Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 11, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ATLAS TECHNICAL CONSULTANTS, INC. | |
Entity Central Index Key | 0001751143 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity File Number | 001-38745 | |
Entity Ex Transition Period | false | |
Entity Filer Category | Accelerated Filer | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE | |
Entity Common Stock, Shares Outstanding | 29,741,710 |
Unaudited Consolidated Balance
Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and equivalents | $ 18,924 | $ 20,185 |
Accounts receivable, net | 88,947 | 90,775 |
Unbilled receivables, net | 47,150 | 40,513 |
Prepaid expenses | 4,477 | 5,266 |
Other current assets | 529 | 812 |
Total current assets | 160,027 | 157,551 |
Property and equipment, net | 15,946 | 14,824 |
Intangible assets, net | 92,248 | 92,389 |
Goodwill | 92,006 | 85,125 |
Other long-term assets | 2,925 | 2,884 |
TOTAL ASSETS | 363,152 | 352,773 |
Current liabilities: | ||
Trade accounts payable | 27,584 | 30,754 |
Accrued liabilities | 9,749 | 10,085 |
Current maturities of long-term debt | 14,050 | 10,875 |
Other current liabilities | 9,820 | 13,712 |
Total current liabilities | 61,203 | 65,426 |
Long-term debt, net of current maturities and loan costs | 276,313 | 158,557 |
Other long-term liabilities | 7,849 | 1,347 |
Total liabilities | 345,365 | 225,330 |
COMMITMENTS AND CONTINGENCIES (NOTE 14) | ||
Redeemable preferred stock | 143,172 | |
Members' Capital | 127,443 | |
Additional paid in capital | (23,632) | |
Non-controlling interest | (100,250) | |
Retained earnings/(deficit) | (1,506) | |
Total shareholders' equity/members' capital | (125,385) | 127,443 |
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK. SHAREHOLDERS' EQUITY AND MEMBERS' CAPITAL | 363,152 | 352,773 |
Class A common stock | ||
Current liabilities: | ||
Common stock | 1 | |
Class B common stock | ||
Current liabilities: | ||
Common stock | $ 2 |
Unaudited Consolidated Balanc_2
Unaudited Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Class A common stock | ||
Common stock, par value | $ .0001 | |
Common stock shares authorized | 400,000,000 | |
Common stock shares issued | 5,767,342 | |
Common stock shares outstanding | 5,767,342 | |
Class B common stock | ||
Common stock, par value | $ .0001 | |
Common stock shares authorized | 23,974,368 | |
Common stock shares issued | 23,974,368 | |
Common stock shares outstanding | 23,974,368 |
Unaudited Statements of Operati
Unaudited Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 109,302 | $ 105,611 |
Cost of revenues | (58,898) | (57,172) |
Operating expenses | (68,365) | (44,869) |
Operating (loss) income | (17,961) | 3,570 |
Interest expense | (5,640) | (2,385) |
Other income (expense) | 32 | (296) |
(Loss) income before income taxes | (23,569) | 889 |
Income tax expense | (5) | |
Net (loss) income from continuing operations | (23,569) | 884 |
Loss from discontinued operations | (149) | |
Net (loss) income | (23,569) | 735 |
Provision for non-controlling interest | 3,260 | |
Redeemable preferred stock dividends | (2,244) | |
Net (loss) income attributable to Class A common stock shareholders/members | $ (22,553) | $ 735 |
(Loss) Per Class A Common Share | $ (0.26) | |
Class A common shares (basic and diluted) | $ 5,767,342 |
Unaudited Statements of Cash Fl
Unaudited Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (23,569) | $ 735 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 5,002 | 5,169 |
Equity-based compensation expense | 9,845 | 56 |
Loss (gain) on sale of property and equipment | 11 | (36) |
Write-off of deferred financing costs related to debt extinguishment | 1,712 | 40 |
Amortization of deferred financing costs | 249 | 58 |
Provision for bad debts | 92 | 96 |
Changes in assets & liabilities: | ||
Decrease in accounts receivable and unbilled receivable | 193 | 7,807 |
Decrease in prepaid expenses | 789 | 1,071 |
Decrease in other current assets | 283 | 83 |
(Decrease) in trade accounts payable | (3,948) | (4,875) |
(Decrease) in accrued liabilities | (1,248) | (1,180) |
(Decrease) in other current and long-term liabilities | (1,956) | (7,682) |
(Increase) in other long-term assets | (27) | (754) |
Net cash (used) provided by operating activities | (12,572) | 588 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (1,080) | (1,585) |
Proceeds from disposal of property and equipment | 188 | |
Purchase of business, net of cash acquired | (10,500) | |
Net cash (used in) investing activities | (11,580) | (1,397) |
Cash flows from financing activities: | ||
Proceeds from issuance of debt | 302,000 | 187,634 |
Payment of loan acquisition costs | (11,886) | (1,274) |
Repayments of debt | (171,144) | (127,399) |
Proceeds from issuance of redeemable preferred stock | 141,840 | |
Issuance of common stock | 10,229 | |
Member distributions | (21,830) | |
Payment to shareholders associated with Atlas Business Combination | (226,318) | |
Payment of contingent earn-out | (2,500) | |
Net cash provided by financing activities | 22,891 | 56,461 |
Net change in cash and equivalents | (1,261) | 55,652 |
Cash and equivalents - beginning of period | 20,185 | 6,509 |
Cash and equivalents - end of period | 18,924 | 62,161 |
Cash paid during the period for: | ||
Interest | 3,508 | 730 |
Taxes | 5 | |
Capital assets financed | 157 | |
Contingent consideration share settled | 1,060 | |
Dividends on preferred shares accrued and note paid | $ 912 |
Unaudited Statements of Shareho
Unaudited Statements of Shareholders' Equity and Members' Capital - USD ($) $ in Thousands | Class A Common Stock | Class B Common Stock | Additional Paid in Capital | Members' Capital | Non- Controlling Interests | Retained Earnings | Total |
Balance at beginning at Dec. 31, 2018 | $ 171,794 | $ 171,794 | |||||
Member distributions | |||||||
Equity based compensation | 56 | 56 | |||||
Dividends on redeemable preferred stock | |||||||
Net income | 735 | 735 | |||||
Balance at ending at Mar. 31, 2019 | 172,585 | 172,585 | |||||
Balance at beginning at Dec. 31, 2019 | 127,443 | 127,443 | |||||
Member distributions | (21,830) | 21,830 | |||||
Equity based compensation | 9,845 | 9,845 | |||||
Net income prior to Atlas Business Combination | (21,047) | (21,047) | |||||
Recapitalization in connection with Atlas Business Combination | $ 1 | $ 2 | $ (23,632) | $ (94,411) | $ (96,990) | (215,030) | |
Recapitalization in connection with Atlas Business Combination (in shares) | 5,767 | 23,974 | |||||
Net (loss) post Atlas Business Combination | (1,451) | $ (1,071) | (2,522) | ||||
Dividends on redeemable preferred stock | (1,809) | (435) | 2,244 | ||||
Balance at ending at Mar. 31, 2020 | $ 1 | $ 2 | $ (23,632) | $ (100,250) | $ (1,506) | $ (125,385) | |
Balance at ending (in shares) at Mar. 31, 2020 | 5,767 | 23,974 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION Organization Atlas Technical Consultants, Inc. (the “Company”, “We”, or “Atlas” and formerly named Boxwood Merger Corp. (“Boxwood”)) was a blank check company, incorporated in Delaware on June 28, 2017. The Company was formed for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, recapitalization, or other similar business transaction, one or more operating businesses or assets. On February 14, 2020 (the “Closing Date”), the Company consummated its acquisition of Atlas Intermediate Holdings LLC, a Delaware limited liability company (“Atlas Intermediate”), pursuant to the Unit Purchase Agreement, dated as of August 12, 2019, as amended on January 22, 2020 (the “Purchase Agreement”), by and among the Company, Atlas TC Holdings LLC, a wholly-owned subsidiary of the Company and a Delaware limited liability company (“Holdings”), Atlas TC Buyer LLC, a wholly-owned subsidiary of Holdings and a Delaware limited liability company (the “Buyer”), Atlas Intermediate and Atlas Technical Consultants Holdings LP, a Delaware limited partnership (the “Seller”). The acquisition of Atlas Intermediate pursuant to the Purchase Agreement together with the other transactions contemplated by the Purchase Agreement is referred to herein as the “Atlas Business Combination.” Following the consummation of the Atlas Business Combination, the combined company is organized in an “Up-C” structure in which the business of Atlas Intermediate and its subsidiaries is held by Holdings and will continue to operate through the subsidiaries of Atlas Intermediate, and in which the Company’s only direct assets will consist of common units of Holdings (“Holdings Units”). The Company is the sole manager of Holdings in accordance with the terms of the amended and restated limited liability company agreement of Holdings (the “Holdings LLC Agreement”) entered into in connection with the consummation of the Atlas Business Combination. The Company has more than 140 offices in 40 states and employs more than 3,200 employees and is headquartered in Austin, Texas. The Company provides public and private sector clients with comprehensive support in managing large-scale infrastructure improvement programs including engineering, design, program development/management, compliance services acquisition and project control services, as well as construction engineering & inspection and materials testing. Services are provided throughout the United States and its territories to a broad base of clients with no single client representing 10% or more of our revenues for either the quarter ended March 31, 2019 or 2018. Services are rendered primarily on a time and materials and cost-plus basis with approximately 95% of our contracts on that basis and the remainder represented by firm fixed price contracts. Basis of Presentation The acquisition of Atlas Intermediate has been accounted for as a reverse recapitalization. Under this method of accounting, Atlas is treated as the acquired company and Atlas Intermediate is treated as the acquirer for financial reporting purposes. Therefore, the consolidated financial results include information regarding Atlas Intermediate as the Company’s predecessor entity. Thus, the financial statements included in this report reflect (i) the historical operating results of Atlas Intermediate prior to the Atlas Business Combination; (ii) the combined results of the Company and Atlas Intermediate following the Atlas Business Combination; (iii) the assets, liabilities and members’ capital of Atlas Intermediate at their historical costs; and (iv) the Company’s equity and earnings per share presented for the period from the Closing Date. The accompanying interim statements of the Company have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments and disclosures necessary for a fair statement of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year or for any other period. These interim statements should be read in conjunction with the audited financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K that the Company filed with the SEC on March 16, 2020 and Form 8-K/A filed with the SEC on March 16, 2020. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Fiscal Year The Company’s subsidiaries report the results of operations based on 52 or 53-week periods ending on the Friday nearest December 31 while Atlas reports on a calendar year end. For clarity of presentation, all periods are presented as if the year ended on December 31. During each quarter, our subsidiaries will close on the Friday closest to March 31, June 30, and September 30 and Atlas will close on the actual calendar day. The impact of the difference between these dates was insignificant. The Company has appropriately eliminated all transactions between itself and its subsidiaries when presenting its balance sheet. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounts Receivable and Accrued Billings The Company records its trade accounts receivable and unbilled receivables at their face amounts less allowances. On a periodic basis, the Company monitors the trade accounts receivable and unbilled receivables from its customers for any collectability issues. The allowance for doubtful accounts is established based on reviews of individual customer accounts, recent loss experience, current economic conditions, and other pertinent factors. As of March 31, 2020 and December 31, 2019, the allowance for trade accounts receivable was $2.0 million and $2.1 million, respectively, while the allowance for unbilled receivables was $0.7 million and $0.6 million, respectively. The allowances reflect the Company's best estimate of collectability risks on outstanding receivables and unbilled services. Property and Equipment Purchases of new assets and costs of improvement to extend the useful life of existing assets are capitalized. Routine maintenance and repairs are charged to expenses as incurred. When an asset is sold or retired, the costs and related accumulated depreciation are eliminated from the accounts, and the resulting gains or losses on disposal are recognized in the accompanying combined statement of operations. The Company depreciates its assets on a straight-line basis over the assets' useful lives, which range from 3 to 10 years. Impairment of Long-Lived Assets The Company assesses long-lived assets for impairment when events or circumstances indicate that the carrying value of an asset may not be recoverable. The Company recognizes an impairment if the net book value of such assets exceeds the future undiscounted cash flows attributable to such assets. There were no impairment charges for the quarters ended March 31, 2020 and 2019. Goodwill Goodwill represents the excess of the cost of net assets acquired over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. In accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 350, Intangibles – Goodwill and Other, we evaluate goodwill annually for impairment on October 1, or whenever events or changes in circumstances indicate the asset may be impaired, using the quantitative method. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. These qualitative factors include: macroeconomic and industry conditions, cost factors, overall financial performance and other relevant entity-specific events. If we determine that this threshold is met, then performing the two-step quantitative impairment test is unnecessary. We may elect to bypass the qualitative assessment and proceed directly to the quantitative test for any reporting unit. The two-step impairment test requires a comparison of the carrying value of the assets and liabilities associated with a reporting unit, including goodwill, with the fair value of the reporting unit. We determine fair value through multiple valuation techniques, and weight the results accordingly. We make certain subjective and complex judgments in assessing whether an event of impairment of goodwill has occurred, including assumptions and estimates used to determine the fair value of our reporting units. If the carrying value of our reporting unit exceeds the fair value of our reporting unit, we would calculate the implied fair value as compared to the carrying value to determine the appropriate impairment charge, if any. There were no impairment charges for the quarters ended March 31, 2020 and 2019. Revenue Recognition During the fourth quarter of 2019, we adopted ASC Topic 606, Revenue from Contracts with Customers ("Topic 606"), using the modified retrospective approach to all contracts that were not completed as of the beginning of fiscal year 2019. We utilize the portfolio method practical expedient, which allows companies to account for multiple contracts as a portfolio, instead of accounting for them on a contract by contract basis (commonly known as the contract method). For our time and materials contracts, we apply the as-invoiced practical expedient, which permits us to recognize revenue as the right to invoice for services performed. The new standard did not materially affect our consolidated net income, financial position, or cash flows. Below is a description of the basic types of contracts from which the Company may earn revenue: Time and Materials Contracts Under the time and materials ("T&M") arrangements, contract fees are based upon time and materials incurred. The contracts may be structured as basic time and materials, cost plus a margin or time and materials subject to a maximum contract value (the "ceiling"). Due to the potential limitation of the contract's ceiling, the economic factors of the contracts subject to a ceiling differ from the economic factors of basic T&M and cost plus contracts. The majority of the Company's contracts are for projects where it bills the client monthly at hourly billing or unit rates. The billing rates are determined by contract terms. Under cost plus contracts, the Company charges its clients for contract related costs at cost, an agreed upon overhead rate plus a fixed fee or rate. Under time and materials contracts with a ceiling, the Company charges the clients for time and materials based upon the work performed however there is a ceiling or a not to exceed value. There are often instances that a contract is modified to extend the contract value past the original or amended ceiling. As the consideration is variable depending on the outcome of the contract renegotiation, the Company will estimate the total contract price in accordance with the variable consideration guidelines and will only include consideration that it expects to receive from the customer. When the Company is reaching the ceiling, the contract will be renegotiated, or we cease work when the maximum contract value is reached. The Company will continue to work if it is probable that the contract will be extended. The Company is only entitled to consideration for the work it has performed, and the ceiling amount is not a guaranteed contract value. The Company earned approximately 95% of its revenues under T&M contracts during the quarters ended March 31, 2020 and 2019. Fixed Price Contracts Under fixed price contracts, the Company's clients pay an agreed amount negotiated in advance for a specified scope of work. The Company is guaranteed to receive the consideration to the extent that the Company delivers under the contract. The Company recognizes revenue over a period of time on fixed price contracts using the input method based upon direct costs incurred to date, which are compared to total projected direct costs. Costs are the most relevant measure to determine the transfer of the service to the customer. The Company assess contracts quarterly and may recognize any expected future loss before actually incurring the loss. When the Company is expecting to reach the total consideration under the contract, the Company will begin to negotiate a change order. Change Orders and Claims Change orders are modifications of an original contract that effectively change the provisions of the contract without adding new provisions. Either the Company or its client may initiate change orders. They may include changes in specifications or design, manner of performance, facilities, equipment, materials, sites and period of completion of the work. Management evaluates when a change order is probable based upon its experience in negotiating change orders, the customer's written approval of such changes or separate documentation of change order costs that are identifiable. Change orders may take time to be formally documented and terms of such change orders are agreed with the client before the work is performed. Sometimes circumstances require that work progresses before an agreement is reached with the client. If the Company is having difficulties in renegotiating the change order, the Company will stop work if possible, record all costs incurred to date, and determine, on a project by project basis, the appropriate final revenue recognition. Claims are amounts in excess of the agreed contract price that the Company seeks to collect from its clients or others for client-caused delays, errors in specifications and designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated additional contract costs. Costs related to change orders and claims are recognized when they are incurred. The Company evaluates claims on an individual basis and recognizes revenue it believes is probable to collect. Performance Obligations The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and therefore, is not distinct. However, in some instances, we may also promise to provide distinct goods or services within a contract, resulting in multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. Typically, we sell a customer a specific service and use the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation. The Company's performance obligations are satisfied as work progresses or at a point in time. Revenue on our cost-reimbursable contracts is recognized over time using direct costs incurred or direct costs incurred to date as compared to the estimated total direct costs for performance obligations because it best depicts the transfer of control to the customer. Contract costs include labor, subcontractors' costs and other direct costs. Gross revenue from services transferred to customers at a point in time is recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the reports and/or analysis performed. As of March 31, 2020 and December 31, 2019, we had $607 and $601 million of remaining performance obligations, or backlog, respectively of which $364 million and $361 million, respectively or 60% is expected to be recognized over the next 12 months and the majority of the balance over the next 24 months. Contracts for which work authorizations have been received are included in backlog. Project cancellations or scope adjustments may occur, from time to time, with respect to contracts reflected in backlog. Most of our government contracts are multi-year contracts for which funding is appropriated on an annual basis, therefore backlog includes only those amounts that have been funded and authorized and does not reflect the full amounts we may receive over the term of such contracts. In the case of non-government contracts, backlog includes future revenue at contract rates, excluding contract renewals or extensions that are at the discretion of the client. For contracts with a not-to-exceed maximum amount, we include revenue from such contracts in backlog to the extent of the remaining estimated amount. Our backlog for the period beyond 12 months may be subject to variation from year-to-year as existing contracts are completed, delayed, or renewed or new contracts are awarded, delayed, or cancelled. As a result, we believe that year-to-year comparisons of the portion of backlog expected to be performed more than one year in the future are difficult to assess and not necessarily indicative of future revenues or profitability. Contract Assets and Liabilities The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables (contract assets), and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities). Billed and unbilled receivables are reflected on the face of the Consolidated Balance Sheet. The liability "Billings in excess of costs and estimated earnings on uncompleted contracts" represents billings in excess of revenues recognized on these contracts as of the reporting date and is reported within "other current liabilities" on the Consolidated Balance Sheet. This liability was $311 thousand and $343 thousand as of March 31, 2020 and December 31, 2019, respectively. Revenue recognized that was included in the contract liability balance at the beginning of the fiscal year was $32 thousand and $32 thousand for the quarters ended March 31, 2020 and 2019, respectively. U.S. Federal Acquisition Regulations The Company has contracts with the U.S. federal, state and local governments that contain provisions requiring compliance with the U.S. Federal Acquisition Regulations ("FAR"). These regulations are generally applicable to all of its contracts that are directly funded or partially funded by pass through funds from the U.S. federal government. These provisions limit the recovery of certain specified indirect costs on contracts subject to the FAR. Cost-plus contracts covered by the FAR provide for upward or downward adjustments if actual recoverable costs differ from the estimate billed under forward pricing arrangements. Most of the Company's government contracts are subject to termination at the convenience of the government. Contracts typically provide for reimbursement of costs incurred and payment of fees earned through the date of such termination. Government contracts that are subject to the FAR are subject to audits performed by the Defense Contract Audit Agency ("DCAA") and many other state governmental agencies. As such, the Company's overhead rates, cost proposals, incurred government contract costs and internal control systems are subject to review. During the course of its audits, the DCAA or a state agency may question incurred costs if it believes the Company has accounted for such costs in a manner inconsistent with the requirements of the FAR or Cost Accounting Standards and recommend that the applicable contracting officer disallow such costs. Historically, the Company has not incurred significant disallowed costs because of such audits. However, the Company can provide no assurance that the rate audits will not result in material disallowances of incurred costs in the future. The Company provides for a refund liability to the extent that it expects to refund some of the consideration received from a customer. The liability at March 31, 2020 and December 31, 2019 was $813 thousand. Disaggregation of Revenues As described further in Note 2 – Summary of Significant Accounting Policies, the Company has one operating segment, Engineering, Testing, Inspection and Other Consultative Services, which reflects how the Company is being managed. The Company provides public and private sector clients with comprehensive support in managing large-scale infrastructure improvement programs including engineering, design, program development/management, compliance services acquisition and project control services, as well as construction engineering & inspection and materials testing. Public sector clients approximate one-third of the Company's revenues in each reporting period presented. All services performed by the Company are rendered in the United States and its territories via two contract types, time and materials or fixed price contracts. The Company derives 95% of its revenues from T&M contracts. Cash Flows The Company has presented its cash flows using the indirect method and considers all highly liquid investments with a maturity of three months or less at acquisition to be cash equivalents. At times, our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance limit. Comprehensive Income There are no other components of comprehensive income other than net income and the provision for non-controlling interest associated with Holding Units. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade accounts receivable. These risks primarily relate to the concentration of customers who are large, governmental customers and regional governmental customers. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral. Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurements ("ASC 820"), establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described as follows: Level 1 — Inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that management has the ability to access. Level 2 — Inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Level 3 — Inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The asset or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company has various financial instruments, including cash and cash equivalents, accounts receivable and payable, accrued liabilities, and long-term debt. The carrying value of the Company's cash and cash equivalents, accounts receivable, and payable and accrued liabilities approximate their fair value due to their short-term nature. The Company believes that the aggregate fair values of its long-term debt approximates their carrying amounts as the interest rates on the debt are either reset on a frequent basis or reflect current market rates. The Company applies the provisions of ASC 805, Business Combinations, in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed. The allocation of the purchase price to identifiable intangible assets is based on valuations performed to determine the fair values of such assets as of the acquisition dates. Generally, the Company engages a third-party independent valuation specialist to assist in management's determination of fair values of tangible and intangible assets acquired and liabilities assumed. The fair values of earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. The Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability on the Consolidated Balance Sheet. Changes in the estimated fair value of contingent earnout payments are included in operating expenses in the accompanying combined statements of operations. Several factors are considered when determining contingent consideration liabilities as part of the purchase price, including whether (i) the valuation of the acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (ii) the former owners of the acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of other key employees. The contingent earn-out payments are not affected by employment termination. The Company reviews and re-assesses the estimated fair value of contingent consideration liabilities on a quarterly basis, and the updated fair value could differ materially from the initial estimates. The Company measures contingent consideration recognized in connection with business combinations at fair value on a recurring basis using significant unobservable inputs classified as Level 3 inputs. The Company uses a probability-weighted discounted cash flow approach as a valuation technique to determine the fair value of the contingent consideration liabilities on the acquisition date and at each reporting period. The significant unobservable inputs used in the fair value measurements are projections over the earn-out period, and the probability outcome percentages that are assigned to each scenario. Significant increases or decreases to either of these inputs in isolation could result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent consideration liabilities. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate on the acquisition date and amount paid will be recorded in earnings. The following table summarizes the changes in the fair value of estimated contingent consideration: Contingent consideration, as of December 31, 2019 $ 1,060 Additions for acquisitions 5,625 Reduction of liability for payment made (1,060 ) Decrease of liability related to re-measurement of fair value Total contingent consideration, as of March 31, 2020 5,625 Current portion of contingent consideration - Contingent consideration, less current portion $ 5,625 Equity-Based Compensation The Company recognizes the cost of services received in an equity-based payment transaction with an employee as services are received and record either a corresponding increase in equity or a liability, depending on whether the instruments granted satisfy the equity or liability classification criteria. The measurement objective for these equity awards is the estimated fair value at the grant date of the equity instruments that the Company is obligated to issue when employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments. The compensation cost for an award classified as an equity instrument is recognized ratably over the requisite service period, including an estimate of forfeitures. The requisite service period is the period during which an employee is required to provide service in exchange for an award. Equity compensation was $9,845 thousand and $56 thousand for the quarters ended March 31, 2020 and 2019, respectively. Consistent with the change in control provisions within the agreements, the Company fully expensed the remaining unamortized value of the stock awards that vested upon the completion of the Atlas Business Combination. Income Taxes Following the consummation of the Atlas Business Combination, the Company is organized in an "Up-C" structure in which the business of Atlas Intermediate and its subsidiaries is held by Holdings and will continue to operate through the subsidiaries of Atlas Intermediate, and in which the Company's only direct assets will consist of common units of Holdings Units. The Company is the sole manager of Holdings in accordance with the terms of the Holdings LLC Agreement entered into in connection with the consummation of the Atlas Business Combination. Previously, Atlas Intermediate was treated as a partnership for federal and state income tax purposes with all income tax liabilities and/or benefits of the Company being passed through to the partners and members. As such, no recognition of federal or state income taxes for the Company or its subsidiaries have been provided for in the accompanying consolidated financial statements except as disclosed below. The State of Texas imposes a margin tax, with an effective rate of 0.7%, based on the prior year's Texas-sourced gross receipts. This tax is treated as an income tax and accrued in the accounting period in which the taxable gross receipts are recognized. The State of Texas margin tax was insignificant in the quarters ended March 31, 2020 and 2019. In addition, there are two C-Corporations ("C-Corp") subsidiaries for which we account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The results of operations prior to the Atlas Business Combination were treated consistently in this manner. Subsequent to the Atlas Business Combination, the Up-C structure allowed the holders of our Class B common stock, par value $0.0001 per share (the "Class B common stock") to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or "pass through" entity, for U.S. federal income (and certain state and local) tax purposes following the business combination. One of these benefits is that, for U.S. federal income (and certain state and local) purposes, future taxable income of Atlas that is allocated to the Seller and its limited partners will be taxed on a flow-through basis and therefore will not be subject to corporate taxes at the entity level. Income tax relating to the C-Corps is not considered in the provision for non-controlling interest calculation as it is solely the responsibility of the holders of our Class A common stock, par value $0.0001 per share (the "Class A common stock"). The Texas margin tax is considered within the provision of non-controlling interest as it generated through the results of Atlas Intermediate and its subsidiaries. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. Deferred taxes consisted of the following: March 31, December 31, (in millions) Asset: Current $ 0.7 $ - Noncurrent 13.0 - Deferred tax asset, gross 13.7 - Valuation allowance (13.7 ) - Deferred tax asset, net $ - $ - Liability: Current $ - $ - Noncurrent 0.6 0.6 Deferred tax liability, gross 0.6 0.6 Valuation allowance - - Deferred tax liability, net $ 0.6 $ 0.6 There are no net operating loss carryforwards. The Company records its deferred tax liabilities in other long-term liabilities within its Consolidated Balance Sheet. Income tax expense was $0.0 million and $0.0 million for the quarters ended March 31, 2020 and 2019, respectively. Income tax expense for the quarter ended March 31, 2019 and the period beginning January 1, 2020 through the Closing Date differs from the 21% statutory federal tax rate and various state tax rates applied to the Company's pre-tax income due to only certain C-Corp subsidiaries being subject to recognition of federal or state income taxes in the Company's Consolidated Statement of Operations. The rate reconciliation for the period from the Atlas Business Combination through March 31, 2020 is as follows: Pre-tax loss $ 2,522 Statutory tax rate 26 % Tax benefit 656 Deferred tax asset valuation reserve (656 ) Income tax expense, net $ - Redeemable Preferred Stock On February 14, 2020, in connection with the consummation of the Atlas Business Combination, Holdings and GSO COF III AIX-2 LP ("GSO AIV-2") entered into a subscription agreement, dated February 14, 2020 (the "Subscription Agreement") pursuant to which, GSO AIV-2 purchased 145,000 units of a new class of Series A Senior Preferred Units of Holdings (the "Preferred Units") at a price per Preferred Unit of $978.21 for an aggregate cash purchase price of $141,840,450, which represents a 2.179% original issue discount on the Preferred Units (such purchase, the "GSO Placement"). The GSO Placement was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and/or Regulation D promulgated thereunder. The Preferred Units rank senior in priority to all other existing and future equity securities of Holdings with respect to liquidation preference and distribution rights. The Preferred Units have a liquidation preference of $1,000 per Preferred Unit (the "Liquidation Preference"). Subject to any limitations set forth in the Atlas Credit Agreement (as defined in Note 7), the Preferred Units pay a dividend of 5% per annum, plus either an additional 6.25% per annum in cash or 7.25% per annum in additional Preferred Units, at Holdings' option, payable quarterly in arrears. If a cash dividend is not able to be made because of a limitation under the Atlas Credit Agreement, then the Liquidation Preference with respect to any Unit shall increase to 3.5625% in any quarter until a cash dividend can be made. The Preferred Units do not possess voting rights and are not convertible into any other security of Holdings. Holdings may redeem the Preferred Units beginning on the second anniversary of the Closing Date at a price of 103% of the Liquidation Preference (the "Redemption Premium"), and on the third anniversary of their issuance at the Liquidation Preference, in each case plus accrued and unpaid dividends. The Preferred Units may only be redeemed by Holdings within the first two years of the Closing Date upon a change of control as described below, in which case such Preferred Units will be redeemed at a customary make-whole amount as if the Preferred Units were redeemed on the second anniversary. Subject to the terms of Holdings' and its subsidiaries' senior credit agreements, Holdings will be required to redeem the Preferred Units at the Redemption Premium, plus accrued and unpaid dividends, in the event of (i) a change of control, (ii) sales or other dispositions of all or substantially all of Holdings' assets and (iii) the insolvency or bankruptcy of Holdings or any of its material subsidiaries. Finally, holders of the Preferred Units may require Holdings to redeem their Preferred Units at the Liquidation Preference, plus accrued and unpaid dividends, beginning on the eighth anniversary of the Closing Date, subject to certain customary limitations. Redeemable preferred stock, as of December 31, 2019 $ - Additions 141,840 Accrued paid in kind dividends 1,321 Accretion of discount 11 Redeemable preferred stock, as of March 31, 2020 $ 143,172 Segment The Company has one operating and reporting segment, Engineering, Testing, Inspection and Other Consultative Services. This financial information is reviewed regularly by our chief operating decision ma |
Atlas Business Combination
Atlas Business Combination | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
ATLAS BUSINESS COMBINATION | NOTE 3 – ATLAS BUSINESS COMBINATION On the Closing Date, the Company completed the acquisition of Atlas Intermediate and its subsidiaries and in return the Atlas Intermediate members: (i) received 24.0 million shares of Class B common stock in the Company, (ii) repaid the $171.5 million of outstanding debt and interest accrued and due lender, (iii) payment of $10.9 million of seller incurred acquisition-related costs, (iv) settlement $1.1 million of contingent consideration associated with the SCST, Inc. acquisition and (v) paid $2.2 million of change in control payments due certain executives. This was paid for with: (i) $20.7 million of cash raised from SPAC shareholders and the private placement discussed herein, (ii) the issuance of redeemable preferred stock in the amount of $141.8 million and (iii) the issuance of new debt in the amount of $271.0 million discussed in Note 7. The shares of non-economic Class B common stock of the Company, which entitles each holder to one vote per share, are redeemable on a one-for-one basis for shares of Class A common stock at the option of the Unit Holders (formerly members) as their lock-up period expire. Upon the redemption by any Class B common stock shares for Class A common stock, a corresponding number of shares of Class B common stock will be cancelled. In connection with the Company’s entry into the Atlas Business Combination, the Company agreed to issue and sell in a private placement an aggregate of 1,000,0000 shares of Class A common stock for a purchase price of $10.23 per share, and aggregate consideration of $10.2 million (the “Private Placement”). The Private Placement was consummated concurrently with the Closing Date and the proceeds of the Private Placement were used to fund a portion of the consideration paid to the Atlas Intermediate members. Because the holders of our Class B common stock have effective control of the combined company after the Closing Date through its majority voting interests in both the Company and, accordingly, Atlas Intermediate, the Atlas Business Combination was accounted for as a reverse recapitalization. Although the Company was the legal acquirer, Atlas Intermediate was the accounting acquirer. As a result, the reports filed by the Company subsequent to the Atlas Business Combination are prepared “as if” Atlas Intermediate is the predecessor and legal successor to the Company. The historical operations of Atlas Intermediate are deemed to be those of the Company. Thus, the financial statements included in this report reflect (i) the historical operating results of Atlas Intermediate prior to the Atlas Business Combination; (ii) the combined results of the Company and Atlas Intermediate following the Atlas Business Combination; (iii) the assets, liabilities and members’ capital of Atlas Intermediate at their historical cost; and (iv) the Company’s equity and earnings per share for the period from the Closing Date. |
Business Acquisitions
Business Acquisitions | 3 Months Ended |
Mar. 31, 2020 | |
Business Acquisitions | |
BUSINESS ACQUISITIONS | NOTE 4 – BUSINESS ACQUISITIONS In February 2020, the Company acquired Long Engineering (“LONG”), a land surveying and engineering company headquartered in Atlanta, Georgia. The aggregate purchase price consideration paid in connection with the acquisition was $10.5 million in cash, subject to customary closing working capital adjustments plus an earnout of up to $12 million upon the achievement of certain financial targets to be paid upon the first, second and third anniversaries of the closing. The Company did not acquire any entities during 2019. Acquisition costs of approximately $0.3 million have been expensed in 2020 in the Consolidated Statement of Operations within operating expenses. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition: Cash $ - Accounts receivable 5,094 Property and equipment 1,423 Other long-term assets 14 Intangible assets 3,491 Liabilities (778 ) Net assets acquired $ 9,244 Consideration paid (cash and rollover equity) $ 10,500 Contingent earnout liability at fair value (cash) 5,625 Total consideration 16,125 Excess consideration over the preliminary amounts assigned to the net assets acquired (goodwill) $ 6,881 |
Property and Equipment, Net
Property and Equipment, Net | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment, Net [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 5 – PROPERTY AND EQUIPMENT, NET The Company depreciates its assets on a straight-line basis over the assets' useful lives, which range from 3 to 10 years. Property and equipment consist of the following: March 31, December 31, Average 2020 2019 life Furniture and fixtures $ 3,000 $ 2,793 3-5 years Equipment and vehicles 31,668 29,504 3-10 years Computers 18,902 15,122 3 years Leasehold improvements 5,047 4,936 3-5 years Construction in Progress 79 2,503 Less: Accumulated depreciation and amortization (42,750 ) (40,034 ) $ 15,946 $ 14,824 Property and equipment under capital leases: March 31, December 31, 2020 2019 Computer equipment $ 1,450 $ 1,241 Less accumulated depreciation (664 ) (557 ) $ 786 $ 684 Capital leases for computer equipment have an average lease term of five years with minimum lease payments as follows: 2020 (nine months remaining) $ 329 2021 335 2022 334 2023 250 2024 73 Thereafter - $ 1,321 Depreciation expense was approximately $1.4 million and $1.3 million for the quarters ended March 31, 2020 and 2019, respectively. |
Goodwill and Intangibles
Goodwill and Intangibles | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLES | NOTE 6 – GOODWILL AND INTANGIBLES The carrying amount, including changes therein, of goodwill was as follows: Balance as of December 31, 2019 $ 85,125 Acquisitions 6,881 Disposals - Measurement period adjustments - Balance as of March 31, 2020 $ 92,006 The Company did not recognize any impairments of goodwill in the quarters ended March 31, 2020 or 2019. Intangible assets as of March 31, 2020 and December 31, 2019 consist of the following: March 31, 2020 December 31, 2019 Remaining Gross Accumulated Net book Gross Accumulated Net book useful life amount amortization value amount amortization value (in years) Definite life intangible assets: Customer relationships $ 109,130 (26,300 ) $ 82,830 $ 106,620 (23,759 ) $ 82,861 19.0 Tradenames 19,601 (10,326 ) 9,275 18,620 (9,282 ) 9,338 10.0 Non-competes 600 (457 ) 143 600 (410 ) 190 2.7 Total intangibles $ 129,331 $ (37,083 ) $ 92,248 $ 125,840 $ (33,451 ) $ 92,389 Amortization expense for the quarters ended March 31, 2020 and 2019 was $3.6 million and $3.9 million, respectively. Amortization of intangible assets for the next five years and thereafter is expected to be as follows: 2020 (nine months remaining) $ 10,831 2021 11,860 2022 11,267 2023 10,978 2024 10,924 Thereafter 36,388 $ 92,248 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
