(MARK ONE)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
March 31, 2023
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
| 84-2531628 | ||||
(State or other jurisdiction of
| (I.R.S. Employer
| ||||
509 7th Street, N.W.
Washington, D.C. 20004
(202) 654-7060
offices, including zip code)
Check
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock, $0.0001 par value per share | CTOS | New York Stock Exchange | ||||||
| Redeemable warrants, exercisable for Common Stock, $0.0001 par value per share | CTOS.WS | New York Stock Exchange | ||||||
| Large accelerated filer | Accelerated filer | ☒ | |||||||||||||
| Non-accelerated filer | Smaller reporting company | ☐ | |||||||||||||
| Emerging growth company | ☐ | ||||||||||||||
As
CAPITOL INVESTMENT CORP. IV
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2017
TABLE OF CONTENTS
| FINANCIAL INFORMATION | Page Number | |||||||||||||
| Financial Statements | ||||||||||||||
| Unaudited Condensed | ||||||||||||||
| Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended March 31, 2023 and 2022 | ||||||||||||||
| Unaudited Condensed | ||||||||||||||
| Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2023 and 2022 | ||||||||||||||
| Notes to Unaudited Condensed Consolidated Financial Statements | ||||||||||||||
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |||||||||||||
| Item 3. | Quantitative and Qualitative Disclosures | |||||||||||||
| Item 4. | Controls and Procedures | |||||||||||||
| PART II | OTHER INFORMATION | |||||||||||||
| Item | Legal Proceedings | |||||||||||||
| Item 1A. | Risk Factors | |||||||||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||||||||
| Item | Defaults Upon Senior Securities | |||||||||||||
| Mine Safety Disclosures | ||||||||||||||
| Item 5. | Other Information | |||||||||||||
| Item 6. | Exhibits | |||||||||||||
| SIGNATURES | ||||||||||||||
Capitol Investment Corp. IV
September 30, 2017
(Unaudited)
| ASSETS | ||||
| Current Assets | ||||
| Cash | $ | 948,017 | ||
| Prepaid expenses and other current assets | 164,762 | |||
| Total Current Assets | 1,112,779 | |||
| Cash held in Trust Account | 402,500,000 | |||
| Total Assets | $ | 403,612,779 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| Current liabilities | ||||
| Accounts payable and accrued expenses | $ | 69,902 | ||
| Advance from related party | 5,100 | |||
| Total Current Liabilities | 75,002 | |||
| Deferred underwriting fee | 14,087,500 | |||
| Total Liabilities | 14,162,502 | |||
| Commitments | ||||
| Class A Ordinary Shares, subject to possible redemption, 38,445,027 shares at redemption value | 384,450,270 | |||
| Shareholders’ Equity | ||||
| Preference Shares, $0.0001 par value; 1,000,000 authorized; none issued and outstanding | — | |||
| Class A Ordinary Shares, $0.0001 par value; 400,000,000 shares authorized; 1,804,973 shares issued and outstanding (excluding 38,445,027 shares subject to possible redemption) | 180 | |||
| Class B Ordinary Shares, $0.0001 par value; 50,000,000 shares authorized; 10,062,500 shares issued and outstanding | 1,006 | |||
| Additional paid-in capital | 5,170,887 | |||
| Accumulated deficit | (172,066 | ) | ||
| Total Shareholders’ Equity | 5,000,007 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 403,612,779 | ||
TheSheets (unaudited)
| (in $000s, except share data) | March 31, 2023 | December 31, 2022 | |||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 32,218 | $ | 14,360 | |||||||
| Accounts receivable, net | 167,640 | 193,106 | |||||||||
| Financing receivables, net | 46,122 | 38,271 | |||||||||
| Inventory | 714,354 | 596,724 | |||||||||
| Prepaid expenses and other | 29,462 | 25,784 | |||||||||
| Total current assets | 989,796 | 868,245 | |||||||||
| Property and equipment, net | 128,839 | 121,956 | |||||||||
| Rental equipment, net | 894,557 | 883,674 | |||||||||
| Goodwill | 703,848 | 703,827 | |||||||||
| Intangible assets, net | 297,486 | 304,132 | |||||||||
| Operating lease assets | 28,509 | 29,434 | |||||||||
| Other assets | 26,348 | 26,944 | |||||||||
| Total Assets | $ | 3,069,383 | $ | 2,938,212 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 126,041 | $ | 87,255 | |||||||
| Accrued expenses | 70,113 | 68,784 | |||||||||
| Deferred revenue and customer deposits | 32,360 | 34,671 | |||||||||
| Floor plan payables - trade | 159,029 | 136,634 | |||||||||
| Floor plan payables - non-trade | 312,470 | 293,536 | |||||||||
| Operating lease liabilities - current | 5,220 | 5,262 | |||||||||
| Current maturities of long-term debt | 5,243 | 6,940 | |||||||||
| Current portion of finance lease obligations | 852 | 1,796 | |||||||||
| Total current liabilities | 711,328 | 634,878 | |||||||||
| Long-term debt, net | 1,394,039 | 1,354,766 | |||||||||
| Finance leases | 3,142 | 3,206 | |||||||||
| Operating lease liabilities - noncurrent | 23,932 | 24,818 | |||||||||
| Deferred income taxes | 29,615 | 29,086 | |||||||||
| Derivative, warrants and other liabilities | 2,490 | 3,015 | |||||||||
| Total long-term liabilities | 1,453,218 | 1,414,891 | |||||||||
| Commitments and contingencies (see Note 15) | |||||||||||
| Stockholders' Equity | |||||||||||
| Common stock — $0.0001 par value, 500,000,000 shares authorized, 248,441,588 and 248,311,104 shares issued and outstanding, at March 31, 2023 and December 31, 2022, respectively | 25 | 25 | |||||||||
| Treasury stock, at cost — 2,427,395 and 2,241,069 shares at March 31, 2023 and December 31, 2022, respectively | (16,736) | (15,537) | |||||||||
| Additional paid-in capital | 1,524,938 | 1,521,487 | |||||||||
| Accumulated other comprehensive loss | (8,605) | (8,947) | |||||||||
| Accumulated deficit | (594,785) | (608,585) | |||||||||
| Total stockholders' equity | 904,837 | 888,443 | |||||||||
| Total Liabilities and Stockholders' Equity | $ | 3,069,383 | $ | 2,938,212 | |||||||
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| (in $000s, except per share data) | 2023 | 2022 | |||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||
| Rental revenue | $ | 118,288 | $ | 109,145 | |||||||||||||||||||||||||
| Equipment sales | 301,290 | 227,186 | |||||||||||||||||||||||||||
| Parts sales and services | 32,585 | 30,145 | |||||||||||||||||||||||||||
| Total revenue | 452,163 | 366,476 | |||||||||||||||||||||||||||
| Cost of Revenue | |||||||||||||||||||||||||||||
| Cost of rental revenue | 29,899 | 25,793 | |||||||||||||||||||||||||||
| Depreciation of rental equipment | 40,330 | 44,964 | |||||||||||||||||||||||||||
| Cost of equipment sales | 246,125 | 187,278 | |||||||||||||||||||||||||||
| Cost of parts sales and services | 26,148 | 23,948 | |||||||||||||||||||||||||||
| Total cost of revenue | 342,502 | 281,983 | |||||||||||||||||||||||||||
| Gross Profit | 109,661 | 84,493 | |||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 56,991 | 53,655 | |||||||||||||||||||||||||||
| Amortization | 6,672 | 13,335 | |||||||||||||||||||||||||||
| Non-rental depreciation | 2,650 | 3,047 | |||||||||||||||||||||||||||
| Transaction expenses and other | 3,460 | 4,648 | |||||||||||||||||||||||||||
| Total operating expenses | 69,773 | 74,685 | |||||||||||||||||||||||||||
| Operating Income (Loss) | 39,888 | 9,808 | |||||||||||||||||||||||||||
| Other Expense | |||||||||||||||||||||||||||||
| Interest expense, net | 29,176 | 19,156 | |||||||||||||||||||||||||||
| Financing and other expense (income) | (3,951) | (9,080) | |||||||||||||||||||||||||||
| Total other expense | 25,225 | 10,076 | |||||||||||||||||||||||||||
| Income (Loss) Before Income Taxes | 14,663 | (268) | |||||||||||||||||||||||||||
| Income Tax Expense (Benefit) | 863 | 3,005 | |||||||||||||||||||||||||||
| Net Income (Loss) | $ | 13,800 | $ | (3,273) | |||||||||||||||||||||||||
| Other Comprehensive Income (Loss): | |||||||||||||||||||||||||||||
| Unrealized foreign currency translation adjustments | $ | 342 | $ | — | |||||||||||||||||||||||||
| Other Comprehensive Income (Loss) | 342 | — | |||||||||||||||||||||||||||
| Comprehensive Income (Loss) | $ | 14,142 | $ | (3,273) | |||||||||||||||||||||||||
| Net Income (Loss) Per Share: | |||||||||||||||||||||||||||||
| Basic | $ | 0.06 | $ | (0.01) | |||||||||||||||||||||||||
