Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 04, 2023 | |
Entity Listings [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-38343 | |
Entity Registrant Name | TARGET HOSPITALITY CORP. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 98-1378631 | |
Entity Address, Address Line One | 9320 Lakeside Boulevard, Suite 300 | |
Entity Address, City or Town | The Woodlands | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77381 | |
City Area Code | 800 | |
Local Phone Number | 832-4242 | |
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 | 101,596,056 | |
Entity Central Index Key | 0001712189 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Common Stock [Member] | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Common stock, par value $0.0001 per share | |
Trading Symbol | TH | |
Security Exchange Name | NASDAQ | |
Warrants to purchase common stock [Member] | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Warrants to purchase common stock | |
Trading Symbol | THWWW | |
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 69,578 | $ 181,673 |
Accounts receivable, less allowance for doubtful accounts of $268 and $4, respectively | 53,325 | 42,153 |
Prepaid expenses and other assets | 6,940 | 12,553 |
Total current assets | 129,843 | 236,379 |
Specialty rental assets, net | 366,226 | 357,129 |
Other property, plant and equipment, net | 33,314 | 31,898 |
Operating lease right-of-use assets, net | 19,718 | 27,298 |
Goodwill | 41,038 | 41,038 |
Other intangible assets, net | 73,026 | 75,182 |
Deferred financing costs revolver, net | 1,682 | 896 |
Other non-current assets | 1,121 | 1,907 |
Total assets | 665,968 | 771,727 |
Current liabilities: | ||
Accounts payable | 17,247 | 17,563 |
Accrued liabilities | 31,926 | 39,642 |
Deferred revenue and customer deposits | 50,578 | 120,040 |
Current portion of operating lease obligations | 9,672 | 12,516 |
Current portion of finance lease and other financing obligations (Note 8) | 1,276 | 1,135 |
Current warrant liabilities | 5,351 | |
Current portion of long-term debt, net (Note 8) | 207,405 | |
Total current liabilities | 323,455 | 190,896 |
Long-term debt (Note 8): | ||
Principal amount | 334,500 | |
Less: unamortized original issue discount | (360) | (971) |
Less: unamortized term loan deferred financing costs | (1,735) | (4,681) |
Long-term debt, net | 328,848 | |
Long-term finance lease and other financing obligations | 1,110 | 1,088 |
Long-term operating lease obligations | 9,088 | 11,104 |
Other non-current liabilities | 182 | 6,309 |
Deferred revenue and customer deposits | 4,583 | 5,479 |
Deferred tax liability | 34,893 | 15,172 |
Asset retirement obligations | 2,334 | 2,247 |
Warrant liabilities | 9,737 | |
Total liabilities | 375,645 | 570,880 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Common Stock, $0.0001 par, 400,000,000 authorized, 111,025,911 issued and 101,595,246 outstanding as of June 30, 2023 and 109,747,366 issued and 100,316,701 outstanding as of December 31, 2022. | 10 | 10 |
Common Stock in treasury at cost, 9,430,665 shares as of June 30, 2023 and as of December 31, 2022. | (23,559) | (23,559) |
Additional paid-in-capital | 138,779 | 139,287 |
Accumulated other comprehensive loss | (2,600) | (2,574) |
Accumulated earnings | 177,693 | 87,683 |
Total stockholders' equity | 290,323 | 200,847 |
Total liabilities and stockholders' equity | $ 665,968 | $ 771,727 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Consolidated Balance Sheets | ||
Allowance for doubtful accounts | $ 268 | $ 4 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock shares authorized | 400,000,000 | 400,000,000 |
Common stock shares issued | 111,025,911 | 109,747,366 |
Common stock, number of share outstanding | 101,595,246 | 100,316,701 |
Treasury stock, shares | 9,430,665 | 9,430,665 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenue: | ||||
Revenue | $ 92,523 | $ 74,370 | $ 187,359 | $ 133,045 |
Total revenue | 143,630 | 109,647 | 291,449 | 189,982 |
Costs: | ||||
Depreciation of specialty rental assets | 17,992 | 11,861 | 35,589 | 24,661 |
Gross profit | 82,366 | 52,545 | 164,329 | 80,460 |
Selling, general and administrative | 13,457 | 11,103 | 28,656 | 22,862 |
Other depreciation and amortization | 3,841 | 3,585 | 7,644 | 7,580 |
Other expense (income), net | 311 | 24 | 1,315 | (195) |
Operating income | 64,757 | 37,833 | 126,714 | 50,213 |
Loss on extinguishment of debt | 2,128 | |||
Interest expense, net | 5,276 | 9,667 | 12,773 | 19,238 |
Change in fair value of warrant liabilities | (675) | (853) | (4,385) | 374 |
Income before income tax | 60,156 | 29,019 | 116,198 | 30,601 |
Income tax expense | 13,703 | 6,168 | 25,920 | 7,256 |
Net income | 46,453 | 22,851 | 90,278 | 23,345 |
Change in fair value of warrant liabilities | (675) | (853) | (4,385) | 374 |
Net income attributable to common stockholders - diluted | 45,778 | 21,998 | 85,893 | 23,719 |
Other comprehensive loss | ||||
Foreign currency translation | (5) | (47) | (26) | (65) |
Comprehensive income | $ 46,448 | $ 22,804 | $ 90,252 | $ 23,280 |
Two Class Method: | ||||
Weighted average number shares outstanding - basic | 101,465,088 | 97,076,935 | 101,056,450 | 97,007,247 |
Weighted average number shares outstanding - diluted | 105,045,608 | 97,076,935 | 105,699,684 | 97,007,247 |
Net income per share - basic | $ 0.46 | $ 0.24 | $ 0.89 | $ 0.24 |
Net income per share - diluted | $ 0.44 | $ 0.24 | $ 0.81 | $ 0.24 |
Services | ||||
Revenue: | ||||
Revenue | $ 92,523 | $ 74,370 | $ 187,359 | $ 133,045 |
Costs: | ||||
Costs | 35,734 | 40,014 | 75,434 | 74,705 |
Specialty rental | ||||
Revenue: | ||||
Revenue, subject to ASC 840 | 51,107 | 35,277 | 104,090 | 56,937 |
Costs: | ||||
Costs | $ 7,538 | $ 5,227 | $ 16,097 | $ 10,156 |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Changes in Stockholders Equity - USD ($) $ in Thousands | Cumulative Effect, Period of Adoption, Adjustment Accumulated Earnings | Cumulative Effect, Period of Adoption, Adjustment | Cumulative Effect, Period of Adoption, Adjusted Balance Common Stock | Cumulative Effect, Period of Adoption, Adjusted Balance Treasury Stock | Cumulative Effect, Period of Adoption, Adjusted Balance Additional Paid-in Capital | Cumulative Effect, Period of Adoption, Adjusted Balance Accumulated Other Comprehensive Loss | Cumulative Effect, Period of Adoption, Adjusted Balance Accumulated Earnings | Cumulative Effect, Period of Adoption, Adjusted Balance | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Earnings | Total |
Beginning Balances at Dec. 31, 2021 | $ 10 | $ (23,559) | $ 109,538 | $ (2,462) | $ 13,744 | $ 97,271 | ||||||||
Beginning Balances (In Shares) at Dec. 31, 2021 | 101,952,683 | 4,414,767 | ||||||||||||
Net Income (Loss) | 494 | 494 | ||||||||||||
Stock-based compensation, net | 560 | 560 | ||||||||||||
Cancelled common stock (in shares) | (5,015,898) | 5,015,898 | ||||||||||||
Cumulative translation adjustment | (18) | (18) | ||||||||||||
Ending Balances at Mar. 31, 2022 | $ 10 | $ (23,559) | 110,098 | (2,480) | 14,238 | 98,307 | ||||||||
Ending Balances (In shares) at Mar. 31, 2022 | 96,936,785 | 9,430,665 | ||||||||||||
Beginning Balances at Dec. 31, 2021 | $ 10 | $ (23,559) | 109,538 | (2,462) | 13,744 | 97,271 | ||||||||
Beginning Balances (In Shares) at Dec. 31, 2021 | 101,952,683 | 4,414,767 | ||||||||||||
Net Income (Loss) | 23,345 | |||||||||||||
Cumulative translation adjustment | (65) | |||||||||||||
Ending Balances at Jun. 30, 2022 | $ 10 | $ (23,559) | 113,515 | (2,527) | 37,089 | 124,528 | ||||||||
Ending Balances (In shares) at Jun. 30, 2022 | 97,228,690 | 9,430,665 | ||||||||||||
Beginning Balances at Mar. 31, 2022 | $ 10 | $ (23,559) | 110,098 | (2,480) | 14,238 | 98,307 | ||||||||
Beginning Balances (In Shares) at Mar. 31, 2022 | 96,936,785 | 9,430,665 | ||||||||||||
Net Income (Loss) | 22,851 | 22,851 | ||||||||||||
Stock-based compensation, net | 3,494 | 3,494 | ||||||||||||
Stock-based compensation, net (in shares) | 291,905 | |||||||||||||
Tax withholdings related to net share settlement of equity awards | (77) | (77) | ||||||||||||
Cumulative translation adjustment | (47) | (47) | ||||||||||||
Ending Balances at Jun. 30, 2022 | $ 10 | $ (23,559) | 113,515 | (2,527) | 37,089 | 124,528 | ||||||||
Ending Balances (In shares) at Jun. 30, 2022 | 97,228,690 | 9,430,665 | ||||||||||||
Beginning Balances at Dec. 31, 2022 | $ (268) | $ (268) | $ 10 | $ (23,559) | $ 139,287 | $ (2,574) | $ 87,415 | $ 200,579 | $ 10 | $ (23,559) | 139,287 | (2,574) | 87,683 | 200,847 |
Beginning Balances (In Shares) at Dec. 31, 2022 | 100,316,701 | 9,430,665 | 100,316,701 | 9,430,665 | ||||||||||
Net Income (Loss) | 43,825 | 43,825 | ||||||||||||
Stock-based compensation, net | 2,112 | 2,112 | ||||||||||||
Stock-based compensation, net (in shares) | 643,662 | |||||||||||||
Tax withholdings related to net share settlement of equity awards | (6,177) | (6,177) | ||||||||||||
Cumulative translation adjustment | (21) | (21) | ||||||||||||
Issuance of Common Stock from exercise of warrants | 42 | 42 | ||||||||||||
Issuance of Common Stock from exercise of warrants (in shares) | 2,869 | |||||||||||||
Issuance of Common Stock from exercise of stock options | 1,252 | 1,252 | ||||||||||||
Issuance of Common Stock from exercise of stock options (in shares) | 410,226 | |||||||||||||
Ending Balances at Mar. 31, 2023 | $ 10 | $ (23,559) | 136,516 | (2,595) | 131,240 | 241,612 | ||||||||
Ending Balances (In shares) at Mar. 31, 2023 | 101,373,458 | 9,430,665 | ||||||||||||
Beginning Balances at Dec. 31, 2022 | $ (268) | $ (268) | $ 10 | $ (23,559) | $ 139,287 | $ (2,574) | $ 87,415 | $ 200,579 | $ 10 | $ (23,559) | 139,287 | (2,574) | 87,683 | 200,847 |
Beginning Balances (In Shares) at Dec. 31, 2022 | 100,316,701 | 9,430,665 | 100,316,701 | 9,430,665 | ||||||||||
Net Income (Loss) | 90,278 | |||||||||||||
Cumulative translation adjustment | (26) | |||||||||||||
Ending Balances at Jun. 30, 2023 | $ 10 | $ (23,559) | 138,779 | (2,600) | 177,693 | 290,323 | ||||||||
Ending Balances (In shares) at Jun. 30, 2023 | 101,595,246 | 9,430,665 | ||||||||||||
Beginning Balances at Mar. 31, 2023 | $ 10 | $ (23,559) | 136,516 | (2,595) | 131,240 | 241,612 | ||||||||
Beginning Balances (In Shares) at Mar. 31, 2023 | 101,373,458 | 9,430,665 | ||||||||||||
Net Income (Loss) | 46,453 | 46,453 | ||||||||||||
Stock-based compensation, net | 2,337 | 2,337 | ||||||||||||
Stock-based compensation, net (in shares) | 207,288 | |||||||||||||
Tax withholdings related to net share settlement of equity awards | (241) | (241) | ||||||||||||
Cumulative translation adjustment | (5) | (5) | ||||||||||||
Issuance of Common Stock from exercise of warrants | 167 | 167 | ||||||||||||
Issuance of Common Stock from exercise of warrants (in shares) | 14,500 | |||||||||||||
Ending Balances at Jun. 30, 2023 | $ 10 | $ (23,559) | $ 138,779 | $ (2,600) | $ 177,693 | $ 290,323 | ||||||||
Ending Balances (In shares) at Jun. 30, 2023 | 101,595,246 | 9,430,665 |
Unaudited Consolidated Statem_3
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities: | ||
Net Income (Loss) | $ 90,278 | $ 23,345 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation | 36,530 | 25,386 |
Amortization of intangible assets | 6,703 | 6,855 |
Noncash operating lease expense | 9,471 | |
Accretion of asset retirement obligation | 87 | 85 |
Amortization of deferred financing costs | 1,753 | 2,296 |
Amortization of original issue discount | 313 | 346 |
Change in fair value of warrant liabilities | (4,385) | 374 |
Stock-based compensation expense | 9,113 | 5,227 |
Gain on disposal of specialty rental assets and other property, plant and equipment | 207 | (101) |
Loss on extinguishment of debt | 2,128 | |
Deferred income taxes | 19,722 | 6,350 |
Provision for loss on receivables, net of recoveries | 65 | 163 |
Changes in operating assets and liabilities | ||
Accounts receivable | (11,547) | (49,714) |
Prepaid expenses and other assets | 5,621 | 2,168 |
Accounts payable and other accrued liabilities | (19,425) | (771) |
Deferred revenue and customer deposits | (70,359) | (26,191) |
Operating lease obligation | (6,751) | |
Other non-current assets and liabilities | 751 | 815 |
Net cash provided by (used in) operating activities | 70,275 | (3,367) |
Cash flows from investing activities: | ||
Purchase of specialty rental assets | (42,916) | (15,424) |
Purchase of property, plant, and equipment | (1,493) | (15,955) |
Acquired intangible assets | (4,547) | |
Proceeds from sale of specialty rental assets and other property, plant and equipment | 165 | 615 |
Net cash used in investing activities | (48,791) | (30,764) |
Cash flows from financing activities: | ||
Principal payments on finance and finance lease obligations | (701) | (297) |
Principal payments on borrowings from ABL Facility | (16,000) | |
Proceeds from borrowings on ABL | 36,800 | |
Repayment of Senior Notes | (125,000) | |
Payment of issuance costs from warrant exchange | (1,504) | |
Proceeds from issuance of Common Stock from exercise of warrants | 209 | |
Proceeds from issuance of Common Stock from exercise of options | 1,252 | |
Payment of deferred financing costs | (1,423) | |
Taxes paid related to net share settlement of equity awards | (6,418) | (77) |
Net cash provided by (used in) financing activities | (133,585) | 20,426 |
Effect of exchange rate changes on cash and cash equivalents | 6 | (3) |
Net decrease in cash and cash equivalents | (112,095) | (13,708) |
Cash and cash equivalents - beginning of period | 181,673 | 23,406 |
Cash and cash equivalents - end of period | 69,578 | 9,698 |
Non-cash investing and financing activity: | ||
Non-cash change in accrued capital expenditures | (2,142) | (8,349) |
Non-cash change in finance lease obligations | $ (882) | $ (654) |
Organization and Nature of Oper
