Cover
Cover - shares | 3 Months Ended | ||
Apr. 01, 2023 | Jul. 10, 2023 | Jun. 30, 2023 | |
Document and Entity Information | |||
Document Type | 10-Q | ||
Document Quarterly Report | true | ||
Document Period End Date | Apr. 01, 2023 | ||
Document Transition Report | false | ||
Entity File Number | 001-40147 | ||
Entity Registrant Name | QUALTEK SERVICES INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 83-3584928 | ||
Entity Address, Address Line One | 475 Sentry Parkway E, | ||
Entity Address, Address Line Two | Suite 200, | ||
Entity Address, City or Town | Blue Bell | ||
Entity Address, State or Province | PA | ||
Entity Address, Postal Zip Code | 19422 | ||
City Area Code | 484 | ||
Local Phone Number | 804-4585 | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Central Index Key | 0001839412 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | Q1 | ||
Amendment Flag | false | ||
Class A common stock | |||
Document and Entity Information | |||
Title of 12(b) Security | Class A Common Stock | ||
Trading Symbol | QTEKQ (1) | ||
Security Exchange Name | NASDAQ | ||
Entity Common Stock, Shares Outstanding | 27,805,659 | ||
Warrants | |||
Document and Entity Information | |||
Title of 12(b) Security | Warrants | ||
Trading Symbol | QTEWQ (1) | ||
Security Exchange Name | NASDAQ | ||
Class B common stock | |||
Document and Entity Information | |||
Entity Common Stock, Shares Outstanding | 23,304,200 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 8,149 | $ 495 |
Accounts receivable, net of allowance for doubtful accounts of $5,071 thousand and $5,408 thousand, respectively | 222,580 | 244,964 |
Inventories, net | 6,728 | 9,033 |
Prepaid expenses | 6,843 | 5,289 |
Other current assets | 6,536 | 2,815 |
Total current assets | 250,836 | 262,596 |
Property and equipment, net of accumulated depreciation of $43,732 thousand and $39,671 thousand, respectively | 63,958 | 59,818 |
Operating lease right-of-use assets | 27,405 | 28,566 |
Intangible assets, net | 311,157 | 321,686 |
Goodwill | 14,493 | 14,493 |
Other non-current assets | 4,072 | 1,768 |
Total assets | 671,921 | 688,927 |
Current liabilities: | ||
Current portion of long-term debt and finance lease obligations, net | 592,867 | 556,426 |
Current portion of operating lease liability | 9,516 | 9,594 |
Accounts payable | 77,311 | 83,298 |
Accrued expenses | 48,131 | 50,510 |
Contract liabilities | 22,358 | 24,094 |
Total current liabilities | 750,183 | 723,922 |
Long-term finance lease liabilities | 27,337 | 22,875 |
Long-term operating lease liability | 21,217 | 22,491 |
Tax receivable agreement liabilities | 15,084 | 15,084 |
Other non-current liabilities | 5,277 | 5,275 |
Total liabilities | 819,098 | 789,647 |
Commitments and contingencies (Notes 6 and 14) | ||
Deficit: | ||
Additional paid-in capital | 174,507 | 174,112 |
Accumulated deficit | (251,142) | (226,648) |
Non-controlling interest | (70,547) | (48,189) |
Total deficit | (147,177) | (100,720) |
Total liabilities and deficit | 671,921 | 688,927 |
Class A common stock | ||
Deficit: | ||
Common stock | 3 | 3 |
Class B common stock | ||
Deficit: | ||
Common stock | $ 2 | $ 2 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Allowance for doubtful accounts | $ 5,071 | $ 5,408 |
Accumulated depreciation | $ 43,732 | $ 39,671 |
Class A common stock | ||
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock issued (in shares) | 27,805,659 | 27,805,659 |
Common stock outstanding (in shares) | 27,805,659 | 27,805,659 |
Class B common stock | ||
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock issued (in shares) | 23,304,200 | 23,304,200 |
Common stock outstanding (in shares) | 23,304,200 | 23,304,200 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Revenue | $ 156,246,000 | $ 148,161,000 |
Costs and expenses: | ||
Cost of revenues, excluding depreciation and amortization | 143,444,000 | 132,105,000 |
General and administrative | 24,376,000 | 22,141,000 |
Transaction expenses | 0 | 9,268,000 |
Depreciation and amortization | 14,999,000 | 14,766,000 |
Total costs and expenses | 182,819,000 | 178,280,000 |
Loss from operations | (26,573,000) | (30,119,000) |
Other income (expense): | ||
Gain on sale/disposal of property and equipment | 304,000 | 1,915,000 |
Interest expense | (20,583,000) | (12,343,000) |
Total other expense | (20,279,000) | (10,428,000) |
Net loss | (46,852,000) | (40,547,000) |
Less: Net loss attributable to non-controlling interests | (22,358,000) | (35,547,000) |
Net loss attributable to QualTek Services Inc. | (24,494,000) | (5,000,000) |
Comprehensive loss | $ (24,494,000) | $ (5,000,000) |
Earnings per share: | ||
Net loss per share - continuing operations - basic (in dollars per share) | $ (0.88) | $ (0.20) |
Net loss per share - continuing operations - diluted (in dollars per share) | $ (0.91) | $ (0.20) |
Weighted average common shares outstanding - diluted (in shares) | 44,998,748 | |
Class A common stock | ||
Earnings per share: | ||
Weighted average common shares outstanding - basic (in shares) | 25,530,725 | 22,171,350 |
Weighted average common shares outstanding - diluted (in shares) | 44,998,748 | 22,171,350 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total | Adjustment | Class A Units | Additional Paid-In Capital | Additional Paid-In Capital Adjustment | Accumulated Deficit | Accumulated Deficit Adjustment | Accumulated Other Comprehensive Income | Non-controlling Interest | Class A common stock | Class A common stock Common shares | Class B common stock | Class B common stock Common shares |
Beginning balance (in shares) at Dec. 31, 2021 | 2,258,909 | 0 | 0 | ||||||||||
Beginning balance at Dec. 31, 2021 | $ (66,978) | $ (3,409) | $ 252,595 | $ 0 | $ (12,270) | $ (320,080) | $ 8,861 | $ 507 | $ 0 | $ 0 | $ 0 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Share based compensation (in shares) | 462,572 | ||||||||||||
Share based compensation | 6,711 | 6,711 | |||||||||||
Business Combination (in shares) | (2,258,909) | 24,446,284 | 26,201,003 | ||||||||||
Business Combination | 100,170 | $ (252,595) | 216,972 | 121,247 | (507) | 15,048 | $ 2 | $ 3 | |||||
Tax receivable agreement liability | (34,092) | (34,092) | |||||||||||
Net loss | (40,547) | (5,000) | (35,547) | ||||||||||
Ending balance at Apr. 02, 2022 | (38,145) | $ 0 | 177,321 | (194,972) | $ 0 | (20,499) | $ 2 | $ 3 | |||||
Ending balance (in shares) at Apr. 02, 2022 | 0 | 24,446,284 | 26,663,575 | ||||||||||
Beginning balance (in shares) at Dec. 31, 2022 | 27,805,659 | 27,805,659 | 23,304,200 | 23,304,200 | |||||||||
Beginning balance at Dec. 31, 2022 | (100,720) | 174,112 | (226,648) | (48,189) | $ 3 | $ 2 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Share based compensation | 395 | 395 | |||||||||||
Net loss | (46,852) | (24,494) | (22,358) | ||||||||||
Ending balance at Apr. 01, 2023 | $ (147,177) | $ 174,507 | $ (251,142) | $ (70,547) | $ 3 | $ 2 | |||||||
Ending balance (in shares) at Apr. 01, 2023 | 27,805,659 | 27,805,659 | 23,304,200 | 23,304,200 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (46,852) | $ (40,547) |
Adjustments: | ||
Depreciation and amortization | 14,999 | 14,766 |
Amortization of debt issuance costs | 1,576 | 1,668 |
Share-based compensation - stock options | 395 | 0 |
Share-based compensation - Class P Units | 0 | 6,711 |
Provision for bad debt expense | (196) | (1,006) |
Gain on sale of property and equipment | (304) | (1,915) |
Other | 231 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | 22,581 | (10,475) |
Inventories | 2,306 | (1,176) |
Prepaid expenses and other assets | (7,539) | 1,374 |
Accounts payable and accrued liabilities | (8,435) | (8,827) |
Contract liabilities | (1,736) | (1,259) |
Net cash used in operating activities from continuing operations | (22,974) | (40,686) |
Net cash provided by operating activities from discontinued operations | 0 | 1,063 |
Net cash used in operating activities | (22,974) | (39,623) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (941) | (801) |
Proceeds from sale of property and equipment | 407 | 2,278 |
Net cash (used in) provided by investing activities | (534) | 1,477 |
Cash flows from financing activities: | ||
Repayment of line of credit | (6,181) | (48,069) |
Proceeds from senior unsecured convertible notes | 0 | 124,685 |
Proceeds of short-term debt (net) | 54,926 | 0 |
Payments of Debt Issuance Costs | 11,089 | 0 |
Repayment of short-term debt | (2,391) | (2,391) |
Repayment of acquisition debt | 0 | (34,718) |
Repayment of promissory note | 0 | (500) |
Payments for financing fees | 0 | (8,928) |
Payments of finance leases | (4,103) | (4,330) |
Proceeds from issuance of common stock - PIPE | 0 | 36,948 |
Payments for equity issuance costs | 0 | (24,999) |
Tax distributions to members | 0 | (98) |
Net cash provided by financing activities | 31,162 | 37,600 |
Effect of foreign currency exchange rate translation on cash | 0 | (10) |
Net increase (decrease) in cash | 7,654 | (556) |
Cash: | ||
Beginning of year | 495 | 2,151 |
End of year | 8,149 | 1,595 |
Balances included in the consolidated balance sheets: | ||
Cash | 8,149 | 180 |
Cash included in current assets of discontinued operations | 0 | 1,415 |
Cash at end of year | 8,149 | 1,595 |
Cash paid for: | ||
Interest from continuing operations | 13,266 | 12,287 |
Non-cash investing and financing activities: | ||
Assets acquired under financing leases from continuing operations | $ 8,239 | $ 5,264 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 01, 2023 | |
Accounting Policies [Abstract] | |
Nature of Business and Summary of Significant Accounting Policies | Nature of Business and Summary of Significant Accounting Policies Nature of Business: QualTek Services Inc. (collectively with its consolidated subsidiaries, “QualTek”, the “Company”, “we”, “our”, or “us”) is a leading provider of communication infrastructure services and renewable solutions, delivering a full suite of critical services to major telecommunications and utility customers across the United States. We operate in two reportable segments, which reflects the way performance is assessed and resources are allocated by our Chief Executive Officer, who is our chief operating decision maker. Our Telecom segment provides engineering, construction, installation, network design, project management, site acquisition and maintenance services to major telecommunication carriers, cable providers and utility companies in various locations in the United States. Our Renewables and Recovery Logistics segment provides businesses with continuity and disaster recovery operations as well as new fiber optic construction services and maintenance and repair services for telecommunications, renewable energy, commercial and utilities customers across the United States. On February 14, 2022, QualTek Services Inc. completed the Business Combination (the “Business Combination”) with QualTek HoldCo, LLC (“QualTek HoldCo”) (f/k/a BCP QualTek HoldCo, LLC), a Delaware limited liability company (“BCP QualTek”) (the “Closing”), pursuant to the Business Combination Agreement (the “Business Combination Agreement”) dated as of June 16, 2021, by and among (i) ROCR, (ii) Roth CH III Blocker Merger Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of ROCR (“Blocker Merger Sub”), (iii) BCP QualTek Investors, LLC, a Delaware limited liability company (the “Blocker”), (iv) Roth CH III Merger Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of ROCR (“Company Merger Sub”), (v) BCP QualTek and (vi) BCP QualTek, LLC, a Delaware limited liability company, solely in its capacity as representative of the Blocker’s equity holders and BCP QualTek’s equity holders. The cumulative value of the merger consideration in the Business Combination was $306,888 thousand. Blocker Merger Sub merged with and into the Blocker (the “Blocker Merger”), resulting in the equity interests of the Blocker being converted into the right to receive 11,924 thousand shares of Class A common stock of the Company (the “Class A Common Stock”), and the owners of such equity interests in the Blocker (the “Blocker Owners”) being entitled to such shares of Class A Common Stock at the Closing, and thereafter, the surviving Blocker merged with and into ROCR, with ROCR as the surviving company (the “Buyer Merger”), resulting in the cancellation of the equity interests of the surviving Blocker and ROCR directly owning all of the units of QualTek HoldCo (the “QualTek Units”) previously held by the Blocker. Immediately following the Buyer Merger, Company Merger Sub merged with and into QualTek HoldCo, with QualTek HoldCo as the surviving company (the “QualTek Merger”), resulting in (i) QualTek HoldCo becoming a subsidiary of ROCR, (ii) the QualTek Units (excluding those held by the Blocker and ROCR) being converted into the right to receive 18,765 thousand shares of Class B common stock, par value $0.0001 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”) and the holders of QualTek Units being entitled to such shares of Class B Common Stock at the Closing, (iii) the QualTek Units held by ROCR being converted into the right to receive a number of common units of QualTek HoldCo (the “Common Units”) equal to the number of shares of Class A Common Stock issued and outstanding (i.e., 21,571 thousand QualTek Units), less the number of Common Units received in connection with the contribution described immediately below (i.e., 16,160 thousand QualTek Units). With respect to the portion of merger consideration to which the Blocker Owners and holders of QualTek Units were entitled as described above, the cumulative value of such merger consideration equaled the Equity Value. The “Equity Value” is the sum of (i) $294,319 thousand, plus (ii) the value of any Equity Interests of the Company issued as consideration for any acquisitions by the Company prior to the Closing (i.e., $10,000 thousand), plus (iii) the amount of interest accrued on that certain convertible promissory note (see Note 6-Debt and Capital Lease Obligations ) in an aggregate principal amount of $30,558 thousand issued by the Company to BCP QualTek II in exchange for all of BCP QualTek II’s Class B Units. No portion of the merger consideration was paid in cash. The foregoing represents the total consideration to be paid to the Blocker Owners and holders of QualTek Units in connection with the Business Combination. The Company contributed, as a capital contribution in exchange for a portion of the QualTek Units it acquired in the QualTek Merger (i.e., 16,160 thousand QualTek Units), $161,604 thousand, representing the amount of cash available after payment of the merger consideration under the Business Combination Agreement, which was used in part by QualTek or its Subsidiaries to pay the transaction expenses under the Business Combination Agreement. On February 14, 2022, in connection with the Closing of the Business Combination, the Company: – entered into an indenture (the “Indenture”) with Wilmington Trust, National Association, as trustee (the "Trustee"), and certain guarantors party thereto, including, among others, certain subsidiaries of the Company, in respect of $124,685 thousand in aggregate principal amount of senior unsecured convertible notes due 2027 (“2027 Convertible Notes”, see Note 6-Debt and Capital Lease Obligations ) that were issued to certain investors; – received $35,915 thousand in aggregate consideration from Private Investment in Public Equity (“PIPE”) subscribers investors in exchange for 3,989 thousand shares of Class A Common Stock; – received $1,033 thousand from ROCR at closing, comprised of $1,004 thousand from the trust account for 100 thousand shares that were not redeemed by the public shareholders and $29 thousand of cash from ROCR's closing balance sheet; – issued 2,275 thousand shares of Class A Common Stock (“Blocker Owner Earnout Shares”) and 3,836 thousand shares of Class B Common Stock (“Earnout Voting Shares”) (collectively, the “Earnout Shares”) that are subject to certain restriction on transfer and voting and potential forfeiture pending the achievement of the earn out targets; – converted convertible notes due June 2021 (“Convertible notes - June 2021”) into 2,875 thousand shares of Class A Common Stock and 4,063 thousand shares of Class B common stock; – assumed 2,875 thousand warrants (“Public Warrants”) and 102 thousand private placement warrants sold by ROCR as part of its initial public offering (“Private Placement Warrants”); – fully repaid $34,718 thousand of acquisition debt plus accrued interest with the proceeds from the transaction; – paid down $73,000 thousand of debt associated with the QualTek Holdco line of credit; – paid down $500 thousand of ROCR's promissory note; and – pursuant to the Tax Receivable Agreement (“TRA”) entered into by and between the Company, QualTek HoldCo, LLC, the TRA Holders (as defined in the TRA) and the TRA Holder Representative (as defined in the TRA), the Company will be required to pay the TRA Holders 85% of the amount of savings, if any, that the Company is deemed to realize in certain circumstances as a result of certain tax attributes that exist following the Business Combination and that are created thereafter, including as a result of payments made under the TRA. Refer to Note 12-Tax Receivable Agreement regarding the disclosures of the impact of the TRA as of the Closing Date and as of April 1, 2023. The Business Combination is accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“GAAP”) with QualTek HoldCo treated as the accounting acquirer. Accordingly, our consolidated financial statements represent a continuation of the financial statements of QualTek HoldCo with net assets of QualTek Services Inc. stated at historical cost. Following the closing of the Business Combination, the combined company is organized in an “Up-C” structure in which QualTek Services Inc. became the sole managing member of QualTek HoldCo and therefore, operates and controls all of the business and affairs of QualTek HoldCo. Accordingly, QualTek Services Inc. consolidates the financial results of QualTek HoldCo, and reports a non-controlling interest in its consolidated financial statements representing the economic interest in QualTek HoldCo owned by the members, other than the Blocker, of QualTek HoldCo referred to as the “Flow-Through Sellers.” As of April 1, 2023, the Company owned an economic interest of approximately 52% in QualTek HoldCo. The remaining approximately 48% economic interest is owned by the Flow-Through Sellers. Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP, under the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and on a basis consistent with the audited consolidated financial statements and related notes thereto of QualTek HoldCo and its consolidated subsidiaries as of and for the year ended December 31, 2022. The consolidated balance sheet of QualTek HoldCo as of December 31, 2022, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. These unaudited consolidated financial statements should be read in conjunction with such audited consolidated financial statements and related notes thereto of QualTek HoldCo, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on April 28, 2023 (the “Form 10-K”) and 10-K/A filed with SEC on May 2, 2023 (“Form 10-K/A”). These unaudited consolidated financial statements include all adjustments (consisting only of normal recurring adjustments unless otherwise noted) that management considers necessary for a fair statement of the Company’s results of operations, financial condition, cash flows and stockholders’ equity for the interim periods presented. Due to the seasonal nature of the Company's business, interim results are not necessarily indicative of the results to be expected for the full year. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has negative working capital and recurring losses from operations, recurring negative cash flows from operations and substantial cumulative net losses to date. As previously reported in the Company’s Current Reports on Form 8-K filed with the SEC on May 31, 2023 and July 7, 2023, on May 24, 2023 (the "Petition Date"), the Company and certain of its subsidiaries (together with the Company, the “Company Parties”) commenced voluntary cases (the "Chapter 11 Cases") under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Chapter 11 cases are being jointly administered by the Bankruptcy Court under the lead case In re QualTek Services Inc., Case No. 23-90584 (CML). The Company expects to incur significant professional fees and other costs in connection with, and throughout, the Chapter 11 Cases. The Company expects to continue operations in the normal course for the duration of the Chapter 11 Cases. To ensure ordinary course operations, the Company obtained approval from the Bankruptcy Court for certain “first day” motions to continue its ordinary course operations after the filing date. On June 13, 2023, the Company received approval from the Bankruptcy Court for $40,000 thousand of financing from the Term Loan Debtor-in-Possession ("DIP") Facility, which will provide it with immediate liquidity so that the Company can continue operating its business as usual during the Chapter 11 Cases and pay the costs and professional fees associated therewith, although the Company plans to lower its operating budget and further reduce the scale of its operations in connection with the Chapter 11 Cases. However, for the duration of the Chapter 11 Cases, the Company’s operations and ability to develop and execute its business plan, its financial condition, liquidity and its continuation as a going concern are subject to a high degree of risk and uncertainty associated with the Chapter 11 Cases. The outcome of the Chapter 11 Cases is dependent upon factors that are outside of the Company’s control, including actions of the Bankruptcy Court. The Company can give no assurances that it will be able to secure additional sources of funds to support its operations, or, if such funds are available to the Company, that such additional financing will be sufficient to meet its needs. See Note 16. Subsequent Events for further information. As such, management cannot conclude that such plans will be effectively implemented within one year after the date that the financial statements are issued. As a result, management has concluded that the aforementioned conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date the financial statements are issued. If the Company is unable to raise additional capital in sufficient amounts or on terms acceptable, or improve its current debt levels, the Company may have to significantly scale back its operations. The consolidated financial statements do not reflect any adjustments that might be necessary if the Company is unable to continue as a going concern. If the Company raises additional funds by issuing equity securities, substantial dilution to existing stockholders will result. If the Company raises additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict the Company’s ability to operate its business. 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, liabilities, revenues, and expenses. These estimates are based on historical experience and various other assumptions that management believes to be reasonable under the current facts and circumstances. Actual results could differ from those estimates and assumptions. Emerging Growth Company: The Company is an “Emerging Growth Company” (“EGC”), 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 is exempted from certain reporting requirements that are applicable to other public companies that are not EGCs including, but not limited to, not being required to comply with the independent registered public accounting firm 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)(l) 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, it will have different application dates for public or private companies, the Company, as an EGC, 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 consolidated financial statements with another public company which is neither an EGC nor an EGC which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Risks and uncertainties: The Company’s business operations may be adversely impacted by its current liquidity constraints. As a result of these liquidity constraints, the Company has filed for petition under Chapter 11 of the U.S. Bankruptcy Code. F or the duration of the Chapter 11 Cases, the Company’s operations and ability to develop and execute its business plan, its financial condition, liquidity and its continuation as a going concern are subject to a high degree of risk and uncertainty. The Company’s business operations may also be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Principles of Consolidation: The consolidated financial statements comprise the accounts of the Company and its consolidated subsidiaries, including QualTek HoldCo. For the periods prior to the Business Combination, the consolidated financial statements of the Company comprise the accounts of QualTek HoldCo and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Non-controlling Interests: The Company presents non-controlling interests as a component of equity on its unaudited consolidated balance sheets and reports the portion of its loss for non-controlling interests as net loss attributable to non-controlling interests in the unaudited consolidated statements of operations and comprehensive loss. The non-controlling interests represent the economic interest in QualTek Holdco held by the Flow-through Sellers (see Note 9-Equity ). Revenue Recognition: Revenue is recognized when, or as, control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for the goods and services transferred. A contractual agreement exists when each party involved approves and commits to, the rights of the parties and payment terms are identified, the agreement has commercial substance, and collectability of consideration is probable. The Company’s services are performed for the sole benefit of its customers, whereby the assets being created or maintained are controlled by the customer and the services the Company performs do not have alternative benefits for the Company. The Company earns revenue primarily from construction related projects under certain master service agreements ("MSAs") and other service agreements contracts. Portions of the contracts include one or multiple performance obligations, which is a contractual promise to deliver a distinct good or transfer of a specific service to a customer. We use different methods of revenue recognition for different types of contracts. For the Company’s projects recognized under the input method, the Company typically identifies two promised goods and services in the contract: (a) delivery of materials, for which revenue is recognized at a point in time, and (b) installation and construction services, for which revenue is recognized over time as related cost are incurred. The Company determined that the materials and the construction services are both considered distinct performance obligations. The Company’s customers are able to benefit from the materials and construction services both on their own and in connection with readily available resources, indicating that both promises are capable of being distinct. The Company further determined that its promises to transfer the materials and to provide the construction services are each separately identifiable from the other promises in the contract. Further, these promises do not represent inputs to a combined output which may represent a single performance obligation as no significant integration services are provided, there is not a high degree of customization, and the promises are not highly interrelated. As a result, the Company concludes that its input method contracts typically include two performance obligations: the sale of materials and construction services. Revenue for engineering, construction, project management and site acquisition services are primarily recognized by the Company over time utilizing the cost-to-cost measure of progress, which is an input method, on contracts for specific projects, and for certain MSAs and other service agreements. The majority of our performance obligations are completed within one year. The cost-to-cost measure of progress best depicts the continuous transfer of control of goods or services to the customer, and correspondingly, when performance obligations are satisfied, for these contracts. Revenue for engineering, aerial and underground construction for projects with customer-specified service requirements are primarily performed under MSAs and other contracts that contain customer-specified service requirements. These agreements include pricing for individual tasks, including, for example, the placement of underground or aerial fiber, directional boring, and fiber splicing, each based on a specific unit of measure. Revenue is recognized over time as services are performed and customers simultaneously receive and consume the benefits provided by the Company. Output measures such as units delivered are utilized to assess progress against specific contractual performance obligations. The Company allocates total contract consideration to each performance obligation using the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation. The Company’s customers simultaneously receive and consume the benefit provided by the Company, and revenue is recognized over time as services are performed for all performance obligations identified in the contract. Output measures such as units delivered are utilized to assess progress against specific contractual performance obligations. Revenue from fulfillment, maintenance, and recovery services provided to the telecommunication, cable and utility industries is recognized as the services are rendered. These services are generally performed under master or other service agreements and billed on a contractually agreed price per unit on a work order basis. Each service is a separate performance obligation that is recognized upon completion at a point in time as the service is delivered. Transaction prices for the Company’s contracts may include variable consideration such as contracted materials. Management estimates variable consideration for a performance obligation utilizing estimation methods that it believes best predict the amount of consideration to which the Company will be entitled. Variable consideration is included in the estimated transaction price if it is probable that when the uncertainty associated with the variable consideration is resolved, there will not be a significant reversal of the cumulative amount of revenue that has been recognized. Management’s estimates of variable consideration and the determination of whether to include estimated amounts in the transaction price are based largely on engineering studies, past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer and all other relevant information that is reasonably available at the time of the estimate. The effect of variable consideration on the transaction price of a performance obligation is typically recognized as an adjustment to revenue on a cumulative catch-up basis, as such variable consideration is generally for services encompassed under the existing contract. To the extent variable consideration reflected in transaction prices are not resolved in accordance with management’s estimates, there could be reductions in, or reversals of, previously recognized revenue. Sales, use and other taxes collected concurrent with revenue-producing activities are excluded from revenue. Most of the Company’s contracts include assurance warranties which do not include any additional distinct services other than the assurance that the services and materials comply with agreed-upon specifications. Therefore, there is not a separate performance obligation for these warranties. For contracts containing more than one performance obligation, the Company allocates the transaction price on a relative standalone selling price (“SSP”) basis. The Company determines SSP based on the price at which the performance obligation is sold separately. If the SSP is not observable through past transactions, the Company estimates the SSP taking into account available information, such as market conditions and internally approved pricing guidelines related to the performance obligation. Revenue generated from fulfillment, maintenance, compliance and recovery services as well as certain performance obligations related to material sales is recognized at a point in time. Point in time revenue accounted for approximately 30% and 41% of consolidated revenue for three months ended April 1, 2023 and April 2, 2022, respectively. Substantially all the Company’s other revenue is recognized over time. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. Significant Customers Revenue concentration information for significant customers as a percentage of total consolidated revenue was as follows (in thousands): For the Three Months Ended April 1, 2023 April 2, 2022 Amount % of Total Amount % of Total Customers: AT&T $ 67,829 43.4 % $ 55,983 37.8 % Verizon 20,163 12.9 % 22,851 15.4 % T-Mobile 18,993 12.2 % 19,183 13.0 % Total $ 106,985 68.5 % $ 98,017 66.2 % Stock-Based Compensation: The Company provides the QualTek Services Inc. 2022 Long-Term Incentive Plan (the “LTIP”), which was adopted by the Board of Directors and was approved by the Company’s stockholders on February 14, 2022. The Company measures all stock-based awards granted to employees based on the fair value on the date of grant in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”). Compensation expense of those awards is recognized over the requisite service period, which is generally the vesting period of the respective award. Generally, the Company issues awards with service-only vesting conditions and records the expense using the straight-line method. The Company accounts for forfeitures as they occur. The Company uses the Black-Scholes option-pricing model to determine the fair value of its option awards at the time of grant. The Company classifies stock-based compensation expense in its unaudited consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified. Income Taxes: The Company is subject to income taxes at the U.S. federal, state, and local levels for income tax purposes, including with respect to its allocable share of any taxable income and other separately stated items of QualTek HoldCo. Income taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequence on differences between the carrying amounts of assets and liabilities and their respective tax basis, using tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is “more-likely-than-not” that some portion or all of the deferred tax assets will not be realized. The realization of the deferred tax assets is dependent on the amount of future taxable income. Tax Receivable Agreement Liabilities: The TRA liabilities represent amounts payable to the Flow-through Sellers. The TRA liabilities are carried at a value equal to the undiscounted expected future payments due under the TRA. The Company recorded its initial estimate of future payments as an increase in TRA liabilities and a decrease to additional paid-in capital in the consolidated financial statements. Subsequent adjustments to the liabilities for future payments under the TRA related to changes in estimated future tax rates or state income tax apportionment are recognized through current period net loss in the consolidated statements of operations and comprehensive loss. See Note 12-Tax Receivable Agreement. Basic and Diluted Loss Per Share: The Company applies the two-class method for calculating and presenting loss per share, and separately presents loss per share for Class A Common Stock. Shares of Class B Common Stock do not participate in the earnings and losses of the Company. As a result, the shares of Class B Common Stock are not considered participating securities and are not included in the weighted-average shares outstanding for purposes of loss per share. The Company has issued and outstanding Earnout Shares, including the Blocker Owner Earnout Shares and Earnout Voting Shares, which are subject to forfeiture if the achievement of certain stock price thresholds are not met within five years of the Business Combination. The basic and diluted net loss per share is presented in conformity with the two-class method required for participating securities, as the Blocker Owner Earnout Shares are considered participating securities. Unvested Blocker Owner Earnout Shares are not included in the denominator of the basic and diluted loss per share calculation until the contingent condition is met. The Earnout Voting Shares are not considered participating securities and are not included in the weighted-average shares outstanding for purposes of calculating loss per share. Warrant Accounting: The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. The Company recorded the Public Warrants assumed as part of the Business Combination as equity (see Note 9-Equity ). For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations and comprehensive loss. The Company recorded the Private Placement Warrants assumed as part of the Business Combination as a liability. The fair value of the Private Placement Warrants (see Note 7-Warrants ) was estimated using Black-Scholes call option model (see Note 8-Fair Value Measurements ). Earnout Shares: During the five-year period following the closing of the Business Combination, |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Apr. 01, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The Company calculated the basic and diluted loss per share for the period following the Business Combination under the two-class method. The Earnout Shares are considered legally issued and outstanding shares of Class A and Class B common stock, subject to restrictions on transfer and voting. The Blocker Owner Earnout Shares are entitled to receive, ratably with the other outstanding Class A Common Stock, dividends, and other distributions prior to vesting. The Earnout Voting Shares have only voting rights and therefore are not entitled to receive any distributions. The basic and diluted net loss per share is presented in conformity with the two-class method required for participating securities, as the Blocker Owner Earnout Shares are considered participating securities. The net loss per share amounts is the same for Class A Common Stock and the Blocker Owner Earnout Shares because the holders of each are legally entitled to equal per share earnings, losses, and distributions, whether through dividends or liquidation. Shares of Class B common stock do not participate in the earnings or losses of the Company and, therefore, are not participating securities. As such, a separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. The basic loss per