| Diluted | $ | 0.06 | $ | (0.01) | |||||||||||||||||||||||||
| Weighted-Average Common Shares Outstanding: | |||||||||||||||||||||||||||||
| Basic (in thousands) | 246,049 | 247,058 | |||||||||||||||||||||||||||
| Diluted (in thousands) | 247,053 | 247,058 | |||||||||||||||||||||||||||
Capitol Investment Corp. IV
Condensed Statement of Operations
(Unaudited)
Three Months Ended September 30, | For the Period from May 1, September 30, | |||||||
| 2017 | 2017 | |||||||
| Operating and formation costs | $ | 167,016 | $ | 172,066 | ||||
| Net loss | $ | (167,016 | ) | $ | (172,066 | ) | ||
| Weighted average shares outstanding, basic and diluted(1) | 10,098,357 | 9,566,111 | ||||||
| Basic and diluted net loss per ordinary share | $ | (0.02 | ) | $ | (0.02 | ) | ||
The
Capitol Investment Corp. IV
For the Period from May 1, 2017 (Inception) through September 30, 2017
(Unaudited)
| Cash Flows from Operating Activities: | ||||
| Net loss | $ | (172,066 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Changes in operating assets and liabilities: | ||||
| Prepaid expenses and other current assets | (164,762 | ) | ||
| Accounts payable and accrued expenses | 69,902 | |||
| Net cash used in operating activities | (266,926 | ) | ||
| Cash Flows from Investing Activities: | ||||
| Investment of cash in Trust Account | (402,500,000 | ) | ||
| Net cash used in investing activities | (402,500,000 | ) | ||
| Cash Flows from Financing Activities: | ||||
| Proceeds from issuance of Class B ordinary shares to initial shareholders | 25,000 | |||
| Proceeds from sale of Units, net of underwriting discounts paid | 394,450,000 | |||
| Proceeds from sale of Private Placement Warrants | 9,800,000 | |||
| Advances from related party | 5,100 | |||
| Proceeds from note payable to shareholder | 250,000 | |||
| Repayment of note payable to shareholder | (250,000 | ) | ||
| Payment of offering costs | (565,157 | ) | ||
| Net cash provided by financing activities | 403,714,943 | |||
| Net Change in Cash and Cash Equivalents | 948,017 | |||
| Cash and Cash Equivalents – Beginning | — | |||
| Cash and Cash Equivalents – Ending | $ | 948,017 | ||
| Non-cash Investing and Financing Activities: | ||||
| Deferred underwriting fee payable | $ | 14,087,500 | ||
| Initial classification of ordinary shares subject to redemption | $ | 384,612,780 | ||
| Change in value of ordinary shares subject to redemption | $ | (162,510 | ) | |
The (unaudited)
| Three Months Ended March 31, | |||||||||||||||||
| (in $000s) | 2023 | 2022 | |||||||||||||||
| Operating Activities | |||||||||||||||||
| Net income (loss) | $ | 13,800 | $ | (3,273) | |||||||||||||
| Adjustments to reconcile net income (loss) to net cash flow from operating activities: | |||||||||||||||||
| Depreciation and amortization | 52,091 | 62,500 | |||||||||||||||
| Amortization of debt issuance costs | 2,407 | 1,326 | |||||||||||||||
| Provision for losses on accounts receivable | 1,872 | 2,811 | |||||||||||||||
| Share-based compensation | 3,147 | 3,364 | |||||||||||||||
| Gain on sales and disposals of rental equipment | (21,320) | (5,420) | |||||||||||||||
| Change in fair value of derivative and warrants | (525) | (5,767) | |||||||||||||||
| Deferred tax expense | 514 | 2,849 | |||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||
| Accounts and financing receivables | 17,161 | (33,520) | |||||||||||||||
| Inventories | (117,580) | (51,384) | |||||||||||||||
| Prepaids, operating leases and other | (4,987) | (4,637) | |||||||||||||||
| Accounts payable | 35,916 | 29,869 | |||||||||||||||
| Accrued expenses and other liabilities | 1,328 | (5,343) | |||||||||||||||
| Floor plan payables - trade, net | 22,395 | (13,031) | |||||||||||||||
| Customer deposits and deferred revenue | (2,313) | (10,115) | |||||||||||||||
| Net cash flow from operating activities | 3,906 | (29,771) | |||||||||||||||
| Investing Activities | |||||||||||||||||
| Acquisition of business, net of cash acquired | — | (50,513) | |||||||||||||||
| Purchases of rental equipment | (109,145) | (45,945) | |||||||||||||||
| Proceeds from sales and disposals of rental equipment | 78,626 | 49,961 | |||||||||||||||
| Purchase of non-rental property and cloud computing arrangements | (9,429) | (1,961) | |||||||||||||||
| Net cash flow from investing activities | (39,948) | (48,458) | |||||||||||||||
| Financing Activities | |||||||||||||||||
| Proceeds from debt | 13,537 | 75 | |||||||||||||||
| Share-based payments | 228 | (6) | |||||||||||||||
| Borrowings under revolving credit facilities | 35,000 | 50,000 | |||||||||||||||
| Repayments under revolving credit facilities | (10,331) | (34,844) | |||||||||||||||
| Repayments of notes payable | (2,020) | (1,872) | |||||||||||||||
| Finance lease payments | (377) | (2,275) | |||||||||||||||
| Repurchase of common stock | (1,122) | — | |||||||||||||||
| Acquisition of inventory through floor plan payables - non-trade | 187,381 | 140,126 | |||||||||||||||
| Repayment of floor plan payables - non-trade | (168,447) | (85,066) | |||||||||||||||
| Net cash flow from financing activities | 53,849 | 66,138 | |||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 51 | — | |||||||||||||||
| Net Change in Cash and Cash Equivalents | 17,858 | (12,091) | |||||||||||||||
| Cash and Cash Equivalents at Beginning of Period | 14,360 | 35,902 | |||||||||||||||
| Cash and Cash Equivalents at End of Period | $ | 32,218 | $ | 23,811 | |||||||||||||
| Three Months Ended March 31, | |||||||||||||||||
| (in $000s) | 2023 | 2022 | |||||||||||||||
| Supplemental Cash Flow Information | |||||||||||||||||
| Interest paid | $ | 13,130 | $ | 4,865 | |||||||||||||
| Income taxes paid | 10 | — | |||||||||||||||
| Non-Cash Investing and Financing Activities | |||||||||||||||||
| Rental equipment and property and equipment purchases in accounts payable | 2,938 | — | |||||||||||||||
| Rental equipment sales in accounts receivable | 621 | 23,551 | |||||||||||||||
CAPITOL INVESTMENT CORP. IVNOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MAY 1, 2017 (INCEPTION) THROUGH SEPTEMBER 30, 2017
(Unaudited)
| Shares | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders' Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||||||||
| (in $000s, except share data) | Common | Treasury | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | 248,311,104 | (2,241,069) | $ | 25 | $ | (15,537) | $ | 1,521,487 | $ | (8,947) | $ | (608,585) | $ | 888,443 | |||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | 13,800 | 13,800 | |||||||||||||||||||||||||||||||||||||||||||||
| Other Comprehensive Income | — | — | — | — | — | 342 | — | 342 | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchase | — | (174,744) | — | (1,122) | — | — | — | (1,122) | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based payments | 130,484 | (11,582) | — | (77) | 3,451 | — | — | 3,374 | |||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | 248,441,588 | (2,427,395) | $ | 25 | $ | (16,736) | $ | 1,524,938 | $ | (8,605) | $ | (594,785) | $ | 904,837 | |||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders' Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in $000s, except share data) | Common | Treasury | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | 247,358,412 | (318,086) | $ | 25 | $ | (3,020) | $ | 1,508,995 | $ | — | $ | (647,490) | $ | 858,510 | |||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | (3,273) | (3,273) | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based payments | 102,630 | (21,505) | — | (287) | 3,559 | — | — | 3,272 | |||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | 247,461,042 | (339,591) | $ | 25 | $ | (3,307) | $ | 1,512,554 | $ | — | $ | (650,763) | $ | 858,509 | |||||||||||||||||||||||||||||||||||||||
Capitol Investment Corp. IV (the “Company”its wholly owned subsidiaries (“we,” “our,” “us,” or “the Company”) was incorporatedare engaged in the Cayman Islands on May 1, 2017 asbusiness of providing a blank check company whose objective isrange of products and services to acquire,customers through a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, one or more businesses or entities (a “Business Combination”).