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | 1. Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies Organization and Nature of Operations Target Hospitality Corp. (“Target Hospitality” and, together with its subsidiaries, the “Company”) was formed on March 15, 2019 and is one of North America’s largest providers of vertically integrated specialty rental and value-added hospitality services. 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 the natural resources development and government sectors principally located in the West Texas, South Texas, New Mexico and Midwest regions. The Company, whose securities are listed on the Nasdaq Capital Market, together with its wholly owned subsidiaries, Topaz Holdings LLC, a Delaware limited liability company (“Topaz”), and Arrow Bidco, LLC, a Delaware limited liability company (“Arrow Bidco”), serve as the holding companies for the businesses of Target Logistics Management, LLC and its subsidiaries (“Target”) and RL Signor Holdings, LLC (“Signor”). TDR Capital LLP indirectly owns approximately 64% 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 who purchased the shares of Platinum Eagle in a private placement transaction, and other public shareholders. 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 Target Hospitality’s Annual Report on the Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”). The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2023 or any future period. The accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of financial position as of June 30, 2023, and results of operations for the three and six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022. The consolidated balance sheet as of December 31, 2022, was derived from the audited consolidated balance sheets of Target Hospitality, but does not contain all of the footnote disclosures from those annual financial statements. 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. 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 is earned 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 evenly over the contractual term of the arrangement, based on a contractual fixed minimum amount and defined period of performance. Some of our revenue is recognized on a daily basis, for each night a customer stays, at a contractual day rate. Our customers typically contract for accommodation services under committed contracts with terms that most often range from several months to three years. Our payment terms vary by type and location of our customer and the service offered. The time between invoicing and when payment is due is not significant. When lodging and services are billed and collected in advance, recognition of revenue is deferred until services are rendered. Cost of services includes labor, food, utilities, supplies, leasing and other direct costs associated with operating the lodging units as well as repair and maintenance expenses. Cost of rental includes leasing costs, utilities, 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. 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. Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses ASU 2016-13, Topic 326, or ASC 326 Codification Improvements to Topic 326, Financial Instruments - Credit Losses The following table presents the impact of the adoption of ASC 326 on the consolidated balance sheet as of January 1, 2023: Balance Balance Pre-Adoption Adjustments Post-Adoption Accounts receivable, less allowance for doubtful accounts $ 42,153 $ (268) $ 41,885 Accumulated earnings $ 87,683 $ (268) $ 87,415 |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2023 | |
Revenue | |
Revenue | 2. Revenue Total revenue recognized under Topic 606 was $187.4 million and $133.0 million for the six months ended June 30, 2023 and 2022, respectively, while specialty rental income was $104.1 million and $56.9 million subject to the guidance of ASC 842 for the six months ended June 30, 2023 and 2022, respectively. Total revenue recognized under Topic 606 was $92.5 million and $74.4 million for the three months ended June 30, 2023 and 2022, respectively, while specialty rental income was $51.1 million and $35.3 million subject to the guidance of ASC 842 for the three months ended June 30, 2023 and 2022, respectively. The following table disaggregates our services income by our two reportable segments as well as the All Other category: Hospitality and Facility Services – South (“HFS – South”), Government, and All Other for the dates indicated below: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 2023 2022 HFS – South $ 37,645 $ 31,025 $ 71,933 $ 61,148 Government $ 51,580 $ 41,233 $ 109,584 $ 67,816 All Other $ 3,298 $ 2,112 $ 5,842 $ 4,081 Total services revenues $ 92,523 $ 74,370 $ 187,359 $ 133,045 Refer to Note 17 – Business Segments, for a discussion of the change in our reportable segments, which was applied to all comparison periods, including the above table. Allowance for Credit Losses The Company maintains allowances for credit losses. These allowances reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. Our estimate could require a change based on changing circumstances, including changes in the economy or in the circumstances of individual customers. Contract Assets and Liabilities We do not have any contract assets. Contract liabilities primarily consist of deferred revenue that represent payments for room nights that the customer may use in the future as well as advanced payments for community builds, and mobilization of asset activities related to community expansions that are being recognized over the related contract period. Activity in the deferred revenue accounts as of the dates indicated below was as follows: For Six Months Ended June 30, 2023 2022 Balances at Beginning of the Period $ 125,519 $ 34,411 Additions to deferred revenue — 1,596 Revenue recognized (70,358) (27,787) Balances at End of the Period $ 55,161 $ 8,220 As of June 30, 2023, 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: For the Years Ended December 31, 2023 2024 2025 2026 2027 Total Revenue expected to be recognized as of June 30, 2023 $ 87,591 $ 36,120 $ 19,490 $ 14,328 $ - $ 157,529 The Company applied some of the practical expedients in Topic 606, including the “right to invoice” practical expedient, 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 for contracts without minimum revenue commitments. 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. |
Specialty Rental Assets, Net
Specialty Rental Assets, Net | 6 Months Ended |
Jun. 30, 2023 | |
Specialty Rental Assets, Net | |
Specialty Rental Assets, Net | 3. Specialty Rental Assets, Net Specialty rental assets, net at the dates indicated below consisted of the following: June 30, December 31, 2023 2022 Specialty rental assets $ 733,909 $ 698,095 Construction-in-process 5,056 4,653 Less: accumulated depreciation (372,739) (345,619) Specialty rental assets, net $ 366,226 $ 357,129 Depreciation expense related to specialty rental assets was $35.6 million and $24.7 million for the six months ended June 30, 2023 and 2022, respectively, and is included in depreciation of specialty rental assets in the consolidated statements of comprehensive income. For the three months ended June 30, 2023 and 2022, depreciation expense of specialty rental assets was $18.0 million and $11.9 million, respectively, and is included in depreciation of specialty rental assets in the consolidated statements of comprehensive income. During the six months ended June 30, 2023, the Company disposed of assets with accumulated depreciation of approximately $8.7 million along with the related gross cost of approximately $9.1 million. These disposals were primarily associated with fully depreciated asset retirement costs as well as a sale of assets. These asset disposals resulted in disposal costs of approximately $1.2 million and a net loss on the sales and disposal of assets of approximately $0.2 million (net of sale proceeds of approximately $0.2 million) and is reported within other expense (income), net in the accompanying consolidated statement of comprehensive income for the six months ended June 30, 2023. In January 2023, the Company purchased a group of assets consisting of land, specialty rental assets (modular units, site work, and furniture & fixtures) and intangibles for approximately $18.6 million, of which approximately $13.2 million is included within this asset group, to support growth of the HFS – South segment discussed in Note 17, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible and intangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land, specialty rental assets and intangible assets. During the three months ended June 30, 2023, the Company purchased a group of assets consisting of land and specialty rental assets (modular units, site work, and furniture & fixtures) for approximately $5.0 million, of which approximately $4.6 million is included within this asset group, to support growth of the Government segment discussed in Note 17, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land and specialty rental assets. |
Other Property, Plant and Equip
Other Property, Plant and Equipment, Net | 6 Months Ended |
Jun. 30, 2023 | |
Other Property, Plant and Equipment, Net | |
Other Property, Plant and Equipment, Net | 4. Other Property, Plant and Equipment, Net Other property, plant and equipment, net at the dates indicated below, consisted of the following: June 30, December 31, 2023 2022 Land $ 29,784 $ 28,483 Buildings and leasehold improvements 799 769 Machinery and office equipment 1,708 1,581 Other 8,212 7,341 40,503 38,174 Less: accumulated depreciation (7,189) (6,276) Total other property, plant and equipment, net $ 33,314 $ 31,898 Depreciation expense related to other property, plant and equipment was $0.9 million and $0.7 million for the six months ended June 30, 2023 and 2022, respectively, and is included in other depreciation and amortization in the consolidated statements of comprehensive income. For the three months ended June 30, 2023 and 2022, depreciation expense related to other property, plant and equipment was $0.5 million and $0.4 million, respectively, and is included in other depreciation and amortization in the consolidated statements of comprehensive income. In January 2023, the Company purchased a group of assets consisting of land, specialty rental assets (modular units, site work, and furniture & fixtures) and intangibles for approximately $18.6 million, of which approximately $0.9 million is included within this asset group related to the land portion of the acquisition, to support growth of the HFS – South segment discussed in Note 17, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible and intangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land, specialty rental assets and intangible assets. During the three months ended June 30, 2023, the Company purchased a group of assets consisting of land and specialty rental assets (modular units, site work, and furniture & fixtures) for approximately $5.0 million, of which approximately $0.4 million is included within this asset group, to support growth of the Government segment discussed in Note 17, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land and specialty rental assets. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets, net | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Other Intangible Assets, net | |
Goodwill and Other Intangible Assets, net | 5. Goodwill and Other Intangible Assets, net The financial statements reflect goodwill from previous acquisitions that is all attributable to the HFS – South business segment and reporting unit. Changes in the carrying amount of goodwill were as follows: HFS - South Balance at January 1, 2022 $ 41,038 Changes in Goodwill - Balance at December 31, 2022 41,038 Changes in Goodwill - Balance at June 30, 2023 $ 41,038 Intangible assets other than goodwill at the dates indicated below consisted of the following: June 30, 2023 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 4.4 $ 133,105 $ (76,796) $ 56,309 Non-compete agreement 4.6 349 (32) 317 Total 133,454 (76,828) 56,626 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 149,854 $ (76,828) $ 73,026 December 31, 2022 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 4.6 $ 128,907 $ (70,125) $ 58,782 Total 128,907 (70,125) 58,782 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 145,307 $ (70,125) $ 75,182 For the six months ended June 30, 2023 and 2022, amortization expense related to intangible assets was $6.7 million and $6.9 million, respectively, and is included in other depreciation and amortization in the consolidated statements of comprehensive income. For the three months ended June 30, 2023 and 2022, amortization expense related to intangible assets was $3.4 million and $3.2 million, respectively. In January 2023, the Company purchased a group of assets consisting of land, specialty rental assets (modular units, site work, and furniture & fixtures) and intangibles for approximately $18.6 million, of which approximately $4.5 million is included within this intangible asset group comprised of approximately $4.2 million of customer relationships and approximately $0.3 million related to a non-compete agreement. This acquisition was completed in order to support growth of the HFS – South segment discussed in Note 17, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible and intangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land, specialty rental assets and intangible assets. The estimated aggregate amortization expense as of June 30, 2023 for each of the next five years and thereafter is as follows: Rest of 2023 $ 6,744 2024 13,475 2025 13,475 2026 12,879 2027 8,270 Thereafter 1,783 Total $ 56,626 |
Other Non-Current Assets
Other Non-Current Assets | 6 Months Ended |
Jun. 30, 2023 | |
Other Non-Current Assets | |
Other Non-Current Assets | 6. Other Non-Current Assets Other non-current assets includes capitalized software implementation costs for the implementation of cloud computing systems. 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: June 30, December 31, 2023 2022 Cloud computing implementation costs $ 7,130 $ 7,198 Less: accumulated amortization (6,009) (5,357) Other non-current assets $ 1,121 $ 1,841 The majority of 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. |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Accrued Liabilities. | |
Accrued Liabilities | 7. Accrued Liabilities Accrued liabilities as of the dates indicated below consists of the following: June 30, December 31, 2023 2022 Employee accrued compensation expense $ 6,090 $ 11,873 Other accrued liabilities 19,913 18,230 Accrued interest on debt 5,923 9,539 Total accrued liabilities $ 31,926 $ 39,642 Other accrued liabilities in the above table relates primarily to accrued utilities, real estate and sales taxes, state and federal income taxes, and other accrued operating expenses. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt | |
Debt | 8. Debt Senior Secured Notes 2024 On March 15, 2019, Arrow 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”) by and among Arrow 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 and began September 15, 2019. On March 15, 2023, Arrow Bidco redeemed $125 million in aggregate principal amount of the outstanding Notes. The redemption was accounted for as a partial extinguishment of debt. Refer to the table below for the components of the amounts related to the Notes, which are recognized as a current liability within the current portion of long-term debt, net in the accompanying consolidated balance sheet as of June 30, 2023. June 30, 2023 Principal amount of 9.50% Senior Secured Notes, due 2024 $ 209,500 Less: unamortized original issue discount (360) Less: unamortized term loan deferred financing costs (1,735) Current portion of long-term debt, net $ 207,405 If Arrow Bidco undergoes a change of control or sells certain of its assets, Arrow Bidco may be required to offer to repurchase the Notes. Arrow 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 a 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 March 15 of each of the years set below. Redemption Year Price 2023 and thereafter 100.000% Arrow Bidco exercised this redemption option for the first time on March 15, 2023 to redeem $125 million of the Notes as discussed above. The Notes are unconditionally guaranteed by Topaz and each of Arrow 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 ABL Facility (as defined below). To the extent lenders under the 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 Arrow Bidco and the Note Guarantors (subject to customary exclusions). The guarantees of the Notes by TLM Equipment, LLC, a Delaware limited liability company which holds certain of Target Hospitality’s assets, are subordinated to its obligations under the ABL Facility. The Notes contain certain negative covenants, including limitations that restrict Arrow 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 Arrow 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 Arrow Bidco or any restricted subsidiary of Arrow Bidco; selling, leasing or transferring any of its property or assets to Arrow Bidco or any restricted subsidiary of Arrow 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 approximately $3.3 million and the unamortized balance of approximately $0.4 million is included as a reduction of the principal within current portion of long-term debt, net on the consolidated balance sheet as of June 30, 2023. The discount is amortized over the life of the Notes using the effective interest method. Arrow Bidco’s ultimate parent, Target Hospitality, has no significant independent assets or operations except as included in the guarantors of the 2024 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. Finance Lease and Other Financing Obligations The Company’s finance lease and other financing obligations as of June 30, 2023 consisted of approximately $2.4 million of finance leases. The finance leases pertain to leases entered into during 2019 through June 30, 2023, for commercial-use vehicles with 36-month The Company’s finance lease and other financing obligations as of December 31, 2022 consisted of approximately $2.2 million of finance leases related to commercial-use vehicles with the same terms as described above. ABL Facility On March 15, 2019, Topaz, Arrow 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 (as amended on February 1, 2023, the “ABL Facility”). During the six months ended June 30, 2023, no amounts were drawn or repaid In accordance with the First Amendment to the ABL Facility on February 1, 2023 (the “First Amendment”), the reference interest rate for LIBOR borrowings changed from LIBOR to Term SOFR (commencing as of the effective date of the First Amendment). Borrowings under the ABL Facility, at the relevant borrower’s (the borrowers under the ABL Facility, the “Borrowers”) option, bear interest at either (1) Term SOFR or (2) a base rate, in each case plus an applicable margin. The applicable margin is 2.25% to 2.75% with respect to Term SOFR borrowings and 1.25% to 1.75% with respect to base rate borrowings. The ABL Facility provides borrowing availability of an amount equal to the lesser of (i) (a) $125 million and (b) the Borrowing Base (defined below) (the “Line Cap”). The Borrowing Base is, at any time of determination, an amount (net of reserves) equal to the sum of: ● 85% of the net book value of the Borrowers’ eligible accounts receivables, plus ● the lesser of (i) 95% of the net book value of the Borrowers’ eligible rental equipment and (ii) 85% of the net orderly liquidation value of the Borrowers’ eligible rental equipment, minus ● customary reserves The ABL Facility includes borrowing capacity available for standby letters of credit of up to $25 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 ABL Facility. In addition, the ABL Facility will provide the Borrowers with the option to increase commitments under the ABL Facility in an aggregate amount not to exceed $75 million plus any voluntary prepayments that are accompanied by permanent commitment reductions under the ABL Facility. As a result of the First Amendment, the termination date of the ABL Facility was extended from September 15, 2023 to February 1, 2028, which extended termination date is subject to a springing maturity that will accelerate the maturity of the ABL Facility if any of the 2024 Senior Secured Notes remain outstanding on the date that is six months prior to the stated maturity date thereof. The obligations under the 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 Arrow Bidco (together with Topaz, the “ABL Guarantors”), other than certain excluded subsidiaries. The ABL Facility is secured by (i) a first priority pledge of the equity interests of Topaz, Arrow Bidco, Target, and Signor 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 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 ABL Facility is less than the greater of (a) $15.625 million and (b) 12.5% of the Line Cap. The 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 Borrowers continued flexibility to operate and develop their businesses. The ABL Facility also contains certain customary representations and warranties, affirmative covenants and events of default. The carrying value of debt outstanding as of the dates indicated below consist of the following: June 30, December 31, 2023 2022 Finance lease and other financing obligations $ 2,386 $ 2,223 ABL Facility — — 9.50% Senior Secured Notes due 2024, face amount 209,500 334,500 Less: unamortized original issue discount (360) (971) Less: unamortized term loan deferred financing costs (1,735) (4,681) Total debt, net 209,791 331,071 Less: current maturities (208,681) (1,135) Total long-term debt $ 1,110 $ 329,936 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 For the six months ended June 30, June 30, June 30, June 30, 2023 2022 2023 2022 Interest incurred on finance lease and other financing obligations $ 50 $ 15 $ 92 $ 29 Interest expense incurred on ABL Facility and Notes 5,094 8,316 12,564 16,567 Amortization of deferred financing costs on ABL facilities and Notes 663 1,161 1,753 2,296 Amortization of original issue discount on Notes 121 175 313 346 Interest income (652) — (1,949) — Interest expense, net $ 5,276 $ 9,667 $ 12,773 $ 19,238 Deferred Financing Costs and Original Issue Discount 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 consolidated balance sheets as of June 30, 2023 and December 31, 2022. Accumulated amortization expense related to the deferred financing costs was approximately $12.7 million and $11.2 million as of June 30, 2023 and December 31, 2022, respectively. Accumulated amortization of the original issue discount was approximately $2.6 million and $2.3 million as of June 30, 2023 and December 31, 2022, respectively. As previously mentioned, the partial redemption of the 2024 Senior Secured Notes on March 15, 2023 was accounted for as a partial extinguishment of debt and consequently, a portion of the unamortized deferred financing costs and unamortized original issue discount were expensed through loss on extinguishment of debt on the consolidated statement of comprehensive income as of the prepayment date. The Company recognized a charge of approximately $1.7 million in loss on extinguishment of debt related to the write-off of unamortized deferred financing costs and unamortized original issue discount for the six months ended June 30, 2023 . Accumulated amortization related to revolver deferred financing costs for the ABL Facility was approximately $5.0 million and $4.8 million as of June 30, 2023 and December 31, 2022, respectively. Revolver deferred financing costs are presented on the consolidated balance sheets as of June 30, 2023 and December 31, 2022 within deferred financing costs revolver, net. In connection with the First Amendment, which was considered a modification for accounting purposes, any unamortized deferred financing costs from the 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 amendment date. As such, the Company recognized a charge of approximately $0.4 million in loss on extinguishment of debt related to the write-off of unamortized deferred financing costs pertaining to non-continuing lenders for the six months ended June 30, 2023. As the borrowing capacity of each of the continuing lenders on the amended ABL Facility was greater than the borrowing capacity of the ABL Facility before the amendment, the unamortized deferred financing costs at the time of the modification of approximately $0.4 million associated with the continuing lenders was deferred and amortized over the remaining term of the ABL Facility. Additionally, the Company incurred and paid approximately $1.4 million of deferred financing costs as a result of the ABL Facility amendment, which are capitalized and presented on the consolidated balance sheet as of June 30, 2023 within deferred financing costs revolver, net. These costs are amortized over the contractual term of the line-of-credit through the maturity date using the straight-line method. 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 and six months ended June 30, 2023 and 2022, respectively. Future maturities The aggregate annual principal maturities of debt and finance lease obligations for each of the next five years and thereafter, based on contractual terms are listed in the table below. The schedule of future maturities as of June 30, 2023, consists of the following: Rest of 2023 $ 565 2024 210,586 2025 674 2026 61 Total $ 211,886 |
Warrant Liabilities
Warrant Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Warrant Liabilities | |
Warrant Liabilities | 9. Warrant Liabilities On January 17, 2018, 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 Warrants”) that occurred simultaneously with the completion of its initial public offering. Each Private Warrant entitles the holder to purchase one share of Common Stock at $11.50 per share. The purchase price of the Private Warrants was added to the proceeds from the Public Offering and was held in the Trust Account until the formation of the Company on March 15, 2019. The Private Warrants (including the shares of Common Stock issuable upon exercise of the Private Warrants) were not transferable, assignable or salable until 30 days after the formation of the Company on March 15, 2019, and they may be exercised on a cashless basis and are non-redeemable so long as they are held by the initial purchasers of the Private Warrants or their permitted transferees. The Company evaluated the Private Warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity Subsequent changes in the estimated fair value of the Private Warrants are reflected in the change in fair value of warrant liabilities in the accompanying consolidated statements of comprehensive income. The change in the estimated fair value of the Private Warrants resulted in a loss (gain) of approximately ($4.4) million and $0.4 million for the six months ended June 30, 2023 and 2022, respectively. For the three months ended June 30, 2023 and 2022, the change in the estimated fair value of the Private Warrants resulted in a gain of approximately ($0.7) million and ($0.9) million, respectively. As of June 30, 2023 and 2022, 1,533,334 and 5,333,334, Private Warrants were outstanding, respectively, which expire no later than March 15, 2024 if they remain unredeemed. As of June 30, 2023, the Private Warrants were classified as current warrant liabilities in the accompanying consolidated balance sheet. The Company determined the following estimated fair values for the outstanding Private Warrants as of the dates indicated below: June 30, December 31, 2023 2022 Warrant liabilities $ 5,351 $ 9,737 Total $ 5,351 $ 9,737 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Taxes | |
Income Taxes | 10. Income Taxes Income tax expense was approximately $25.9 million and $7.3 million for the six months ended June 30, 2023 and 2022, respectively. For the three months ended June 30, 2023 and 2022, income tax expense was approximately $13.7 million and $6.2 million, respectively. The effective tax rate for the three months ended June 30, 2023 and 2022, was 22.8% and 21.3%, respectively. The effective tax rate for the six months ended June 30, 2023 and 2022, was 22.3% and 23.7%. The fluctuation in the rate for the three and six months ended June 30, 2023 and 2022, respectively, results primarily from the relationship of year-to-date income before income tax for the three and six months ended June 30, 2023 and 2022, respectively. The Company accounts for income taxes in interim periods under ASC 740-270, Income Taxes – Interim Reporting |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 11. 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, 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 Facility 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 Company measured the Private Warrant liabilities at fair value on a recurring basis at each reporting period end as more fully discussed below. Changes in the fair value of the Level 1 & 2 Disclosures: The carrying amounts and fair values of financial assets and liabilities, which are either Level 1 or Level 2, are as follows: June 30, 2023 December 31, 2022 Financial Assets (Liabilities) Not Measured at Fair Value Carrying Amount Fair Value Carrying Amount Fair Value ABL Facility (See Note 8) - Level 2 $ — $ — $ — $ — 2024 Senior Secured Notes (See Note 8) - Level 1 $ (207,405) $ (209,946) $ (328,848) $ (335,403) Recurring fair value measurements Level 3 Disclosures: There were 1,533,334 Private Warrants outstanding as of June 30, 2023 and December 31, 2022. Based on the fair value assessment that was performed, the Company determined a fair value price per Private Warrant of $3.49 and $6.35 as of June 30, 2023 and December 31, 2022, respectively. The fair value is classified as Level 3 in the fair value hierarchy due to the use of pricing inputs that are less observable in the marketplace combined with management judgment required for the assumptions underlying the calculation of value. The Company determined the estimated fair value of the Private Warrants using the Black-Scholes option-pricing model. June 30, December 31, 2023 2022 Exercise Price $ 11.50 $ 11.50 Stock Price $ 13.42 $ 15.14 Dividend Yield % 0.00 % 0.00 Expected Term (in Years) 0.71 1.20 Risk-Free Interest Rate % 5.30 % 4.56 Expected Volatility % 52.00 % 70.00 Per Share Value of Warrants $ 3.49 $ 6.35 The following table presents changes in Level 3 liabilities measured at fair value for the three months ended June 30, 2023: Private Placement Warrants Balance at December 31, 2022 $ 9,737 Change in fair value of warrant liabilities (3,711) Balance at March 31, 2023 6,026 Change in fair value of warrant liabilities (675) Balance at June 30, 2023 5,351 There were no transfers of financial instruments between the three levels of the fair value hierarchy during the six months ended June 30, 2023 and 2022 and the year ended December 31, 2022. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 12. 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. |