share was computed by dividing net loss attributable to common shareholders for the period subsequent to the Business Combination by the weighted average number of shares of Class A Common Stock outstanding for the same period. Diluted loss per share was computed in a manner consistent with that of basic loss per share while giving effect to all shares of potentially dilutive common stock that were outstanding during the period. The following tables present the calculation of basic and diluted net loss per share for the current year period from the three months ended April 1, 2023 and the prior year period from February 14, 2022 to April 2, 2022 (in thousands except share and per share data): Basic: For the Three months ended Numerator: Net loss $ (46,852) Less: Loss attributable to non-controlling interests (22,358) Net loss attributable to QualTek Services Inc. (24,494) Less: Loss attributable to participating securities (2,004) Net loss attributable to Class A common shareholders, basic $ (22,490) Denominator: Weighted average Class A common shareholders outstanding 27,805,659 Less: Weighted average unvested Blocker Owner Earnout Shares outstanding (2,274,934) Weighted average Class A common shareholders outstanding, basic 25,530,725 Net loss per share - basic $ (0.88) Diluted: For the Three months ended Numerator: Net loss $ (46,852) Less: Loss attributable to non-controlling interests (3,680) Net loss attributable to QualTek Services, Inc. (43,172) Less: Loss attributable to participating securities (2,078) Net loss attributable to Class A common shareholders, diluted $ (41,094) Denominator: Weighted average Class A common shares outstanding 27,805,659 Less: weighted average unvested Blocker Owner Earnout Shares outstanding (2,274,934) Add: Weighted-average Class B common shares if converted to Class A common shares outstanding (excluding Earnout Voting shares) 19,468,023 Weighted average Class A common shares outstanding, diluted 44,998,748 Net loss per share - diluted $ (0.91) February 14, 2022 through April 1, 2022 Numerator: Net loss $ (11,016) Less: Loss attributable to non-controlling interests (6,016) Net loss attributable to QualTek Services, Inc. (5,000) Less: Loss attributable to participating securities (465) Net loss attributable to Class A common shareholders, basic and diluted $ (4,535) Denominator: Weighted average Class A common shares outstanding 24,446,284 Less: weighted average unvested Blocker Owner Earnout Shares outstanding (2,274,934) Weighted average Class A common shares outstanding, basic and diluted 22,171,350 Net loss per share - basic and diluted $ (0.20) The consolidated statements of operations and comprehensive loss reflect a net loss in the period presented and therefore the effect of the following securities are not included in the calculation of diluted loss per share as including them would have had an anti-dilutive effect: For the Three months ended February 14, 2022 through Excluded from the calculation (1) Stock options 5,632,011 — Class B common stock — 22,827,398 Private Placement Warrants 101,992 101,992 Public Warrants 2,874,979 2,874,979 Convertible Notes 12,468,500 12,468,500 Total potentially dilutive shares excluded from calculation 21,077,482 38,272,869 ____________________________________ (1) This table excludes Earnout Voting Shares as the earn out contingency has not been met at period end. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Apr. 01, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consisted of the following (in thousands): April 1, December 31, 2022 Office furniture $ 2,287 $ 2,229 Computers 2,284 2,296 Machinery, equipment and vehicles 27,914 27,178 Land 140 140 Building 340 340 Leasehold improvements 5,224 5,178 Software 2,449 2,416 Assets under financing lease 65,712 57,905 Construction in process 1,340 1,807 107,690 99,489 Less: accumulated depreciation (43,732) (39,671) Property and equipment, net $ 63,958 $ 59,818 Property and equipment include assets acquired under financing leases of $65,712 thousand and $57,905 thousand as well as accumulated depreciation of $17,517 thousand and $15,096 thousand as of April 1, 2023 and December 31, 2022, respectively. Depreciation expense was $4,470 thousand and $3,785 thousand for the three months ended April 1, 2023 and April 2, 2022, respectively. |
Accounts Receivable, Contract A
Accounts Receivable, Contract Assets and Liabilities, and Customer Credit Concentration | 3 Months Ended |
Apr. 01, 2023 | |
Receivables [Abstract] | |
Accounts Receivable, Contract Assets and Liabilities, and Customer Credit Concentration | Accounts Receivable, Contract Assets and Liabilities, and Customer Credit Concentration The following provides further details on the consolidated balance sheet accounts of accounts receivable, contract assets and contract liabilities. Accounts Receivable The Company is party to non-recourse financing arrangements in the ordinary course of business, under which certain receivables are settled with the customer's bank in return for a nominal fee. Discount charges related to these arrangements which are included in "Interest expense" on the consolidated statements of operations and comprehensive loss were not material in all periods presented. Contract Assets and Liabilities Contract assets represent our right to consideration from our customers when such right is conditioned on something other than the passage of time. Contract assets, which primarily consist of retainage (an agreed-upon portion of billed amounts not expected to be collected until the projects have been completed), were not material at April 1, 2023 and December 31, 2022. Our accounts receivable represent unconditional rights to consideration, including unbilled revenues for the estimated value of unbilled work for projects with performance obligations recognized over time. Contract liabilities primarily represent advanced billing and payment received in excess of revenues recognized and before our performance obligations have been satisfied. Contract liabilities were $22,358 thousand and $24,094 thousand at April 1, 2023 and December 31, 2022, respectively. The amount of revenue recognized for the three months ended April 1, 2023 and April 2, 2022 that was previously included in contract liabilities at the beginning of the period was $13,432 thousand and $7,215 thousand, respectively. Customer Credit Concentration Customers whose accounts receivable exceeded 10% of the total gross accounts receivable were as follows (in thousands): April 1, 2023 December 31, 2022 Amounts % of Total Amounts % of Total AT&T $ 70,239 30.9 % $ 76,816 30.7 % Verizon 30,917 13.6 % 56,551 22.6 % T-Mobile 28,873 12.7 % 36,663 14.6 % Total $ 130,029 57.2 % $ 170,030 67.9 % Allowance for Doubtful Accounts The following table summarizes the changes in the Company's allowance for doubtful accounts (in thousands): For the Three Months Ended April 1, 2023 December 31, 2022 Balance at beginning of year $ 5,408 $ 5,614 Charged to expense (196) 8,533 Deductions for uncollectible receivables written off (141) (8,739) Balance at end of period $ 5,071 $ 5,408 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Apr. 01, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill Changes in the carrying amount of goodwill by reportable segment is as follows (in thousands): Renewables Telecom Total Goodwill as of December 31, 2022 $ 13,598 $ 895 $ 14,493 Measurement period adjustments, net — — — Goodwill as of April 1, 2023 $ 13,598 $ 895 $ 14,493 ____________________________________ Due to the substantial doubt about the Company's ability to continue as a going concern, the Company determined that a triggering event existed as of April 1, 2023, which warranted an interim goodwill impairment assessment. As of April 1, 2023, we performed a quantitative assessment and determined that none of the Company's goodwill was impaired. Intangible Assets Intangible assets consisted of the following (in thousands): April 1, 2023 Weighted Gross Accumulated Net carrying Customer relationships 8.6 $ 424,260 $ (142,341) $ 281,919 Trademarks and trade names 9.3 59,969 (30,731) 29,238 $ 484,229 $ (173,072) $ 311,157 December 31, 2022 Weighted Gross Accumulated Net carrying Customer relationships 8.8 $ 424,260 $ (133,535) $ 290,725 Trademarks and trade names 9.3 59,969 (29,008) 30,961 $ 484,229 $ (162,543) $ 321,686 Amortization expense of intangible assets was $10,529 thousand and for the three months ended April 1, 2023, and was $10,572 thousand for the three months ended April 2, 2022, respectively. |
Debt and Finance Lease Obligati
Debt and Finance Lease Obligations | 3 Months Ended |
Apr. 01, 2023 | |
Debt and Lease Obligation [Abstract] | |
Debt and Finance Lease Obligations | Debt and Finance Lease Obligations The filing of the Chapter 11 Cases constituted an event of default that accelerated the Company Parties’ respective obligations under the Indenture, the ABL Credit Agreement and the Term Loan Credit Agreement (collectively, the “Debt Instruments”). The Debt Instruments provide that, as a result of the Chapter 11 Cases, the principal and interest due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Debt Instruments are automatically stayed as a result of the Chapter 11 Cases, and the stakeholders’ rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code. In addition, on March 15, 2023, the Company did not make an interest payment of approximately $3,700 thousand due on its 2027 Convertible Notes. The Company had a 30-day grace period, or until April 14, 2023, to make the interest payment. The Company did not make the interest payment, and, as a result, an event of default occurred under the Indenture, the ABL Credit Agreement and the Term Loan Credit Agreement. Due to the substantial doubt about the Company’s ability to continue as a going concern, and the Company’s defaults under the Debt Instruments, as of December 31, 2022 and April 1, 2023, the Company reclassified $548,847 thousand and $595,074 thousand of its outstanding debt from long-term to current, respectively. Line of credit: The Company, through its wholly-owned subsidiaries, has an Asset Based Lending Credit Agreement (“ABL Credit Agreement”) with PNC Bank, National Association (“PNC”). Under the ABL Credit Agreement, the Company has access to an aggregate revolving credit facility, including a swingline subfacility and a letter of credit subfacility for working capital needs and general corporate purposes. The Company's ability to borrow under the ABL credit facility is subject to periodic borrowing base determinations, which borrowing base consists primarily of certain eligible accounts receivable and eligible inventory. Interest on the outstanding principal amount, payable in arrears monthly, is based on either an elected Base Rate plus an applicable margin, or an adjusted Eurodollar rate, plus an applicable margin, as defined in the agreement. The interest rate under the ABL Credit Agreement as of April 1, 2023 was 12.00% . Standby letters of credit totaling $5,903 thousand, issued for our insurance carriers and in support of performance under certain contracts, were outstanding and the borrowing capacity available under the ABL Credit Agreement was approximately $3,866 thousand as of April 1, 2023. On March 16, 2023, the Company, through its wholly-owned subsidiaries QualTek Buyer, LLC and QualTek LLC, entered into an amendment to the ABL Credit Agreement among QualTek Buyer, LLC, QualTek LLC, certain subsidiaries of QualTek LLC and PNC, as administrative agent and collateral agent (the “ABL Amendment”). The ABL Amendment provides for a reduction in the aggregate commitment from $130,000 thousand to $105,000 thousand, a modification of the interest rate to SOFR plus 5.00% and a modification of the maturity date of the ABL facility to be June 16, 2024. The ABL Amendment also implemented modifications to certain of the affirmative covenants, negative covenants and events of default. In connection with the proposed joint plan of reorganization (as amended, supplemented or modified, the "Plan"), the ABL Credit Agreement and the ABL Amendment have been replaced by the Company’s debtor-in-possession financing arrangements. For information about subsequent events related to the Company’s debtor-in-possession financing arrangements, see Note 1 6 – Subsequent Events . Term loan: The Company has a Senior Secured Term Credit and Guaranty Agreement (“Term Loan Credit Agreement”) with UMB Bank, N.A. as the administrative agent and collateral agent, for $380,000 thousand. On a quarterly basis, principal payments of $2,391 thousand plus interest are due with all unpaid principal and interest due at maturity on July 17, 2025. On March 16, 2023, the Company, through its wholly-owned subsidiaries QualTek Buyer, LLC and QualTek LLC, entered into an amendment to the Term Loan Credit Agreement among QualTek Buyer, LLC, QualTek LLC, certain subsidiaries of QualTek LLC and UMB Bank, N.A., as administrative agent and collateral agent (the “Term Loan Amendment”) due June 16, 2024. The Term Loan Amendment provides for $55,000 thousand of immediately available new money incremental term loans under the Term Loan Credit Agreement. Each of the lenders providing the new money incremental term loans, and existing term lenders who agree to take new money incremental term loans by assignment after the closing date and participate in the reallocation process, will be entitled to receive rollover loans structured as a new facility of term loans under the Term Loan Credit Agreement. Pursuant to the payment waterfall, the new money incremental term loans will be senior to the rollover loans, and the rollover loans will be senior to the existing term loans. On March 16, 2023, the Company borrowed the full $55,000 thousand of new money incremental term loans. The Term Loan Amendment also provides for $20,000 thousand of additional new money incremental term loans under the Term Loan Credit Agreement, subject to the satisfaction of certain conditions precedent. On May 12, 2023, the Company borrowed $10,000 thousand of additional new money incremental term loans. In connection with the Plan, the Term Loan Credit Agreement and the Term Loan Amendment have been overridden by the Company’s debtor-in-possession financing arrangements. For information about subsequent events related to the Company’s debtor-in-possession financing arrangements, see Note 1 6 – Subsequent Events . Senior Unsecured Convertible Notes: In connection with the Business Combination, on February 14, 2022, the Company entered into the Indenture pursuant to which the Company issued the 2027 Convertible Notes due February 15, 2027, in an aggregate principal amount of $124,685 thousand, receiving $122,191 thousand in net cash proceeds. The 2027 Convertible Notes have an original issue discount of $2,494 thousand. Further, $6,384 thousand in debt issuance costs were incurred. The total of $8,878 thousand recorded as debt discount is being amortized using the effective interest method through the maturity dates of the 2027 Convertible Notes. The 2027 Convertible Notes provide for an interest rate that is set quarterly based on gross leverage with a minimum interest rate of 9.50% per annum and up to a maximum of 11.75% per annum, with an additional interest of 2% per annum in certain circumstances as described in the Indenture. Interest is payable on a quarterly basis commencing on June 15, 2022. For the three months ended April 1, 2023 and April 2, 2022, the Company recorded interest expense of $3,622 thousand and $1,913 thousand, respectively. As of April 1, 2023 and April 2, 2022, the 2027 Convertible Notes are presented net of a debt discount of $6,880 thousand and $8,656 thousand on the consolidated balance sheet with accretion of $444 thousand and $222 thousand, respectively. Subject to and upon compliance with the provisions of the Indenture, each holder of a 2027 Convertible Note is provided with the right, at such holder’s option, to convert all or any portion (if the portion to be converted is $1 thousand principal amount or an integral multiple thereof) of such 2027 Convertible Note at any time prior to the close of business on the second scheduled trading day immediately preceding February 15, 2027, at an initial conversion rate of 100 shares of the Company’s Class A Common Stock, which is equal to an initial conversion price of $10.00 per share (subject to adjustment as provided in the Indenture) per $1 thousand principal amount of the 2027 Convertible Note. If a fundamental change (as defined in the Indenture) occurs prior to February 15, 2027, holders of the 2027 Convertible Notes will have the right to require the Company to repurchase all or any portion of their 2027 Convertible Notes in principal amounts of $1 thousand or an integral multiple thereof, at a repurchase price equal to the principal amount of the 2027 Convertible Notes to be repurchased, plus accrued and unpaid interest. The 2027 Convertible Notes may be converted by the Company any time after the two-year anniversary of the Closing of the Business Combination on February 14, 2022 (the “Company Forced Conversion Date”) subject to the following conditions: (i) the Company’s share price trading at or above $14 per share for 20 out of any 30 consecutive trading days after the Company Forced Conversion Date; (ii) the holders receive a make-whole payment in the form of cash or additional shares at the time of such conversion; (iii) the 60-day average daily trading volume ending on the last trading day of the applicable exercise period being greater than or equal to $15,000 thousand; (iv) the conversion of the 2027 Convertible Notes being made on a pro-rata basis across all 2027 Convertible Note investors; and (v) the conversion of the 2027 Convertible Notes, together with all previously converted 2027 Convertible Notes, resulting in no more than 20% of the free float of the Company’s Class A Common Stock. The Company determined that there was no derivative liability associated with the 2027 Convertible Notes under ASC 815-15, Derivatives and Hedging . Per ASC 815-10-15-74(a), contracts that are both indexed to its own stock and classified in stockholders’ equity in its statement of financial position are not considered to be derivative instruments. The conversion feature is indexed to the Company’s own stock and is classified in stockholders’ equity on the consolidated balance sheets. As the conversion features would meet the scope exception as described in paragraphs ASC 815-15-74(a), the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at April 1, 2023, the conversion feature does not meet derivative classification. The 2027 Convertible Notes have customary anti-dilution protections and customary negative covenants, including limitations on indebtedness, restricted payments, and permitted investments. In connection with the Plan, each holder of allowed Convertible Notes Claims (as defined in the "Plan") will receive (i) its pro rata share of 10% (subject to dilution) of the new equity interests to be issued by the Company on the Plan Effective Date and (ii) its pro rata share of the warrants to purchase 7.5% of the new equity interests to be issued by the Company on the Plan Effective Date, and the 2027 Convertible Notes will be canceled or otherwise retired in full. Debt outstanding was as follows (in thousands): April 1, December 31, Current Maturities: Line of credit $ 85,498 $ 91,665 Term loan 376,930 334,378 2027 Convertible Notes 117,805 117,361 Current portion of finance lease obligations 12,634 13,022 Current portion of long-term debt and finance lease obligations, net of deferred financing costs (1) $ 592,867 $ 556,426 Long-term borrowings: Finance lease obligations $ 39,971 $ 35,897 Less: current portion of finance lease obligations (12,634) (13,022) Finance lease obligations, net of current portion 27,337 22,875 Total long-term borrowings $ 27,337 $ 22,875 (1) The current maturities of long-term debt for the years ended April 1, 2023 and December 31, 2022 is net of deferred financing costs and convertible debt discount of $24,405 thousand and $15,007 thousand, respectively. |
Warrants
Warrants | 3 Months Ended |
Apr. 01, 2023 | |
Warrants [Abstract] | |
Warrants | WarrantsPrior to the Business Combination, ROCR issued 2,875 thousand Public Warrants and 102 thousand Private Placement Warrants (collectively, the “Warrants”). Upon the closing of the Business Combination, the Company assumed the Warrants. The Public Warrants became exercisable on 30 days after the completion of the Business Combination (See Note 8 - Fair Value Measurement ). No warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the shares of Class A Common Stock issuable upon exercise of the warrants and a current prospectus relating to such shares of Class A Common Stock. Notwithstanding the foregoing, during any period when the Company shall have failed to maintain an effective registration statement, warrant holders may exercise warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. The warrants will expire five years from the closing of the Business Combination. Once the warrants become exercisable, the Company may redeem the Public Warrants: – in whole and not in part; – at a price of $0.01 per warrant; – at any time after the warrants become exercisable; – upon not less than 30 days’ prior written notice of redemption to each warrant holder; – if, and only if, the reported last sale price of the shares of Class A Common Stock equals or exceeds $18.00 per share, for any 20 trading days within a 30-day trading period commencing after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and – if, and only if, there is a current registration statement in effect with respect to the shares of Class A Common Stock underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A Common Stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuances of shares of Class A Common Stock at a price below their respective exercise prices. Additionally, in no event will the Company be required to net cash settle the warrants. The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A Common Stock issuable upon the exercise of the Private Placement Warrants were not transferable, assignable or saleable until completion of the Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are nonredeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants are redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. In connection with the Plan, all existing equity interests, including the Warrants, will be cancelled, released and extinguished and such equity interests will have no further force or effect. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Apr. 01, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company measures and reports certain financial and non-financial assets and liabilities on a fair value basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e. observable inputs) and the lowest priority to data lacking transparency (i.e. unobservable inputs). An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant inputs to its valuation. The following is a description of the three hierarchy levels. Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Active markets are considered to be those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in inactive markets. Level 3 Unobservable inputs are not corroborated by market data. This category is comprised of financial and non-financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies using significant inputs that are generally less readily observable from objective sources. Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred. There were no transfers between any levels during the three months ended April 1, 2023 and April 2, 2022, respectively. Acquisition-related contingent consideration is measured at fair value on a recurring basis using unobservable inputs such as projections of financial results and cash flows for the acquired businesses and a discount factor based on the weighted average cost of capital which fall within Level 3 of the fair value hierarchy. As a result of the Business Combination, the Company has outstanding Private Placement Warrants and Public Warrants. The Private Placement Warrants are substantially similar to the Public Warrants, but not directly traded or quoted on an active market and not subject to the redemption right under certain circumstances (see Note 7 -Warrants ). The Private Placement Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liability on the accompanying consolidated balance sheet. As of the Closing Date and April 1, 2023, the Private Placement Warrants were valued using a Black-Scholes call option model. The Black-Scholes call option model’s primary unobservable input utilized in determining the fair value of the Private Placement Warrants is the Public Warrants implied volatility adjusted for the redemption feature, which is considered to be a Level 3 fair value measurement. In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial liabilities that are measured at fair value on a recurring basis at April 1, 2023 and December 31, 2022 and the related activity for the three months ended April 1, 2023 and April 2, 2022 (in thousands). Fair Value at April 1, 2023 Carrying Value Level 1 Level 2 Level 3 Financial liabilities Contingent consideration (1) $ 5,200 $ — $ — $ 5,200 Warrant liability (1) 77 — — 77 $ 5,277 $ — $ — $ 5,277 Fair Value at December 31, 2022 Carrying Value Level 1 Level 2 Level 3 Financial liabilities: Contingent consideration (1) $ 5,200 $ — $ — $ 5,200 Warrant liability (1) 77 — — 77 $ 5,277 $ — $ — $ 5,277 (1) Included in "Other non-current liabilities" on the consolidated balance sheets. The following table sets forth a summary of the changes in fair value of the Company’s financial liabilities (in thousands): Warrant Contingent January 1, 2023 $ 77 $ 5,200 Change in fair value — — April 1, 2023 $ 77 $ 5,200 Warrant Contingent January 1, 2022 $ — $ 30,756 Assumption of private placement warrants in Business Combination 77 — Accretion — 410 April 2, 2022 $ 77 $ 31,166 |
Equity
Equity | 3 Months Ended |
Apr. 01, 2023 | |
Equity [Abstract] | |
Equity | Equity QualTek Services Inc. Class A Common Stock: The Company is authorized to issue 500,000 thousand shares of Class A Common Stock with a par value of $0.0001 per share. At April 1, 2023, there were 27,806 thousand shares of Class A Common Stock (inclusive of 2,275 thousand shares of Blocker Owner Earnout Shares) issued and outstanding. Holders of Class A Common Stock are entitled to full economic rights, including the right to receive dividends when and if declared by the Board. Each holder of Class A Common Stock is entitled to one vote for each share of Class A Common Stock held. Upon liquidation of the Company, holders of Class A Common Stock are entitled to share ratably in all assets remaining after payment of debts and other liabilities. QualTek Services Inc. Class B Common Stock: The Company is authorized to issue 500,000 thousand shares of Class B Common Stock with a par value of $0.0001 per share. At April 1, 2023 and December 31, 2022, there were 23,304 thousand shares of Class B Common Stock (inclusive of 3,836 thousand shares of Earnout Voting Shares) issued and outstanding. Holders of Class B Common Stock do not have economic rights but are entitled to one vote for each share of Class B Common Stock held. Upon liquidation of the Company, holders are not entitled to receive any assets remaining after payment of debts and other liabilities. Holders of Class A Common Stock and Class B Common Stock vote as a single class on all matters requiring a shareholder vote. Non-controlling Interests: QualTek Services Inc. is the sole managing member of QualTek HoldCo and consolidates the financial results of QualTek HoldCo. The non-controlling interests balance represents the economic interest in QualTek HoldCo held by the Flow-through Sellers. The following table summarizes the ownership of QualTek HoldCo as of April 1, 2023 and December 31, 2022: Common Units Ownership Common Units held by QualTek Services Inc. (1) 25,530,724 52 % Common Units held by Flow-through Sellers 23,304,200 48 % Balance at end of period 48,834,924 100 % (1) Earnouts related to QualTek Services Inc. are contingently issuable shares where the underlying units are not issued, and as such the earnout amount is not included in the calculation of NCI. Each Common Unit corresponds to a share of Class B Common Stock. Common Unit holders share in QualTek HoldCo’s profits or loss and distributions on a pro rata basis. The Flow-through Sellers have the right to exchange their Common Units in QualTek HoldCo for shares of Class A Common Stock of QualTek Services Inc. on a one-to-one basis after the expiration of the Lock-Up Period (as defined in the Third Amended and Restated Limited Liability Company Agreement of QualTek HoldCo). In connection with the exercise of the exchange of the Common Units, the Flow-through Sellers will be required to surrender a number of shares of Class B Common Stock, which the Company will cancel for no consideration on a one-for-one basis with the number of Common Units so exchanged. Public Warrants: In connection with the Business Combination, the Company assumed the Public Warrants, which are recorded as a component of equity. As of April 1, 2023 and December 31, 2022, there were 2,875 thousand Public Warrants outstanding. Refer to Note 7 - Warrants for additional information. Earnout Shares: As discussed in Note 1-Nature of Business and Summary of Significant Accounting Policies , the Company issued 2,275 thousand shares of Class A Common Stock (Blocker Owner Earnout Shares) and 3,836 thousand shares of Class B Common Stock (Earnout Voting Shares) that are subject to certain restriction on transfer and voting and potential forfeiture pending the achievement of the earn out targets. Blocker Owner Earnout Shares are entitled to receive, ratably with the other outstanding shares of Class A Common Stock, dividends, and other distributions prior to vesting. Earnout Voting Shares have only voting rights and therefore are not entitled to receive any distributions. Each Earnout Voting Share has a corresponding Common Unit of QualTek HoldCo which is subject to the same vesting conditions. At April 1, 2023 and December 31, 2022, the earn out targets have not been achieved and all Earnout Shares are unvested. In connection with the Plan, all existing equity interests will be cancelled, released and extinguished and such equity interests will have no further force or effect. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Apr. 01, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Long-term Incentive Plan The Company's Long-term Incentive Plan ("LTIP") allows for the award of equity incentives, including stock options, restricted shares, performance awards, stock appreciation rights, other share-based awards and other cash-based awards to certain employees, directors, officers, or consultants to the Company or its subsidiaries. As of April 1, 2023, there were 2,194 thousand shares of Class A Common Stock available for future grant under the LTIP. The number of shares of Class A Common Stock reserved for issuance under the 2022 LTIP will automatically increase on January 1 st each year, starting on January 1, 2023 and continuing through January 1, 2032, by the lesser of (a) the lesser of (i) two percent (2%) of the total number of shares of the Company’s Class A Common Stock and Class B Common Stock outstanding on December 31 st of the immediately preceding calendar year and (ii) such number of shares of Class A Common Stock that would result in the number of shares of Class A Common Stock reserved being equal to 15% of the aggregate number of shares of Class A Common Stock and Class B Common Stock outstanding as of the final day of the immediately preceding calendar year, and (b) a lesser number determined by the Company’s Board of Directors prior to the applicable January 1 st . Stock Options Stock options under the LTIP are granted at the discretion of the Board of Directors or its Committee and expire no more than ten years from the grant date. Outstanding stock options generally vest in equal installments over a four-year period subject to the grantee’s continued service on each applicable vesting. All options under the LTIP are exercisable, upon vesting, for shares of Class A Common Stock of the Company. Outstanding stock options expire 10 years from the grant date. During the three months ended April 1, 2023, there were no stock options granted or exercised. There were 356 thousand stock options vested and the total fair value of stock options vested was $477 thousand. As of April 1, 2023, 4,304 thousand outstanding stock options were unvested, which had a weighted average grant date fair value of $1.08. There were 5,279 thousand stock options outstanding as of April 1, 2023, with a weighted average exercise price of $5.38. There were no stock options outstanding or granted as of April 2, 2022. Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value ($000) Outstanding at January 1, 2023 5,632,011 $5.92 Granted — — Exercised — — Forfeited or expired (228,063) 6.80 Cancelled (125,250) 7.50 Outstanding at April 1, 2023 5,278,698 $5.38 5.67 — Exercisable at April 1, 2023 1,074,716 $7.27 5.51 — The following table summarizes stock-based compensation expense recognized in the consolidated statements of operations and comprehensive loss (in thousands): Three Months Ended April 1, 2023 April 2, 2022 Cost of revenue $ 33 $ — General and administrative expenses 362 — Total $ 395 $ — Absent the effect of forfeiture of stock compensation cost for any departures of employees, the following tables summarize the unrecognized compensation cost, the weighted average period the cost is expected to be amortized, and the estimated annual compensation cost for the future periods indicated below (excludes any future award) (in thousands): Unrecognized Compensation Cost Weighted April 1, April 1, Stock options $ 4,162 2.8 Total Unrecognized Compensation Cost Total 2023 2024 2025 2026 and beyond Stock options $ 4,162 $ 1,155 $ 1,414 $ 1,358 $ 235 In connection with the Plan, all existing options will be cancelled, released and extinguished and such options will have no further force or effect. |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 01, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Prior to the Business Combination, QualTek HoldCo was treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, QualTek HoldCo’s is not subject to U.S. federal and certain state and local income taxes. Any taxable income and losses were passed through to and included in the taxable income of its members. Following the Business Combination, the Company is subject to income taxes at the U.S. federal, state, and local levels for income tax purposes, including with respect to its allocable share of any taxable income of QualTek HoldCo. The effective tax rate was 0% for three months ended April 1, 2023 and April 2, 2022, respectively. The Company, based on the consideration of the relevant positive and negative evidence available, maintained a full valuation allowance against its deferred tax assets. The Company provides for income taxes and related accounts using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequence on differences between the carrying amounts of assets and liabilities and their respective tax basis, using tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when it is “more-likely-than-not” that some portion or all of the deferred tax assets will not be realized. The realization of the deferred tax assets is dependent on the amount of future taxable income. |
Tax Receivable Agreement
Tax Receivable Agreement | 3 Months Ended |
Apr. 01, 2023 | |
Tax Receivable Agreement [Abstract] | |
Tax Receivable Agreement | Tax Receivable Agreement As part of the Business Combination, the Company entered into the TRA. Under the terms of the TRA, the Company will be required to pay to the TRA Holders 85% of the applicable cash tax savings, if any, in the U.S. federal, state and local tax that the Company realizes or is deemed to realize in certain circumstances as a result of (i) existing tax basis in certain assets of QualTek HoldCo and certain of its direct and indirect subsidiaries allocable to the Company as a result of the acquisition of Common Units by the Company as part of the Business Combination, (ii) tax basis adjustments resulting from taxable exchanges of Common Units acquired by the Company, (iii) tax deductions in respect to portions of certain payments made under the TRA, and (iv) certain tax attributes of the Company that were acquired directly or indirectly pursuant to the Business Combination. The Company generally retains the benefit of the remaining 15% of the applicable tax savings. The TRA liabilities are carried at a value equal to the undiscounted expected future payments due under the TRA. As of the date of the Business Combination, the Company recorded $34,092 thousand as an estimate of future payments as an increase in TRA liabilities and a decrease to additional paid-in capital in the consolidated financial statements. As of December 31, 2022, based upon management’s long-term plan of the Company’s future taxable income, management concluded that it is more likely than not that the applicable cash tax savings subject to the TRA would not be realized; therefore, the Company reduced its TRA liability by $19,008 thousand, which was recognized as reduction to “General and administrative” expense in the consolidated statement of operations. As of April 1, 2023, there has been no change in management's long-term plan of the Company's future taxable income, and the balance of the TRA liability is $15,084 thousand. The Company estimates it will be able to utilize some, but not all, of the tax attributes based on current tax forecasts. If there was sufficient income to utilize all tax attributes, the TRA liabilities would be $43,364 thousand. If subsequent adjustments to the liability for future payments occur, those changes would be recognized through current period earnings. It is anticipated that pursuant to the Restructuring, the TRA will be cancelled and rejected, in which case the Company would have no liability thereunder. |
Segments and Related Informatio
Segments and Related Information | 3 Months Ended |
Apr. 01, 2023 | |
Segment Reporting [Abstract] | |
Segments and Related Information | Segments and Related Information The Chief Operating Decision Maker (“CODM”) of the Company manages its operation under two operating segments, which represent its two reportable segments: (1) Telecom and (2) Renewables and Recovery Logistics. The Telecom segment performs site acquisition, engineering, project management, installation, testing, last mile installation, and maintenance solutions of communication infrastructure for telecommunication and cable providers, businesses, public venues, government facilities, and residential subscribers. The Renewables and Recovery Logistics segment derives its revenue from providing new fiber optic construction services, maintenance and repair services as well as businesses with continuity and disaster relief services to renewable energy, commercial, telecommunication and utility companies. The segment also provides business-as-usual services such as generator storage and repair and cell maintenance services. The accounting policies of the reportable segments are the same as those described in Note 1-Nature of Business and Summary of Significant Accounting Policies . All intercompany transactions and balances are eliminated in consolidation. Intercompany revenue and costs between entities within a reportable segment are eliminated to arrive at segment totals. Corporate results include amounts related to corporate functions such as administrative costs, professional fees, acquisition-related transaction costs and other discrete items. We present adjusted EBITDA as the key metric used by our management to assess the operating and financial performance of our operations in order to make decisions on allocation of resources. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management. Summarized financial information for the Company’s reportable segments is presented and reconciled to the Company’s consolidated financial information in the following tables (in thousands). For The Three Months Ended Revenue: April 1, 2023 April 2, 2022 Telecom $ 149,712 $ 132,664 Renewables and Recovery Logistics 6,534 15,497 Total consolidated revenue $ 156,246 $ 148,161 Total Assets: April 1, April 2, Telecom $ 586,496 $ 588,755 Renewables and Recovery Logistics 66,049 81,288 Corporate (1) 19,376 2,541 Total consolidated assets $ 671,921 $ 672,584 (1) Corporate includes both corporate assets and intercompany eliminations For The Three Months Ended Capital Expenditures: April 1, 2023 April 2, 2022 Telecom $ 8,536 $ 5,533 Renewables and Recovery Logistics 644 366 Corporate — 166 Total consolidated capital expenditures $ 9,180 $ 6,065 For the Three Months Ended Amortization and Depreciation: April 1, 2023 April 2, 2022 Amortization and depreciation Telecom $ 12,140 $ 11,661 Renewables and Recovery Logistics 2,652 2,895 Corporate 207 210 Total consolidated amortization and depreciation $ 14,999 $ 14,766 For The Three Months Ended Interest Expense: April 1, 2023 April 2, 2022 Telecom $ 1,584 $ 517 Renewables and Recovery Logistics 222 204 Corporate 18,777 11,623 Total consolidated interest expense $ 20,583 $ 12,343 For The Three Months Ended April 1, 2023 April 2, 2022 EBITDA: Telecom $ 6,025 $ 3,578 Renewables and Recovery Logistics (220) 5,380 Corporate (17,075) (22,396) Consolidated EBITDA $ (11,270) $ (13,438) EBITDA Reconciliation: Loss on Operations $ (46,852) $ (40,547) Plus: Interest expense 20,583 12,343 Depreciation 4,470 3,785 Amortization 10,529 10,981 Total consolidated EBITDA $ (11,270) $ (13,438) |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 01, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation: From time to time, we are subject to certain legal proceedings and claims arising in the ordinary course of business. These matters are subject to many uncertainties, and it is possible that some of these matters ultimately could be decided, resolved or settled in a manner that could have an adverse effect on us. Although the resolution and amount of liability cannot be predicted with certainty, it is the opinion of management, based on information available at this time, that such legal proceedings and claims are not expected to have a material effect on the Company’s financial position, results of operations, and cash flows. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Apr. 01, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party TransactionsOn July 18, 2018, the Company entered into an Advisory Services Agreement with its majority member. The agreement requires quarterly advisory fees of $125 thousand paid at the beginning of each quarter. As of March 1, 2022, this business agreement was completed and no longer exists. For the three months ended April 2, 2022, the Company incurred $126 thousand in advisory fees. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Apr. 01, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Voluntary Filing under Chapter 11: As previously reported in the Company’s Current Reports on Form 8-K filed with the SEC on May 31, 2023 and July 7, 2023, on the Petition Date, the Company Parties, commenced voluntary cases under the Bankruptcy Code in the Bankruptcy Court. The Chapter 11 Cases are being jointly administered by the Bankruptcy Court under the lead case In re QualTek Services Inc., Case No. 23-90584 (CML). On May 24, 2023, the Company Parties filed a proposed joint plan of reorganization (as amended, supplemented or modified, the “Plan”) and associated disclosure statement (the “Disclosure Statement”) in the Bankruptcy Court. Later that day, the Bankruptcy Court entered an order that, among other things, approved the Disclosure Statement on a conditional basis. On June 29, 2023, the Company Parties filed the Debtors’ Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code (Technical Modifications) , which incorporated certain technical modifications to the Plan. On June 30, 2023, the Bankruptcy Court entered the Order Approving the Debtors’ Disclosure Statement for, and Confirming, the Debtors’ Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code (the “Confirmation Order”), which approved the Disclosure Statement on a final basis and confirmed the Plan. The Company Parties expect that the effective date of the Plan will occur once all conditions precedent to the Plan have been satisfied (the “Plan Effective Date”). Since the Petition Date, the Company Parties have been operating their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Company Parties received approval from the Bankruptcy Court for a variety of “first day” motions designed to facilitate the administration of the Chapter 11 Cases and minimize disruption to the Company Parties’ operations by, among other things, easing the strain on the Company Parties’ relationships with employees, vendors, and customers following the commencement of the Chapter 11 Cases. The Company Parties received Bankruptcy Court authority to honor trade claims in the ordinary course of business during the Chapter 11 Cases. Restructuring Support Agreement: As previously reported in the Company’s Form 8-K filed with the SEC on May 31, 2023, on the Petition Date, the Company Parties entered into a Restructuring Support Agreement (the “Restructuring Support Agreement”), which became effective on May 25, 2023, with certain of their creditors (the “Consenting Creditors”) and certain of the Company’s stockholders (the “Consenting Stockholders” and, together with the Consenting Creditors, the “Consenting Stakeholders”). The Restructuring Support Agreement contemplates agreed-upon terms for a financial restructuring and recapitalization of the Company Parties’ capital structure (the “Restructuring”) to be implemented through the commencement of the Chapter 11 Cases. Pursuant to the Restructuring Support Agreement, the Consenting Stakeholders agreed, subject to certain terms and conditions, to support the Plan to implement the Restructuring, which Plan was filed in the Chapter 11 Cases and which was approved pursuant to the Confirmation Order. The material terms of the Restructuring are set forth in the term sheets attached to the Restructuring Support Agreement (collectively, the “Term Sheets” and the transactions described therein, the “Restructuring Transactions”), which terms include that, among other things: (i) trade claims will be paid in the ordinary course of business during and after the Chapter 11 Cases; (ii) on the effective date of the Plan Effective Date, the Company (as reorganized, the “Reorganized Company”) will issue a single class of common equity interests to certain classes of creditors pursuant to the Plan; (iii) on the Plan Effective Date, the Company Parties will enter into a new asset-based credit facility on terms consistent with those set forth in the Term Sheets attached to the Restructuring Support Agreement; (iv) on the Plan Effective Date, the Reorganized Company will enter into exit financing facilities, including $25,000 thousand in principal amount of first lien term loans to be funded by new money investments from the Company’s post-petition term loan lenders and such other terms as set forth in the Term Sheets attached to the Restructuring Support Agreement; and (v) on the Plan Effective Date, there will be no recovery for holders of the Company’s existing equity interests. Debtor-in-Possession Financing: Prior to the Petition Date, the Company Parties and certain of the lenders from time to time under the Term Loan Credit Agreement (as defined below) (the “Term Loan DIP Lenders”) agreed to enter into a senior secured super-priority debtor‑in‑possession term loan credit facility consisting of $40,000 thousand of new money term loan commitments, as well as $66,900 thousand of roll-up term loans, subject to the terms and conditions set forth therein (the “Term Loan DIP Credit Agreement,” and the facility thereunder, the “Term Loan DIP Facility”). Additionally, prior to the Petition Date, the Company Parties and certain of the lenders from time to time under the ABL Credit Agreement (as defined below) (the “ABL DIP Lenders”) agreed to enter into a senior secured super-priority debtor‑in‑possession asset‑based revolving credit facility in an aggregate principal amount of up to the lesser of $101,200 thousand and the borrowing base (minus the amount of prepetition ABL obligations) subject to the terms and conditions set forth therein (the “ABL DIP Credit Agreement,” and together with the Term Loan DIP Credit Agreement, the “DIP Credit Agreements;” and the facility under the ABL DIP Credit Agreement, the “ABL DIP Facility,” and together with the Term Loan DIP Facility, the “DIP Facilities”). On May 24, 2023, the Bankruptcy Court entered an order approving entry into the DIP Facilities on an interim basis. The Term Loan DIP Facility consists of the following tranches: (i) (x) $25,000 thousand in new money DIP term loans made in a single draw on May 25, 2023 upon entry of the order approving the DIP Facilities on an interim basis and (y) $25,000 thousand in roll-up term loans deemed made on May 25, 2023, which loans constitute a dollar-for-dollar roll-up of prepetition Amendment No. 3 Term Loans (as defined in the Term Loan Credit Agreement) held by the Term Loan DIP Lenders funding the $25,000 thousand of new money DIP term loans, and (ii) (x) $15,000 thousand in new money delayed draw term loan commitments to be made in a single draw following entry of the final DIP order which was entered on June 13, 2023 and (y) additional roll-up term loans to be deemed made on such date, which loans constitute a roll-up of the remaining outstanding amount of prepetition Amendment No. 3 Term Loans (as defined in the Term Loan Credit Agreement) held by the Term Loan DIP Lenders. Furthermore, the lenders under the Term Loan DIP Facility have committed to provide $25,000 thousand in new money exit financing. The ABL DIP Facility is a senior secured super- priority revolving facility in an aggregate principal amount of up to the lesser of $101,200 thousand and the borrowing base (minus the amount of prepetition ABL obligations). The ABL DIP Facility contains a “creeping” roll-up through the entry of the Final Order (as defined in the Plan), at which time all remaining outstanding prepetition asset-backed loan facility obligations shall convert to ABL DIP Facility obligations. The DIP Credit Agreements contain various representations and warranties, affirmative and negative covenants and events of default customary for debtor-in-possession financings of this type, including covenants mandating compliance by the Company with a 13-week budget, variance testing and other reporting requirements. The proceeds of all or a portion of the DIP Credit Agreements may be used for, among other things, post-petition working capital for the Company and its subsidiaries, payment of costs to administer the Chapter 11 Cases, payment of expenses and fees of the transactions contemplated by the Chapter 11 Cases, payment of court-approved adequate protection obligations under the DIP Credit Agreements, and payment of other costs, in each case, subject to an approved budget and such other purposes permitted under the DIP Credit Agreements and the Interim DIP Order (as defined in the Plan) or any other order of the Bankruptcy Court. Automatic Stay: Pursuant to Section 362 of the Bankruptcy Code, the filing of the Chapter 11 Cases automatically stayed most actions against or on behalf of the Company Parties. Subject to certain exceptions under the Bankruptcy Code, the filing of the Company Parties’ Chapter 11 Cases automatically stayed the continuation of most legal proceedings or the filing of other actions against or on behalf of the Company Parties or their property to recover on, collect or secure a claim arising prior to the Petition Date or to exercise control over property of the Company Parties’ bankruptcy estates, unless and until the Bankruptcy Court modifies or lifts the automatic stay as to any such claim. Notwithstanding the general application of the automatic stay described above, governmental authorities may determine to continue actions brought under their police and regulatory powers. Nasdaq Delisting: On May 24, 2023, the Company received written notice (the “Delisting Notice”) from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, as a result of the Chapter 11 Cases and in accordance with Nasdaq Listing Rules 5101, 5110(b) and IM-5101-1, the staff of Nasdaq had determined that the Company’s Class A Common Stock and warrants would be delisted from Nasdaq, effective June 2, 2023. In the Delisting Notice, the staff of Nasdaq referenced the Chapter 11 Cases and associated public concerns raised by them, concerns regarding the residual equity interest of the existing listed securities holders and concerns about the Company’s ability to sustain compliance with all requirements for continued listing on Nasdaq. In accordance with the Delisting Notice, trading of the Company’s Class A Common Stock and warrants on Nasdaq was suspended at the opening of business on June 2, 2023, and at such time, the Company’s Class A common stock and warrants commenced trading on the Pink Open Market under the symbols “QTEKQ” and "QTEWQ," respectively. On July 10, 2023, Nasdaq filed a Form 25 with the SEC to delist our Class A Common Stock and warrants and to remove them from registration under Section 12(b) of the Exchange Act. The delisting will become effective 10 days after the filing of the Form 25. In accordance with Rule 12d2-2 of the Exchange Act, the deregistration of our Class A Common Stock and warrants under Section 12(b) of the Exchange Act will become effective 90 days, or such shorter period as the SEC may determine, from the date of the Form 25 filing. |
Nature of Business and Summar_2
Nature of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 01, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP, under the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and on a basis consistent with the audited consolidated financial statements and related notes thereto of QualTek HoldCo and its consolidated subsidiaries as of and for the year ended December 31, 2022. The consolidated balance sheet of QualTek HoldCo as of December 31, 2022, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. These unaudited consolidated financial statements should be read in conjunction with such audited consolidated financial statements and related notes thereto of QualTek HoldCo, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on April 28, 2023 (the “Form 10-K”) and 10-K/A filed with SEC on May 2, 2023 (“Form 10-K/A”). These unaudited consolidated financial statements include all adjustments (consisting only of normal recurring adjustments unless otherwise noted) that management considers necessary for a fair statement of the Company’s results of operations, financial condition, cash flows and stockholders’ equity for the interim periods presented. Due to the seasonal nature of the Company's business, interim results are not necessarily indicative of the results to be expected for the full year. |
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, liabilities, revenues, and expenses. These estimates are based on historical experience and various other assumptions that management believes to be reasonable under the current facts and circumstances. Actual results could differ from those estimates and assumptions. |
Emerging Growth Company | Emerging Growth Company: The Company is an “Emerging Growth Company” (“EGC”), 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 is exempted from certain reporting requirements that are applicable to other public companies that are not EGCs including, but not limited to, not being required to comply with the independent registered public accounting firm 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)(l) 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, it will have different application dates for public or private companies, the Company, as an EGC, 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 consolidated financial statements with another public company which is neither an EGC nor an EGC which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. |
Risks and uncertainties | Risks and uncertainties: The Company’s business operations may be adversely impacted by its current liquidity constraints. As a result of these liquidity constraints, the Company has filed for petition under Chapter 11 of the U.S. Bankruptcy Code. F or the duration of the Chapter 11 Cases, the Company’s operations and ability to develop and execute its business plan, its financial condition, liquidity and its continuation as a going concern are subject to a high degree of risk and uncertainty. The Company’s business operations may also be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. |
Principles of Consolidation | Principles of Consolidation: The consolidated financial statements comprise the accounts of the Company and its consolidated subsidiaries, including QualTek HoldCo. For the periods prior to the Business Combination, the consolidated financial statements of the Company comprise the accounts of QualTek HoldCo and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Non-controlling Interests | Non-controlling Interests: The Company presents non-controlling interests as a component of equity on its unaudited consolidated balance sheets and reports the portion of its loss for non-controlling interests as net loss attributable to non-controlling interests in the unaudited consolidated statements of operations and comprehensive loss. The non-controlling interests represent the economic interest in QualTek Holdco held by the Flow-through Sellers |
Revenue Recognition | Revenue Recognition: Revenue is recognized when, or as, control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for the goods and services transferred. A contractual agreement exists when each party involved approves and commits to, the rights of the parties and payment terms are identified, the agreement has commercial substance, and collectability of consideration is probable. The Company’s services are performed for the sole benefit of its customers, whereby the assets being created or maintained are controlled by the customer and the services the Company performs do not have alternative benefits for the Company. The Company earns revenue primarily from construction related projects under certain master service agreements ("MSAs") and other service agreements contracts. Portions of the contracts include one or multiple performance obligations, which is a contractual promise to deliver a distinct good or transfer of a specific service to a customer. We use different methods of revenue recognition for different types of contracts. For the Company’s projects recognized under the input method, the Company typically identifies two promised goods and services in the contract: (a) delivery of materials, for which revenue is recognized at a point in time, and (b) installation and construction services, for which revenue is recognized over time as related cost are incurred. The Company determined that the materials and the construction services are both considered distinct performance obligations. The Company’s customers are able to benefit from the materials and construction services both on their own and in connection with readily available resources, indicating that both promises are capable of being distinct. The Company further determined that its promises to transfer the materials and to provide the construction services are each separately identifiable from the other promises in the contract. Further, these promises do not represent inputs to a combined output which may represent a single performance obligation as no significant integration services are provided, there is not a high degree of customization, and the promises are not highly interrelated. As a result, the Company concludes that its input method contracts typically include two performance obligations: the sale of materials and construction services. Revenue for engineering, construction, project management and site acquisition services are primarily recognized by the Company over time utilizing the cost-to-cost measure of progress, which is an input method, on contracts for specific projects, and for certain MSAs and other service agreements. The majority of our performance obligations are completed within one year. The cost-to-cost measure of progress best depicts the continuous transfer of control of goods or services to the customer, and correspondingly, when performance obligations are satisfied, for these contracts. Revenue for engineering, aerial and underground construction for projects with customer-specified service requirements are primarily performed under MSAs and other contracts that contain customer-specified service requirements. These agreements include pricing for individual tasks, including, for example, the placement of underground or aerial fiber, directional boring, and fiber splicing, each based on a specific unit of measure. Revenue is recognized over time as services are performed and customers simultaneously receive and consume the benefits provided by the Company. Output measures such as units delivered are utilized to assess progress against specific contractual performance obligations. The Company allocates total contract consideration to each performance obligation using the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation. The Company’s customers simultaneously receive and consume the benefit provided by the Company, and revenue is recognized over time as services are performed for all performance obligations identified in the contract. Output measures such as units delivered are utilized to assess progress against specific contractual performance obligations. Revenue from fulfillment, maintenance, and recovery services provided to the telecommunication, cable and utility industries is recognized as the services are rendered. These services are generally performed under master or other service agreements and billed on a contractually agreed price per unit on a work order basis. Each service is a separate performance obligation that is recognized upon completion at a point in time as the service is delivered. Transaction prices for the Company’s contracts may include variable consideration such as contracted materials. Management estimates variable consideration for a performance obligation utilizing estimation methods that it believes best predict the amount of consideration to which the Company will be entitled. Variable consideration is included in the estimated transaction price if it is probable that when the uncertainty associated with the variable consideration is resolved, there will not be a significant reversal of the cumulative amount of revenue that has been recognized. Management’s estimates of variable consideration and the determination of whether to include estimated amounts in the transaction price are based largely on engineering studies, past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer and all other relevant information that is reasonably available at the time of the estimate. The effect of variable consideration on the transaction price of a performance obligation is typically recognized as an adjustment to revenue on a cumulative catch-up basis, as such variable consideration is generally for services encompassed under the existing contract. To the extent variable consideration reflected in transaction prices are not resolved in accordance with management’s estimates, there could be reductions in, or reversals of, previously recognized revenue. Sales, use and other taxes collected concurrent with revenue-producing activities are excluded from revenue. Most of the Company’s contracts include assurance warranties which do not include any additional distinct services other than the assurance that the services and materials comply with agreed-upon specifications. Therefore, there is not a separate performance obligation for these warranties. For contracts containing more than one performance obligation, the Company allocates the transaction price on a relative standalone selling price (“SSP”) basis. The Company determines SSP based on the price at which the performance obligation is sold separately. If the SSP is not observable through past transactions, the Company estimates the SSP taking into account available information, such as market conditions and internally approved pricing guidelines related to the performance obligation. Revenue generated from fulfillment, maintenance, compliance and recovery services as well as certain performance obligations related to material sales is recognized at a point in time. Point in time revenue accounted for approximately 30% and 41% of consolidated revenue for three months ended April 1, 2023 and April 2, 2022, respectively. Substantially |
Stock-Based Compensation | Stock-Based Compensation: The Company provides the QualTek Services Inc. 2022 Long-Term Incentive Plan (the “LTIP”), which was adopted by the Board of Directors and was approved by the Company’s stockholders on February 14, 2022. The Company measures all stock-based awards granted to employees based on the fair value on the date of grant in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”). Compensation expense of those awards is recognized over the requisite service period, which is generally the vesting period of the respective award. Generally, the Company issues awards with service-only vesting conditions and records the expense using the straight-line method. The Company accounts for forfeitures as they occur. The Company uses the Black-Scholes option-pricing model to determine the fair value of its option awards at the time of grant. The Company classifies stock-based compensation expense in its unaudited consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified. |
Income Taxes | Income Taxes: The Company is subject to income taxes at the U.S. federal, state, and local levels for income tax purposes, including with respect to its allocable share of any taxable income and other separately stated items of QualTek HoldCo. Income taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequence on differences between the carrying amounts of assets and liabilities and their respective tax basis, using tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is “more-likely-than-not” that some portion or all of the deferred tax assets will not be realized. The realization of the deferred tax assets is dependent on the amount of future taxable income. |
Tax Receivable Agreement Liabilities | ax Receivable Agreement Liabilities: The TRA liabilities represent amounts payable to the Flow-through Sellers. The TRA liabilities are carried at a value equal to the undiscounted expected future payments due under the TRA. The Company recorded its initial estimate of future payments as an increase in TRA liabilities and a decrease to additional paid-in capital in the consolidated financial statements. Subsequent adjustments to the liabilities for future payments under the TRA related to changes in estimated future tax rates or state income tax apportionment are recognized through current period net loss in the consolidated statements of operations and comprehensive loss. |
Basic and Diluted Loss Per Share | Basic and Diluted Loss Per Share: The Company applies the two-class method for calculating and presenting loss per share, and separately presents loss per share for Class A Common Stock. Shares of Class B Common Stock do not participate in the earnings and losses of the Company. As a result, the shares of Class B Common Stock are not considered participating securities and are not included in the weighted-average shares outstanding for purposes of loss per share. The Company has issued and outstanding Earnout Shares, including the Blocker Owner Earnout Shares and Earnout Voting Shares, which are subject to forfeiture if the achievement of certain stock price thresholds are not met within five years of the Business Combination. The basic and diluted net loss per share is presented in conformity with the two-class method required for participating securities, as the Blocker Owner Earnout Shares are considered participating securities. Unvested |
Warrant Accounting | Warrant Accounting: The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. The Company recorded the Public Warrants assumed as part of the Business Combination as equity (see Note 9-Equity ). For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations and comprehensive loss. The Company recorded the Private Placement Warrants assumed as part of the Business Combination as a liability. The fair value of the Private Placement Warrants (see Note 7-Warrants |
Earnout Shares | Earnout Shares: During the five-year period following the closing of the Business Combination, (i) if the closing sale price per share of Class A Common Stock equals or exceeds $15.00 per share for 20 trading days during any 30 consecutive trading day period, 50% of the Earnout Shares will be earned, and (ii) if the closing sale price per share of Class A Common Stock equals or exceeds $18.00 per share for 20 trading days during any 30 consecutive trading day period, the remaining 50% of the Earnout Shares will be earned. Once the Earnout Shares are earned, they are no longer subject to the restrictions on transfer and voting. The Earnout Shares are considered legally issued and outstanding shares of common stock subject to restrictions on transfer and voting and potential forfeiture pending the achievement of the earn out targets described above. The Company evaluated the Earnout Shares and concluded that they meet the criteria for equity classification. The Earnout Shares were classified in stockholders’ equity, recognized at fair value upon the closing of the Business Combination and will not be subsequently remeasured. |
Transaction Costs | Transaction Costs: The Company incurred $24,999 thousand in direct and incremental costs associated with the Business Combination and PIPE Financing related to the equity issuance, consisting primarily of investment banking, legal, accounting and other professional fees, which were capitalized and charged against the proceeds of the Business Combination and PIPE Financing as a reduction of additional paid-in capital in the accompanying unaudited consolidated balance sheets in accordance with Staff Accounting Bulletin (“SAB”) Topic 5.A, Expenses of Offering. The Company incurred $9,268 thousand of expenses for the three months ended April 2, 2022. These expenses were not direct and incremental costs and accordingly, were recorded in "Transaction expenses" on consolidated statements of operations and comprehensive loss. For the three months ended April 1, 2023, there were no transaction expenses recorded. |
Recent accounting pronouncements | Recent accounting pronouncements: In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326) : Measurement of Credit Losses on Financial Instruments (“ASU No. 2016-13”), which requires the measurement and recognition of expected credit losses for certain financial assets, including trade accounts receivable. ASU No. 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of relevant information, including an entity’s historical experience, current conditions and other reasonable and supportable forecasts that affect collectability over the life of a financial asset. The amendments in ASU No. 2016-13 are effective for fiscal years beginning after December 15, 2022, with early adoption permitted. We adopted this standard effective January 1, 2023 and the impact of adoption was not material to our financial statements. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers to improve the accounting for acquired revenue contracts with customers in business combination by addressing diversity in practice and inconsistency related to (i) the recognition of an acquired contract liability and (ii) payment terms and their effect on subsequent revenue recognized by the acquirer. This amendment requires that, at acquisition date, an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) as if it had originated the contracts, while also taking into account how the acquiree applied ASC 606. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023, with early adoption permitted. We are currently evaluating the effect that the updated standard will have on our financial statements. |
Nature of Business and Summar_3
Nature of Business and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Revenue from Significant Customers | Revenue concentration information for significant customers as a percentage of total consolidated revenue was as follows (in thousands): For the Three Months Ended April 1, 2023 April 2, 2022 Amount % of Total Amount % of Total Customers: AT&T $ 67,829 43.4 % $ 55,983 37.8 % Verizon 20,163 12.9 % 22,851 15.4 % T-Mobile 18,993 12.2 % 19,183 13.0 % Total $ 106,985 68.5 % $ 98,017 66.2 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted earnings per unit | The following tables present the calculation of basic and diluted net loss per share for the current year period from the three months ended April 1, 2023 and the prior year period from February 14, 2022 to April 2, 2022 (in thousands except share and per share data): Basic: For the Three months ended Numerator: Net loss $ (46,852) Less: Loss attributable to non-controlling interests (22,358) Net loss attributable to QualTek Services Inc. (24,494) Less: Loss attributable to participating securities (2,004) Net loss attributable to Class A common shareholders, basic $ (22,490) Denominator: Weighted average Class A common shareholders outstanding 27,805,659 Less: Weighted average unvested Blocker Owner Earnout Shares outstanding (2,274,934) Weighted average Class A common shareholders outstanding, basic 25,530,725 Net loss per share - basic $ (0.88) Diluted: For the Three months ended Numerator: Net loss $ (46,852) Less: Loss attributable to non-controlling interests (3,680) Net loss attributable to QualTek Services, Inc. (43,172) Less: Loss attributable to participating securities (2,078) Net loss attributable to Class A common shareholders, diluted $ (41,094) Denominator: Weighted average Class A common shares outstanding 27,805,659 Less: weighted average unvested Blocker Owner Earnout Shares outstanding (2,274,934) Add: Weighted-average Class B common shares if converted to Class A common shares outstanding (excluding Earnout Voting shares) 19,468,023 Weighted average Class A common shares outstanding, diluted 44,998,748 Net loss per share - diluted $ (0.91) February 14, 2022 through April 1, 2022 Numerator: Net loss $ (11,016) Less: Loss attributable to non-controlling interests (6,016) Net loss attributable to QualTek Services, Inc. (5,000) Less: Loss attributable to participating securities (465) Net loss attributable to Class A common shareholders, basic and diluted $ (4,535) Denominator: Weighted average Class A common shares outstanding 24,446,284 Less: weighted average unvested Blocker Owner Earnout Shares outstanding (2,274,934) Weighted average Class A common shares outstanding, basic and diluted 22,171,350 Net loss per share - basic and diluted $ (0.20) |
Schedule of anti dilutive effect | The consolidated statements of operations and comprehensive loss reflect a net loss in the period presented and therefore the effect of the following securities are not included in the calculation of diluted loss per share as including them would have had an anti-dilutive effect: For the Three months ended February 14, 2022 through Excluded from the calculation (1) Stock options 5,632,011 — Class B common stock — 22,827,398 Private Placement Warrants 101,992 101,992 Public Warrants 2,874,979 2,874,979 Convertible Notes 12,468,500 12,468,500 Total potentially dilutive shares excluded from calculation 21,077,482 38,272,869 ____________________________________ (1) This table excludes Earnout Voting Shares as the earn out contingency has not been met at period end. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following (in thousands): April 1, December 31, 2022 Office furniture $ 2,287 $ 2,229 Computers 2,284 2,296 Machinery, equipment and vehicles 27,914 27,178 Land 140 140 Building 340 340 Leasehold improvements 5,224 5,178 Software 2,449 2,416 Assets under financing lease 65,712 57,905 Construction in process 1,340 1,807 107,690 99,489 Less: accumulated depreciation (43,732) (39,671) Property and equipment, net $ 63,958 $ 59,818 |
Accounts Receivable, Contract_2
Accounts Receivable, Contract Assets and Liabilities, and Customer Credit Concentration (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Receivables [Abstract] | |
Schedule of customer credit concentration | Customers whose accounts receivable exceeded 10% of the total gross accounts receivable were as follows (in thousands): April 1, 2023 December 31, 2022 Amounts % of Total Amounts % of Total AT&T $ 70,239 30.9 % $ 76,816 30.7 % Verizon 30,917 13.6 % 56,551 22.6 % T-Mobile 28,873 12.7 % 36,663 14.6 % Total $ 130,029 57.2 % $ 170,030 67.9 % |
Schedule of allowance for doubtful accounts | The following table summarizes the changes in the Company's allowance for doubtful accounts (in thousands): For the Three Months Ended April 1, 2023 December 31, 2022 Balance at beginning of year $ 5,408 $ 5,614 Charged to expense (196) 8,533 Deductions for uncollectible receivables written off (141) (8,739) Balance at end of period $ 5,071 $ 5,408 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | Changes in the carrying amount of goodwill by reportable segment is as follows (in thousands): Renewables Telecom Total Goodwill as of December 31, 2022 $ 13,598 $ 895 $ 14,493 Measurement period adjustments, net — — — Goodwill as of April 1, 2023 $ 13,598 $ 895 $ 14,493 |
Schedule of intangible assets | Intangible assets consisted of the following (in thousands): April 1, 2023 Weighted Gross Accumulated Net carrying Customer relationships 8.6 $ 424,260 $ (142,341) $ 281,919 Trademarks and trade names 9.3 59,969 (30,731) 29,238 $ 484,229 $ (173,072) $ 311,157 December 31, 2022 Weighted Gross Accumulated Net carrying Customer relationships 8.8 $ 424,260 $ (133,535) $ 290,725 Trademarks and trade names 9.3 59,969 (29,008) 30,961 $ 484,229 $ (162,543) $ 321,686 |
Debt and Finance Lease Obliga_2
Debt and Finance Lease Obligations (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Debt and Lease Obligation [Abstract] | |
Schedule of carrying values and estimated fair values of debt instruments and capital lease obligations | Debt outstanding was as follows (in thousands): April 1, December 31, Current Maturities: Line of credit $ 85,498 $ 91,665 Term loan 376,930 334,378 2027 Convertible Notes 117,805 117,361 Current portion of finance lease obligations 12,634 13,022 Current portion of long-term debt and finance lease obligations, net of deferred financing costs (1) $ 592,867 $ 556,426 Long-term borrowings: Finance lease obligations $ 39,971 $ 35,897 Less: current portion of finance lease obligations (12,634) (13,022) Finance lease obligations, net of current portion 27,337 22,875 Total long-term borrowings $ 27,337 $ 22,875 (1) The current maturities of long-term debt for the years ended April 1, 2023 and December 31, 2022 is net of deferred financing costs and convertible debt discount of $24,405 thousand and $15,007 thousand, respectively. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of the Company's financial liabilities that are measured at fair value on recurring basis | In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial liabilities that are measured at fair value on a recurring basis at April 1, 2023 and December 31, 2022 and the related activity for the three months ended April 1, 2023 and April 2, 2022 (in thousands). Fair Value at April 1, 2023 Carrying Value Level 1 Level 2 Level 3 Financial liabilities Contingent consideration (1) $ 5,200 $ — $ — $ 5,200 Warrant liability (1) 77 — — 77 $ 5,277 $ — $ — $ 5,277 Fair Value at December 31, 2022 Carrying Value Level 1 Level 2 Level 3 Financial liabilities: Contingent consideration (1) $ 5,200 $ — $ — $ 5,200 Warrant liability (1) 77 — — 77 $ 5,277 $ — $ — $ 5,277 (1) Included in "Other non-current liabilities" on the consolidated balance sheets. |
Summary of changes in fair value of Level 3 financial liabilities | The following table sets forth a summary of the changes in fair value of the Company’s financial liabilities (in thousands): Warrant Contingent January 1, 2023 $ 77 $ 5,200 Change in fair value — — April 1, 2023 $ 77 $ 5,200 Warrant Contingent January 1, 2022 $ — $ 30,756 Assumption of private placement warrants in Business Combination 77 — Accretion — 410 April 2, 2022 $ 77 $ 31,166 |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Equity [Abstract] | |
Summary Of Ownership Interest In Noncontrolling Interest | The following table summarizes the ownership of QualTek HoldCo as of April 1, 2023 and December 31, 2022: Common Units Ownership Common Units held by QualTek Services Inc. (1) 25,530,724 52 % Common Units held by Flow-through Sellers 23,304,200 48 % Balance at end of period 48,834,924 100 % (1) Earnouts related to QualTek Services Inc. are contingently issuable shares where the underlying units are not issued, and as such the earnout amount is not included in the calculation of NCI. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Stock Option Activity | Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value ($000) Outstanding at January 1, 2023 5,632,011 $5.92 Granted — — Exercised — — Forfeited or expired (228,063) 6.80 Cancelled (125,250) 7.50 Outstanding at April 1, 2023 5,278,698 $5.38 5.67 — Exercisable at April 1, 2023 1,074,716 $7.27 5.51 — |
Summary of stock-based compensation expense recognized in the consolidated statements of operations | The following table summarizes stock-based compensation expense recognized in the consolidated statements of operations and comprehensive loss (in thousands): Three Months Ended April 1, 2023 April 2, 2022 Cost of revenue $ 33 $ — General and administrative expenses 362 — Total $ 395 $ — |
Summary of unrecognized compensation cost, the weighted average period the cost is expected to be amortized, and estimated annual compensation cost for the future periods | Absent the effect of forfeiture of stock compensation cost for any departures of employees, the following tables summarize the unrecognized compensation cost, the weighted average period the cost is expected to be amortized, and the estimated annual compensation cost for the future periods indicated below (excludes any future award) (in thousands): Unrecognized Compensation Cost Weighted April 1, April 1, Stock options $ 4,162 2.8 Total Unrecognized Compensation Cost Total 2023 2024 2025 2026 and beyond Stock options $ 4,162 $ 1,155 $ 1,414 $ 1,358 $ 235 |
Segments and Related Informat_2
Segments and Related Information (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Segment Reporting [Abstract] | |
Summarized financial information for the company's reportable segments | Summarized financial information for the Company’s reportable segments is presented and reconciled to the Company’s consolidated financial information in the following tables (in thousands). For The Three Months Ended Revenue: April 1, 2023 April 2, 2022 Telecom $ 149,712 $ 132,664 Renewables and Recovery Logistics 6,534 15,497 Total consolidated revenue $ 156,246 $ 148,161 Total Assets: April 1, April 2, Telecom $ 586,496 $ 588,755 Renewables and Recovery Logistics 66,049 81,288 Corporate (1) 19,376 2,541 Total consolidated assets $ 671,921 $ 672,584 (1) Corporate includes both corporate assets and intercompany eliminations For The Three Months Ended Capital Expenditures: April 1, 2023 April 2, 2022 Telecom $ 8,536 $ 5,533 Renewables and Recovery Logistics 644 366 Corporate — 166 Total consolidated capital expenditures $ 9,180 $ 6,065 For the Three Months Ended Amortization and Depreciation: April 1, 2023 April 2, 2022 Amortization and depreciation Telecom $ 12,140 $ 11,661 Renewables and Recovery Logistics 2,652 2,895 Corporate 207 210 Total consolidated amortization and depreciation $ 14,999 $ 14,766 For The Three Months Ended Interest Expense: April 1, 2023 April 2, 2022 Telecom $ 1,584 $ 517 Renewables and Recovery Logistics 222 204 Corporate 18,777 11,623 Total consolidated interest expense $ 20,583 $ 12,343 For The Three Months Ended April 1, 2023 April 2, 2022 EBITDA: Telecom $ 6,025 $ 3,578 Renewables and Recovery Logistics (220) 5,380 Corporate (17,075) (22,396) Consolidated EBITDA $ (11,270) $ (13,438) EBITDA Reconciliation: Loss on Operations $ (46,852) $ (40,547) Plus: Interest expense 20,583 12,343 Depreciation 4,470 3,785 Amortization 10,529 10,981 Total consolidated EBITDA $ (11,270) $ (13,438) |
Nature of Business and Summar_4
Nature of Business and Summary of Significant Accounting Policies - Narrative (Details) $ / shares in Units, shares in Thousands | 3 Months Ended | |||||
Feb. 14, 2022 USD ($) $ / shares shares | Apr. 01, 2023 USD ($) tradingDay segment $ / shares | Apr. 02, 2022 USD ($) | Jun. 13, 2023 USD ($) | May 25, 2023 USD ($) | Dec. 31, 2022 $ / shares | |
Accounting Policies [Line Items] | ||||||
Number of reportable segments (in segments) | segment | 2 | |||||
Proceeds from issuance of common stock | $ 0 | $ 36,948,000 | ||||
Repayments of debt | $ 34,718,000 | |||||
Repayments of long-term lines of credit | $ 6,181,000 | 48,069,000 | ||||
Repayment of promissory note | $ 500,000 | |||||
Tax receivable agreement, percentage of savings payable | 85% | |||||
Earnout period | 5 years | |||||
Earnout per shares (in dollars per share) | $ / shares | $ 15 | |||||
Earnout shares, trading days (in trading days) | tradingDay | 20 | |||||
Earnout shares, consecutive trading days | 30 days | |||||
Percentage of earnout shares earned | 50% | |||||
Business combination and PIPE financing, transaction costs | $ 24,999,000 | |||||
Transaction expenses | $ 0 | $ 9,268,000 | ||||
Plan | Debtor-in-Possession Financing Term Loan Credit Facility | Subsequent event | ||||||
Accounting Policies [Line Items] | ||||||
Amount outstanding on term loan | $ 40,000,000 | $ 40,000,000 | ||||
Revenue Benchmark | Product Concentration Risk | Transferred at Point in Time | ||||||
Accounting Policies [Line Items] | ||||||
Credit concentration percentage | 30% | 41% | ||||
Holdco line of credit | ||||||
Accounting Policies [Line Items] | ||||||
Repayments of long-term lines of credit | $ 73,000,000 | |||||
Public Warrants | ||||||
Accounting Policies [Line Items] | ||||||
Warrants Issued (in shares) | shares | 2,875 | |||||
Private warrants | ||||||
Accounting Policies [Line Items] | ||||||
Warrants Issued (in shares) | shares | 102 | |||||
PIPE financing | ||||||
Accounting Policies [Line Items] | ||||||
Proceeds from issuance of common stock | $ 35,915,000 | |||||
QualTek HoldCo, LLC | ||||||
Accounting Policies [Line Items] | ||||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 52% | |||||
QualTek HoldCo, LLC | Flow-through sellers | ||||||
Accounting Policies [Line Items] | ||||||
Noncontrolling interest, ownership percentage by parent | 48% | |||||
Class A common stock | ||||||
Accounting Policies [Line Items] | ||||||
Common stock par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||
Debt conversion, shares issued (in shares) | shares | 2,875 | |||||
Earnout per shares (in dollars per share) | $ / shares | 18 | |||||
Class A common stock | PIPE financing | ||||||
Accounting Policies [Line Items] | ||||||
Number of units issued (in shares) | shares | 3,989 | |||||
Class A common stock | Blocker owner earnout shares | ||||||
Accounting Policies [Line Items] | ||||||
Number of units issued (in shares) | shares | 2,275 | |||||
Class B common stock | ||||||
Accounting Policies [Line Items] | ||||||
Common stock par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||
Debt conversion, shares issued (in shares) | shares | 4,063 | |||||
Class B common stock | Earnout voting shares | ||||||
Accounting Policies [Line Items] | ||||||
Number of units issued (in shares) | shares | 3,836 | |||||
Roth CH Acquisition III Co. | ||||||
Accounting Policies [Line Items] | ||||||
Amount received at closing | $ 1,033,000 | |||||
Amount received from Trust account | $ 1,004,000 | |||||
Number of shares not redeemed by public share holders (in shares) | shares | 100 | |||||
Cash received | $ 29,000 | |||||
Business combination | ||||||
Accounting Policies [Line Items] | ||||||
Business combination consideration transferred | 306,888,000 | |||||
Amount considered for calculation of equity value | 294,319,000 | |||||
Rollover equity | 10,000,000 | |||||
Acquisition debt | $ 30,558,000 | |||||
Business combination | Roth ChIii Blocker Merger Sub LLC and BCP Qualtek Investors LLC | ||||||
Accounting Policies [Line Items] | ||||||
Number of shares (in shares) | shares | 16,160 | |||||
Issued and outstanding (in shares) | shares | 21,571 | |||||
Rollover equity | $ 161,604,000 | |||||
Business combination | Roth ChIii Blocker Merger Sub LLC and BCP Qualtek Investors LLC | Class A common stock | ||||||
Accounting Policies [Line Items] | ||||||
Number of shares (in shares) | shares | 11,924 | |||||
Business combination | Roth ChIii Blocker Merger Sub LLC and BCP Qualtek Investors LLC | Class B common stock | ||||||
Accounting Policies [Line Items] | ||||||
Number of shares (in shares) | shares | 18,765 | |||||
Common stock par value (in dollars per share) | $ / shares | $ 0.0001 | |||||
Convertible note subscription agreements | ||||||
Accounting Policies [Line Items] | ||||||
Aggregate principal amount of convertible debt | $ 124,685,000 |
Nature of Business and Summar_5
Nature of Business and Summary of Significant Accounting Policies - Significant Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Accounting Policies [Line Items] | ||
Revenue | $ 156,246 | $ 148,161 |
AT&T | Revenue benchmark | Customer concentration risk | ||
Accounting Policies [Line Items] | ||
Revenue | $ 67,829 | $ 55,983 |
Credit concentration percentage | 43.40% | 37.80% |
Verizon | Revenue benchmark | Customer concentration risk | ||
Accounting Policies [Line Items] | ||
Revenue | $ 20,163 | $ 22,851 |
Credit concentration percentage | 12.90% | 15.40% |
T-Mobile | Revenue benchmark | Customer concentration risk | ||
Accounting Policies [Line Items] | ||
Revenue | $ 18,993 | $ 19,183 |
Credit concentration percentage | 12.20% | 13% |
Total | Revenue benchmark | Customer concentration risk | ||
Accounting Policies [Line Items] | ||
Revenue | $ 106,985 | $ 98,017 |
Credit concentration percentage | 68.50% | 66.20% |
Earnings Per Share - Summary of
Earnings Per Share - Summary of EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 2 Months Ended | 3 Months Ended | |
Apr. 01, 2022 | Apr. 01, 2023 | Apr. 02, 2022 | |
Numerator: | |||
Net loss | $ (11,016) | $ (46,852) | $ (40,547) |
Less: Loss attributable to non-controlling interests | (22,358) | (35,547) | |
Less: Loss attributable to non-controlling interests | (6,016) | (3,680) | |
Net loss attributable to QualTek Services Inc. | (24,494) | $ (5,000) | |
Less: Loss attributable to participating securities | (2,004) | ||
Less: Loss attributable to participating securities | (465) | (2,078) | |
Net loss attributable to QualTek Services, Inc. | $ (5,000) | $ (43,172) | |
Denominator: | |||
Weighted average Class A common shares outstanding (in shares) | 24,446,284 | ||
Less: weighted average unvested Blocker Owner Earnout Shares outstanding (in shares) | (2,274,934) | ||
Add: Weighted-average Class B common shares if converted to Class A common shares outstanding (excluding Earnout Voting shares) (in shares) | 19,468,023 | ||
Weighted average Class A common shareholders outstanding, basic (in shares) | 22,171,350 | ||
Weighted average Class A and B common shares outstanding, diluted (in shares) | 22,171,350 | 44,998,748 | |
Net loss per share - basic (in dollars per share) | $ (0.20) | $ (0.88) | $ (0.20) |
Net loss per share - diluted (in dollars per share) | $ (0.20) | $ (0.91) | $ (0.20) |
Class A common stock | |||
Numerator: | |||
Net loss attributable to Class A common shareholders, basic | $ (4,535) | $ (22,490) | |
Net loss attributable to QualTek Services, Inc. | $ (4,535) | $ (41,094) | |
Denominator: | |||
Weighted average Class A common shareholders outstanding (in shares) | 27,805,659 | ||
Less: weighted average unvested Blocker Owner Earnout Shares outstanding (in shares) | (2,274,934) | ||
Weighted average Class A common shares outstanding (in shares) | 27,805,659 | ||
Less: weighted average unvested Blocker Owner Earnout Shares outstanding (in shares) | 2,274,934 | ||
Weighted average Class A common shareholders outstanding, basic (in shares) | 25,530,725 | 22,171,350 | |
Weighted average Class A and B common shares outstanding, diluted (in shares) | 44,998,748 | 22,171,350 |
Earnings Per Share - Anti-Dilut
Earnings Per Share - Anti-Dilutive Securities (Details) - shares | 2 Months Ended | 3 Months Ended |
Apr. 02, 2022 | Apr. 01, 2023 | |
Anti-dilutive securities | ||
Total potentially dilutive shares excluded from calculation (in shares) | 38,272,869 | 21,077,482 |
Stock options | ||
Anti-dilutive securities | ||
Total potentially dilutive shares excluded from calculation (in shares) | 0 | 5,632,011 |
Class B common stock | ||
Anti-dilutive securities | ||
Total potentially dilutive shares excluded from calculation (in shares) | 22,827,398 | 0 |
Private Placement Warrants | ||
Anti-dilutive securities | ||
Total potentially dilutive shares excluded from calculation (in shares) | 101,992 | 101,992 |
Public Warrants | ||
Anti-dilutive securities | ||
Total potentially dilutive shares excluded from calculation (in shares) | 2,874,979 | 2,874,979 |
Convertible Notes | ||
Anti-dilutive securities | ||
Total potentially dilutive shares excluded from calculation (in shares) | 12,468,500 | 12,468,500 |
Property and Equipment - Summar
Property and Equipment - Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 | Apr. 02, 2022 | Dec. 31, 2022 | |
Property and Equipment | |||
Assets under financing lease | $ 65,712 | $ 57,905 | |
Property, plant and equipment, net | 107,690 | 99,489 | |
Less: accumulated depreciation | (43,732) | (39,671) | |
Property and equipment, net | 63,958 | 59,818 | |
Depreciation and amortization expense | 4,470 | $ 3,785 | |
Office furniture | |||
Property and Equipment | |||
Property and equipment, gross | 2,287 | 2,229 | |
Computers | |||
Property and Equipment | |||
Property and equipment, gross | 2,284 | 2,296 | |
Machinery, equipment and vehicles | |||
Property and Equipment | |||
Property and equipment, gross | 27,914 | 27,178 | |
Land | |||
Property and Equipment | |||
Property and equipment, gross | 140 | 140 | |
Building | |||
Property and Equipment | |||
Property and equipment, gross | 340 | 340 | |
Leasehold improvements | |||
Property and Equipment | |||
Property and equipment, gross | 5,224 | 5,178 | |
Software | |||
Property and Equipment | |||
Property and equipment, gross | 2,449 | 2,416 | |
Assets under financing lease | |||
Property and Equipment | |||
Assets under financing lease | 65,712 | 57,905 | |
Less: accumulated depreciation | (17,517) | (15,096) | |
Construction in process | |||
Property and Equipment | |||
Property and equipment, gross | $ 1,340 | $ 1,807 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 | Apr. 02, 2022 | Dec. 31, 2022 | |
Property and Equipment | |||
Assets under financing lease | $ 65,712 | $ 57,905 | |
Accumulated depreciation | 43,732 | 39,671 | |
Depreciation and amortization expense | 4,470 | $ 3,785 | |
Assets under financing lease | |||
Property and Equipment | |||
Assets under financing lease | 65,712 | 57,905 | |
Accumulated depreciation | $ 17,517 | $ 15,096 |
Accounts Receivable, Contract_3
Accounts Receivable, Contract Assets and Liabilities, and Customer Credit Concentration - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 | Apr. 02, 2022 | Dec. 31, 2022 | |
Receivables [Abstract] | |||
Contract liabilities | $ 22,358 | $ 24,094 | |
Amount of revenue recognized that was included in contract liabilities | $ 13,432 | $ 7,215 |
Accounts Receivable, Contract_4
Accounts Receivable, Contract Assets and Liabilities, and Customer Credit Concentration - Schedule of Customer Credit Concentration (Details) - Accounts receivable and contract assets - Credit concentration risk - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Apr. 01, 2023 | Dec. 31, 2022 | |
Total | ||
Concentration Risk | ||
Amounts of accounts receivable and contract assets | $ 130,029 | $ 170,030 |
Credit concentration percentage | 57.20% | 67.90% |
AT&T | ||
Concentration Risk | ||
Amounts of accounts receivable and contract assets | $ 70,239 | $ 76,816 |
Credit concentration percentage | 30.90% | 30.70% |
Verizon | ||
Concentration Risk | ||
Amounts of accounts receivable and contract assets | $ 30,917 | $ 56,551 |
Credit concentration percentage | 13.60% | 22.60% |
T-Mobile | ||
Concentration Risk | ||
Amounts of accounts receivable and contract assets | $ 28,873 | $ 36,663 |
Credit concentration percentage | 12.70% | 14.60% |
Accounts Receivable, Contract_5
Accounts Receivable, Contract Assets and Liabilities, and Customer Credit Concentration - Schedule of allowance for doubtful accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Apr. 01, 2023 | Dec. 31, 2022 | |
Receivables [Abstract] | ||
Balance at beginning of year | $ 5,408 | $ 5,614 |
Charged to expense | (196) | 8,533 |
Deductions for uncollectible receivables written off | (141) | (8,739) |
Balance at end of period | $ 5,071 | $ 5,408 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands | 3 Months Ended |
Apr. 01, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 14,493 |
Measurement period adjustments, net | 0 |
Ending balance | 14,493 |
Renewables and Recovery Logistics | |
Goodwill [Roll Forward] | |
Beginning balance | 13,598 |
Measurement period adjustments, net | 0 |
Ending balance | 13,598 |
Telecom | |
Goodwill [Roll Forward] | |
Beginning balance | 895 |
Measurement period adjustments, net | 0 |
Ending balance | $ 895 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Intangible assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Apr. 01, 2023 | Dec. 31, 2022 | |
Intangible assets | ||
Gross Carrying Amount | $ 484,229 | $ 484,229 |
Accumulated amortization | (173,072) | (162,543) |
Net carrying Amount | $ 311,157 | $ 321,686 |
Customer relationships | ||
Intangible assets | ||
Weighted Average Remaining Useful Life | 8 years 7 months 6 days | 8 years 9 months 18 days |
Gross Carrying Amount | $ 424,260 | $ 424,260 |
Accumulated amortization | (142,341) | (133,535) |
Net carrying Amount | $ 281,919 | $ 290,725 |
Trademarks and trade names | ||
Intangible assets | ||
Weighted Average Remaining Useful Life | 9 years 3 months 18 days | 9 years 3 months 18 days |
Gross Carrying Amount | $ 59,969 | $ 59,969 |
Accumulated amortization | (30,731) | (29,008) |
Net carrying Amount | $ 29,238 | $ 30,961 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense of intangible assets | $ 10,529 | $ 10,572 |
Debt and Finance Lease Obliga_3
Debt and Finance Lease Obligations - Narrative (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Mar. 16, 2023 USD ($) | Mar. 15, 2023 USD ($) | Feb. 14, 2022 USD ($) tradingDay $ / shares | Apr. 01, 2023 USD ($) $ / shares | Apr. 02, 2022 USD ($) | Dec. 31, 2022 USD ($) | May 12, 2023 USD ($) | |
Debt Instrument [Line Items] | |||||||
Reclassified outstanding debt from long-term to current. | $ 595,074 | $ 548,847 | |||||
Interest expense | 20,583 | $ 12,343 | |||||
Periodic payment, interest | $ 2,391 | ||||||
Plan | |||||||
Debt Instrument [Line Items] | |||||||
Percentage of pro rata share of new equity interests to be issued | 10% | ||||||
Percentage of pro rata share of warrants to purchase new equity interests to be issued | 7.50% | ||||||
Revolving credit facility | |||||||
Debt Instrument [Line Items] | |||||||
Current borrowing capacity | $ 105,000 | ||||||
Maximum borrowing capacity | $ 130,000 | ||||||
Stand by letters of credit outstanding | $ 5,903 | ||||||
Amount available under credit facility | 3,866 | ||||||
Senior unsecured convertible notes | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount of convertible debt | $ 124,685 | ||||||
Proceeds from issuance of debt | 122,191 | ||||||
Discounts | 2,494 | ||||||
Debt issuance costs | 6,384 | ||||||
Debt discount | $ 8,878 | ||||||
Interest expense | 3,622 | 1,913 | |||||
Additional interest rate | 2% | ||||||
Accretion of debt discount | 444 | 222 | |||||
Principal amount denomination | $ 1 | ||||||
Conversion ratio | 100 | ||||||
Conversion price (in dollars per share) | $ / shares | $ 10 | ||||||
Debt instrument, threshold conversion period | 2 years | ||||||
Debt instrument, convertible, stock price trigger (in dollars per share) | $ / shares | $ 14 | ||||||
Threshold of trading days, convertible debt (in days) | tradingDay | 20 | ||||||
Debt instrument, convertible, threshold consecutive trading days (in days) | tradingDay | 30 | ||||||
Debt instrument, convertible, average daily trading volume calculation, period | 60 days | ||||||
Debt instrument, convertible, average daily trading volume, threshold amount | $ 15,000 | ||||||
Debt instrument after conversion, threshold percentage of free float of common stock | 20% | ||||||
New Money Incremental Term Loans | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | 20,000 | ||||||
Term loan | $ 55,000 | ||||||
New Money Incremental Term Loans | Subsequent event | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 10,000 | ||||||
Term Loan Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Term loan | $ 380,000 | ||||||
Convertible Promissory Notes, June 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Discounts | $ 6,880 | $ 8,656 | |||||
Convertible Notes 2027 | |||||||
Debt Instrument [Line Items] | |||||||
Interest not paid | $ 3,700 | ||||||
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Revolving credit facility | |||||||
Debt Instrument [Line Items] | |||||||
Applicable interest rate margin | 5% | ||||||
Revolving credit facility | Base rate | |||||||
Debt Instrument [Line Items] | |||||||
Applicable interest rate margin | 12% | ||||||
Minimum | Senior unsecured convertible notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt interest rate | 9.50% | ||||||
Maximum | Senior unsecured convertible notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt interest rate | 11.75% |
Debt and Finance Lease Obliga_4
Debt and Finance Lease Obligations - Fair Market Value Due to Variable Interest Rates Based on Current Rates (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Current Maturities: | ||
Current portion of finance lease obligations | $ 12,634 | $ 13,022 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Current portion of long-term debt and finance lease obligations, net | Current portion of long-term debt and finance lease obligations, net |
Current portion of long-term debt and finance lease obligations, net of deferred financing costs | $ 592,867 | $ 556,426 |
Long-term borrowings: | ||
Finance lease obligations | 39,971 | 35,897 |
Less: current portion of finance lease obligations | (12,634) | (13,022) |
Long-term finance lease liabilities | 27,337 | 22,875 |
Total long-term borrowings | 27,337 | 22,875 |
Net deferred financing cost and convertible debt discount | 24,405 | 15,007 |
Line of credit | ||
Current Maturities: | ||
Debt, carrying amount | 85,498 | 91,665 |
Secured debt | ||
Current Maturities: | ||
Debt, carrying amount | 376,930 | 334,378 |
2027 Convertible Notes | ||
Current Maturities: | ||
Debt, carrying amount | $ 117,805 | $ 117,361 |
Warrants - Narrative (Details)
Warrants - Narrative (Details) - $ / shares shares in Thousands | 3 Months Ended | |||
Feb. 14, 2022 | Apr. 01, 2023 | Dec. 31, 2022 | Feb. 13, 2022 | |
Public Warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding (in shares) | 2,875 | 2,875 | 2,875 | |
Public Warrants exercisable term after the completion of a business combination | 30 days | |||
Warrant expiration term | 5 years | |||
Redemption price per public warrant (in dollars per share) | $ 0.01 | |||
Redemption period | 30 days | |||
Warrant redemption condition minimum share price (in dollars per share) | $ 18 | |||
Threshold trading days for redemption of public warrants | 20 days | |||
Threshold consecutive trading days for redemption of public warrants | 30 days | |||
Private Placement Warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding (in shares) | 102 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair value of the Company Financial Liabilities (Details) - Fair value, recurring - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Financial liabilities | ||
Contingent consideration | $ 5,200 | $ 5,200 |
Warrant liability | 77 | 77 |
Total liabilities | 5,277 | 5,277 |
Level 1 | ||
Financial liabilities | ||
Contingent consideration | 0 | 0 |
Warrant liability | 0 | 0 |
Total liabilities | 0 | 0 |
Level 2 | ||
Financial liabilities | ||
Contingent consideration | 0 | 0 |
Warrant liability | 0 | 0 |
Total liabilities | 0 | 0 |
Level 3 | ||
Financial liabilities | ||
Contingent consideration | 5,200 | 5,200 |
Warrant liability | 77 | 77 |
Total liabilities | $ 5,277 | $ 5,277 |
Fair Value Measurements - Fai_2
Fair Value Measurements - Fair Value of the Company Level 3 Financial Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Warrant liability | ||
Changes in fair value of financial liabilities | ||
Balance at the beginning | $ 77 | $ 0 |
Change in fair value | 0 | |
Assumption of private placement warrants in Business Combination | 77 | |
Balance at the end | 77 | 77 |
Contingent consideration | ||
Changes in fair value of financial liabilities | ||
Balance at the beginning | 5,200 | 30,756 |
Change in fair value | 0 | |
Accretion | 410 | |
Balance at the end | $ 5,200 | $ 31,166 |
Equity - Narrative (Details)
Equity - Narrative (Details) | 3 Months Ended | ||
Apr. 01, 2023 vote $ / shares shares | Dec. 31, 2022 $ / shares shares | Feb. 13, 2022 shares | |
Class of Stock [Line Items] | |||
Conversion ratio | 1 | ||
Public Warrants | |||
Class of Stock [Line Items] | |||
Warrants outstanding (in shares) | 2,875,000 | 2,875,000 | 2,875,000 |
Blocker owner earnout shares | |||
Class of Stock [Line Items] | |||
Common stock outstanding (in shares) | 2,275,000 | ||
Common stock issued (in shares) | 2,275,000 | ||
Class A common stock | |||
Class of Stock [Line Items] | |||
Common stock authorized (in shares) | 500,000,000 | 500,000,000 | |
Common stock par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |
Common stock outstanding (in shares) | 27,805,659 | 27,805,659 | |
Common stock issued (in shares) | 27,805,659 | 27,805,659 | |
Number of votes per share of stock (in votes) | vote | 1 | ||
Class A common stock | Blocker owner earnout shares | |||
Class of Stock [Line Items] | |||
Shares issued (in shares) | 2,275,000 | ||
Class B common stock | |||
Class of Stock [Line Items] | |||
Common stock authorized (in shares) | 500,000,000 | 500,000,000 | |
Common stock par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |
Common stock outstanding (in shares) | 23,304,200 | 23,304,200 | |
Common stock issued (in shares) | 23,304,200 | 23,304,200 | |
Number of votes per share of stock (in votes) | vote | 1 | ||
Class B common stock | Earnout voting shares | |||
Class of Stock [Line Items] | |||
Common stock outstanding (in shares) | 3,836,000 | 3,836,000 | |
Common stock issued (in shares) | 3,836,000 | 3,836,000 | |
Shares issued (in shares) | 3,836,000 |
Equity - Summary Of Ownership I
Equity - Summary Of Ownership Interest In Noncontrolling Interest (Details) - shares | 3 Months Ended | 12 Months Ended |
Apr. 01, 2023 | Dec. 31, 2022 | |
Class of Stock [Line Items] | ||
Common Units (in shares) | 48,834,924 | 48,834,924 |
Ownership Percentage | 100% | 100% |
Flow-through sellers | ||
Class of Stock [Line Items] | ||
Common Units (in shares) | 23,304,200 | 23,304,200 |
Ownership Percentage | 48% | 48% |
QualTek Services Inc. | ||
Class of Stock [Line Items] | ||
Common Units (in shares) | 25,530,724 | 25,530,724 |
Ownership Percentage | 52% | 52% |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 | Apr. 02, 2022 | Dec. 31, 2022 | |
Stock-Based Compensation | |||
Options granted (in shares) | 0 | 0 | |
Options exercised (in shares) | 0 | ||
Stock options outstanding (in shares) | 5,278,698 | 5,632,011 | |
Weighted average exercise price of options outstanding (in dollars per share) | $ 5.38 | $ 5.92 | |
Stock options | |||
Stock-Based Compensation | |||
Unrecognized Compensation Cost | $ 4,162 | ||
Weighted Average Remaining Period to be Recognized (in Years) | 2 years 9 months 18 days | ||
LTIP | Class A common stock | |||
Stock-Based Compensation | |||
Shares available for future grant (in shares) | 2,194,000 | ||
Automatic annual increase as a percentage of shares outstanding | 2% | ||
Shares reserved percentage | 15% | ||
LTIP | Stock options | |||
Stock-Based Compensation | |||
Expiration period | 10 years | ||
Vesting period | 4 years | ||
Options vested (in shares) | 356,000 | ||
Fair value of options vested | $ 477 | ||
Unvested options (in shares) | 4,304,000 | ||
Unvested options, weighted average grant date fair value (in dollars per share) | $ 1.08 | ||
Stock options outstanding (in shares) | 5,279,000 | 0 | |
Weighted average exercise price of options outstanding (in dollars per share) | $ 5.38 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding, beginning balance (in shares) | 5,632,011 | |
Granted (in shares) | 0 | 0 |
Exercised (in shares) | 0 | |
Forfeited or expired (in shares) | (228,063) | |
Canceled (in shares) | (125,250) | |
Outstanding, ending balance (in shares) | 5,278,698 | |
Exercisable (in shares) | 1,074,716 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Weighted average exercise price of options outstanding, beginning balance (in dollars per share) | $ 5.92 | |
Granted, weighted average exercise price (in dollars per share) | 0 | |
Exercised, weighted average exercise price (in dollars per share) | 0 | |
Forfeited or expired, weighted average exercise price (in dollars per share) | 6.80 | |
Canceled, weighted average exercise price (in dollars per share) | 7.50 | |
Weighted average exercise price of options outstanding, ending balance (in dollars per share) | 5.38 | |
Exercisable, weighted average exercise price (in dollars per share) | $ 7.27 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Additional Disclosures [Abstract] | ||
Outstanding, weighted-average remaining contractual term | 5 years 8 months 1 day | |
Exercisable, weighted average remaining contractual term | 5 years 6 months 3 days | |
Outstanding, aggregate intrinsic value | $ 0 | |
Exercisable, aggregate intrinsic value | $ 0 |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock-based compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Stock-based compensation expense | ||
Stock-based compensation expense | $ 395 | $ 0 |
Cost of revenue | ||
Stock-based compensation expense | ||
Stock-based compensation expense | 33 | 0 |
General and administrative expenses | ||
Stock-based compensation expense | ||
Stock-based compensation expense | $ 362 | $ 0 |
Stock-Based Compensation - Unre
Stock-Based Compensation - Unrecognized compensation cost (Details) - Stock options $ in Thousands | 3 Months Ended |
Apr. 01, 2023 USD ($) | |
Stock-Based Compensation | |
Unrecognized Compensation Cost | $ 4,162 |
Weighted Average Remaining Period to be Recognized (in Years) | 2 years 9 months 18 days |
Estimated annual compensation cost for the future periods | |
Total | $ 4,162 |
2023 | 1,155 |
2024 | 1,414 |
2025 | 1,358 |
2026 and beyond | $ 235 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 0% | 0% |
Tax Receivable Agreement - Narr
Tax Receivable Agreement - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Dec. 31, 2022 | |
Tax Receivable Agreement [Abstract] | ||
Cash tax savings payable to holders (as a percent) | 85% | |
Cash tax savings retained (as a percent) | 15% | |
Estimate of future payments | $ 34,092 | |
Tax receivable agreement gain on liability decrease | 19,008 | |
Tax receivable agreement liabilities | 15,084 | $ 15,084 |
TRA liabilities if sufficient income to utilize tax attributes | $ 43,364 |
Segments and Related Informat_3
Segments and Related Information - Narrative (Details) | 3 Months Ended |
Apr. 01, 2023 segment | |
Segment Reporting [Abstract] | |
Number of operating segments (in segments) | 2 |
Number of reportable segments (in segments) | 2 |
Segments and Related Informat_4
Segments and Related Information - Summarized financial information for the company's reportable segments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 | Apr. 02, 2022 | Dec. 31, 2022 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 156,246 | $ 148,161 | |
Total assets | 671,921 | 672,584 | $ 688,927 |
Capital expenditures | 9,180 | 6,065 | |
Amortization and depreciation | 14,999 | 14,766 | |
Interest expense | 20,583 | 12,343 | |
EBITDA | (11,270) | (13,438) | |
Telecom | |||
Segment Reporting Information [Line Items] | |||
Revenues | 149,712 | 132,664 | |
Renewables and Recovery Logistics | |||
Segment Reporting Information [Line Items] | |||
Revenues | 6,534 | 15,497 | |
Operating segments | Telecom | |||
Segment Reporting Information [Line Items] | |||
Total assets | 586,496 | 588,755 | |
Capital expenditures | 8,536 | 5,533 | |
Amortization and depreciation | 12,140 | 11,661 | |
Interest expense | 1,584 | 517 | |
EBITDA | 6,025 | 3,578 | |
Operating segments | Renewables and Recovery Logistics | |||
Segment Reporting Information [Line Items] | |||
Total assets | 66,049 | 81,288 | |
Capital expenditures | 644 | 366 | |
Amortization and depreciation | 2,652 | 2,895 | |
Interest expense | 222 | 204 | |
Operating segments | Renewables and Recovery Logistics Segment | |||
Segment Reporting Information [Line Items] | |||
EBITDA | (220) | 5,380 | |
Corporate, non-segment | |||
Segment Reporting Information [Line Items] | |||
Total assets | 19,376 | 2,541 | |
Capital expenditures | 0 | 166 | |
Amortization and depreciation | 207 | 210 | |
Interest expense | 18,777 | 11,623 | |
EBITDA | $ (17,075) | $ (22,396) |
Segments and Related Informat_5
Segments and Related Information - EBITDA Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Segment Reporting [Abstract] | ||
Loss on Operations | $ (46,852) | $ (40,547) |
Interest expense | 20,583 | 12,343 |
Depreciation | 4,470 | 3,785 |
Amortization | 10,529 | 10,981 |
EBITDA | $ (11,270) | $ (13,438) |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - Majority shareholder - Advisory services agreement - USD ($) $ in Thousands | 3 Months Ended | |
Jul. 18, 2018 | Apr. 02, 2022 | |
Related Party Transactions | ||
Quarterly advisory fees | $ 125 | |
Advisory fees | $ 126 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event - USD ($) $ in Thousands | Jun. 13, 2023 | May 25, 2023 |
Debtor-in-Possession Financing Term Loan Credit Facility | Plan | ||
Subsequent Event [Line Items] | ||
Amount outstanding on term loan | $ 40,000 | $ 40,000 |
Term Loan Credit Agreement | ||
Subsequent Event [Line Items] | ||
Amount outstanding on term loan | 25,000 | |
Term Loan Credit Agreement | Debtor-in-Possession Financing Term Loan Credit Facility | ||
Subsequent Event [Line Items] | ||
Maximum borrowing capacity | 101,200 | |
Roll Up Term Loan [Member] | Debtor-in-Possession Financing Term Loan Credit Facility | ||
Subsequent Event [Line Items] | ||
Amount outstanding on term loan | 66,900 | |
Roll Up Term Loan [Member] | Debtor-in-Possession Financing Term Loan Credit Facility | Plan | ||
Subsequent Event [Line Items] | ||
Amount outstanding on term loan | 25,000 | |
New Money Delayed Draw Term Loan | Debtor-in-Possession Financing Term Loan Credit Facility | Plan | ||
Subsequent Event [Line Items] | ||
Amount outstanding on term loan | 15,000 | |
New Money Term Loan | Debtor-in-Possession Financing Term Loan Credit Facility | Plan | ||
Subsequent Event [Line Items] | ||
Amount outstanding on term loan | $ 25,000 |
Uncategorized Items - qtek-2023
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2020-06 [Member] |