fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied retrospectively. The Company does not plan to early adopt. The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings. Companies that elect to reclassify these amounts must reclassify stranded tax effects for all items accounted for in accumulated other comprehensive income. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. This guidance requires qualitative disclosure of the accounting policy for releasing income tax effects from accumulated other comprehensive income and if the reclassification election is made, the impacts of the change on the consolidated financial statements. The Company adopted ASU 2018-02 in the first quarter of 2019, did not reclassify the tax effects stranded in accumulated other comprehensive income, and there was no impact on the Company's consolidated results of operations or cash flows. The Company's policy for releasing disproportionate income tax effects from AOCI utilizes the portfolio approach. In August 2018, the FASB issued ASU No. 2018‑15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350‑40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018‑15”). The amendments in this update align the requirements for capitalizing implementation costs incurred in a cloud computing arrangement (i.e. hosting arrangement) that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software under Subtopic 350‑40. The amendments require certain costs incurred during the application development stage to be capitalized and other costs incurred during the preliminary project and post-implementation stages to be expensed as they are incurred. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement including reasonably certain renewals, beginning when the module or component of the hosting arrangement is ready for its intended use. Accounting for the hosting component of the arrangement is not affected. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. The Company early adopted this pronouncement on January 1, 2019. In January 2017, the FASB issued ASU 2017-01, “ Business Combinations (Topic 805): Clarifying the Definition of a Business ” which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. ASU 2017-01 requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC Topic 606 (previously described). The standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted. The Company adopted this pronouncement in connection with the Superior acquisition discussed in Note 3. In June 2018, the FASB issued ASU Improvements to Nonemployee Share-Based Payment Accounting , or ASU |
Business Combination
Business Combination | 6 Months Ended |
Jun. 30, 2019 | |
Business Combination | |
Business Combination | 2. Business Combination On March 15, 2019, Platinum Eagle consummated the Business Combination pursuant to the terms of the Merger Agreements and acquired all of the issued and outstanding equity interests in Target Parent and Signor Parent from the Sellers. Pursuant to the Merger Agreements, Topaz purchased from the Sellers all of the issued and outstanding equity interests of Target Parent and Signor Parent for $1.311 billion, of which $563.1 million was paid in cash and the remaining $747.9 million was paid to the Sellers in the form of 25,686,327 shares of Common Stock, to Algeco Seller, and 49,100,000 shares of Common Stock, to Arrow Seller. The following tables reconcile the elements of the Business Combination to the consolidated statement of cash flows for the six months ended June 30, 2019. Recapitalization Cash - Platinum Eagle's Trust (net of redemptions) $ 146,137 Cash - PIPE 80,000 Gross cash received by Target Hospitality from Business Combination 226,137 Less: fees to underwriters (7,385) Net cash received from Recapitalization 218,752 Plus: non-cash contribution - forgiveness of related party loan 104,285 Less: non-cash net liabilities assumed from PEAC (8,840) Net contributions from Recapitalization Transaction $ 314,197 Contributions from Affiliate Transaction bonus amounts $ 28,519 Payment of historical ABL facility 9,904 Payment of affiliate amounts 684 Total contributions $ 39,107 Cash paid to Algeco Seller $ 563,134 The cash paid to Algeco Seller was funded from the proceeds from debt (described below), net cash received from Recapitalization (described above), offset by deferred financing costs and certain other transaction costs incurred in connection with the Business Combination. The $340 million of gross proceeds from Bidco’s offering of Senior Secured Notes less $3.3 million of original issuance discount and $40 million through Bidco’s entry into a new ABL facility are shown separately in the consolidated statement of cash flow for the six months ended June 30, 2019. Prior to the Business Combination, Platinum Eagle had 32,500,000 shares of Class A common stock, par value $0.0001 per share (the “Class A Shares”) outstanding and 8,125,000 shares of Class B common stock, par value $0.0001 per share (the “Class B Shares”) outstanding, which comprised of Founder Shares held by the Founders (as defined below) and Former Platinum Eagle Director Shares held by individuals who are not founders but were directors of PEAC. On March 15, 2019, Platinum Eagle was renamed Target Hospitality Corp. and each currently issued and outstanding share of Platinum Eagle Class B Shares automatically converted on a one-for-one basis, into shares of Platinum Eagle Delaware Class A Shares. Immediately thereafter, each currently issued and outstanding share of Platinum Eagle Class A Shares automatically converted on a one-for-one basis, into shares of the common stock of Target Hospitality. In connection with the Business Combination, 18,178,394 Class A Shares were redeemed. The number of shares of Common Stock of Target Hospitality issued immediately following the consummation of the Business Combination is summarized as follows: Shares by Type Number of shares by type at June 30, 2019 Platinum Eagle Class A Shares outstanding prior to the Business Combination 32,500,000 Less: Redemption of Platinum Eagle Class A Shares (18,178,394) Class A Shares of Platinum Eagle 14,321,606 Founder Shares 8,050,000 Former Platinum Eagle Director Shares 75,000 Shares issued to PIPE investors 8,000,000 Shares issued to PEAC and PIPE investors 30,446,606 Shares issued to the Sellers 74,786,327 Total Outstanding Shares of Common Stock issued and outstanding 105,232,933 Less: Founders Shares in escrow (5,015,898) Total Shares of Common Stock outstanding for earnings (loss) per share computation (See Note 17) 100,217,035 In connection with the closing of and as a result of the consummation of the Business Combination, certain members of the Company’s management and employees received bonus payments as a result of the Business Combination being consummated in the aggregate amount of $28.5 million. The bonuses have been reflected in the selling, general and administrative expense line in the consolidated statements of comprehensive income (loss). The bonuses were funded by a contribution from Algeco Seller in March of 2019 and is reflected as the transaction bonus amount contribution above. The Company also incurred transaction costs related to the Business Combination of approximately $8 million, which are included in selling, general and administrative expenses on the consolidated statement of comprehensive income (loss) for the six months ended June 30, 2019. Upon the consummation of the Business Combination, outstanding l oans to officers were forgiven, which resulted in $1.6 million of additional expenses recognized in selling, general and administrative expenses on the consolidated statement of comprehensive income (loss) for the six months ended June 30, 2019 as more fully discussed in Note 16. Earnout Agreement On March 15, 2019 (the “Closing Date”), in connection with the closing of the Business Combination, Harry E. Sloan, Jeff Sagansky and Eli Baker (together, the “Founders”) and the Company entered into an earnout agreement (the “Earnout Agreement”), pursuant to which, on the Closing Date, 5,015,898 Founder Shares were placed in escrow (the “Escrow Shares”), to be released at any time during the period of three years following the Closing Date upon the occurrence of the following triggering events: (i) fifty percent (50%) of the Escrow Shares will be released to the Founder Group (as defined in the Earnout Agreement) if the closing price of the shares of Target Hospitality’s common stock as reported on Nasdaq exceeds $12.50 per share for twenty (20) of any thirty (30) consecutive trading days and (ii) the remaining fifty percent (50%) of the Escrow Shares will be released to the Founder Group if the closing price of the shares of Target Hospitality’s common stock as reported on Nasdaq exceeds $15.00 per share for twenty (20) of any thirty (30) consecutive trading days, in each case subject to certain notice mechanics. Upon the expiration of the three-year earnout period, any Founders’ Shares remaining in escrow that were not released in accordance with the Earnout Agreement will be transferred to the Company for cancellation. The fair value of the Company’s contingent right to cancel the Founders’ Shares has been recorded as a component of additional paid in capital, with an equal and offsetting capital contribution from the Founders. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2019 | |
Acquisitions | |
Acquisitions | 3. Acquisitions Signor Acquisition On September 7, 2018, Bidco purchased 100% of the membership interests of Signor. Bidco acquired Signor for an aggregate purchase price of $201.5 million, excluding $15.5 million of cash and cash equivalents and restricted cash acquired. Included in the purchase price was $1.2 million of amounts owed to the sellers as a result of a subsequent working capital true-up adjustment recognized in accrued liabilities, with a corresponding increase to goodwill, as of December 31, 2018 in the accompanying consolidated balance sheets. The amount of the purchase price in excess of the fair value of the net assets acquired was recorded as goodwill. The following table summarizes the allocation of the total purchase price to the net assets acquired and liabilities assumed at the date of acquisition by Bidco at estimated fair value: Cash, cash equivalents and restricted cash $ 15,536 Accounts receivable 13,008 Property and equipment 79,026 Other current assets 581 Goodwill 26,115 Customer relationships 96,225 Total assets acquired 230,491 Accounts payable (3,678) Accrued expenses (9,051) Capital lease liability and note payable (490) Unearned revenue (201) Total liabilities assumed (13,420) Net assets acquired $ 217,071 The aggregate fair value of the acquired accounts receivable approximated the aggregate gross contractual amount. The contractual cash flows not expected to be collected at the acquisition date amounted to approximately $0.7 million. Intangible assets related to customer relationships represent the aggregate value of those relationships from existing contracts and future operations on a look-through basis, considering the end customers of Signor. The intangible assets received by Bidco will be amortized on a straight-line basis over an estimated useful life of nine years from the date of the business combination. The purchase price allocation performed resulted in the recognition of approximately $26.1 million of goodwill. The goodwill recognized is attributable to expected revenue synergies generated by the expansion of territory of workforce housing, and costs synergies resulting from the consolidation or elimination of certain functions. All of the goodwill is expected to be deductible for income tax purposes. All of the goodwill was allocated to the Permian Basin segment of our reportable segments discussed in Note 21. The following unaudited pro forma information presents consolidated financial information as if Signor had been acquired as of January 1, 2018: Period Revenue Income before taxes 2018 pro forma from January 1, 2018 to June 30, 2018 $ 128,406 $ 11,039 2018 pro forma for the three months ended June 30, 2018 $ 68,735 $ 15,005 Signor added $46.2 million and $9.4 million to our revenue and income before income taxes, respectively, for the six months ended June 30, 2019. For the three months ended June 30, 2019, Signor added $22.9 million and $5.0 million to our revenue and income before taxes, respectively. These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Signor to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property and equipment, and intangible assets had been applied from January 1, 2018. This pro forma information is not necessarily indicative of the Company’s results of operations had the acquisition been completed on January 1, 2018, nor is it necessarily indicative of the Company’s future results. This pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisition, and also does not reflect additional revenue opportunities following the acquisition. 2018 supplemental pro forma income before taxes was adjusted to include $5.2 million of acquisition-related costs incurred in connection with the Signor acquisition. Superior Acquisition On June 19, 2019, Target Logistics Management LLC (“TLM”), entered into a purchase agreement (the “Superior Purchase Agreement”) with Superior Lodging, LLC, Superior Lodging Orla South, LLC, and Superior Lodging Kermit, LLC (collectively, the “Superior Sellers”), and certain other parties named thererin, pursuant to which TLM acquired substantially all of the assets in connection with three workforce communities in the Delaware Basin of West Texas, including temporary housing facilities and underlying real estate (the “Communities”). Pursuant to the Superior Purchase Agreement, TLM acquired the Communities for a purchase price of $30.0 million in cash, which represents the acquisition date fair value of consideration transferred. The purchase price was funded by drawing on the New ABL Facility discussed in Note 9. The Superior Purchase Agreement provided for a simultaneous signing and closing on June 19, 2019. This acquisition further expands the Company’s presence in the Permian Basin. Immediately prior to the acquisition of the Communities, TLM provided management and catering services to the Superior Sellers at two of the Communities. At the time of the acquisition, all three Communities were fully operational and provided vertically integrated comprehensive hospitality services consistent with Target’s business. Certain affiliates of the Superior Sellers will continue to lease 140 beds in the Communities for the next year. The following table summarizes the preliminary allocation of the total purchase price to the net assets acquired and liabilities assumed at the date of acquisition by TLM at estimated fair value. These amounts are provisional, pending the completion of the valuation and related analysis: Property and equipment $ 18,009 Customer relationships 5,000 Goodwill 6,991 Total assets acquired $ 30,000 The above provisional amounts reflected are subject to further adjustment, which may affect the fair values ascribed to goodwill, customer relationships, and property and equipment. The Company expects its analysis to be substantially complete by the close of the third quarter. Intangible assets related to customer relationships represent the aggregate provisional value of those relationships from existing arrangements and future operations on a look-through basis, considering the end customers. The intangible assets received will be amortized on a straight-line basis over an estimated useful life in line with the Company’s policy and finalized upon finalization of the valuation and related analysis. The following unaudited pro forma information presents consolidated financial information as if Superior had been acquired as of January 1, 2018: Period Revenue Income before taxes 2019 pro forma from January 1, 2019 to June 30, 2019 $ $ 2019 pro forma for the three months ended June 30, 2019 $ $ 2018 pro forma from January 1, 2018 to June 30, 2018 $ 86,067 $ 2018 pro forma for the three months ended June 30, 2018 $ 46,561 $ 5,922 Superior added $0.4 million and $0.2 million to our revenue and income (loss) before income taxes, respectively, for the three and six months ended June 30, 2019. These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Superior to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property and equipment, and intangible assets had been applied from January 1, 2018. This pro forma information is not necessarily indicative of the Company’s results of operations had the acquisition been completed on January 1, 2018, nor is it necessarily indicative of the Company’s future results. This pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisition, and also does not reflect additional revenue opportunities following the acquisition. In connection with this acquisition, the Company incurred approximately $0.3 million of acquisition-related costs, which are recognized in selling, general, and administrative expenses in the accompanying unaudited consolidated statement of comprehensive income (loss) for the three and six months ended June 30, 2019. 2019 supplemental pro-forma income (loss) before taxes was adjusted to exclude these acquisition-related costs. 2018 supplemental pro-forma income before income taxes was adjusted to include these charges. The preliminary purchase price allocation performed by the Company resulted in the recognition of $6.9 million of goodwill. The goodwill recognized is attributable to expected revenue synergies generated by the territorial expansion of workforce housing, and costs synergies resulting from the consolidation or elimination of certain functions. All of the goodwill is expected to be deductible for income tax purposes. All of the goodwill was allocated to the Permian Basin segment of our reportable segments discussed in Note 21. |
Specialty Rental Assets, Net
Specialty Rental Assets, Net | 6 Months Ended |
Jun. 30, 2019 | |
Specialty Rental Assets, Net | |
Specialty Rental Assets, Net | 4. Specialty Rental Assets, Net Specialty rental assets, net at the dates indicated below consisted of the following: June 30, December 31, 2019 2018 Specialty rental assets $ 479,101 $ 432,158 Construction-in-process 36,608 18,356 Less: accumulated depreciation (176,407) (156,955) Specialty rental assets, net $ 339,302 $ 293,559 Depreciation expense related to Specialty rental assets was $19.9 million and $13.4 million for the six months ended June 30, 2019 and 2018, respectively, and is included in depreciation of specialty rental assets in the consolidated statements of comprehensive income (loss). For the three months ended June 30, 2019 and 2018, depreciation of specialty rental assets was $10.0 million and $6.8 million, respectively. |
Other Property, Plant and Equip
Other Property, Plant and Equipment, Net | 6 Months Ended |
Jun. 30, 2019 | |
Other Property, Plant and Equipment, Net | |
Other Property, Plant and Equipment, Net | 5. Other Property, Plant and Equipment, Net Other property, plant, and equipment, net at the dates indicated below, consisted of the following: June 30, December 31, 2019 2018 Land $ 17,134 $ 16,245 Buildings and leasehold improvements 964 908 Machinery and office equipment 1,138 1,083 Software and other 1,803 1,667 21,039 19,903 Less: accumulated depreciation (1,667) (1,021) Total other property, plant and equipment, net $ 19,372 $ 18,882 Depreciation expense related to other property, plant and equipment was $0.7 million and $0.3 million for the six months ended June 30, 2019 and 2018, respectively, and is included in other depreciation and amortization in the consolidated statements of comprehensive income (loss). For the three months ended June 30, 2019 and 2018, depreciation related to other property, plant and equipment was $0.3 million and $0.3 million, respectively. The June 30, 2019 and December 31, 2018 land amounts in the table above includes approximately $7.6 million of land acquired as part of the Signor acquisition discussed in Note 3, which is currently not being used in the operations of the business. Management is evaluating future plans for this land with options to potentially sell the land; however, the land is not currently classified as held for sale as it is not expected to be sold within the next twelve months. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets, net | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Other Intangible Assets, net | |
Goodwill and Other Intangible Assets, net | 6. Goodwill and Other Intangible Assets, net As discussed in Note 3, the financial statements reflect Bidco’s acquisition of Signor in September 2018 and TLM’s acquisition of Superior in June 2019, resulting in the recognition of goodwill. In connection with the Signor and Superior transactions, all goodwill was attributable to the Permian Basin business segment and reporting unit. Changes in the carrying amount of goodwill were as follows: Permian Basin Balance at January 1, 2018 $ 8,065 Acquisition of Signor 26,115 Balance at December 31, 2018 34,180 Acquisition of Superior 6,991 Balance at June 30, 2019 $ 41,171 As mentioned in Note 3, the goodwill amount associated with the Superior acquisition included in the table above as of June 30, 2019 is provisional and subject to change. Intangible assets other than goodwill at the dates indicated below consisted of the following: June 30, 2019 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 8.1 $ 132,920 $ (23,992) $ 108,928 Non-compete Agreements — 11,400 (11,400) — Total 144,320 (35,392) 108,928 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 160,720 $ (35,392) $ 125,328 As mentioned in Note 3, the customer relationship intangible amounts associated with the Superior acquisition included in the table above as of June 30, 2019 are provisional and subject to change. December 31, 2018 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 8.3 $ 127,920 $ (16,937) $ 110,983 Non-compete Agreements — 11,400 (11,400) — Total 139,320 (28,337) 110,983 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 155,720 $ (28,337) $ 127,383 The aggregate amortization expense for intangible assets subject to amortization was $7.1 million and $2.1 million for the six months ended June 30, 2019 and 2018, respectively, and is included in other depreciation and amortization in the consolidated statements of comprehensive income (loss). The estimated aggregate amortization expense as of June 30, 2019 for each of the next five years and thereafter is as follows: Rest of 2019 $ 7,425 2020 14,814 2021 14,814 2022 13,461 2023 13,039 Thereafter 45,375 Total $ 108,928 |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Accrued Liabilities | |
Accrued Liabilities | 7. Accrued Liabilities Accrued liabilities as of the dates indicated below consists of the following: June 30, December 31, 2019 2018 Accrued expenses $ 4,501 $ 9,104 Employee accrued compensation expense 4,257 5,774 Other accrued liabilities 9,650 4,844 Accrued interest on debt 9,664 244 Accrued interest due affiliates — 3,334 Total accrued liabilities $ 28,072 $ 23,300 |
Notes Due from Affiliates
Notes Due from Affiliates | 6 Months Ended |
Jun. 30, 2019 | |
Notes Due from Affiliates | |
Notes Due from Affiliates | 8. Notes Due from Affiliates The Company records interest income on notes due from affiliates based on the stated interest rate in the loan agreement. Interest income of $0 and $2.3 million associated with notes due from affiliates is reflected in interest expense, net on the consolidated statements of comprehensive income (loss) for the six months ended June 30, 2019 and 2018, respectively. All affiliate notes were paid in connection with the Business Combination discussed in Note 2. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt | |
Debt | 9. Debt Senior Secured Notes 2024 In connection with the closing of the Business Combination, Bidco issued $340 million in aggregate principal amount of 9.50% senior secured notes due March 15, 2024 (the “2024 Senior Secured Notes” or “Notes”) under an indenture dated March 15, 2019 (the “Indenture”). The Indenture was entered into by and among Bidco, the guarantors named therein (the “Note Guarantors”), and Deutsche Bank Trust Company Americas , as trustee and as collateral agent. Interest is payable semi-annually on September 15 and March 15 beginning September 15, 2019. Refer to table below for a description of the amounts related to the Notes. Principal Unamortized Original Issue Discount Unamortized Deferred Financing Costs 9.50% Senior Secured Notes, due 2024 $ 340,000 $ 3,154 $ 15,607 Before March 15, 2021, Bidco may redeem the Notes at a redemption price equal to 100% of the principal amount, plus a customary make whole premium for the Notes being redeemed, plus accrued and unpaid interest, if any, up to but not including the redemption date. The customary make whole premium, with respect to the Notes on any applicable redemption date, as calculated by Bidco, is the greater of (i) 1.00% of the then outstanding principal amount of the Note; and (ii) the excess of (a) the present value at such redemption date of (i) the redemption price set on or after March 15, 2021 plus (ii) all required interest payments due on the Note through March 15, 2021, excluding accrued but unpaid interest to the redemption date, in each case, computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the then outstanding principal amount of the Notes. Before March 15, 2021, Bidco may redeem up to 40% of the aggregate principal amount of outstanding Notes at a redemption price equal to 109.50% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to but not including the redemption date, with the net proceeds of any equity offerings. Bidco may redeem up to 10% of the aggregate principal amount of the Notes during each twelve-month period commencing on the issue date and prior to March 15, 2021 at a redemption price equal to 103% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to but not including the redemption date. If Bidco undergoes a change of control or sells certain of its assets, Bidco may be required to offer to repurchase the Notes. On or after March 15, 2021, Bidco at its option, may redeem the Notes, in whole or part, upon not less than fifteen (15) and not more than sixty (60) days’ prior written notice to holders and not less than twenty (20) days’ prior written notice to the trustee (or such shorter timeline as the trustee may agree), at the redemption price expressed as percentage of principal amount set forth below, plus accrued and unpaid interest thereon but not including the applicable redemption date (subject to the right of Note holders on the relevant record date to receive interest due on an interest payment date falling on or prior to the redemption date), if redeemed during the 12-month period beginning August 15 of each of the years set below. Redemption Year Price 2021 104.750% 2022 102.375% 2023 and thereafter 100.000% The Notes are unconditionally guaranteed by Topaz and each of Bidco’s direct and indirect wholly-owned domestic subsidiaries (collectively, the “Note Guarantors”). Target Hospitality is not an issuer or a guarantor of the Notes. The Note Guarantors are either borrowers or guarantors under the New ABL Facility. To the extent lenders under the New ABL Facility release the guarantee of any Note Guarantor, such Note Guarantor is also released from obligations under the Notes. These guarantees are secured by a second priority security interest in substantially all of the assets of Bidco and the Note Guarantors (subject to customary exclusions). The guarantees of the Notes by TLM Equipment, LLC, a Delaware limited liability company (“TLM Equipment LLC”) which holds certain of Target Hospitality’s assets, are subordinated to its obligations under the New ABL Facility. The Notes contain certain negative covenants, including limitations that restrict Bidco’s ability and the ability of certain of its subsidiaries, to directly or indirectly, create additional financial obligations. With certain specified exceptions, these negative covenants prohibit Bidco and certain of its subsidiaries from: creating or incurring additional debt; paying dividends or making any other distributions with respect to its capital stock; making loans or advances to Bidco or any restricted subsidiary of Bidco; selling, leasing or transferring any of its property or assets to Bidco or any restricted subsidiary of Bidco; directly or indirectly creating, incurring or assuming any lien of any kind securing debt on the collateral; or entering into any sale and leaseback transaction. In connection with the issuance of the Notes, there was an original issue discount of $3.3 million and the unamortized balance of $3.2 million is presented on the face of the consolidated balance sheet as of June 30, 2019 as a reduction of the principal. The discount is amortized over the life of the Notes using the effective interest method. Bidco’s ultimate parent, Target Hospitality, has no significant independent assets or operations except as included in the guarantors of the Senior Secured Notes, the guarantees under the Notes are full and unconditional and joint and several, and any subsidiaries of Target Hospitality that are not subsidiary guarantors of the Notes are minor. There are also no significant restrictions on the ability of Target Hospitality or any guarantor to obtain funds from its subsidiaries by dividend or loan. See discussion of certain negative covenants above. Therefore, pursuant to the SEC Rules, no individual guarantor financial statement disclosures are deemed necessary. Capital Lease and Other Financing Obligations The Company’s capital lease and other financing obligations as of June 30, 2019 consisted solely of $0.6 million of capital leases. The $1.5 million related to the equipment financing agreement as of December 31, 2018 was fully repaid in January 2019. The Company entered into a capital lease for certain equipment with a lease term expiring in October 2019 and an effective interest rate of 7.43%. The Company’s capital leases relating to commercial-use vehicles have interest rates ranging from 3.3% to 20.7% with lease terms that expire through December 31, 2019. New ABL Facility On the Closing Date, in connection with the closing of the Business Combination, Topaz, Bidco, Target, Signor and each of their domestic subsidiaries entered into an ABL credit agreement that provides for a senior secured asset based revolving credit facility in the aggregate principal amount of up to $125 million (the “New ABL Facility”). The historical debt of Bidco, Target and their respective subsidiaries under the ABL facility of Algeco Seller was settled at the time of the consummation of the Business Combination on the Closing Date. Approximately $40 million of proceeds from the New ABL Facility were used to finance a portion of the consideration payable and fees and expenses incurred in connection with the Business Combination. Borrowings under the New ABL Facility, at the relevant borrower’s (the borrowers under the New ABL Facility, the “ABL Borrowers”) option, bear interest at either (1) an adjusted LIBOR or (2) a base rate, in each case plus an applicable margin. The applicable margin is 2.50% with respect to LIBOR borrowings and 1.50% with respect to base rate borrowings. Commencing at the completion of the first full fiscal quarter after the Closing Date, the applicable margin for borrowings under the New ABL Facility is subject to one step-down of 0.25% and one step-up of 0.25%, based on achieving certain excess availability levels with respect to the New ABL Facility. The New ABL Facility provides borrowing availability of an amount equal to the lesser of (i) (a) $125 million and (b) the Borrowing Base (defined below) (the “Line Cap”). The Borrowing Base is, at any time of determination, an amount (net of reserves) equal to the sum of: · 85% of the net book value of the Borrowers’ eligible accounts receivables, plus · the lesser of (i) 95% of the net book value of the Borrowers’ eligible rental equipment and (ii) 85% of the net orderly liquidation value of the Borrowers’ eligible rental equipment, minus · customary reserves The New ABL Facility includes borrowing capacity available for standby letters of credit of up to $15 million and for ‘‘swingline’’ loan borrowings of up to $15 million. Any issuance of letters of credit or making of a swingline loan will reduce the amount available under the New ABL Facility. In addition, the New ABL Facility will provide the Borrowers with the option to increase commitments under the New ABL Facility in an aggregate amount not to exceed $75 million plus any voluntary prepayments that are accompanied by permanent commitment reductions under the New ABL Facility. The termination date of the New ABL Facility is September 15, 2023. The obligations under the New ABL Facility are unconditionally guaranteed by Topaz and each existing and subsequently acquired or organized direct or indirect wholly-owned U.S. organized restricted subsidiary of Bidco (together with Topaz, the “ABL Guarantors”), other than certain excluded subsidiaries. The New ABL Facility is secured by (i) a first priority pledge of the equity interests of Topaz, Bidco, Target, and Signor (the “Borrowers) and of each direct, wholly-owned US organized restricted subsidiary of any Borrower or any ABL Guarantor, (ii) a first priority pledge of up to 65% of the voting equity interests in each non-US restricted subsidiary of any Borrower or ABL Guarantor and (iii) a first priority security interest in substantially all of the assets of the Borrower and the ABL Guarantors (in each case, subject to customary exceptions). The New ABL Facility requires the Borrowers to maintain a (i) minimum fixed charge coverage ratio of 1.00:1.00 and (ii) maximum total net leverage ratio of 4.00:1.00, at any time when the excess availability under the New ABL Facility is less than the greater of (a) $15.625 million and (b) 12.5% of the Line Cap. The New ABL Facility also contains a number of customary negative covenants. Such covenants, among other things, limit or restrict the ability of each of the Borrowers, their restricted subsidiaries, and where applicable, Topaz, to: · incur additional indebtedness, issue disqualified stock and make guarantees; · incur liens on assets; · engage in mergers or consolidations or fundamental changes; · sell assets; · pay dividends and distributions or repurchase capital stock; · make investments, loans and advances, including acquisitions; · amend organizational documents and master lease documents; · enter into certain agreements that would restrict the ability to pay dividends; · repay certain junior indebtedness; and · change the conduct of its business. The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that grant the ABL Borrowers continued flexibility to operate and develop their businesses. The New ABL Facility also contains certain customary representations and warranties, affirmative covenants and events of default. The carrying value of debt outstanding as of the dates indicated below consist of the following: June 30, December 31, 2019 2018 Capital lease and other financing obligations $ 570 $ 2,460 ABL Facility 70,000 20,550 9.50% Senior Secured Notes due 2024, face amount 340,000 — Less: unamortized original issue discount (3,154) — Less: unamortized term loan deferred financing costs (15,607) — Total debt, net 391,809 23,010 Less: current maturities (570) (2,446) Total long-term debt $ 391,239 $ 20,564 Interest expense incurred on debt Interest incurred and expensed on debt, including capital lease and other financing obligations, was approximately $12.5 million and $1.2 million for the six months ended June 30, 2019 and 2018, respectively, of which approximately $9.7 million and $0.3 million was accrued as of June 30, 2019 and December 31, 2018, respectively. For the three months ended June 30, 2019 and 2018, $9.8 million and $5.6 million was recognized, respectively. The interest expense is recognized in interest expense, net, in the consolidated statements of comprehensive income (loss). Deferred Financing Costs and Original Issue Discount The Company incurred and deferred approximately $16.3 million of deferred financing costs and approximately $3.3 million of original issue discount in connection with the issuance of the Notes in 2019 in connection with the Business Combination, which are included in the carrying value of the Notes as of June 30, 2019. These will be amortized through the maturity date of the Notes using the effective interest method. Amortization expense related to the deferred financing costs and original issue discount was approximately $0.9 million and is included in interest expense, net on the consolidated statement of comprehensive income (loss) for the six months ended June 30, 2019. For the three months ended June 30, 2019, $0.7 million of interest expense was incurred. The Company also incurred deferred financing costs associated with the New ABL Facility as a result of the Business Combination in the amount of approximately $4.1 million, which are capitalized and presented on the unaudited consolidated balance sheet as of June 30, 2019. These costs are amortized over the contractual term of the line-of-credit through the initial maturity date using the straight-line method. Amortization of revolver deferred financing costs was $0.2 million and $0 for the six month periods ended June 30, 2019 and 2018, respectively, and is included in interest expense, net in the consolidated statements of comprehensive income (loss). For the three months ended June 30 2019 and 2018, $0.2 million and $0, was incurred, respectively. Accumulated amortization related to revolver deferred financing costs was $0.2 million and $0 as of June 30, 2019 and December 31, 2018, respectively. The New ABL Facility was considered a modification of the old ABL facility for accounting purposes. Certain of the lenders under the old ABL facility are also lenders under the New ABL Facility. As the borrowing capacity of each of the continuing lenders in the New ABL Facility is greater than the borrowing capacity of the old ABL facility, the unamortized deferred financing costs at the time of the modification of approximately $1.8 million associated with the continuing lenders of the old ABL facility will be deferred and amortized over the remaining term of the New ABL Facility. Any unamortized deferred financing costs from the old ABL facility that pertain to non-continuing lenders were expensed through loss on extinguishment of debt on the consolidated statement of comprehensive loss as of the modification date. The Company recognized a charge of $0.9 million in loss on extinguishment of debt related to the write-off of deferred financing costs pertaining to non-continuing lenders for the six months ended June 30, 2019. Amortization of deferred financing costs related to the old ABL was $0.3 million and $0 for the six month periods ended June 30, 2019 and 2018, respectively, and is included in interest expense, net in the consolidated statements of comprehensive income (loss). Future maturities The aggregate annual principal maturities of debt and capital lease obligations for each of the next five years and thereafter, based on contractual terms are listed in the table below. The schedule of future maturities as of June 30, 2019 consists of the following: Rest of 2019 $ 570 2020 — 2021 — 2022 — 2023 70,000 Thereafter 340,000 Total $ 410,570 |
Notes Due to Affiliates
Notes Due to Affiliates | 6 Months Ended |
Jun. 30, 2019 | |
Notes Due to Affiliates | |
Notes Due to Affiliates | 10. Notes Due to Affiliates The Company records interest expense on notes due to affiliates based on the stated interest rate in the loan agreement. Interest incurred and expensed of $1.9 million and $10.6 million associated with notes due to affiliates is reflected in interest expense, net on the consolidated statements of comprehensive income (loss) for the periods ended June 30, 2019 and 2018, respectively. For the three months ended June 30, 2019 and 2018, $0 and $5.3 million, respectively. As part of an intercompany debt restructuring, which occurred in December of 2018, Target Parent collected cash for the repayment of 100% of its affiliate note receivables and related accrued interest (Note 8), which amounted to approximately $61 million. Additionally, the sole member of Target Parent contributed $217 million to Target Parent on December 14, 2018. Cash received for the above amounts as of December 14, 2018 totaled approximately $278 million. The cash was used to pay off all intercompany debt and related accrued interest owed by Target Parent as of December 14, 2018, which amounted to approximately $278 million. As part of the Business Combination, the affiliate note that was executed in September 2018 in connection with the acquisition of Signor has been extinguished. Prior to the Business Combination, Signor paid $9 million to a TDR affiliate, of which $5.3 million was used to pay off the accrued interest and the remaining $3.7 million was used to pay down the outstanding principal, reducing the amount owed to $104.3 million. Upon consummation of the Business Combination, the remaining principal was settled between Signor and the TDR affiliate in the form of a capital contribution. Notes due to affiliates as of the dates indicated below consist of the following: Interest Date of June 30 December 31 Affiliate Lender Rate Maturity 2019 2018 Arrow Holdings S.a.r.l. LIBOR + 4% September 2023 $ — $ 108,047 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Taxes | |
Income Taxes | 11. Income Taxes Income tax expense was $2.3 million and $0.9 million for the six months ended June 30, 2019 and 2018, respectively. For the three months ended June 30, 2019 and 2018, income tax expense was $4.1 million and $1.8 million, respectively. The effective tax rate for the three months ended June 30, 2019 and 2018, was 28.04% and 29.23%, respectively. The effective tax rate for the six months ended June 30, 2019 and 2018, was -201.60% and 79.66%, respectively. The fluctuation in the rate for the six months ended June 30, 2019 and 2018 results primarily from the relationship of year-to-date income (loss) for the six months ended June 30, 2019 and 2018 and the discrete treatment of the Transaction bonus amounts and Transaction costs discussed in Note 2 as well as the restructuring costs in 2018. Excluding the impact of the aforementioned items treated discretely, the effective tax rate for the six months ended June 30, 2019 and 2018 is 24.12% and 26.9%, respectively. The Company accounts for income taxes in interim periods under ASC 740-270, Income Taxes – Interim Reporting , which generally requires us to apply an estimated annual consolidated effective tax rate to consolidated pre-tax income. In addition, the guidance under ASC 740 further provides that, in establishing the estimated annual effective tax rate, the Company excludes losses from jurisdictions in which no tax benefit is expected to be recognized for such losses. |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value | |
Fair Value | 12. Fair Value The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Company has assessed that the fair value of cash and cash equivalents, trade receivables, related party receivables, trade payables, other current liabilities, and other debt approximates their carrying amounts largely due to the short-term maturities or recent commencement of these instruments. The fair value of the ABL Revolver is primarily based upon observable market data, such as market interest rates, for similar debt. The fair value of the Notes is based upon observable market data. The fair value of notes due to and notes due from affiliates are based upon similarly publicly-traded instruments with a readily-available market value as a proxy. The carrying amounts and fair values of financial assets and liabilities, which are either Level 1 or Level 2, are as follows: June 30, 2019 December 31, 2018 Carrying Carrying Financial Assets (Liabilities) Not Measured at Fair Value Amount Fair Value Amount Fair Value ABL Facility (See Note 9) - Level 2 $ (70,000) $ (70,000) $ (20,550) $ (20,550) Senior Secured Notes (See Note 9) - Level 1 $ (321,239) $ (343,400) $ — $ — Notes due from affiliates (See Note 8) - Level 2 $ — $ — $ 638 $ 638 Notes due to affiliates (See Note 10) - Level 2 $ — $ — $ (108,047) $ There were no transfers of financial instruments between the three levels of the fair value hierarchy during the six months ended June 30, 2019 and the year ended December 31, 2018. |
Business Restructuring
Business Restructuring | 6 Months Ended |
Jun. 30, 2019 | |
Business Restructuring | |
Business Restructuring | 13. Business Restructuring The Company incurred costs associated with restructuring plans designed to streamline operations and reduce costs of $0.2 million and $7.4 million during the six months ended June 30, 2019 and 2018, respectively. For the three months ended June 30, 2019 and 2018, $0 and $1.2 million were incurred, respectively. The following is a summary of the activity in our restructuring accruals: June 30, June 30, 2019 2018 Balance at January 1 $ 1,462 $ 2,395 Charges during the period 168 7,414 Cash payments during the period (1,630) (8,338) Balance at June 30 $ — $ 1,471 The restructuring costs relate to the closure of the Baltimore, MD corporate office for Target Parent which resulted in downsizing of corporate employees consisting of employee termination costs. As part of the corporate restructuring plans, certain employees were required to render future service in order to receive their termination benefits. The termination costs associated with these employees was recognized over the period from the date of communication to the employee to the actual date of termination. No further amounts are expected to be incurred in connection with this restructuring as of June 30, 2019. These restructuring costs pertain to corporate locations and do not impact the segments discussed in Note 21. |
Involuntary Conversion
Involuntary Conversion | 6 Months Ended |
Jun. 30, 2019 | |
Involuntary Conversion | |
Involuntary Conversion | 14. Involuntary Conversion One of the Company’s properties in North Dakota incurred flood damage in November of 2017. Specialty rental assets were written-down by $1.8 million as of December 31, 2017 related to the damaged portion of the property. During the six months ended June 30, 2019 and 2018, respectively, approximately $0.3 and $3.0 million in insurance proceeds were received. For the six months ended June 30, 2019 and 2018, the Company recognized a gain on involuntary conversion associated with this event in the amount of approximately $0.3 and $1.2 million, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 15. Commitments and Contingencies The Company is involved in various lawsuits or claims in the ordinary course of business. Management is of the opinion that there is no pending claim or lawsuit which, if adversely determined, would have a material impact on the financial condition of the Company. |
Related Parties
Related Parties | 6 Months Ended |
Jun. 30, 2019 | |
Related Parties | |
Related Parties | 16. Related Parties Loans to officers were provided as retention payments and were earned and forgiven over a four-year period and charged to compensation expense on a straight-line basis as amounts were forgiven. The amounts due as of December 31, 2018 are included in the Notes due from officers in the consolidated balance sheets. No amounts were due as of June 30, 2019 as the remaining amounts due were forgiven on March 15, 2019 as part of the consummation of the Business Combination. Compensation expense recognized for the six months ended June 30, 2019 and 2018, totaled $1.6 million and $0.3 million, respectively, and are included in selling, general and administrative expense in the consolidated statement of comprehensive income (loss). Approximately $1.4 million of the $1.6 million recognized as compensation expense during the six months ended June 30, 2019 represent the loan forgiveness previously discussed. Prior to the Business Combination, Target Parent was a co-borrower and co-guarantor of the obligations of the other borrowers under the old ABL facility discussed in Note 9. The other borrowers and guarantors were affiliates of TDR. As a result of the Business Combination, the amounts owed on the historical ABL facility were paid off and Target Parent was released from its obligation under that agreement. The total amount outstanding under the historical ABL facility at December 31, 2018 was $151.9 million, which included the $20.6 million reported on the balance sheet as of December 31, 2018. Target Parent had amounts due from affiliates in the amount of $0 and $0.6 million as of June 30, 2019 and December 31, 2018, respectively. The $0.6 million note due from affiliate as of December 31, 2018 represents financing costs and bonus amounts paid by Target Parent on behalf of an affiliate during the fourth quarter of 2018. This amount was collected during the first quarter of 2019. On September 6, 2018, Signor Parent entered into a related party note with Arrow Seller for $108 million which was paid off as part of the Business Combination and is discussed in Note 10. Target Parent leased modular buildings from an ASG affiliate to serve one of its customers. The rent expense related to the leasing of the modular buildings amounted to $0 and $0.3 million for the six months ended June 30, 2019 and 2018, respectively. Rent expense under this arrangement for the three months ended June 30, 2019 and 2018, was $0 and $0.2 million, respectively. In August 2018, Target Parent purchased these leased buildings for $1.6 million. During the six months ended June 30, 2019 and 2018, respectively, the Company incurred $0.4 million and $0.4 million in commissions owed to related parties, included in selling, general and administrative expense in the accompanying unaudited consolidated statements of comprehensive income (loss). For the three months ended June 30, 2019 and 2018, respectively, $0.2 million and $0.2 million in commissions were incurred. At June 30, 2019 and December 31, 2018, respectively, the Company accrued $0.2 million for these commissions. Prior to the closing of the Business Combination, Mr. Diarmuid Cummins (the “Advisor”) provided certain consulting and advisory services (the “Services”) to Target Parent and certain of its affiliated entities (collectively, “Algeco”), including Target. The Advisor was compensated for these Services by Algeco. Following the closing of the Business Combination, the Advisor continued to provide these Services to Algeco and to the Company and is serving as an observer on the board of directors of the Company. The Advisor is currently compensated for these services by Chard Camp Catering Services Ltd. (“Chard”), a wholly-owned subsidiary of the Company. In June 2019, Chard and Algeco Global Sarl (“Algeco Global”) entered in to a reimbursement agreement, as amended in July 2019, (the “Agreement”), pursuant to which Algeco Global agreed to reimburse Chard for 100% of the total compensation paid by it to the Advisor, from and after January 1, 2019, with such amounts to be paid monthly. The initial term of the Agreement runs through December 31, 2019. The Company and Algeco Global are each majority owned by TDR Capital. This reimbursement for the three and six months ended June 30, 2019 amounts to approximately $0.6 million and is included in the other income, net line within the consolidated statement of comprehensive income (loss) and as a related party receivable on the consolidated balance sheet as of June 30, 2019. |
Earnings (Loss) per Share Share
Earnings (Loss) per Share Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings per Share | |
Earnings (Loss) per Share | 17. Earnings (Loss) per Share Basic earnings (loss) per share (“EPS” or “LPS”) is calculated by dividing net income or loss attributable to Target Hospitality by the weighted average number of shares of Common Stock outstanding during the period. Diluted EPS is computed similarly to basic net earnings per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. A loss was recorded for the six months ended June 30, 2019, while net income was recorded for the six months ended June 30, 2018. Net income was recorded for the three months ended June 30, 2019 and 2018. During periods when net losses are incurred, potential dilutive securities would be antidulitive and are excluded from the calculation of diluted loss per share for that period. For the periods presented, the dilutive effect of potential dilutive securities was anti-dilutive, and therefore have been excluded from the calculation of diluted earnings (loss) per share for those periods. The following table is a reconciliation of net income (loss) and weighted-average shares of common stock outstanding for purposes of calculating basic and diluted EPS for the periods indicated below ($ in thousands, except per share amounts): For the Three Months Ended For the Six Months Ended June 30, June 30, June 30, June 30, 2019 2018 2019 2018 Numerator Net income (loss) attributable to Common Stockholders $ 10,580 $ 4,424 $ (3,399) $ 230 Denominator Weighted average shares outstanding - basic and diluted 100,217,035 25,686,327 89,960,451 25,686,327 Net income (loss) per share - basic and diluted $ 0.11 $ 0.17 $ (0.04) $ 0.01 As discussed in Note 2, 5,015,898 shares of the 8,050,000 shares of Common Stock held by the Founders, were placed into escrow concurrent with the Business Combination. Upon being placed into escrow, the voting and economic rights of the shares were suspended for the period they are in escrow. Given that the Founders are not entitled to vote or participate in the economic rewards available to the other shareholders with respect to these shares, these shares are not included in the LPS or EPS calculations. Warrants representing 16,166,650 shares of the Company’s Common Stock for the three and six months ended June 30, 2019 were excluded from the computation of EPS and LPS because they are considered anti-dilutive as the exercise price exceeds the average market price of the common stock price during the applicable periods. As discussed in Note 19, RSUs and stock options were outstanding for the three and six months ended June 30, 2019, respectively. These RSUs and stock options were excluded from the computation of EPS and LPS because their effect would have been anti-dilutive. |
Stockholders Equity
Stockholders Equity | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders Equity | |
Stockholders’ Equity | 18. Stockholders’ Equity Common Stock As of June 30, 2019, Target Hospitality had 105,232,933 shares of Common Stock, par value $0.0001 per share issued and outstanding. Each share of Common Stock has one vote, except the voting rights related to the 5,015,898 of Founder Shares placed in escrow have been suspended subject to release pursuant to the terms of the Earnout Agreement, as discussed in Note 2. Preferred Shares Target Hospitality is authorized to issue 1,000,000 preferred shares at $0.0001 par value. As of June 30, 2019, no preferred shares were issued and outstanding. Warrants On January 17, 2018, PEAC sold 32,500,000 units at a price of $10.00 per unit (the “Units”) in its initial public offering (the “Public Offering”), including the issuance of 2,500,000 Units as a result of the underwriters’ partial exercise of their overallotment option. Each Unit consisted of one Class A ordinary share of PEAC, par value $0.0001 per share (the “Public Shares”), and one-third of one warrant to purchase one ordinary share (the “Public Warrants”). Each Public Warrant entitles the holder to purchase one share of the Company’s Common Stock at a price of $11.50 per share. No fractional shares will be issued upon exercise of the Public Warrants. If upon exercise of the Public Warrants, a holder would be entitled to receive a fractional interest in a share, the Company will upon exercise, round down to the nearest whole number, the number of shares to be issued to the Public Warrant holder. Each Public Warrant became exercisable 30 days after the completion of the Business Combination. On January 17, 2018, Platinum Eagle Acquisition LLC, a Delaware limited liability company (the “Sponsor”), Harry E. Sloan, Joshua Kazam, Fredric D. Rosen, the Sara L. Rosen Trust and the Samuel N. Rosen 2015 Trust, purchased from PEAC an aggregate of 5,333,334 warrants at a price of $1.50 per warrant (for an aggregate purchase price of $8.0 million) in a private placement (the “Private Placement Warrants”) that occurred simultaneously with the completion of the Public Offering. Each Private Placement Warrant entitles the holder to purchase one share of common stock at $11.50 per share. The purchase price of the Private Placement Warrants was added to the proceeds from the Public Offering and was held in the Trust Account until the closing of the Business Combination. The Private Placement Warrants (including the shares of Common Stock issuable upon exercise of the Private Placement Warrants) were not transferable, assignable or salable until 30 days after the closing date of the Business Combination, and they are non-redeemable so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers of the Private Placement Warrants or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants (as defined above). Otherwise, the Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants and have no net cash settlement provisions. As of June 30, 2019, the Company had 16,166,650 warrants issued and outstanding with the same terms as described above. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | 19. Stock-Based Compensation On March 15, 2019, in connection with the Business Combination, the Company’s board of directors approved the adoption of the Target Hospitality Corp. 2019 Incentive Award Plan (the “Plan”), under which 4,000,000 of the Company’s shares of Common Stock were reserved for issuance pursuant to future grants of share awards. The expiration date of the Plan, on and after which date no awards may be granted, is March 15, 2029. Restricted Stock Units On May 21, 2019, the Compensation Committee granted time-based RSUs to certain of the Company’s executive officers, other employees, and directors. Each RSU represents a contingent right to receive, upon vesting, one share of the Company’s Common Stock or its cash equivalent, as determined by the Company. The number of RSUs granted to certain named executive officers and certain other employees totaled 212,621. These RSU awards granted vest in four equal installments on each of the first four anniversaries of the grant date, on May 21, 2020, 2021, 2022, and 2023. The number of RSUs granted to non-executive directors of the board amounted to 81,967 and were also granted on May 21, 2019. The RSU awards granted to non-executive directors of the board vest over one year on the anniversary of the date of grant or the date of the first annual meeting of the stockholders following the grant date, whichever is sooner. Additionally, on May 21, 2019, the Compensation Committee approved the election by Mr. Archer, the CEO, pursuant to his employment agreement dated January 29, 2019, to receive his annual base salary for the period July 1, 2019 to December 31, 2019 in the form of 30,000 RSUs. These RSUs vest in six equal installments on the first of each month, beginning on July 1, 2019 through December 1, 2019. The table below represents the changes in RSUs for the six months ended June 30, 2019: Number of Shares Weighted Average Grant Date Fair Value per Share Balance at December 31, 2018 — $ — Granted 324,588 Balance at June 30, 2019 324,588 $ 10.83 Stock-based compensation expense for these RSUs recognized in selling, general and administrative expense in the consolidated statement of comprehensive income (loss) for the three and six months ended June 30, 2019 and 2018 was approximately $0.1 million and $0, respectively, with an associated tax benefit of less than $0.1 million. At June 30, 2019, unrecognized compensation expense related to RSUs totaled $3.4 million and is expected to be recognized over a remaining term of approximately 3.8 years. Stock Option Awards On May 21, 2019, the Compensation Committee granted 482,792 time-based stock option awards to certain employees. Each option represents the right upon vesting, to buy one share of the Company’s common stock, par value $0.0001 per share, for $10.83 per share. The stock options vest in four equal installments on each of the first four anniversaries of the grant date, on May 21, 2020, 2021, 2022, and 2023 and expire ten years from the grant date. The following table presents the changes in stock options outstanding and related information for our employees during the three and six months ended June 30, 2019: Options Weighted Average Exercise Price Per Share Weighted Average Contractual Life (Years) Intrinsic Value Outstanding Options at December 31, 2018 - $ - - $ - Granted 482,792 10.83 9.9 - Outstanding Options at June 30, 2019 482,792 $ 10.83 9.9 $ - No stock options were exercisable at June 30, 2019 or December 31, 2018. Stock-based compensation expense for these stock option awards recognized in selling, general and administrative expense in the consolidated statement of comprehensive income (loss) for the three and six months ended June 30, 2019 and 2018 was approximately $0.1 million and $0, respectively, with an associated tax benefit of less than $0.1 million. At June 30, 2019, unrecognized compensation expense related to stock options totaled $1.6 million and is expected to be recognized over a remaining term of approximately 3.8 years. The fair value of each option award at the grant date was estimated using the Black-Scholes option-pricing model with the following assumptions: Assumptions Expected stock volatility % Expected dividend yield % Expected term (years) Risk-free interest rate % Exercise price $ Weighted-average grant date fair value $ The volatility assumption used in the Black-Scholes option-pricing model is based on peer group volatility as the Company does not have a sufficient trading history as a stand-alone public company to calculate volatility. Additionally, due to an insufficient history with respect to stock option activity and post vesting cancellations, the expected term assumption is based on the simplified method permitted under SEC rules, whereby, the simple average of the vesting period for each tranche of award and its contractual term is aggregated to arrive at a weighted average expected term for the award. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a dividend on its shares of common stock. Stock-based payments are subject to service based vesting requirements and expense is recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur. No stock options were forfeited during the three and six months ended June 30, 2019. |
Retirement plans
Retirement plans | 6 Months Ended |
Jun. 30, 2019 | |
Retirement plans | |
Retirement plans | 20. Retirement plans We offer a defined contribution 401(k) retirement plan to substantially all of our U.S. employees. Participants may contribute from 1% to 90% of eligible compensation, inclusive of pretax and / or Roth deferrals (subject to Internal Revenue Service limitations), and we make matching contributions under this plan on the first 6% of the participant’s compensation (100% match of the first 3% employee contribution and 50% match on the next 3% contribution). Our matching contributions vest at a rate of 20% per year for each of the employee’s first five years of service and then are fully vested thereafter. We recognized expense of $0.5 million and $0.1 million related to matching contributions under our various defined contribution plans during the six months ended June 30, 2019 and 2018, respectively. For the three months ended June 30, 2019 and 2018, we recognized expense of $0.2 and $0.1 million, respectively, related to these matching contributions. |
Business Segments
Business Segments | 6 Months Ended |
Jun. 30, 2019 | |
Business Segments | |
Business Segments | 21. Business Segments The Company is organized primarily on the basis of geographic region, customer industry group and operates primarily in three reportable segments. Our remaining operating segments have been consolidated and included in an “All Other” category. The following is a brief description of our reportable segments and a description of business activities conducted by All Other. Permian Basin — Segment operations consist primarily of specialty rental and vertically integrated hospitality services revenue from customers in the oil and gas industry located primarily in Texas and New Mexico. Bakken Basin — Segment operations consist primarily of specialty rental and vertically integrated hospitality services revenue from customers in the oil and gas industry located primarily in North Dakota. Government — Segment operations consist primarily of specialty rental and vertically integrated hospitality services revenue from Government customers located in Texas. All Other — Segment operations consist primarily of revenue from the construction phase of the contract with TCPL discussed in Note 1 as well as specialty rental and vertically integrated hospitality services revenue from customers in the Oil and Gas industry located outside of the Permian and Bakken Basins. The table below presents information about reported segments for the six and three months ended June 30 (except for asset information for 2018 that is presented as of December 31): 2019 The Permian Basin The Bakken Basin Government All Other Total For the Six Months Ended June 30, 2019 Revenue $ 104,748 $ 10,511 $ 33,285 $ 14,796 (a) $ 163,340 Adjusted gross profit $ 65,182 $ 4,333 $ 24,168 $ 3,104 $ 96,787 Capital expenditures $ 44,867 $ 77 $ 76 $ 3,962 Total Assets $ 291,027 $ 61,663 $ 39,704 $ 7,451 $ 399,845 For the Three Months Ended June 30, 2019 Revenue $ 52,037 $ 5,738 $ 16,729 $ 6,854 $ 81,358 Adjusted gross profit $ 32,588 $ 2,698 $ 12,317 $ 1,529 $ 49,132 Capital expenditures $ 26,170 $ — $ 40 $ 935 Total Assets $ 291,027 $ 61,663 $ 39,704 $ 7,451 $ 399,845 2018 The Permian Basin The Bakken Basin Government All Other Total For the Six Months Ended June 30, 2018 Revenue $ 36,232 $ 12,631 $ 33,155 $ 2,104 (a) $ 84,122 Adjusted gross profit $ 23,092 $ 4,703 $ 23,297 $ 148 $ 51,240 Capital expenditures $ 42,005 $ 3,160 $ 462 $ 531 Total Assets (as of December 31, 2018) $ 234,368 $ 64,770 $ 43,994 $ 3,489 $ 346,621 For the Three Months Ended June 30, 2018 Revenue $ 20,569 $ 7,061 $ 16,634 $ 1,212 (a) $ 45,476 Adjusted gross profit $ 13,634 $ 2,872 $ 11,783 $ 245 $ 28,534 Capital expenditures $ 18,223 $ 1,867 $ 78 $ 224 Total Assets (as of December 31, 2018) $ 234,368 $ 64,770 $ 43,994 $ 3,489 $ 346,621 (a) A reconciliation of total segment adjusted gross profit to total consolidated income (loss) before income taxes for the three and six months ended June 30, 2019 and 2018, respectively, is as follows: For the Three Months Ended For the Six Months Ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Total reportable segment adjusted gross profit $ 47,603 $ 28,289 $ 93,683 $ 51,092 Other adjusted gross profit 1,529 245 3,104 148 Depreciation and amortization (13,776) (7,904) (27,440) (15,797) Selling, general, and administrative expenses (10,925) (7,998) (55,676) (18,180) Restructuring costs — (1,158) (168) (7,414) Other income, net 123 515 161 965 Currency losses, net — (68) — (68) Loss on extinguishment of debt — — (907) — Interest expense, net (9,853) (5,670) (13,884) (9,615) Consolidated income (loss) before income taxes $ 14,701 $ 6,251 $ (1,127) $ 1,131 A reconciliation of total segment assets to total consolidated assets as of June 30, 2019 and December 31, 2018, is as follows: June 30, 2019 December 31, 2018 Total reportable segment assets $ 391,775 $ 343,132 Other assets 8,070 3,489 Restricted cash 257 257 Other unallocated amounts 208,627 218,154 Total Assets $ 608,729 $ 565,032 Other unallocated assets consist of the following as reported in the consolidated balance sheets of the Company as of the dates indicated below: June 30, 2019 December 31, 2018 Total current assets $ 66,103 $ 74,986 Other intangible assets, net 125,328 127,383 Deferred tax asset 10,921 12,420 Deferred financing costs revolver, net 5,471 2,865 Notes due from officers — 500 Other non current assets 804 — Total other unallocated amounts of assets $ 208,627 $ 218,154 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events | |
Subsequent Events | 22. Subsequent Events On July 1, 2019, the Company purchased a 168-room community from ProPetro Services, Inc. (“ProPetro”) for an aggregate purchase price of $5.0 million in cash, which represents the acquisition date fair value of consideration transferred. The purchase price was funded by cash on hand as of the acquisition date. On July 1, 2019, in connection with the purchase of this community, the Company and ProPetro entered into an amendment to its existing Network Lease and Services Agreement resulting in ProPetro leasing from the Company an additional 166 rooms per night for one year subject to three one-year extension options. The ProPetro acquisition further expands the Company’s presence in the Permian Basin and will be included in the Company’s Permian Basin segment. The Company is currently assessing the fair value of the net identifiable assets acquired in the transaction, and has not finalized the accounting. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Organization and Nature of Operations | Organization and Nature of Operations Target Hospitality Corp. (“Target Hospitality” or the “Company”) was formed on March 15, 2019 and is one of the largest vertically integrated specialty rental and hospitality services companies in the United States. The Company provides vertically integrated specialty rental and comprehensive hospitality services including: catering food services, maintenance, housekeeping, grounds-keeping, on-site security, overall workforce lodge management, and laundry service. Target Hospitality serves clients in oil, gas, mining, alternative energy, government and immigrations sectors principally located in the West Texas, South Texas, Oklahoma and Bakken regions, as well as various large linear-construction (pipeline and infrastructure) projects in the United States. The Company, whose securities are listed on the Nasdaq Capital Market, serves as the holding company for the businesses of Target Logistics Management, LLC and its subsidiaries (“Target”) and RL Signor Holdings, LLC and its subsidiaries (“Signor”). TDR Capital LLP (“TDR Capital” or “TDR”) owns approximately 62% of Target Hospitality and the remaining ownership is broken out among the founders of the Company’s legal predecessor, Platinum Eagle Acquisition Corp. (“Platinum Eagle” or “PEAC”), investors in Platinum Eagle’s private placement transaction completed substantially and concurrently with the Business Combination (as defined below) (the “PIPE”), and other public shareholders. On November 13, 2018, PEAC entered into: (i) the agreement and plan of merger, as amended on January 4, 2019 (the “Signor Merger Agreement”), by and among PEAC, Signor Merger Sub LLC, a Delaware limited liability company and wholly-owned subsidiary of Platinum Eagle and sister company to the Holdco Acquiror (defined below as Topaz Holdings LLC) (“Signor Merger Sub”), Arrow Holdings S.a.r.l., a Luxembourg société à responsabilité limitée (the “Arrow Seller”) and Signor Parent (as defined below), and (ii) the agreement and plan of merger, as amended on January 4, 2019 (the “Target Merger Agreement” and, together with the Signor Merger Agreement, the “Merger Agreements”), by and among Platinum Eagle, Topaz Holdings LLC, a Delaware limited liability company (“Topaz”), Arrow Bidco, LLC, a Delaware limited liability company (“Bidco”), Algeco Investments B.V., a Netherlands besloten vennotschap (the “Algeco Seller”) and Target Parent (as defined below), to effect a business combination (the “Business Combination”). Pursuant to the Merger Agreements, on March 15, 2019, Platinum Eagle, through its wholly-owned subsidiary, Topaz, acquired all of the issued and outstanding equity interests of Arrow Parent Corp., a Delaware corporation (“Signor Parent”), the owner of Bidco and the owner of Signor from the Arrow Seller, and all of the issued and outstanding equity interests of Algeco US Holdings LLC, a Delaware limited liability company (“Target Parent”), the owner of Target, from the Algeco Seller, for approximately $1.311 billion. The purchase price was paid in a combination of shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and cash. The Arrow Seller and the Algeco Seller are hereinafter referred to as the “Sellers.” Target Parent, was formed by TDR in September 2017. Prior to the Business Combination, Target Parent was directly owned by Algeco Scotsman Global S.a.r.l. (“ASG”) which is ultimately owned by a group of investment funds managed and controlled by TDR. During 2018, ASG assigned all of its ownership interest in Target Parent to the Algeco Seller, an affiliate of ASG that is also ultimately owned by a group of investment funds managed and controlled by TDR. Target Parent acted as a holding company that included the U.S. corporate employees of ASG and certain of its affiliates and certain related administrative costs and was the owner of Target, its operating company. Target Parent received capital contributions, made distributions, and maintained cash as well as other amounts owed to and from affiliated entities. As discussed above, in connection with the closing of the Business Combination, Target Parent merged with and into Bidco, with Bidco as the surviving entity. Signor Parent owned 100% of Bidco until the closing of the Business Combination in connection with which Signor Parent merged with and into Topaz with Topaz being the surviving entity. Prior to the Business Combination, Signor Parent was owned by the Arrow Seller, which is ultimately owned by a group of investment funds managed and controlled by TDR. Signor Parent was formed in August 2018 and acted as a holding company for Bidco, which was formed in September 2018, also as a holding company. Bidco acquired Signor on September 7, 2018 (see Note 3). Neither Signor Parent nor Bidco had operating activity, but each received capital contributions, made distributions, and maintained cash as well as other amounts owed to and from affiliated entities. Signor Parent was dissolved upon consummation of the Business Combination and merger with Topaz described above on March 15, 2019. |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Certain information in footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) has been condensed or omitted pursuant to those rules and regulations. The financial statements included in this report should be read in conjunction with the audited combined financial statements of Target Parent and Signor Parent and accompanying notes thereto for the year ended December 31, 2018 as well as the consolidated financial statements and notes included in the PEAC Annual Report on Form 10-K for the year ended December 31, 2018. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2019 or any future period. Due to the Restructuring discussed in the audited combined financial statements of Target Parent and Signor Parent and accompanying notes thereto for the year ended December 31, 2018, there are approximately $0.4 million and $15.0 million of additional expenses related to the activity of Target Parent included in the unaudited consolidated statements of comprehensive income (loss) for the six months ended June 30, 2019 and 2018, respectively. There are approximately $0 and $3.6 million of additional expenses related to this activity included in the unaudited consolidated statements of comprehensive income (loss) for the three months ended June 30, 2019 and 2018, respectively. Approximately $0.2 million and $7.4 million are reported in restructuring costs for the six months ended June 30, 2019 and 2018, respectively, while $0 and $1.2 million are reported in restructuring costs for the three months ended June 2019 and 2018, respectively. Approximately $0.2 million and $7.6 million of these expenses are reported in selling, general and administrative expenses for the six months ended June 30, 2019 and 2018, respectively, while $0 and $2.4 million are included in selling, general and administrative expenses within the statement of comprehensive income (loss) for the three months ended June 30, 2019 and 2018, respectively. The accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, except for the adjustments described above as part of the Restructuring and the adjustments described as part of the Business Combination discussed in Note 2, necessary for a fair statement of financial position as of June 30, 2019, and results of operations for the three and six months ended June 30, 2019 and 2018, and cash flows for the six months ended June 30, 2019 and 2018. The consolidated balance sheet as of December 31, 2018, was derived from the audited combined financial statements of Target Parent and Signor Parent but does not contain all of the footnote disclosures from those annual financial statements. |
Reclassifications | Reclassifications Certain prior year amounts in these financial statements have been reclassified to conform to the current year presentation with no impact to net income (loss) and comprehensive income (loss), stockholders’ equity or cash flows. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. If the underlying estimates and assumptions upon which the financial statements are based change in future periods, actual amounts may differ from those included in the accompanying unaudited consolidated financial statements. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries that it controls due to ownership of a majority voting interest. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. All intercompany balances and transactions are eliminated. The Business Combination was accounted for as a reverse recapitalization in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations . Although Platinum Eagle was the indirect acquirer of Target Parent and Signor Parent for legal purposes, Target Parent and Signor Parent were considered the acquirer for accounting and financial reporting purposes. As a result of Target Parent and Signor Parent being the accounting acquirer in the Business Combination, the financial reports filed with the SEC by the Company subsequent to the Business Combination are prepared “as if” Target Parent and Signor Parent are the accounting predecessor of the Company. The historical operations of Target Parent and Signor Parent are deemed to be those of the Company. Thus, the financial statements included in this report reflect (i) the historical operating results of Target Parent and Signor Parent prior to the Business Combination; (ii) the consolidated results of the Company, Target Parent and Signor Parent following the Business Combination on March 15, 2019; (iii) the assets and liabilities of Target Parent and Signor Parent at their historical cost; and (iv) the Company’s equity structure for all periods presented. The recapitalization of the number of shares of Common Stock attributable to the purchase of Target Parent and Signor Parent in connection with the Business Combination is reflected retroactively to the earliest period presented and will be utilized for calculating loss per share in all prior periods presented. No step-up basis of intangible assets or goodwill was recorded in the Business Combination transaction consistent with the treatment of the transaction as a reverse recapitalization of Target Parent and Signor Parent. |
Revenue Recognition | Revenue Recognition The Company derives revenue from specialty rental and hospitality services, specifically lodging and related ancillary services. Revenue is recognized in the period in which lodging and services are provided pursuant to the terms of contractual relationships with the customers. Certain arrangements contain a lease of lodging facilities to customers. The leases are accounted for as an operating lease under the authoritative guidance for leases and are recognized as income using the straight-line method over the term of the lease agreement. When the Company enters into arrangements with multiple deliverables, arrangement consideration is allocated between the deliverables based on the relative estimated selling price of each deliverable. The estimated price of lodging and service deliverables is based on the price of lodging and services when sold separately, or based upon the best estimate of selling price. When lodging and services are billed and collected in advance, recognition of revenue is deferred until services are rendered. Certain of the Company’s contractual arrangements allow customers the ability to use paid but unused lodging and services for a specified period. The Company recognizes revenue for these paid but unused lodging and services as they are consumed, as it becomes probable the lodging and services will not be used, or upon expiration of the specified term. Cost of services includes labor, food, utilities, supplies, rent and other direct costs associated with operating the lodging units. Cost of rental includes leasing costs and other direct costs of maintaining the lodging units. Incremental direct costs of acquiring contracts includes sales commissions which are expensed as incurred and reflected in selling, general and administrative expenses in the consolidated statements of comprehensive income (loss). The Company originated a contract in 2013 with TransCanada Pipelines (“TCPL”) to construct, deliver, cater and manage all accommodations and hospitality services in conjunction with the planned construction of the Keystone XL pipeline project. During the construction phase of the contract, the Company is currently performing services under limited notices to proceed (“LNTP”) and change orders. The Company recognizes revenue associated with the LNTPs using the percentage of completion method with progress towards completion measured using the cost-to-cost method as the basis to recognize revenue. Billings on the LNTPs in excess of costs incurred and estimated profits are classified as deferred revenue. Costs incurred and estimated profits in excess of billings on these contracts are recognized as unbilled receivables. Management believes this cost-to-cost method is the most appropriate measure of progress to the satisfaction of a performance obligation on the LNTPs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, estimated profitability and final contract settlements may result in revisions to projected costs and revenue and are recognized in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. Factors that may affect future project costs and margins include weather, production efficiencies, availability and costs of labor, materials and subcomponents. These factors can significantly impact the accuracy of our estimates and materially impact our future reported earnings. The Company recognizes revenues associated with change orders during the construction phase as costs are incurred in connection with the project change orders. The revenue recognized on the change orders includes a margin mark-up on costs incurred as allowable under the contract terms. The Company also originated a contract on March 1, 2019 with a customer to construct, deliver, cater and manage all accommodations and hospitality services in conjunction with the construction of an accommodation facility in the Permian Basin. During the construction phase, the Company recognizes revenue using the percentage of completion method similarly to TCPL. The construction is expected to be completed during 2019. Revenues associated with these contracts are reflected as construction fee income in the consolidated statements of comprehensive income (loss) and amounted to approximately $13.6 million and $0 for the six months ended June 30, 2019 and 2018, respectively, while $6.4 million and $0 are recognized in the consolidated statements of comprehensive income (loss) for the three months ended June 30, 2019 and 2018, respectively. Of the total construction fee income approximately $13.0 million and $0, is a result of projects with TCPL for the six months ended June 30, 2019 and 2018, respectively, while $0.6 million and $0 are related to the Permian Basin project for the six months ended June 30, 2019 and 2018, respectively. For the three months ended June 30, 2019 and 2018, $5.8 million and $0 is a result of projects with TCPL while $0.6 million and $0 are related to the Permian Basin project. Additionally, the Company collects sales, use, occupancy and similar taxes, which the Company presents on a net basis (excluded from revenues) in the consolidated statements of comprehensive income (loss). |
Stock-Based Compensation | Stock-Based Compensation The Company sponsors an equity incentive plan (the “Plan”) in which certain employees and non-employee directors participate. The Plan is administered by the compensation committee of the board of directors of the Company (the “Compensation Committee”). The Company measures the cost of services received in exchange for an award of equity instruments (typically restricted stock unit awards (“RSUs”) and stock options) based on the grant-date fair value of the award as the awards issued under the Plan are equity classified. The fair value of the stock options is calculated using the Black-Scholes option-pricing model while the fair value of the RSUs is calculated based on the Company’s share price on the grant-date. The resulting cost is recognized over the period during which an employee or non-employee director is required to provide service in exchange for the awards, usually the vesting period. Forfeitures are accounted for as they occur. Refer to Note 19 for further details of activity related to the Plan. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards The Company meets the definition of an emerging growth company (“EGC”) as defined under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). In reliance on exemptions provided under the JOBS Act for EGCs, the Company has elected to defer compliance with new or revised financial accounting standards until a company that is not an issuer (as defined under section 2(a) of the Sarbanes-Oxley Act of 2002) is required to comply with such standards. As such, compliance dates included below pertain to non-issuers, and as permitted, early adoption dates are indicated. In May 2014, the FASB issued ASU 2014‑09, Revenue from Contracts with Customers (Topic 606) , which prescribes a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers. The new guidance will supersede virtually all existing revenue guidance under US GAAP. The new standard becomes effective for the Company’s year ended December 31, 2019 financial statements and interim periods thereafter. Topic 606 allows either full or modified retrospective transition, and the Company currently plans to use the modified retrospective method of adoption. This approach consists of recognizing the cumulative effect of initially applying the standard as an adjustment to opening retained earnings. As part of the modified retrospective approach in the year of adoption, the Company will present the comparative periods under legacy GAAP and disclose the amount by which each financial statement line item was affected as a result of applying the new standard and an explanation of significant changes. The core principle contemplated by this new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. In April and May 2016, the FASB also issued clarifying updates to the new standard specifically to address certain core principles including the identification of performance obligations, licensing guidance, the assessment of the collectability criterion, the presentation of taxes collected from customers, non-cash considerations, contract modifications and completed contracts at transition. The Company is currently evaluating the impact that the updated guidance will have on the Company’s financial statements and related disclosures. As part of the evaluation process, the Company is holding regular meetings with key stakeholders from across the organization to discuss the impact of the standard on its existing contracts. The Company is utilizing a bottom-up approach to analyze the impact of the standard on its portfolio of contracts by reviewing the Company’s current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to the Company’s existing revenue contracts. In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842) . This guidance revises existing practice related to accounting for leases under ASC Topic 840 Leases (ASC 840) for both lessees and lessors. The new guidance requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes, the new standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). While the new standard maintains similar accounting for lessors as under ASC 840, the new standard reflects updates to, among other things, align with certain changes to the lessee model. The new standard will be effective for the Company during the year ended December 31, 2020 and interim periods thereafter. Topic 842 allows an entity to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach or to adopt under the new optional transition method that allows an entity to recognize a cumulative-effect adjustment to the opening balance of retained earnings as of the adoption date. The Company is currently evaluating the impact of the pronouncement on its consolidated financial statements. In June 2016, the FASB issued ASU 2016‑13, Financial Instruments - Credit Losses ( ASU 2016‑13 or Topic 326 ). This new standard changes how companies account for credit impairment for trade and other receivables as well as changing the measurement of credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 will replace the current "incurred loss" model with an "expected loss" model. Under the "incurred loss" model, a loss (or allowance) is recognized only when an event has occurred (such as a payment delinquency) that causes the entity to believe that a loss is probable (i.e., that it has been "incurred"). Under the "expected loss" model, a loss (or allowance) is recognized upon initial recognition of the asset that reflects all future events that leads to a loss being realized, regardless of whether it is probable that the future event will occur. The "incurred loss" model considers past events and current conditions, while the "expected loss" model includes expectations for the future which have yet to occur. ASU Codification Improvements to Topic 326, Financial Instruments - Credit Losses , was issued in November 2018 and excludes operating leases from the new guidance and also extends the effective date of ASU 2016-13 for non-public business entities. The ASU is effective for financial statements issued for reporting periods beginning after December 15, 2021 and interim periods within those reporting periods. The Company is currently evaluating the impact of this new standard on its consolidated financial statements. In October 2016, the FASB issued ASU 2016‑16, Income Taxes (Topic 740): Intra-entity Transfers of Assets other than Inventory . This guidance requires an entity to recognize the income tax consequences of intra-entity sale or transfers of assets, other than inventory, at the time of transfer. The new standard requires the Company to recognize the income tax effects of intercompany sales or transfers of assets, other than inventory, in the income statement as income tax expense (or benefit) in the period the sale or transfer occurs. The exception to recognizing the income tax effects of intercompany sales or transfers of assets remains in place for intercompany inventory sales and transfers. The new standard will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted for all entities as long as entities adopt at the beginning of an annual reporting period. The Company adopted the pronouncement on January 1, 2019 and determined that it had no impact on its consolidated financial statements. In November 2016, the FASB issued ASU No. 2016‑18, Statement of cash flows (Topic 230): Restricted cash . The amendments in this update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. This update addresses stakeholder concerns around the diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The provisions of ASU No. 2016‑18 are effective for fiscal years beginning after December 15, 2018, and interim periods with fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied retrospectively. The Company does not plan to early adopt. The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings. Companies that elect to reclassify these amounts must reclassify stranded tax effects for all items accounted for in accumulated other comprehensive income. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. This guidance requires qualitative disclosure of the accounting policy for releasing income tax effects from accumulated other comprehensive income and if the reclassification election is made, the impacts of the change on the consolidated financial statements. The Company adopted ASU 2018-02 in the first quarter of 2019, did not reclassify the tax effects stranded in accumulated other comprehensive income, and there was no impact on the Company's consolidated results of operations or cash flows. The Company's policy for releasing disproportionate income tax effects from AOCI utilizes the portfolio approach. In August 2018, the FASB issued ASU No. 2018‑15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350‑40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018‑15”). The amendments in this update align the requirements for capitalizing implementation costs incurred in a cloud computing arrangement (i.e. hosting arrangement) that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software under Subtopic 350‑40. The amendments require certain costs incurred during the application development stage to be capitalized and other costs incurred during the preliminary project and post-implementation stages to be expensed as they are incurred. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement including reasonably certain renewals, beginning when the module or component of the hosting arrangement is ready for its intended use. Accounting for the hosting component of the arrangement is not affected. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. The Company early adopted this pronouncement on January 1, 2019. In January 2017, the FASB issued ASU 2017-01, “ Business Combinations (Topic 805): Clarifying the Definition of a Business ” which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. ASU 2017-01 requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC Topic 606 (previously described). The standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted. The Company adopted this pronouncement in connection with the Superior acquisition discussed in Note 3. In June 2018, the FASB issued ASU Improvements to Nonemployee Share-Based Payment Accounting , or ASU |
Business Combination (Tables)
Business Combination (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Business Combination | |
Schedule of reconciliation of cash flows and net proceeds to the Sellers | Recapitalization Cash - Platinum Eagle's Trust (net of redemptions) $ 146,137 Cash - PIPE 80,000 Gross cash received by Target Hospitality from Business Combination 226,137 Less: fees to underwriters (7,385) Net cash received from Recapitalization 218,752 Plus: non-cash contribution - forgiveness of related party loan 104,285 Less: non-cash net liabilities assumed from PEAC (8,840) Net contributions from Recapitalization Transaction $ 314,197 Contributions from Affiliate Transaction bonus amounts $ 28,519 Payment of historical ABL facility 9,904 Payment of affiliate amounts 684 Total contributions $ 39,107 Cash paid to Algeco Seller $ 563,134 |
Schedule of common stock issued immediately consummation of business combination | Shares by Type Number of shares by type at June 30, 2019 Platinum Eagle Class A Shares outstanding prior to the Business Combination 32,500,000 Less: Redemption of Platinum Eagle Class A Shares (18,178,394) Class A Shares of Platinum Eagle 14,321,606 Founder Shares 8,050,000 Former Platinum Eagle Director Shares 75,000 Shares issued to PIPE investors 8,000,000 Shares issued to PEAC and PIPE investors 30,446,606 Shares issued to the Sellers 74,786,327 Total Outstanding Shares of Common Stock issued and outstanding 105,232,933 Less: Founders Shares in escrow (5,015,898) Total Shares of Common Stock outstanding for earnings (loss) per share computation (See Note 17) 100,217,035 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Signor | |
Schedule of preliminary allocation of total purchase price | Cash, cash equivalents and restricted cash $ 15,536 Accounts receivable 13,008 Property and equipment 79,026 Other current assets 581 Goodwill 26,115 Customer relationships 96,225 Total assets acquired 230,491 Accounts payable (3,678) Accrued expenses (9,051) Capital lease liability and note payable (490) Unearned revenue (201) Total liabilities assumed (13,420) Net assets acquired $ 217,071 |
Schedule of unaudited pro forma information | Period Revenue Income before taxes 2018 pro forma from January 1, 2018 to June 30, 2018 $ 128,406 $ 11,039 2018 pro forma for the three months ended June 30, 2018 $ 68,735 $ 15,005 |
Superior | |
Schedule of preliminary allocation of total purchase price | Property and equipment $ 18,009 Customer relationships 5,000 Goodwill 6,991 Total assets acquired $ 30,000 |
Schedule of unaudited pro forma information | Period Revenue Income before taxes 2019 pro forma from January 1, 2019 to June 30, 2019 $ $ 2019 pro forma for the three months ended June 30, 2019 $ $ 2018 pro forma from January 1, 2018 to June 30, 2018 $ 86,067 $ 2018 pro forma for the three months ended June 30, 2018 $ 46,561 $ 5,922 |
Specialty Rental Assets, Net (T
Specialty Rental Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Specialty Rental Assets, Net | |
Schedule of Specialty rental assets | June 30, December 31, 2019 2018 Specialty rental assets $ 479,101 $ 432,158 Construction-in-process 36,608 18,356 Less: accumulated depreciation (176,407) (156,955) Specialty rental assets, net $ 339,302 $ 293,559 |
Other Property, Plant and Equ_2
Other Property, Plant and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Other Property, Plant and Equipment, Net | |
Schedule of other property, plant and equipment, net | June 30, December 31, 2019 2018 Land $ 17,134 $ 16,245 Buildings and leasehold improvements 964 908 Machinery and office equipment 1,138 1,083 Software and other 1,803 1,667 21,039 19,903 Less: accumulated depreciation (1,667) (1,021) Total other property, plant and equipment, net $ 19,372 $ 18,882 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets, net (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Other Intangible Assets, net | |
Schedule of changes in carrying amount of goodwill | Permian Basin Balance at January 1, 2018 $ 8,065 Acquisition of Signor 26,115 Balance at December 31, 2018 34,180 Acquisition of Superior 6,991 Balance at June 30, 2019 $ 41,171 |
Schedule of intangible assets other than goodwill | June 30, 2019 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 8.1 $ 132,920 $ (23,992) $ 108,928 Non-compete Agreements — 11,400 (11,400) — Total 144,320 (35,392) 108,928 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 160,720 $ (35,392) $ 125,328 As mentioned in Note 3, the customer relationship intangible amounts associated with the Superior acquisition included in the table above as of June 30, 2019 are provisional and subject to change. December 31, 2018 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 8.3 $ 127,920 $ (16,937) $ 110,983 Non-compete Agreements — 11,400 (11,400) — Total 139,320 (28,337) 110,983 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 155,720 $ (28,337) $ 127,383 |
Schedule of estimated aggregate amortization expense | Rest of 2019 $ 7,425 2020 14,814 2021 14,814 2022 13,461 2023 13,039 Thereafter 45,375 Total $ 108,928 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accrued Liabilities | |
Schedule of accrued liabilities | June 30, December 31, 2019 2018 Accrued expenses $ 4,501 $ 9,104 Employee accrued compensation expense 4,257 5,774 Other accrued liabilities 9,650 4,844 Accrued interest on debt 9,664 244 Accrued interest due affiliates — 3,334 Total accrued liabilities $ 28,072 $ 23,300 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Instrument [Line Items] | |
Summary of carrying value of debt outstanding | June 30, December 31, 2019 2018 Capital lease and other financing obligations $ 570 $ 2,460 ABL Facility 70,000 20,550 9.50% Senior Secured Notes due 2024, face amount 340,000 — Less: unamortized original issue discount (3,154) — Less: unamortized term loan deferred financing costs (15,607) — Total debt, net 391,809 23,010 Less: current maturities (570) (2,446) Total long-term debt $ 391,239 $ 20,564 |
Schedule of future maturities | Rest of 2019 $ 570 2020 — 2021 — 2022 — 2023 70,000 Thereafter 340,000 Total $ 410,570 |
Senior Secured Notes 2024 | |
Debt Instrument [Line Items] | |
Summary of carrying value of debt outstanding | Principal Unamortized Original Issue Discount Unamortized Deferred Financing Costs 9.50% Senior Secured Notes, due 2024 $ 340,000 $ 3,154 $ 15,607 |
Schedule of debt redemption | . Redemption Year Price 2021 104.750% 2022 102.375% 2023 and thereafter 100.000% |
Notes Due to Affiliates (Tables
Notes Due to Affiliates (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Notes Due to Affiliates | |
Summary of notes due to affiliates | Interest Date of June 30 December 31 Affiliate Lender Rate Maturity 2019 2018 Arrow Holdings S.a.r.l. LIBOR + 4% September 2023 $ — $ 108,047 |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value | |
Summary of carrying amounts and fair values of financial assets and liabilities | June 30, 2019 December 31, 2018 Carrying Carrying Financial Assets (Liabilities) Not Measured at Fair Value Amount Fair Value Amount Fair Value ABL Facility (See Note 9) - Level 2 $ (70,000) $ (70,000) $ (20,550) $ (20,550) Senior Secured Notes (See Note 9) - Level 1 $ (321,239) $ (343,400) $ — $ — Notes due from affiliates (See Note 8) - Level 2 $ — $ — $ 638 $ 638 Notes due to affiliates (See Note 10) - Level 2 $ — $ — $ (108,047) $ |
Business Restructuring (Tables)
Business Restructuring (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Business Restructuring | |
Summary of the activity in our restructuring accruals | : June 30, June 30, 2019 2018 Balance at January 1 $ 1,462 $ 2,395 Charges during the period 168 7,414 Cash payments during the period (1,630) (8,338) Balance at June 30 $ — $ 1,471 |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings per Share | |
Schedule of reconciliation of net loss and weighted-average shares of common stock outstanding | The following table is a reconciliation of net income (loss) and weighted-average shares of common stock outstanding for purposes of calculating basic and diluted EPS for the periods indicated below ($ in thousands, except per share amounts): For the Three Months Ended For the Six Months Ended June 30, June 30, June 30, June 30, 2019 2018 2019 2018 Numerator Net income (loss) attributable to Common Stockholders $ 10,580 $ 4,424 $ (3,399) $ 230 Denominator Weighted average shares outstanding - basic and diluted 100,217,035 25,686,327 89,960,451 25,686,327 Net income (loss) per share - basic and diluted $ 0.11 $ 0.17 $ (0.04) $ 0.01 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Stock-Based Compensation | |
Schedule of changes in restricted stock units | Number of Shares Weighted Average Grant Date Fair Value per Share Balance at December 31, 2018 — $ — Granted 324,588 Balance at June 30, 2019 324,588 $ 10.83 |
Schedule of changes in stock options | Options Weighted Average Exercise Price Per Share Weighted Average Contractual Life (Years) Intrinsic Value Outstanding Options at December 31, 2018 - $ - - $ - Granted 482,792 10.83 9.9 - Outstanding Options at June 30, 2019 482,792 $ 10.83 9.9 $ - |
Schedule of assumptions using Black-scholes option-pricing model | Assumptions Expected stock volatility % Expected dividend yield % Expected term (years) Risk-free interest rate % Exercise price $ Weighted-average grant date fair value $ |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Business Segments | |
Schedule of Segment Reporting Information | 2019 The Permian Basin The Bakken Basin Government All Other Total For the Six Months Ended June 30, 2019 Revenue $ 104,748 $ 10,511 $ 33,285 $ 14,796 (a) $ 163,340 Adjusted gross profit $ 65,182 $ 4,333 $ 24,168 $ 3,104 $ 96,787 Capital expenditures $ 44,867 $ 77 $ 76 $ 3,962 Total Assets $ 291,027 $ 61,663 $ 39,704 $ 7,451 $ 399,845 For the Three Months Ended June 30, 2019 Revenue $ 52,037 $ 5,738 $ 16,729 $ 6,854 $ 81,358 Adjusted gross profit $ 32,588 $ 2,698 $ 12,317 $ 1,529 $ 49,132 Capital expenditures $ 26,170 $ — $ 40 $ 935 Total Assets $ 291,027 $ 61,663 $ 39,704 $ 7,451 $ 399,845 2018 The Permian Basin The Bakken Basin Government All Other Total For the Six Months Ended June 30, 2018 Revenue $ 36,232 $ 12,631 $ 33,155 $ 2,104 (a) $ 84,122 Adjusted gross profit $ 23,092 $ 4,703 $ 23,297 $ 148 $ 51,240 Capital expenditures $ 42,005 $ 3,160 $ 462 $ 531 Total Assets (as of December 31, 2018) $ 234,368 $ 64,770 $ 43,994 $ 3,489 $ 346,621 For the Three Months Ended June 30, 2018 Revenue $ 20,569 $ 7,061 $ 16,634 $ 1,212 (a) $ 45,476 Adjusted gross profit $ 13,634 $ 2,872 $ 11,783 $ 245 $ 28,534 Capital expenditures $ 18,223 $ 1,867 $ 78 $ 224 Total Assets (as of December 31, 2018) $ 234,368 $ 64,770 $ 43,994 $ 3,489 $ 346,621 (a) |
Schedule of reconciliation of total segment adjusted gross profit | For the Three Months Ended For the Six Months Ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Total reportable segment adjusted gross profit $ 47,603 $ 28,289 $ 93,683 $ 51,092 Other adjusted gross profit 1,529 245 3,104 148 Depreciation and amortization (13,776) (7,904) (27,440) (15,797) Selling, general, and administrative expenses (10,925) (7,998) (55,676) (18,180) Restructuring costs — (1,158) (168) (7,414) Other income, net 123 515 161 965 Currency losses, net — (68) — (68) Loss on extinguishment of debt — — (907) — Interest expense, net (9,853) (5,670) (13,884) (9,615) Consolidated income (loss) before income taxes $ 14,701 $ 6,251 $ (1,127) $ 1,131 |
Schedule of reconciliation of total segment assets to total combined assets | June 30, 2019 December 31, 2018 Total reportable segment assets $ 391,775 $ 343,132 Other assets 8,070 3,489 Restricted cash 257 257 Other unallocated amounts 208,627 218,154 Total Assets $ 608,729 $ 565,032 |
Schedule of unallocated assets consist of the following as reported in the combined balance sheets | June 30, 2019 December 31, 2018 Total current assets $ 66,103 $ 74,986 Other intangible assets, net 125,328 127,383 Deferred tax asset 10,921 12,420 Deferred financing costs revolver, net 5,471 2,865 Notes due from officers — 500 Other non current assets 804 — Total other unallocated amounts of assets $ 208,627 $ 218,154 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 15, 2019 | Sep. 07, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Additional expenses | $ 0 | $ 3,600 | $ 400 | $ 15,000 | |||
Selling, general and administrative expenses, Target Parent | 0 | 2,400 | 200 | 7,600 | |||
Restructuring costs | 0 | 1,158 | 168 | 7,414 | |||
Services income | 81,358 | 45,476 | 163,340 | 84,122 | |||
Construction fee | |||||||
Services income | 6,383 | 0 | 13,562 | 0 | |||
Construction fee | Trans Canada Pipelines | |||||||
Services income | 5,800 | 0 | 13,000 | 0 | |||
Construction fee | Other Customer | |||||||
Services income | $ 600 | 0 | 600 | $ 0 | |||
Signor | |||||||
Services income | $ 22,900 | $ 46,200 | |||||
Algeco and Arrow | Membership Purchase Agreement | |||||||
Purchase price | $ 1,311,000 | ||||||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | ||||||
TDR Capital | Target Hospitality | |||||||
Ownership interest in an affiliate | 62.00% | 62.00% | |||||
Bidco | Signor | |||||||
Percentage acquired | 100.00% | ||||||
Purchase price | $ 201,500 | ||||||
Signor | Bidco | |||||||
Ownership percentage | 100.00% | 100.00% |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | Mar. 15, 2019 | Jun. 30, 2019 | Jun. 30, 2018 |
Business acquisition | |||
Net cash received from Recapitalization | $ 218,752 | ||
Plus: non-cash contribution - forgiveness of related party loan | 104,285 | ||
Less: non-cash net liabilities assumed from PEAC | (8,840) | ||
Payment of Historical ABL facility | 27,790 | $ 5,075 | |
Total cash received from affiliates | 39,107 | ||
Payment of deferred financing costs | (19,799) | ||
Cash paid to Algeco Seller | 563,134 | ||
Arrow holdings S.a.r.l. | |||
Business acquisition | |||
Transaction bonus amounts | 28,519 | ||
Payment of Historical ABL facility | 9,904 | ||
Payment of affiliate amounts | 684 | ||
Total cash received from affiliates | 39,107 | ||
Target Parent and Arrow Parent | |||
Business acquisition | |||
Aggregate purchase price | $ 1,311,000 | ||
Cash consideration | 563,100 | ||
Paid to the seller | $ 747,900 | ||
Cash - Platinum Eagle's Trust (net of redemptions) | 146,137 | ||
Cash - PIPE | 80,000 | ||
Less: fees to underwriters | 7,385 | ||
Net cash received from Recapitalization | 218,752 | ||
Plus: non-cash contribution - forgiveness of related party loan | 104,285 | ||
Less: non-cash net liabilities assumed from PEAC | (8,840) | ||
Net contributions from Recapitalization Transaction | 314,197 | ||
Gross cash received by Target Hospitality from Business Combination | 226,137 | ||
Less: Underwriting fees | $ (7,385) | ||
Arrow Seller | |||
Business acquisition | |||
Shares issued | 49,100,000 | ||
Algeco Seller | |||
Business acquisition | |||
Shares issued | 25,686,327 |
Business Combinations - Bidcos
Business Combinations - Bidcos offering of Senior Secured Notes (Details) - USD ($) $ in Thousands | Mar. 15, 2019 | Jun. 30, 2019 |
Business acquisition | ||
Principal amount | $ 340,000 | |
Proceeds from borrowings on ABL | 77,240 | |
New ABL facility | ||
Business acquisition | ||
Proceeds from borrowings on ABL | $ 40,000 | 40,000 |
Senior Secured Notes 2024 | ||
Business acquisition | ||
Principal amount | 340,000 | |
Payment of original issuance cost | $ 3,300 |
Business Combinations - Platinu
Business Combinations - Platinum Eagle (Details) - $ / shares | Mar. 14, 2019 | Jun. 30, 2019 | Mar. 15, 2019 | Dec. 31, 2018 | Jan. 17, 2018 |
Business Acquisition [Line Items] | |||||
Common stock, Number of share outstanding | 105,232,933 | 74,786,327 | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||
Class A ordinary share | |||||
Business Acquisition [Line Items] | |||||
Common stock, Number of share outstanding | 32,500,000 | 14,321,606 | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||
Common stock redeemed (in shares) | 18,178,394 | ||||
Class A ordinary share | Target Parent and Arrow Parent | |||||
Business Acquisition [Line Items] | |||||
Common stock redeemed (in shares) | 18,178,394 | ||||
Common Class B | |||||
Business Acquisition [Line Items] | |||||
Common stock, Number of share outstanding | 8,125,000 | ||||
Common stock, par value | $ 0.0001 |
Business Combinations - Shares
Business Combinations - Shares by Type (Details) - shares | Mar. 14, 2019 | Jun. 30, 2019 | Mar. 15, 2019 | Dec. 31, 2018 |
Business acquisition | ||||
Total Outstanding Shares of Common Stock Outstanding | 105,232,933 | 74,786,327 | ||
Total Outstanding Shares of Common Stock issued | 105,232,933 | 74,786,327 | ||
Less: Founders shares in escrow | (5,015,898) | (5,015,898) | ||
Total Shares of Common Stock outstanding for earnings (loss) per share computation (See Note 17) | 100,217,035 | |||
PIPE investors | ||||
Business acquisition | ||||
Total Outstanding Shares of Common Stock issued | 8,000,000 | |||
Platinum Eagle And PIPE Investor | ||||
Business acquisition | ||||
Total Outstanding Shares of Common Stock issued | 30,446,606 | |||
Algeco Sellers | ||||
Business acquisition | ||||
Shares issued to the Sellers | 74,786,327 | |||
Founder Shares | ||||
Business acquisition | ||||
Total Outstanding Shares of Common Stock issued | 8,050,000 | |||
Former Director Shares | ||||
Business acquisition | ||||
Total Outstanding Shares of Common Stock issued | 75,000 | |||
Class A ordinary share | ||||
Business acquisition | ||||
Total Outstanding Shares of Common Stock Outstanding | 32,500,000 | 14,321,606 | ||
Less: Redemption of Platinum Eagle Class A Shares | (18,178,394) | |||
Class A ordinary share | Target Parent and Arrow Parent | ||||
Business acquisition | ||||
Less: Redemption of Platinum Eagle Class A Shares | (18,178,394) |
Business Combinations - Other i
Business Combinations - Other information (Details) - Selling, General and Administrative Expenses $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Business Acquisition [Line Items] | |
Payment of Transaction Bonus | $ 28.5 |
Transaction fees | 8 |
Loans to officers forgiven amount | $ 1.6 |
Business Combination - Earnout
Business Combination - Earnout Agreement (Details) - $ / shares | Mar. 15, 2019 | Jun. 30, 2019 |
Common shares placed into escrow | 5,015,898 | 5,015,898 |
Scenario if share price exceeds $12.50 | ||
Period after business combination to release shares from escrow account | 3 years | |
Share price | $ 12.50 | |
Number of trading days to monitor share price to release shares from escrow account | 20 days | |
Number of consecutive trading days to monitor share price to release shares from escrow account | 30 days | |
Percentage of founder shares to be released from escrow account | 50.00% | |
Scenario if share price exceeds $15.00 | ||
Period after business combination to release shares from escrow account | 3 years | |
Share price | $ 15 | |
Number of trading days to monitor share price to release shares from escrow account | 20 days | |
Number of consecutive trading days to monitor share price to release shares from escrow account | 30 days | |
Percentage of founder shares to be released from escrow account | 50.00% |
Acquisitions (Details)
Acquisitions (Details) $ in Thousands | Jun. 19, 2019USD ($)item | Sep. 07, 2018USD ($) |
Superior | ||
Business acquisition | ||
Number of workforce communities | item | 3 | |
Purchase price | $ 30,000 | |
Number of location being serviced prior to acquisition | item | 2 | |
Number of beds leased after acqusition | item | 140 | |
Bidco | Signor | ||
Business acquisition | ||
Ownership interest acquired | 100.00% | |
Aggregate purchase price | $ 201,500 | |
Cash, cash equivalents and restricted cash | 15,536 | |
Working capital true-up adjustment | $ 1,200 |
Acquisitions - Preliminary allo
Acquisitions - Preliminary allocation of total purchase price (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 19, 2019 | Dec. 31, 2018 | Sep. 07, 2018 |
Allocation of total purchase price to net assets acquired and liabilities assumed | ||||
Goodwill | $ 41,171 | $ 34,180 | ||
Superior | ||||
Allocation of total purchase price to net assets acquired and liabilities assumed | ||||
Property and equipment | $ 18,009 | |||
Goodwill | 6,991 | |||
Customer relationships | 5,000 | |||
Total assets acquired | $ 30,000 | |||
Bidco | Signor | ||||
Allocation of total purchase price to net assets acquired and liabilities assumed | ||||
Cash, cash equivalents and restricted cash | $ 15,536 | |||
Accounts receivable | 13,008 | |||
Property and equipment | 79,026 | |||
Other current assets | 581 | |||
Goodwill | 26,115 | |||
Customer relationships | 96,225 | |||
Total assets acquired | 230,491 | |||
Accounts payable | (3,678) | |||
Accrued expenses | (9,051) | |||
Capital lease liability and note payable | (490) | |||
Unearned revenue | 201 | |||
Total liabilities assumed | (13,420) | |||
Net assets acquired | $ 217,071 |
Acquisitions - Other informatio
Acquisitions - Other information (Details) - Bidco - Signor $ in Millions | Sep. 07, 2018USD ($) |
Business acquisition | |
Contractual cash flows not expected to be collected | $ 0.7 |
Estimated useful lives | 9 years |
Acquisitions - Pro forma inform
Acquisitions - Pro forma information and acquisition cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Jun. 19, 2019 | |
Pro forma information | ||||||
Revenue | $ 81,358 | $ 45,476 | $ 163,340 | $ 84,122 | ||
Income before income taxes | 14,701 | 6,251 | (1,127) | 1,131 | ||
Signor | ||||||
Pro forma information | ||||||
Revenue, if acquired beginning of the year | 68,735 | 128,406 | ||||
Income before taxes, if acquired beginning of the year | 15,005 | 11,039 | ||||
Revenue | 22,900 | 46,200 | ||||
Income before income taxes | 5,000 | 9,400 | ||||
Acquisition related cost | $ 5,200 | |||||
Superior | ||||||
Pro forma information | ||||||
Revenue, if acquired beginning of the year | 85,463 | 46,561 | 168,089 | 86,067 | ||
Income before taxes, if acquired beginning of the year | 16,738 | $ 5,922 | 1,378 | $ 622 | ||
Revenue | 400 | 400 | ||||
Income before income taxes | 200 | 200 | ||||
Acquisition related cost | $ 300 | $ 300 | ||||
Goodwill expected to be deductible for tax purposes | $ 6,900 |
Specialty Rental Assets, Net (D
Specialty Rental Assets, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Specialty rental assets | |||||
Less: accumulated depreciation | $ (176,407) | $ (176,407) | $ (156,955) | ||
Specialty rental assets, net | 339,302 | 339,302 | 293,559 | ||
Depreciation of specialty rental assets | 9,960 | $ 6,792 | 19,861 | $ 13,395 | |
Specialty rental assets | |||||
Specialty rental assets | |||||
Specialty rental assets, gross | 479,101 | 479,101 | 432,158 | ||
Construction-in-process | |||||
Specialty rental assets | |||||
Specialty rental assets, gross | $ 36,608 | $ 36,608 | $ 18,356 |
Other Property, Plant and Equ_3
Other Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Other property, plant and equipment | |||||
Other property, plant and equipment, gross | $ 21,039 | $ 21,039 | $ 19,903 | ||
Less: accumulated depreciation | (1,667) | (1,667) | (1,021) | ||
Property, Plant and Equipment, Other, Net, Total | 19,372 | 19,372 | 18,882 | ||
Depreciation | 20,385 | $ 13,733 | |||
Land | |||||
Other property, plant and equipment | |||||
Other property, plant and equipment, gross | 17,134 | 17,134 | 16,245 | ||
Land | Signor | |||||
Other property, plant and equipment | |||||
Property, Plant and Equipment, Other, Net, Total | 7,600 | 7,600 | 7,600 | ||
Buildings and leasehold improvements | |||||
Other property, plant and equipment | |||||
Other property, plant and equipment, gross | 964 | 964 | 908 | ||
Machinery and office equipment | |||||
Other property, plant and equipment | |||||
Other property, plant and equipment, gross | 1,138 | 1,138 | 1,083 | ||
Software and other | |||||
Other property, plant and equipment | |||||
Other property, plant and equipment, gross | 1,803 | 1,803 | $ 1,667 | ||
Property, Plant and Equipment Other Types | |||||
Other property, plant and equipment | |||||
Depreciation | $ 300 | $ 300 | $ 700 | $ 300 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets, net - Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Goodwill | ||
Goodwill, Beginning Balance | $ 34,180 | |
Goodwill, Ending Balance | 41,171 | $ 34,180 |
Permian Basin | Permian Basin | ||
Goodwill | ||
Goodwill, Beginning Balance | 34,180 | 8,065 |
Goodwill, Ending Balance | 41,171 | 34,180 |
Permian Basin | Permian Basin | Signor | ||
Goodwill | ||
Goodwill acquired | $ 26,115 | |
Permian Basin | Permian Basin | Superior | ||
Goodwill | ||
Goodwill acquired | $ 6,991 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets, net - Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Intangible assets subject to amortization | |||
Gross Carrying Amount | $ 144,320 | $ 139,320 | |
Accumulated Amortization | (35,392) | (28,337) | |
Net Book Value | 108,928 | 110,983 | |
Total intangible assets other than goodwill | |||
Gross Carrying Amount | 160,720 | 155,720 | |
Net Book Value | 125,328 | 127,383 | |
Aggregate amortization expense of intangible assets | 7,055 | $ 2,068 | |
Tradenames | |||
Indefinite lived assets: | |||
Net Book Value | 16,400 | 16,400 | |
Total intangible assets other than goodwill | |||
Gross Carrying Amount | $ 16,400 | $ 16,400 | |
Customer relationships | |||
Intangible assets subject to amortization | |||
Weighted average remaining lives | 8 years 1 month 6 days | 8 years 3 months 18 days | |
Gross Carrying Amount | $ 132,920 | $ 127,920 | |
Accumulated Amortization | (23,992) | (16,937) | |
Net Book Value | 108,928 | 110,983 | |
Non-compete Agreements | |||
Intangible assets subject to amortization | |||
Gross Carrying Amount | 11,400 | 11,400 | |
Accumulated Amortization | $ (11,400) | $ (11,400) |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets, net - Future Amortization Expense (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Estimated aggregate amortization expense: | ||
Rest of 2019 | $ 7,425 | |
2020 | 14,814 | |
2021 | 14,814 | |
2022 | 13,461 | |
2023 | 13,039 | |
Thereafter | 45,375 | |
Finite-Lived Intangible Assets, Net, Total | $ 108,928 | $ 110,983 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Accrued Liabilities | ||
Accrued expenses | $ 4,501 | $ 9,104 |
Employee accrued compensation expense | 4,257 | 5,774 |
Other accrued liabilities | 9,650 | 4,844 |
Accrued interest on debt | 9,664 | 244 |
Accrued interest due affiliates | 3,334 | |
Total accrued liabilities | $ 28,072 | $ 23,300 |
Notes Due from Affiliates (Deta
Notes Due from Affiliates (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Notes Due from Affiliates | ||
Interest income | $ 0 | $ 2.3 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Mar. 15, 2019 | Jun. 30, 2019 |
Debt | ||
Unamortized Original Issue Discount | $ 3,154 | |
Unamortized Deferred Financing Costs | 15,607 | |
Amortization | $ 147 | |
Minimum | ||
Debt | ||
Period for prior written notice to trustee for redemption | 20 days | |
Senior Secured Notes 2024 | ||
Debt | ||
Aggregate principal amount | $ 340,000 | $ 340,000 |
Interest rate (as a percent) | 9.50% | |
Unamortized Original Issue Discount | $ 3,300 | 3,154 |
Unamortized Deferred Financing Costs | $ 16,300 | $ 15,607 |
Senior Secured Notes 2024 | Minimum | ||
Debt | ||
Period for prior written notice to holders for redemption | 15 days | |
Senior Secured Notes 2024 | Maximum | ||
Debt | ||
Period for prior written notice to holders for redemption | 60 days | |
Prior to March 15, 2021 with redemption price equal to 100% | Senior Secured Notes 2024 | ||
Debt | ||
Maximum percentage of principal amount of notes redeemed | 1.00% | |
Redemption price | 100.00% | |
Treasury rate - basis points | 50.00% | |
Prior to March 15, 2021 with redemption price equal to 109.5% | Senior Secured Notes 2024 | ||
Debt | ||
Maximum percentage of principal amount of notes redeemed | 40.00% | |
Redemption price | 109.50% | |
Twelve-month period commencing on the issue date and prior to March 15, 2021 | Senior Secured Notes 2024 | ||
Debt | ||
Maximum percentage of principal amount of notes redeemed | 10.00% | |
Redemption price | 103.00% | |
2021 | Senior Secured Notes 2024 | ||
Debt | ||
Redemption price | 104.75% | |
2022 | Senior Secured Notes 2024 | ||
Debt | ||
Redemption price | 102.375% | |
2023 and thereafter | Senior Secured Notes 2024 | ||
Debt | ||
Redemption price | 100.00% |
Debt - Capital Lease and Other
Debt - Capital Lease and Other Financing Obligations (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Capital Lease and Other Financing Obligations | ||
Equipment financing arrangement | $ 1.5 | |
Capital leases | $ 0.6 | |
Equipment | ||
Capital Lease and Other Financing Obligations | ||
Interest rate (as a percent) | 7.43% | |
Commercial-use vehicles | Minimum | ||
Capital Lease and Other Financing Obligations | ||
Interest rate (as a percent) | 3.30% | |
Commercial-use vehicles | Maximum | ||
Capital Lease and Other Financing Obligations | ||
Interest rate (as a percent) | 20.70% |
Debt - ABL Facility (Details)
Debt - ABL Facility (Details) - USD ($) $ in Thousands | Mar. 15, 2019 | Jun. 30, 2019 |
ABL Facility | ||
Proceeds from line of credit | $ 77,240 | |
New ABL facility | ||
ABL Facility | ||
Borrowing capacity | $ 125,000 | |
Proceeds from line of credit | $ 40,000 | $ 40,000 |
Borrowing base, line cap (as a percent) | 12.50% | |
Applicable margin - one step-down (as a percent) | 0.25% | |
Applicable margin - one step-up (as a percent) | 0.25% | |
Percentage of net book value of borrowers' eligible accounts receivables | 85.00% | |
Percentage of net book value of borrowers' eligible rental equipment | 95.00% | |
Percentage of net orderly liquidation value of borrowers' eligible rental equipment | 85.00% | |
Options to increase commitments | $ 75,000 | |
Percentage of voting equity interests in non-US restricted subsidiary pledge | 65.00% | |
Minimum fixed charge coverage ratio | 100.00% | |
Maximum total net leverage ratio | 400.00% | |
Borrowing base | $ 15,625 | |
Line cap (as a percent) | 12.50% | |
New ABL facility | Libor | ||
ABL Facility | ||
Variable rate (as a percent) | 2.50% | |
New ABL facility | Base rate | ||
ABL Facility | ||
Variable rate (as a percent) | 1.50% | |
Standby letters of credit | ||
ABL Facility | ||
Borrowing capacity | $ 15,000 | |
Swingline | ||
ABL Facility | ||
Borrowing capacity | $ 15,000 |
Debt - Carrying Value of Debt O
Debt - Carrying Value of Debt Outstanding (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 15, 2019 | Dec. 31, 2018 |
Carrying value of debt outstanding | |||
Capital lease and other financing obligations | $ 600 | ||
Long-term debt, net | 410,570 | ||
Principal amount | 340,000 | ||
Less: unamortized original issue discount | (3,154) | ||
Less: unamortized term loan deferred financing costs | (15,607) | ||
Total debt, net | 391,809 | $ 23,010 | |
Less: current maturities | (570) | (2,446) | |
Total long-term debt | 391,239 | 20,564 | |
New ABL facility | |||
Carrying value of debt outstanding | |||
Long-term debt, net | 70,000 | 20,550 | |
Less: unamortized term loan deferred financing costs | (4,100) | ||
Capital lease and other financing obligations | |||
Carrying value of debt outstanding | |||
Capital lease and other financing obligations | 570 | $ 2,460 | |
Senior Secured Notes 2024 | |||
Carrying value of debt outstanding | |||
Long-term debt, net | 321,239 | ||
Principal amount | 340,000 | ||
Less: unamortized original issue discount | (3,154) | $ (3,300) | |
Less: unamortized term loan deferred financing costs | $ (15,607) | $ (16,300) |
Debt - Interest Expense and Def
Debt - Interest Expense and Deferred Financing Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Mar. 15, 2019 | Dec. 31, 2018 | |
Debt | ||||||
Interest incurred and expensed on debt | $ 9,800 | $ 5,600 | $ 12,500 | $ 1,200 | ||
Accrued interest | 9,700 | 9,700 | $ 300 | |||
Debt issuance costs | 15,607 | 15,607 | ||||
Amortization of deferred financing costs | 1,250 | |||||
Gain (Loss) on Extinguishment of Debt | (907) | |||||
Historical ABL facility | ||||||
Debt | ||||||
Amortization of deferred financing costs | 100 | 0 | 300 | 0 | ||
Accumulated amortization of deferred financing costs | 900 | 900 | 600 | |||
Gain (Loss) on Extinguishment of Debt | 900 | |||||
Senior Secured Notes 2024 | ||||||
Debt | ||||||
Interest incurred and expensed on debt | 700 | |||||
Debt issuance costs | 15,607 | 15,607 | $ 16,300 | |||
Unamortized debt discount | $ 3,300 | |||||
Amortization of Debt Issuance Costs and Discounts | 900 | |||||
New ABL facility | ||||||
Debt | ||||||
Debt issuance costs | 4,100 | 4,100 | ||||
Amortization of deferred financing costs | 200 | $ 0 | 200 | $ 0 | ||
Accumulated amortization of deferred financing costs | 200 | 200 | $ 0 | |||
New ABL facility | Historical ABL facility | ||||||
Debt | ||||||
Debt issuance costs | $ 1,800 | $ 1,800 |
Debt - Future Maturities (Detai
Debt - Future Maturities (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Future maturities of long term debt | |
Rest of 2019 | $ 570 |
2023 | 70,000 |
Thereafter | 340,000 |
Long-term debt, net | $ 410,570 |
Notes Due to Affiliates (Detail
Notes Due to Affiliates (Details) - USD ($) $ in Thousands | Mar. 14, 2019 | Dec. 14, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Notes due to affiliates | |||||||
Interest expense associated with notes due to affiliates | $ 0 | $ 5,300 | $ 1,900 | $ 10,600 | |||
Total cash received from affiliates | 39,107 | ||||||
Payment of affiliate amounts | 3,762 | ||||||
Note due to affiliates | $ 108,047 | ||||||
Arrow holdings S.a.r.l. | |||||||
Notes due to affiliates | |||||||
Total cash received from affiliates | $ 39,107 | ||||||
Note due to affiliates | $ 108,047 | ||||||
Arrow holdings S.a.r.l. | Libor | |||||||
Notes due to affiliates | |||||||
Variable rate (as a percent) | 4.00% | ||||||
Target Parent | |||||||
Notes due to affiliates | |||||||
Repayment from a related party | 100.00% | ||||||
Cash collected for repayments of debt | $ 61,000 | ||||||
Contribution from members of holdings to holding | $ 217,000 | ||||||
Total cash received from affiliates | 278,000 | ||||||
Payment of affiliate amounts | $ 278,000 | ||||||
Signor | |||||||
Notes due to affiliates | |||||||
Payment of affiliate amounts | $ 9,000 | ||||||
Payment of accrued interest | 5,300 | ||||||
Payment of principal amount | 3,700 | ||||||
Note due to affiliates | $ 104,300 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Taxes | ||||
Income Tax Expense (Benefit) | $ 4,121 | $ 1,827 | $ 2,272 | $ 901 |
Effective tax rate | 28.04% | 29.23% | (201.60%) | 79.66% |
Exculding the impact of Effective tax rate | 24.12% | 26.90% |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Carrying amounts and fair values of financial assets and liabilities | ||
Transfers of financials assets form level 1 to level 2 | $ 0 | $ 0 |
Transfers of financials assets form level 2 to level 1 | 0 | 0 |
Transfers of financials assets in and out of level 3 | 0 | 0 |
Transfers of financials liabilities form level 1 to level 2 | 0 | 0 |
Transfers of financials liabilities form level 2 to level 1 | 0 | 0 |
Transfers of financials liabilities in and out of level 3 | 0 | 0 |
Carrying amount | New ABL facility | ||
Carrying amounts and fair values of financial assets and liabilities | ||
Debt Instrument, Fair Value Disclosure, | (70,000) | (20,550) |
Fair value | New ABL facility | Level 2 | ||
Carrying amounts and fair values of financial assets and liabilities | ||
Debt Instrument, Fair Value Disclosure, | (70,000) | (20,550) |
Arrow holdings S.a.r.l. | Carrying amount | ||
Carrying amounts and fair values of financial assets and liabilities | ||
Notes due from affiliates | 638 | |
Notes due to affiliates | (108,047) | |
Arrow holdings S.a.r.l. | Fair value | Level 2 | ||
Carrying amounts and fair values of financial assets and liabilities | ||
Notes due from affiliates | 638 | |
Notes due to affiliates | $ (108,047) | |
Senior Secured Notes 2024 | Carrying amount | ||
Carrying amounts and fair values of financial assets and liabilities | ||
Debt Instrument, Fair Value Disclosure, | (321,239) | |
Senior Secured Notes 2024 | Fair value | Level 1 | ||
Carrying amounts and fair values of financial assets and liabilities | ||
Debt Instrument, Fair Value Disclosure, | $ (343,400) |
Business Restructuring (Details
Business Restructuring (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Restructuring Reserve [Roll Forward] | ||||
Balance at the beginning | $ 1,462 | $ 2,395 | ||
Charges during the period | $ 0 | $ 1,158 | 168 | 7,414 |
Cash payments during the year | (1,630) | (8,338) | ||
Balance at the end | $ 1,471 | $ 1,471 | ||
Expected to be incurred | $ 0 | $ 0 |
Involuntary Conversion (Details
Involuntary Conversion (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2017 | |
Unusual or Infrequent Item, or Both [Line Items] | |||
Insurance proceeds received | $ 362 | $ 3,015 | |
Gain on involuntary conversion | (11) | 1,250 | |
NORTH DAKOTA | |||
Unusual or Infrequent Item, or Both [Line Items] | |||
Specialty rental assets written down | $ 1,800 | ||
Insurance proceeds received | 300 | 3,000 | |
Gain on involuntary conversion | $ 300 | $ 1,200 |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Sep. 06, 2018 | |
Related parties | |||||||
Note due to affiliates | $ 108,047 | ||||||
Accrued | $ 200 | $ 200 | $ 200 | $ 200 | $ 200 | ||
Historical ABL facility | |||||||
Related parties | |||||||
Amount outstanding | 20,600 | ||||||
Selling, General and Administrative Expenses | |||||||
Related parties | |||||||
Commission | 200 | 200 | $ 400 | 400 | |||
Target Parent | Historical ABL facility | |||||||
Related parties | |||||||
Amount outstanding | 151,900 | ||||||
Executive Officer | |||||||
Related parties | |||||||
Forgiveness Period | 4 years | ||||||
Due from Related Parties, Total | 0 | 0 | $ 0 | ||||
Amounts outstanding forgiven | 1,400 | 1,600 | |||||
Executive Officer | Selling, General and Administrative Expenses | |||||||
Related parties | |||||||
Compensation expense recognized | 1,600 | 300 | |||||
Arrow holdings S.a.r.l. | |||||||
Related parties | |||||||
Receipt on due from affiliate | 600 | ||||||
Note due to affiliates | 108,047 | ||||||
Arrow holdings S.a.r.l. | Target Parent | |||||||
Related parties | |||||||
Amounts due from affiliates | $ 0 | 0 | 0 | $ 600 | |||
Rent expense | 0 | $ 200 | 0 | $ 300 | |||
Leased buildings purchased | 1,600 | ||||||
Arrow holdings S.a.r.l. | Signor Parent | |||||||
Related parties | |||||||
Note due to affiliates | $ 108,000 | ||||||
Algeco Global | |||||||
Related parties | |||||||
Compensation percentage | 100.00% | ||||||
Reimbursement of employee compensation | $ 600 | $ 600 |
Earnings (Loss) per Share (Deta
Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Mar. 15, 2019 | |
Numerator | |||||||
Net income (loss) attributable to Common Stockholders | $ 10,580 | $ (13,979) | $ 4,424 | $ (4,194) | $ (3,399) | $ 230 | |
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | |||||||
Weighted average number of shares outstanding - basic and diluted (in shares) | 100,217,035 | 25,686,327 | 89,960,451 | 25,686,327 | |||
Net loss per share | $ 0.11 | $ 0.17 | $ (0.04) | $ 0.01 | |||
Common shares placed into escrow | 5,015,898 | 5,015,898 | 5,015,898 | ||||
Founder Shares | |||||||
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | |||||||
Shares issued to the Sellers | 8,050,000 | ||||||
Founder Shares | |||||||
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | |||||||
Excluded from computation of loss per share | 5,015,898 | ||||||
Warrant | |||||||
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | |||||||
Excluded from computation of loss per share | 16,166,650 |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 17, 2018 | Jun. 30, 2019 | Mar. 15, 2019 | Mar. 14, 2019 | Dec. 31, 2018 |
Common Stock | |||||
Common stock shares issued | 105,232,933 | 74,786,327 | |||
Common stock, Number of share outstanding | 105,232,933 | 74,786,327 | |||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||
Common shares placed into escrow | 5,015,898 | 5,015,898 | |||
Preferred Shares | |||||
Preferred stock, shares authorized | 1,000,000 | ||||
Preferred stock, par value | $ 0.0001 | ||||
Preferred stock, shares issued | 0 | ||||
Preferred stock, shares outstanding | 0 | ||||
Warrants | |||||
Warrants to issue shares of common stock | 16,166,650 | ||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||
Number of fractional shares issued upon exercise of warrants | 0 | ||||
Private placement | |||||
Warrants | |||||
Warrants to issue shares of common stock | 5,333,334 | ||||
Aggregate purchase price per warrant | $ 1.50 | ||||
Aggregate purchase price | $ 8 | ||||
Number of stock issued for each warrant | 1 | ||||
Share price | $ 11.50 | ||||
Warrant exercisable term | 30 days | ||||
Public Offering | |||||
Warrants | |||||
Share price | $ 11.50 | ||||
Warrant exercisable term | 30 years | ||||
Number of units sold | 32,500,000 | ||||
Price per unit | $ 10 | ||||
Number of warrants per unit | 0.33 | ||||
Over allotment | |||||
Warrants | |||||
Number of units sold | 2,500,000 | ||||
Class A ordinary share | |||||
Common Stock | |||||
Common stock, Number of share outstanding | 14,321,606 | 32,500,000 | |||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||
Warrants | |||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||
Class A ordinary share | Public Offering | |||||
Warrants | |||||
Number of shares per unit | 1 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | May 21, 2019installmentitemshares | Jun. 30, 2019$ / sharesshares | Jun. 30, 2019installment$ / sharesshares | Mar. 15, 2019shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares reserved for issuance | 4,000,000 | |||
options forfeited | 0 | 0 | ||
Time-based restricted stock unit | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Right to buy number of shares upon vesting | 1 | |||
Number of equal installments | installment | 6 | |||
Options | ||||
Granted (in shares) | 30,000 | 324,588 | ||
Outstanding Options at end of period (in shares) | 324,588 | 324,588 | ||
Weighted Average Grant Date Fair Value per Share | ||||
Granted (in dollars per share) | $ / shares | $ 10.83 | |||
Outstanding Options at end of period (in dollars per share) | $ / shares | $ 10.83 | $ 10.83 | ||
Director | Time-based restricted stock unit | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period (in years) | 1 year | |||
Granted (in shares) | 81,967 | |||
Nondirector | Time-based restricted stock unit | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of equal installments | installment | 4 | |||
Number of anniversaries the awards vest | item | 4 | |||
Granted (in shares) | 212,621 |
Stock-Based Compensation - Opti
Stock-Based Compensation - Options to Purchase Common Shares (Details) - Time-based stock option awards | May 21, 2019installmentitem$ / sharesshares | Jun. 30, 2019shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in shares) | shares | 482,792 | 482,792 |
Right to buy number of shares upon vesting | shares | 1 | |
Per value | $ / shares | $ 0.0001 | |
Share price | $ / shares | $ 10.83 | |
Expiration Period (in years) | 10 years | |
Nondirector | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of equal installments | installment | 4 | |
Number of anniversaries the awards vest | item | 4 |
Stock-Based Compensation - Chan
Stock-Based Compensation - Changes in stock options (Details) - Time-based stock option awards - $ / shares | May 21, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Options | |||
Granted (in shares) | 482,792 | 482,792 | |
Outstanding Options at end of period (in shares) | 482,792 | ||
Exercisable Options at end of period (in shares) | 0 | 0 | |
Weighted Average Exercise Price per Share | |||
Granted (in dollars per share) | $ 10.83 | ||
Outstanding Options at end of period (in dollars per share) | $ 10.83 | ||
Weighted Average Contractual Life (Years) | |||
Granted (in years) | 9 years 10 months 24 days | ||
Outstanding Options (in years) | 9 years 10 months 24 days |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions (Details) - $ / shares | May 21, 2019 | Jun. 30, 2019 | Jun. 30, 2019 |
Assumptions: | |||
Forfeited (in shares) | 0 | 0 | |
Time-based stock option awards | |||
Assumptions: | |||
Share price | $ 10.83 | ||
Expected stock volatility | 25.94% | ||
Expected dividend yield | 0.00% | ||
Expected term (years) | 6 years 3 months | ||
Risk-free interest rate | 2.26% | ||
Exercise price | $ 10.83 | $ 10.83 | |
Granted (in shares) | 482,792 | 482,792 | |
Weighted-average grant date fair value | $ 3.34 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Time-based restricted stock unit | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based Compensation Expense | $ 0.1 | $ 0 | $ 0.1 | $ 0 |
Unrecognized compensation expense | 3.4 | $ 3.4 | ||
Period for unrecognized compensation expense expected to be recognized | 3 years 9 months 18 days | |||
Time-based stock option awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based Compensation Expense | 0.1 | 0 | $ 0.1 | 0 |
Unrecognized compensation expense | 1.6 | $ 1.6 | ||
Period for unrecognized compensation expense expected to be recognized | 3 years 9 months 18 days | |||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Associated tax benefit from stock-based compensation expense | 0.1 | 0.1 | $ 0.1 | 0.1 |
Maximum | Time-based restricted stock unit | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Associated tax benefit from stock-based compensation expense | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 |
Retirement plans (Details)
Retirement plans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Retirement plans | ||||
Minimum percentage of annual eligible compensation by the participants | 1.00% | |||
Maximum percentage of annual eligible compensation by the participants | 90.00% | |||
Percentage of contribution matched | 6.00% | |||
Percentage of contribution, matched 100% by employer | 3.00% | |||
Employer match of employee contributions of first 3% of contributions | 100.00% | |||
Percentage of contribution, matched 50% by employer | 3.00% | |||
Employer match of employee contributions of next 3% of contributions | 50.00% | |||
Vesting percentage | 20.00% | |||
Vesting period | 5 years | |||
Contribution expenses | $ 0.2 | $ 0.1 | $ 0.5 | $ 0.1 |
Business Segments (Details)
Business Segments (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)segment | Jun. 30, 2018USD ($)segment | Dec. 31, 2018USD ($) | |
Business segments | |||||
Number of Reportable Segments | segment | 3 | 3 | |||
Revenue | $ 81,358 | $ 45,476 | $ 163,340 | $ 84,122 | |
Adjusted gross profit | 47,603 | 28,289 | 93,683 | 51,092 | |
Total assets | 608,729 | 608,729 | $ 565,032 | ||
Operating Segments | |||||
Business segments | |||||
Revenue | 81,358 | 45,476 | 163,340 | 84,122 | |
Adjusted gross profit | 49,132 | 28,534 | 96,787 | 51,240 | |
Total assets | 399,845 | 399,845 | 346,621 | ||
Permian Basin | Operating Segments | |||||
Business segments | |||||
Revenue | 52,037 | 20,569 | 104,748 | 36,232 | |
Adjusted gross profit | 32,588 | 13,634 | 65,182 | 23,092 | |
Capital expenditures | 26,170 | 18,223 | 44,867 | 42,005 | |
Total assets | 291,027 | 291,027 | 234,368 | ||
Bakken Basin | Operating Segments | |||||
Business segments | |||||
Revenue | 5,738 | 7,061 | 10,511 | 12,631 | |
Adjusted gross profit | 2,698 | 2,872 | 4,333 | 4,703 | |
Capital expenditures | 1,867 | 77 | 3,160 | ||
Total assets | 61,663 | 61,663 | 64,770 | ||
Government | Operating Segments | |||||
Business segments | |||||
Revenue | 16,729 | 16,634 | 33,285 | 33,155 | |
Adjusted gross profit | 12,317 | 11,783 | 24,168 | 23,297 | |
Capital expenditures | 40 | 78 | 76 | 462 | |
Total assets | 39,704 | 39,704 | 43,994 | ||
Other assets | |||||
Business segments | |||||
Total assets | 8,070 | 8,070 | 3,489 | ||
Other assets | Operating Segments | |||||
Business segments | |||||
Revenue | 6,854 | 1,212 | 14,796 | 2,104 | |
Adjusted gross profit | 1,529 | 245 | 3,104 | 148 | |
Capital expenditures | 935 | $ 224 | 3,962 | $ 531 | |
Total assets | $ 7,451 | $ 7,451 | $ 3,489 |
Business Segments - Reconciliat
Business Segments - Reconciliation of total segment adjusted gross profit to total combined income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Business Segments | ||||
Total reportable segment adjusted gross profit | $ 47,603 | $ 28,289 | $ 93,683 | $ 51,092 |
Other adjusted gross profit | 1,529 | 245 | 3,104 | 148 |
Depreciation and amortization | (13,776) | (7,904) | (27,440) | (15,797) |
Selling, general and administrative expenses | (10,925) | (7,998) | (55,676) | (18,180) |
Restructuring costs | 0 | (1,158) | (168) | (7,414) |
Other income, net | 123 | 515 | 161 | 965 |
Currency losses, net | 68 | 68 | ||
Loss on extinguishment of debt | 907 | |||
Interest expense, net | (9,853) | (5,670) | (13,884) | (9,615) |
Income (loss) before income tax | $ 14,701 | $ 6,251 | $ (1,127) | $ 1,131 |
Business Segments - Reconcili_2
Business Segments - Reconciliation of total segment assets to total combined assets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 608,729 | $ 565,032 |
Restricted cash | 257 | 257 |
Total Reportable Segment Assets | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 391,775 | 343,132 |
Other assets | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 8,070 | 3,489 |
Other unallocated amounts | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 208,627 | $ 218,154 |
Business Segments - Unallocated
Business Segments - Unallocated assets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Total current assets | $ 66,103 | $ 74,986 |
Other intangible assets, net | 125,328 | 127,383 |
Deferred tax asset | 10,921 | 12,420 |
Deferred financing costs revolver, net | 5,471 | 2,865 |
Notes due from officers | 500 | |
Other non current assets | 804 | |
Total assets | 608,729 | 565,032 |
Other unallocated amounts | ||
Total current assets | 66,103 | 74,986 |
Other intangible assets, net | 125,328 | 127,383 |
Deferred tax asset | 10,921 | 12,420 |
Deferred financing costs revolver, net | 5,471 | 2,865 |
Notes due from officers | 500 | |
Other non current assets | 804 | |
Total assets | $ 208,627 | $ 218,154 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events - Pro Petro Services Inc $ in Millions | Jul. 01, 2019USD ($)roomitem |
Subsequent Events | |
Number of rooms | 168 |
Aggregate purchase price | $ | $ 5 |
Network Services and Lease Agreement | |
Subsequent Events | |
Number of rooms per night under agreement | 166 |
Agreement term | 1 year |
Number of Renewals | item | 3 |
Renewal Term | 1 year |