Earnings (Loss) per Share
Earnings (Loss) per Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings (Loss) per Share | |
Earnings (Loss) per Share | 13. 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 income per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. We apply the treasury stock method in the calculation of diluted earnings per share. During periods when net losses are incurred, potential dilutive securities would be anti-dilutive and are excluded from the calculation of diluted loss per share for that period. Net income was recorded for the three and six months ended June 30, 2023 and 2022. The following table reconciles net income attributable to common stockholders and the weighted average shares outstanding for the basic calculation to the net income attributable to common stockholders and the weighted average shares outstanding for the diluted calculation for the periods indicated below ($ in thousands, except per share amounts): For the Three Months Ended For the Six Months Ended June 30, June 30, June 30, June 30, 2023 2022 2023 2022 Numerator Net income attributable to Common Stockholders - basic $ 46,453 $ 22,851 $ 90,278 $ 23,345 Change in fair value of warrant liabilities (675) (853) (4,385) 374 Net income attributable to Common Stockholders - diluted $ 45,778 $ 21,998 $ 85,893 $ 23,719 Denominator Weighted average shares outstanding - basic 101,465,088 97,076,935 101,056,450 97,007,247 Dilutive effect of outstanding securities: Warrants 1,357,752 — 1,844,596 — PSUs 473,115 — 480,882 — SARs 191,496 — 233,334 — Stock Options 418,934 — 606,983 — RSUs 1,139,223 — 1,477,439 — Weighted average shares outstanding - diluted 105,045,608 97,076,935 105,699,684 97,007,247 Net income per share - basic $ 0.46 $ 0.24 $ 0.89 $ 0.24 Net income per share - diluted $ 0.44 $ 0.24 $ 0.81 $ 0.24 When liability-classified warrants are in the money and the impact of their inclusion on diluted EPS is dilutive, diluted EPS also assumes share settlement of such instruments through an adjustment to net income available to common stockholders for the fair value (gain) loss on common stock warrant liabilities and inclusion of the number of dilutive shares in the denominator. The Public and Private Warrants representing a total of 16,166,650 shares of the Company’s Common Stock for the three and six months ended June 30, 2022 were excluded from the computation of diluted EPS because they are considered anti-dilutive. Public and Private Warrants representing a total 8,044,287 shares of the Company’s Common Stock for the three and six months ended June 30, 2023 were included in the computation of diluted EPS because their effect is dilutive as noted in the above table. As discussed in Note 15, stock-based compensation awards were outstanding for the three and six months ended June 30, 2023 and 2022. These stock-based compensation awards were excluded from the computation of diluted EPS for the three and six months ended June 30, 2022 because their effect would have been anti-dilutive. For the three and six months ended June 30, 2023, stock-based compensation awards were included in the computation of diluted EPS because their effect is dilutive as noted in the above table. However, approximately 1,005,769 of contingently issuable PSUs were excluded from the computation of diluted EPS for the three and six months ended June 30, 2023 as not all necessary conditions for issuance of these PSUs were satisfied, which includes 68,269 of PSUs that did not meet all of the Company’s Total Shareholder Return performance and Diversification EBITDA criteria (see Note 15) and 937,500 of PSUs issued in 2022 that did not meet all of the specified share price thresholds as discussed in the Company’s 2022 Form 10K. Shares of treasury stock have been excluded from the computation of EPS. |
Stockholders Equity
Stockholders Equity | 6 Months Ended |
Jun. 30, 2023 | |
Stockholders Equity | |
Stockholders' Equity | 14. Stockholders’ Equity Common Stock As of June 30, 2023 and December 31, 2022, Target Hospitality had 111,025,911 and 109,747,366 shares of Common Stock, par value $0.0001 per share issued with 101,595,246 and 100,316,701 outstanding, respectively. Each share of Common Stock has one vote. Preferred Shares Target Hospitality is authorized to issue 1,000,000 preferred shares at $0.0001 par value. As of June 30, 2023, no preferred shares were issued and outstanding. Public 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 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 formation of the Company. During the three months ended March 31, 2023, holders of Public Warrants exercised 2,869 Public Warrants for shares of Common Stock resulting in the Company receiving cash proceeds of less than $0.1 million and issuing 2,869 shares of Common Stock. During the three months ended June 30, 2023, holders of Public Warrants exercised 14,500 Public Warrants for shares of Common Stock resulting in the Company receiving cash proceeds of approximately $0.2 million and issuing 14,500 shares of Common Stock. As of June 30, 2023, the Company had 6,510,953 Public Warrants issued and outstanding. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Stock-Based Compensation | |
Stock-Based Compensation | 15. Stock-Based Compensation On February 28, 2023, the Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors adopted a new form Executive Restricted Stock Unit Agreement (the “RSU Agreement”) and a new form Executive Performance Stock Unit Agreement (the “PSU Agreement” and together with the RSU Agreement, the “Award Agreements”) with respect to the granting of restricted stock units (“RSUs”) and performance restricted stock units (“PSUs”), respectively, under the Target Hospitality Corp. 2019 Incentive Plan (as amended, the “Plan”). The new Award Agreements will be used for all awards to executive officers made on or after March 1, 2023. The RSU Agreement has material terms that are substantially similar to those in the form Executive Restricted Stock Unit Agreement last approved by the Compensation Committee and previously disclosed by the Company. Each PSU awarded under the PSU Agreement represents the right to receive one share of the Company’s common stock, par value $0.0001 per share. PSUs vest and become unrestricted on the third anniversary of the grant date. The number of PSUs that vest pursuant to the PSU Agreement is based on the Company’s Total Shareholder Return (the “TSR Based Award”) performance and the Company’s Diversification EBITDA (as defined in the PSU Agreement) (the “Diversification EBITDA Based Award”), each measured based on the applicable Performance Period specified in the PSU Agreement. The number of PSUs that vest pursuant to the TSR Based Award range from 0% to 200% of the Target Level (as defined in the PSU Agreement) depending upon the achievement of a specified percentile rank during the applicable Performance Period. The number of PSUs that vest pursuant to the Diversification EBITDA Based Award range from 0% to 200% of the Target Level (as defined in the PSU Agreement) depending upon the Company’s Qualifying EBITDA (as defined in the PSU Agreement) during the applicable Performance Period. Vesting of PSUs is contingent upon the executive’s continued employment through the vesting date, unless the executive’s employment is terminated by reason of death, without Cause, for Good Reason, or in the event of a Change in Control (each term as defined in the Plan). Restricted Stock Units On March 1, 2023, the Compensation Committee awarded an aggregate of 214,901 time-based RSUs to certain of the Company’s executive officers and other employees, which vest ratably over a four-year period. On April 17, 2023, the Compensation Committee awarded 2,383 time-based RSUs to one of the Company’s employees, which vest ratably over a four-year period. On May 18, 2023, the Compensation Committee awarded an aggregate of 57,616 time-based RSUs to certain of the Company’s non-employee directors, which vest in full on the first anniversary of the grant date of, if earlier, the date of the first annual meeting of the stockholders of the Company following the grant date. On June 19, 2023, the Compensation Committee awarded a newly appointed non-employee director 6,875 RSUs which vest in full on May 18, 2024, or, if earlier, the date of the 2024 annual meeting of the stockholders of the Company. The table below represents the changes in RSUs: Number of Shares Weighted Average Grant Date Fair Value per Share Balance at December 31, 2022 2,658,581 $ 2.98 Granted 281,775 15.20 Vested (1,133,821) 3.36 Balance at June 30, 2023 1,806,535 $ 4.64 Stock-based compensation expense for these RSUs recognized in selling, general and administrative expense in the consolidated statements of comprehensive income for the six months ended June 30, 2023 and 2022, was approximately $2.7 million and $2.9 million, respectively, with an associated tax benefit of approximately $0.7 million and $0.7 million, respectively. For the three months ended June 30, 2023 and 2022, stock-based compensation expense for RSUs was approximately $1.4 million and $1.3 million, respectively, with an associated tax benefit of $0.4 million and $0.3 million, respectively. At June 30, 2023, unrecognized compensation expense related to RSUs totaled approximately $9.4 million and is expected to be recognized over a remaining term of approximately 2.60 years. Performance Stock Units On March 1, 2023, the Company awarded an aggregate of 91,025 time and performance-based PSUs to certain of the Company’s employees, which vest upon satisfaction of continued service with the Company until the third anniversary of the Grant Date and attainment of Company performance criteria. These PSUs were valued using a Monte Carlo simulation with the following assumptions on the grant date: the expected volatility was approximately 45.86%, the term was 2.84 years, the correlation coefficient was 0.6210, the dividend rate was 0.0% and the risk-free interest rate was approximately 4.60%, which resulted in a calculated fair value of approximately $20.66 per PSU as of the grant date. The table below represents the changes in PSUs: Number of Shares Weighted Average Grant Date Fair Value per Share Balance at December 31, 2022 1,495,017 $ 4.72 Granted 91,025 17.82 Balance at June 30, 2023 1,586,042 $ 5.47 Stock-based compensation expense for these PSUs recognized in selling, general and administrative expense in the consolidated statement of comprehensive income for the six months ended June 30, 2023 and 2022, was approximately $1.4 million and $0.2 million, respectively, with an associated tax benefit of approximately $0.4 million and less than $0.1 million, respectively. For the three months ended June 30, 2023 and 2022, stock-based compensation expense was approximately $0.7 million and $0.2 million, respectively, with an associated tax benefit of $0.2 million and less than $0.1 million, respectively. At June 30, 2023, unrecognized compensation expense related to PSUs totaled approximately $6.5 million and is expected to be recognized over a remaining term of approximately 2.11 years. Stock Option Awards During the six months ended June 30, 2023, there were stock options exercised as shown in the following table. The table below represents the changes in stock options: 528,558 stock options were exercisable at June 30, 2023. Options Weighted Average Exercise Price Per Share Weighted Average Contractual Life (Years) Intrinsic Value Outstanding Options at December 31, 2022 1,510,661 $ 6.13 6.86 $ 13,615 Exercised (671,392) 5.81 - 7,423 Outstanding Options at June 30, 2023 839,269 $ 6.38 6.39 $ 5,906 Stock-based compensation expense for these stock option awards recognized in selling, general and administrative expense in the consolidated statements of comprehensive income for the six months ended June 30, 2023 and 2022, was approximately $0.3 million and $0.4 million, respectively, with an associated tax benefit of approximately $0.1 million and $0.1 million, respectively. For the three months ended June 30, 2023 and 2022, stock-based compensation expense was approximately $0.2 million and $0.2 million, respectively, with an associated tax benefit of less than $0.1 million and less than $0.1 million, respectively. At June 30, 2023, unrecognized compensation expense related to stock options totaled $0.3 million and is expected to be recognized over a remaining term of approximately 0.65 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 (range) % 25.94 - 30.90 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 $ 1.42 The volatility assumption used in the Black-Scholes option-pricing model is based on peer group volatility as the Company does not have a sufficient trading history as a stand-alone public company to calculate volatility. Additionally, due to an insufficient history with respect to stock option activity and post vesting cancellations, the expected term assumption is based on the simplified method permitted under SEC rules, whereby, the simple average of the vesting period for each tranche of award and its contractual term is aggregated to arrive at a weighted average expected term for the award. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a dividend on its shares of Common Stock. Stock-based payments are subject to service-based vesting requirements and expense is recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur. No stock options were forfeited during the six months ended June 30, 2023. Stock Appreciation Right Awards As approved by the Compensation Committee, the employee related exercised SARs shown in the table below were paid in cash in the amount of $10.0 million based on the difference between (a) the fair market value of a Common Share on the date of exercise, over (b) the grant date price; during the first quarter of 2023. The table below represents the changes in SARs: Number of Units Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Outstanding SARs at December 31, 2022 1,537,776 $ 1.82 8.17 Exercised (755,436) 1.79 - Outstanding SARs at June 30, 2023 782,340 $ 1.85 7.68 Under the authoritative guidance for stock-based compensation, these SARs are considered liability-based awards. The Company recognized a liability associated with its SARs of approximately $7.3 million as of June 30, 2023, of which approximately $7.1 million is included in accrued liabilities and approximately $0.2 million is included in other non-current liabilities in the accompanying consolidated balance sheet as of June 30, 2023. The liability associated with these SAR awards recognized as of December 31, 2022, was approximately $12.6 million, of which approximately $6.3 million is included in accrued liabilities and approximately $6.3 million is included in other non-current liabilities in the accompanying consolidated balance sheet as of December 31, 2022. These SARs were valued using the Black-Scholes option pricing model with the following assumptions on the grant date: the expected volatility was approximately 43.5%, the term was 6.25 years, the dividend rate was 0.0% and the risk-free interest rate was approximately 1.07%, which resulted in a calculated fair value of approximately $0.78 per SAR as of the grant date. The fair value of these liability awards will be remeasured at each reporting period until the date of settlement. At June 30, 2023, these SARs were valued using the Black-Scholes option pricing model with the following assumptions for awards granted on February 25, 2021 and August 5, 2021, respectively: the expected volatility was approximately 38.77% and 35.41%, the term was 0.33 years and 0.60 years, the dividend rate was 0.0% and 0.0%, the risk-free interest rate was approximately 5.42% and 5.38%, and the exercise price was $1.79 and $3.54, which resulted in a calculated fair value of approximately $11.66 and $9.99 per SAR, respectively, as of June 30, 2023. At December 31, 2022, these SARs were valued using the Black-Scholes option pricing model with the following assumptions for awards granted on February 25, 2021 and August 5, 2021, respectively: the expected volatility was approximately 46.86% and 47.27%, the term was 0.65 years and 1.10 years, the dividend rate was 0.0% and 0.0%, the risk-free interest rate was approximately 4.70% and 4.65%, and the exercise price was $1.79 and $3.54, which resulted in a calculated fair value of approximately $13.40 and $11.78 per SAR, respectively, as of December 31, 2022. The estimated weighted-average fair value of each SAR as of June 30, 2023 and December 31, 2022 was $12.22 and $13.61, respectively. Increases and decreases in stock-based compensation expense are recognized over the vesting period, or immediately for vested awards. For the six months ended June 30, 2023 and 2022, the Company recognized compensation expense related to these awards of approximately $4.7 million and $1.6 million, respectively, in selling, general and administrative expense in the consolidated statements of comprehensive income. For the three months ended June 30, 2023 and 2022, the Company recognized compensation expense related to these awards of approximately $1.1 million and $0.1 million, respectively. At June 30, 2023, unrecognized compensation expense related to SARs totaled approximately $4.3 million and is expected to be recognized over a remaining weighted-average term of approximately 0.67 years. At June 30, 2023, the intrinsic value of the SARs was $9.1 million. 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 appreciation right 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 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. SARs are subject to service-based vesting requirements and expense is recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur. No SARs were forfeited during the six months ended June 30, 2023. |
Retirement Plans
Retirement Plans | 6 Months Ended |
Jun. 30, 2023 | |
Retirement Plans | |
Retirement Plans | 16. 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 5% of the participant’s compensation (100% match of the first 3% employee contribution and 50% match on the next 2% contribution). Our matching contributions fully vest upon participation. For the six months ended June 30, 2023 and 2022, we recognized expense of $0.6 million and $0.5 million, respectively. For the three months ended June 30, 2023 and 2022, we recognized expense of $0.2 million and $0.2 million, respectively. |
Business Segments
Business Segments | 6 Months Ended |
Jun. 30, 2023 | |
Business Segments | |
Business Segments | 17. Business Segments The Company has six operating segments, none of which qualify for aggregation. Four of the segments were disclosed as reportable segments in 2022, based on the 10% tests. The aggregate external revenues of these reportable segments exceeded 75% of the Company’s consolidated revenues. The remaining operating segments were combined in the “All Other” category. In 2023, two of the four operating segments (“TCPL Keystone” and “HFS – Midwest”) that were disclosed as reportable segments in 2022 became quantitatively immaterial as they did not exceed the threshold for any of the 10% tests and are now combined in the “All Other” category in 2023. As such, in 2023 and for all comparison periods, the Company has two reportable segments and the aggregate external revenues of these two reportable segments exceed 75% of the Company’s consolidated revenues in all periods presented. The Company is organized primarily on the basis of geographic region and customer industry group. The following is a brief description of our reportable segments and a description of business activities conducted by All Other. HFS – South — Government All Other — The table below presents information about reported segments for the three months ended June 30 (except for asset information for 2022 that is presented as of December 31): 2023 HFS - South Government All Other Total For the Six Months Ended June 30, 2023 Revenue $ 74,925 $ 210,682 $ 5,842 (a) $ 291,449 Adjusted gross profit $ 24,950 $ 176,309 $ (1,341) $ 199,918 Total Assets $ 191,862 $ 214,018 $ 32,979 $ 438,859 For the Three Months Ended June 30, 2023 Revenue $ 39,154 $ 101,179 $ 3,297 (a) $ 143,630 Adjusted gross profit $ 13,294 $ 87,535 $ (471) $ 100,358 2022 HFS - South Government All Other Total For the Six Months Ended June 30, 2022 Revenue $ 64,196 $ 121,705 $ 4,081 (a) $ 189,982 Adjusted gross profit $ 27,284 $ 78,575 $ (738) $ 105,121 Total Assets (as of December 31, 2022) $ 176,637 $ 217,029 $ 34,722 $ 428,388 For the Three Months Ended June 30, 2022 Revenue $ 32,620 $ 74,915 $ 2,112 (a) $ 109,647 Adjusted Gross Profit $ 13,967 $ 50,699 $ (260) $ 64,406 (a) Revenues from segments below the quantitative thresholds are attributable to four 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 For the Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Total reportable segment adjusted gross profit $ 100,829 $ 64,666 $ 201,259 $ 105,859 Other adjusted gross profit (471) (260) (1,341) (738) Depreciation and amortization (21,833) (15,446) (43,233) (32,241) Selling, general, and administrative expenses (13,457) (11,103) (28,656) (22,862) Other expense (income), net (311) (24) (1,315) 195 Loss on extinguishment of debt — — (2,128) — Interest expense, net (5,276) (9,667) (12,773) (19,238) Change in fair value of warrant liabilities 675 853 4,385 (374) Consolidated income before income taxes $ 60,156 $ 29,019 $ 116,198 $ 30,601 A reconciliation of total segment assets to total consolidated assets as of the dates indicated below, is as follows: June 30, 2023 December 31, 2022 Total reportable segment assets $ 405,880 $ 426,825 Other assets 34,698 3,240 Other unallocated amounts 225,390 341,662 Total Assets $ 665,968 $ 771,727 Other unallocated assets consist of the following as reported in the consolidated balance sheets of the Company as of the dates indicated below: June 30, 2023 December 31, 2022 Total current assets $ 129,843 $ 236,379 Other intangible assets, net 73,026 75,182 Operating lease right-of-use assets, net 19,718 27,298 Deferred financing costs revolver, net 1,682 896 Other non-current assets 1,121 1,907 Total other unallocated amounts of assets $ 225,390 $ 341,662 |
Organization and Nature of Op_2
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | |
Organization and Nature of Operations | Organization and Nature of Operations Target Hospitality Corp. (“Target Hospitality” and, together with its subsidiaries, the “Company”) was formed on March 15, 2019 and is one of North America’s largest providers of vertically integrated specialty rental and value-added hospitality services. 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 the natural resources development and government sectors principally located in the West Texas, South Texas, New Mexico and Midwest regions. The Company, whose securities are listed on the Nasdaq Capital Market, together with its wholly owned subsidiaries, Topaz Holdings LLC, a Delaware limited liability company (“Topaz”), and Arrow Bidco, LLC, a Delaware limited liability company (“Arrow Bidco”), serve as the holding companies for the businesses of Target Logistics Management, LLC and its subsidiaries (“Target”) and RL Signor Holdings, LLC (“Signor”). TDR Capital LLP indirectly owns approximately 64% 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 who purchased the shares of Platinum Eagle in a private placement transaction, and other public shareholders. |
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 Target Hospitality’s Annual Report on the Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”). The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2023 or any future period. The accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of financial position as of June 30, 2023, and results of operations for the three and six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022. The consolidated balance sheet as of December 31, 2022, was derived from the audited consolidated balance sheets of Target Hospitality, but does not contain all of the footnote disclosures from those annual financial statements. |
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. |
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 is earned 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 evenly over the contractual term of the arrangement, based on a contractual fixed minimum amount and defined period of performance. Some of our revenue is recognized on a daily basis, for each night a customer stays, at a contractual day rate. Our customers typically contract for accommodation services under committed contracts with terms that most often range from several months to three years. Our payment terms vary by type and location of our customer and the service offered. The time between invoicing and when payment is due is not significant. When lodging and services are billed and collected in advance, recognition of revenue is deferred until services are rendered. Cost of services includes labor, food, utilities, supplies, leasing and other direct costs associated with operating the lodging units as well as repair and maintenance expenses. Cost of rental includes leasing costs, utilities, 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. 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. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses ASU 2016-13, Topic 326, or ASC 326 Codification Improvements to Topic 326, Financial Instruments - Credit Losses The following table presents the impact of the adoption of ASC 326 on the consolidated balance sheet as of January 1, 2023: Balance Balance Pre-Adoption Adjustments Post-Adoption Accounts receivable, less allowance for doubtful accounts $ 42,153 $ (268) $ 41,885 Accumulated earnings $ 87,683 $ (268) $ 87,415 |
Organization and Nature of Op_3
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | |
Schedule of adjustments related to operating leases | Balance Balance Pre-Adoption Adjustments Post-Adoption Accounts receivable, less allowance for doubtful accounts $ 42,153 $ (268) $ 41,885 Accumulated earnings $ 87,683 $ (268) $ 87,415 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue | |
Summary of disaggregation of revenue by reportable segments as well as the all other category | For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 2023 2022 HFS – South $ 37,645 $ 31,025 $ 71,933 $ 61,148 Government $ 51,580 $ 41,233 $ 109,584 $ 67,816 All Other $ 3,298 $ 2,112 $ 5,842 $ 4,081 Total services revenues $ 92,523 $ 74,370 $ 187,359 $ 133,045 |
Summary of contract liabilities | For Six Months Ended June 30, 2023 2022 Balances at Beginning of the Period $ 125,519 $ 34,411 Additions to deferred revenue — 1,596 Revenue recognized (70,358) (27,787) Balances at End of the Period $ 55,161 $ 8,220 |
Summary of revenue expected to be recognized from contracts where the price and quantity of the product or service are fixed | For the Years Ended December 31, 2023 2024 2025 2026 2027 Total Revenue expected to be recognized as of June 30, 2023 $ 87,591 $ 36,120 $ 19,490 $ 14,328 $ - $ 157,529 |
Specialty Rental Assets, Net (T
Specialty Rental Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Specialty Rental Assets, Net | |
Schedule of specialty rental assets | June 30, December 31, 2023 2022 Specialty rental assets $ 733,909 $ 698,095 Construction-in-process 5,056 4,653 Less: accumulated depreciation (372,739) (345,619) Specialty rental assets, net $ 366,226 $ 357,129 |
Other Property, Plant and Equ_2
Other Property, Plant and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Other Property, Plant and Equipment, Net | |
Schedule of other property, plant and equipment, net | June 30, December 31, 2023 2022 Land $ 29,784 $ 28,483 Buildings and leasehold improvements 799 769 Machinery and office equipment 1,708 1,581 Other 8,212 7,341 40,503 38,174 Less: accumulated depreciation (7,189) (6,276) Total other property, plant and equipment, net $ 33,314 $ 31,898 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets, net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Other Intangible Assets, net | |
Schedule of changes in carrying amount of goodwill | HFS - South Balance at January 1, 2022 $ 41,038 Changes in Goodwill - Balance at December 31, 2022 41,038 Changes in Goodwill - Balance at June 30, 2023 $ 41,038 |
Schedule of intangible assets other than goodwill | June 30, 2023 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 4.4 $ 133,105 $ (76,796) $ 56,309 Non-compete agreement 4.6 349 (32) 317 Total 133,454 (76,828) 56,626 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 149,854 $ (76,828) $ 73,026 December 31, 2022 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 4.6 $ 128,907 $ (70,125) $ 58,782 Total 128,907 (70,125) 58,782 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 145,307 $ (70,125) $ 75,182 |
Schedule of estimated aggregate amortization expense | Rest of 2023 $ 6,744 2024 13,475 2025 13,475 2026 12,879 2027 8,270 Thereafter 1,783 Total $ 56,626 |
Other Non-Current Assets (Table