At September 30, 2017, the Company had not yet commenced any operations. All activity through September 30, 2017rentals and sales of specialty equipment, rentals and sales of aftermarket parts and services related to the Company’s formationspecialty equipment, and repair, maintenance and customization services related to that equipment.
The registration statementelectric utility transmission and distribution, telecommunications, rail and other infrastructure-related industries in North America. Our core business relates to our new equipment inventory and rental fleet of specialty equipment that is utilized by service providers in infrastructure development and improvement work. We offer our specialized equipment to a diverse customer base, including utilities and contractors, for the Company’s initial public offering was declared effectivemaintenance, repair, upgrade, and installation of critical infrastructure assets, including distribution and transmission electric lines, telecommunications networks and rail systems, as well as for lighting and signage. We rent, produce, sell and service a broad range of new and used equipment, including bucket trucks, digger derricks, dump trucks, cranes, service trucks, and heavy-haul trailers. We manage the business in three reporting segments: Equipment Rental Solutions (“ERS”), Truck and Equipment Sales (“TES”) and Aftermarket Parts and Services (“APS”).
The Company’s management has broad discretion with respect to the specific applicationour ERS segment consist of the net proceedsrental and sale from the rental fleet of the Offeringforegoing products.
Following the closing of the Offering and the Private Placement on August 21, 2017, an amount of $402,500,000 (or $10.00 per Class A ordinary share sold to the public in the Offering included in the Units (“Public Shares”)) from the sale of the Units and Private Placement Warrants is being heldused equipment purchased from third parties or received via trade-ins from new equipment sales customers. In all of these cases, we will sell used equipment directly to customers, rather than relying on auctions. Activities in a trust account (the “Trust Account”) and may be invested only in U.S. “government securities” within the meaning of Section 2(a)(16)our TES segment consist of the Investment Company Actproduction and sale of 1940,new and used specialty equipment and vocational trucks, which includes equipment from leading original equipment manufacturers (“OEMs”) across our end-markets, as amended (the “Investment Company Act”well as our Load King
In connection with any proposed initial Business Combination, the Company will either (1) seek shareholder approval of such initial Business Combination at a meeting called for such purpose or (2) provide shareholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a shareholder vote), in each case where shareholders may seek to convert their Public Shares into their pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid. Notwithstanding the foregoing, if the Company seeks shareholder approval of such initial Business Combination, a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) will be restricted from seeking conversion rights with respect to 20% or more of the public shares without the Company’s prior written consent. The Company will proceed with a Business Combination only if it has net tangible assets of at least $5,000,001 upon consummation of the Business Combination and, if the Company seeks shareholder approval, a majority of the outstanding shares of the Company voted are voted in favor of the Business Combination. In connection with any shareholder vote required to approve any Business Combination, the Sponsors and other initial shareholders of the Company (collectively, the “Initial Shareholders”) have agreed (i) to vote any of their respective shares in favor of the initial Business Combination and (ii) not to convert any of their respective ordinary shares (or sell such shares to the Company in any related tender offer).
CAPITOL INVESTMENT CORP. IVNOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MAY 1, 2017 (INCEPTION) THROUGH SEPTEMBER 30, 2017
(Unaudited)
Holders of warrants sold as part of the Units will not be entitled to vote on the proposed Business Combination and will have no conversion or liquidation rights with respect to their ordinary shares underlying such warrants.
Pursuant to the Company’s Amended and Restated Memorandum and Articles of Association, if the Company is unable to complete its initial Business Combination by August 21, 2019, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding Public Shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining holders of ordinary sharesmanufacturing processes and the Company’s boardongoing semiconductor shortage, which could potentially limit the ability of directors, dissolve and liquidate. If the Company is unablethese manufacturers to consummate an initial Business Combination and is forced to redeem 100%meet demand in future periods.
If the Company is unable to complete its initial Business Combination and expends all of the net proceeds of the Offering not deposited in the Trust Account, without taking into account any interest earned on the Trust Account, the Company expects that the initial per-share redemption price for Class A ordinary shares will be $10.00. The proceeds deposited in the Trust Account could, however, become subject to claims of the Company’s creditors that are in preference to the claims of the Company’s shareholders. In addition, if the Company is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate and subject to the claims of third parties with priority over the claims of the Company’s shareholders. Therefore, the actual per-share redemption price may be less than $10.00.
The Company’s executive officers have agreed that they will be liable under certain circumstances to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by the Company for services rendered, contracted for or products sold to the Company. However, there can be no assurance that they will be able to satisfy those obligations should they arise.
Note 2 — Significant Accounting Policies
ThePresentation
The accompanying unaudited condensed financialentire year or for any other periods. These interim statements should be read in conjunction with the Company’s prospectus as filed withCustom Truck One Source, Inc. audited consolidated financial statements included in the SEC and declared effective on August 15, 2017, as well as the Company’s CurrentCustom Truck One Source, Inc. Annual Report on Form 8-K, as filed with the SEC on August 25, 2017. The interim results for the period from May 1, 2017 (inception) through September 30, 2017 are not necessarily indicative of the results to be expected10-K for the year endingended December 31, 2017 or for any future interim periods.
Emerging growth company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
CAPITOL INVESTMENT CORP. IVNOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MAY 1, 2017 (INCEPTION) THROUGH SEPTEMBER 30, 2017
(Unaudited)
Use of estimates
Estimates
Making estimates Actual results could differ from those estimates.
| (in $000s) | March 31, 2023 | December 31, 2022 | |||||||||
| Accounts receivables | $ | 188,040 | $ | 212,347 | |||||||
| Less: allowance for doubtful accounts | (20,400) | (19,241) | |||||||||
| Accounts receivable, net | $ | 167,640 | $ | 193,106 | |||||||
Cashservice capacity of an asset (i.e., replacement cost).
The Company considers all short-term investmentsLiabilities with a maturity of three months or less when purchasedRecurring Fair Value Measurements -
Cashassets or liabilities which we measure at fair value on a recurring basis.
At September 30, 2017, theLiabilities with Nonrecurring Fair Value Measurements
Ordinary shares subject to possible redemption
The Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any)and liabilities are classified as a liability instrument and arenot measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights thatvalue on an ongoing basis. These assets and liabilities, which include long-lived assets, goodwill, and intangible assets, are either withinsubject to fair value adjustment in certain circumstances. From time to time, the controlfair value is determined on these assets as part of related impairment tests. For certain assets and liabilities acquired in business combinations, we record the fair value as of the holderacquisition date. Refer to Note 3: Acquisition, for the fair values of assets acquired and liabilities assumed in connection with our business combinations. Other than acquisition adjustments, no adjustments to fair value or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2017, ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s condensed balance sheet.
Offering costs
Offering costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the Offering. Offering costs amounting to $22,702,657fair value measurements were charged to shareholder’s equity upon the completion of the Offering.
Income taxes
The Company accountsrequired for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred taxnon-financial assets and liabilities for all periods presented. See Note 13: Fair Value Measurements for additional information.
| (in $000s) | January 14, 2022 | Changes | December 31, 2022 | ||||||||||||||
| Current assets | $ | 2,891 | $ | 956 | $ | 3,847 | |||||||||||
| Property, equipment and other assets | 819 | — | 819 | ||||||||||||||
| Rental equipment | 34,224 | — | 34,224 | ||||||||||||||
| Total identifiable assets acquired | 37,934 | 956 | 38,890 | ||||||||||||||
| Total identifiable liabilities assumed | (6,011) | (1,596) | (7,607) | ||||||||||||||
| Total net assets | 31,923 | (640) | 31,283 | ||||||||||||||
| Goodwill | 8,685 | (41) | 8,644 | ||||||||||||||
| Intangible assets | 11,027 | — | 11,027 | ||||||||||||||
| Net assets acquired (purchase price) | 51,635 | (681) | 50,954 | ||||||||||||||
| Less: cash acquired | (1,122) | — | (1,122) | ||||||||||||||
| Net cash paid | $ | 50,513 | $ | (681) | $ | 49,832 | |||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| (in $000s) | 2023 | 2022 | |||||||||||||||||||||||||||
| United States | $ | 438,278 | $ | 356,897 | |||||||||||||||||||||||||
| Canada | 13,885 | 9,579 | |||||||||||||||||||||||||||
| Total revenue | $ | 452,163 | $ | 366,476 | |||||||||||||||||||||||||
| Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in $000s) | Topic 842 | Topic 606 | Total | Topic 842 | Topic 606 | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Rental: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rental | $ | 112,903 | $ | — | $ | 112,903 | $ | 105,135 | $ | — | $ | 105,135 | |||||||||||||||||||||||||||||||||||||||||
| Shipping and handling | — | 5,385 | 5,385 | — | 4,010 | 4,010 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total rental revenue | 112,903 | 5,385 | 118,288 | 105,135 | 4,010 | 109,145 | |||||||||||||||||||||||||||||||||||||||||||||||
| Sales and services: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equipment sales | 17,708 | 283,582 | 301,290 | 12,237 | 214,949 | 227,186 | |||||||||||||||||||||||||||||||||||||||||||||||
| Parts and services | 4,815 | 27,770 | 32,585 | 2,220 | 27,925 | 30,145 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total sales and services | 22,523 | 311,352 | 333,875 | 14,457 | 242,874 | 257,331 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 135,426 | $ | 316,737 | $ | 452,163 | $ | 119,592 | $ | 246,884 | $ | 366,476 | |||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| (in $000s) | 2023 | 2022 | |||||||||||||||||||||
| Equipment sales | $ | 24,172 | $ | 12,237 | |||||||||||||||||||
| Cost of equipment sales | 23,225 | 10,370 | |||||||||||||||||||||
| Gross profit (loss) | $ | 947 | $ | 1,867 | |||||||||||||||||||
| (in $000s) | March 31, 2023 | December 31, 2022 | |||||||||
| Whole goods | $ | 585,218 | $ | 468,557 | |||||||
| Aftermarket parts and services inventory | 129,136 | 128,167 | |||||||||
| Inventory | $ | 714,354 | $ | 596,724 | |||||||
| (in $000s) | March 31, 2023 | December 31, 2022 | |||||||||
| Trade: | |||||||||||
| Daimler Truck Financial | $ | 113,916 | $ | 105,447 | |||||||
| PACCAR Financial Services | 45,113 | 31,187 | |||||||||
| Trade floor plan payables | $ | 159,029 | $ | 136,634 | |||||||
| Non-trade: | |||||||||||
| PNC Equipment Finance, LLC | $ | 312,470 | $ | 293,536 | |||||||
| Non-trade floor plan payables | $ | 312,470 | $ | 293,536 | |||||||
| (in $000s) | March 31, 2023 | December 31, 2022 | |||||||||
| Rental equipment | $ | 1,367,852 | $ | 1,360,205 | |||||||
| Less: accumulated depreciation | (473,295) | (476,531) | |||||||||
| Rental equipment, net | $ | 894,557 | $ | 883,674 | |||||||
| (in $000s) | March 31, 2023 | December 31, 2022 | March 31, 2023 | December 31, 2022 | |||||||||||||||||||
| ABL Facility | $ | 462,400 | $ | 437,731 | 6.5% | 6.1% | |||||||||||||||||
| 2029 Secured Notes | 920,000 | 920,000 | 5.5% | 5.5% | |||||||||||||||||||
| 2023 Credit Facility | 13,725 | — | 5.8% | — | |||||||||||||||||||
| Notes payable | 29,716 | 31,661 | 3.1%-5.0% | 3.1%-5.0% | |||||||||||||||||||
| Total debt outstanding | 1,425,841 | 1,389,392 | |||||||||||||||||||||
| Deferred financing fees | (26,559) | (27,686) | |||||||||||||||||||||
| Total debt excluding deferred financing fees | 1,399,282 | 1,361,706 | |||||||||||||||||||||
| Less: current maturities | (5,243) | (6,940) | |||||||||||||||||||||
| Long-term debt | $ | 1,394,039 | $ | 1,354,766 | |||||||||||||||||||
ASC 740 also clarifiesused to finance improvements to the accounting for uncertainty in income taxes recognizedproperty. In connection with entering into the agreement, the Company received net proceeds of $13.7 million with the ability to draw an additional $4.2 million upon completion of certain construction milestones. Borrowings bear interest at a fixed rate of 5.75% per
CAPITOL INVESTMENT CORP. IVNOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MAY 1, 2017 (INCEPTION) THROUGH SEPTEMBER 30, 2017
(Unaudited)
Net loss per ordinary share
The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings
Concentration of credit risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times may exceed the federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair value of financial instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
Recent accounting pronouncements
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying balance sheet.
Note 3 — Initial Public Offering
On August 21, 2017, the Company sold 40,250,000 Units at a price of $10.00 per Unit in the Offering. Each Unit consists of one Class A ordinary share and one third of one warrant (“Warrant”). Each whole Warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share. The Warrants are exercisable commencing on the later of 30 days after the Company’s completion of a Business Combination or August 21, 2018 and expire five years from the completion of a Business Combination. The Company may redeem the Warrants at a price of $0.01 per Warrant upon 30 days’ notice, only in the event that the last sale price of the Class A ordinary shares is at least $18.00 per share for any 20 trading days within a 30-trading day period ending on the third day prior to the date on which notice of redemption is given. If the Company redeems the Warrants as described above, it will have the option to require any holder that wishes to exercise his Warrant to do so on a “cashless basis.” In accordance with the warrant agreement relating to the Warrants sold in the Offering, the Company is only required to use its best efforts to file the registration statement covering the shares underlying the Warrants within 15 business days after the closing of the Business Combination and to maintain the effectiveness of such registration statement. If a registration statement is not effective within 60 days following the consummation of a Business Combination, Warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise Warrants on a cashless basis. If the Company is unable to consummate a Business Combination, the Company will redeem 100% of the Public Shares using the funds in the Trust Account as described in Note 1. In such event, the Warrants will be worthless.
Note 4 — Private Placement Warrants
Simultaneously with the Offering, the Company’s Sponsors and directors purchased an aggregate of 6,533,333 Private Placement Warrants at $1.50 per warrant (for an aggregate purchase price of $9,800,000) from the Company. All of the proceeds received from these purchases were placed in the Trust Account.
The Private Placement Warrants are identical to the Warrants included in the Units sold in the Offering, except that the Private Placement Warrants (i) are not redeemable by the Company and (ii) may be exercised for cash or on a cashless basis, so long as they are held by the initial purchasers or any of their permitted transferees. Additionally, the purchasers have agreed not to transfer, assign or sell any of the Private Placement Warrants, including the ordinary shares issuable upon exercise of the Private Placement Warrants (except to certain permitted transferees), until 30 days after the completion of the Company’s initial Business Combination.
CAPITOL INVESTMENT CORP. IVNOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MAY 1, 2017 (INCEPTION) THROUGH SEPTEMBER 30, 2017
(Unaudited)
In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial Business Combination, the Company’s Sponsors, officers and directors or their respective affiliates may, but are not obligated to, loan the Company funds as may be required on a non-interest bearing basis. If the Company completes its initial Business Combination, the Company would repay such loaned amounts. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants of the post business combination entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants.
Note 5 — Advances from Related Party
As of September 30, 2017, the Company’s Chief Executive Officer advanced an aggregate of $5,100 for costs related to the Offering. The advances are non-interest bearing, unsecured and due on demand.
Note 6 — Note Payable to Related Party
The Company issued a $250,000 principal amount unsecured promissory note to the Company’s Chief Executive Officer on June 1, 2017. The note was non-interest bearing and payable on the earlier to occur of (i) June 1, 2018, (ii) the consummation of the Offering or (iii) the date on which the Company determined not to proceed with the Offering. This loan was repaid upon the consummation of the Offering.
Note 7 — Administrative Services Agreement
The Company presently occupies office space provided by two affiliates of the Company’s executive officers. Such affiliates have agreed that, until the Company consummates a Business Combination, they will make such office space, as well as certain office and secretarial services, available to the Company, as may be required by the Company from time to time. The Company commenced paying such affiliates an aggregate of up to $20,000 per month for such services on August 15, 2017. For the three months ended September 30, 2017March 31, 2023 and for the period from May 1, 2017 (inception) through September 30, 2017, the Company incurred $30,000 in fees for these services, of which $30,000 isMarch 31, 2022, respectively, and included warrants, contingently issuable shares, and share-based compensation, and were not included in accounts payablethe computation of diluted earnings (loss) per share because they would be anti-dilutive.
dilutive earnings (loss) per share:
| Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in $000s, except per share data) | Net Income (Loss) | Weighted Average Shares | Per Share Amount | Net Income (Loss) | Weighted Average Shares | Per Share Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic earnings (loss) per share | $ | 13,800 | 246,049 | $ | 0.06 | $ | (3,273) | 247,058 | $ | (0.01) | ||||||||||||||||||||||||||||||||||||||||||||||
| Dilutive common share equivalents | 1,004 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted earnings (loss) per share | $ | 13,800 | 247,053 | $ | 0.06 | $ | (3,273) | 247,058 | $ | (0.01) | ||||||||||||||||||||||||||||||||||||||||||||||
The Company granted the underwriters a 45-day option to purchase up to 5,250,000 additional Units to cover over-allotments at the Offering price, less the underwriting discounts11: Equity
The underwritersDecember 31, 2022, we were paid a cash underwriting discount of two percent (2.0%) of the gross proceeds of the Offering, or $8,050,000. In addition, the underwriters are entitled to a deferred fee of three and one-half percent (3.5%) of the gross proceeds of the Offering, or $14,087,500. The deferred fee will be paid in cash upon the closing of a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.
The Initial Shareholders, the holders of the Private Placement Warrants (and underlying Class A ordinary shares) and the holders of any warrants (and underlying Class A ordinary shares) issued upon conversion of working capital loans made by the Company’s Sponsors, officers, directors or their affiliates, if any such loans are issued, are entitled to registration rights with respect to their securities pursuant to an agreement dated as of August 15, 2017. The holders of the majority of the securities are entitled to demand that the Company register these securities at any time commencing after expiration of the transfer restrictions. In addition, the holders have certain “piggy-back” registration rights on registration statements filed after the Company’s consummation of a Business Combination.
The Company entered into three consulting arrangements for services to help identify and introduce the Company to potential targets and provide assistance with due diligence, deal structuring, documentation and obtaining stockholder approval for a business combination. These agreements provide for an aggregate annual fee of $560,000 and success fee of $1,090,000 upon the consummation of a Business Combination.
Note 9 — Shareholder Equity
Preference Shares
The Company is authorized to issue 1,000,000 preference10,000,000 shares of preferred stock with a par value of $0.0001 per share, with such designation, rights and preferences as may be determined from time to time by the Company’sour board of directors. As of September 30, 2017,March 31, 2023 and December 31, 2022, there arewere no preference shares of preferred stock issued or outstanding.
CAPITOL INVESTMENT CORP. IVNOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MAY 1, 2017 (INCEPTION) THROUGH SEPTEMBER 30, 2017
(Unaudited)
Ordinary Shares
The
In connection with
On closing of the Offering, the holders of the Class B ordinary shares agreed not to transfer such shares until one year after the date of the consummation of an initial Business Combination or earlier if, subsequentreceive: (1) up to an initial Business Combination, (i)additional 1,800,000 shares of common stock through July 31, 2024, in increments of 900,000 shares, if the last salestrading price of the Company’s Class A ordinary shares equals orcommon stock exceeds $12.00$13.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations)or $16.00 per share for any 20 trading days within any 30-tradingduring a 30 consecutive trading day period commencingor if a sale transaction of the Company occurs in which the consideration paid per share to holders of common stock of the Company exceeds $13.00 per share or $16.00 per share, and (2) an additional 1,651,798 shares of common stock if during the seven-year period ending July 31, 2026, the trading price of common stock exceeds $19.00 per share for any 20 trading days during a 30 consecutive trading day period or if a sale transaction of the Company occurs in which the consideration paid per share to holders of common stock exceeds $19.00 per share.
| Carrying Value | Fair Value | ||||||||||||||||||||||
| (in $000s) | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| March 31, 2023 | |||||||||||||||||||||||
| ABL Facility | $ | 462,400 | $ | — | $ | 462,400 | $ | — | |||||||||||||||
| 2029 Secured Notes | 920,000 | — | 805,000 | — | |||||||||||||||||||
| 2023 Credit Facility | 13,725 | — | 13,725 | — | |||||||||||||||||||
| Other notes payable | 29,716 | — | 29,716 | — | |||||||||||||||||||
| Warrant liabilities | 2,487 | — | — | 2,487 | |||||||||||||||||||
| December 31, 2022 | |||||||||||||||||||||||
| ABL Facility | $ | 437,731 | $ | — | $ | 437,731 | $ | — | |||||||||||||||
| 2029 Secured Notes | 920,000 | — | 814,200 | — | |||||||||||||||||||
| Other notes payable | 31,661 | — | 31,661 | — | |||||||||||||||||||
| Warrant liabilities | 3,012 | — | — | 3,012 | |||||||||||||||||||
As of September 30, 2017, there were 1,804,973 Class A ordinary shares issued and outstanding (excluding 38,445,027 ordinary shares subject to possible redemption) and 10,062,500 Class B ordinary shares issued and outstanding.
Note 10 — Subsequent Events
management. The Company evaluates subsequent eventsalso rents equipment and transactions that occur after the balance sheet date uppurchases inventory from R&M Equipment Rental.
The Class Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| (in $000s) | 2023 | 2022 | |||||||||||||||||||||||||||
| Total revenues from transactions with related parties | $ | 8,455 | $ | 7,851 | |||||||||||||||||||||||||
| Expenses incurred from transactions with related parties included in cost of revenue | $ | 358 | $ | 1,297 | |||||||||||||||||||||||||
| Expenses incurred from transactions with related parties included in operating expenses | $ | 1,395 | $ | 1,631 | |||||||||||||||||||||||||
| (in $000s) | March 31, 2023 | December 31, 2022 | |||||||||
| Accounts receivable from related parties | $ | 2,280 | $ | 7,813 | |||||||
| Accounts payable to related parties | $ | 199 | $ | 1,475 | |||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2023 | |||||||||||||||||||||||
| (in $000s) | ERS | TES | APS | Total | |||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Rental | $ | 113,784 | $ | — | $ | 4,504 | $ | 118,288 | |||||||||||||||
| Equipment sales | 92,136 | 209,154 | — | 301,290 | |||||||||||||||||||
| Parts and services | — | — | 32,585 | 32,585 | |||||||||||||||||||
| Total revenue | 205,920 | 209,154 | 37,089 | 452,163 | |||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
| Rentals/parts and services | 29,060 | — | 26,987 | 56,047 | |||||||||||||||||||
| Equipment sales | 71,081 | 175,044 | — | 246,125 | |||||||||||||||||||
| Depreciation of rental equipment | 39,512 | — | 818 | 40,330 | |||||||||||||||||||
| Total cost of revenue | 139,653 | 175,044 | 27,805 | 342,502 | |||||||||||||||||||
| Gross profit | $ | 66,267 | $ | 34,110 | $ | 9,284 | $ | 109,661 | |||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2022 | |||||||||||||||||||||||
| (in $000s) | ERS | TES | APS | Total | |||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Rental | $ | 105,561 | $ | — | $ | 3,584 | $ | 109,145 | |||||||||||||||
| Equipment sales | 59,353 | 167,833 | — | 227,186 | |||||||||||||||||||
| Parts and services | — | — | 30,145 | 30,145 | |||||||||||||||||||
| Total revenue | 164,914 | 167,833 | 33,729 | 366,476 | |||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
| Rentals/parts and services | 24,791 | — | 24,950 | 49,741 | |||||||||||||||||||
| Equipment sales | 43,230 | 144,048 | — | 187,278 | |||||||||||||||||||
| Depreciation of rental equipment | 43,966 | — | 998 | 44,964 | |||||||||||||||||||
| Total cost of revenue | 111,987 | 144,048 | 25,948 | 281,983 | |||||||||||||||||||
| Gross profit | $ | 52,927 | $ | 23,785 | $ | 7,781 | $ | 84,493 | |||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| (in $000s) | 2023 | 2022 | |||||||||||||||||||||||||||
| Gross Profit | $ | 109,661 | $ | 84,493 | |||||||||||||||||||||||||
| Selling, general and administrative expenses | 56,991 | 53,655 | |||||||||||||||||||||||||||
| Amortization | 6,672 | 13,335 | |||||||||||||||||||||||||||
| Non-rental depreciation | 2,650 | 3,047 | |||||||||||||||||||||||||||
| Transaction expenses and other | 3,460 | 4,648 | |||||||||||||||||||||||||||
| Interest expense, net | 29,176 | 19,156 | |||||||||||||||||||||||||||
| Financing and other expense (income) | (3,951) | (9,080) | |||||||||||||||||||||||||||
| Income (Loss) Before Income Taxes | $ | 14,663 | $ | (268) | |||||||||||||||||||||||||
of Financial Condition and Results of Operations inventory sold. The equipment and inventory acquired received a purchase accounting step-up in basis, which is a non-cash adjustment to the equipment cost pursuant to our credit agreement. the applicable interest rates would correspondingly change our interest expense on the ABL Facility by approximately $0.6 million on an annual basis. 4. Mine Safety Disclosures(in $000s) March 31, 2023 December 31, 2022 Assets: United States $ 2,950,122 $ 2,830,958 Canada 119,261 107,254 $ 3,069,383 $ 2,938,212 This Quarterly Report on Form 10-Q includesSection 27A of the Private Securities Litigation Reform Act of 1933,1995, as amended, and Section 21E of the Securities Exchange Act of 1934,should be evaluated as amended (the “Exchange Act”). We have based these forward-lookingsuch. These statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminologyoften include words such as “may,“anticipate,” “expect,” “suggest,” “plan,” “believe,” “intend,” “estimate,” “target,” “project,” “should,” “could,” “would,” “expect,“may,” “plan,“will,” “anticipate,“forecast,” “believe,” “estimate,” “continue,” or the negative of such terms orand other similar expressions. FactorsWe base these forward-looking statements or projections on our current expectations, plans and assumptions that might cause or contribute towe have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such a discrepancy include, buttime. As you read and consider this report, you should understand that these statements are not limitedguarantees of performance or results and are subject to those describedand involve risks, uncertainties and assumptions. You should not place undue reliance on these forward-looking statements or projections. Below is a summary of risk factors applicable to us that may materially affect such forward-looking statements and projections:other Securitiesworkforce;Exchange Commission (“SEC”) filings. Referencesretain the experienced personnel, including skilled technicians, we need to “we”, “us”, “our” or the “Company” arecompete in our industries;Capitol Investment Corp. IV, except where the context requires otherwise. The following discussion should be read in conjunction withattract and retain highly skilled personnel and our condensed financial statements and related notes thereto included elsewhere in this report.OverviewWe are a blank check company formed in the Cayman Islands on May 1, 2017 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (“business combination”).We consummatedinability to retain our initial public offering (“Initial Public Offering”) on August 21, 2017. All activity through September 30, 2017 relatessenior management;formationoperation and the Initial Public Offering. Since August 21, 2017, we have been searching for a target business with which to complete an initial business combination.Results of OperationsOur entire activity since May 1, 2017 (inception) up to August 21, 2017 was in preparation for our Initial Public Offering. Since the offering, our activity has been limited to the search for a prospective initial business combination, and we will not be generating any operating revenues until the closing and completion of our initial business combination. We expect to incur increased expensesmanufacturing locations as a result of being a public company (for legal,health concerns, equipment failures, natural disasters, work stoppages, power outages or other reasons;accountingwhich, if not remediated, could result in material misstatements in our financial statements;auditing compliance)our access to additional capital, prevent us from growing our business and increase our risk of default;due diligencelighting and signage. We rent, produce, sell and service a broad range of new and used equipment, including bucket trucks, digger derricks, dump trucks, cranes, service trucks, and heavy-haul trailers. We manage the business in three reporting segments: Equipment Rental Solutions (“ERS”), Truck and Equipment Sales (“TES”) and Aftermarket Parts and Services (“APS”).expecthave net operating loss carryforward and disallowed interest deduction carryforward assets, which are generally available to be used to offset taxable income generated in future years. Due to limitations on the use of theseexpenseseffective tax rate differs from the federal statutory tax rate.Three Months Ended (in $000s) March 31, 2023 % of revenue March 31, 2022 % of revenue $ Change % change December 31, 2022 % of revenue Rental revenue $ 118,288 26.2% $ 109,145 29.8% $ 9,143 8.4% $ 127,829 26.3% Equipment sales 301,290 66.6% 227,186 62.0% 74,104 32.6% 325,746 66.9% Parts sales and services 32,585 7.2% 30,145 8.2% 2,440 8.1% 33,149 6.8% Total revenue 452,163 100.0% 366,476 100.0% 85,687 23.4% 486,724 100.0% Cost of revenue, excluding rental equipment depreciation 302,172 66.8% 237,019 64.7% 65,153 27.5% 317,596 65.3% Depreciation of rental equipment 40,330 8.9% 44,964 12.3% (4,634) (10.3)% 40,803 8.4% Gross profit 109,661 24.3% 84,493 23.1% 25,168 29.8% 128,325 26.4% Operating expenses 69,773 74,685 (4,912) 76,677 Operating income (loss) 39,888 9,808 30,080 51,648 Total other expense 25,225 10,076 15,149 20,157 Income (loss) before income taxes 14,663 (268) 14,931 31,491 Income tax expense (benefit) 863 3,005 (2,142) 554 Net income (loss) $ 13,800 $ (3,273) $ 17,073 $ 30,937 substantially after this period.Forin total revenue for the three months ended September 30, 2017March 31, 2023 compared to the three months ended March 31, 2022 was primarily due to strong customer demand for new equipment and rental equipment, as wells as for parts sales and services record levels of vehicle production. The rental revenue reflects our continued expansion of our rental fleet, higher utilization and pricing gains. Equipment sales increased as the continuing improvement in supply chain challenges allowed for greater order fulfillments and our ability to replenish inventory.from May 1, 2017 (inception)of 5.9%. The effect of these items resulted in approximately $0.9 million of tax expense being recognized in the three months ended March 31, 2023.]September 30, 2017, we hadour earnings, as well as sales of used and rental equipment. Our highly variable cost structure adjusts with the utilization of our equipment, thereby reducing our costs to match our revenue. We principally evaluate financial performance based on the following measurements: average OEC on rent, fleet utilization, and OEC on rent yield. We also report sales order backlog related to our customers’ orders for new vocational heavy duty trucks as an indicator of the demand environment for our products. The table below presents these key measures.Three Months Ended (in $000s) March 31, 2023 March 31, 2022 Change % Change December 31, 2022 % Change Ending OEC $ 1,457,870 $ 1,364,660 $ 93,210 6.8 % $ 1,455,820 0.1 % Average OEC on rent $ 1,214,300 $ 1,119,100 $ 95,200 8.5 % $ 1,267,600 (4.2) % Fleet utilization 83.6 % 82.5 % 1.1 % 1.3 % 86.3 % (3.1) % OEC on rent yield 39.6 % 39.1 % 0.5 % 1.3 % 39.5 % 0.3 % Sales order backlog $ 855,049 $ 586,368 $ 268,681 45.8 % $ 754,142 13.4 % lossrental fleet additions since the first quarter 2022.$167,016 and $172,066, respectively, whichthe factors noted above.Three Months Ended (in $000s) March 31, 2023 March 31, 2022 $
Change% Change December 31, 2022 % Change Net income (loss) $ 13,800 $ (3,273) $ 17,073 521.6 % $ 30,937 (55.4) % Interest expense 22,363 17,445 4,918 28.2 % 21,432 4.3 % Income tax expense (benefit) 863 3,005 (2,142) 71.3 % 554 55.8 % Depreciation and amortization 52,090 62,500 (10,410) (16.7) % 52,362 (0.5) % EBITDA 89,116 79,677 9,439 11.8 % 105,285 (15.4) % Adjustments: 7,199 9,026 (1,827) (20.2) % 8,268 (12.9) % 3,460 4,648 (1,188) (25.6) % 9,026 (61.7) % 2,803 529 2,274 429.9 % 1,411 98.7 % 3,147 3,364 (217) (6.5) % 2,771 13.6 % (525) (5,767) 5,242 90.9 % (2,277) (76.9) % Adjusted EBITDA $ 105,200 $ 91,477 $ 13,723 15.0 % $ 124,484 (15.5) % formation costs.Three Months Ended (in $000s) March 31, 2023 March 31, 2022 December 31, 2022 Equipment sales $ (24,172) $ (12,237) $ (14,518) Cost of equipment sales 23,225 10,370 14,509 Gross profit (947) (1,867) (9) Interest (income) expense (3,428) (2,888) (4,303) Rentals invoiced 7,178 5,284 5,723 Sales-type lease adjustment $ 2,803 $ 529 $ 1,411 Three Months Ended (in $000s) March 31, 2023 March 31, 2022 $ Change % Change December 31, 2022 $ Change Rental revenue $ 113,784 $ 105,561 $ 8,223 7.8 % $ 123,429 (7.8) % Equipment sales 92,136 59,353 32,783 55.2 % 78,472 17.4 % Total revenue 205,920 164,914 41,006 24.9 % 201,901 2.0 % Cost of rental revenue 29,060 24,791 4,269 17.2 % 26,735 8.7 % Cost of equipment sales 71,081 43,230 27,851 64.4 % 57,504 23.6 % Depreciation of rental equipment 39,512 43,966 (4,454) (10.1) % 39,836 (0.8) % Total cost of revenue 139,653 111,987 27,666 24.7 % 124,075 12.6 % Gross profit $ 66,267 $ 52,927 $ 13,340 25.2 % $ 77,826 (14.9) % Three Months Ended (in $000s) March 31, 2023 March 31, 2022 $ Change % Change December 31, 2022 % Change Equipment sales $ 209,154 $ 167,833 $ 41,321 24.6 % $ 247,274 (15.4) % Cost of equipment sales 175,044 144,048 30,996 21.5 % 202,887 (13.7) % Gross profit $ 34,110 $ 23,785 $ 10,325 43.4 % $ 44,387 (23.2) % Three Months Ended (in $000s) March 31, 2023 March 31, 2022 $ Change % Change December 31, 2022 % Change Rental revenue $ 4,504 $ 3,584 $ 920 25.7 % $ 4,400 2.4 % Parts and services revenue 32,585 30,145 2,440 8.1 % 33,149 (1.7) % Total revenue 37,089 33,729 3,360 10.0 % 37,549 (1.2) % Cost of revenue 26,987 24,950 2,037 8.2 % 30,470 (11.4) % Depreciation of rental equipment 818 998 (180) (18.0) % 967 (15.4) % Total cost of revenue 27,805 25,948 1,857 7.2 % 31,437 (11.6) % Gross profit $ 9,284 $ 7,781 $ 1,503 19.3 % $ 6,112 51.9 % September 30, 2017,March 31, 2023, we had $32.2 million in cash and cash equivalents compared to $14.4 million as of $948,017 held outsideDecember 31, 2022. As of March 31, 2023, we had $462.4 million of outstanding borrowings under our ABL Facility compared to $437.7 million of outstanding borrowing under the ABL Facility as of December 31, 2022.Account. UntilNational Association, as trustee and the consummationguarantors party thereto (the “Indenture”). The Issuer pays interest on the 2029 Secured Notes semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2021. Unless earlier redeemed, the 2029 Secured Notes will mature on April 15, 2029.Initial Public Offering,outstanding 2029 Secured Notes of such series may declare the Company’s only sourceentire principal amount of liquidity wasall the 2029 Secured Notes to be due and payable immediately (except that if such event of default is caused by certain events of bankruptcy or insolvency, the entire principal of the 2029 Secured Notes will become due and payable immediately without further action or notice).purchaseinterest free period of ordinary sharesup to 150 days. The total borrowing capacity under the Daimler Facility is $175.0 million. As of March 31, 2023 and March 31, 2022, borrowings on the Daimler Facility were $113.9 million and $39.0 million, respectively. The Daimler agreement is evergreen and is subject to termination by either party through written notice.sponsors,Company with a line of credit of $75.0 million to finance inventory purchases of new Peterbilt and/or Kenworth trucks, tractors, and loanschassis. Effective during the first quarter of 2023, the interest rate has become U.S. Prime Rate minus 0.6%. Previously, amounts borrowed against this line ofadvances from related parties.On August 21, 2017, we consummatedMarch 31, 2022, borrowings on the Initial Public OfferingPACCAR line of 40,250,000 Units, which includescredit were $45.1 million and $20.7 million, respectively. The PACCAR agreement extends automatically each April and is subject to termination by either party through written notice.full exercise by the underwriters of their over-allotment optionPrime Rate in the amountforegoing agreements represent the rate as published in the Wall Street Journal.5,250,000 Units,March 31, 2023, the Loan Agreement provides the Company with a $315.0 million revolving credit facility, which matures on August 25, 2023 and bears interest at a pricerate of $10.00 per Unit, generating gross proceedsthree-month term SOFR plus 3.25%. As of $402,500,000. SimultaneouslyMarch 31, 2023 and March 31, 2022, borrowings on the Loan Agreement were $312.5 million and $220.3 million, respectively. The facility was increased from $315.0 million to $370.0 million on April 17, 2023.the closingSecurity Bank of the Initial Public Offering, we consummated the sale of 6,533,333 Private Placement Warrants to our sponsorsKansas City (“SBKC”) that bears interest at a pricerate of $1.503.125% per warrant, generating gross proceedsannum, and a $3.5 million loan agreement with SBKC that bears interest at a rate of $9,800,000.Following3.5% per annum.Initial Public Offering,Company entered into a totalnew credit agreement allowing for borrowings of $402,500,000 was placed in the Trust Account and we had $1,052,665 of cash held outside of the Trust Account, after payment of all costs relatedup to the Initial Public Offering, and available for working capital purposes. We incurred $22,702,657 in Initial Public Offering related costs, including $8,050,000 of underwriting fees, $14,087,500 of deferred underwriting fees and $565,157 of Initial Public Offering costs.10For the period May 1, 2017 (inception) through September 30, 2017, cash used in operating activities was $266,926, consisting of a net loss of $172,066 and changes in operating assets and liabilities of $94,860.As of September 30, 2017, we had cash held in the Trust Account of $402,500,000. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account not previously released to us (less taxes payable and deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay our income taxes, if any, and for our working capital needs, subject to an annual limit of $750,000. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and$18.0 million (the “2023 Credit Facility”). Proceeds from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.We do not believe we will needcredit agreement were used to raise additional funds in order to meet the expenditures required for operating our business prior to our initial business combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsors, officers and directors or their respective affiliates may, but are not obligated to, loan us funds as may be required on a non-interest basis. If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outsideCompany’s acquisition of real property from a related party in December 2022. A portion of the Trust Account to repay such loaned amounts but noloan proceeds from our Trust Account wouldwill be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants of the post business combination entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identicalfinance improvements to the Private Placement Warrants. Priorproperty. In connection with entering into the agreement, the Company received proceeds of $13.7 million with the ability to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsors, officers, directors or their respective affiliates as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.Moreover, we may need to obtaindraw an additional financing to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held in our Trust Account or because we become obligated to redeem a significant number of our public shares$4.2 million upon completion of certain construction milestones. Borrowings bear interest at a fixed rate of 5.75% per annum and are required to be repaid monthly in an amount of approximately $0.1 million with a balloon payment due on the business combination, in which casematurity date of January 13, 2028. Borrowings are secured by the real property and improvements.Three Months Ended March 31, (in $000s) 2023 2022 Net cash flow from operating activities $ 3,906 $ (29,771) Net cash flow used in investing activities (39,948) (48,458) Net cash flow from financing activities 53,849 66,138 Effect of exchange rate changes 51 — Net change in cash and cash equivalents $ 17,858 $ (12,091) may issue additional securities or incur debt in connection with such business combination. Ifhad cash and cash equivalents of $32.2 million, a decrease of $17.9 million from December 31, 2022. Generally, we are unablemanage our cash flow by using any excess cash, after considering our working capital and capital expenditure needs, including paying down the outstanding balance under our ABL Facility.complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account.Off-Balance Sheet ArrangementsWe did not have any off-balance sheet arrangements asnet cash provided by operating activities of September 30, 2017.Contractual obligationsWe do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay two affiliates of the Company’s executive officers a monthly fee of $20,000 for office space and office and secretarial support provided to the Company. We began incurring these fees on August 15, 2017 and will continue to incur these fees monthly until the earlier of the completion of a business combination and the Company’s liquidation.Critical Accounting PoliciesThe preparation of financial statements and related disclosures in conformity with accounting principles generally accepted$29.8 million in the United Statessame period of America (“GAAP”) requires management2022. The use of cash in the current period is the result of our increased levels of inventory purchases and production.make estimates and assumptions that affectcash used in investing activities of $48.5 million in 2022.reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. The Company has not identified any critical accounting policies.
three months ended March 31, 2023, as compared to $66.1 million in 2022.11As of September 30, 2017, we were not to any market or interest rate risk. Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, may be invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that invest solely in US treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate market risk whenin connection with our long-term debt. Our principal interest rate exposure relates to outstanding amounts under our asset-based revolving credit facility and ifour floor plan financing arrangements. Interest rate changes generally impact the amount of our interest payments and, therefore, our future net proceedsincome and cash flows, assuming other factors are investedheld constant. As of March 31, 2023, we had $462.4 million aggregate principal amount of variable rate debt, consisting of the balance outstanding under the ABL Facility. Holding other variables constant, each one-eighth percentage point increase or decrease in such securities.Disclosure controls and procedures are designed to ensure that information required to be disclosedus in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.Under the supervision andthis Quarterly Report on Form 10-Q, we carried out an evaluation with the participation of our management, including our principal executive officerChief Executive Officer and principal financialChief Financial Officer. Based on that assessment, the Chief Executive Officer and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and proceduresChief Financial Officer concluded as of March 31, 2023, the end of the fiscal quarter ended September 30, 2017, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, ourCompany’s disclosure controls and procedures were not effective atbecause of the material weakness in our internal control over financial reporting described below.reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specifiedsignificant change in the SEC’s rulesCompany’s internal control over financial reporting. We are in the process of completing the integration of policies, processes, people, technology and forms.Changesoperations for the combined company. As part of this integration, we identified deficiencies in the design and operating effectiveness of internal controls associated with the control activities component of the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) framework.overOver Financial ReportingTherechange inchanges to our internal control over financial reporting that occurred during the most recently completed fiscal quarter covered by this Quarterly Report on Form 10-Qended March 31, 2023 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.125.1. Legal Proceedings from RegisteredIn May 2017, we issuedour sponsors an aggregate of 10,062,500 founder shares in exchange for a capital contribution of $25,000, or approximately $0.0025 per share. The foregoing issuances were made pursuant to the exemption from registration contained in Section 4(a)(2)$30.0 million of the Securities ActCompany’s common stock. This authorization does not have an expiration date. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of 1933, as amended (“Securities Act”). Our sponsors then transferred 50,000 founder shares to eachrepurchases depending on market conditions and corporate needs.independent directors in June 2017 and transferred an aggregate of 32,500 founder shares to certain other persons associated with them in August 2017, in each case atcommon stock during the same per-share purchase price paid by our sponsors.On August 21, 2017, we consummated the Initial Public Offering of 40,250,000 units, including 5,250,000 units that were subject to the underwriters’ over-allotment option. Each unit consists of one Class A ordinary share and one third of one redeemable warrant (“Warrant”), each whole Warrant to purchase one Class A ordinary share at a price of $11.50 per share. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $402,500,000. Citigroup Global Markets Inc., Deutsche Bankthree months ended March 31, 2023:ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
(in $000s)January 1, 2023 - January 31, 2023 65,178 $ 6.37 64,535 $ 19,311 February 1, 2023 - February 28, 2023 — $ — — $ 19,311 March 1, 2023 - March 31, 2023 153,509 $ 6.44 142,570 $ 18,394 Total 218,687 $ 6.42 207,105 Inc. and J.P. Morgan Securities LLC acted as joint book-running managers of the Initial Public Offering. The securities in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333- 219146). The Securities and Exchange Commission declared the registration statement effective on August 15, 2017.Simultaneous with the consummation of the Initial Public Offering, we consummated the private placement of 6,533,333 warrants (“Private Placement Warrants”) to our sponsors and directors at a price of $1.50 per Private Placement Warrant, generating total proceeds of $9,800,000. This issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.The Private Placement Warrants are identical to the Warrants included in the units sold in the Initial Public Offering except that the Private Placement Warrants are exercisable on a cashless basis and, if we call the Warrants for redemption, the Private Placement Warrants will not be redeemable by us so long as they are held by the initial purchasers or their permitted transferees. The purchasers of the Private Placement Warrants have agreed that the Private Placement Warrants will not be sold or transferred by them (except in limited situations) until 30 days after we have completed an initial business combination.Of the gross proceeds received from the Initial Public Offering and private placement of Private Placement Warrants, $402,500,000 was placed in a Trust Account.We incurred a total of $22,137,500 in underwriting discounts and commissions and $565,157 for other costs and expenses related to our formation and the Initial Public Offering.For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, 2 of this Form 10-Q.Exhibit No.DescriptionExhibit No. Description 31.131.232101.INS 101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH 101.SCHXBRL Taxonomy Extension Schema DocumentDocument.101.CAL 101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentDocument.101.DEF 101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentDocument.101.LAB 101.LABXBRL Taxonomy Extension Label Linkbase DocumentDocument.101.PRE 101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentLinkbase.104 13Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). In accordance withCAPITOL INVESTMENT CORP. IVDate: November 8, 2017By:/s/ Mark D. EinName:Mark D. EinTitle:Chairman of the Board andDate: May 9, 2023 /s/ Ryan McMonagle Ryan McMonagle, Chief Executive Officer (Principal Executive Officer)Date: By:May 9, 2023/s/ L. Dyson DrydenChristopher J. EperjesyName:L. Dyson DrydenTitle:President andChristopher J. Eperjesy, Chief Financial Officer(Principal Financial and Accounting Officer)14