LONG-TERM DEBT | NOTE 7 – LONG-TERM DEBT In October 2017, concurrent with the closing of the acquisition of Moreland Altobelli Associates, LLC ("Moreland"), Atlas Intermediate obtained a bridge loan from Regions Bank in the amount of $42.0 million. In November 2017, concurrent with the closing of the Consolidated Engineering Laboratories ("ETS") acquisition, Atlas Intermediate entered into a credit agreement with a group led by Regions Bank providing a term loan of $95.0 million and a revolving credit facility of $30.0 million secured by the assets owned by Atlas Intermediate. Proceeds from the credit agreement were used to fund the acquisition of ETS, repayment of the bridge loan, and for a redemption of $15.2 million of initial equity contributions made by the initial members once overall leverage amounts were determined. The credit agreement is scheduled to mature in November 2022 with quarterly principal payments required beginning December 2017. Interest is compounded based on the variable rate in effect. ATC Group Partners ("ATC") had a business loan agreement (the "Loan Agreement") maturing on January 29, 2020. The Loan Agreement included a revolving credit facility that shall not exceed $45 million. Security for the loan was provided by a first-priority interest in substantially all of ATC's assets and a promissory note. Borrowings under the Loan Agreement bear interest at the one-month London Interbank Offered Rate (LIBOR) plus a margin based on the total leverage ratio as defined in the Loan Agreement. In March 2019, subsequent to the merger with ATC, the outstanding balance on the Loan Agreement was paid in full and terminated, and the existing Atlas credit facility was amended to provide a term loan of $145.0 million and a revolving credit facility of $50.0 million, in which $31.8 million was funded at closing ("Atlas Credit Facility"). Proceeds of the Atlas Credit Facility were used to repay existing debt of $123.9 million and fund a shareholder distribution of $52.8 million made in April 2019. The Atlas Credit Facility was secured by assets of Atlas Intermediate. The Atlas Credit Facility requires quarterly principal payments of $2.719 million through March 31, 2023, and then $3.625 million until the final maturity in March 2024, and bears interest at an annual rate of LIBOR plus a margin ranging from 275 to 425 basis points determined by the Company's Consolidated Leverage Ratio, as defined. For the interest payment made in the in the quarter ended December 31, 2019, the applicable margin was 375 basis points and the total interest rate was 5.500%. The Atlas Credit Facility was scheduled to mature in March 2024. However, in connection with the consummation of the Atlas Business Combination, the Atlas Credit Facility was repaid and a new credit arrangement (the "Atlas Credit Agreement") was entered into with Macquarie Capital (the "Lender" or "Lead Arranger"). The Atlas Credit Agreement called for a term loan (the "Term Loan") in the amount of $281.0 million and revolving letter of credit (the "Revolver") in the amount of $40.0 million of which $21.0 million was drawn upon through March 31, 2020. The term loan proceeds were used to repay the existing Atlas Credit Facility in the amount of $171.0 million and partially fund the Atlas Business Combination and the LONG acquisition. Under the terms of the Atlas Credit Agreement, the Term Loan and Revolver are set to expire on February 14, 2027 and February 14, 2025, respectively. Interest is payable monthly or at the end of the applicable interest period in arrears on any outstanding borrowings. The interest rates under the Atlas Credit Facility will be equal to either (i) Adjusted LIBOR as defined in the Credit Agreement, plus 4.75%, or (ii) an Alternate Base Rate as defined in the Credit Agreement, plus 3.75%. The Atlas Credit Agreement is guaranteed by Holdings and secured by (i) a first priority pledge of the equity interests of subsidiaries of Holdings and Atlas Intermediate and (ii) a first priority lien on substantially all other assets of Holdings, Atlas Intermediate and all of their direct and indirect subsidiaries. On March 31, 2020, the terms of the Atlas Credit Agreement were modified to reduce the maturity of the Term Loan by one year to February 14, 2026 from February 14, 2027. The interest rate for the Term Loan was increased to (i) Adjusted LIBOR as defined in the Atlas Credit Agreement, plus 6.25%, or (ii) an Alternate Base Rate as defined in the Atlas Credit Agreement, plus 5.25%. The interest rate for the Revolver was increased to (i) Adjusted LIBOR as defined in the Atlas Credit Agreement, plus 5.0%, or (ii) an Alternate Base Rate as defined in the Credit Agreement, plus 4.0%. The modification also increased rate of amortization applicable to the Term Loan to 5.0% per annum (commencing on June 30, 2020). The modifications to the Atlas Credit Agreement resulted from the exercise of the market-flex rights by the lead arranger in connection with the syndication process, which, in addition, required the payment of an upfront fee in an amount equal to 2% of the currently outstanding Term Loans, which was paid subsequent to the balance sheet date. The market-flex rights were included in the Atlas Credit Agreement and were exercised by the lead arranger upon completion of the time period allowed to complete a syndication process. The Company has been in compliance with the terms of the Atlas Credit Facility and Atlas Credit Agreement as of March 31, 2020 and December 31, 2019, respectively. Long-term debt consisted of the following: March 31, December 31, Atlas credit facility - term loan $ - $ 136,844 Atlas credit agreement - term loan 281,000 - Atlas credit facility - revolving loan 34,300 Atlas credit agreement - revolving 21,000 - Subtotal 302,000 171,144 Less: Loan costs, net (11,637 ) (1,712 ) Less current maturities of long-term debt (14,050 ) (10,875 ) Long-term debt $ 276,313 $ 158,557 Aggregate long-term principal payments subsequent to March 31, 2020, are as follows (amounts in thousands): 2020 (nine months remaining) $ 10,538 2021 14,050 2022 14,050 2023 14,050 2024 14,050 Thereafter 235,262 $ 302,000 |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | NOTE 8- SHAREHOLDERS’ EQUITY Shares Outstanding Prior to the Atlas Business Combination, the Company was a special purpose acquisition company with no operations, formed as a vehicle to affect a business combination with one or more operating businesses. After the consummation of the Atlas Business Combination, the Company became a holding company whose sole material operating asset consists of its interest in Atlas Intermediate. The following table summarizes the changes in the outstanding stock and warrants from the Closing Date through March 31, 2020: Class A Class B Warrants Private Beginning Balance, as of Closing Date 5,767,342 23,974,368 20,000,000 3,750,000 Issuances - - - - Transfers to Class A from Class B - - - - Shares Outstanding at March 31, 2020 5,767,342 23,974,368 20,000,000 3,750,000 Class A Common Stock Class B Common Stock Public Warrants Private Placement Warrants Private Placement In connection with the Company’s entry into the Contribution Agreement, the Company agreed to issue and sell in a private placement an aggregate of 1,000,000 shares of Class A common stock for a purchase price of $10.23 per share, and aggregate consideration of $10.2 million (the “Private Placement”). The Private Placement was consummated concurrently with the Closing Date and the proceeds of the Private Placement were used to fund a portion of the cash consideration paid to the Unit Holders. Non-controlling Interest The Company ownership and voting structure is comprised of holders of our Class A common stock that participate 100% in the results of Atlas Technical Consultants, Inc. and 19.4% in Atlas Intermediate and its subsidiaries and holders of our Class B common stock that participate in the results of Atlas Intermediate and its subsidiaries until their Class B common stock is converted to Class A common stock. The holders of our Class B common stock participate in 80.6% of Atlas Intermediate and its subsidiaries. In connection with the Atlas Business Combination, it was determined that the results of Atlas Intermediate and its subsidiaries would be fully consolidated within the results of the Company. Due to the participation of the holders of our Class B common stock in the results of Atlas Intermediate and subsidiaries, a non-controlling interest was deemed to exist. Non-controlling ownership interests in Atlas Intermediate and its subsidiaries are presented in the Consolidated Balance Sheet within shareholders’ equity as a separate component. In addition, consolidated net income includes earnings attributable to both the shareholders and the non-controlling interests. |
Loss Per Share
Loss Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Loss Per Share | |
LOSS PER SHARE | NOTE 9 – LOSS PER SHARE The Atlas Business Combination was structured as a reverse capitalization by which the Company issued stock for the net assets of Atlas Intermediate accompanied by a recapitalization. Earnings per share is calculated for the Company only for periods after the Atlas Business Combination due to the reverse recapitalization. (Loss) per share was calculated as follows: Closing Date Numerator: Net (loss) post Atlas Business Combination $ (2,522 ) Provision for non-controlling interest 3,260 Redeemable preferred stock dividends (2,244 ) Net (loss) attributable to Class A common shares - basic and diluted $ (1,506 ) Denominator: Weighted average shares outstanding - basic and diluted 5,767,342 Net (loss) per Class A common share, basic and diluted $ (0.26 ) The Company had the following shares that were excluded from the computation of diluted earnings per share because their inclusion would have been anti-dilutive for the periods presented but could potentially dilute basic earnings per share in future periods: Closing Date Warrants 20,000,000 Private placement warrants 3,750,000 Total 23,750,000 The Class B common shares are excluded as these shareholders do not share in the income of Atlas Technical Consultants, Inc. and represent a non-controlling interest in the results of Atlas Intermediate and its subsidiaries. |
Equity Based Compensation
Equity Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Equity Based Compensation | |
EQUITY BASED COMPENSATION | NOTE 10 – EQUITY BASED COMPENSATION In December 2017, Atlas Intermediate's Parent granted service-based Class A units to certain members of Atlas' management. As of December 31, 2017, 1,000 units were authorized and reserved for issuance with 504 granted in December 2017. The Class A units granted provide for service-based vesting annually over 4 years from the grant date. In April 2019, Atlas Intermediate's Parent granted service-based Class A units to certain members of Atlas' management. As of January 1, 2019, 1,666 units were authorized and reserved for issuance with 973.65 units granted as of December 31, 2019. The Class A units granted provide for service-based vesting annually over 4 years from the grant date. The grant date fair value was determined using assumptions about the current waterfall expected payout. In connection with the Atlas Business Combination, the outstanding shares were vested under the change of control provisions within the agreements. The shares are currently reflected as Class B Common Shares and may be converted to Class A Common Shares as the lock-up agreements expire. The following summarizes the activity of Class A unit awards during the period ended December March 31, 2020: Number of Grant Unvested Class A units as of December 31, 2019 1,226 $ 12,117 Granted - - Vested and converted to Class B common stock (1,226 ) - Forfeited - - Unvested Class A units as of March 31, 2020 - $ 12,117 Equity compensation was $9,845 thousand and $56 thousand for the quarters ended March 31, 2020 and 2019, respectively. |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS | NOTE 11 – RELATED-PARTY TRANSACTIONS During the quarters ended March 31, 2020 and 2019, the Company leased office space from former owners of acquired companies that became shareholders and/or officers of the Company. The Company recognized lease expenses under these leases within the Statement of Operations in the amount of $160 thousand and $161 thousand for the quarters ended March 31, 2020 and 2010, respectively. During the quarter's ended March 31, 2020 and 2019, the Company performed certain environmental consulting work for an affiliate of one of its principal shareholders or members and collected fees related to these services in the amount of $53 thousand and $33 thousand, respectively. On February 3, 2020, the Company entered into a subscription agreement with SCST, Inc., a California corporation, pursuant to which it agreed to acquire 105,977 shares of Class A common stock (the "SCST Stock"), for an aggregate purchase price of $1.1 million, in a private placement not registered under the Securities Act, in reliance on the exemption from Registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The issuance of the SCST Stock was completed in connection with the Atlas Business Combination and served to settle the contingent consideration to them as of December 31, 2019. On February 14, 2020, the Company entered into a non-interest bearing short-term loan with the former owners of Atlas Intermediate to purchase insurance contracts in the amount of $1.4 million. The loan has not been repaid as of the date of these financial statements and is accounted for in Accrued Liabilities within the Consolidated Balance Sheet. |
Employee Benefit Plans
Employee Benefit Plans | 3 Months Ended |
Mar. 31, 2020 | |
Employee Benefit Plans | |
EMPLOYEE BENEFIT PLANS | NOTE 12 — EMPLOYEE BENEFIT PLANS The Company maintains employee savings plans which allow for voluntary contributions into designated investment funds by eligible employees. The Company may, at the discretion of its Board of Managers, make additional contributions to these plans. Total contributions related to these plans made by the Company in 2019 and 2018 were $1.3 and $0.9 million, respectively. |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued Operations | |