Other Non-Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Other Non-Current Assets | |
Schedule of other non-current assets | June 30, December 31, 2023 2022 Cloud computing implementation costs $ 7,130 $ 7,198 Less: accumulated amortization (6,009) (5,357) Other non-current assets $ 1,121 $ 1,841 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accrued Liabilities. | |
Schedule of accrued liabilities | June 30, December 31, 2023 2022 Employee accrued compensation expense $ 6,090 $ 11,873 Other accrued liabilities 19,913 18,230 Accrued interest on debt 5,923 9,539 Total accrued liabilities $ 31,926 $ 39,642 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt | |
Summary of carrying value of debt outstanding | June 30, December 31, 2023 2022 Finance lease and other financing obligations $ 2,386 $ 2,223 ABL Facility — — 9.50% Senior Secured Notes due 2024, face amount 209,500 334,500 Less: unamortized original issue discount (360) (971) Less: unamortized term loan deferred financing costs (1,735) (4,681) Total debt, net 209,791 331,071 Less: current maturities (208,681) (1,135) Total long-term debt $ 1,110 $ 329,936 |
Components of interest expense | For the three months ended For the six months ended June 30, June 30, June 30, June 30, 2023 2022 2023 2022 Interest incurred on finance lease and other financing obligations $ 50 $ 15 $ 92 $ 29 Interest expense incurred on ABL Facility and Notes 5,094 8,316 12,564 16,567 Amortization of deferred financing costs on ABL facilities and Notes 663 1,161 1,753 2,296 Amortization of original issue discount on Notes 121 175 313 346 Interest income (652) — (1,949) — Interest expense, net $ 5,276 $ 9,667 $ 12,773 $ 19,238 |
Schedule of future maturities | Rest of 2023 $ 565 2024 210,586 2025 674 2026 61 Total $ 211,886 |
Senior Secured Notes 2024 | |
Debt | |
Summary of carrying value of debt outstanding | June 30, 2023 Principal amount of 9.50% Senior Secured Notes, due 2024 $ 209,500 Less: unamortized original issue discount (360) Less: unamortized term loan deferred financing costs (1,735) Current portion of long-term debt, net $ 207,405 |
Schedule of debt redemption | Redemption Year Price 2023 and thereafter 100.000% |
Warrant Liabilities (Tables)
Warrant Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Warrant Liabilities | |
Schedule of warrant liabilities | June 30, December 31, 2023 2022 Warrant liabilities $ 5,351 $ 9,737 Total $ 5,351 $ 9,737 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value of Financial Instruments | |
Summary of carrying amounts and fair values of financial assets and liabilities | June 30, 2023 December 31, 2022 Financial Assets (Liabilities) Not Measured at Fair Value Carrying Amount Fair Value Carrying Amount Fair Value ABL Facility (See Note 8) - Level 2 $ — $ — $ — $ — 2024 Senior Secured Notes (See Note 8) - Level 1 $ (207,405) $ (209,946) $ (328,848) $ (335,403) |
Summary of inputs used to calculate the fair value of the warrant liabilities | June 30, December 31, 2023 2022 Exercise Price $ 11.50 $ 11.50 Stock Price $ 13.42 $ 15.14 Dividend Yield % 0.00 % 0.00 Expected Term (in Years) 0.71 1.20 Risk-Free Interest Rate % 5.30 % 4.56 Expected Volatility % 52.00 % 70.00 Per Share Value of Warrants $ 3.49 $ 6.35 |
Schedule of changes in Level 3 liabilities measured at fair value | Private Placement Warrants Balance at December 31, 2022 $ 9,737 Change in fair value of warrant liabilities (3,711) Balance at March 31, 2023 6,026 Change in fair value of warrant liabilities (675) Balance at June 30, 2023 5,351 |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings (Loss) per Share | |
Schedule of reconciliation of net loss and weighted-average shares of common stock outstanding | weighted average shares outstanding for the diluted calculation for the periods indicated below ($ in thousands, except per share amounts): For the Three Months Ended For the Six Months Ended June 30, June 30, June 30, June 30, 2023 2022 2023 2022 Numerator Net income attributable to Common Stockholders - basic $ 46,453 $ 22,851 $ 90,278 $ 23,345 Change in fair value of warrant liabilities (675) (853) (4,385) 374 Net income attributable to Common Stockholders - diluted $ 45,778 $ 21,998 $ 85,893 $ 23,719 Denominator Weighted average shares outstanding - basic 101,465,088 97,076,935 101,056,450 97,007,247 Dilutive effect of outstanding securities: Warrants 1,357,752 — 1,844,596 — PSUs 473,115 — 480,882 — SARs 191,496 — 233,334 — Stock Options 418,934 — 606,983 — RSUs 1,139,223 — 1,477,439 — Weighted average shares outstanding - diluted 105,045,608 97,076,935 105,699,684 97,007,247 Net income per share - basic $ 0.46 $ 0.24 $ 0.89 $ 0.24 Net income per share - diluted $ 0.44 $ 0.24 $ 0.81 $ 0.24 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Stock-Based Compensation | |
Schedule of changes in restricted stock units | Number of Shares Weighted Average Grant Date Fair Value per Share Balance at December 31, 2022 2,658,581 $ 2.98 Granted 281,775 15.20 Vested (1,133,821) 3.36 Balance at June 30, 2023 1,806,535 $ 4.64 |
Schedule of changes in performance stock units | Number of Shares Weighted Average Grant Date Fair Value per Share Balance at December 31, 2022 1,495,017 $ 4.72 Granted 91,025 17.82 Balance at June 30, 2023 1,586,042 $ 5.47 |
Schedule of changes in stock options | Options Weighted Average Exercise Price Per Share Weighted Average Contractual Life (Years) Intrinsic Value Outstanding Options at December 31, 2022 1,510,661 $ 6.13 6.86 $ 13,615 Exercised (671,392) 5.81 - 7,423 Outstanding Options at June 30, 2023 839,269 $ 6.38 6.39 $ 5,906 |
Schedule of assumptions using Black-scholes option-pricing model | Assumptions Weighted average expected stock volatility (range) % 25.94 - 30.90 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 $ 1.42 |
Stock appreciation right awards | Number of Units Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Outstanding SARs at December 31, 2022 1,537,776 $ 1.82 8.17 Exercised (755,436) 1.79 - Outstanding SARs at June 30, 2023 782,340 $ 1.85 7.68 |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Business Segments | |
Schedule of Segment Reporting Information | The table below presents information about reported segments for the three months ended June 30 (except for asset information for 2022 that is presented as of December 31): 2023 HFS - South Government All Other Total For the Six Months Ended June 30, 2023 Revenue $ 74,925 $ 210,682 $ 5,842 (a) $ 291,449 Adjusted gross profit $ 24,950 $ 176,309 $ (1,341) $ 199,918 Total Assets $ 191,862 $ 214,018 $ 32,979 $ 438,859 For the Three Months Ended June 30, 2023 Revenue $ 39,154 $ 101,179 $ 3,297 (a) $ 143,630 Adjusted gross profit $ 13,294 $ 87,535 $ (471) $ 100,358 2022 HFS - South Government All Other Total For the Six Months Ended June 30, 2022 Revenue $ 64,196 $ 121,705 $ 4,081 (a) $ 189,982 Adjusted gross profit $ 27,284 $ 78,575 $ (738) $ 105,121 Total Assets (as of December 31, 2022) $ 176,637 $ 217,029 $ 34,722 $ 428,388 For the Three Months Ended June 30, 2022 Revenue $ 32,620 $ 74,915 $ 2,112 (a) $ 109,647 Adjusted Gross Profit $ 13,967 $ 50,699 $ (260) $ 64,406 (a) Revenues from segments below the quantitative thresholds are attributable to four 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 For the Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Total reportable segment adjusted gross profit $ 100,829 $ 64,666 $ 201,259 $ 105,859 Other adjusted gross profit (471) (260) (1,341) (738) Depreciation and amortization (21,833) (15,446) (43,233) (32,241) Selling, general, and administrative expenses (13,457) (11,103) (28,656) (22,862) Other expense (income), net (311) (24) (1,315) 195 Loss on extinguishment of debt — — (2,128) — Interest expense, net (5,276) (9,667) (12,773) (19,238) Change in fair value of warrant liabilities 675 853 4,385 (374) Consolidated income before income taxes $ 60,156 $ 29,019 $ 116,198 $ 30,601 |
Schedule of reconciliation of total segment assets to total combined assets | June 30, 2023 December 31, 2022 Total reportable segment assets $ 405,880 $ 426,825 Other assets 34,698 3,240 Other unallocated amounts 225,390 341,662 Total Assets $ 665,968 $ 771,727 |
Schedule of unallocated assets consist of the following as reported in the combined balance sheets | June 30, 2023 December 31, 2022 Total current assets $ 129,843 $ 236,379 Other intangible assets, net 73,026 75,182 Operating lease right-of-use assets, net 19,718 27,298 Deferred financing costs revolver, net 1,682 896 Other non-current assets 1,121 1,907 Total other unallocated amounts of assets $ 225,390 $ 341,662 |
Organization and Nature of Op_4
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 | Jan. 01, 2023 | Dec. 31, 2022 | |
Accounts receivable, less allowance for doubtful accounts | $ 53,325 | $ 42,153 | |
Accumulated earnings | $ 177,693 | 87,683 | |
Maximum | |||
Contract for accommodation services under take-or-pay contracts term | 3 years | ||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2016-13 | |||
Accounts receivable, less allowance for doubtful accounts | (268) | ||
Accumulated earnings | $ (300) | (268) | |
Cumulative Effect, Period of Adoption, Adjusted Balance | Accounting Standards Update 2016-13 | |||
Accounts receivable, less allowance for doubtful accounts | 41,885 | ||
Accumulated earnings | $ 87,415 | ||
TDR Capital | Target Hospitality | |||
Ownership interest in an affiliate | 64% |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 92,523 | $ 74,370 | $ 187,359 | $ 133,045 |
Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 92,523 | 74,370 | 187,359 | 133,045 |
Specialty rental | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, subject to ASC 840 | $ 51,107 | $ 35,277 | $ 104,090 | $ 56,937 |
Revenue - Disaggregation Revenu
Revenue - Disaggregation Revenue (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) segment | Jun. 30, 2022 USD ($) | Dec. 31, 2022 segment | |
Disaggregation of Revenue [Line Items] | |||||
Number of Reportable Segments | segment | 2 | 4 | |||
Total revenue | $ 92,523 | $ 74,370 | $ 187,359 | $ 133,045 | |
Services | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | 92,523 | 74,370 | 187,359 | 133,045 | |
Services | HFS - South | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | 37,645 | 31,025 | 71,933 | 61,148 | |
Services | Government | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | 51,580 | 41,233 | 109,584 | 67,816 | |
Services | All Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | $ 3,298 | $ 2,112 | $ 5,842 | $ 4,081 |
Revenue - Contract Liabilities
Revenue - Contract Liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Change in Contract with Customer, Liability [Abstract] | ||
Balances at Beginning of the Period | $ 125,519 | $ 34,411 |
Additions to deferred revenue | 1,596 | |
Revenue recognized | (70,358) | (27,787) |
Balances at End of the Period | $ 55,161 | $ 8,220 |
Revenue - Revenue Expected to b
Revenue - Revenue Expected to be Recognized (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized | $ 157,529 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized in periods | 6 months |
Revenue expected to be recognized | $ 87,591 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized in periods | 1 year |
Revenue expected to be recognized | $ 36,120 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized in periods | 1 year |
Revenue expected to be recognized | $ 19,490 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized in periods | 1 year |
Revenue expected to be recognized | $ 14,328 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized in periods | 1 year |
Specialty Rental Assets, Net (D
Specialty Rental Assets, Net (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||||||
Less: accumulated depreciation | $ (372,739) | $ (372,739) | $ (345,619) | |||
Specialty rental assets, net | 366,226 | 366,226 | 357,129 | |||
Depreciation | 17,992 | $ 11,861 | 35,589 | $ 24,661 | ||
Purchase of property, plant and equipment | $ 18,600 | 5,000 | ||||
Specialty rental assets | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Specialty rental assets, gross | 733,909 | 733,909 | 698,095 | |||
Accumulated depreciation | 8,700 | 8,700 | ||||
Depreciation | 18,000 | $ 11,900 | 35,600 | $ 24,700 | ||
Purchase of property, plant and equipment | $ 13,200 | 4,600 | ||||
Gross cost | 9,100 | 9,100 | ||||
Gain (Loss) on Disposition of Property Plant Equipment | 200 | |||||
Proceeds from Sale of Property, Plant, and Equipment | 200 | |||||
Property, Plant And Equipment, Disposal Costs | 1,200 | |||||
Construction-in-process | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Specialty rental assets, gross | $ 5,056 | $ 5,056 | $ 4,653 |
Other Property, Plant and Equ_3
Other Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Other property, plant and equipment | ||||||
Other property, plant and equipment, gross | $ 40,503 | $ 40,503 | $ 38,174 | |||
Less: accumulated depreciation | (7,189) | (7,189) | (6,276) | |||
Total other property, plant and equipment, net | 33,314 | 33,314 | 31,898 | |||
Depreciation on Other PPE | 3,841 | $ 3,585 | 7,644 | $ 7,580 | ||
Capital expenditures | $ 18,600 | 5,000 | ||||
Land | ||||||
Other property, plant and equipment | ||||||
Other property, plant and equipment, gross | 29,784 | 29,784 | 28,483 | |||
Capital expenditures | $ 900 | 400 | ||||
Buildings and leasehold improvements | ||||||
Other property, plant and equipment | ||||||
Other property, plant and equipment, gross | 799 | 799 | 769 | |||
Machinery and office equipment | ||||||
Other property, plant and equipment | ||||||
Other property, plant and equipment, gross | 1,708 | 1,708 | 1,581 | |||
Software and other | ||||||
Other property, plant and equipment | ||||||
Other property, plant and equipment, gross | 8,212 | 8,212 | $ 7,341 | |||
Property, Plant and Equipment Other Types | ||||||
Other property, plant and equipment | ||||||
Depreciation on Other PPE | $ 500 | $ 400 | $ 900 | $ 700 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets, net - Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Goodwill and Other Intangible Assets, net | ||
Goodwill, Beginning Balance | $ 41,038 | $ 41,038 |
Goodwill, Ending Balance | $ 41,038 | $ 41,038 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets, net - Intangible Assets (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Intangible assets subject to amortization | ||||||
Gross Carrying Amount | $ 133,454 | $ 133,454 | $ 128,907 | |||
Accumulated Amortization | (76,828) | (76,828) | (70,125) | |||
Net Book Value | 56,626 | 56,626 | 58,782 | |||
Total intangible assets other than goodwill | ||||||
Gross Carrying Amount | 149,854 | 149,854 | 145,307 | |||
Net Book Value | 73,026 | 73,026 | 75,182 | |||
Aggregate amortization expense of intangible assets | 3,400 | $ 3,200 | 6,703 | $ 6,855 | ||
