Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 21, 2020 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Entity Registrant Name | TARGET HOSPITALITY CORP. | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 102,406,268 | |
Entity Central Index Key | 0001712189 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 7,504 | $ 6,787 |
Accounts receivable, less allowance for doubtful accounts of $1,419 and $989, respectively | 49,258 | 48,483 |
Prepaid expenses and other assets | 5,557 | 4,649 |
Related party receivable | 276 | 876 |
Total current assets | 62,595 | 60,795 |
Restricted cash | 52 | 52 |
Specialty rental assets, net | 347,464 | 353,695 |
Other property, plant and equipment, net | 11,182 | 11,541 |
Goodwill | 41,038 | 41,038 |
Other intangible assets, net | 114,119 | 117,866 |
Deferred tax asset | 6,472 | 6,427 |
Deferred financing costs revolver, net | 4,373 | 4,688 |
Other non-current assets | 5,893 | 4,690 |
Total assets | 593,188 | 600,792 |
Current liabilities: | ||
Accounts payable | 11,007 | 7,793 |
Accrued liabilities | 18,776 | 35,330 |
Deferred revenue and customer deposits | 14,967 | 16,809 |
Current portion of capital lease and other financing obligations (Note 11) | 1,712 | 989 |
Total current liabilities | 46,462 | 60,921 |
Long-term debt (Note 10): | ||
Principal amount | 340,000 | 340,000 |
Less: unamortized original issue discount | (2,754) | (2,876) |
Less: unamortized term loan deferred financing costs | (13,278) | (13,866) |
Long-term debt, net | 323,968 | 323,258 |
Revolving credit facility (Note 10) | 85,000 | 80,000 |
Long-term capital lease and other financing obligations (Note 11) | 1,003 | 996 |
Deferred revenue and customer deposits | 5,993 | 9,390 |
Asset retirement obligations | 2,869 | 2,825 |
Total liabilities | 465,295 | 477,390 |
Commitments and contingencies (Note 14) | ||
Stockholders' equity: | ||
Common Stock, $0.0001 par, 380,000,000 authorized, 105,338,760 issued and 100,923,993 outstanding as of March 31, 2020 and 105,254,929 issued and 100,840,162 outstanding as of December 31, 2019. | 10 | 10 |
Common Stock in treasury at cost, 4,414,767 shares as of March 31, 2020 and December 31, 2019, respectively | (23,559) | (23,559) |
Additional paid-in-capital | 112,595 | 111,794 |
Accumulated other comprehensive loss | (2,669) | (2,558) |
Accumulated earnings | 41,516 | 37,715 |
Total stockholders' equity | 127,893 | 123,402 |
Total liabilities and stockholders' equity | 593,188 | 600,792 |
Senior Secured Notes 2024 | ||
Long-term debt (Note 10): | ||
Principal amount | 340,000 | $ 340,000 |
Less: unamortized original issue discount | (2,754) | |
Less: unamortized term loan deferred financing costs | (13,278) | |
New ABL Facility | ||
Long-term debt (Note 10): | ||
Less: unamortized term loan deferred financing costs | $ (3,900) |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Consolidated Balance Sheets | ||
Allowance for doubtful accounts | $ 1,419 | $ 989 |
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 | 105,338,760 | 105,254,929 |
Common stock, Number of share outstanding | 100,923,993 | 100,840,162 |
Treasury stock, shares | 4,414,767 | 4,414,767 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Revenue: | |||
Revenue | $ 55,072 | $ 68,252 | |
Revenue | 71,655 | $ 81,982 | |
Costs: | |||
Depreciation of specialty rental assets | 12,897 | 9,900 | 9,901 |
Gross profit | 27,147 | 37,754 | |
Selling, general and administrative | 9,990 | 44,752 | 44,752 |
Other depreciation and amortization | 4,116 | 3,763 | |
Restructuring costs | 0 | 168 | 168 |
Other income, net | (1,015) | (38) | (38) |
Operating income (loss) | 14,056 | (10,891) | |
Loss on extinguishment of debt | 907 | 907 | |
Interest expense , net | 10,022 | 4,031 | 4,031 |
Income (loss) before income tax | 4,034 | (15,829) | (15,829) |
Income tax expense (benefit) | 233 | (1,900) | (1,850) |
Net income (loss) | 3,801 | $ (13,979) | (13,979) |
Other comprehensive income | |||
Foreign currency translation | (111) | ||
Comprehensive income (loss) | $ 3,690 | $ (13,979) | |
Two Class Method: | |||
Weighted average number shares outstanding - basic and diluted | 95,849,854 | 79,589,905 | 79,589,905 |
Net income (loss) per share - basic and diluted | $ 0.04 | $ (0.18) | $ (0.18) |
Services | |||
Revenue: | |||
Revenue | $ 53,938 | $ 61,073 | |
Costs: | |||
Costs | 29,007 | 32,009 | |
Specialty rental | |||
Revenue: | |||
Revenue | 16,583 | 13,730 | |
Revenue | 16,600 | $ 13,700 | |
Costs: | |||
Costs | 2,604 | 2,318 | |
Construction fee | |||
Revenue: | |||
Revenue | $ 1,134 | $ 7,179 |
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 | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Earnings | Total |
Beginning Balances at Dec. 31, 2017 | $ 307,366 | $ (2,463) | $ 44,088 | $ 348,991 | ||||||||||
Recapitalization transaction | $ 7 | $ 319,968 | $ (307,366) | $ (12,609) | ||||||||||
Recapitalization transaction (in shares) | 74,786,327 | |||||||||||||
Ending Balances at Dec. 31, 2018 | $ 7 | $ 319,968 | $ (2,463) | $ 31,479 | $ 348,991 | |||||||||
Ending Balances (In shares) at Dec. 31, 2018 | 74,786,327 | |||||||||||||
Net income (loss) | (13,979) | (13,979) | ||||||||||||
Recapitalization transaction | $ 3 | 314,194 | 314,197 | |||||||||||
Recapitalization transaction (in shares) | 30,446,606 | |||||||||||||
Contribution | 39,107 | 39,107 | ||||||||||||
Recapitalization transaction - cash paid to Algeco Seller | (563,134) | (563,134) | ||||||||||||
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 | $ 7 | 319,968 | (2,463) | 31,479 | 348,991 | |||||||||
Beginning Balances (In Shares) at Dec. 31, 2018 | 74,786,327 | |||||||||||||
Net income (loss) | (13,979) | |||||||||||||
Ending Balances at Dec. 31, 2019 | $ 10 | $ (23,559) | 111,794 | (2,558) | 37,715 | 123,402 | ||||||||
Ending Balances (In shares) at Dec. 31, 2019 | 100,840,162 | 4,414,767 | ||||||||||||
Net income (loss) | 3,801 | 3,801 | ||||||||||||
Stock-based compensation | 884 | 884 | ||||||||||||
Stock-based compensation (in shares) | 83,831 | |||||||||||||
Shares used to settle payroll tax withholding | (83) | (83) | ||||||||||||
Cumulative translation adjustment | (111) | (111) | ||||||||||||
Ending Balances at Mar. 31, 2020 | $ 10 | $ (23,559) | $ 112,595 | $ (2,669) | $ 41,516 | $ 127,893 | ||||||||
Ending Balances (In shares) at Mar. 31, 2020 | 100,923,993 | 4,414,767 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 3,801 | $ (13,979) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 13,265 | 10,138 |
Amortization of intangible assets | 3,747 | 3,526 |
Accretion of asset retirement obligation | 44 | 54 |
Amortization of deferred financing costs | 904 | 315 |
Amortization of original issue discount | 122 | 21 |
Stock-based compensation expense | 884 | |
Officer loan compensation expense | 1,583 | |
Gain on involuntary conversio | (619) | |
Loss on extinguishment of debt | 907 | |
Deferred income taxes | (35) | (2,037) |
Provision for loss on receivables, net of recoveries | 530 | |
Changes in operating assets and liabilities | ||
Accounts receivable | (1,120) | 1,974 |
Related party receivable | 578 | |
Prepaid expenses and other assets | (949) | (422) |
Accounts payable and other accrued liabilities | (4,094) | (4,801) |
Deferred revenue and customer deposits | (5,239) | (3,825) |
Other non-current assets and liabilities | (1,268) | (199) |
Net cash provided by (used in) operating activities | 10,551 | (6,745) |
Cash flows from investing activities: | ||
Purchase of specialty rental assets | (10,751) | (14,623) |
Purchase of property, plant and equipment | (13) | (37) |
Receipt of insurance proceeds | 619 | |
Repayments from affiliates | 638 | |
Net cash used in investing activities | (10,145) | (14,022) |
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 | (3) | (1,475) |
Proceeds from borrowings on finance and capital lease obligations | 733 | |
Principal payments on borrowings from ABL | (22,500) | (27,790) |
Proceeds from borrowings on ABL | 27,500 | 47,240 |
Repayment of affiliate note | (3,762) | |
Contributions from affiliate | 39,107 | |
Recapitalization | 218,752 | |
Recapitalization - cash paid to Algeco Seller | (563,134) | |
Payment of deferred financing costs | (13,944) | |
Restricted shares surrendered to pay tax liabilities | (83) | |
Purchase of treasury stock | (5,318) | |
Net cash provided by financing activities | 329 | 31,693 |
Effect of exchange rate changes on cash and cash equivalents | (18) | |
Net increase in cash, cash equivalents and restricted cash | 717 | 10,926 |
Cash, cash equivalents and restricted cash - beginning of period | 6,839 | 12,451 |
Cash, cash equivalents and restricted cash - end of period | $ 7,556 | 23,377 |
Non-cash investing and financing activity: | ||
Non-cash change in accrued capital expenditures | (7,177) | |
Non-cash contribution from affiliate - forgiveness of affiliate note | 104,285 | |
Non-cash distribution to PEAC - liability transfer from PEAC, net | (8,840) | |
Non-cash change in accrued deferred financing costs | $ (6,424) |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Mar. 31, 2019 |
Reconciliation of cash, cash equivalents, and restricted cash to consolidated balance sheets: | ||
Cash and cash equivalents | $ 7,504 | $ 23,120 |
Restricted cash | 52 | 257 |
Total cash, cash cash equivalents, and restricted cash shown in the statement of cash flows | $ 7,556 | $ 23,377 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
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 and food services, maintenance, housekeeping, grounds-keeping, security, health and recreation services, overall workforce community 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 vennootschap (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. 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 Target Hospitality Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2020 or any future period. The accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, and the adjustments described as part of the Business Combination discussed in Note 3, necessary for a fair statement of financial position as of March 31, 2020, and results of operations for the three months ended March 31, 2020 and 2019, and cash flows for the three months ended March 31, 2020 and 2019. The consolidated balance sheet as of December 31, 2019, was derived from the audited consolidated balance sheets of Target Hospitality Corp. 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. Because performance obligations related to specialty rental and hospitality services are satisfied over time, the majority of our revenue is recognized on a daily basis, for each night a customer stays, at a contractual day rate. 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. Costs associated with contracts include 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 recognizes revenue associated with community construction using the percentage of completion method with progress towards completion measured using the cost-to-cost method as the basis to recognize revenue. Management believes this cost-to-cost method is the most appropriate measure of progress to the satisfaction of a performance obligation on the community construction. 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. 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). 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 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. In 2019, the FASB voted to delay the effective date for the new standard for financial statements issued for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021 for non-issuers (including EGCs). Early application continues to be allowed. 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 change 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. In 2019, the FASB voted to delay the effective date for the new standard for financial statements issued for reporting periods beginning after December 15, 2022 and interim periods within those reporting periods. The Company is currently evaluating the impact of this new standard on its consolidated financial statements. 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 prospectively on January 1, 2019 as a result of deciding to implement cloud computing systems during 2019. Such implementations began in 2019 and, as a result, the Company capitalized certain implementation costs during 2019. Such systems were placed into service beginning January of 2020 at which time the Company will began to amortize these capitalized costs over the period of the service arrangement into selling, general and administrative expenses. Refer to Note 8 for additional details. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes, eliminates certain exceptions and implements additional requirements which result in a more consistent application of ASC 740 Income Taxes. The new standard is effective for fiscal years beginning after December 15, 2020 for public entities and early adoption is permitted. We are currently in the process of evaluating the impact of adopting ASU 2019-12 on our consolidated financial statements. Recent Developments – CO VI D-19 and D isruption in Oil and Gas Industry On January 30, 2020, the World Health Organization declared an outbreak of a highly contagious form of an upper respiratory infection caused by the Coronavirus Disease 2019 (“COVID-19”) , a novel coronavirus strain commonly referred to as “coronavirus”. The global outbreak of COVID-19 and the declaration of a pandemic by the World Health Organization on March 11, 2020 presents new risks to the Company’s business. Further, in the first quarter of 2020, crude oil prices fell sharply, due to the spread of COVID-19 and actions by Saudi Arabia and Russia. The Company’s ability to operate and supply chain have not experienced material disruptions in the first quarter and the Company continues to work with suppliers to ensure there is no service disruption or shortage of critical products at our communities. the situation surrounding COVID-19 and the decrease in demand for oil and natural gas, and simultaneous oversupply remains fluid and the potential for a material impact on the Company increases the longer the virus impacts the level of economic activity in the United States and globally. The economic effects of this have led the Company to implement several cost containment measures primarily initiated in April of 2020, including salary reductions, reductions in workforce, furloughs, reduced discretionary spending and elimination of all non-essential travel. In addition to these measures, the Company has temporarily closed and consolidated several communities in the Permian Basin and in May of 2020, the Company temporarily closed all communities in the Bakken Basin. Additionally, as discussed in our subsequent events footnote to these financial statements, the Company has executed contract modifications with several customers in the oil and natural gas industry resulting in extended terms and reduced minimum contract commitments in 2020. These modifications utilize multi-year contract extensions to maintain contract value and provide the Company with greater visibility on long-term revenue and cash flow. This mutually beneficial approach balances average daily rates with contract term and positions the Company to take advantage of a more balanced market. There have been significant changes to the global economic situation and to public securities markets as a result of COVID-19. It is possible that these changes could cause changes to estimates as a result of the markets in which the Company operates, the price of the Company’s publicly traded equity and debt in comparison to the Company’s carrying value. Such changes to estimates could potentially result in impacts that would be material to the Company’s consolidated financial statements, particularly with respect to the fair value of the Company’s reporting units in relation to potential goodwill impairment, the fair value of long-lived and other intangible assets in relation to potential impairment and the allowance for doubtful accounts. See additional information regarding COVID-19 in “ Item 1A. Risk Factors ”. As a result of the impact of COVID-19 and the disruption in the oil and gas industry, we also concluded a trigger event had occurred and we tested our long-lived and intangible assets, including goodwill, for impairment. Based upon our impairment assessments, which utilized the Company’s current long-term projections, we determined the carrying amount of these assets were not impaired. Due to the uncertain and rapidly evolving nature of the conditions surrounding the COVID-19 pandemic as well as the decrease in demand for oil and natural gas, given that a significant portion of our customer base operates in the oil and gas industry, changes in economic outlook may change our long-term projections. Refer to Note 7 for additional information on our goodwill impairment testing and the related results. Additionally, in connection with COVID-19, on March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). The CARES Act, among other things, includes provisions relating to the 80 percent limitation of net operating loss and modifications to the business interest deduction limitations. We are currently evaluating how provisions in the CARES Act will impact our consolidated financial statements, but the CARES Act did not have a material impact on our provision for income taxes for the three months ended March 31, 2020 . |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Revenue | |
Revenue | 2. Revenue Total revenue under contracts recognized under Topic 606 was $55.1 million and $68.3 million for the three months ended March 31, 2020 and 2019, respectively, while $16.6 million and $13.7 million was specialty rental income subject to the guidance of ASC 840 for the three months ended March 31, 2020 and 2019, respectively. The following table disaggregates our revenue by our three reportable segments as well as the All Other category: Permian Basin, Bakken Basin, Government, and All Other for the dates indicated below: For the three months ended March 31, 2020 2019 Permian Basin Services income $ 43,286 $ 48,798 Total Permian Basin revenues 43,286 48,798 Bakken Basin Services income $ 4,185 $ 4,773 Total Bakken Basin revenues 4,185 4,773 Government Services income $ 5,854 $ 6,737 Total Government revenues 5,854 6,737 All Other Services income $ 613 $ 810 Construction fee income 1,134 7,134 Total All Other revenues 1,747 7,944 Total revenues $ 55,072 $ 68,252 As a result of the current market environment discussed in Note 1 “Summary of Significant Accounting Policies - Recent Developments – CO VI D-19 and D isruption in Oil and Gas Industry” , the Company considered the increased risk of delayed customer payments and payment defaults associated with customer liquidity issues and bankruptcies. The Company routinely monitors the financial stability of our customers, which involves a high degree of judgment in assessing customers’ historical time to pay, financial condition and various customer-specific factors. To date, there has been no significant deterioration in the collectability of our receivables, and we do not currently expect any, based on current known facts and circumstances. Thus, there has been no significant change in our allowance for doubtful accounts as of March 31, 2020. However, due to uncertainties around the continued impact of the COVID-19 global pandemic and decrease in demand for oil and natural gas as discussed in Note 1, our assessment could materially change in the future. Contract Assets and Liabilities We do not have any contract assets and we did not recognize any impairments of any contract assets or liabilities. Contract liabilities under Topic 606 primarily consist of deferred revenue that represent room nights that the customer has not used and may use in the future. Activity in the deferred revenue accounts as of the dates indicated below was as follows: For Three Months Ended March 31, 2020 2019 Balances at Beginning of the Period $ 26,199 $ 37,376 Additions to deferred revenue — 2,082 Revenue recognized (5,239) (5,907) Balances at End of the Period $ 20,960 $ 33,551 As of March 31, 2020, for contracts greater than one year, the following table discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue, and only represents revenue expected to be recognized from contracts where the price and quantity of the product or service are fixed (in thousands): For the Years Ended December 31, 2020 2021 2022 Thereafter Total Revenue expected to be recognized as of March 31, 2020 $ $ $ $ - $ The Company applied some of the practical expedients in Topic 606, including the “right to invoice” practical expedient in ASC 606-10-55-18, and does not disclose consideration for remaining performance obligations with an original expected duration of one year or less or for variable consideration related to unsatisfied (or partially unsatisfied) performance obligations. Due to the application of these practical expedients, the table above represents only a portion of the Company’s expected future consolidated revenues and it is not necessarily indicative of the expected trend in total revenues. |
Business Combination
Business Combination | 3 Months Ended |
Mar. 31, 2020 | |
Business Combination | |
Business Combination | 3. 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 three months ended March 31, 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 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 the 2024 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 three months ended March 31, 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 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 per share computation (See Note 16) 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 for the three months ended March 31, 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 three months ended March 31, 2019 as more fully discussed in Note 15. 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 | 3 Months Ended |
Mar. 31, 2020 | |
Acquisitions | |
Acquisitions | 4. Acquisitions 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, 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 10. 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 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: Property and equipment $ 18,342 Customer relationships 4,800 Goodwill 6,858 Total assets acquired $ 30,000 Intangible assets related to customer relationships represent the aggregate value of those relationships from existing arrangements and future operations on a look-through basis, considering the end customers. The intangible assets received are being amortized on a straight-line basis over an estimated useful life of nine years from the date of the business combination. The following unaudited pro forma information presents consolidated financial information as if Superior had been acquired as of January 1, 2019: Period Revenue Income before taxes 2019 pro forma from January 1, 2019 to March 31, 2019 $ 85,129 $ (13,289) Superior added $3.6 million and $1.6 million to our revenue and income before income taxes, respectively, for the three months ended March 31, 2020. 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, 2019. This pro forma information is not necessarily indicative of the Company’s results of operations had the acquisition been completed on January 1, 2019, 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 does not reflect additional revenue opportunities following the acquisition. In connection with this acquisition, the Company incurred approximately $0.4 million of acquisition-related costs and the supplemental pro-forma income before taxes was adjusted to include these acquisition-related costs. The 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 20. ProPetro On July 1, 2019, TLM 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. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible assets based on their estimated relative fair values, which resulted in the entire purchase price being allocated to property and equipment. |
Specialty Rental Assets, Net
Specialty Rental Assets, Net | 3 Months Ended |
Mar. 31, 2020 | |
Specialty Rental Assets, Net | |
Specialty Rental Assets, Net | 5. Specialty Rental Assets, Net Specialty rental assets, net at the dates indicated below consisted of the following: March 31, December 31, 2020 2019 Specialty rental assets $ 547,561 $ 545,399 Construction-in-process 13,176 8,672 Less: accumulated depreciation (213,273) (200,376) Specialty rental assets, net $ 347,464 $ 353,695 Depreciation expense related to specialty rental assets was $12.9 million and $9.9 million for the three months ended March 31, 2020 and 2019, respectively, and is included in depreciation of specialty rental assets in the consolidated statements of comprehensive income (loss). |
Other Property, Plant and Equip
Other Property, Plant and Equipment, Net | 3 Months Ended |
Mar. 31, 2020 | |
Other Property, Plant and Equipment, Net | |
Other Property, Plant and Equipment, Net | 6. Other Property, Plant and Equipment, Net Other property, plant and equipment, net at the dates indicated below, consisted of the following: March 31, December 31, 2020 2019 Land $ 9,155 $ 9,155 Buildings and leasehold improvements 978 978 Machinery and office equipment 1,903 1,903 Software and other 1,700 1,690 13,736 13,726 Less: accumulated depreciation (2,554) (2,185) Total other property, plant and equipment, net $ 11,182 $ 11,541 Depreciation expense related to other property, plant and equipment was approximately $0.3 million for the three months ended March 31, 2020 and 2019, respectively, and is included in other depreciation and amortization in the unaudited consolidated statements of comprehensive income. The March 31, 2020 and December 31, 2019 land amounts in the table above includes approximately $0.7 million of land which is currently not being used in the operations of the business. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets, net | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Other Intangible Assets, net | |
Goodwill and Other Intangible Assets, net | 7. Goodwill and Other Intangible Assets, net The financial statements reflect goodwill from previous acquisitions that is all 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, 2019 $ 34,180 Acquisition of Superior 6,858 Balance at December 31, 2019 41,038 Changes in Goodwill - Balance at March 31, 2020 $ 41,038 As a result of the global COVID-19 pandemic and the recent decrease in demand and oversupply of oil and natural gas during the first quarter of 2020 which impacted the trading price of our common stock, we identified a trigger event requiring us to assess our long-lived and intangibles assets for recoverability and perform a quantitative impairment assessment of reporting units with goodwill, all of which is within the Permian Basin reporting unit. To determine the fair value of our reporting units and test for impairment, we utilized an income approach (discounted cash flow method), as we believe this is the most direct approach to incorporate the specific economic attributes and risk profiles of our reporting units into our valuation model. We did not utilize a market approach given the current situation with the industry and the lack of contemporaneous transactions. To the extent market indicators of fair value were available, we considered such information as well as market participant assumptions in our discounted cash flow analysis and determination of fair value. The discounted cash flow methodology is based, to a large extent, on assumptions about future events, which includes the use of significant unobservable inputs, representative of a Level 3 fair value measurement. Given the current volatile market environment, we utilized third-party valuation advisors to assist us with these valuations. These analyses required significant judgment, including management’s short-term and long-term forecast of operating performance, revenue growth rates, profitability margins, capital expenditures, timing of future cash flows based on an eventual recovery of the oil and gas industry, the remaining useful life and service potential of the asset (in the case of long-lived assets, including definite-lived intangibles), and discount rates (in the case of our goodwill assessment) based on our weighted average cost of capital. These forecasted cash flows took into consideration historical and recent results, committed contracts and near-term prospects and management's outlook for the future, as well as the increased market risk surrounding the award and execution of future contracts. Based on our quantitative assessments, we determined the carrying value of our long-lived assets was recoverable and goodwill associated with our Permian Basin reporting unit was not impaired. However, the fair value of the reporting unit exceeded its net book value by a margin of less than 20%. Our estimate of fair value was based upon assumptions believed to be reasonable. However, impairment assessments incorporate inherent uncertainties, including projected commodity pricing, supply and demand for our services and future market conditions, which are difficult to predict in volatile economic environments and could result in impairment charges in future periods if actual results materially differ from the estimated assumptions utilized in our forecasts. Further, given the dynamic nature of the COVID-19 pandemic and related market conditions, we cannot reasonably estimate the period of time that these events will persist or the full extent of the impact they will have on our business. We will continue to take actions designed to mitigate the adverse effects of the rapidly changing market environment and expect to continue to adjust our cost structure to market conditions. This may include continued reductions of our workforce to better align our employee count with anticipated lower activity levels and sustained reduction of capital spending at maintenance levels until demand returns to previous levels. Intangible assets other than goodwill at the dates indicated below consisted of the following: Intangible assets other than goodwill at the dates indicated below consisted of the following: Intangible assets other than goodwill at the dates indicated below consisted of the following: March 31, 2020 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 8.1 $ 132,720 $ (35,001) $ 97,719 Total 132,720 (35,001) 97,719 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 149,120 $ (35,001) $ 114,119 December 31, 2019 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 8.3 $ 132,720 $ (31,254) $ 101,466 Total 132,720 (31,254) 101,466 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 149,120 $ (31,254) $ 117,866 The aggregate amortization expense for intangible assets subject to amortization was $3.7 million and $3.5 million for the three months ended March 31, 2020 and 2019, respectively, and is included in other depreciation and amortization in the consolidated statements of comprehensive income (loss). The estimated aggregate amortization expense as of March 31, 2020 for each of the next five years and thereafter is as follows: Rest of 2020 $ 10,909 2021 14,656 2022 13,302 2023 12,881 2024 12,881 Thereafter 33,090 Total $ 97,719 |
Other Non-Current Assets
Other Non-Current Assets | 3 Months Ended |
Mar. 31, 2020 | |
Other Assets, Noncurrent Disclosure [Abstract] | |
Other Non-Current Assets | 8. Other Non-Current Assets Other non-current assets includes capitalized software implementation costs for the implementation of cloud computing systems. The Company capitalizes expenditures related to the implementation of cloud computing software as incurred during the application development stage. Such capitalized costs are amortized to selling, general, and administrative expenses over the term of the cloud computing hosting arrangement, including reasonably certain renewals, beginning when the module or component of the hosting arrangement is ready for its intended use. As of the dates indicated below, capitalized implementation costs and related accumulated amortization in other non-current assets on the consolidated balance sheets amounted to the following: March 31, December 31, 2020 2019 Cloud computing implementation costs $ 6,247 $ Less: accumulated amortization (354) - Other non-current assets $ $ None of these costs were amortized during 2019 as the related systems were not ready for their intended use as of December 31, 2019. Such systems were placed into service beginning January of 2020 at which time the Company began to amortize these capitalized costs on a straight-line basis over the period of the remaining service arrangements of between 2 and 4 years . Such amortization expense amounted to approximately $0.4 million and $0 for the three months ended March 31, 2020 and 2019, respectively. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Accrued Liabilities | |
Accrued Liabilities | 9. Accrued Liabilities Accrued liabilities as of the dates indicated below consists of the following: March 31, December 31, 2020 2019 Employee accrued compensation expense $ 4,682 $ 6,929 Other accrued liabilities 12,508 18,683 Accrued interest on debt 1,586 9,718 Total accrued liabilities $ 18,776 $ 35,330 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt | |
Debt | 10. 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 $ 2,754 $ 13,278 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 number 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 (as defined below). 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 $2.8 million is presented on the face of the consolidated balance sheet as of March 31, 2020 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 March 31, 2020 consisted of approximately $2.0 million of capital leases related primarily to vehicles and approximately $0.7 million of other financing arrangements. The Company’s capital lease and other financing obligations as of December 31, 2019 consisted of approximately $2.0 million of capital leases. In December 2019, the Company entered into a lease for certain equipment with a lease term expiring November 2022 and an effective interest rate of 4.3%. The Company’s lease relates to commercial-use vehicles. 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 As a result of the current market environment mentioned in Note 1 “Summary of Significant Accounting Policies - Recent Developments – CO VI D-19 and D isruption in Oil and Gas Industry” , there could be reductions in our Borrowing Base as a result of potential future impairments of our long-lived assets. 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: March 31, December 31, 2020 2019 Capital lease and other financing obligations $ 2,715 $ 1,985 ABL facilities 85,000 80,000 9.50% Senior Secured Notes due 2024, face amount 340,000 340,000 Less: unamortized original issue discount (2,754) (2,876) Less: unamortized term loan deferred financing costs (13,278) (13,866) Total debt, net 411,683 405,243 Less: current maturities (1,712) (996) Total long-term debt $ 409,971 $ 404,247 Interest expense, net The components of interest expense, net (which includes interest expense incurred) recognized in the unaudited consolidated statements of comprehensive income for the periods indicated below consist of the following: For the three months ended March 31, March 31, 2020 2019 Interest expense incurred on Notes Due to Affiliates $ - $ 1,955 Interest incurred on capital lease and other financing obligations 16 - Interest expense incurred on ABL facilities and Notes 8,980 1,741 Amortization of deferred financing costs on Notes 589 103 Amortization of deferred financing costs on New ABL facility 214 37 Amortization of deferred financing costs on Algeco ABL facility 101 174 Amortization of original issue discount on Notes 122 21 Interest expense, net $ 10,022 $ 4,031 The interest expense incurred on Notes Due to Affiliates shown in the above table was associated with an affiliate note between Signor and a TDR affiliate that was settled in the form of a capital contribution u pon consummation of the Business Combination as discussed in Note 3. Deferred Financing Costs and Original Issue Discount The Company incurred and deferred approximately $15.9 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 March 31, 2020. The Company presents unamortized deferred financing costs and unamortized original issue discount as a direct deduction from the principal amount of the Notes on the unaudited consolidated balance sheet as of March 31, 2020. Accumulated amortization expense related to the deferred financing costs was approximately $2.6 million and $2.0 million as of March 31, 2020 and December 31, 2019, respectively. Accumulated amortization of the original issue discount was approximately $0.5 million and $0.4 million as of March 31, 2020 and December 31, 2019. 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 $3.9 million, which are capitalized and presented on the unaudited consolidated balance sheet as of March 31, 2020 and December 31, 2019 within deferred financing costs revolver, net. These costs are amortized over the contractual term of the line-of-credit through the initial maturity date using the straight-line method. The New ABL Facility was considered a modification of the Algeco ABL facility for accounting purposes. Certain of the lenders under the Algeco 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 Algeco 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 Algeco ABL facility was deferred and is being amortized over the remaining term of the New ABL Facility. Any unamortized deferred financing costs from the Algeco ABL facility that pertained to non-continuing lenders were expensed through loss on extinguishment of debt on the consolidated statement of comprehensive income 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 three months ended March 31, 2019. Accumulated amortization related to revolver deferred financing costs for both the Algeco ABL facility and New ABL Facility was approximately $1.3 million and $1.1 million as of March 31, 2020 and December 31, 2019, respectively. Refer to the components of interest expense in the table above for the amounts of the amortization expense related to the deferred financing costs and original issue discount recognized for each of these debt instruments for the three months ended March 31, 2020 and 2019, respectively. 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 March 31, 2020, consists of the following: Rest of 2020 $ 1,712 2021 700 2022 303 2023 — 2024 85,000 Thereafter 340,000 Total $ 427,715 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Taxes | |
Income Taxes | 11. Income Taxes Income tax expense (benefit) was approximately $0.2 million and $(1.9) million for the three months ended March 31, 2020 and 2019, respectively. The effective tax rate for the three months ended March 31, 2020 and 2019, was 5.8% and 11.7%, respectively. The Company’s effective tax rate was lower during the three months ended March 31, 2020 as compared with the three months ended March 31, 2019 primarily resulting from the discrete treatment of the Transaction bonus amounts and Transaction costs discussed in Note 3. 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. As discussed in Note 1, we determined the CARES ACT did not have a material impact on our provision for income taxes for the three months ended March 31, 2020. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 12. Fair Value of Financial Instruments 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 carrying amounts and fair values of financial assets and liabilities, which are either Level 1 or Level 2, are as follows: March 31, 2020 December 31, 2019 Financial Assets (Liabilities) Not Measured at Fair Value Carrying Fair Value Carrying Fair Value ABL facilities (See Note 10) - Level 2 $ (85,000) $ (85,000) $ (80,000) $ (80,000) Senior Secured Notes (See Note 10) - Level 1 $ (323,968) $ (170,000) $ (323,258) $ (325,693) There were no transfers of financial instruments between the three levels of the fair value hierarchy during the three months ended March 31, 2020 and 2019 and the year ended December 31, 2019. |
Business Restructuring
Business Restructuring | 3 Months Ended |
Mar. 31, 2020 | |
Business Restructuring | |
Business Restructuring | 13. Business Restructuring The Company incurred costs associated with restructuring plans that originated in 2017 designed to streamline operations and reduce costs of $0.0 million and $0.2 million during the three months ended March 31, 2020 and 2019, respectively. The following is a summary of the activity in our restructuring accruals: March 31 2020 2019 Balance at January 1 $ — $ 1,462 Charges during the period — 168 Cash payments during the period — (1,630) Balance at March 31 $ — $ — 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 March 31, 2020. These restructuring costs pertain to corporate locations and do not impact the segments discussed in Note 20. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 14. 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 | 3 Months Ended |
Mar. 31, 2020 | |
Related Parties | |
Related Parties | 15. 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. No amounts were due as of March 31, 2020 and December 31, 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 three months ended March 31, 2020 and 2019 , totaled $0 and $1.6 million, respectively, and are included in selling, general and administrative expense in the consolidated statement of comprehensive income (loss). 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 $0.1 million and $0.1 million for the for three months ended March 31, 2020 and 2019, respectively. During the three months ended March 31, 2020 and 2019, respectively, the Company incurred $0.2 million and $0.2 million in commissions owed to related parties, included in selling, general and administrative expense in the accompanying unaudited consolidated statements of comprehensive income. At March 31, 2020 and December 31, 2019, 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 into 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 ran through December 31, 2019 and automatically extended for an additional 12 month term. The Company and Algeco Global are each majority owned by TDR Capital. This reimbursement for the three months ended March 31, 2020 amounts to approximately $0.3 million and is included in the other expense (income), net line within the consolidated statement of comprehensive income (loss) while approximately $0.3 million is recorded as a related party receivable on the consolidated balance sheet as of March 31, 2020. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings per Share | |
Earnings per Share | 16. Earnings (Loss) per Share Basic earnings (loss) per share (“EPS” or “LPS”) is calculated by dividing net income or loss attributable to Target Hospitality by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed similarly to basic net earnings per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. During periods when net losses are incurred, potential dilutive securities would be antidilutive and are excluded from the calculation of diluted loss per share for that period. Net income was recorded for three months ended March 31, 2020, while a net loss was recorded for the three months ended March 31, 2019 . The following table presents basic and diluted EPS for the periods indicated below ($ in thousands, except per share amounts): For the Three Months Ended March 31, March 31, 2020 2019 Numerator Net income (loss) attributable to Common Stockholders $ 3,801 $ (13,979) Denominator Weighted average shares outstanding - basic and diluted 95,849,854 79,589,905 Net income (loss) per share - basic and diluted $ 0.04 $ (0.18) As discussed in Note 3, 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 EPS or LPS calculations. Warrants representing 16,166,650 shares of the Company’s common stock for the three months ended March 31, 2020 and 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 during the applicable periods. As discussed in Note 18, RSUs and stock options were outstanding for the three months ended March 31, 2020 . These RSUs and stock options were excluded from the computation of EPS because their effect would have been anti-dilutive. As discussed in Note 17, the Company repurchased shares of its outstanding common stock. These shares of treasury stock have been excluded from the computation of EPS. |
Stockholders Equity
Stockholders Equity | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders Equity | |
Stockholders’ Equity | 17. Stockholders’ Equity Common Stock As of March 31, 2020 and December 31, 2019, Target Hospitality had 105,338,760 and 105,254,929 shares of Common Stock, par value $0.0001 per share issued while 100,923,993 and 100,840,162 were outstanding, respectively. 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 3. Preferred Shares Target Hospitality is authorized to issue 1,000,000 preferred shares at $0.0001 par value. As of March 31, 2020, 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 March 31, 2020, and December 31, 2019, the Company had 16,166,650 warrants issued and outstanding with the same terms as described above. Common Stock in Treasury On August 15, 2019, the Company's Board of Directors approved the 2019 Share Repurchase Program (“2019 Plan”), authorizing the repurchase of up to $75.0 million of common stock from August 30, 2019 to August 15, 2020. During the three months ended March 31, 2020, the Company did not repurchase any common stock. As of March 31, 2020, 4,414,767 shares of common stock for an aggregated price of approximately $23.6 million were held as treasury stock (at cost). As of March 31, 2020, the 2019 Plan had a remaining capacity of approximately $51.4 million. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Stock-Based Compensation | |
Stock-Based Compensation | 18. 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. On March 4, 2020, the Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company adopted a new form of Executive Nonqualified Stock Option Award Agreement (the “Stock Option Agreement”) and a new form of Executive Restricted Stock Unit Agreement (the “RSU Agreement” and together with the Stock Option Agreement, the “Award Agreements”) with respect to the granting of nonqualified stock options and restricted stock units, respectively, granted under the Plan. The new Award Agreements will be used for all awards to executive officers made on or after March 4, 2020. The Award Agreements have material terms that are substantially similar to those in the forms of award agreements last approved by the Compensation Committee and disclosed by the Company, except for the following: under the new Award Agreements, if the participant’s employment or service terminates due to Retirement (as defined in the Plan), and the participant has been continuously employed by the Company for at least twelve months following the grant date, then any portion of the participant’s awarded securities scheduled to become vested within twelve months after the participant’s termination date shall be vested on his or her termination date. 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. On September 3, 2019, our recently appointed Chief Financial Officer received a grant of 81,434 RSUs, which vested on March 15, 2020 and 48,860 RSUs, which vest on each of the first four anniversaries of the grant date, respectively. 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. On March 4, 2020, 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 503,757. These RSU awards granted vest in four equal installments on each of the first four anniversaries of the grant date, on March 4, 2021, 2022, 2023, and 2024. 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 vested in six equal installments on the first of each month, beginning on July 1, 2019 through December 1, 2019. On January 2, 2020, 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 January 1, 2020 to December 31, 2020 in the form of 124,741 RSUs. These RSUs vest in twelve equal installments on the first of each month, except for one twelfth vested on January 9, 2020. During the three months ended March 31, 2020, certain of the Company's employees surrendered RSUs owned by them to satisfy their statutory minimum federal and state tax obligations associated with the vesting of RSUs issued under the Plan. The table below represents the changes in RSUs: Number of Weighted Balance at December 31, 2019 401,797 $ 9.31 Granted 628,498 Vested and released (113,487) Forfeited (5,194) 10.83 Balance at March 31, 2020 911,614 $ 6.63 Stock-based compensation expense for these RSUs recognized in selling, general and administrative expense in the consolidated statement of comprehensive income for the three months ended March 31, 2020 and 2019, was approximately $0.8 million and $0.0, respectively, with an associated tax benefit of $0.2 million and $0, respectively. At March 31, 2020, unrecognized compensation expense related to RSUs totaled $4.5 million and is expected to be recognized over a remaining term of approximately 3.2 years. Stock Option Awards On May 21, 2019, the Compensation Committee granted 482,792 time-based stock option awards to certain employees. On September 3, 2019 the Compensation Committee made an additional grant of 171,429 time-based stock options to our newly appointed Chief Financial Officer. Additionally, on March 4, 2020 the Compensation Committee granted 1,140,873 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 $4.67 to $10.83 per share. The stock options vest in four equal installments on each of the first four anniversaries of the grant date and expire ten years from the grant date. The following table presents the changes in stock options outstanding and related information for our employees: Options Weighted Average Weighted Average Intrinsic Value Outstanding Options at December 31, 2019 579,370 $ 9.44 9.48 $ - Granted 1,140,873 4.51 - - Forfeited (16,842) 10.83 - - Outstanding Options at March 31, 2020 1,703,401 $ 6.15 9.68 $ - 2,807 stock options were exercisable at March 31, 2020. Stock-based compensation expense for these stock option awards recognized in selling, general and administrative expense in the unaudited consolidated statement of comprehensive income for the three months ended March 31, 2020 and 2019, was approximately $0.1 million and $0, respectively, with an associated tax benefit of less than $0.1 million. At March 31, 2020, unrecognized compensation expense related to stock options totaled $2.9 million and is expected to be recognized over a remaining term of approximately 3.66 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 Weighted average expected stock volatility % 25.80 Expected dividend yield % 0.00 Expected term (years) 6.25 Risk-free interest rate (range) % 0.82 - 2.26 Exercise price (range) $ 4.51 - 10.83 Weighted-average grant date fair value $ 1.88 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. 16,842 stock options were forfeited during the three months ended March 31, 2020. |
Retirement Plans
Retirement Plans | 3 Months Ended |
Mar. 31, 2020 | |
Retirement Plans | |
Retirement Plans | 19. 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. For the three months ended March 31, 2020 and 2019, we recognized expense of $0.1 million and $0.3 million, respectively, related to these matching contributions. |
Business Segments
Business Segments | 3 Months Ended |
Mar. 31, 2020 | |
Business Segments | |
Business Segments | 20. 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 three months ended March 31 (except for asset information for 2019 that is presented as of December 31): 2020 Permian Basin Bakken Basin Government All Other Total For the Three Months Ended March 31, 2020 Revenue $ 49,131 $ 4,185 $ 16,592 $ 1,747 (a) $ 71,655 Adjusted gross profit $ 26,784 $ 1,404 $ 11,580 $ 276 $ 40,044 Total Assets $ 302,732 $ 57,764 $ 33,233 $ 5,955 $ 399,684 2019 Permian Basin Bakken Basin Government All Other Total For the Three Months Ended March 31, 2019 Revenue $ 52,712 $ 4,772 $ 16,555 $ 7,943 (a) $ 81,982 Adjusted gross profit $ 32,594 $ 1,635 $ 11,851 $ 1,575 $ 47,655 Total Assets (as of December 31, 2019) $ 305,701 $ 59,134 $ 35,484 $ 5,955 $ 406,274 (a) Revenues from segments below the quantitative thresholds are attributable to three operating segments of the Company and are reported in the “All Other” category previously described. A reconciliation of total segment adjusted gross profit to total consolidated income (loss) before income taxes for the dates indicated below, is as follows: For the Three Months Ended March 31, 2020 March 31, 2019 Total reportable segment adjusted gross profit $ 39,768 $ 46,080 Other adjusted gross profit 276 1,575 Depreciation and amortization (17,013) (13,664) Selling, general, and administrative expenses (9,990) (44,752) Restructuring costs — (168) Other income, net 1,015 38 Loss on extinguishment of debt — (907) Interest expense, net (10,022) (4,031) Consolidated income before income taxes $ 4,034 $ (15,829) A reconciliation of total segment assets to total consolidated assets as of the dates indicated below, is as follows: March 31, 2020 December 31, 2019 Total reportable segment assets $ 393,729 $ 400,319 Other assets 5,955 5,955 Restricted cash 52 52 Other unallocated amounts 193,452 194,466 Total Assets $ 593,188 $ 600,792 Other unallocated assets consist of the following as reported in the consolidated balance sheets of the Company as of the dates indicated below: March 31, 2020 December 31, 2019 Total current assets $ 62,595 $ 60,795 Other intangible assets, net 114,119 117,866 Deferred tax asset 6,472 6,427 Deferred financing costs revolver, net 4,373 4,688 Other non-current assets 5,893 4,690 Total other unallocated amounts of assets $ 193,452 $ 194,466 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events | |
Subsequent Events | 21. Subsequent Events In April 2020, the Company executed a contract with TC Energy for services related to the construction and operations of facilities along the Keystone XL pipeline. As discussed in Note 1, in April of 2020, the Company temporarily closed and consolidated several communities in the Permian Basin. In addition, in May of 2020, the Company temporarily closed all communities in the Bakken Basin. In May of 2020, the Company executed contract modifications to several existing contracts with certain customers in the oil and gas industry in response to declining economic conditions that resulted from the effects of the COVID-19 pandemic and decrease in demand for oil and natural gas, as more fully discussed in Note 1. Under the terms of these modifications, the term and, in some cases, the amount of the contracts were modified resulting in extended terms and reduced minimum commitment amounts in 2020. These modifications utilize multi-year contract extensions to maintain contract value and provide the Company with greater visibility on long-term revenue and cash flow. This mutually beneficial approach balances average daily rates with contract term and positions the Company to take advantage of a more balanced market. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
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 and food services, maintenance, housekeeping, grounds-keeping, security, health and recreation services, overall workforce community 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 vennootschap (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. 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 Target Hospitality Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2020 or any future period. The accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, and the adjustments described as part of the Business Combination discussed in Note 3, necessary for a fair statement of financial position as of March 31, 2020, and results of operations for the three months ended March 31, 2020 and 2019, and cash flows for the three months ended March 31, 2020 and 2019. The consolidated balance sheet as of December 31, 2019, was derived from the audited consolidated balance sheets of Target Hospitality Corp. 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. Because performance obligations related to specialty rental and hospitality services are satisfied over time, the majority of our revenue is recognized on a daily basis, for each night a customer stays, at a contractual day rate. 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. Costs associated with contracts include 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 recognizes revenue associated with community construction using the percentage of completion method with progress towards completion measured using the cost-to-cost method as the basis to recognize revenue. Management believes this cost-to-cost method is the most appropriate measure of progress to the satisfaction of a performance obligation on the community construction. 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. 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). |
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 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. In 2019, the FASB voted to delay the effective date for the new standard for financial statements issued for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021 for non-issuers (including EGCs). Early application continues to be allowed. 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 change 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. In 2019, the FASB voted to delay the effective date for the new standard for financial statements issued for reporting periods beginning after December 15, 2022 and interim periods within those reporting periods. The Company is currently evaluating the impact of this new standard on its consolidated financial statements. 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 prospectively on January 1, 2019 as a result of deciding to implement cloud computing systems during 2019. Such implementations began in 2019 and, as a result, the Company capitalized certain implementation costs during 2019. Such systems were placed into service beginning January of 2020 at which time the Company will began to amortize these capitalized costs over the period of the service arrangement into selling, general and administrative expenses. Refer to Note 8 for additional details. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes, eliminates certain exceptions and implements additional requirements which result in a more consistent application of ASC 740 Income Taxes. The new standard is effective for fiscal years beginning after December 15, 2020 for public entities and early adoption is permitted. We are currently in the process of evaluating the impact of adopting ASU 2019-12 on our consolidated financial statements. Recent Developments – CO VI D-19 and D isruption in Oil and Gas Industry On January 30, 2020, the World Health Organization declared an outbreak of a highly contagious form of an upper respiratory infection caused by the Coronavirus Disease 2019 (“COVID-19”) , a novel coronavirus strain commonly referred to as “coronavirus”. The global outbreak of COVID-19 and the declaration of a pandemic by the World Health Organization on March 11, 2020 presents new risks to the Company’s business. Further, in the first quarter of 2020, crude oil prices fell sharply, due to the spread of COVID-19 and actions by Saudi Arabia and Russia. The Company’s ability to operate and supply chain have not experienced material disruptions in the first quarter and the Company continues to work with suppliers to ensure there is no service disruption or shortage of critical products at our communities. the situation surrounding COVID-19 and the decrease in demand for oil and natural gas, and simultaneous oversupply remains fluid and the potential for a material impact on the Company increases the longer the virus impacts the level of economic activity in the United States and globally. The economic effects of this have led the Company to implement several cost containment measures primarily initiated in April of 2020, including salary reductions, reductions in workforce, furloughs, reduced discretionary spending and elimination of all non-essential travel. In addition to these measures, the Company has temporarily closed and consolidated several communities in the Permian Basin and in May of 2020, the Company temporarily closed all communities in the Bakken Basin. Additionally, as discussed in our subsequent events footnote to these financial statements, the Company has executed contract modifications with several customers in the oil and natural gas industry resulting in extended terms and reduced minimum contract commitments in 2020. These modifications utilize multi-year contract extensions to maintain contract value and provide the Company with greater visibility on long-term revenue and cash flow. This mutually beneficial approach balances average daily rates with contract term and positions the Company to take advantage of a more balanced market. There have been significant changes to the global economic situation and to public securities markets as a result of COVID-19. It is possible that these changes could cause changes to estimates as a result of the markets in which the Company operates, the price of the Company’s publicly traded equity and debt in comparison to the Company’s carrying value. Such changes to estimates could potentially result in impacts that would be material to the Company’s consolidated financial statements, particularly with respect to the fair value of the Company’s reporting units in relation to potential goodwill impairment, the fair value of long-lived and other intangible assets in relation to potential impairment and the allowance for doubtful accounts. See additional information regarding COVID-19 in “ Item 1A. Risk Factors ”. As a result of the impact of COVID-19 and the disruption in the oil and gas industry, we also concluded a trigger event had occurred and we tested our long-lived and intangible assets, including goodwill, for impairment. Based upon our impairment assessments, which utilized the Company’s current long-term projections, we determined the carrying amount of these assets were not impaired. Due to the uncertain and rapidly evolving nature of the conditions surrounding the COVID-19 pandemic as well as the decrease in demand for oil and natural gas, given that a significant portion of our customer base operates in the oil and gas industry, changes in economic outlook may change our long-term projections. Refer to Note 7 for additional information on our goodwill impairment testing and the related results. Additionally, in connection with COVID-19, on March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). The CARES Act, among other things, includes provisions relating to the 80 percent limitation of net operating loss and modifications to the business interest deduction limitations. We are currently evaluating how provisions in the CARES Act will impact our consolidated financial statements, but the CARES Act did not have a material impact on our provision for income taxes for the three months ended March 31, 2020 . |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue | |
Summary of disaggregation of revenue by reportable segments as well as the all other category | For the three months ended March 31, 2020 2019 Permian Basin Services income $ 43,286 $ 48,798 Total Permian Basin revenues 43,286 48,798 Bakken Basin Services income $ 4,185 $ 4,773 Total Bakken Basin revenues 4,185 4,773 Government Services income $ 5,854 $ 6,737 Total Government revenues 5,854 6,737 All Other Services income $ 613 $ 810 Construction fee income 1,134 7,134 Total All Other revenues 1,747 7,944 Total revenues $ 55,072 $ 68,252 |
Summary of contract liabilities | For Three Months Ended March 31, 2020 2019 Balances at Beginning of the Period $ 26,199 $ 37,376 Additions to deferred revenue — 2,082 Revenue recognized (5,239) (5,907) Balances at End of the Period $ 20,960 $ 33,551 |
Summary of revenue expected to be recognized from contracts where the price and quantity of the product or service are fixed | As of March 31, 2020, for contracts greater than one year, the following table discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue, and only represents revenue expected to be recognized from contracts where the price and quantity of the product or service are fixed (in thousands): For the Years Ended December 31, 2020 2021 2022 Thereafter Total Revenue expected to be recognized as of March 31, 2020 $ $ $ $ - $ |
Business Combination (Tables)
Business Combination (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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 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 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 per share computation (See Note 16) 100,217,035 |
Acquisitions (Tables)
Acquisitions (Tables) - Superior | 3 Months Ended |
Mar. 31, 2020 | |
Schedule of preliminary allocation of total purchase price | Property and equipment $ 18,342 Customer relationships 4,800 Goodwill 6,858 Total assets acquired $ 30,000 |
Schedule of unaudited pro forma information | Period Revenue Income before taxes 2019 pro forma from January 1, 2019 to March 31, 2019 $ 85,129 $ (13,289) |
Specialty Rental Assets, Net (T
Specialty Rental Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Specialty Rental Assets, Net | |
Schedule of Specialty rental assets | March 31, December 31, 2020 2019 Specialty rental assets $ 547,561 $ 545,399 Construction-in-process 13,176 8,672 Less: accumulated depreciation (213,273) (200,376) Specialty rental assets, net $ 347,464 $ 353,695 |
Other Property, Plant and Equ_2
Other Property, Plant and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Other Property, Plant and Equipment, Net | |
Schedule of other property, plant and equipment, net | March 31, December 31, 2020 2019 Land $ 9,155 $ 9,155 Buildings and leasehold improvements 978 978 Machinery and office equipment 1,903 1,903 Software and other 1,700 1,690 13,736 13,726 Less: accumulated depreciation (2,554) (2,185) Total other property, plant and equipment, net $ 11,182 $ 11,541 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Other Intangible Assets, net | |
Schedule of changes in carrying amount of goodwill | Permian Basin Balance at January 1, 2019 $ 34,180 Acquisition of Superior 6,858 Balance at December 31, 2019 41,038 Changes in Goodwill - Balance at March 31, 2020 $ 41,038 |
Schedule of intangible assets other than goodwill | Intangible assets other than goodwill at the dates indicated below consisted of the following: Intangible assets other than goodwill at the dates indicated below consisted of the following: March 31, 2020 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 8.1 $ 132,720 $ (35,001) $ 97,719 Total 132,720 (35,001) 97,719 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 149,120 $ (35,001) $ 114,119 December 31, 2019 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 8.3 $ 132,720 $ (31,254) $ 101,466 Total 132,720 (31,254) 101,466 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 149,120 $ (31,254) $ 117,866 |
Schedule of estimated aggregate amortization expense | Rest of 2020 $ 10,909 2021 14,656 2022 13,302 2023 12,881 2024 12,881 Thereafter 33,090 Total $ 97,719 |
Other Non-Current Assets (Table
Other Non-Current Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Other Assets, Noncurrent Disclosure [Abstract] | |
Other non-current assets | March 31, December 31, 2020 2019 Cloud computing implementation costs $ 6,247 $ Less: accumulated amortization (354) - Other non-current assets $ $ |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accrued Liabilities | |
Schedule of accrued liabilities | March 31, December 31, 2020 2019 Employee accrued compensation expense $ 4,682 $ 6,929 Other accrued liabilities 12,508 18,683 Accrued interest on debt 1,586 9,718 Total accrued liabilities $ 18,776 $ 35,330 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt | |
Summary of carrying value of debt outstanding | March 31, December 31, 2020 2019 Capital lease and other financing obligations $ 2,715 $ 1,985 ABL facilities 85,000 80,000 9.50% Senior Secured Notes due 2024, face amount 340,000 340,000 Less: unamortized original issue discount (2,754) (2,876) Less: unamortized term loan deferred financing costs (13,278) (13,866) Total debt, net 411,683 405,243 Less: current maturities (1,712) (996) Total long-term debt $ 409,971 $ 404,247 |
Components of interest expense | For the three months ended March 31, March 31, 2020 2019 Interest expense incurred on Notes Due to Affiliates $ - $ 1,955 Interest incurred on capital lease and other financing obligations 16 - Interest expense incurred on ABL facilities and Notes 8,980 1,741 Amortization of deferred financing costs on Notes 589 103 Amortization of deferred financing costs on New ABL facility 214 37 Amortization of deferred financing costs on Algeco ABL facility 101 174 Amortization of original issue discount on Notes 122 21 Interest expense, net $ 10,022 $ 4,031 |
Schedule of future maturities | Rest of 2020 $ 1,712 2021 700 2022 303 2023 — 2024 85,000 Thereafter 340,000 Total $ 427,715 |
Senior Secured Notes 2024 | |
Debt | |
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 $ 2,754 $ 13,278 |
Schedule of debt redemption | . Redemption Year Price 2021 104.750% 2022 102.375% 2023 and thereafter 100.000% |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value of Financial Instruments | |
Summary of carrying amounts and fair values of financial assets and liabilities | March 31, 2020 December 31, 2019 Financial Assets (Liabilities) Not Measured at Fair Value Carrying Fair Value Carrying Fair Value ABL facilities (See Note 10) - Level 2 $ (85,000) $ (85,000) $ (80,000) $ (80,000) Senior Secured Notes (See Note 10) - Level 1 $ (323,968) $ (170,000) $ (323,258) $ (325,693) |
Business Restructuring (Tables)
Business Restructuring (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Restructuring | |
Summary of the activity in our restructuring accruals | March 31 2020 2019 Balance at January 1 $ — $ 1,462 Charges during the period — 168 Cash payments during the period — (1,630) Balance at March 31 $ — $ — |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings per Share | |
Schedule of reconciliation of net loss and weighted-average shares of common stock outstanding | The following table presents basic and diluted EPS for the periods indicated below ($ in thousands, except per share amounts): For the Three Months Ended March 31, March 31, 2020 2019 Numerator Net income (loss) attributable to Common Stockholders $ 3,801 $ (13,979) Denominator Weighted average shares outstanding - basic and diluted 95,849,854 79,589,905 Net income (loss) per share - basic and diluted $ 0.04 $ (0.18) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stock-Based Compensation | |
Schedule of changes in restricted stock units | Number of Weighted Balance at December 31, 2019 401,797 $ 9.31 Granted 628,498 Vested and released (113,487) Forfeited (5,194) 10.83 Balance at March 31, 2020 911,614 $ 6.63 |
Schedule of changes in stock options | Options Weighted Average Weighted Average Intrinsic Value Outstanding Options at December 31, 2019 579,370 $ 9.44 9.48 $ - Granted 1,140,873 4.51 - - Forfeited (16,842) 10.83 - - Outstanding Options at March 31, 2020 1,703,401 $ 6.15 9.68 $ - |
Schedule of assumptions using Black-scholes option-pricing model | Assumptions Weighted average expected stock volatility % 25.80 Expected dividend yield % 0.00 Expected term (years) 6.25 Risk-free interest rate (range) % 0.82 - 2.26 Exercise price (range) $ 4.51 - 10.83 Weighted-average grant date fair value $ 1.88 |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Segments | |
Schedule of Segment Reporting Information | 2020 Permian Basin Bakken Basin Government All Other Total For the Three Months Ended March 31, 2020 Revenue $ 49,131 $ 4,185 $ 16,592 $ 1,747 (a) $ 71,655 Adjusted gross profit $ 26,784 $ 1,404 $ 11,580 $ 276 $ 40,044 Total Assets $ 302,732 $ 57,764 $ 33,233 $ 5,955 $ 399,684 2019 Permian Basin Bakken Basin Government All Other Total For the Three Months Ended March 31, 2019 Revenue $ 52,712 $ 4,772 $ 16,555 $ 7,943 (a) $ 81,982 Adjusted gross profit $ 32,594 $ 1,635 $ 11,851 $ 1,575 $ 47,655 Total Assets (as of December 31, 2019) $ 305,701 $ 59,134 $ 35,484 $ 5,955 $ 406,274 (a) Revenues from segments below the quantitative thresholds are attributable to three operating segments of the Company and are reported in the “All Other” category previously described. |
Schedule of reconciliation of total segment adjusted gross profit | For the Three Months Ended March 31, 2020 March 31, 2019 Total reportable segment adjusted gross profit $ 39,768 $ 46,080 Other adjusted gross profit 276 1,575 Depreciation and amortization (17,013) (13,664) Selling, general, and administrative expenses (9,990) (44,752) Restructuring costs — (168) Other income, net 1,015 38 Loss on extinguishment of debt — (907) Interest expense, net (10,022) (4,031) Consolidated income before income taxes $ 4,034 $ (15,829) |
Schedule of reconciliation of total segment assets to total combined assets | March 31, 2020 December 31, 2019 Total reportable segment assets $ 393,729 $ 400,319 Other assets 5,955 5,955 Restricted cash 52 52 Other unallocated amounts 193,452 194,466 Total Assets $ 593,188 $ 600,792 |
Schedule of unallocated assets consist of the following as reported in the combined balance sheets | March 31, 2020 December 31, 2019 Total current assets $ 62,595 $ 60,795 Other intangible assets, net 114,119 117,866 Deferred tax asset 6,472 6,427 Deferred financing costs revolver, net 4,373 4,688 Other non-current assets 5,893 4,690 Total other unallocated amounts of assets $ 193,452 $ 194,466 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | |
Revenue | $ 55,072 | $ 68,252 | |
Construction fee | |||
Revenue | 1,134 | $ 7,179 | |
Algeco and Arrow | |||
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% | ||
Signor | Bidco | |||
Ownership percentage | 100.00% |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 55,072 | $ 68,252 | |
Revenue. | 71,655 | $ 81,982 | |
Specialty rental | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 16,583 | $ 13,730 | |
Revenue. | $ 16,600 | $ 13,700 |
Revenue - Disaggregation Revenu
Revenue - Disaggregation Revenue (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Disaggregation of Revenue [Line Items] | |||
Number of Reportable Segments | segment | 3 | ||
Total Revenue | $ 55,072 | $ 68,252 | |
All Other | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenue | 1,747 | 7,944 | |
Services | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenue | 53,938 | $ 61,073 | |
Services | Permian Basin | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenue | 43,286 | 48,798 | |
Services | Bakken Basin | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenue | 4,185 | 4,773 | |
Services | Government | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenue | 5,854 | 6,737 | |
Services | All Other | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenue | 613 | 810 | |
Construction fee | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenue | 1,134 | $ 7,179 | |
Construction fee | All Other | |||
Disaggregation of Revenue [Line Items] | |||
Total Revenue | $ 1,134 | $ 7,134 |
Revenue - Contract Liabilities
Revenue - Contract Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Change in Contract with Customer, Liability [Abstract] | ||
Balances at Beginning of Year | $ 26,199 | $ 37,376 |
Additions to deferred revenue | 2,082 | |
Revenue recognized | (5,239) | (5,907) |
Balances at End of Year | $ 20,960 | $ 33,551 |
Revenue - Revenue Expected to b
Revenue - Revenue Expected to be Recognized (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized | $ 50,187 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue expected to be recognized | $ 23,775 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue expected to be recognized | $ 23,413 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue expected to be recognized | $ 2,999 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | Mar. 15, 2019 | Mar. 31, 2020 | Mar. 31, 2019 |
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 | $ 22,500 | 27,790 | |
Total cash received from affiliates | $ 39,107 | ||
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 | ||
Acquisition price paid in form of cash | 563,100 | ||
Paid to the seller | $ 747,900 | ||
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 | ||
Arrow Seller | |||
Business acquisition | |||
Shares issued | 49,100,000 | ||
Algeco Seller | |||
Business acquisition | |||
Shares issued | 25,686,327 |
Business Combinations - Bidco's
Business Combinations - Bidco's offering of Senior Secured Notes (Details) - USD ($) $ in Thousands | Mar. 15, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Business acquisition | ||||
Principal amount | $ 340,000 | $ 340,000 | ||
Proceeds from borrowings on ABL | 27,500 | $ 47,240 | ||
New ABL Facility | ||||
Business acquisition | ||||
Proceeds from borrowings on ABL | $ 40,000 | 40,000 | ||
Senior Secured Notes 2024 | ||||
Business acquisition | ||||
Principal amount | 340,000 | $ 340,000 | ||
Payment of original issuance cost | $ 3,300 |
Business Combinations - Platinu
Business Combinations - Platinum Eagle (Details) - $ / shares | Mar. 15, 2019 | Mar. 14, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 14, 2018 | Jan. 17, 2018 |
Business Acquisition [Line Items] | ||||||
Common stock, Number of share outstanding | 100,923,993 | 100,840,162 | ||||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||||
Class A ordinary share | ||||||
Business Acquisition [Line Items] | ||||||
Common stock, Number of share outstanding | 14,321,606 | 32,500,000 | 32,500,000 | |||
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. 15, 2019 | Mar. 14, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 14, 2018 |
Business acquisition | |||||
Total Outstanding Shares of Common Stock Outstanding | 100,923,993 | 100,840,162 | |||
Total Outstanding Shares of Common Stock issued | 105,232,933 | 105,338,760 | 105,254,929 | ||
Less: Founders shares in escrow | (5,015,898) | (5,015,898) | |||
Total Shares of Common Stock outstanding for earnings per share computation (see Note 20) | 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 | 14,321,606 | 32,500,000 | 32,500,000 | ||
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) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Business Acquisition [Line Items] | ||
Transaction fees | $ 0.4 | |
Selling, general, and administrative expenses | ||
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 | Mar. 31, 2020 |
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 ($)item | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Business acquisition | |||||
Goodwill | $ 41,038 | $ 41,038 | |||
Permian Basin | |||||
Business acquisition | |||||
Goodwill | $ 41,038 | $ 41,038 | $ 34,180 | ||
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 acquisition | item | 140 | ||||
Goodwill | $ 6,858 |
Acquisitions - Preliminary allo
Acquisitions - Preliminary allocation of total purchase price (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 19, 2019 |
Allocation of total purchase price to net assets acquired and liabilities assumed | |||
Goodwill | $ 41,038 | $ 41,038 | |
Superior | |||
Allocation of total purchase price to net assets acquired and liabilities assumed | |||
Property and equipment | $ 18,342 | ||
Goodwill | 6,858 | ||
Customer relationships | 4,800 | ||
Total assets acquired | $ 30,000 |
Acquisitions - Other informatio
Acquisitions - Other information (Details) - USD ($) $ in Thousands | Jun. 19, 2019 | Mar. 31, 2020 | Dec. 31, 2019 |
Business acquisition | |||
Goodwill | $ 41,038 | $ 41,038 | |
Superior | |||
Business acquisition | |||
Estimated useful lives | 9 years | ||
Goodwill | $ 6,858 |
Acquisitions - Pro forma inform
Acquisitions - Pro forma information and acquisition cost (Details) - USD ($) $ in Thousands | Jul. 01, 2019 | Mar. 31, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2019 | Jun. 19, 2019 |
Pro forma information | ||||||
Revenue | $ 71,655 | $ 81,982 | ||||
Income (loss) before income taxes | 4,034 | $ (15,829) | $ (15,829) | |||
Acquisition related cost | 400 | |||||
Selling, general, and administrative expenses | ||||||
Pro forma information | ||||||
Acquisition related cost | $ 8,000 | |||||
Superior | ||||||
Pro forma information | ||||||
Revenue, if acquired beginning of the year | 85,129 | |||||
Income before taxes, if acquired beginning of the year | $ (13,289) | |||||
Revenue | $ 3,600 | |||||
Income (loss) before income taxes | $ 1,600 | |||||
Goodwill expected to be deductible for tax purposes | $ 6,900 | |||||
Pro Petro | ||||||
Pro forma information | ||||||
Purchase price | $ 5,000 |
Acquisitions - Pro Petro (Detai
Acquisitions - Pro Petro (Details) - Pro Petro $ in Millions | Jul. 01, 2019USD ($)room |
Business acquisition | |
Property, plant, and equipment | $ 5 |
Number of Rooms | room | 168 |
Purchase price | $ 5 |
Specialty Rental Assets, Net (D
Specialty Rental Assets, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Less: accumulated depreciation | $ (213,273) | $ (200,376) |
Specialty rental assets, net | 347,464 | 353,695 |
Specialty rental assets | ||
Property, Plant and Equipment [Line Items] | ||
Specialty rental assets, gross | 547,561 | 545,399 |
Construction-in-process | ||
Property, Plant and Equipment [Line Items] | ||
Specialty rental assets, gross | $ 13,176 | $ 8,672 |
Other Property, Plant and Equ_3
Other Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Mar. 31, 2020 | Mar. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Other property, plant and equipment | ||||||
Other property, plant and equipment, gross | $ 13,736 | $ 13,726 | ||||
Less: accumulated depreciation | (2,554) | (2,185) | ||||
Property, Plant and Equipment, Other, Net, Total | 11,182 | 11,541 | ||||
Depreciation | 13,265 | $ 10,138 | ||||
Land | ||||||
Other property, plant and equipment | ||||||
Other property, plant and equipment, gross | 9,155 | 9,155 | ||||
Land | Signor | ||||||
Other property, plant and equipment | ||||||
Property, Plant and Equipment, Other, Net, Total | $ 700 | $ 700 | ||||
Buildings and leasehold improvements | ||||||
Other property, plant and equipment | ||||||
Other property, plant and equipment, gross | 978 | 978 | ||||
Machinery and office equipment | ||||||
Other property, plant and equipment | ||||||
Other property, plant and equipment, gross | 1,903 | 1,903 | ||||
Software and other | ||||||
Other property, plant and equipment | ||||||
Other property, plant and equipment, gross | $ 1,700 | $ 1,690 | ||||
Property, Plant and Equipment Other Types | ||||||
Other property, plant and equipment | ||||||
Depreciation | $ 300 | $ 300 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets, net - Goodwill (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Goodwill | |
Goodwill, Ending Balance | $ 41,038 |
Permian Basin | |
Goodwill | |
Goodwill, Beginning Balance | 34,180 |
Goodwill acquired | $ 6,858 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets, net - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Intangible assets subject to amortization | |||
Gross Carrying Amount | $ 132,720 | $ 132,720 | |
Accumulated Amortization | (35,001) | (31,254) | |
Net Book Value | 97,719 | 101,466 | |
Total intangible assets other than goodwill | |||
Gross Carrying Amount | 149,120 | 149,120 | |
Net Book Value | 114,119 | 117,866 | |
Aggregate amortization expense of intangible assets | 3,747 | $ 3,526 | |
Tradenames | |||
Indefinite lived assets: | |||
Net Book Value | 16,400 | ||
Total intangible assets other than goodwill | |||
Gross Carrying Amount | 16,400 | $ 16,400 | |
Net Book Value | $ 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 | $ 132,720 | $ 132,720 | |
Accumulated Amortization | (35,001) | (31,254) | |
Net Book Value | $ 97,719 | $ 101,466 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets, net - Future Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Estimated aggregate amortization expense: | ||
Rest of 2020 | $ 10,909 | |
2021 | 14,656 | |
2022 | 13,302 | |
2023 | 12,881 | |
2024 | 12,881 | |
Thereafter | 33,090 | |
Finite-Lived Intangible Assets, Net, Total | $ 97,719 | $ 101,466 |
Other Non-Current Assets (Narra
Other Non-Current Assets (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Other Depreciation and Amortization | $ 4,116 | $ 3,763 | |
Amortization of Intangible Assets | 3,747 | $ 3,526 | |
Computer Software, Intangible Asset [Member] | |||
Amortization of Intangible Assets | $ 400 | $ 0 | |
Computer Software, Intangible Asset [Member] | Maximum | |||
Finite-Lived Intangible Asset, Useful Life | 4 years | ||
Computer Software, Intangible Asset [Member] | Minimum | |||
Finite-Lived Intangible Asset, Useful Life | 2 years |
Other Non-Current Assets (Other
Other Non-Current Assets (Other non-current assets) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Other Assets, Noncurrent Disclosure [Abstract] | ||
Cloud computing implementation costs | $ 6,247 | $ 4,690 |
Less: accumulated amortization | (354) | |
Other non-current assets | 5,893 | 4,690 |
Finite-Lived Intangible Assets, Accumulated Amortization | 35,001 | 31,254 |
Finite-Lived Intangible Assets, Net | $ 97,719 | $ 101,466 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Accrued Liabilities | ||
Employee accrued compensation expense | $ 4,682 | $ 6,929 |
Other accrued liabilities | 12,508 | 18,683 |
Accrued interest on debt | 1,586 | 9,718 |
Total accrued liabilities | $ 18,776 | $ 35,330 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Mar. 15, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Debt | ||||
Unamortized Original Issue Discount | $ 2,754 | $ 2,876 | ||
Unamortized Deferred Financing Costs | 13,278 | $ 13,866 | ||
Amortization | $ 122 | $ 21 | ||
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 | 2,754 | ||
Unamortized Deferred Financing Costs | $ 15,900 | $ 13,278 | ||
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 | Mar. 31, 2020 | Dec. 31, 2019 |
Lessee, Lease, Description [Line Items] | ||
Other financing obligations | $ 0.7 | |
Commercial-use vehicles | ||
Lessee, Lease, Description [Line Items] | ||
Capital leases | $ 2 | $ 2 |
Interest rate (as a percent) | 4.30% |
Debt - ABL Facility (Details)
Debt - ABL Facility (Details) - USD ($) $ in Thousands | Mar. 15, 2019 | Mar. 31, 2020 | Mar. 31, 2019 |
ABL Facility | |||
Proceeds from line of credit | $ 27,500 | $ 47,240 | |
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 | Mar. 15, 2019 | Mar. 31, 2020 | Dec. 31, 2019 |
Carrying value of debt outstanding | |||
Long-term debt, net | $ 427,715 | ||
Principal amount | 340,000 | $ 340,000 | |
Less: unamortized original issue discount | (2,754) | (2,876) | |
Less: unamortized term loan deferred financing costs | (13,278) | (13,866) | |
Total debt, net | 411,683 | 405,243 | |
Less: current maturities | (1,712) | (996) | |
Total long-term debt | 409,971 | 404,247 | |
New ABL Facility | |||
Carrying value of debt outstanding | |||
Long-term debt, net | 85,000 | 80,000 | |
Less: unamortized term loan deferred financing costs | (3,900) | ||
Capital lease and other financing obligations | |||
Carrying value of debt outstanding | |||
Capital lease and other financing obligations | 2,715 | 1,985 | |
Senior Secured Notes 2024 | |||
Carrying value of debt outstanding | |||
Principal amount | 340,000 | $ 340,000 | |
Less: unamortized original issue discount | $ (3,300) | (2,754) | |
Less: unamortized term loan deferred financing costs | $ (15,900) | $ (13,278) | |
Interest rate (as a percent) | 9.50% |
Debt - Components of interest e
Debt - Components of interest expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | |||
Interest expense incurred on Notes Due to Affiliates | $ 1,955 | ||
Interest incurred on capital lease and other financing obligations | $ 16 | ||
Interest expense incurred on ABL facilities and Notes | 8,980 | 1,741 | |
Amortization of deferred financing costs | 904 | 315 | |
Amortization of original issue discount | 122 | 21 | |
Interest expense , net | 10,022 | 4,031 | $ 4,031 |
Senior Secured Notes 2024 | |||
Debt Instrument [Line Items] | |||
Amortization of deferred financing costs | 589 | 103 | |
New ABL Facility | |||
Debt Instrument [Line Items] | |||
Amortization of deferred financing costs | 214 | 37 | |
Algeco ABL facility | |||
Debt Instrument [Line Items] | |||
Amortization of deferred financing costs | $ 101 | $ 174 |
Debt - Interest Expense and Def
Debt - Interest Expense and Deferred Financing Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Mar. 15, 2019 | |
Debt | ||||
Interest incurred and expensed on debt | $ 8,980 | $ 1,741 | ||
Debt issuance costs | 13,278 | $ 13,866 | ||
Amortization of deferred financing costs | 904 | 315 | ||
Loss on extinguishment of debt | $ (907) | (907) | ||
Algeco ABL facility | ||||
Debt | ||||
Loss on extinguishment of debt | 900 | |||
Senior Secured Notes 2024 | ||||
Debt | ||||
Debt issuance costs | 13,278 | $ 15,900 | ||
Unamortized debt discount | 3,300 | |||
Accumulated amortization of deferred financing costs | 2,600 | 2,000 | ||
Accumulated amortization of debt issuance costs | 500 | 400 | ||
New ABL Facility | ||||
Debt | ||||
Debt issuance costs | 3,900 | |||
New ABL Facility | Algeco ABL facility | ||||
Debt | ||||
Debt issuance costs | 1,800 | |||
Accumulated amortization related to revolver deferred financing costs | $ 1,300 | $ 1,100 |
Debt - Future Maturities (Detai
Debt - Future Maturities (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Future maturities of long term debt | |
Rest of 2020 | $ 1,712 |
2021 | 700 |
2022 | 303 |
2024 | 85,000 |
Thereafter | 340,000 |
Long-term debt, net | $ 427,715 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Income Taxes | |||
Income tax expense (benefit) | $ 233 | $ (1,900) | $ (1,850) |
Effective tax rate | 5.80% | 11.70% |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Carrying amounts and fair values of financial assets and liabilities | |||
Transfers of financials assets form level 1 to level 2 | $ 0 | $ 0 | $ 0 |
Transfers of financials assets form level 2 to level 1 | 0 | 0 | 0 |
Transfers of financials assets in and out of level 3 | 0 | 0 | 0 |
Transfers of financials liabilities form level 1 to level 2 | 0 | 0 | 0 |
Transfers of financials liabilities form level 2 to level 1 | 0 | 0 | 0 |
Transfers of financials liabilities in and out of level 3 | 0 | $ 0 | 0 |
Carrying amount | New ABL Facility | Level 2 | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Debt Instrument, Fair Value Disclosure, | (85,000) | (80,000) | |
Fair value | New ABL Facility | Level 2 | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Debt Instrument, Fair Value Disclosure, | (85,000) | (80,000) | |
Senior Secured Notes 2024 | Carrying amount | Level 1 | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Debt Instrument, Fair Value Disclosure, | (323,968) | (323,258) | |
Senior Secured Notes 2024 | Fair value | Level 1 | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Debt Instrument, Fair Value Disclosure, | $ (170,000) | $ (325,693) |
Business Restructuring (Details
Business Restructuring (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Restructuring Reserve [Roll Forward] | |||
Balance at the beginning | $ 1,462 | $ 1,462 | |
Charges during the period | $ 0 | 168 | $ 168 |
Cash payments during the year | $ (1,630) | ||
Expected to be incurred | $ 0 |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jun. 30, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Related parties | ||||
Secured Debt | $ 323,968 | $ 323,258 | ||
Debt issuance costs | 13,278 | 13,866 | ||
Accrued | 200 | 200 | ||
Due from related parties | 300 | |||
Selling, general, and administrative expenses | ||||
Related parties | ||||
Loans to officers forgiven amount | 1,600 | |||
Commission | $ 200 | $ 200 | ||
Executive Officer | ||||
Related parties | ||||
Forgiveness period | 4 years | |||
Due from related parties | $ 0 | $ 0 | ||
Executive Officer | Selling, general, and administrative expenses | ||||
Related parties | ||||
Compensation expense recognized | 0 | 1,600 | ||
Arrow holdings S.a.r.l. | Target Parent | ||||
Related parties | ||||
Rent expense | $ 100 | $ 100 | ||
Algeco Global | ||||
Related parties | ||||
Compensation percentage | 100.00% | |||
Extended term of agreement | 12 months | |||
Reimbursement of employee compensation | $ 300 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Numerator | |||
Net loss | $ 3,801 | $ (13,979) | $ (13,979) |
Weighted average number shares outstanding - basic and diluted | 95,849,854 | 79,589,905 | 79,589,905 |
Net income (loss) per share - basic and diluted | $ 0.04 | $ (0.18) | $ (0.18) |
Founder Shares | |||
Numerator | |||
Shares issued to the Sellers | 8,050,000 | ||
Founder Shares | |||
Numerator | |||
Excluded from computation of loss per share | 5,015,898 | ||
Warrant | |||
Numerator | |||
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 | Mar. 31, 2020 | Dec. 31, 2019 | Aug. 15, 2019 | May 21, 2019 | Mar. 15, 2019 | Mar. 14, 2019 | Mar. 14, 2018 |
Common Stock | ||||||||
Common stock shares issued | 105,338,760 | 105,254,929 | 105,232,933 | |||||
Common stock, Number of share outstanding | 100,923,993 | 100,840,162 | ||||||
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 | |||||||
Share Repurchase Program 2019 Plan | ||||||||
Treasury Stock, Shares [Abstract] | ||||||||
Stock repurchase authorized amount | $ 75 | |||||||
Repurchase of common stock as part of a share repurchase program (In Shares) | 4,414,767 | |||||||
Repurchase of common stock as part of a share repurchase program | $ 23.6 | |||||||
Remaining authorized repurchase amount | $ 51.4 | |||||||
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 | ||||||||
Number of stock issued for each warrant | 1 | |||||||
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 | 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 | |||||||
Maximum | ||||||||
Warrants | ||||||||
Aggregate purchase price per warrant | $ 10.83 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | Mar. 04, 2020installmentitemshares | Jan. 02, 2020installmentshares | Sep. 03, 2019installmentshares | May 21, 2019installmentitemshares | Mar. 31, 2020$ / sharesshares | Dec. 31, 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 | 16,842 | ||||||
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 | 1 | |||||
Options | |||||||
Outstanding Options at beginning of period (in shares) | 401,797 | ||||||
Granted (in shares) | 628,498 | ||||||
Vested and released (in shares) | (113,487) | ||||||
Forfeited (in shares) | (5,194) | ||||||
Outstanding Options at end of period (in shares) | 911,614 | 401,797 | |||||
Weighted Average Grant Date Fair Value per Share | |||||||
Outstanding Options at beginning of period (in shares) | $ / shares | $ 9.31 | ||||||
Granted (in dollars per share) | $ / shares | 4.70 | ||||||
Vested and released (in dollars per share) | $ / shares | 5.81 | ||||||
Forfeited (in dollars per share) | $ / shares | 10.83 | ||||||
Outstanding Options at end of period (in dollars per share) | $ / shares | $ 6.63 | $ 9.31 | |||||
Time-based restricted stock unit | Chief Financial Officer | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of anniversaries the awards vest | installment | 4 | ||||||
Time-based restricted stock unit | Chief Financial Officer | Grant One | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted (in shares) | 81,434 | ||||||
Time-based restricted stock unit | Chief Financial Officer | Grant Two | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted (in shares) | 48,860 | ||||||
Time-based restricted stock unit | CEO | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of equal installments | installment | 12 | 6 | |||||
Options | |||||||
Granted (in shares) | 124,741 | 30,000 | |||||
Time-based stock option awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Right to buy number of shares upon vesting | 1 | ||||||
Number of anniversaries the awards vest | item | 4 | ||||||
Granted (in shares) | 1,140,873 | ||||||
Director | 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 | ||||||
Vesting period (in years) | 1 year | ||||||
Granted (in shares) | 503,757 | 81,967 | |||||
Employees | 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 | ||||||
Employees | Time-based stock option awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of equal installments | installment | 4 | ||||||
Granted (in shares) | 1,140,873 | 482,792 | |||||
Employees | Time-based stock option awards | Chief Financial Officer | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted (in shares) | 171,429 |
Stock-Based Compensation - Opti
Stock-Based Compensation - Options to Purchase Common Shares (Details) | Mar. 04, 2020shares | Sep. 03, 2019shares | May 21, 2019installmentitem$ / sharesshares | Mar. 31, 2020shares |
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share price | $ / shares | $ 10.83 | |||
Time-based stock option awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 1,140,873 | |||
Right to buy number of shares upon vesting | 1 | |||
Per value | $ / shares | $ 0.0001 | |||
Number of anniversaries the awards vest | item | 4 | |||
Expiration Period (in years) | 10 years | |||
Time-based stock option awards | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share price | $ / shares | $ 4.67 | |||
Employees | Time-based stock option awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 1,140,873 | 482,792 | ||
Number of equal installments | installment | 4 | |||
Chief Financial Officer | Employees | Time-based stock option awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 171,429 |
Stock-Based Compensation - Chan
Stock-Based Compensation - Changes in stock options (Details) - Time-based stock option awards - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Number of shares | ||
Outstanding Options at beginning of period (in shares) | 579,370 | |
Granted (in shares) | 1,140,873 | |
Forfeited (in shares) | (16,842) | |
Outstanding Options at end of period (in shares) | 1,703,401 | 579,370 |
Exercisable Options at end of period (in shares) | 2,807 | |
Weighted Average Exercise Price per Share | ||
Outstanding Options at beginning of period (in dollars per share) | $ 9.44 | |
Granted (in dollars per share) | 4.51 | |
Forfeited (in dollars per share) | 10.83 | |
Outstanding Options at end of period (in dollars per share) | $ 6.15 | $ 9.44 |
Weighted Average Contractual Life (Years) | ||
Outstanding Options (in years) | 9 years 8 months 5 days | 9 years 5 months 23 days |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions (Details) | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Assumptions: | |
Forfeited (in shares) | shares | 16,842 |
Time-based stock option awards | |
Assumptions: | |
Weighted average expected stock volatility | 25.80% |
Expected dividend yield | 0.00% |
Expected term (years) | 6 years 3 months |
Weighted-average grant date fair value | $ 1.88 |
Minimum | |
Assumptions: | |
Exercise price (range) | 4.51 |
Maximum | |
Assumptions: | |
Exercise price (range) | $ 10.83 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Time-based restricted stock unit | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based Compensation Expense | $ 0.8 | $ 0 |
Associated tax benefit from stock-based compensation expense | 0 | |
Unrecognized compensation expense | $ 4.5 | |
Period for unrecognized compensation expense expected to be recognized | 3 years 2 months 12 days | |
Time-based stock option awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based Compensation Expense | $ 0.1 | 0 |
Unrecognized compensation expense | $ 2.9 | |
Period for unrecognized compensation expense expected to be recognized | 3 years 7 months 28 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 |
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 | $ 0.2 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
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 | $ 0.1 | $ 0.3 |
Business Segments (Details)
Business Segments (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($)segment | Dec. 31, 2019USD ($) | |
Business segments | |||
Number of reportable segments | segment | 3 | ||
Number of operating segments | segment | 3 | 3 | |
Revenue | $ 71,655 | $ 81,982 | |
Adjusted gross profit | 39,768 | $ 46,080 | |
Total assets | 593,188 | 600,792 | |
Operating Segments | |||
Business segments | |||
Revenue | 71,655 | 81,982 | |
Adjusted gross profit | 40,044 | 47,655 | |
Total assets | 399,684 | 406,274 | |
Permian Basin | Operating Segments | |||
Business segments | |||
Revenue | 49,131 | 52,712 | |
Adjusted gross profit | 26,784 | 32,594 | |
Total assets | 302,732 | 305,701 | |
Bakken Basin | Operating Segments | |||
Business segments | |||
Revenue | 4,185 | 4,772 | |
Adjusted gross profit | 1,404 | 1,635 | |
Total assets | 57,764 | 59,134 | |
Government | Operating Segments | |||
Business segments | |||
Revenue | 16,592 | 16,555 | |
Adjusted gross profit | 11,580 | 11,851 | |
Total assets | 33,233 | 35,484 | |
All Other | |||
Business segments | |||
Total assets | 5,955 | 5,955 | |
All Other | Operating Segments | |||
Business segments | |||
Revenue | 1,747 | 7,943 | |
Adjusted gross profit | 276 | $ 1,575 | |
Total assets | $ 5,955 | $ 5,955 |
Business Segments - Reconciliat
Business Segments - Reconciliation of total segment adjusted gross profit to total combined income (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Business Segments | |||
Total reportable segment adjusted gross profit | $ 39,768 | $ 46,080 | |
Other adjusted gross profit | 276 | 1,575 | |
Depreciation and amortization | (17,013) | (13,664) | |
Selling, general and administrative expenses | (9,990) | (44,752) | $ (44,752) |
Restructuring costs | 0 | (168) | (168) |
Other (income) expense, net | 1,015 | 38 | 38 |
Loss on extinguishment of debt | (907) | (907) | |
Interest expense, net | (10,022) | (4,031) | (4,031) |
Income (loss) before income tax | $ 4,034 | $ (15,829) | $ (15,829) |
Business Segments - Reconcili_2
Business Segments - Reconciliation of total segment assets to total combined assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 593,188 | $ 600,792 |
Restricted cash | 52 | 52 |
Total reportable segment assets | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 393,729 | 400,319 |
All Other | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 5,955 | 5,955 |
Other unallocated amounts | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 193,452 | $ 194,466 |
Business Segments - Unallocated
Business Segments - Unallocated assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Total current assets | $ 62,595 | $ 60,795 |
Other intangible assets, net | 114,119 | 117,866 |
Deferred tax asset | 6,472 | 6,427 |
Deferred financing costs revolver, net | 4,373 | 4,688 |
Other non-current assets | 5,893 | 4,690 |
Total assets | 593,188 | 600,792 |
Other unallocated amounts | ||
Total current assets | 62,595 | 60,795 |
Other intangible assets, net | 114,119 | 117,866 |
Deferred tax asset | 6,472 | 6,427 |
Deferred financing costs revolver, net | 4,373 | 4,688 |
Other non-current assets | 5,893 | 4,690 |
Total assets | $ 193,452 | $ 194,466 |