DISCONTINUED OPERATIONS | NOTE 13 – DISCONTINUED OPERATIONS In June 2017, ATC decided that it would wind down the operations of its Power and Industrial (P&I) operation by the end of 2017 due to the loss of one of P&I’s major customers. On December 27, 2017, ATC entered into an asset purchase agreement with a third party, which was the final step in finalizing the terms of the shutdown of the P&I service line. ATC completed the sale during 2018 which resulted in an immaterial gain. No other operations were discontinued from January 1, 2019 through December 31, 2019. The P&I service line’s activity in the combined balance sheet and combined statement of cash flows were not material. The loss from discontinued operations presented in the combined statement of operations for the quarter ended March 31, 2020 and 2019 consisted of the following: For the quarter ended March 31, 2020 2019 Revenues $ - $ - Cost of revenues - - Operating expenses - (149 ) Operating loss - (149 ) Depreciation and amortization - - Other Income/(Expense) - - Loss from discontinued operations $ - $ (149 ) |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 14 – COMMITMENTS AND CONTINGENCIES The Company is subject to certain claims and lawsuits typically filed against engineering companies, alleging primarily professional errors or omissions. The Company carries professional liability insurance, subject to certain deductibles and policy limits, against such claims. While management does not believe that the resolution of these claims will have a material adverse effect, individually or in aggregate, on its financial position, results of operations or cash flows, management acknowledges the uncertainty surrounding the ultimate resolution of these matters. The Company leases office space, laboratory facilities, and automobiles under operating lease agreements and has options to renew most leases. These leases expire at varying dates through 2025. The Company also rents equipment on a job-by-job basis. Future minimum payments under non-cancelable operating leases as of March 31, 2020 are as follows: 2020 (nine months remaining) $ 8,709 2021 8,974 2022 6,478 2023 6,049 2024 3,031 Thereafter 3,860 $ 37,101 Rental expense associated with facility and equipment operating leases for the quarters ended March 31, 2020 and 2019 was $3.1 million and $2.7 million, respectively. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 15 – SUBSEQUENT EVENTS In late 2019, a pneumonia like virus within the Wuhan Province of China was reported to the World Health Organization ("WHO"). By January 30, 2020, the outbreak was declared a "public health emergency of international concern" by the WHO and on February 11, 2020, the WHO announced a name for this strain of coronavirus as COVID-19. On March 11, 2020, the WHO characterized the spread of the virus as a pandemic. A U.S. National Emergency was declared on March 13, 2020 and a task force was assembled to deal with the pandemic within the U.S. There have been three financial responses from the U.S. Government in addition to interest rate cuts by the U.S. Federal Reserve Board which were initially done to stabilize the U.S. stock markets. They include: the Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020, Families First Coronavirus Response Act, Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020 The outbreak of communicable diseases, or the perception that such an outbreak could occur, could result in a widespread public health crisis that could adversely affect the U.S. economy and its financial markets, resulting in an economic downturn that could negatively impact the demand for our services. Furthermore, uncertainty regarding the impact of any outbreak of pandemic or contagious disease, including COVID-19, could lead to increased volatility in the markets in which we operate. The occurrence or continuation of any of these events could lead to decreased revenues and limit our ability to execute on our business plan, which could adversely affect our business, financial condition and results of operations. Subsequent to the issuance of the date of the financial statements, we reduced our workforce through various actions. As a safety focused organization, we have encouraged our employees to work from home wherever possible and to honor all shelter in place rules put forth by their State or local governments. We continue to monitor the credit quality and access to capital for our non-governmental clients as this can be an indication of their ability to go forth with future projects and continue to pay for contracted services. As an infrastructure company, the work we do is currently deemed essential by Federal, State and local governments but any change from that designation could have a negative result on our business as well as our peers. We are in compliance with our debt covenants as of March 31, 2020 and our models indicate that we will continue to be for the foreseeable. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Accounts Receivable and Accrued Billings | Accounts Receivable and Accrued Billings The Company records its trade accounts receivable and unbilled receivables at their face amounts less allowances. On a periodic basis, the Company monitors the trade accounts receivable and unbilled receivables from its customers for any collectability issues. The allowance for doubtful accounts is established based on reviews of individual customer accounts, recent loss experience, current economic conditions, and other pertinent factors. As of March 31, 2020 and December 31, 2019, the allowance for trade accounts receivable was $2.0 million and $2.1 million, respectively, while the allowance for unbilled receivables was $0.7 million and $0.6 million, respectively. The allowances reflect the Company's best estimate of collectability risks on outstanding receivables and unbilled services. |
Property and Equipment | Property and Equipment Purchases of new assets and costs of improvement to extend the useful life of existing assets are capitalized. Routine maintenance and repairs are charged to expenses as incurred. When an asset is sold or retired, the costs and related accumulated depreciation are eliminated from the accounts, and the resulting gains or losses on disposal are recognized in the accompanying combined statement of operations. The Company depreciates its assets on a straight-line basis over the assets' useful lives, which range from 3 to 10 years. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company assesses long-lived assets for impairment when events or circumstances indicate that the carrying value of an asset may not be recoverable. The Company recognizes an impairment if the net book value of such assets exceeds the future undiscounted cash flows attributable to such assets. There were no impairment charges for the quarters ended March 31, 2020 and 2019. |
Goodwill | Goodwill Goodwill represents the excess of the cost of net assets acquired over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. In accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 350, Intangibles – Goodwill and Other, we evaluate goodwill annually for impairment on October 1, or whenever events or changes in circumstances indicate the asset may be impaired, using the quantitative method. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. These qualitative factors include: macroeconomic and industry conditions, cost factors, overall financial performance and other relevant entity-specific events. If we determine that this threshold is met, then performing the two-step quantitative impairment test is unnecessary. We may elect to bypass the qualitative assessment and proceed directly to the quantitative test for any reporting unit. The two-step impairment test requires a comparison of the carrying value of the assets and liabilities associated with a reporting unit, including goodwill, with the fair value of the reporting unit. We determine fair value through multiple valuation techniques, and weight the results accordingly. We make certain subjective and complex judgments in assessing whether an event of impairment of goodwill has occurred, including assumptions and estimates used to determine the fair value of our reporting units. If the carrying value of our reporting unit exceeds the fair value of our reporting unit, we would calculate the implied fair value as compared to the carrying value to determine the appropriate impairment charge, if any. There were no impairment charges for the quarters ended March 31, 2020 and 2019. |
Revenue Recognition | Revenue Recognition During the fourth quarter of 2019, we adopted ASC Topic 606, Revenue from Contracts with Customers ("Topic 606"), using the modified retrospective approach to all contracts that were not completed as of the beginning of fiscal year 2019. We utilize the portfolio method practical expedient, which allows companies to account for multiple contracts as a portfolio, instead of accounting for them on a contract by contract basis (commonly known as the contract method). For our time and materials contracts, we apply the as-invoiced practical expedient, which permits us to recognize revenue as the right to invoice for services performed. The new standard did not materially affect our consolidated net income, financial position, or cash flows. Below is a description of the basic types of contracts from which the Company may earn revenue: |
Time and Materials Contracts | Time and Materials Contracts Under the time and materials ("T&M") arrangements, contract fees are based upon time and materials incurred. The contracts may be structured as basic time and materials, cost plus a margin or time and materials subject to a maximum contract value (the "ceiling"). Due to the potential limitation of the contract's ceiling, the economic factors of the contracts subject to a ceiling differ from the economic factors of basic T&M and cost plus contracts. The majority of the Company's contracts are for projects where it bills the client monthly at hourly billing or unit rates. The billing rates are determined by contract terms. Under cost plus contracts, the Company charges its clients for contract related costs at cost, an agreed upon overhead rate plus a fixed fee or rate. Under time and materials contracts with a ceiling, the Company charges the clients for time and materials based upon the work performed however there is a ceiling or a not to exceed value. There are often instances that a contract is modified to extend the contract value past the original or amended ceiling. As the consideration is variable depending on the outcome of the contract renegotiation, the Company will estimate the total contract price in accordance with the variable consideration guidelines and will only include consideration that it expects to receive from the customer. When the Company is reaching the ceiling, the contract will be renegotiated, or we cease work when the maximum contract value is reached. The Company will continue to work if it is probable that the contract will be extended. The Company is only entitled to consideration for the work it has performed, and the ceiling amount is not a guaranteed contract value. The Company earned approximately 95% of its revenues under T&M contracts during the quarters ended March 31, 2020 and 2019. |
Fixed Price Contracts | Fixed Price Contracts Under fixed price contracts, the Company's clients pay an agreed amount negotiated in advance for a specified scope of work. The Company is guaranteed to receive the consideration to the extent that the Company delivers under the contract. The Company recognizes revenue over a period of time on fixed price contracts using the input method based upon direct costs incurred to date, which are compared to total projected direct costs. Costs are the most relevant measure to determine the transfer of the service to the customer. The Company assess contracts quarterly and may recognize any expected future loss before actually incurring the loss. When the Company is expecting to reach the total consideration under the contract, the Company will begin to negotiate a change order. |
Change Orders and Claims | Change Orders and Claims Change orders are modifications of an original contract that effectively change the provisions of the contract without adding new provisions. Either the Company or its client may initiate change orders. They may include changes in specifications or design, manner of performance, facilities, equipment, materials, sites and period of completion of the work. Management evaluates when a change order is probable based upon its experience in negotiating change orders, the customer's written approval of such changes or separate documentation of change order costs that are identifiable. Change orders may take time to be formally documented and terms of such change orders are agreed with the client before the work is performed. Sometimes circumstances require that work progresses before an agreement is reached with the client. If the Company is having difficulties in renegotiating the change order, the Company will stop work if possible, record all costs incurred to date, and determine, on a project by project basis, the appropriate final revenue recognition. Claims are amounts in excess of the agreed contract price that the Company seeks to collect from its clients or others for client-caused delays, errors in specifications and designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated additional contract costs. Costs related to change orders and claims are recognized when they are incurred. The Company evaluates claims on an individual basis and recognizes revenue it believes is probable to collect. |
Performance Obligations | Performance Obligations The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and therefore, is not distinct. However, in some instances, we may also promise to provide distinct goods or services within a contract, resulting in multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. Typically, we sell a customer a specific service and use the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation. The Company's performance obligations are satisfied as work progresses or at a point in time. Revenue on our cost-reimbursable contracts is recognized over time using direct costs incurred or direct costs incurred to date as compared to the estimated total direct costs for performance obligations because it best depicts the transfer of control to the customer. Contract costs include labor, subcontractors' costs and other direct costs. Gross revenue from services transferred to customers at a point in time is recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the reports and/or analysis performed. As of March 31, 2020 and December 31, 2019, we had $607 and $601 million of remaining performance obligations, or backlog, respectively of which $364 million and $361 million, respectively or 60% is expected to be recognized over the next 12 months and the majority of the balance over the next 24 months. Contracts for which work authorizations have been received are included in backlog. Project cancellations or scope adjustments may occur, from time to time, with respect to contracts reflected in backlog. Most of our government contracts are multi-year contracts for which funding is appropriated on an annual basis, therefore backlog includes only those amounts that have been funded and authorized and does not reflect the full amounts we may receive over the term of such contracts. In the case of non-government contracts, backlog includes future revenue at contract rates, excluding contract renewals or extensions that are at the discretion of the client. For contracts with a not-to-exceed maximum amount, we include revenue from such contracts in backlog to the extent of the remaining estimated amount. Our backlog for the period beyond 12 months may be subject to variation from year-to-year as existing contracts are completed, delayed, or renewed or new contracts are awarded, delayed, or cancelled. As a result, we believe that year-to-year comparisons of the portion of backlog expected to be performed more than one year in the future are difficult to assess and not necessarily indicative of future revenues or profitability. |
Contract Assets and Liabilities | Contract Assets and Liabilities The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables (contract assets), and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities). Billed and unbilled receivables are reflected on the face of the Consolidated Balance Sheet. The liability "Billings in excess of costs and estimated earnings on uncompleted contracts" represents billings in excess of revenues recognized on these contracts as of the reporting date and is reported within "other current liabilities" on the Consolidated Balance Sheet. This liability was $311 thousand and $343 thousand as of March 31, 2020 and December 31, 2019, respectively. Revenue recognized that was included in the contract liability balance at the beginning of the fiscal year was $32 thousand and $32 thousand for the quarters ended March 31, 2020 and 2019, respectively. |
U.S. Federal Acquisition Regulations | U.S. Federal Acquisition Regulations The Company has contracts with the U.S. federal, state and local governments that contain provisions requiring compliance with the U.S. Federal Acquisition Regulations (“FAR”). These regulations are generally applicable to all of its contracts that are directly funded or partially funded by pass through funds from the U.S. federal government. These provisions limit the recovery of certain specified indirect costs on contracts subject to the FAR. Cost-plus contracts covered by the FAR provide for upward or downward adjustments if actual recoverable costs differ from the estimate billed under forward pricing arrangements. Most of the Company’s government contracts are subject to termination at the convenience of the government. Contracts typically provide for reimbursement of costs incurred and payment of fees earned through the date of such termination. Government contracts that are subject to the FAR are subject to audits performed by the Defense Contract Audit Agency (“DCAA”) and many other state governmental agencies. As such, the Company’s overhead rates, cost proposals, incurred government contract costs and internal control systems are subject to review. During the course of its audits, the DCAA or a state agency may question incurred costs if it believes the Company has accounted for such costs in a manner inconsistent with the requirements of the FAR or Cost Accounting Standards and recommend that the applicable contracting officer disallow such costs. Historically, the Company has not incurred significant disallowed costs because of such audits. However, the Company can provide no assurance that the rate audits will not result in material disallowances of incurred costs in the future. The Company provides for a refund liability to the extent that it expects to refund some of the consideration received from a customer. The liability at March 31, 2020 and December 31, 2019 was $813 thousand. |
Disaggregation of Revenues | Disaggregation of Revenues As described further in Note 2 – Summary of Significant Accounting Policies, the Company has one operating segment, Engineering, Testing, Inspection and Other Consultative Services, which reflects how the Company is being managed. The Company provides public and private sector clients with comprehensive support in managing large-scale infrastructure improvement programs including engineering, design, program development/management, compliance services acquisition and project control services, as well as construction engineering & inspection and materials testing. Public sector clients approximate one-third of the Company's revenues in each reporting period presented. All services performed by the Company are rendered in the United States and its territories via two contract types, time and materials or fixed price contracts. The Company derives 95% of its revenues from T&M contracts. |
Cash Flows | Cash Flows The Company has presented its cash flows using the indirect method and considers all highly liquid investments with a maturity of three months or less at acquisition to be cash equivalents. At times, our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance limit. |
Comprehensive Income | Comprehensive Income There are no other components of comprehensive income other than net income and the provision for non-controlling interest associated with Holding Units. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade accounts receivable. These risks primarily relate to the concentration of customers who are large, governmental customers and regional governmental customers. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurements (“ASC 820”), establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described as follows: Level 1 — Inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that management has the ability to access. Level 2 — Inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Level 3 — Inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company has various financial instruments, including cash and cash equivalents, accounts receivable and payable, accrued liabilities, and long-term debt. The carrying value of the Company’s cash and cash equivalents, accounts receivable, and payable and accrued liabilities approximate their fair value due to their short-term nature. The Company believes that the aggregate fair values of its long-term debt approximates their carrying amounts as the interest rates on the debt are either reset on a frequent basis or reflect current market rates. The Company applies the provisions of ASC 805, Business Combinations, in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed. The allocation of the purchase price to identifiable intangible assets is based on valuations performed to determine the fair values of such assets as of the acquisition dates. Generally, the Company engages a third-party independent valuation specialist to assist in management’s determination of fair values of tangible and intangible assets acquired and liabilities assumed. The fair values of earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. The Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability on the Consolidated Balance Sheet. Changes in the estimated fair value of contingent earnout payments are included in operating expenses in the accompanying combined statements of operations. Several factors are considered when determining contingent consideration liabilities as part of the purchase price, including whether (i) the valuation of the acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (ii) the former owners of the acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of other key employees. The contingent earn-out payments are not affected by employment termination. The Company reviews and re-assesses the estimated fair value of contingent consideration liabilities on a quarterly basis, and the updated fair value could differ materially from the initial estimates. The Company measures contingent consideration recognized in connection with business combinations at fair value on a recurring basis using significant unobservable inputs classified as Level 3 inputs. The Company uses a probability-weighted discounted cash flow approach as a valuation technique to determine the fair value of the contingent consideration liabilities on the acquisition date and at each reporting period. The significant unobservable inputs used in the fair value measurements are projections over the earn-out period, and the probability outcome percentages that are assigned to each scenario. Significant increases or decreases to either of these inputs in isolation could result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent consideration liabilities. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate on the acquisition date and amount paid will be recorded in earnings. The following table summarizes the changes in the fair value of estimated contingent consideration: Contingent consideration, as of December 31, 2019 $ 1,060 Additions for acquisitions 5,625 Reduction of liability for payment made (1,060 ) Decrease of liability related to re-measurement of fair value Total contingent consideration, as of March 31, 2020 5,625 Current portion of contingent consideration - Contingent consideration, less current portion $ 5,625 |
Equity-Based Compensation | Equity-Based Compensation The Company recognizes the cost of services received in an equity-based payment transaction with an employee as services are received and record either a corresponding increase in equity or a liability, depending on whether the instruments granted satisfy the equity or liability classification criteria. The measurement objective for these equity awards is the estimated fair value at the grant date of the equity instruments that the Company is obligated to issue when employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments. The compensation cost for an award classified as an equity instrument is recognized ratably over the requisite service period, including an estimate of forfeitures. The requisite service period is the period during which an employee is required to provide service in exchange for an award. Equity compensation was $9,845 thousand and $56 thousand for the quarters ended March 31, 2020 and 2019, respectively. Consistent with the change in control provisions within the agreements, the Company fully expensed the remaining unamortized value of the stock awards that vested upon the completion of the Atlas Business Combination. |
Income Taxes | Income Taxes Following the consummation of the Atlas Business Combination, the Company is organized in an “Up-C” structure in which the business of Atlas Intermediate and its subsidiaries is held by Holdings and will continue to operate through the subsidiaries of Atlas Intermediate, and in which the Company’s only direct assets will consist of common units of Holdings Units. The Company is the sole manager of Holdings in accordance with the terms of the Holdings LLC Agreement entered into in connection with the consummation of the Atlas Business Combination. Previously, Atlas Intermediate was treated as a partnership for federal and state income tax purposes with all income tax liabilities and/or benefits of the Company being passed through to the partners and members. As such, no recognition of federal or state income taxes for the Company or its subsidiaries have been provided for in the accompanying consolidated financial statements except as disclosed below. The State of Texas imposes a margin tax, with an effective rate of 0.7%, based on the prior year’s Texas-sourced gross receipts. This tax is treated as an income tax and accrued in the accounting period in which the taxable gross receipts are recognized. The State of Texas margin tax was insignificant in the quarters ended March 31, 2020 and 2019. In addition, there are two C-Corporations (“C-Corp”) subsidiaries for which we account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The results of operations prior to the Atlas Business Combination were treated consistently in this manner. Subsequent to the Atlas Business Combination, the Up-C structure allowed the holders of our Class B common stock, par value $0.0001 per share (the “Class B common stock”) to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass through” entity, for U.S. federal income (and certain state and local) tax purposes following the business combination. One of these benefits is that, for U.S. federal income (and certain state and local) purposes, future taxable income of Atlas that is allocated to the Seller and its limited partners will be taxed on a flow-through basis and therefore will not be subject to corporate taxes at the entity level. Income tax relating to the C-Corps is not considered in the provision for non-controlling interest calculation as it is solely the responsibility of the holders of our Class A common stock, par value $0.0001 per share (the “Class A common stock”). The Texas margin tax is considered within the provision of non-controlling interest as it generated through the results of Atlas Intermediate and its subsidiaries. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. Deferred taxes consisted of the following: March 31, December 31, (in millions) Asset: Current $ 0.7 $ - Noncurrent 13.0 - Deferred tax asset, gross 13.7 - Valuation allowance (13.7 ) - Deferred tax asset, net $ - $ - Liability: Current $ - $ - Noncurrent 0.6 0.6 Deferred tax liability, gross 0.6 0.6 Valuation allowance - - Deferred tax liability, net $ 0.6 $ 0.6 There are no net operating loss carryforwards. The Company records its deferred tax liabilities in other long-term liabilities within its Consolidated Balance Sheet. Income tax expense was $0.0 million and $0.0 million for the quarters ended March 31, 2020 and 2019, respectively. Income tax expense for the quarter ended March 31, 2019 and the period beginning January 1, 2020 through the Closing Date differs from the 21% statutory federal tax rate and various state tax rates applied to the Company’s pre-tax income due to only certain C-Corp subsidiaries being subject to recognition of federal or state income taxes in the Company’s Consolidated Statement of Operations. The rate reconciliation for the period from the Atlas Business Combination through March 31, 2020 is as follows: Pre-tax loss $ 2,522 Statutory tax rate 26 % Tax benefit 656 Deferred tax asset valuation reserve (656 ) Income tax expense, net $ - |
Redeemable Preferred Stock | Redeemable Preferred Stock On February 14, 2020, in connection with the consummation of the Atlas Business Combination, Holdings and GSO COF III AIX-2 LP ("GSO AIV-2") entered into a subscription agreement, dated February 14, 2020 (the "Subscription Agreement") pursuant to which, GSO AIV-2 purchased 145,000 units of a new class of Series A Senior Preferred Units of Holdings (the "Preferred Units") at a price per Preferred Unit of $978.21 for an aggregate cash purchase price of $141,840,450, which represents a 2.179% original issue discount on the Preferred Units (such purchase, the "GSO Placement"). The GSO Placement was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and/or Regulation D promulgated thereunder. The Preferred Units rank senior in priority to all other existing and future equity securities of Holdings with respect to liquidation preference and distribution rights. The Preferred Units have a liquidation preference of $1,000 per Preferred Unit (the "Liquidation Preference"). Subject to any limitations set forth in the Atlas Credit Agreement (as defined in Note 7), the Preferred Units pay a dividend of 5% per annum, plus either an additional 6.25% per annum in cash or 7.25% per annum in additional Preferred Units, at Holdings' option, payable quarterly in arrears. If a cash dividend is not able to be made because of a limitation under the Atlas Credit Agreement, then the Liquidation Preference with respect to any Unit shall increase to 3.5625% in any quarter until a cash dividend can be made. The Preferred Units do not possess voting rights and are not convertible into any other security of Holdings. Holdings may redeem the Preferred Units beginning on the second anniversary of the Closing Date at a price of 103% of the Liquidation Preference (the "Redemption Premium"), and on the third anniversary of their issuance at the Liquidation Preference, in each case plus accrued and unpaid dividends. The Preferred Units may only be redeemed by Holdings within the first two years of the Closing Date upon a change of control as described below, in which case such Preferred Units will be redeemed at a customary make-whole amount as if the Preferred Units were redeemed on the second anniversary. Subject to the terms of Holdings' and its subsidiaries' senior credit agreements, Holdings will be required to redeem the Preferred Units at the Redemption Premium, plus accrued and unpaid dividends, in the event of (i) a change of control, (ii) sales or other dispositions of all or substantially all of Holdings' assets and (iii) the insolvency or bankruptcy of Holdings or any of its material subsidiaries. Finally, holders of the Preferred Units may require Holdings to redeem their Preferred Units at the Liquidation Preference, plus accrued and unpaid dividends, beginning on the eighth anniversary of the Closing Date, subject to certain customary limitations. Redeemable preferred stock, as of December 31, 2019 $ - Additions 141,840 Accrued paid in kind dividends 1,321 Accretion of discount 11 Redeemable preferred stock, as of March 31, 2020 $ 143,172 |
Segment | Segment The Company has one operating and reporting segment, Engineering, Testing, Inspection and Other Consultative Services. This financial information is reviewed regularly by our chief operating decision maker to assess performance and make decisions regarding the allocation of resources and is equivalent to our consolidated information. Our chief operating decision maker does not review below the consolidated level. Our chief operating decision maker is our Chief Executive Officer. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, FASB issued ASU 2016-02, Leases. ASU 2016-02 requires lessees to recognize, in the balance sheet, a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset over the lease term. The amendments in this accounting standard update are to be applied using a modified retrospective approach and are effective for fiscal years beginning after December 15, 2020. The Company is currently evaluating the requirements of ASU 2016-02 and its impact on the consolidated and combined financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments (Topic 326) - Credit Losses: Measurement of Credit Losses on Financial Instruments |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of changes in the fair value of estimated contingent consideration | Contingent consideration, as of December 31, 2019 $ 1,060 Additions for acquisitions 5,625 Reduction of liability for payment made (1,060 ) Decrease of liability related to re-measurement of fair value Total contingent consideration, as of March 31, 2020 5,625 Current portion of contingent consideration - Contingent consideration, less current portion $ 5,625 |
Schedule of Deferred Tax | March 31, December 31, (in millions) Asset: Current $ 0.7 $ - Noncurrent 13.0 - Deferred tax asset, gross 13.7 - Valuation allowance (13.7 ) - Deferred tax asset, net $ - $ - Liability: Current $ - $ - Noncurrent 0.6 0.6 Deferred tax liability, gross 0.6 0.6 Valuation allowance - - Deferred tax liability, net $ 0.6 $ 0.6 |
Schedule of rate reconciliation for the period from the Atlas Business Combination | Pre-tax loss $ 2,522 Statutory tax rate 26 % Tax benefit 656 Deferred tax asset valuation reserve (656 ) Income tax expense, net $ - |
Schedule of redeem their Preferred Units at the Liquidation | Redeemable preferred stock, as of December 31, 2019 $ - Additions 141,840 Accrued paid in kind dividends 1,321 Accretion of discount 11 Redeemable preferred stock, as of March 31, 2020 $ 143,172 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Acquisitions | |
Schedule of preliminary fair values of the assets acquired and liabilities | Cash $ - Accounts receivable 5,094 Property and equipment 1,423 Other long-term assets 14 Intangible assets 3,491 Liabilities (778 ) Net assets acquired $ 9,244 Consideration paid (cash and rollover equity) $ 10,500 Contingent earnout liability at fair value (cash) 5,625 Total consideration 16,125 Excess consideration over the preliminary amounts assigned to the net assets acquired (goodwill) $ 6,881 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment, Net [Abstract] | |
Schedule of property and equipment | March 31, December 31, Average 2020 2019 life Furniture and fixtures $ 3,000 $ 2,793 3-5 years Equipment and vehicles 31,668 29,504 3-10 years Computers 18,902 15,122 3 years Leasehold improvements 5,047 4,936 3-5 years Construction in Progress 79 2,503 Less: Accumulated depreciation and amortization (42,750 ) (40,034 ) $ 15,946 $ 14,824 |
Schedule of property and equipment under capital leases | March 31, December 31, 2020 2019 Computer equipment $ 1,450 $ 1,241 Less accumulated depreciation (664 ) (557 ) $ 786 $ 684 |
Schedule of minimum lease payments | 2020 (nine months remaining) $ 329 2021 335 2022 334 2023 250 2024 73 Thereafter - $ 1,321 |
Goodwill and Intangibles (Table
Goodwill and Intangibles (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | Balance as of December 31, 2019 $ 85,125 Acquisitions 6,881 Disposals - Measurement period adjustments - Balance as of March 31, 2020 $ 92,006 |
Schedule of intangible assets | March 31, 2020 December 31, 2019 Remaining Gross Accumulated Net book Gross Accumulated Net book useful life amount amortization value amount amortization value (in years) Definite life intangible assets: Customer relationships $ 109,130 (26,300 ) $ 82,830 $ 106,620 (23,759 ) $ 82,861 19.0 Tradenames 19,601 (10,326 ) 9,275 18,620 (9,282 ) 9,338 10.0 Non-competes 600 (457 ) 143 600 (410 ) 190 2.7 Total intangibles $ 129,331 $ (37,083 ) $ 92,248 $ 125,840 $ (33,451 ) $ 92,389 |
Schedule of amortization of intangible assets | 2020 (nine months remaining) $ 10,831 2021 11,860 2022 11,267 2023 10,978 2024 10,924 Thereafter 36,388 $ 92,248 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
Schedule of long term debt | March 31, December 31, Atlas credit facility - term loan $ - $ 136,844 Atlas credit agreement - term loan 281,000 - Atlas credit facility - revolving loan 34,300 Atlas credit agreement - revolving 21,000 - Subtotal 302,000 171,144 Less: Loan costs, net (11,637 ) (1,712 ) Less current maturities of long-term debt (14,050 ) (10,875 ) Long-term debt $ 276,313 $ 158,557 |
Schedule of long-term principal payments | 2020 (nine months remaining) $ 10,538 2021 14,050 2022 14,050 2023 14,050 2024 14,050 Thereafter 235,262 $ 302,000 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of outstanding stock and warrants | Class A Class B Warrants Private Beginning Balance, as of Closing Date 5,767,342 23,974,368 20,000,000 3,750,000 Issuances - - - - Transfers to Class A from Class B - - - - Shares Outstanding at March 31, 2020 5,767,342 23,974,368 20,000,000 3,750,000 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Loss Per Share | |
Schedule of (loss) per share | Closing Date Numerator: Net (loss) post Atlas Business Combination $ (2,522 ) Provision for non-controlling interest 3,260 Redeemable preferred stock dividends (2,244 ) Net (loss) attributable to Class A common shares - basic and diluted $ (1,506 ) Denominator: Weighted average shares outstanding - basic and diluted 5,767,342 Net (loss) per Class A common share, basic and diluted $ (0.26 ) |
Schedule of anti-dilutive for the periods | Closing Date Warrants 20,000,000 Private placement warrants 3,750,000 Total 23,750,000 |
Equity Based Compensation (Tabl
Equity Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity Based Compensation | |
Schedule of activity of Class A unit awards | Number of Grant Unvested Class A units as of December 31, 2019 1,226 $ 12,117 Granted - - Vested and converted to Class B common stock (1,226 ) - Forfeited - - Unvested Class A units as of March 31, 2020 - $ 12,117 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued Operations | |
Schedule of loss from discontinued operations presented in the combined statement of operations | For the quarter ended March 31, 2020 2019 Revenues $ - $ - Cost of revenues - - Operating expenses - (149 ) Operating loss - (149 ) Depreciation and amortization - - Other Income/(Expense) - - Loss from discontinued operations $ - $ (149 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum payments under non-cancelable operating leases | 2020 (nine months remaining) $ 8,709 2021 8,974 2022 6,478 2023 6,049 2024 3,031 Thereafter 3,860 $ 37,101 |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details) | Feb. 14, 2020 | Mar. 31, 2020 |
Organization and Basis of Presentation (Textual) | ||
Services provided, description | Services are provided throughout the United States and its territories to a broad base of clients with no single client representing 10% or more of our revenues for either the quarter ended March 31, 2019 or 2018. Services are rendered primarily on a time and materials and cost-plus basis with approximately 95% of our contracts on that basis and the remainder represented by firm fixed price contracts. | |
Atlas Intermediate [Member] | Purchase Agreement [Member] | ||
Organization and Basis of Presentation (Textual) | ||
Unit purchase agreement date | Aug. 12, 2019 | |
Amendment date | Jan. 22, 2020 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Accounting Policies [Abstract] | |
Contingent consideration, as of December 31, 2019 | $ 1,060 |
Additions for acquisitions | 5,625 |
Reduction of liability for payment made | (1,060) |
Decrease of liability related to re-measurement of fair value | |
Total contingent consideration, as of March 31, 2020 | 5,625 |
Current portion of contingent consideration | |
Contingent consideration, less current portion | $ 5,625 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Asset: | ||
Current | $ 160,027 | $ 157,551 |
Liability: | ||
Current | 61,203 | 65,426 |
Deferred tax [Member] | ||
Asset: | ||
Current | 700 | |
Noncurrent | 13,000 | |
Deferred tax asset, gross | 13,700 | |
Valuation allowance | (13,700) | |
Deferred tax asset, net | ||
Liability: | ||
Current | ||
Noncurrent | 600 | 600 |
Deferred tax liability, gross | 600 | 600 |
Valuation allowance | ||
Deferred tax liability, net | $ 600 | $ 600 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statutory tax rate | 21.00% | |
Tax benefit | $ 5 | |
Atlas [Member] | ||
Pre-tax loss | $ 2,522 | |
Statutory tax rate | 26.00% | |
Tax benefit | $ 656 | |
Deferred tax asset valuation reserve | (656) | |
Income tax expense, net |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Accounting Policies [Abstract] | |
Redeemable preferred stock, as of December 31, 2019 | |
Additions | 141,840 |
Accrued paid in kind dividends | 1,321 |
Accretion of discount | 11 |
Redeemable preferred stock, as of March 31, 2020 | $ 143,172 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details Textual) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Feb. 14, 2020USD ($)shares | Mar. 31, 2020USD ($)$ / shares | Mar. 31, 2019USD ($)Segment | Dec. 31, 2019USD ($)$ / shares | |
Allowance for trade accounts receivable | $ 2,000 | $ 2,100 | ||
Allowance for unbilled receivables | $ 700 | 600 | ||
T&M contracts | 95.00% | |||
Performance obligations or backlog, description | As of March 31, 2020 and December 31, 2019, we had $607 and $601 million of remaining performance obligations, or backlog, respectively of which $364 million and $361 million, respectively or 60% is expected to be recognized over the next 12 months and the majority of the balance over the next 24 months. | |||
Revenue recognized contract liability | $ 32 | $ 32 | ||
Other current liabilities | 311 | 343 | ||
Refund liability | 813 | $ 813 | ||
Equity compensation | 9,845 | 56 | ||
Income tax expense | $ 0 | $ 0 | ||
Statutory federal tax rate | 21.00% | |||
Liquidation preference percentage | 103.00% | |||
Number of operating segment | Segment | 1 | |||
Number of reporting segment | Segment | 1 | |||
Class B Common Stock [Member] | ||||
Common stock par value | $ / shares | $ .0001 | |||
Class A Common Stock [Member] | ||||
Common stock par value | $ / shares | $ 0.0001 | |||
Maximum [Member] | ||||
Assets useful lives | 10 years | |||
State of effective tax rate | $ 700 | |||
Minimum [Member] | ||||
Assets useful lives | 3 years | |||
Subscription Agreement [Member] | ||||
Aggregate cash purchase price | $ 141,840,450 | |||
Preferred units issued | shares | 145,000 | |||
Redeemable preferred stock, description | The “Subscription Agreement”) pursuant to which, GSO AIV-2 purchased 145,000 units of a new class of Series A Senior Preferred Units of Holdings (the “Preferred Units”) at a price per Preferred Unit of $978.21 for an aggregate cash purchase price of $141,840,450, which represents a 2.179% original issue discount on the Preferred Units (such purchase, the “GSO Placement”). | |||
Liquidation preference | $ 1,000 | |||
Atlas Credit Agreement [Member] | ||||
Preferred units paid, description | The Preferred Units pay a dividend of 5% per annum, plus either an additional 6.25% per annum in cash or 7.25% per annum in additional Preferred Units, at Holdings' option, payable quarterly in arrears. | |||
Liquidation preference percentage | 3.5625% |
Atlas Business Combination (Det
Atlas Business Combination (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Atlas Business Combination (Textual) | |
Business combination, description | The Company completed the acquisition of Atlas Intermediate and its subsidiaries and in return the Atlas Intermediate members: (i) received 24.0 million shares of Class B common stock in the Company, (ii) repaid the $171.5 million of outstanding debt and interest accrued and due lender, (iii) payment of $10.9 million of seller incurred acquisition-related costs, (iv) settlement $1.1 million of contingent consideration associated with the SCST, Inc. acquisition and (v) paid $2.2 million of change in control payments due certain executives. This was paid for with: (i) $20.7 million of cash raised from SPAC shareholders and the private placement discussed herein, (ii) the issuance of redeemable preferred stock in the amount of $141.8 million and (iii) the issuance of new debt in the amount of $271.0 million discussed in Note 7. |
Class A Common Stock [Member] | Private Placement [Member] | |
Atlas Business Combination (Textual) | |
Aggregate of shares | shares | 10,000,000 |
Purchase price per share | $ / shares | $ 10.23 |
Aggregate consideration | $ | $ 10,200 |
Business Acquisitions (Details)
Business Acquisitions (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Business Acquisitions | ||
Cash | ||
Accounts receivable | 5,094 | |
Property and equipment | 1,423 | |
Other long-term assets | 14 | |
Intangible assets | 3,491 | |
Liabilities | (778) | |
Net assets acquired | 9,244 | |
Consideration paid (cash and rollover equity) | 10,500 | |
Contingent earnout liability at fair value (cash) | 5,625 | $ 1,060 |
Total consideration | 16,125 | |
Excess consideration over the preliminary amounts assigned to the net assets acquired (goodwill) | $ 6,881 |
Business Acquisitions (Details
Business Acquisitions (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | |
Feb. 29, 2020 | Mar. 31, 2020 | |
Business Acquisitions (Textual) | ||
Acquisition in cash | $ 10,500 | |
Acquisiton, description | Subject to customary closing working capital adjustments plus an earnout of up to $12 million upon the achievement of certain financial targets to be paid upon the first, second and third anniversaries of the closing. | |
Acquisition costs | $ 300 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Less: Accumulated depreciation and amortization | $ (42,750) | $ (40,034) |
Property and equipment, net | $ 15,946 | 14,824 |
Minimum [Member] | ||
Average life | 3 years | |
Maximum [Member] | ||
Average life | 10 years | |
Furniture and fixtures [Member] | ||
Property and equipment, gross | $ 3,000 | 2,793 |
Furniture and fixtures [Member] | Minimum [Member] | ||
Average life | 3 years | |
Furniture and fixtures [Member] | Maximum [Member] | ||
Average life | 5 years | |
Equipment and vehicles [Member] | ||
Property and equipment, gross | $ 31,668 | 29,504 |
Equipment and vehicles [Member] | Minimum [Member] | ||
Average life | 3 years | |
Equipment and vehicles [Member] | Maximum [Member] | ||
Average life | 10 years | |
Computers [Member] | ||
Property and equipment, gross | $ 18,902 | 15,122 |
Average life | 3 years | |
Leasehold improvements [Member] | ||
Property and equipment, gross | $ 5,047 | 4,936 |
Leasehold improvements [Member] | Minimum [Member] | ||
Average life | 3 years | |
Leasehold improvements [Member] | Maximum [Member] | ||
Average life | 5 years | |
Construction in Progress [Member] | ||
Property and equipment, gross | $ 79 | $ 2,503 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details 1) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment, Net [Abstract] | ||
Computer equipment | $ 1,450 | $ 1,241 |
Less accumulated depreciation | (664) | (557) |
Property and equipment under capital leases | $ 786 | $ 684 |
Property and Equipment, Net (_3
Property and Equipment, Net (Details 2) $ in Thousands | Mar. 31, 2020USD ($) |
Property, Plant and Equipment, Net [Abstract] | |
2020 (nine months remaining) | $ 329 |
2021 | 335 |
2022 | 334 |
2023 | 250 |
2024 | 73 |
Thereafter | |
Minimum lease payments | $ 1,321 |
Property and Equipment, Net (_4
Property and Equipment, Net (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Property and Equipment, Net (Textual) | ||
Depreciation expense | $ 1,400 | $ 1,300 |
Minimum [Member] | ||
Property and Equipment, Net (Textual) | ||
Useful lives | 3 years | |
Maximum [Member] | ||
Property and Equipment, Net (Textual) | ||
Useful lives | 10 years |
Goodwill and Intangibles (Detai
Goodwill and Intangibles (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Beginning Balance | $ 85,125 |
Acquisitions | 6,881 |
Disposals | |
Measurement period adjustments | |
Ending Balance | $ 92,006 |
Goodwill and Intangibles (Det_2
Goodwill and Intangibles (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Definite life intangible assets: | ||
Gross amount | $ 129,331 | $ 125,840 |
Accumulated amortization | (37,083) | (33,451) |
Net book value | 92,248 | 92,389 |
Customer relationships [Member] | ||
Definite life intangible assets: | ||
Gross amount | 109,130 | 106,620 |
Accumulated amortization | (26,300) | (23,759) |
Net book value | $ 82,830 | 82,861 |
Remaining useful life (in years) | 19 years | |
Tradenames [Member] | ||
Definite life intangible assets: | ||
Gross amount | $ 19,601 | 18,620 |
Accumulated amortization | (10,326) | (9,282) |
Net book value | $ 9,275 | 9,338 |
Remaining useful life (in years) | 10 years | |
Non-competes [Member] | ||
Definite life intangible assets: | ||
Gross amount | $ 600 | 600 |
Accumulated amortization | (457) | (410) |
Net book value | $ 143 | $ 190 |
Remaining useful life (in years) | 2 years 8 months 12 days |
Goodwill and Intangibles (Det_3
Goodwill and Intangibles (Details 2) $ in Thousands | Mar. 31, 2020USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2020 (nine months remaining) | $ 10,831 |
2021 | 11,860 |
2022 | 11,267 |
2023 | 10,978 |
2024 | 10,924 |
Thereafter | 36,388 |
Amortization of intangible assets | $ 92,248 |
Goodwill and Intangibles (Det_4
Goodwill and Intangibles (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Goodwill and Intangibles (Textual) | ||
Amortization expense | $ 3,600 | $ 3,900 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Long-term Debt, Unclassified [Abstract] | ||
Atlas credit facility - term loan | $ 136,844 | |
Atlas credit agreement - term loan | 281,000 | |
Atlas credit facility - revolving loan | 34,300 | |
Atlas credit agreement - revolving | 21,000 | |
Subtotal | 302,000 | 171,144 |
Less: Loan costs, net | (11,637) | (1,712) |
Less current maturities of long-term debt | (14,050) | (10,875) |
Long-term debt | $ 276,313 | $ 158,557 |
Long-Term Debt (Details 1)
Long-Term Debt (Details 1) $ in Thousands | Mar. 31, 2020USD ($) |
Long-term Debt, Unclassified [Abstract] | |
2020 (nine months remaining) | $ 10,538 |
2021 | 14,050 |
2022 | 14,050 |
2023 | 14,050 |
2024 | 14,050 |
Thereafter | 235,262 |
Total | $ 302,000 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Apr. 30, 2019 | Nov. 30, 2017 | Mar. 31, 2020 | Mar. 31, 2019 | Oct. 31, 2017 | |
Long-Term Debt (Textual) | |||||
Repayment of existing debt | $ 171,144 | $ 127,399 | |||
Credit agreement, description | The terms of the Atlas Credit Agreement were modified to reduce the maturity of the Term Loan by one year to February 14, 2026 from February 14, 2027. The interest rate for the Term Loan was increased to (i) Adjusted LIBOR as defined in the Atlas Credit Agreement, plus 6.25%, or (ii) an Alternate Base Rate as defined in the Atlas Credit Agreement, plus 5.25%. The interest rate for the Revolver was increased to (i) Adjusted LIBOR as defined in the Atlas Credit Agreement, plus 5.0%, or (ii) an Alternate Base Rate as defined in the Credit Agreement, plus 4.0%. The modification also increased rate of amortization applicable to the Term Loan to 5.0% per annum (commencing on June 30, 2020). | ||||
Business combination, description | The Atlas Credit Agreement called for a term loan (the "Term Loan") in the amount of $281.0 million and revolving letter of credit (the "Revolver") in the amount of $40.0 million of which $21.0 million was drawn upon through March 31, 2020. The term loan proceeds were used to repay the existing Atlas Facility in the amount of $171.0 million and partially fund the Atlas Business Combination and the Long acquisition. | ||||
ATC [Member] | |||||
Long-Term Debt (Textual) | |||||
Term loan | 145,000 | ||||
Revolving credit facility | $ 45,000 | $ 281,000 | 50,000 | ||
Credit facility funded at closing | $ 31,800 | ||||
Repayment of existing debt | $ 123,900 | ||||
Shareholder distribution | $ 52,800 | ||||
Credit facility interest terms | The Atlas Credit Facility requires quarterly principal payments of $2.719 million through March 31, 2023, and then $3.625 million until the final maturity in March 2024, and bears interest at an annual rate of LIBOR plus a margin ranging from 275 to 425 basis points determined by the Company's Consolidated Leverage Ratio, as defined. For the interest payment made in the in the quarter ended December 31, 2019, the applicable margin was 375 basis points and the total interest rate was 5.500 %. | ||||
Credit agreement, description | Under the terms of the Atlas Credit Agreement, the Term Loan and Revolver are set to expire on February 14, 2027 and February 14, 2025, respectively. Interest is payable monthly or at the end of the applicable interest period in arrears on any outstanding borrowings. The interest rates under the Atlas Credit Facility will be equal to either (i) Adjusted LIBOR as defined in the Credit Agreement, plus 4.75%, or (ii) an Alternate Base Rate as defined in the Credit Agreement, plus 3.75%. | ||||
Moreland [Member] | |||||
Long-Term Debt (Textual) | |||||
Bridge loan | $ 42,000 | ||||
ETS [Member] | |||||
Long-Term Debt (Textual) | |||||
Term loan | 95,000 | ||||
Revolving credit facility | 30,000 | ||||
Redemption of equity | $ 15,200 | ||||
Maturity date | November 2022 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) | 3 Months Ended |
Mar. 31, 2020shares | |
Shares Outstanding at March 31, 2020 | 23,750,000 |
Private Placement Warrants [Member] | |
Beginning Balance, as of Closing Date | 3,750,000 |
Issuances | |
Transfers to Class A from Class B | |
Shares Outstanding at March 31, 2020 | 3,750,000 |
Warrants [Member] | |
Beginning Balance, as of Closing Date | 20,000,000 |
Issuances | |
Transfers to Class A from Class B | |
Shares Outstanding at March 31, 2020 | 20,000,000 |
Class A Common Stock [Member] | |
Beginning Balance, as of Closing Date | 5,767,342 |
Issuances | |
Transfers to Class A from Class B | |
Shares Outstanding at March 31, 2020 | 5,767,342 |
Class B Common Stock [Member] | |
Beginning Balance, as of Closing Date | 23,974,368 |
Issuances | |
Transfers to Class A from Class B | |
Shares Outstanding at March 31, 2020 | 23,974,368 |
Shareholders' Equity (Details T
Shareholders' Equity (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Warrants outstanding | 23,750,000 | |
Non-controlling Interest, description | The Company ownership and voting structure is comprised of holders of our Class A common stock that participate 100% in the results of Atlas Technical Consultants, Inc. and 19.4% in Atlas Intermediate and its subsidiaries and holders of our Class B common stock that participate in the results of Atlas Intermediate and its subsidiaries until their Class B common stock is converted to Class A common stock. The holders of our Class B common stock participate in 80.6% of Atlas Intermediate and its subsidiaries. | |
Private Placement [Member] | ||
Warrants outstanding | 3,750,000 | |
Warrants outstanding per share | $ 1 | |
Description of warrants for redemption | (i) they will not be redeemable by the Company so long as they are held by the Sponsor and (ii) they may be exercisable by the holders on a cashless basis. At March 31, 2020, there were 3,750,000 Private Placement Warrants outstanding. | |
Public Warrants [Member] | ||
Warrants outstanding | 20,000,000 | |
Class A Common Stock [Member] | ||
Common stock, authorized | 400,000,000 | |
Common stock, par value (in dollars per share) | $ .0001 | |
Common stock, issued | 5,767,342 | |
Common stock, outstanding | 5,767,342 | |
Description of voting rights of common stock | Entitled to one vote for each share. | |
Class A Common Stock [Member] | Private Placement [Member] | ||
Warrants outstanding per share | $ 11.50 | |
Aggregate of private placement shares | 1,000,000 | |
Purchase price per share | $ 10.23 | |
Aggregate consideration private placement | $ 10,200 | |
Class A Common Stock [Member] | Public Warrants [Member] | ||
Warrants outstanding | 20,000,000 | |
Warrants outstanding per share | $ 11.50 | |
Description of voting rights of common stock | In November 2018, the Company consummated its initial public offering of units, each consisting of one share of Class A common stock and one-half of one warrant (“Public Warrant”). | |
Description of warrants for redemption | The Public Warrants will expire five years after the closing of the Atlas Business Combination or earlier upon redemption or liquidation. The Company may call the Public Warrants for redemption, in whole and not in part, at a price of $0.01 per warrant with not less than 30 days’ notice provided to the Public Warrant holders. However, this redemption right can only be exercised if the last sale price of the Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-day trading period ending three business days before we send the notice of redemption to the Public Warrant holders. | |
Class B Common Stock [Member] | ||
Common stock, authorized | 23,974,368 | |
Common stock, par value (in dollars per share) | $ .0001 | |
Common stock, issued | 23,974,368 | |
Common stock, outstanding | 23,974,368 | |
Description of voting rights of common stock | Entitle the holder to one vote per share. |
Loss Per Share (Details)
Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Net (loss) post Atlas Business Combination | $ (2,522) | |
Provision for non-controlling interest | (3,260) | |
Redeemable preferred stock dividends | 2,244 | |
Net (loss) attributable to Class A common shares - basic and diluted | $ (1,506) | |
Denominator: | ||
Weighted average shares outstanding - basic and diluted | 5,767,342 | |
Net (loss) per Class A common share, basic and diluted | $ (0.26) |
Loss Per Share (Details 1)
Loss Per Share (Details 1) - shares | Mar. 31, 2020 | Dec. 31, 2019 |
Total | 23,750,000 | |
Private placement warrants [Member] | ||
Total | 3,750,000 | 3,750,000 |
Warrants [Member] | ||
Total | 20,000,000 |
Equity Based Compensation (Deta
Equity Based Compensation (Details) | 3 Months Ended |
Mar. 31, 2020USD ($)shares | |
Number of unvested Class A Units | |
Balance, Unvested Class A units | shares | 1,226 |
Granted | shares | |
Vested and converted to Class B common stock | shares | (1,226) |
Forfeited | shares | |
Balance, Unvested Class A units | shares | |
Grant date fair value | |
Unvested Class A units | $ | $ 12,117 |
Granted | $ | |
Vested and converted to Class B common stock | $ | |
Forfeited | $ | |
Unvested Class A units | $ | $ 12,117 |
Equity Based Compensation (De_2
Equity Based Compensation (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jan. 31, 2019 | Dec. 31, 2017 | Mar. 31, 2020 | Mar. 31, 2019 | |
Equity Based Compensation (Textual) | ||||
Shares authorized | 1,666 | 1,000 | ||
Shares reserved for issuance | 973.65 | 504 | ||
Vesting term | 4 years | 4 years | ||
Equity compensation | $ 9,845 | $ 56 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) $ in Thousands | Feb. 03, 2020 | Feb. 14, 2019 | Mar. 31, 2020 | Mar. 31, 2019 |
Related Party Transactions (Textual) | ||||
Lease expenses | $ 160 | $ 161 | ||
Service fees | $ 53 | $ 33 | ||
Purchase insurance contracts | $ 1,400 | |||
Class A Common Stock [Member] | ||||
Related Party Transactions (Textual) | ||||
Number of shares issued | 105,977 | |||
Aggregate purchase price | $ 1,100 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Employee Benefit Plans (Textual) | ||
Total contributions | $ 1,300 | $ 900 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Discontinued Operations | ||
Revenues | ||
Cost of revenues | ||
Operating expenses | (149) | |
Operating loss | (149) | |
Depreciation and amortization | ||
Other Income/(Expense) | ||
Loss from discontinued operations | $ (149) |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2020 (nine months remaining) | $ 8,709 |
2021 | 8,974 |
2022 | 6,478 |
2023 | 6,049 |
2024 | 3,031 |
Thereafter | 3,860 |
Total | $ 37,101 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Commitments and Contingencies (Textual) | ||
Rental expense | $ 3,100 | $ 2,700 |