Acquired intangible assets | $ 4,500 | 4,547 | ||||
Tradenames | ||||||
Indefinite lived assets: | ||||||
Net Book Value | $ 16,400 | $ 16,400 | $ 16,400 | |||
Customer relationships | ||||||
Intangible assets subject to amortization | ||||||
Weighted average remaining lives | 4 years 4 months 24 days | 4 years 4 months 24 days | 4 years 7 months 6 days | |||
Gross Carrying Amount | $ 133,105 | $ 133,105 | $ 128,907 | |||
Accumulated Amortization | (76,796) | (76,796) | (70,125) | |||
Net Book Value | $ 56,309 | $ 56,309 | $ 58,782 | |||
Total intangible assets other than goodwill | ||||||
Acquired intangible assets | 4,200 | |||||
Non-compete agreements | ||||||
Intangible assets subject to amortization | ||||||
Weighted average remaining lives | 4 years 7 months 6 days | 4 years 7 months 6 days | ||||
Gross Carrying Amount | $ 349 | $ 349 | ||||
Accumulated Amortization | (32) | (32) | ||||
Net Book Value | $ 317 | $ 317 | ||||
Total intangible assets other than goodwill | ||||||
Acquired intangible assets | $ 300 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets, net - Future Amortization Expense (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Estimated aggregate amortization expense: | ||
Rest of 2023 | $ 6,744 | |
2024 | 13,475 | |
2025 | 13,475 | |
2026 | 12,879 | |
2027 | 8,270 | |
Thereafter | 1,783 | |
Total | $ 56,626 | $ 58,782 |
Other Non-Current Assets - Narr
Other Non-Current Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Amortization of Intangible Assets | $ 3,400 | $ 3,200 | $ 6,703 | $ 6,855 |
Capitalized software | ||||
Amortization of Intangible Assets | $ 300 | $ 400 | $ 700 | $ 900 |
Capitalized software | Maximum | ||||
Useful life of intangible asset | 4 years | 4 years | ||
Capitalized software | Minimum | ||||
Useful life of intangible asset | 2 years | 2 years |
Other Non-Current Assets - Othe
Other Non-Current Assets - Other non-current assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Other Non-Current Assets | ||
Cloud computing implementation costs | $ 7,130 | $ 7,198 |
Less: accumulated amortization | (6,009) | (5,357) |
Other non-current assets | $ 1,121 | $ 1,841 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Accrued Liabilities. | ||
Employee accrued compensation expense | $ 6,090 | $ 11,873 |
Other accrued liabilities | 19,913 | 18,230 |
Accrued interest on debt | 5,923 | 9,539 |
Total accrued liabilities | $ 31,926 | $ 39,642 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Mar. 15, 2023 | Mar. 15, 2019 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Debt | |||||||
Less: unamortized original issue discount | $ (360) | $ (360) | $ (971) | ||||
Less: unamortized term loan deferred financing costs | (1,735) | (1,735) | $ (4,681) | ||||
Current portion of long-term debt, net | 207,405 | 207,405 | |||||
Repayments of senior debt | 125,000 | ||||||
Amortization | 121 | $ 175 | $ 313 | $ 346 | |||
Minimum | |||||||
Debt | |||||||
Period for prior written notice to trustee for redemption | 20 days | ||||||
ABL Facility | |||||||
Debt | |||||||
Less: unamortized term loan deferred financing costs | (1,400) | $ (1,400) | |||||
Senior Secured Notes 2024 | |||||||
Debt | |||||||
Principal amount of 9.50% Senior Secured Notes, due 2024 | $ 340,000 | 209,500 | $ 209,500 | ||||
Interest rate (as a percent) | 9.50% | 9.50% | 9.50% | ||||
Less: unamortized original issue discount | $ (3,300) | $ (400) | $ (400) | ||||
Extinguishment of debt | $ 125,000 | ||||||
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 | ||||||
2023 and thereafter | Senior Secured Notes 2024 | |||||||
Debt | |||||||
Redemption price | 100% |
Debt - Finance Lease and Other
Debt - Finance Lease and Other Financing Obligations (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Lessee, Lease, Description [Line Items] | ||
Finance lease and other financing obligations, current and long-term | $ 2,386 | $ 2,223 |
Commercial-use vehicles | ||
Lessee, Lease, Description [Line Items] | ||
Capital lease term | 36 months |
Debt - ABL Facility (Details)
Debt - ABL Facility (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Mar. 15, 2019 | Jun. 30, 2023 | Jun. 30, 2022 | |
ABL Facility | |||
Proceeds from line of credit | $ 36,800 | ||
ABL Facility | |||
ABL Facility | |||
Borrowing capacity | $ 125,000 | ||
Proceeds from line of credit | $ 0 | ||
Repayment of line of credit | 0 | ||
Outstanding amount | $ 0 | ||
Borrowing base, line cap (as a percent) | 12.50% | ||
Percentage of net book value of borrowers' eligible accounts receivables | 85% | ||
Percentage of net book value of borrowers' eligible rental equipment | 95% | ||
Percentage of net orderly liquidation value of borrowers' eligible rental equipment | 85% | ||
Options to increase commitments | $ 75,000 | ||
Percentage of voting equity interests in non-US restricted subsidiary pledge | 65% | ||
Minimum fixed charge coverage ratio | 100% | ||
Maximum total net leverage ratio | 400% | ||
Borrowing base | $ 15,625 | ||
Line cap (as a percent) | 12.50% | ||
ABL Facility | SOFR | Minimum | |||
ABL Facility | |||
Variable rate (as a percent) | 2.25% | ||
ABL Facility | SOFR | Maximum | |||
ABL Facility | |||
Variable rate (as a percent) | 2.75% | ||
ABL Facility | Base rate | Minimum | |||
ABL Facility | |||
Variable rate (as a percent) | 1.25% | ||
ABL Facility | Base rate | Maximum | |||
ABL Facility | |||
Variable rate (as a percent) | 1.75% | ||
Standby letters of credit | |||
ABL Facility | |||
Borrowing capacity | $ 25,000 | ||
Swingline | |||
ABL Facility | |||
Borrowing capacity | $ 15,000 |
Debt - Carrying Value of Debt O
Debt - Carrying Value of Debt Outstanding (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Mar. 15, 2019 | Jun. 30, 2023 | Dec. 31, 2022 | |
Carrying value of debt outstanding | |||
Finance lease and other financing obligations | $ 2,386 | $ 2,223 | |
Less: unamortized original issue discount | 360 | 971 | |
Less: unamortized term loan deferred financing costs | (1,735) | (4,681) | |
Total debt, net | 209,791 | 331,071 | |
Less: current maturities | (208,681) | (1,135) | |
Total long-term debt | 1,110 | 329,936 | |
ABL Facility | |||
Carrying value of debt outstanding | |||
Less: unamortized term loan deferred financing costs | (1,400) | ||
Senior Secured Notes 2024 | |||
Carrying value of debt outstanding | |||
Long-term debt, net | 209,500 | $ 334,500 | |
Less: unamortized original issue discount | $ 3,300 | $ 400 | |
Interest rate (as a percent) | 9.50% | 9.50% | 9.50% |
Debt - Components of interest e
Debt - Components of interest expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Debt | ||||
Interest incurred on finance lease and other financing obligations | $ 50 | $ 15 | $ 92 | $ 29 |
Interest expense incurred on ABL Facility and Notes | 5,094 | 8,316 | 12,564 | 16,567 |
Amortization of deferred financing costs on ABL facilities and Notes | 663 | 1,161 | 1,753 | 2,296 |
Amortization of original issue discount on Notes | 121 | 175 | 313 | 346 |
Interest income | (652) | (1,949) | ||
Interest expense, net | $ 5,276 | $ 9,667 | $ 12,773 | $ 19,238 |
Debt - Interest Expense and Def
Debt - Interest Expense and Deferred Financing Costs (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Debt | ||
Loss on extinguishment of debt | $ (2,128) | |
Debt issuance costs | 1,735 | $ 4,681 |
Senior Secured Notes 2024 | ||
Debt | ||
Accumulated amortization of deferred financing costs | 12,700 | 11,200 |
Accumulated amortization of debt issuance costs | 2,600 | 2,300 |
Loss on extinguishment of debt | (1,700) | |
ABL Facility | ||
Debt | ||
Loss on extinguishment of debt | 400 | |
Debt issuance costs | 1,400 | |
ABL Facility | Algeco ABL facility | ||
Debt | ||
Accumulated amortization related to revolver deferred financing costs | 5,000 | $ 4,800 |
Debt issuance costs | $ 400 |
Debt - Schedule of maturities o
Debt - Schedule of maturities of long term debt and finance lease obligations (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Debt | |
Rest of 2023 | $ 565 |
2024 | 210,586 |
2025 | 674 |
2026 | 61 |
Total | $ 211,886 |
Warrant Liabilities - Narrative
Warrant Liabilities - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 17, 2018 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Warrants to issue shares of common stock. | 6,510,953 | 6,510,953 | |||
Fair Value Adjustment of Warrants | $ (675) | $ (853) | $ (4,385) | $ 374 | |
Private Placement Warrants [Member] | |||||
Warrants to issue shares of common stock. | 5,333,334 | 1,533,334 | 5,333,334 | 1,533,334 | 5,333,334 |
Aggregate purchase price per warrant | $ 1.50 | ||||
Aggregate purchase price | $ 8,000 | ||||
Number of stock issued for each warrant | 1 | ||||
Share price | $ 11.50 | ||||
Warrant exercisable term | 30 days | ||||
Fair Value Adjustment of Warrants | $ (700) | $ (900) | $ (4,400) | $ 400 |
Warrant Liabilities - Estimated
Warrant Liabilities - Estimated fair value Private Warrants (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Warrant liabilities | $ 5,351 | $ 9,737 |
Private Placement Warrants [Member] | ||
Warrant liabilities | $ 5,351 | $ 9,737 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Taxes | ||||
Income tax expense | $ 13,703 | $ 6,168 | $ 25,920 | $ 7,256 |
Effective tax rate | 22.80% | 21.30% | 22.30% | 23.70% |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Jun. 30, 2023 USD ($) $ / shares Y shares | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) Y $ / shares shares | |
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants to issue shares of common stock. | shares | 6,510,953 | ||
Level 3 | Private Placement Warrants [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants to issue shares of common stock. | shares | 1,533,334 | 1,533,334 | |
Per Share Value of Warrants | $ / shares | $ 3.49 | $ 6.35 | |
Balance at beginning of the period | $ 6,026 | $ 9,737 | |
Change in fair value of warrant liabilities | (675) | (3,711) | |
Balance at ending of the period | $ 5,351 | $ 6,026 | |
Level 3 | Private Placement Warrants [Member] | Measurement Input, Exercise Price [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants and Rights Outstanding, Measurement Input | $ / shares | 11.50 | 11.50 | |
Level 3 | Private Placement Warrants [Member] | Measurement Input, Share Price [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants and Rights Outstanding, Measurement Input | $ / shares | 13.42 | 15.14 | |
Level 3 | Private Placement Warrants [Member] | Measurement Input, Expected Dividend Rate [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants and Rights Outstanding, Measurement Input | 0 | 0 | |
Level 3 | Private Placement Warrants [Member] | Measurement Input, Expected Term [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants and Rights Outstanding, Measurement Input | Y | 0.71 | 1.20 | |
Level 3 | Private Placement Warrants [Member] | Measurement Input, Risk Free Interest Rate [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants and Rights Outstanding, Measurement Input | 0.0530 | 0.0456 | |
Level 3 | Private Placement Warrants [Member] | Measurement Input, Price Volatility [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants and Rights Outstanding, Measurement Input | 0.5200 | 0.7000 | |
Senior Secured Notes 2024 | Carrying amount | Level 1 | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Debt Instrument, Fair Value Disclosure, | $ (207,405) | $ (328,848) | |
Senior Secured Notes 2024 | Fair value | Level 1 | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Debt Instrument, Fair Value Disclosure, | $ (209,946) | $ (335,403) |
Earnings (Loss) per Share (Deta
Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator | ||||
Net income attributable to Common Stockholders - basic | $ 46,453 | $ 22,851 | $ 90,278 | $ 23,345 |
Change in fair value of warrant liabilities | (675) | (853) | (4,385) | 374 |
Net income attributable to Common Stockholders - diluted | $ 45,778 | $ 21,998 | $ 85,893 | $ 23,719 |
Denominator | ||||
Weighted average shares outstanding - basic | 101,465,088 | 97,076,935 | 101,056,450 | 97,007,247 |
Warrants | 1,357,752 | 1,844,596 | ||
Weighted average shares outstanding - diluted | 105,045,608 | 97,076,935 | 105,699,684 | 97,007,247 |
Net income per share - basic | $ 0.46 | $ 0.24 | $ 0.89 | $ 0.24 |
Net income per share - diluted | $ 0.44 | $ 0.24 | $ 0.81 | $ 0.24 |
Stock Appreciation Rights (SARs) [Member] | ||||
Denominator | ||||
Dilutive effect of outstanding securities | 191,496 | 233,334 | ||
Performance stock units | ||||
Denominator | ||||
Dilutive effect of outstanding securities | 473,115 | 480,882 | ||
Employee Stock Option | ||||
Denominator | ||||
Dilutive effect of outstanding securities | 418,934 | 606,983 | ||
RSUs | ||||
Denominator | ||||
Dilutive effect of outstanding securities | 1,139,223 | 1,477,439 | ||
Warrant | ||||
Denominator | ||||
Excluded from computation of loss per share | 8,044,287 | 16,166,650 | 8,044,287 | 16,166,650 |
Performance stock units | ||||
Denominator | ||||
Excluded from computation of loss per share | 1,005,769 | |||
Antidilutive Securities That Did Not Meet Performance Criteria | 68,269 | |||
Antidilutive Securities That Did Not Meet All Specified Share Price Thresholds | 937,500 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jan. 17, 2018 $ / shares shares | Jun. 30, 2023 USD ($) $ / shares shares | Mar. 31, 2023 USD ($) shares | Jun. 30, 2023 USD ($) Vote $ / shares shares | Dec. 31, 2022 Vote $ / shares shares | |
Common Stock | |||||
Common stock shares issued | 111,025,911 | 111,025,911 | 109,747,366 | ||
Common stock, number of share outstanding | 101,595,246 | 101,595,246 | 100,316,701 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Number of Votes Per Share | Vote | 1 | 1 | |||
Preferred Shares | |||||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | |||
Preferred stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | |||
Preferred stock, shares issued | 0 | 0 | |||
Preferred stock, shares outstanding | 0 | 0 | |||
Warrants | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Warrants to issue shares of common stock. | 6,510,953 | 6,510,953 | |||
Proceeds from issuance of Common Stock from exercise of warrants | $ | $ 209 | ||||
Public Offering | |||||
Warrants | |||||
Number of units sold | 32,500,000 | ||||
Price per unit | $ / shares | $ 10 | ||||
Number of warrants per unit | 0.33 | ||||
Number of fractional shares issued upon exercise of warrants | 0 | ||||
Number of stock issued for each warrant | 1 | ||||
Share price | $ / shares | $ 11.50 | ||||
Warrant exercisable term | 30 days | ||||
Over allotment | |||||
Warrants | |||||
Number of units sold | 2,500,000 | ||||
Public Warrants | |||||
Warrants | |||||
Shares issued during period, warrants exercised | 14,500 | 2,869 | |||
Proceeds from issuance of Common Stock from exercise of warrants | $ | $ 200 | $ 100 | |||
Number of securities called by warrants or rights | 14,500 | 2,869 | 14,500 | ||
Common Stock [Member] | Public Offering | |||||
Common Stock | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | ||||
Warrants | |||||
Number of shares per unit | 1 | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | 12 Months Ended | |||||||
Jun. 19, 2023 | May 18, 2023 | Apr. 17, 2023 | Mar. 01, 2023 | Feb. 28, 2023 | Aug. 05, 2021 | Feb. 25, 2021 | Jun. 30, 2023 | Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||||||
Restricted Stock Units (RSUs) [Member] | |||||||||
Other than options | |||||||||
Outstanding Options at beginning of period (in shares) | 2,658,581 | ||||||||
Granted (in shares) | 281,775 | ||||||||
Vested (in shares) | (1,133,821) | ||||||||
Outstanding Options at end of period (in shares) | 1,806,535 | 2,658,581 | |||||||
Weighted Average Grant Date Fair Value per Share | |||||||||
Outstanding Options at beginning of period (in shares) | $ 2.98 | ||||||||
Granted (in dollars per share) | 15.20 | ||||||||
Vested (in dollars per share) | 3.36 | ||||||||
Outstanding Options at end of period (in dollars per share) | $ 4.64 | $ 2.98 | |||||||
Restricted Stock Units (RSUs) [Member] | Executive Officers and Other Employees | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting period (in years) | 4 years | ||||||||
Other than options | |||||||||
Granted (in shares) | 214,901 | ||||||||
Employee Stock Option [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Forfeited (in shares) | 0 | ||||||||
Expected term (years) | 6 years 3 months | ||||||||
Expected dividend rate | 0% | ||||||||
Stock Appreciation Rights (SARs) [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Unrecognized compensation expense | $ 4.3 | ||||||||
Deferred Compensation Share-based Arrangements, Liability, Current | $ 7.3 | $ 12.6 | |||||||
Estimated Fair Value Per Share | $ 12.22 | $ 13.61 | |||||||
Expected volatility | 43.50% | ||||||||
Expected term (years) | 6 years 3 months | ||||||||
Expected dividend rate | 0% | ||||||||
Expected risk-free interest | 1.07% | ||||||||
Exercise price | $ 9.99 | $ 11.66 | $ 0.78 | ||||||
Other than options | |||||||||
Forfeited (in shares) | 0 | ||||||||
Weighted Average Grant Date Fair Value per Share | |||||||||
Outstanding Options at end of period (in dollars per share) | $ 11.78 | $ 13.40 | |||||||
Aggregate intrinsic value | |||||||||
Outstanding aggregate Intrinsic Value | $ 9.1 | ||||||||
Stock Appreciation Rights (SARs) [Member] | Accrued Liabilities. | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Deferred Compensation Share-based Arrangements, Liability, Current | 7.1 | $ 6.3 | |||||||
Stock Appreciation Rights (SARs) [Member] | Other Noncurrent Liabilities | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Deferred Compensation Share-based Arrangements, Liability, Current | 0.2 | $ 6.3 | |||||||
Stock Appreciation Rights (SARs) [Member] | Stock Option One | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Expected volatility | 35.41% | 38.77% | |||||||
Expected term (years) | 7 months 6 days | 3 months 29 days | |||||||
Expected dividend rate | 0% | 0% | |||||||
Expected risk-free interest | 5.38% | 5.42% | |||||||
Exercise price | $ 3.54 | $ 1.79 | |||||||
Stock Appreciation Rights (SARs) [Member] | Stock Option Two | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Expected volatility | 47.27% | 46.86% | |||||||
Expected term (years) | 1 year 1 month 6 days | 7 months 24 days | |||||||
Expected dividend rate | 0% | 0% | |||||||
Expected risk-free interest | 4.65% | 4.70% | |||||||
Exercise price | $ 3.54 | $ 1.79 | |||||||
Performance stock units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Right to buy number of shares upon vesting | 1 | ||||||||
Common stock, par value (in dollars per share) | $ 0.0001 | ||||||||
Unrecognized compensation expense | $ 6.5 | ||||||||
Expected volatility | 45.86% | ||||||||
Expected term (years) | 2 years 10 months 2 days | ||||||||
Expected dividend rate | 0% | ||||||||
Correlation Coefficient | 0.6210 | ||||||||
Expected risk-free interest | 4.60% | ||||||||
Exercise price | $ 20.66 | ||||||||
Other than options | |||||||||
Outstanding Options at beginning of period (in shares) | 1,495,017 | ||||||||
Granted (in shares) | 91,025 | 91,025 | |||||||
Outstanding Options at end of period (in shares) | 1,586,042 | 1,495,017 | |||||||
Weighted Average Grant Date Fair Value per Share | |||||||||
Outstanding Options at beginning of period (in shares) | $ 4.72 | ||||||||
Granted (in dollars per share) | 17.82 | ||||||||
Outstanding Options at end of period (in dollars per share) | 5.47 | $ 4.72 | |||||||
Director | Restricted Stock Units (RSUs) [Member] | |||||||||
Other than options | |||||||||
Granted (in shares) | 6,875 | 57,616 | |||||||
Employees | Restricted Stock Units (RSUs) [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting period (in years) | 4 years | ||||||||
Other than options | |||||||||
Granted (in shares) | 2,383 | ||||||||
Minimum | Employee Stock Option [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Exercise price | 4.51 | ||||||||
Minimum | Total Shareholder Return Based Performance Share Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting (in percentage) | 0% | ||||||||
Minimum | Diversification EBITDA Based Performance Share Units [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting (in percentage) | 0% | ||||||||
Maximum | Employee Stock Option [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Exercise price | $ 10.83 | ||||||||
Maximum | Total Shareholder Return Based Performance Share Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting (in percentage) | 200% | ||||||||
Maximum | Diversification EBITDA Based Performance Share Units [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting (in percentage) | 200% |
Stock-Based Compensation - Chan
Stock-Based Compensation - Changes in stock options (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Number of shares | ||
Exercisable Options at end of period (in shares) | 528,558 | |
Employee Stock Option [Member] | ||
Number of shares | ||
Outstanding Options at beginning of period (in shares) | 1,510,661 | |
Exercised (in shares) | (671,392) | |
Outstanding Options at end of period (in shares) | 839,269 | 1,510,661 |
Weighted Average Exercise Price per Share | ||
Outstanding Options at beginning of period (in dollars per share) | $ 6.13 | |
Exercised (in dollars per share) | 5.81 | |
Outstanding Options at end of period (in dollars per share) | $ 6.38 | $ 6.13 |
Weighted Average Contractual Life (Years) | ||
Outstanding Options (in years) | 6 years 4 months 20 days | 6 years 10 months 9 days |
Intrinsic Value | ||
Outstanding Options at end of period | $ 5,906 | $ 13,615 |
Exercised | $ 7,423 | |
Stock Appreciation Rights (SARs) [Member] | ||
Number of shares | ||
Outstanding Options at beginning of period (in shares) | 1,537,776 | |
Exercised (in shares) | (755,436) | |
Outstanding Options at end of period (in shares) | 782,340 | 1,537,776 |
Weighted Average Exercise Price per Share | ||
Outstanding Options at beginning of period (in dollars per share) | $ 1.82 | |
Exercised (in dollars per share) | 1.79 | |
Outstanding Options at end of period (in dollars per share) | $ 1.85 | $ 1.82 |
Weighted Average Contractual Life (Years) | ||
Outstanding Options (in years) | 7 years 8 months 4 days | 8 years 2 months 1 day |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Dec. 31, 2022 | Aug. 05, 2021 | Feb. 25, 2021 | |
Employee Stock Option [Member] | ||||
Assumptions: | ||||
Expected dividend yield - minimum | 25.94% | |||
Expected dividend yield - maximum | 30.90% | |||
Expected dividend yield | 0% | |||
Expected term (years) | 6 years 3 months | |||
Risk-free interest rate - minimum | 0.82% | |||
Risk-free interest rate - maximum | 2.26% | |||
Weighted-average grant date fair value | $ 1.42 | |||
Stock Appreciation Rights (SARs) [Member] | ||||
Assumptions: | ||||
Weighted average expected stock volatility | 43.50% | |||
Expected dividend yield | 0% | |||
Expected term (years) | 6 years 3 months | |||
Risk-free interest rate (range) | 1.07% | |||
Exercise price (range) | $ 0.78 | $ 9.99 | $ 11.66 | |
Exercised awards settled in Cash | $ 10 | |||
Minimum | Employee Stock Option [Member] | ||||
Assumptions: | ||||
Exercise price (range) | $ 4.51 | |||
Maximum | Employee Stock Option [Member] | ||||
Assumptions: | ||||
Exercise price (range) | $ 10.83 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Restricted Stock Units (RSUs) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based Compensation Expense | $ 1.4 | $ 1.3 | $ 2.7 | $ 2.9 |
Associated tax benefit from stock-based compensation expense | 0.4 | 0.3 | 0.7 | 0.7 |
Unrecognized compensation expense | 9.4 | $ 9.4 | ||
Period for unrecognized compensation expense expected to be recognized | 2 years 7 months 6 days | |||
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based Compensation Expense | 0.2 | 0.2 | $ 0.3 | 0.4 |
Associated tax benefit from stock-based compensation expense | 0.1 | 0.1 | ||
Unrecognized compensation expense | 0.3 | $ 0.3 | ||
Period for unrecognized compensation expense expected to be recognized | 7 months 24 days | |||
Stock Appreciation Rights (SARs) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based Compensation Expense | 1.1 | 0.1 | $ 4.7 | 1.6 |
Period for unrecognized compensation expense expected to be recognized | 8 months 1 day | |||
Performance stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based Compensation Expense | 0.7 | 0.2 | $ 1.4 | 0.2 |
Associated tax benefit from stock-based compensation expense | 0.2 | 0.1 | $ 0.4 | $ 0.1 |
Period for unrecognized compensation expense expected to be recognized | 2 years 1 month 9 days | |||
Maximum | Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Associated tax benefit from stock-based compensation expense | $ 0.1 | $ 0.1 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Retirement Plans | ||||
Minimum percentage of annual eligible compensation by the participants | 1% | |||
Maximum percentage of annual eligible compensation by the participants | 90% | |||
Percentage of contribution matched | 5% | |||
Percentage of contribution, matched 100% by employer | 3% | |||
Employer match of employee contributions of first 3% of contributions | 100% | |||
Percentage of contribution, matched 50% by employer | 2% | |||
Employer match of employee contributions of next 3% of contributions | 50% | |||
Contribution expenses | $ 0.2 | $ 0.2 | $ 0.6 | $ 0.5 |
Business Segments (Details)
Business Segments (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) segment | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) segment | |
Business segments | |||||
Number of reportable segments | segment | 2 | 4 | |||
Number of Operating Segments | segment | 4 | 6 | |||
Revenue | $ 143,630 | $ 109,647 | $ 291,449 | $ 189,982 | |
Total Assets | 665,968 | 665,968 | $ 771,727 | ||
Operating Segments | |||||
Business segments | |||||
Revenue | 143,630 | 109,647 | 291,449 | 189,982 | |
Adjusted gross profit | 100,358 | 64,406 | 199,918 | 105,121 | |
Total Assets | 438,859 | 438,859 | 428,388 | ||
HFS - South | Operating Segments | |||||
Business segments | |||||
Revenue | 39,154 | 32,620 | 74,925 | 64,196 | |
Adjusted gross profit | 13,294 | 13,967 | 24,950 | 27,284 | |
Total Assets | 191,862 | 191,862 | 176,637 | ||
Government | Operating Segments | |||||
Business segments | |||||
Revenue | 101,179 | 74,915 | 210,682 | 121,705 | |
Adjusted gross profit | 87,535 | 50,699 | 176,309 | 78,575 | |
Total Assets | 214,018 | $ 214,018 | $ 217,029 | ||
Four Segments | Revenues | Customer concentration risk | |||||
Business segments | |||||
Concentration risk, percentage | 75% | ||||
Two Segments | Revenues | Customer concentration risk | |||||
Business segments | |||||
Concentration risk, percentage | 75% | ||||
All Other | Operating Segments | |||||
Business segments | |||||
Revenue | 3,297 | 2,112 | $ 5,842 | 4,081 | |
Adjusted gross profit | (471) | $ (260) | (1,341) | $ (738) | |
Total Assets | $ 32,979 | $ 32,979 | $ 34,722 |
Business Segments - Reconciliat
Business Segments - Reconciliation of total segment adjusted gross profit to total combined income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Other adjusted gross profit | $ (471) | $ (260) | $ (1,341) | $ (738) |
Depreciation and amortization | (21,833) | (15,446) | (43,233) | (32,241) |
Selling, general and administrative expenses | (13,457) | (11,103) | (28,656) | (22,862) |
Other expense (income), net | (311) | (24) | (1,315) | 195 |
Loss on extinguishment of debt | (2,128) | |||
Interest expense, net | (5,276) | (9,667) | (12,773) | (19,238) |
Change in fair value of warrant liabilities | 675 | 853 | 4,385 | (374) |
Income before income tax | 60,156 | 29,019 | 116,198 | 30,601 |
Operating Segments | ||||
Total reportable segment adjusted gross profit | 100,358 | 64,406 | 199,918 | 105,121 |
Operating Segments | Reportable Segments, Excluding Other [Member] | ||||
Total reportable segment adjusted gross profit | $ 100,829 | $ 64,666 | $ 201,259 | $ 105,859 |
Business Segments - Reconcili_2
Business Segments - Reconciliation of total segment assets to total combined assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 665,968 | $ 771,727 |
Operating Segments | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 438,859 | 428,388 |
Operating Segments | All Other | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 32,979 | 34,722 |
Other unallocated amounts | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 225,390 | 341,662 |
Other unallocated amounts | Reportable Segments, Excluding Other [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 405,880 | 426,825 |
Other unallocated amounts | All Other | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Other Assets | 34,698 | 3,240 |
Other Unallocated Assets | $ 225,390 | $ 341,662 |
Business Segments - Unallocated
Business Segments - Unallocated assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Total current assets | $ 129,843 | $ 236,379 |
Other intangible assets, net | 73,026 | 75,182 |
Operating lease right-of-use assets, net | 19,718 | 27,298 |
Deferred financing costs revolver, net | 1,682 | 896 |
Other non-current assets | 1,121 | 1,907 |
Total assets | 665,968 | 771,727 |
Other unallocated amounts | ||
Total current assets | 129,843 | 236,379 |
Other intangible assets, net | 73,026 | 75,182 |
Operating lease right-of-use assets, net | 19,718 | 27,298 |
Deferred financing costs revolver, net | 1,682 | 896 |
Other non-current assets | 1,121 | 1,907 |
Total assets | $ 225,390 | $ 341,662 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||||
Net Income (Loss) | $ 46,453 | $ 43,825 | $ 22,851 | $ 494 | $ 90,278 | $ 23,345 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |