Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Jan. 05, 2024 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-36788 | |
Entity Registrant Name | EXELA TECHNOLOGIES, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-1347291 | |
Entity Address, Address Line One | 2701 E. Grauwyler Rd. | |
Entity Address, City or Town | Irving | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75061 | |
City Area Code | 844 | |
Local Phone Number | 935-2832 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 6,365,353 | |
Entity Central Index Key | 0001620179 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, Par Value $0.0001 per share | |
Trading Symbol | XELA | |
Security Exchange Name | NASDAQ | |
6.00% Series B Cumulative Convertible Perpetual Preferred Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 6.00% Series B Cumulative Convertible Perpetual Preferred Stock, par value $0.0001 per share | |
Trading Symbol | XELAP | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 6,142 | $ 15,073 |
Restricted cash | 39,352 | 29,994 |
Accounts receivable, net of allowance for credit losses of $5,678 and $6,402, respectively | 96,867 | 101,616 |
Related party receivables and prepaid expenses | 117 | 759 |
Income tax receivable | 129 | |
Inventories, net | 11,003 | 16,848 |
Prepaid expenses and other current assets | 21,483 | 26,206 |
Total current assets | 175,093 | 190,496 |
Property, plant and equipment, net of accumulated depreciation of $217,021 and $207,520, respectively | 59,604 | 71,694 |
Operating lease right-of-use assets, net | 38,557 | 40,734 |
Goodwill | 170,262 | 186,802 |
Intangible assets, net | 173,931 | 200,982 |
Deferred income tax assets | 1,417 | 1,483 |
Other noncurrent assets | 26,509 | 29,721 |
Total assets | 645,373 | 721,912 |
Current liabilities | ||
Current portion of long-term debt | 48,221 | 154,802 |
Accounts payable | 73,742 | 79,249 |
Related party payables | 2,499 | 2,473 |
Income tax payable | 2,045 | |
Accrued liabilities | 61,447 | 61,340 |
Accrued compensation and benefits | 53,399 | 54,143 |
Accrued interest | 24,463 | 60,901 |
Customer deposits | 16,319 | 16,955 |
Deferred revenue | 13,842 | 16,405 |
Obligation for claim payment | 60,037 | 44,380 |
Current portion of finance lease liabilities | 5,048 | 5,485 |
Current portion of operating lease liabilities | 11,487 | 11,867 |
Total current liabilities | 370,504 | 510,045 |
Long-term debt, net of current maturities | 1,043,775 | 942,035 |
Finance lease liabilities, net of current portion | 6,815 | 9,448 |
Pension liabilities, net | 16,861 | 16,917 |
Deferred income tax liabilities | 11,859 | 11,180 |
Long-term income tax liabilities | 3,835 | 2,742 |
Operating lease liabilities, net of current portion | 28,684 | 31,030 |
Other long-term liabilities | 5,923 | 6,104 |
Total liabilities | 1,488,256 | 1,529,501 |
Commitments and Contingencies (Note 8) | ||
Stockholders' equity (deficit) | ||
Common Stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 6,365,965 shares issued and outstanding at September 30, 2023 and 1,393,889 shares issued and 1,393,276 shares outstanding at December 31, 2022 | 261 | 162 |
Preferred stock, $0.0001 par value per share, 20,000,000 shares authorized at September 30, 2023 and December 31, 2022, respectively | ||
Additional paid in capital | 1,169,517 | 1,102,619 |
Less: Common Stock held in treasury, at cost; 0 shares at September 30, 2023 and 612 shares at December 31, 2022 | (10,949) | |
Equity-based compensation | 57,524 | 56,958 |
Accumulated deficit | (2,058,388) | (1,948,009) |
Accumulated other comprehensive loss: | ||
Foreign currency translation adjustment | (8,157) | (4,788) |
Unrealized pension actuarial losses, net of tax | (3,641) | (3,583) |
Total accumulated other comprehensive loss | (11,798) | (8,371) |
Total stockholders' deficit | (842,883) | (807,589) |
Total liabilities and stockholders' deficit | 645,373 | 721,912 |
Series A Preferred Stock | ||
Stockholders' equity (deficit) | ||
Preferred stock, $0.0001 par value per share, 20,000,000 shares authorized at September 30, 2023 and December 31, 2022, respectively | 1 | 1 |
Series B Preferred Stock | ||
Stockholders' equity (deficit) | ||
Preferred stock, $0.0001 par value per share, 20,000,000 shares authorized at September 30, 2023 and December 31, 2022, respectively |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Accounts receivable, allowance for doubtful accounts | $ 5,678 | $ 6,402 |
Accumulated depreciation | $ 217,021 | $ 207,520 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock shares authorized | 1,600,000,000 | 1,600,000,000 |
Common stock, shares issued | 6,365,353 | 1,393,889 |
Common stock, shares outstanding | 6,365,353 | 1,393,276 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Treasury Stock (in shares) | 0 | 612 |
Series A Preferred Stock | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | |
Preferred stock, shares authorized | 2,800,000 | |
Preferred stock, shares issued | 2,778,111 | 2,778,111 |
Preferred stock, shares outstanding | 2,778,111 | 2,778,111 |
Series B Preferred Stock | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | |
Preferred stock, shares authorized | 8,100,000 | |
Preferred stock, shares issued | 3,029,900 | 3,029,900 |
Preferred stock, shares outstanding | 3,029,900 | 3,029,900 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue | $ 253,125 | $ 264,038 | $ 799,683 | $ 810,206 |
Cost of revenue (exclusive of depreciation and amortization) | 198,450 | 217,842 | 626,976 | 658,623 |
Selling, general and administrative expenses (exclusive of depreciation and amortization) | 35,367 | 44,369 | 111,774 | 137,604 |
Depreciation and amortization | 14,398 | 17,737 | 45,848 | 53,942 |
Impairment of goodwill and other intangible assets | 29,565 | 29,565 | ||
Related party expense | 2,845 | 2,016 | 8,696 | 6,189 |
Operating profit (loss) | 2,065 | (47,491) | 6,389 | (75,717) |
Other expense (income), net: | ||||
Interest expense, net | 24,708 | 40,897 | 113,980 | 122,928 |
Debt modification and extinguishment costs (gain), net | (571) | (4,696) | (16,129) | 4,305 |
Sundry expense, net | 298 | 781 | 2,546 | 347 |
Other expense (income), net | (1,069) | (1,115) | (1,583) | 12,419 |
Net loss before income taxes | (21,301) | (83,358) | (92,425) | (215,716) |
Income tax expense | (1,807) | (1,924) | (7,005) | (5,721) |
Net loss | (23,108) | (85,282) | (99,430) | (221,437) |
Net loss attributable to common stockholders | $ (25,298) | $ (87,326) | $ (105,865) | $ (226,613) |
Basic (in dollars per share) | $ (3.97) | $ (276.59) | $ (18.08) | $ (1,281.20) |
Diluted (in dollars per share) | $ (3.97) | $ (276.59) | $ (18.08) | $ (1,281.20) |
Series A Preferred Stock | ||||
Other expense (income), net: | ||||
Cumulative dividends for Preferred Stock | $ (1,002) | $ (908) | $ (2,923) | $ (2,648) |
Series B Preferred Stock | ||||
Other expense (income), net: | ||||
Cumulative dividends for Preferred Stock | $ (1,188) | $ (1,136) | $ (3,512) | $ (2,528) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) | ||||
Net loss | $ (23,108) | $ (85,282) | $ (99,430) | $ (221,437) |
Other comprehensive income (loss), net of tax | ||||
Foreign currency translation adjustments | (3,165) | 1,978 | (3,369) | 4,588 |
Unrealized pension actuarial gains (losses), net of tax | 147 | 824 | (58) | 1,934 |
Total other comprehensive loss, net of tax | $ (26,126) | $ (82,480) | $ (102,857) | $ (214,915) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($) $ in Thousands | Common Stock | Preferred Stock Series A Preferred Stock | Preferred Stock Series B Preferred Stock | Treasury Stock | Additional Paid in Capital Series B Preferred Stock | Additional Paid in Capital | Equity-based compensation | Foreign currency translation adjustment | Unrealized Pension Actuarial Losses, net of tax | Accumulated Deficit | Series B Preferred Stock | Total |
Beginning balance at Dec. 31, 2021 | $ 37 | $ 1 | $ (10,949) | $ 838,853 | $ 56,123 | $ (7,463) | $ (10,946) | $ (1,532,428) | $ (666,772) | |||
Beginning balance (in shares) at Dec. 31, 2021 | 66,300 | 2,778,111 | 612 | |||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||||||||
Net loss | (56,956) | (56,956) | ||||||||||
Equity-based compensation | 302 | 302 | ||||||||||
Foreign currency translation adjustment | 1,477 | 1,477 | ||||||||||
Net realized pension actuarial gains (loss), net of tax | 308 | 308 | ||||||||||
Common Stock exchanged for Series B Preferred Stock | $ (2) | 2 | ||||||||||
Common Stock exchanged for Series B Preferred Stock (in shares) | (4,502) | 900,328 | ||||||||||
Issuance of Common Stock from at the market offerings, net of offering costs | $ 24 | 114,509 | 114,533 | |||||||||
Issuance of Common Stock from at the market offerings, net of offering costs (in shares) | 59,070 | |||||||||||
Withholding of employee taxes on vested RSUs | (190) | (190) | ||||||||||
Common Stock issued for vested RSUs (in shares) | 272 | |||||||||||
Ending balance at Mar. 31, 2022 | $ 59 | $ 1 | $ (10,949) | 953,364 | 56,235 | (5,986) | (10,638) | (1,589,384) | (607,298) | |||
Ending balance (in shares) at Mar. 31, 2022 | 121,140 | 2,778,111 | 900,328 | 612 | ||||||||
Beginning balance at Dec. 31, 2021 | $ 37 | $ 1 | $ (10,949) | 838,853 | 56,123 | (7,463) | (10,946) | (1,532,428) | (666,772) | |||
Beginning balance (in shares) at Dec. 31, 2021 | 66,300 | 2,778,111 | 612 | |||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||||||||
Net loss | (221,437) | |||||||||||
Foreign currency translation adjustment | 4,588 | |||||||||||
Net realized pension actuarial gains (loss), net of tax | 1,934 | |||||||||||
Ending balance at Sep. 30, 2022 | $ 142 | $ 1 | $ (10,949) | 1,072,322 | 56,676 | (2,875) | (9,012) | (1,753,865) | (647,560) | |||
Ending balance (in shares) at Sep. 30, 2022 | 400,255 | 2,778,111 | 3,029,900 | 612 | ||||||||
Beginning balance at Mar. 31, 2022 | $ 59 | $ 1 | $ (10,949) | 953,364 | 56,235 | (5,986) | (10,638) | (1,589,384) | (607,298) | |||
Beginning balance (in shares) at Mar. 31, 2022 | 121,140 | 2,778,111 | 900,328 | 612 | ||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||||||||
Net loss | (79,199) | (79,199) | ||||||||||
Equity-based compensation | 528 | 528 | ||||||||||
Foreign currency translation adjustment | 1,133 | 1,133 | ||||||||||
Net realized pension actuarial gains (loss), net of tax | 802 | 802 | ||||||||||
Common Stock exchanged for Series B Preferred Stock | $ (4) | 4 | ||||||||||
Common Stock exchanged for Series B Preferred Stock (in shares) | (10,648) | 2,129,572 | ||||||||||
Issuance of Common Stock from at the market offerings, net of offering costs | $ 36 | 56,328 | 56,364 | |||||||||
Issuance of Common Stock from at the market offerings, net of offering costs (in shares) | 90,948 | |||||||||||
Withholding of employee taxes on vested RSUs | (2) | (2) | ||||||||||
Common Stock issued for vested RSUs (in shares) | 12 | |||||||||||
Agreed cancellation of Common Stock issued for Director's vested RSUs (in shares) | (155) | |||||||||||
Dividend declared and paid on Preferred Stock | $ (1,396) | $ (1,396) | ||||||||||
Ending balance at Jun. 30, 2022 | $ 91 | $ 1 | $ (10,949) | 1,008,300 | 56,761 | (4,853) | (9,836) | (1,668,583) | (629,068) | |||
Ending balance (in shares) at Jun. 30, 2022 | 201,297 | 2,778,111 | 3,029,900 | 612 | ||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||||||||
Net loss | (85,282) | (85,282) | ||||||||||
Equity-based compensation | (142) | (142) | ||||||||||
Foreign currency translation adjustment | 1,978 | 1,978 | ||||||||||
Net realized pension actuarial gains (loss), net of tax | 824 | 824 | ||||||||||
Issuance of Common Stock from at the market offerings, net of offering costs | $ 51 | 65,590 | 65,641 | |||||||||
Issuance of Common Stock from at the market offerings, net of offering costs (in shares) | 200,468 | |||||||||||
Dividend declared and paid on Preferred Stock | (1,136) | (1,136) | ||||||||||
Common Stock repurchased and retired | (487) | (487) | ||||||||||
Common Stock repurchased and retired (in shares) | (1,787) | |||||||||||
Reversal of excess withholding of employee taxes on vested RSUs | 57 | 57 | ||||||||||
Issuance of Common Stock to Executive Chairman under certain subscription agreement | 100 | 100 | ||||||||||
Issuance of Common Stock to Executive Chairman under certain subscription agreement, shares | 355 | |||||||||||
Cancellation of fractional Common Stock on Reverse Stock Split | (45) | (45) | ||||||||||
Ending balance at Sep. 30, 2022 | $ 142 | $ 1 | $ (10,949) | 1,072,322 | 56,676 | (2,875) | (9,012) | (1,753,865) | (647,560) | |||
Ending balance (in shares) at Sep. 30, 2022 | 400,255 | 2,778,111 | 3,029,900 | 612 | ||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||||||||
Cancellation of fractional Common Stock on Reverse Stock Split (shares) | (78) | |||||||||||
Beginning balance at Dec. 31, 2022 | $ 162 | $ 1 | $ (10,949) | 1,102,619 | 56,958 | (4,788) | (3,583) | (1,948,009) | (807,589) | |||
Beginning balance (in shares) at Dec. 31, 2022 | 1,393,276 | 2,778,111 | 3,029,900 | 612 | ||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||||||||
Net loss | (45,436) | (45,436) | ||||||||||
Equity-based compensation | 111 | 111 | ||||||||||
Foreign currency translation adjustment | (2,105) | (2,105) | ||||||||||
Net realized pension actuarial gains (loss), net of tax | (89) | (89) | ||||||||||
Issuance of Common Stock from at the market offerings, net of offering costs | $ 99 | 66,929 | 67,028 | |||||||||
Issuance of Common Stock from at the market offerings, net of offering costs (in shares) | 4,977,744 | |||||||||||
Ending balance at Mar. 31, 2023 | $ 261 | $ 1 | $ (10,949) | 1,169,548 | 57,069 | (6,893) | (3,672) | (1,993,445) | (788,080) | |||
Ending balance (in shares) at Mar. 31, 2023 | 6,371,020 | 2,778,111 | 3,029,900 | 612 | ||||||||
Beginning balance at Dec. 31, 2022 | $ 162 | $ 1 | $ (10,949) | 1,102,619 | 56,958 | (4,788) | (3,583) | (1,948,009) | (807,589) | |||
Beginning balance (in shares) at Dec. 31, 2022 | 1,393,276 | 2,778,111 | 3,029,900 | 612 | ||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||||||||
Net loss | (99,430) | |||||||||||
Foreign currency translation adjustment | (3,369) | |||||||||||
Net realized pension actuarial gains (loss), net of tax | (58) | |||||||||||
Ending balance at Sep. 30, 2023 | $ 261 | $ 1 | 1,169,517 | 57,524 | (8,157) | (3,641) | (2,058,388) | (842,883) | ||||
Ending balance (in shares) at Sep. 30, 2023 | 6,365,353 | 2,778,111 | 3,029,900 | |||||||||
Beginning balance at Mar. 31, 2023 | $ 261 | $ 1 | $ (10,949) | 1,169,548 | 57,069 | (6,893) | (3,672) | (1,993,445) | (788,080) | |||
Beginning balance (in shares) at Mar. 31, 2023 | 6,371,020 | 2,778,111 | 3,029,900 | 612 | ||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||||||||
Net loss | (30,886) | (30,886) | ||||||||||
Equity-based compensation | 203 | 203 | ||||||||||
Foreign currency translation adjustment | 1,901 | 1,901 | ||||||||||
Net realized pension actuarial gains (loss), net of tax | (116) | (116) | ||||||||||
Payment for fractional shares on reverse stock split in May 2023 | (31) | (31) | ||||||||||
Payment for fractional shares on reverse stock split in May 2023 (shares) | (5,667) | |||||||||||
Ending balance at Jun. 30, 2023 | $ 261 | $ 1 | $ (10,949) | 1,169,517 | 57,272 | (4,992) | (3,788) | (2,024,331) | (817,009) | |||
Ending balance (in shares) at Jun. 30, 2023 | 6,365,353 | 2,778,111 | 3,029,900 | 612 | ||||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | ||||||||||||
Net loss | (23,108) | (23,108) | ||||||||||
Equity-based compensation | 252 | 252 | ||||||||||
Foreign currency translation adjustment | (3,165) | (3,165) | ||||||||||
Net realized pension actuarial gains (loss), net of tax | 147 | 147 | ||||||||||
Treasury stock retired | $ 10,949 | (10,949) | ||||||||||
Treasury stock retired (in shares) | (612) | |||||||||||
Ending balance at Sep. 30, 2023 | $ 261 | $ 1 | $ 1,169,517 | $ 57,524 | $ (8,157) | $ (3,641) | $ (2,058,388) | $ (842,883) | ||||
Ending balance (in shares) at Sep. 30, 2023 | 6,365,353 | 2,778,111 | 3,029,900 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |
Sep. 30, 2022 | Jun. 30, 2022 | |
Series B Preferred Stock | ||
Dividend declared and paid on Series B Preferred Stock | $ 0.375 | $ 0.46 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Cash flows from operating activities | |||||
Net loss | $ (99,430) | $ (221,437) | |||
Adjustments to reconcile net loss | |||||
Depreciation and amortization | $ 14,398 | $ 17,737 | 45,848 | 53,942 | |
Original issue discount, debt premium and debt issuance cost amortization | 9,976 | 10,383 | |||
Debt modification and extinguishment gain, net | (17,534) | (1,803) | |||
Impairment of goodwill and other intangible assets | 29,565 | 29,565 | |||
Credit loss expense | 1,818 | 704 | |||
Deferred income tax provision | 680 | 2,492 | |||
Share-based compensation expense | 566 | 694 | |||
Unrealized foreign currency gain | (143) | (1,503) | |||
(Gain) loss on sale of assets | (6,579) | 548 | |||
Change in operating assets and liabilities | |||||
Accounts receivable | 2,954 | 83,282 | |||
Prepaid expenses and other current assets | 8,732 | (6,910) | |||
Accounts payable and accrued liabilities | 23,667 | (37,004) | |||
Related party payables | 668 | 426 | |||
Additions to outsource contract costs | (443) | (330) | |||
Net cash used in operating activities | (29,220) | (86,951) | |||
Cash flows from investing activities | |||||
Purchase of property, plant and equipment | (5,585) | (14,208) | |||
Additions to patents | (15) | ||||
Additions to internally developed software | (2,967) | (2,710) | |||
Proceeds from sale of assets | 29,811 | 194 | |||
Net cash provided by (used in) investing activities | 21,259 | (16,739) | |||
Cash flows from financing activities | |||||
Proceeds from issuance of Common Stock from at the market offerings | 69,260 | 245,073 | |||
Cash paid for equity issuance costs from at the market offerings | (2,232) | (8,480) | |||
Dividend paid on Series B Preferred Stock | (2,532) | ||||
Payment for fractional shares on reverse stock split | (31) | ||||
Repurchases of Common Stock for retirement | (487) | ||||
Borrowings under factoring arrangement and Securitization Facility | 87,653 | 93,867 | |||
Principal repayment on borrowings under factoring arrangement and Securitization Facility | (90,358) | (186,245) | |||
Cash paid for withholding taxes on vested RSUs | (138) | ||||
Lease terminations | 3 | ||||
Cash paid for debt issuance costs | (8,273) | (7,125) | |||
Principal payments on finance lease obligations | (3,477) | (4,342) | |||
Borrowings from senior secured revolving facility and BRCC revolver | 9,600 | 20,000 | |||
Repayments on senior secured revolving facility | (49,477) | ||||
Proceeds from issuance of 2026 Notes | 80,620 | ||||
Borrowings from other loans | 41,843 | 7,500 | |||
Cash paid for debt repurchases | (11,858) | (4,712) | |||
Proceeds From Senior Secured Term Loan | 40,000 | ||||
Proceeds from Second Lien Note | 31,500 | ||||
Repayment of BRCC term loan | (48,529) | (59,209) | |||
Principal repayments on senior secured term loans and other loans | (106,657) | (22,829) | |||
Net cash provided by financing activities | 8,441 | 101,487 | |||
Effect of exchange rates on cash, restricted cash and cash equivalents | (53) | (1,054) | |||
Net increase in cash, restricted cash and cash equivalents | 427 | (3,257) | |||
Cash, restricted cash, and cash equivalents | |||||
Beginning of period | 45,067 | 48,060 | $ 48,060 | ||
End of period | $ 45,494 | $ 44,803 | 45,494 | 44,803 | $ 45,067 |
Supplemental cash flow data: | |||||
Income tax payments, net of refunds received | 3,369 | 5,267 | |||
Interest paid | 80,156 | 93,405 | |||
Noncash investing and financing activities: | |||||
Assets acquired through right-of-use arrangements | 405 | 958 | |||
Issuance of new notes in exchange of 2026 notes | 764,800 | ||||
Issuance of new notes in exchange of 2023 term loan | 2,963 | ||||
Accrued PIK interest paid through issuance of PIK Notes | 44,146 | ||||
Accrued capital expenditures | $ 1,778 | $ 1,916 |
General
General | 9 Months Ended |
Sep. 30, 2023 | |
General | |
General | 1. General These condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements as of and for the year ended December 31, 2022 included in the Exela Technologies, Inc. (the “Company,” “Exela,” “we,” “our” or “us”) annual report on Form 10-K for such period (as amended, the “2022 Form 10-K”), filed with the Securities and Exchange Commission (“SEC”) on April 3, 2023 and May 1, 2023 and available at the SEC’s website at http://www.sec.gov. The accompanying condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”), as they apply to interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These accounting principles require us to use estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from our estimates. The condensed consolidated financial statements are unaudited, but in our opinion include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim period. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year. On May 12, 2023, we effected a one-for- two hundred two hundred Going Concern In accordance with ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern In performing this evaluation, the Company concluded that under the standards of ASC 205-40 the following conditions raised substantial doubt about its ability to continue as a going concern: ● history of net losses, including net losses of $99.4 million for the nine months ended September 30, 2023; ● net operating cash outflow of $29.2 million for the nine months ended September 30, 2023; ● working capital deficit of $195.4 million as of September 30, 2023; and ● an accumulated deficit of $2,058.4 million as of September 30, 2023. The Company has undertaken and/or completed the following plans and actions to improve its available cash balances, liquidity or cash generated from operations: ● identified and in the process of executing on significant cost savings for fiscal year 2024; ● issued approximately $764.8 million aggregate principal amount of New Notes (as defined in Note 5 – Long-Term Debt and Credit Facilities ) in exchange for $956.0 million aggregate principal amount of existing 2026 Notes that provide flexibility to pay up to 50% of the interest payments in 2024 in New Notes. ● executed a $40.0 million financing agreement with certain lenders with Blue Torch Finance LLC acting as an administrative agent and used proceeds to repay existing debt; ● fully discharged $48.4 million of outstanding principal amount of 2023 Term Loans by issuing $3.0 million aggregate principal amount of New Notes and making cash payment of $44.8 million resulting in a debt extinguishment gain of $0.6 million; ● fully repaid $9.0 million of outstanding principal amount of 2023 Notes in cash (see Note 5 – Long-Term Debt and Credit Facilities ); and ● completed the merger of its European business with CFFE on November 29, 2023 (see Note 14 – Subsequent Events for further details). In addition to these actions, management has reviewed the Company's operational plans which include executing on price increases, projected growth of margins and cost containment activities. The Company will have to continue to restore positive operating cash flows and profitability over the next twelve months and otherwise execute its business plan. The Company believes that the effective execution of management’s plans, as described above, will provide sufficient liquidity to meet its financial obligations and allievate substantial doubt. However, there can be no assurance that it will be successful in continuing to restore positive cash flows, or that it can raise additional financing when needed, and obtain it on terms acceptable or favorable to the Company. These factors and the execution risk currently raise substantial doubt about our ability to continue as a going concern for at least twelve months from the date that the financial statements were issued. The Company’s plans to further enhance liquidity include the potential sale of certain non-core assets that are not central to the Company’s long-term strategic vision, and any potential action with respect to these operations would be intended to allow the Company to better focus on its core businesses. The Company has retained financial advisors to assist with the sale of select assets. The Company expects to use the potential net proceeds from this initiative for the pay down of debt. These plans are subject to inherent risks and uncertainties and subject to several factors, including market and economic conditions that are outside of the Company’s control. Accordingly, there can be no assurance that these plans can be effectively implemented and, therefore, that the conditions can be effectively mitigated. Net Loss per Share Earnings per share (“EPS”) is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, using the more dilutive of the two-class method and the if-converted method in the period of earnings. The two class method is an earnings allocation method that determines earnings per share (when there are earnings) for common stock and participating securities. The if-converted method assumes all convertible securities are converted into common stock. Diluted EPS excludes all dilutive potential shares of common stock if their effect is anti-dilutive. As the Company experienced net losses for the periods presented, the impact of the Company’s Series A Perpetual Convertible Preferred Stock (“Series A Preferred Stock”) and Series B Cumulative Convertible Perpetual Preferred Stock (the “Series B Preferred Stock”), was calculated using the if-converted method. As of September 30, 2023, the outstanding shares of the Company’s Series A Preferred Stock and Series B Preferred Stock, if converted would have resulted in an additional 393 shares and 16,079 shares of our Common Stock outstanding, respectively, however, they were not included in the computation of diluted loss per share as their effects were anti-dilutive (i.e., if included, would reduce the net loss per share). Similarly, the Company also did not include the effect of 2,433 shares of Common Stock issuable upon exercise of 9,731,819 warrants sold in a private placement of securities on March 18, 2021 or the effect of the aggregate number of shares issuable pursuant to outstanding restricted stock units, performance units and options (2,471 and 2,486 as of September 30, 2023 and 2022, respectively) in the calculation of diluted loss per share for the three and nine months ended September 30, 2023 and 2022, because their effects were also anti-dilutive. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net loss attributable to common stockholders (A) $ (25,298) $ (87,326) $ (105,865) $ (226,613) Weighted average common shares outstanding – basic and diluted (B) 6,365,353 315,725 5,854,840 176,875 Loss Per Share: Basic and diluted (A/B) $ (3.97) $ (276.59) $ (18.08) $ (1,281.20) Merger Agreement On October 9, 2022, the Company entered into a definitive merger agreement to merge its European business with CF Acquisition Corp. VIII (“CFFE”), a special purpose acquisition company, to form a new publicly-traded company which will be called XBP Europe, Inc. (“XBP Europe”). Following the closing of the transaction, which occurred on November 29, 2023, the Company indirectly owns a majority of the outstanding capital stock of XBP Europe. The effects of these transactions are not reflected in these condensed consolidated financial statements (see Note 14 – Subsequent Events Sale of Non-core Assets On June 8, 2023, the Company completed the sale of its high-speed scanner business, which was a part of its ITPS segment (as defined in Note 3 – Significant Accounting Policies |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2023 | |
New Accounting Pronouncements | |
New Accounting Pronouncements | 2. New Accounting Pronouncements Recently Adopted Accounting Pronouncements Effective January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, Financial Instruments—Credit Losses (Topic 326) Codification Improvements to Topic 326, Financial Instruments—Credit Losses balances presented for December 31, 2022, which were derived under the incurred loss model, are comparable to September 30, 2023. The following table describes the changes in the allowance for expected credit losses for the nine months ended September 30, 2023 (all related to accounts receivables): Balance at January 1, 2023 of the allowance for expected credit losses $ 6,402 Change in the provision for expected credit losses for the period (724) Balance at September 30, 2023 of the allowance for expected credit losses $ 5,678 Effective January 1, 2023, the Company adopted ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers Recently Issued Accounting Pronouncements In March 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-01, Leases (Topic 842): Common Control Arrangements |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Significant Accounting Policies | |
Significant Accounting Policies | 3. Significant Accounting Policies The information presented below supplements the Significant Accounting Policies information presented in the 2022 Form 10-K. Revenue Recognition We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers Nature of Services Our primary performance obligations are to stand ready to provide various forms of business processing services, consisting of a series of distinct services, but that are substantially the same, and have the same pattern of transfer over time, and accordingly are combined into a single performance obligation. Our promise to our customers is typically to perform an unknown or unspecified quantity of tasks and the consideration received is contingent upon the customers’ use (i.e., number of transactions processed, requests fulfilled, etc.); as such, the total transaction price is variable. We allocate variable fees to the single performance obligation charged to the distinct service period in which we have the contractual right to bill under the contract. Disaggregation of Revenues The Company is organized into three segments: Information & Transaction Processing Solutions (“ITPS”), Healthcare Solutions (“HS”), and Legal & Loss Prevention Services (“LLPS”) (See Note 13 – Segment and Geographic Area Information Three Months Ended September 30, 2023 2022 ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 127,074 $ 62,090 $ 18,885 $ 208,049 $ 141,904 $ 60,955 $ 17,774 $ 220,633 EMEA 40,035 — — 40,035 39,053 — — 39,053 Other 5,041 — — 5,041 4,352 — — 4,352 Total $ 172,150 $ 62,090 $ 18,885 $ 253,125 $ 185,309 $ 60,955 $ 17,774 $ 264,038 Nine Months Ended September 30, 2023 2022 ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 410,598 $ 188,740 $ 60,095 $ 659,433 $ 429,979 $ 173,940 $ 55,946 $ 659,865 EMEA 125,107 — — 125,107 136,722 — — 136,722 Other 15,143 — — 15,143 13,619 — — 13,619 Total $ 550,848 $ 188,740 $ 60,095 $ 799,683 $ 580,320 $ 173,940 $ 55,946 $ 810,206 Contract Balances The following table presents contract assets, contract liabilities and contract costs recognized at September 30, 2023 and December 31, 2022: September 30, December 31, January 1, 2023 2022 2022 Accounts receivable, net $ 96,867 $ 101,616 $ 184,102 Deferred revenues 14,881 17,585 17,518 Customer deposits 16,319 16,955 17,707 Costs to obtain and fulfill a contract $ 1,485 $ 1,674 $ 2,328 Accounts receivable, net includes $29.7 million and $25.7 million as of September 30, 2023 and December 31, 2022, respectively, representing amounts not yet billed to customers. We have accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers. Deferred revenues relate to payments received in advance of performance under a contract. A significant portion of this balance relates to maintenance contracts or other service contracts where we received payments for upfront conversions or implementation activities which do not transfer a service to the customer but rather are used in fulfilling the related performance obligations that transfer over time. The advance consideration received from customers is deferred over the contract term. We recognized revenue of $1.6 million and $16.4 million during the three and nine months ended September 30, 2023, respectively that had been deferred as of December 31, 2022. We recognized revenue of $1.8 million and $15.3 million during the three and nine months ended September 30, 2022, respectively that had been deferred as of January 1, 2022. We recognized revenue of $16.5 million during the year ended December 31, 2022 that had been deferred as of January 1, 2022. Costs incurred to obtain and fulfill contracts are deferred and presented as part of intangible assets, net and expensed on a straight-line basis over the estimated benefit period. We recognized $0.2 million and $0.2 million of amortization for these costs for the three months ended September 30, 2023 and 2022, respectively, within depreciation and amortization expense. We recognized $0.6 million and $0.8 million of amortization for these costs for the nine months ended September 30, 2023 and 2022, respectively, within depreciation and amortization expense. We recognized $1.1 million of amortization for these costs in 2022 within depreciation and amortization expense. These costs represent incremental external costs or certain specific internal costs that are directly related to the contract acquisition or fulfillment and can be separated into two principal categories: contract commissions and fulfillment costs. Applying the practical expedient in ASC 340-40-25-4, we recognize the incremental costs of obtaining contracts as an expense when incurred, if the amortization period would have been one year or less. These costs are included in selling, general and administrative expenses. The effect of applying this practical expedient was not material. Customer deposits consist primarily of amounts received from customers in advance for postage. These advanced postage deposits are used to cover the costs associated with postage, with the corresponding postage revenue being recognized as services are performed. Performance Obligations At the inception of each contract, we assess the goods and services promised in our contracts and identify each distinct performance obligation. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts. For the majority of our business and transaction processing service contracts, revenues are recognized as services are provided based on an appropriate input or output method, typically based on the related labor or transactional volumes. Certain of our contracts have multiple performance obligations, including contracts that combine software implementation services with post-implementation customer support. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we estimate our expected costs of satisfying a performance obligation and add an appropriate margin for that distinct good or service. We also use the adjusted market approach whereby we estimate the price that customers in the market would be willing to pay. In assessing whether to allocate variable consideration to a specific part of the contract, we consider the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract. Certain of our software implementation performance obligations are satisfied at a point in time, typically when customer acceptance is obtained. When evaluating the transaction price, we analyze, on a contract-by-contract basis, all applicable variable consideration. The nature of our contracts gives rise to variable consideration, including volume discounts, contract penalties, and other similar items that generally decrease the transaction price. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We do not anticipate significant changes to our estimates of variable consideration. We include reimbursements from customers, such as postage costs, in revenue, while the related costs are included in cost of revenue. Transaction Price Allocated to the Remaining Performance Obligations In accordance with optional exemptions available under ASC 606, we did not disclose the value of unsatisfied performance obligations for (a) contracts with an original expected length of one year or less, and (b) contracts for which variable consideration relates entirely to an unsatisfied performance obligation, which comprise the majority of our contracts. We have certain non-cancellable contracts where we receive a fixed monthly fee in exchange for a series of distinct services that are substantially the same and have the same pattern of transfer over time, with the corresponding remaining performance obligations as of September 30, 2023 in each of the future periods below: Estimated Remaining Fixed Consideration for Unsatisfied Performance Obligations Remainder of 2023 $ 10,169 2024 35,699 2025 30,338 2026 3,663 2027 2,041 2028 and thereafter 1,226 Total $ 83,136 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Assets and Goodwill | |
Intangible Assets and Goodwill | 4. Intangible Assets and Goodwill Intangible Assets Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and consists of the following: September 30, 2023 Gross Carrying Accumulated Intangible Amount (a) Amortization Asset, net Customer relationships $ 507,675 $ (373,656) $ 134,019 Developed technology 88,553 (88,026) 527 Patent 15 (14) 1 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 17,616 (16,131) 1,485 Internally developed software 55,107 (40,786) 14,321 Purchased software 26,749 (8,471) 18,278 Intangibles, net $ 704,115 $ (530,184) $ 173,931 December 31, 2022 Gross Carrying Accumulated Intangible Amount (a) Amortization Asset, net Customer relationships $ 507,723 $ (351,240) $ 156,483 Developed technology 88,553 (88,000) 553 Patent 15 (6) 9 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 17,184 (15,509) 1,675 Internally developed software 52,441 (35,095) 17,346 Purchased software 26,749 (7,133) 19,616 Intangibles, net $ 701,065 $ (500,083) $ 200,982 (a) Amounts include intangible assets acquired in business combinations and asset acquisitions. (b) The carrying amount of trade names for 2023 and 2022 is net of accumulated impairment losses of $44.1 million. Carrying amount of $5.3 million as at September 30, 2023 represents indefinite-lived intangible assets. Goodwill The Company’s operating segments are significant strategic business units that align its products and services with how it manages its business, approaches the markets and interacts with customers. The Company is organized into three segments: ITPS, HS, and LLPS (See Note 13 – Segment and Geographic Area Information Goodwill by reporting segment consists of the following: Balances as at January 1, 2023 (a) Additions Deletions Impairments Currency Translation Adjustments Balances as at September 30, 2023 (a) ITPS $ 81,151 $ — $ (16,500) (b) $ — $ (40) $ 64,611 HS 86,786 — — — — 86,786 LLPS 18,865 — — — — 18,865 Total $ 186,802 $ — $ (16,500) $ — $ (40) $ 170,262 Balances as at January 1, 2022 (a) Additions Deletions Impairments Currency Translation Adjustments Balances as at December 31, 2022 (a) ITPS $ 252,672 $ — $ — $ (171,182) $ (339) $ 81,151 HS 86,786 — — — — 86,786 LLPS 18,865 — — — — 18,865 Total $ 358,323 $ — $ — $ (171,182) $ (339) $ 186,802 (a) The goodwill amount for all periods presented is net of accumulated impairment amounts. Accumulated impairment relating to ITPS was $487.7 million, $487.7 million and $316.5 million as at September 30, 2023, December 31, 2022 and December 31, 2021, respectively. Accumulated impairment relating to LLPS was $243.4 million as at September 30, 2023, December 31, 2022 and December 31, 2021, respectively. (b) The deletion in goodwill is due to derecognition of allocated goodwill on sale of the high-speed scanner business in the second quarter of 2023. Refer to Note 1 —General . |
Long-Term Debt and Credit Facil
Long-Term Debt and Credit Facilities | 9 Months Ended |
Sep. 30, 2023 | |
Long-Term Debt and Credit Facilities | |
Long-Term Debt and Credit Facilities | 5. Long-Term Debt and Credit Facilities Senior Credit Facilities On July 12, 2017, subsidiaries of the Company entered into a First Lien Credit Agreement with Royal Bank of Canada, Credit Suisse AG, Cayman Islands Branch, Natixis, New York Branch and KKR Corporate Lending LLC (the “Credit Agreement”) providing Exela Intermediate LLC, a wholly owned subsidiary of the Company, upon the terms and subject to the conditions set forth in the Credit Agreement, (i) a $350.0 million senior secured term loan scheduled to mature July 12, 2023 with an original issue discount of $7.0 million, and (ii) a $100.0 million senior secured revolving facility scheduled to mature on July 12, 2022 (the “Revolving Credit Facility”). On July 13, 2018, subsidiaries of the Company were able to refinance the $343.4 million of term loans then outstanding under the Credit Agreement (the “Repricing Term Loans”) and borrowed an additional $30.0 million pursuant to incremental term loans (the “2018 Incremental Term Loans”). On April 16, 2019, subsidiaries of the Company borrowed a further $30.0 million pursuant to incremental term loans (the “2019 Incremental Term Loans”, and, together with the 2018 Incremental Terms Loans and Repricing Term Loans, referred to herein as the “2023 Term Loans”). The subsidiaries of the Company made periodic interest and principal repayments on the 2023 Term Loan under the terms of the loan agreements. On December 9, 2021, in a private exchange transaction, subsidiaries of the Company exchanged $212.1 million of 2023 Term Loans for $84.3 million in cash and $127.8 million principal amount of new 11.500% First-Priority Senior Secured Notes scheduled to mature July 12, 2026 (the “2026 Notes”) issued by Exela Intermediate LLC and Exela Finance Inc., wholly-owned subsidiaries of the Company (together, the “Issuers”). As a result of the private exchange, repurchases (as discussed below) and periodic principal repayments, $48.4 million aggregate principal amount of the 2023 Term Loans were outstanding as of July 11, 2023, the date the Company fully repaid and discharged the remaining outstanding balance of the 2023 Term Loans by making a cash payment of $44.8 million and by issuance of $3.0 million principal amount of new 11.500% First-Priority Senior Secured Notes scheduled to mature on April 15, 2026 (the “New Notes”) and issued by the Issuers in an exchange transaction (as discussed below). The Company recorded The 2023 Term Loans bore interest at a rate per annum of, at the borrower’s option, either (a) a LIBOR rate determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a 1.0% floor, or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus 0.5%, (ii) the prime rate and (iii) the one-month adjusted LIBOR plus 1.0%, in each case plus an applicable margin of 6.5% for LIBOR loans and 5.5% for base rate loans. Revolving Credit Facility; Letters of Credit As of December 31, 2021, the $100 million Revolving Credit Facility was fully drawn taking into account approximately $0.5 million in letters of credit issued thereunder as of such date. As of December 31, 2022, the Revolving Credit Facility had been prepaid and terminated as described below. On March 7, 2022, subsidiaries of the Company entered into a Revolving Loan Exchange and Prepayment Agreement with Royal Bank of Canada, Credit Suisse AG, Cayman Islands Branch, KKR Corporate Lending LLC, Granite State Capital Master Fund LP, Credit Suisse Loan Funding LLC and Revolvercap Partners Fund LP exchanging $100.0 million of outstanding Revolving Credit Facility owed by Exela Intermediate LLC, upon the terms and subject to the conditions set forth in the Revolver Exchange agreement, for (i) $50.0 million in cash, and (ii) $50.0 million of 2026 Notes (such exchange, the “Revolver Exchange” and such 2026 Notes, the “Exchange Notes”). Prepayment of Revolving Credit Facility was treated as an extinguishment of debt under ASC 470-50. Accordingly, the Company wrote off the unamortized balance of $0.2 million of debt issuance costs related to Revolving Credit Facility and reported it within debt modification and extinguishment costs (gain), net in our condensed consolidated statements of operations for the nine months ended September 30, 2022. The Exchange Notes were subject to a guarantee in the form of a true-up mechanism whereby subsidiaries of the Company were responsible to make a payment to the holders of the Exchange Notes to true-up the shortfall below certain agreed thresholds, if holders of the Exchange Notes sold their notes at a price below that threshold during agreed periods in 2022. As security for the true-up obligation under the Revolver Exchange, subsidiaries of the Company issued $10.0 million of principal amount of 2026 Notes as collateral (the “Collateral Notes”). The Collateral Notes were not reflected in the consolidated financial statements unless and until they were sold to third parties. On March 7, 2022, we recognized $17.4 million (the fair value of the true-up obligation as accounted for under ASC 450, Contingencies Guarantees In July 2022, $9.0 million of principal amount of the Collateral Notes were sold by the holders of the Exchange Notes for net proceeds of $2.6 million and the proceeds were applied against the true-up amount payable. Additionally, in July 2022, the Company made a cash payment of $2.1 million which was applied against the true-up amount payable. In August 2022, the remaining balance of $20.2 million of net true-up liability was settled with cash payments of $9.9 million and by permitting the holders of the Exchange Notes to keep the $21.0 million of principal amount of 2026 Notes previously placed as Collateral Notes constituting an issuance. The Company made a net reversal of $1.1 million of accrued true-up liability in other expense (income), net in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022. 2023 Notes On July 12, 2017, the Issuers issued $1.0 billion in aggregate principal amount of 10.0% First Priority Senior Secured Notes due 2023 (the “2023 Notes”). The 2023 Notes were guaranteed by nearly all U.S. subsidiaries of Exela Intermediate LLC. The 2023 Notes bore interest at a rate of 10.0% per year. The issuers paid interest on the 2023 Notes on January 15 and July 15 of each year, commencing January 15, 2018. On December 9, 2021, upon the settlement of a public exchange, $662.7 million aggregate principal amount of the 2026 Notes were issued and an aggregate $225.0 million in cash (plus accrued but unpaid interest) was paid to participating holders in respect of the validly tendered $912.7 million principal amount of outstanding 2023 Notes. The Company concluded that the public exchange of notes represented modification of debt under ASC 470-50. As a result of the public exchange and repurchases (as discussed below), $9.0 million aggregate principal amount of the 2023 Notes remained outstanding as of July 11, 2023, the date the Company fully repaid the remaining outstanding balance of the 2023 Notes in cash. 2026 Notes As of December 31, 2022, the Issuers had $980.0 million aggregate principal amount of the 2026 Notes outstanding. During the nine months ended September 30, 2023, no 2026 Notes were sold by subsidiaries of the Company. The 2026 Notes are guaranteed by nearly all U.S. subsidiaries of Exela Intermediate LLC. The 2026 Notes bear interest at a rate of 11.5% per year. We are required to pay interest on the 2026 Notes on January 15 and July 15 of each year, and commenced making such interest payments on July 15, 2022. The 2026 Notes are scheduled to mature on July 12, 2026. The Issuers may redeem the 2026 Notes in whole or in part from time to time, at a redemption price of 100%, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. On July 11, 2023, the Issuers, certain guarantors and U.S. Bank Trust Company, National Association, as trustee, entered into an indenture (the “New Notes Indenture”) governing the Company’s New Notes and issued approximately $764.8 million aggregate principal amount of the New Notes as consideration for the exchange of $956.0 million aggregate principal amount of the Issuers’ existing 2026 Notes pursuant to a public exchange offer (the “2023 Exchange”), which was equivalent to issuing $800 of the New Notes per $1,000 principal amount of the existing 2026 Notes. The Company performed an assessment of the 2023 Exchange and determined that it met the criteria to be accounted for as a troubled debt restructuring under ASC 470-60. The undiscounted cash flows associated with the New Notes issued were compared to the carrying value of the exchanged 2026 Notes and since the undiscounted cash flows of the New Notes exceeded the carrying value of the exchanged 2026 Notes, the carrying value of the New Notes was established at the carrying value of the exchanged 2026 Notes and the Company established new effective interest rates based on the carrying value of the exchanged 2026 Notes prior to the 2023 Exchange. The difference between the principal amount of the issued New Notes and their carrying value was recorded as a premium and is included in long-term debt on the Company’s condensed consolidated balance sheets. The Company recorded a premium of $142.3 million on the notes exchange, which will be reduced as contractual interest payments are made on the New Notes. On July 11, 2023, we entered into a seventh supplemental indenture to the 2026 Notes Indenture which eliminated substantially all of the restrictive covenants, eliminated certain events of default, modified covenants regarding mergers and consolidations and modified or eliminated certain other provisions, including certain provisions relating to future guarantors and defeasance, contained in the 2026 Notes Indenture and the 2026 Notes. In addition, all of the collateral securing the 2026 Notes was released pursuant to the seventh supplemental indenture. The July 11, 2023 transaction resulted in cancellation of debt income (“CODI”) for tax purposes. Absent an exception, a debtor recognizes CODI upon discharge of its outstanding indebtedness for an amount of consideration that is less than the outstanding debt. The Internal Revenue Code of 1986, as amended, (the “Code”), provides that a debtor may exclude CODI from taxable income but must reduce certain of its tax attributes by the amount of CODI. Pursuant to the US tax rules, the Company computes the final CODI calculation based on the tax basis as of the last day of the fiscal tax year (i.e., December 31, 2023) which includes the date in which the debt transaction occurred. As such, the Company applied its best estimate as of July 12, 2023 (transaction date) to compute the CODI impact knowing that certain amounts will change based on regular business operations. For the period ended September 30, 2023, the Company estimated CODI in the amount of $600 million will be excluded from taxable income and result in a partial reduction in the gross U.S. federal and state net operating losses. The Company will finalize the tax effects of CODI, including the estimated tax effects of tax basis and attribute reduction recognized as a result of the debt transaction in the final December 31, 2023 financial statements and subsequent tax return filings. As a result of the 2023 Exchange and repurchases (as discussed below), $24.0 million aggregate principal amount of the 2026 Notes maturing July 12, 2026 remained outstanding as of September 30, 2023. Senior Secured New Notes On July 11, 2023, the Issuers issued approximately $767.8 million aggregate principal amount of the New Notes under the New Notes Indenture, which includes the New Notes issued under the 2023 Exchange (as described above) and as consideration for the exchange of certain of the Company’s outstanding 2023 Term Loans (as described above). The New Notes are scheduled to mature on April 15, 2026. Interest on the New Notes will accrue at 11.500% per annum and will be paid semi-annually, in arrears, on January 15 and July 15 of each year, beginning July 15, 2023. Interest will be payable in cash or in kind by issuing additional New Notes (or increasing the principal amount of the outstanding New Notes) (“PIK Interest”) as described below: (A) for the July 15, 2023 interest payment date, such interest was paid in kind as PIK Interest, (B) for each interest payment date from and including the January 15, 2024 interest payment date through and including the July 15, 2024 interest payment date, such interest shall be paid in cash in an amount equal to (i) 50% of such interest plus (ii) an amount not to exceed an amount that, pro forma for such payment, would leave the issuers with Unrestricted Cash (as defined in the New Notes Indenture) of at least $15.0 million, with the remaining interest paid in kind as PIK Interest, and (C) for interest payment dates falling on or after January 15, 2025, such interest shall be paid in cash. On July 15, 2023, the Company issued $44.1 million in aggregate principal amount of the New Notes as a payment for PIK Interest due on July 15, 2023. $811.9 million aggregate principal amount of the New Notes maturing April 15, 2026 remained outstanding as of September 30, 2023. The Issuers’ obligations under the New Notes and the New Notes Indenture are irrevocably and unconditionally guaranteed, jointly and severally, by the same guarantors (the “Guarantors”) that guarantee the 2026 Notes (other than certain guarantors that have ceased to have operations or assets) and by certain of the Issuers’ other affiliates (the “Affiliated Guarantors”). The New Notes and the related guarantees are first-priority senior secured obligations of the Issuers, the Guarantors and Affiliated Guarantors. The issuers may redeem the New Notes at their option, in whole at any time or in part from time to time, at a redemption price of 100%, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, the New Notes will be mandatorily redeemable in part upon the sale of certain assets that constitute additional credit support. The New Notes Indenture contains covenants that limit the Issuers’ and the Affiliated Guarantors (as defined below) and their respective subsidiaries’ ability to, among other things, (i) incur or guarantee additional indebtedness, (ii) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments, (iii) make investments, (iv) consummate certain asset sales, (v) engage in certain transactions with affiliates, (vi) grant or assume certain liens and (vii) consolidate, merge or transfer all or substantially all of their assets. These covenants are subject to a number of important limitations and exceptions. In addition, upon the occurrence of specified change of control events, the Issuers must offer to repurchase the New Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date. The New Notes Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all of the then outstanding New Notes to be due and payable immediately. Repurchases In July 2021, the Company commenced a debt buyback program to repurchase senior secured indebtedness, which is ongoing. During the three and nine months ended September 30, 2022, we repurchased $15.0 million principal amount of the Exchange Notes issued under the Revolver Exchange (as discussed above) for a net cash consideration of $4.7 million. The gain on early extinguishment of debt for the Exchange Notes during the three and nine months ended September 30, 2022 totaled $5.3 million and is inclusive of $5.0 million and $0.1 million write off of original issue discount and debt issuance costs, respectively. During the nine months ended September 30, 2023, we repurchased $13.8 million principal amount of the 2023 Notes for a cash consideration of $4.4 million. The gain on early extinguishment of debt for the 2023 Notes during the nine months ended September 30, 2023 totaled $9.9 million and is inclusive of less than $0.1 million write off of original issue discount and debt issuance costs. During the nine months ended September 30, 2023, we repurchased $15.1 million principal amount of the 2023 Term Loans for a cash consideration of $8.0 million. The gain on early extinguishment of debt for the 2023 Term Loans during the nine months ended September 30, 2023 totaled $7.1 million and is inclusive of less than $0.1 million write off of original issue discount and debt issuance costs. Gain on the early extinguishment of debt is reported within debt modification and extinguishment costs (gain), net within our condensed consolidated statements of operations. BRCC Facility On November 17, 2021, GP2 XCV, LLC, a subsidiary of the Company (“GP2 XCV”), entered into a borrowing facility with B. Riley Commercial Capital, LLC (which was subsequently assigned to BRF Finance Co., LLC (“BRF Finance”)) pursuant to which such subsidiary was able to borrow an original principal amount of $75.0 million, which was later increased to $115.0 million as of December 7, 2021 (as the same may be amended from time to time, the “BRCC Term Loan”). On March 31, 2022, GP2 XCV and B. Riley Commercial Capital, LLC amended this facility to permit GP2 XCV to borrow up to $51.0 million under a separate revolving loan (the “BRCC Revolver”, collectively with the BRCC Term Loan, the “BRCC Facility”). The BRCC Facility is secured by a lien on all the assets of GP2 XCV and by a pledge of the equity of GP2 XCV. GP2 XCV is a bankruptcy-remote entity, and as such its assets are not available to other creditors of the Company or any of its subsidiaries other than GP2 XCV. Interest under the BRCC Facility accrues at a rate of 11.5% per annum (13.5% per annum default rate) and is payable quarterly on the last business day of each March, June, September and December. The purpose of BRCC Term Loan was to fund certain repurchases of the secured indebtedness and to provide funding for certain debt exchange transactions. The purpose of BRCC Revolver is to fund general corporate purposes. During the nine months ended September 30, 2023, we borrowed $9.6 million of principal amount under the BRCC Revolver. During the nine months ended September 30, 2023, we repaid $48.5 million and $3.7 million of outstanding principal amount under the BRCC Term Loan and the BRCC Revolver, respectively along with $1.6 million of exit fees on the BRCC Term Loan. The exit fees paid on the prepayment of the BRCC Term Loan were treated as a debt extinguishment cost under ASC 470-50 and reported within debt modification and extinguishment costs (gain), net in our condensed consolidated statements of operations. The BRCC Facility matured on June 10, 2023. As of September 30, 2023, the Company had fully repaid the outstanding balance under the BRCC Term Loan. As of September 30, 2023, there were borrowings of $25.9 million outstanding under the BRCC Revolver. The outstanding principal amount under the BRCC Revolver is payable in eleven (11) monthly installments of $2.0 million commencing October 31, 2023, with the remaining outstanding principal balance of $3.9 million payable on September 30, 2024. Senior Secured Term Loan On July 11, 2023, Exela Intermediate LLC and Exela Finance Inc., wholly-owned subsidiaries of the Company, entered into a financing agreement with certain lenders and Blue Torch Finance LLC, as administrative agent, pursuant to which the lenders extended a term loan of principal amount of $40.0 million (“Senior Secured Term Loan”). On the same date, the Company used proceeds of this term loan and cash on hand to repay its outstanding 2023 Notes and 2023 Term Loans. The Senior Secured Term Loan shall be, at the option of the Company, either a Reference Rate Loan, or a SOFR Rate Loan. Each portion of the Senior Secured Term Loan that is a Reference Rate Loan bears interest on the principal amount outstanding from the date of the Senior Secured Term Loan until repaid, at a rate per annum equal to the Reference Rate plus the Applicable Margin. “Reference Rate” for any period means the greatest of (i) 4.00% per annum, (ii) the federal funds rate plus 0.50% per annum, (iii) the Adjusted Term SOFR (which rate shall be calculated based upon an interest period of 1 month and shall be determined on a daily basis) plus 1.00% per annum, and (iv) the rate last quoted by the Wall Street Journal as the "Prime Rate" in the United States. “Applicable Margin,” with respect to the interest rate of (a) any Reference Rate Loan is 10.39% per annum, and (b) any SOFR Rate Loan is 11.39% per annum. SOFR Rate Loans shall bear interest on the principal amount outstanding, at a rate per annum equal to the Adjusted Term SOFR rate for the Interest Period in effect for the Term Loan plus Applicable Margin. “Adjusted Term SOFR” means the rate per annum equal to Term SOFR for such calculation, plus 0.26161%. “Term SOFR,” for calculation with respect to a SOFR Rate Loan, is the per annum forward-looking term rate based on secured overnight financing rate for a tenor comparable to the applicable interest period on the day that is two two The Company may, at any time, elect to have interest on all or a portion of the loans be charged at a rate of interest based upon Term SOFR (the “SOFR Option”) by notifying the administrative agent at least 3 business days. Such notice needs to be provided in the case of the continuation of a SOFR Rate Loan as a SOFR Rate Loan on the last day of the then current interest period. The Company shall have not more than 5 SOFR Rate Loans in effect at any given time, and only may exercise the SOFR Option for SOFR Rate Loans of at least $500,000 and integral multiples of $100,000 in excess thereof. The outstanding principal amount of the Senior Secured Term Loan shall be repaid in eleven (11) equal quarterly installments of $0.5 million commencing December 31, 2023, with the remaining outstanding principal amount of $34.5 million payable at maturity along with accrued and unpaid interest. The maturity date of the Senior Secured Term Loan shall be the earlier of July 11, 2026 and the date that is 91 days prior to the earliest maturity of any of the New Notes or the 2026 Notes (after giving effect to any refinancing indebtedness). The Company may, at any time, prepay the principal of the Senior Secured Term Loan. Each prepayment shall be accompanied by the payment of accrued interest and the applicable premium, if any. Each prepayment shall be applied against the remaining installments of principal due on the Senior Secured Term Loan in the inverse order of maturity. The applicable premium shall be payable in the form of a make-whole amount if prepayment is made within one year of the borrowing date (the “First Period”). If optional prepayment is made after the year one anniversary of the borrowing date to the date of the two-year anniversary (the “Second Period”), the applicable premium shall be an amount equal to 1% times the amount of the principal amount of the Senior Secured Term Loan being paid on such date. The applicable premium shall be zero in case of prepayment after the date of the two-year anniversary of the borrowing date. Further, during the Second Period, if the prepayment is because of an event of default or termination of contract for any reason, the applicable premium shall be 1% times the aggregate principal amount of the Senior Secured Term Loan outstanding on such date. The Senior Secured Term Loan contains customary events of default, affirmative and negative covenants, including limitation on the Company’s and certain of its subsidiaries’ ability to create, incur or allow certain liens; enter into sale and lease-back transactions; make any restricted payments; undergo fundamental changes, as well as certain financial covenants. The Company was in compliance with all financial covenants as of September 30, 2023. Securitization Facility On December 17, 2020, certain subsidiaries of the Company entered into a $145.0 million securitization facility with a five year term (the “Securitization Facility”) with certain lenders and Alter Domus (US), LLC, as administrative agent (the “Securitization Administrative Agent”). The Securitization Facility provided for an initial funding of approximately $92.0 million supported by receivables, and, subject to contribution, a further funding of approximately $53.0 million to be supported by inventory and intellectual property. On December 17, 2020, Exela Receivables 3, LLC (the “Securitization Borrower”) made the initial borrowing of approximately $92.0 million under the Securitization Facility and used a portion of the proceeds to repay $83.0 million of the aggregate outstanding principal amount of loans as of December 17, 2020 under a previous $160.0 million accounts receivable securitization facility (“A/R Facility”) and used the remaining proceeds for general corporate purposes. On April 11, 2021, the Company amended the Securitization Facility to, among other things, extend the period during which the Company could access the approximately $53.0 million in additional borrowings upon the contribution of inventory and intellectual property to support the borrowing base from April 10, 2021 to September 30, 2021. The Securitization Borrower, Exela Receivables 3 Holdco, LLC (the “Securitization Parent SPE,” and together with the Securitization Borrower, the “SPEs”), the Company, and certain of our operating subsidiaries that agreed to sell receivables in connection with the Securitization Facillity (the “Securitization Originators”) provided customary representations and covenants under the agreements underlying the Securitization Factility. The Securitization Facility identified certain events of default upon the occurrence of which the Securitization Administrative Agent may declare the facility’s termination date to have occurred and declare the outstanding Securitization Loan and all other obligations of the Securitization Borrower to be immediately due and payable, however the Securitization Facility does not include an ongoing liquidity covenant like the A/R Facility and aligns reporting obligations with the Company’s other material indebtedness agreements. The Securitization Borrower and Securitization Parent SPE were formed in December 2020, and are identified as variable interest entities (“VIE”) and consolidated into the Company’s financial statements following VIE consolidation model under ASC 810. The Securitization Borrower and Securitization Parent SPE are bankruptcy remote entities and as such their assets are not available to creditors of the Company or any of its subsidiaries. Each loan under the Securitization Facility bore interest on the unpaid principal amount as follows: (i) if a Base Rate Loan, at a rate per annum equal to (x) the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50% and (c) the Adjusted LIBOR Rate (as defined in the Securitization Loan Agreement) plus 1.00%, plus (y) 8.75%; or (ii) if a LIBOR Rate Loan, at the Adjusted LIBOR Rate plus 9.75%. On June 17, 2022, the Company repaid in full the approximately $91.9 million principal amount of loans outstanding under the Securitization Facility,triggered a prepayment premium of $2.7 million and a required payment of approximately $0.5 million and $1.3 million in respect of accrued interest and fees, respectively. All obligations under the Securitization Facility (other than contingent indemnification obligations that expressly survive termination) terminated upon repayment. The Securitization Facility was replaced by the Amended Receivables Purchase Agreement and related agreements described below. Repayment of the Securitization Facility was treated as an extinguishment of debt under ASC 470-50. Accordingly, the Company wrote off the unamortized balance of $3.3 million of debt issuance costs related to the Securitization Facility. On June 17, 2022, the Company entered into an amended and restated receivables purchase agreement (as amended, the “Amended Receivables Purchase Agreement”) under the Securitization Facility among certain of the Company’s subsidiaries, the SPEs and certain global financial institutions (“Purchasers”). The Amended Receivables Purchase Agreement extends the term of the Securitization Facility such that the SPEs may sell certain receivables to the Purchasers until June 17, 2025. Under the Amended Receivables Purchase Agreement, transfers of accounts receivable from the SPEs are treated as sales and are accounted for as a reduction in accounts receivable, because the agreement transfers effective control over and risk related to the accounts receivable to the Purchasers. The Company and related subsidiaries have no continuing involvement in the transferred accounts receivable, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors of the Company, the Securitization Originators, or any other relevant subsidiaries. On June 17, 2022, the Company sold $85.0 million of its accounts receivable and used the whole proceeds from this sale to repay part of the $91.9 million borrowings under the Securitization Facility (as discussed above). These sales were transacted at 100% of the face value of the relevant accounts receivable, resulting in derecognition of the accounts receivable from the Company’s condensed consolidated balance sheet. The Company de-recognized $408.9 million of accounts receivable under this agreement during the year ended December 31, 2022. The amount remitted to the Purchasers during fiscal year 2022 was $308.7 million. The Company de-recognized $119.3 million and $382.2 million of accounts receivable under this agreement during the three and nine months ended September 30, 2023, respectively. The amount remitted to the Purchasers during the three and nine months ended September 30, 2023 was $119.0 million and $385.5 million, respectively. Unsold accounts receivable of $47.1 million and $46.5 million were pledged by the SPEs as collateral to the Purchasers as of September 30, 2023 and December 31, 2022, respectively. These pledged accounts receivables are included in accounts receivable, net in the condensed consolidated balance sheets. The program resulted in a pre-tax loss of $2.0 million and $5.9 million for the three and nine months ended September 30, 2023, respectively. The fair value of the sold accounts receivable approximated their book value due to their short-term nature. Sold accounts receivable are presented as a change in receivables within operating activities in the condensed consolidated statements of cash flows. Second Lien Note On February 27, 2023, the SPEs and B. Riley Commercial Capital, LLC entered into a new Secured Promissory Note (which was subsequently assigned to BRF Finance) pursuant to which B. Riley Commercial Capital, LLC agreed to lend up to $35.0 million secured by a second lien pledge of the Securitization Borrower (the “Second Lien Note”). The Second Lien Note is scheduled to mature on June 17, 2025 and bears interest at a per annum rate of one-month Term SOFR plus 7.5%. The SPEs are party to the Amended Receivables Purchase Agreement, thus the transactions necessitated amendments to that agreement and related documents to permit the addition of subordinated debt and additional borrowing capacity into that transaction structure, in addition to providing for a $5.0 million fee to the lenders for facilitating the transaction. In connection with the above-described facility, we also amended the BRCC Term Loan and BRCC Revolver to provide for $9.6 million of borrowing capacity, which was drawn as described above. As of September 30, 2023, there were borrowings of $31.5 million outstanding under the Second Lien Note payable at maturity. Long-Term Debt Outstanding As of September 30, 2023 and December 31, 2022, the following long-term debt instruments were outstanding: September 30, December 31, 2023 2022 Other (a) $ 34,561 $ 25,117 2023 term loans (b) — 71,470 Senior secured term loan maturing July 11, 2026 (c) 38,264 — 2023 notes ( |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Income Taxes | 6. Income Taxes The Company applies an estimated annual effective tax rate (“ETR”) approach for calculating a tax provision for interim periods, as required under GAAP. The Company recorded an income tax expense of $1.8 million and $1.9 million for the three months ended September 30, 2023 and 2022, respectively. The Company recorded an income tax expense of $7.0 million and $5.7 million for the nine months ended September 30, 2023 and 2022, respectively. The Company's ETR of (8.5)% and (7.6)% for the three and nine months ended September 30, 2023, respectively, differed from the expected U.S. statutory tax rate of 21.0% and was primarily impacted by permanent tax adjustments, state and local current expense, foreign operations, and valuation allowances, including valuation allowances on a portion of the Company’s deferred tax assets on U.S. disallowed interest expense carryforwards created by the provisions of The Tax Cuts and Jobs Act (“TCJA”). For the three and nine months ended September 30, 2022, the Company's ETR of (2.3)% and (2.7)% , respectively, differed from the expected U.S. statutory tax rate of 21.0% and was primarily impacted by permanent tax adjustments, state and local current expense, foreign operations, and valuation allowances, including valuation allowances on a portion of the Company’s deferred tax assets on U.S. disallowed interest expense carryforwards created by the provisions of the TCJA. As of September 30, 2023, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2022. During the three months ended September 30, 2023, the Company entered into an indenture agreement for the Company's New Notes resulting in cancelation of debt income (CODI). Absent an exception, a debtor recognizes CODI upon discharge of its outstanding indebtedness for an amount of consideration that is less than the outstanding debt. The Code provides that a debtor may exclude CODI from taxable income but must reduce certain of its tax attributes by the amount of CODI. Pursuant to the US tax rules, the Company computes the final CODI calculation based on the tax basis as of the last day of the fiscal tax year (i.e., December 31, 2023) which includes the date in which the debt transaction occurred. As such, the Company applied its best estimate as of July 12, 2023 (transaction date) to compute the CODI impact knowing that certain amounts will change based on regular business operations. For the period ended September 30, 2023, the Company estimated CODI in the amount of $600 million will be excluded from taxable income and result in a partial reduction in the gross U.S. federal and state net operating losses, on which there is a full valuation allowance and as such there is no financial statement impact. The Company will finalize the tax effects of CODI, including the estimated tax effects of tax basis and attribute reduction recognized as a result of the debt transaction in the final December 31, 2023 financial statements and subsequent tax return filings. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2023 | |
Employee Benefit Plans | |
Employee Benefit Plans | 7. Employee Benefit Plans German Pension Plan The Company’s subsidiary in Germany provides pension benefits to certain retirees. Employees eligible for participation include all employees who started working for the Company or its predecessors prior to September 30, 1987 and have finished a qualifying period of at least U.K. Pension Plan The Company’s subsidiary in the United Kingdom provides pension benefits to certain retirees and eligible dependents. Employees eligible for participation include all full-time regular employees who were more than three years from retirement prior to October 2001. A retirement pension or a lump-sum payment may be paid dependent upon length of service at the mandatory retirement age. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants as at the earlier of two dates, the participants leaving the Company or December 31, 2015. Norway Pension Plan The Company’s subsidiary in Norway provides pension benefits to eligible retirees and eligible dependents. Employees eligible for participation include all employees who were more than three years from retirement prior to March 2018. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants as at the later of two dates, the participants leaving the Company or April 30, 2018. Asterion Pension Plan In April 2018, through its acquisition of Asterion International Group, the Company became obligated to provide pension benefits to eligible retirees and eligible dependents of Asterion. Employees eligible for participation include all full-time regular employees who were more than three years from retirement prior to July 2003. A retirement pension or a lump-sum payment may be paid dependent upon length of service at the mandatory retirement age. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants as at the earlier of two dates, the participants leaving the Company or April 10, 2018. Tax Effect on Accumulated Other Comprehensive Loss As of September 30, 2023 and December 31, 2022 the Company recorded actuarial losses of $3.6 million and $3.6 million in accumulated other comprehensive loss on the condensed consolidated balance sheets, respectively, which is net of a deferred tax benefit of $2.0 million for each period. Pension Expense The components of the net periodic benefit cost are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Service cost $ 10 $ 15 $ 30 $ 45 Interest cost 766 486 2,275 1,458 Expected return on plan assets (682) (724) (2,025) (2,172) Amortization: Amortization of prior service cost 89 53 266 159 Amortization of net loss 395 646 1,171 1,938 Net periodic benefit cost $ 578 $ 476 $ 1,717 $ 1,428 The Company records pension interest cost within interest expense, net. Expected return on plan assets, amortization of prior service costs, and amortization of net losses are recorded within other expense (income), net. Service cost is recorded within cost of revenue. Employer Contributions The Company’s funding of employer contributions is based on governmental requirements and differs from those methods used to recognize pension expense. The Company made contributions of $1.9 million and $1.9 million to its pension plans during the nine months ended September 30, 2023 and 2022, respectively. The Company has funded the pension plans with the required contributions for 2023 based on current plan provisions. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies Adverse Arbitration Order In April 2020, one of the Company's Nordic subsidiaries commenced an arbitration in Finland against a customer alleging breach of contract and other damages in connection with an outsourcing services agreement and transition services agreement executed in 2017. In September 2020, the customer submitted counterclaims against the Company in an aggregate amount in excess of €10.0 million. Following an expedited arbitration, in late November 2020, the arbitrator awarded the customer approximately $13.0 million in the aggregate for the counterclaimed damages and costs. The Company filed an application to annul the award in late January 2021 with the relevant court asserting, among other bases, that the arbitrator violated due process and procedural rules by disallowing the Company’s witness and expert testimony and maintaining the expedited format following the assertion of significant counterclaims which would ordinarily have required the application of normal rather than expedited rules. On May 28, 2021, the parties entered into a settlement agreement resolving this dispute for a total of $8.8 million including the reimbursement of certain third party charges. As of September 30, 2023, there was a net outstanding balance of $0.9 million for this matter included in accrued liabilities on the condensed consolidated balance sheet. Class Action On March 23, 2020, the Plaintiff, Bo Shen, filed a putative class action against the Company, Ronald Cogburn, the Company’s former Chief Executive Officer, and James Reynolds, the Company’s former Chief Financial Officer and current member of the Company’s board of directors (the “Board”). Plaintiff claims to have been a holder of 4,000 shares of Company stock, purchased on October 4, 2019 at $1.34/share (in the case of the number of shares and share price without adjusting for any of the reverse stock splits occurring after that date). Plaintiff asserts two claims covering the purported class period of March 16, 2018 to March 16, 2020: (1) a violation of Section 10(b) and Rule 10b-5 of the Exchange Act against all defendants; and (2) a violation of Section 20(a) of the Exchange Act against Mr. Cogburn and Mr. Reynolds. The allegations stem from the Company’s press release, dated March 16, 2020 (announcing the postponement of the earnings call and delay in filing of its annual report on Form 10-K for the fiscal year ended December 31, 2019), and press release and related SEC filings, dated March 17, 2020 (announcing its intent to restate its financial statements for 2017, 2018 and interim periods through September 30, 2019) and certain other matters. On July 27, 2023, the parties submitted a settlement agreement to the Court that, if approved, will result in the dismissal of the action with prejudice in exchange for a settlement payment of $5.0 million, which the Company anticipates will be funded by the Company’s insurance carrier to the extent the payment exceeds any remaining deductible under the applicable insurance policy. The settlement agreement was preliminary approved by the Court on August 21, 2023 and the final approval hearing took place on December 7, 2023. The court granted the settlement in full and entered a final judgment of dismissal and final orders approving the plan of allocation and plaintiffs’ attorneys’ fee award, which will be paid entirely out of the existing settlement fund. Contract-Related Contingencies The Company has certain contingent obligations that arise in the ordinary course of providing services to its customers. These contingencies are generally the result of contracts that require the Company to comply with certain performance measurements or the delivery of certain services to customers by a specified deadline. The Company believes the adjustments to the transaction price, if any, under these contract provisions will not result in a significant revenue reversal or have a material adverse effect on the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations or condensed consolidated statements of cash flows. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurement | |
Fair Value Measurement | 9. Fair Value Measurement Assets and Liabilities Measured at Fair Value The carrying amount of assets and liabilities including current portion of other debt approximated their fair value as of September 30, 2023 and December 31, 2022, due to the relative short maturity of these instruments. Management estimates the fair values of the 2026 Notes and New Notes at approximately 17.0% and 17.0%, respectively, of the respective principal balances outstanding as of September 30, 2023. Management estimated the fair values of the 2023 Term Loans, 2023 Notes and 2026 Notes at approximately 64.0%, 65.0% and 15.5%, respectively, of the respective principal balance outstanding as of December 31, 2022. The fair values of secured borrowings under the Company’s securitization facility, BRCC Facility, Second Lien Note and Senior Secured Term Loan are equal to the respective carrying values. Other debt represents the Company’s outstanding loan balances associated with various hardware, software purchases, maintenance and leasehold improvements along with loans and receivables factoring arrangement entered into by subsidiaries of the Company and as such, the cost incurred would approximate fair value. Property and equipment, intangible assets, capital lease obligations, and goodwill are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the respective asset is written down to its fair value. The Company determined the fair value of its long-term debt and current portion of long-term debts using Level 2 inputs, including any recent issuance of the debt, the Company’s credit rating, and the current risk-free rate. The following table provides the carrying amounts and estimated fair values of the Company’s financial instruments as of September 30, 2023 and December 31, 2022: Carrying Fair Fair Value Measurements As of September 30, 2023 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,043,775 $ 219,537 $ — $ 219,537 $ — Current portion of long-term debts 48,221 48,221 — 48,221 — Carrying Fair Fair Value Measurements As of December 31, 2022 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 942,035 $ 184,968 $ — $ 184,968 $ — Current portion of long-term debts 154,802 121,893 — 121,893 — |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Stock-Based Compensation | |
Stock-Based Compensation | 10. Stock-Based Compensation Exela 2018 Stock Incentive Plan On January 17, 2018, Exela’s 2018 Stock Incentive Plan (the “2018 Plan”) became effective. The 2018 Plan provides for the grant of incentive and nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, and other stock-based compensation to eligible participants. The Company was initially authorized to issue up to 694 shares of Common Stock under the 2018 Plan. On June 27, 2022, the shareholders of the Company approved our Amended and Restated 2018 Stock Incentive Plan increasing the number of shares of Common Stock reserved for issuance from an original 694 shares to 4,462. Restricted Stock Unit Restricted stock unit awards generally vest ratably over a one A summary of restricted stock unit activities under the 2018 Plan for the nine months ended September 30, 2023 is summarized in the following table: Average Weighted Remaining Number Average Grant Contractual Life of Units Date Fair Value (Years) Outstanding Balance as of December 31, 2022 8 $ 6,600.00 1.00 Granted — — Forfeited — — Vested — — Outstanding Balance as of September 30, 2023 8 $ 6,600.00 0.25 Options Under the 2018 Plan, stock options are granted at a price per share not less than 100% of the fair market value per share of the underlying stock at the grant date. The vesting period for each option award is established on the grant date, and the options generally expire 10 years from the grant date. Options granted under the 2018 Plan generally require no less than a two Average Weighted Weighted Remaining Average Grant Average Vesting Period Outstanding Date Fair Value Exercise Price (Years) Outstanding Balance as of December 31, 2022 352 $ 22,554.25 $ 47,117.77 0.20 Granted — — Exercised — — Forfeited (14) 27,703.04 Expired — — Outstanding Balance as of September 30, 2023 (1) 338 $ 22,347.33 $ 46,554.52 0.03 (1) 329 of the outstanding options are exercisable as of September 30, 2023. As of September 30, 2023, there was approximately less than $0.1 million of total unrecognized compensation expense related to non-vested restricted stock unit awards and stock option awards under the 2018 Plan, which will be recognized over the respective service period. Stock-based compensation expense is recorded within selling, general and administrative expenses. The Company recorded compensation expense of less than $0.1 million and net reversal of compensation expense of $0.1 million related to restricted stock unit awards and stock option awards under the 2018 Plan for the three and nine months ended September 30, 2023, respectively, due to forfeiture of options. The Company incurred total compensation expense of $0.2 million and $0.6 million related to restricted stock unit awards and stock option awards under the 2018 Plan for the three and nine months ended September 30, 2022, respectively. Market Performance Units On September 14, 2021, the Company granted its Executive Chairman performance units with a market performance condition, which are notional units representing the right to receive one share of Common Stock (or the cash value of one share of Common Stock). At the election of the compensation committee of the Company, these performance units might be settled in cash or in shares of Common Stock. Fifty percent of the performance units covered by the award will vest if, at any time during the period commencing September 14, 2021 and ending June 30, 2024, the volume weighted average of the reported closing price of the Common Stock is $40,000 per share or greater on (x) 60 90 60 90 180 day consideration and will no longer be eligible to vest. In addition, if a change in control occurs prior to the applicable expiration date, if the performance units are assumed by the acquirer, the units will remain outstanding and eligible to vest based solely on his continued service to the Company. If in connection with such change in control the performance units are not assumed by an acquirer, a number of performance units will vest based on the per share price paid in the transaction, with The fair value per unit of the awards was determined to be $5,920 and $6,040 for Tranche 1 and Tranche 2, respectively, on the grant date by application of the Monte Carlo simulation model. On December 31, 2021, the modification date fair value per unit of the awards was determined to be $1,760 and $1,880 for Tranche 1 and Tranche 2, respectively, by application of the Monte Carlo simulation model. The following table summarizes the activity for the market performance restricted stock units for the nine months ended September 30, 2023: Weighted Average Weighted Period Over Number Average Which Expected of Units Fair Value to be Recognized Outstanding Balance as of December 31, 2022 2,125 $ 1,820.00 2.98 Granted — — Forfeited — — Vested — — Outstanding Balance as of September 30, 2023 2,125 $ 1,820.00 2.98 As of September 30, 2023, there was approximately $1.1 million of total unrecognized compensation expense related to non-vested performance unit awards, which will be recognized over the requisite service period. We recognized $0.2 million and $0.7 million compensation expense associated with the performance unit award for the three and nine months ended September 30, 2023, respectively, and $0.2 million and $0.7 million for the three and nine months ended September 30, 2022, respectively. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity | |
Stockholders' Equity | 11. Stockholders’ Equity The following description summarizes the material terms and provisions of the securities that the Company has authorized. Common Stock The Company is authorized to issue 1,600,000,000 shares of Common Stock. Except as otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock, the holders of our Common Stock and Tandem Preferred Stock (that provides a vote to holders of our Series B Preferred Stock, as described below) possess all voting power for the election of the Board and all other matters requiring stockholder action and will at all times vote together as one class on all matters submitted to a vote of Exela stockholders. Holders of our Common Stock are entitled to one vote per share on matters to be voted on by stockholders. Holders of our Common Stock will be entitled to receive such dividends and other distributions, if any, as may be declared from time to time by the Board in its discretion out of funds legally available therefor and shall share equally on a per share basis in such dividends and distributions. The holders of the Common Stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the Common Stock. As of September 30, 2023 and December 31, 2022, there were 6,365,353 and 1,393,276 shares of Common Stock outstanding, respectively. Reverse Stock Split On May 12, 2023, we effected the Reverse Stock Split of our issued and outstanding shares of Common Stock. As a result of the Reverse Stock Split every two hundred Giving effect to the Reverse Stock Split issued and outstanding Common Stock decreased from 278,655,235 to 1,393,276 at December 31, 2022. Common Stock At-The-Market Sales Program On May 27, 2021, the Company entered into an At Market Issuance Sales Agreement (“First ATM Agreement”) with B. Riley Securities, Inc. (“B. Riley”) and Cantor Fitzgerald & Co. (“Cantor”), as distribution agents, under which the Company may offer and sell shares of the Common Stock from time to time through the Distribution Agents, acting as sales agent or principal. On September 30, 2021, the Company entered into a second At Market Issuance Sales Agreement with B. Riley, BNP Paribas Securities Corp., Cantor, Mizuho Securities USA LLC and Needham & Company, LLC, as distribution agents (together with the First ATM Agreement, the “ATM Agreement”). Sales of the shares of Common Stock under the ATM Agreement have been in “at the market offerings” as defined in Rule 415 under the Securities Act, including, without limitation, sales made directly on or through the Nasdaq or on any other existing trading market for the Common Stock, as applicable, or to or through a market maker or any other method permitted by law, including, without limitation, negotiated transactions and block trades. Shares of Common Stock sold under the ATM Agreement have been offered pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-255707), filed with the SEC on May 3, 2021 and declared effective on May 12, 2021, and the Company’s Registration Statement on Form S-3 (File No. 333-263909), filed with the SEC on March 28, 2022 and declared effective on May 10, 2022, and the prospectuses and related prospectus supplements included therein for sales of shares of Common Stock as follows: Supplement Period Number of Shares Sold Weighted Average Price Per Share Gross Proceeds Net Proceeds Prospectus supplement dated May 27, 2021 with an aggregate offering price of up to $100.0 million (“Common ATM Program–1”) May 28, 2021 through July 1, 2021 12,356 $8,032.74 $99.3 million $95.7 million Prospectus supplement dated June 30, 2021 with an aggregate offering price of up to $150.0 million (“Common ATM Program–2”) June 30, 2021 through September 2, 2021 14,395 $10,413.79 $149.9 million $144.4 million Prospectus supplement dated September 30, 2021 with an aggregate offering price of up to $250.0 million (“Common ATM Program–3”) October 6, 2021 through March 31, 2022 83,719 $2,986.18 $250.0 million $241.0 million Prospectus supplement dated May 23, 2022 with an aggregate offering price of up to $250.0 million (“Common ATM Program–4”) May 24, 2022 through March 31, 2023 6,262,182 $36.15 $226.4 million $219.3 million Due to the late filing of the 2022 Form 10-K, the Company lost eligibility to use Form S-3 (and thereby the ability to conduct at the market offerings). As a result of subsequent delinquent quarterly reports on Form 10-Q, including for the period ended September 30, 2023 (the “Q3 Form 10-Q”), the Company will not regain eligibility to use Form S-3 until twelve full calendar months following the date the Q3 Form 10-Q was due. Any future delinquency with respect to the filing of a Form 10-K, Form 10-Q, or certain Form 8-Ks will cause the Company to lose Form S-3 eligibility for at least 12 calendar months from the due date of the delinquent filing. Share Buyback Program On August 10, 2022, the Board authorized a share buyback program (the “2022 Share Buyback Program”), pursuant to which the Company is permitted to repurchase up to 50,000 shares of Common Stock over the next two-year period. The 2022 Share Buyback Program does not obligate the Company to repurchase any shares of Common Stock. No shares were repurchased under the 2022 Share Buyback Program during the nine months ended September 30, 2023. As of September 30, 2023, we had repurchased and concurrently retired a total of 1,787 shares of Common Stock pursuant to the 2022 Share Buyback Program. The Company records such stock repurchases as a reduction to stockholders’ equity. The Company allocates the excess of the repurchase price over the par value of shares acquired to accumulated deficit and additional paid-in capital. The portion allocated to additional paid-in capital is determined by dividing the number of shares to be retired by the number of shares issued multiplied by the balance of additional paid-in capital as of the retirement date. Series A Preferred Stock The Company is authorized to issue 20,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board. The Company has designated 2,800,000 shares of its authorized preferred stock as Series A Preferred Stock. At September 30, 2023 and December 31, 2022, the Company had 2,778,111 shares of Series A Preferred Stock outstanding. The par value of the Series A Preferred Stock is $0.0001 per share. Each share of Series A Preferred Stock is convertible at the holder’s option, at any time into the number of shares of Common Stock determined as of the date of conversion using a certain conversion formula that takes into account the amount of Liquidation Preference per share as adjusted for accrued but unpaid dividends, as described below. As of September 30, 2023, after taking into account the effect of the Reverse Stock Split, each outstanding share of Series A Preferred Stock was convertible into 0.00014 shares of Common Stock using this conversion formula. Accordingly, as of September 30, 2023, 393 shares of Common Stock were issuable upon conversion of 2,778,111 shares of outstanding Series A Preferred Stock. Holders of the Series A Preferred Stock are entitled to receive cumulative dividends at a rate per annum of 10% of the dollar amount of per share liquidation preference (plus accumulated but unpaid dividends, the “Series A Liquidation Preference”) per share of Series A Preferred Stock, paid or accrued quarterly in arrears on the 15 th day of each March, June, September and December. From the issue date through September 30, 2023, the amount of all accrued but unpaid dividends on the Series A Preferred Stock have been added to the Series A Liquidation Preference. The Company shall add the amount of all accrued but unpaid dividends on each quarterly dividend payment date to the Series A Liquidation Preference, except to the extent the Company elects to make all or any portion of such payment in cash on or prior to the applicable dividend payment date, in which case, the amount of the accrued but unpaid dividends that is added to the Series A Liquidation Preference shall be reduced on a dollar-for-dollar basis by the amount of any such cash payment. The Company is not required to make any payment or allowance for unpaid dividends, whether or not in arrears, on converted shares of Series A Preferred Stock or for dividends on the shares of Common Stock issued upon conversion of such shares. The gross dividend accumulation for the three and nine months ended September 30, 2023 was $1.0 million and $2.9 million, respectively. The gross dividend accumulation for the three and nine months ended September 30, 2022 was $0.9 million and $2.6 million, respectively. As of September 30, 2023, the total accumulated but unpaid dividends on the Series A Preferred Stock since inception on July 12, 2017 was $18.8 million. The per share average of cumulative preferred dividends for the three and nine months ended September 30, 2023 was $0.36 and $1.05 , respectively. The per share average of cumulative preferred dividends for the three and nine months ended September 30, 2022 was $0.33 and $0.95 , respectively. In addition, holders of the Series A Preferred Stock will participate in any dividend or distribution of cash or other property paid in respect of the Common Stock pro rata with the holders of the Common Stock (other than certain dividends or distributions that trigger an adjustment to the conversion rate, as described in the Certificate of Designations), as if all shares of Series A Preferred Stock had been converted into Common Stock immediately prior to the date on which such holders of the Common Stock became entitled to such dividend or distribution. Series B Preferred Stock and Tandem Preferred Stock The Company has designated 8,100,000 shares of its authorized and unissued preferred stock as Series B Preferred Stock. At September 30, 2023 and December 31, 2022, the Company had 3,029,900 shares of Series B Preferred Stock outstanding. The par value of the Series B Preferred Stock is $0.0001 per share. Each share of Series B Preferred Stock is convertible at the holder’s option, at any time into the number of shares of Common Stock determined as of the date of conversion using a certain conversion formula that takes into account the amount of liquidation preference per share as adjusted for accrued but unpaid dividends, as described below. As of September 30, 2023, after taking into account the effect of the Reverse Stock Split and payment of the accrued dividend, each outstanding share of Series B Preferred Stock was convertible into 0.00531 of one share of Common Stock using this conversion formula. Accordingly, as of September 30, 2023, 16,079 shares of Common Stock were issuable upon conversion of 3,029,900 shares of outstanding Series B Preferred Stock. The shares of Series B Preferred Stock are listed on the Nasdaq under the symbol “XELAP.” Holders of the Series B Preferred Stock are entitled to receive cumulative dividends at a rate per annum of 6% of the dollar amount of per share liquidation preference (plus accumulated but unpaid dividends, the “Series B Liquidation Preference”) per share of Series B Preferred Stock, paid or accrued quarterly in arrears on the last day of each of March, June, September and December. The Company shall add the amount of all accrued but unpaid dividends on each quarterly dividend payment date to the Series B Liquidation Preference, except to the extent the Company elects to make all or any portion of such payment in cash on or prior to the applicable dividend payment date, in which case, the amount of the accrued but unpaid dividends that is added to the Series B Liquidation Preference shall be reduced on a dollar-for-dollar basis by the amount of any such cash payment. The Company is not required to make any payment or allowance for unpaid dividends, whether or not in arrears, on converted shares of Series B Preferred Stock or for dividends on the shares of Common Stock issued upon conversion of such shares. The gross dividend accrued for the three and nine months ended September 30, 2023 was $1.2 million and $3.5 million, respectively. The gross dividend accrued for the three and nine months ended September 30, 2022 was $1.1 million and $2.5 million, respectively. During the nine months ended September 30, 2022, the Company paid accumulated dividend of $2.5 million. As of September 30, 2023, the total accumulated but unpaid dividends on the Series B Preferred Stock since inception on March 23, 2022 was $4.6 million. The per share average of accrued preferred dividends for the three and nine months ended September 30, 2023 was $0.39 and $1.16, respectively. The per share average of accrued preferred dividends for the three and nine months ended September 30, 2022 was $0.38 and $0.83, respectively. In addition, holders of the Series B Preferred Stock will participate in any dividend or distribution of cash or other property paid in respect of the Common Stock pro rata with the holders of the Common Stock (other than certain dividends or distributions that trigger an adjustment to the conversion rate, as described in the Certificate of Designations), as if all shares of Series B Preferred Stock had been converted into Common Stock immediately prior to the date on which such holders of the Common Stock became entitled to such dividend or distribution. Holders of Series B Preferred Stock also have rights to vote for the election of one additional director to serve on the Board, if dividends on Series B Preferred Stock are in arrears for eight or more consecutive quarters, until all unpaid and accumulated dividends on the Series B Preferred Stock have been paid or declared and a sum sufficient for payment is set aside for such payment. On May 17, 2022, the Company issued one share of tandem preferred stock, par value $0.0001 per share (the “Tandem Preferred Stock”), as a dividend on its existing shares of outstanding Series B Preferred Stock. Any issuance of Series B Preferred Stock after this date shall be automatically accompanied by an equal number of shares of Tandem Preferred Stock. Tandem Preferred Stock are embedded in the Series B Preferred Stock and they provide voting rights to the existing shares of Series B Preferred Stock. Each share of Series B Preferred Stock disclosed in the condensed consolidated balance sheet, the condensed consolidated statements of stockholders’ deficit and the notes to the condensed consolidated financial statements embeds one share of Tandem Preferred Stock. On all matters submitted to a vote of the stockholders of the Company, the holders of the Series B Preferred Stock through their holdings of Tandem Preferred Stock will be entitled to vote with the holders of the Common Stock as a single class. Each share of Tandem Preferred Stock entitles the holder to one vote per share, subject to adjustment for issuance of any shares of Common Stock pursuant to any dividend or distribution on shares of Common Stock, share split or share combination or other transactions as specified in the Certificate of Designation of Tandem Preferred Stock. Shares of Tandem Preferred Stock are not entitled to receive dividends of any kind. In the case of a transfer of the underlying Series B Preferred Stock by a holder to any transferee, the Tandem Preferred Stock shall be automatically transferred simultaneously to such transferee without any further action by such Holder. Upon the redemption of a holder’s shares of Series B Preferred Stock or the conversion of shares of Series B Preferred Stock into Common Stock, an equal number of such holder’s shares of Tandem Preferred Stock shall, without any further action required by the holder, be automatically transferred to the Company for cancellation without the payment of any additional consideration by the Company. In the event of any liquidation, winding-up or dissolution of the Company each holder of the Tandem Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders an amount in cash equal to the par value of such Tandem Preferred Stock with respect to each share of Tandem Preferred Stock held by such holder. Treasury Stock The Company had 612 shares of Common Stock held as treasury stock, 232 shares of which were repurchased under a prior expired share buyback and 380 shares that were returned to the Company pursuant to a contractual obligation. The Company recorded treasury stock using the cost method. On September 30, 2023, the Company retired all of 612 shares of the Common Stock held as treasury stock and charged the excess of the repurchase cost over the par value of the shares to accumulated deficit. Warrants At September 30, 2023, there were warrants outstanding to purchase 2,433 shares of our Common Stock, consisting of 9,731,819 warrants to purchase one-four thousandth of one Private Placement of Unregistered Shares and Warrants On March 15, 2021, the Company, entered into a securities purchase agreement with certain accredited institutional investors pursuant to which the Company issued and sold to ten accredited institutional investors in a private placement an aggregate of 2,433 unregistered shares of the Common Stock at a price of $11,000.00 per share and an equal number of warrants, generating gross proceeds to the Company of $26.8 million. Cantor Fitzgerald acted as placement agent in connection with such sale of unregistered securities and received a placement fee of 5.5% of gross proceeds in connection with such service. In selling the shares without registration, the Company relied on exemptions from registration available under Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder. The Company filed a registration statement on Form S-3 on May 3, 2021 that registered for resale of these shares and the shares underlying these private placement warrants. Each private placement warrant entitles the holder to purchase one-four thousandth of one |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2023 | |
Related-Party Transactions | |
Related-Party Transactions | 12. Related-Party Transactions Relationship with HandsOn Global Management The Company incurred reimbursable travel expenses to HOVS LLC and HandsOn Fund 4 I, LLC (collectively, and together with certain of their affiliated entities managed by HandsOn Global Management LLC, including such entity, “HGM”) of $0 and less than $0.1 million for the three months ended September 30, 2023 and 2022, respectively, and less than $0.1 million for each of the nine months ended September 30, 2023 and 2022. Certain members of our Board, including our Executive Chairman, Par Chadha, Sharon Chadha, Ron Cogburn, and James Reynolds are or have been affiliated with HGM. Our Executive Chairman, Par Chadha and his wife, Sharon Chadha, are currently affiliated with HGM. Messrs. Cogburn and Reynolds were affiliated with HGM until 2020. Pursuant to a master agreement dated January 1, 2015 between Rule 14, LLC and a subsidiary of the Company, the Company incurs marketing fees to Rule 14, LLC, a portfolio company of HGM. Similarly, the Company is party to ten master agreements with entities affiliated with HGM’s managed funds, each of which were entered into during 2015 and 2016. Each master agreement provides the Company with use of certain technology and includes a reseller arrangement pursuant to which the Company is entitled to sell these services to third parties. Any revenue earned by the Company in such third-party sale is shared 75%/25% with each of HGM’s venture affiliates in favor of the Company. The brands Zuma, Athena, Peri, BancMate, Spring, Jet, Teletype, CourtQ and Rewardio are part of the HGM managed funds. The Company has the license to use and resell such brands, as described therein. The Company incurred fees of $2.2 million and $1.5 million relating to these agreements for the three months ended September 30, 2023 and 2022, respectively. The Company incurred fees of $6.7 million and $4.6 million relating to these agreements for the nine months ended September 30, 2023 and 2022, respectively. Certain operating companies lease their operating facilities from HOV RE, LLC and HOV Services Limited, which are affiliates under common control with HGM. The rental expense for these operating leases was less than $0.1 million and $0.1 million for the three and the nine months ended September 30, 2023, respectively, and $0.1 million and $0.2 million for the three and the nine months ended September 30, 2022, respectively. In addition, HOV Services, Ltd. provides the Company data capture and technology services. The expense recognized for these services was approximately $0.5 million and $0.4 million for the three months ended September 30, 2023 and 2022, respectively, and $1.3 million and $1.1 million for the nine months ended September 30, 2023 and 2022, respectively. These expenses are included in cost of revenue in the condensed consolidated statements of operations. Consulting Agreement The Company receives services from Oakana Holdings, Inc. The Company and Oakana Holdings, Inc. are related through a family relationship between our Executive Chairman and the president of Oakana Holdings, Inc. The expense recognized for these services was $0 and an expense reversal of less than $0.1 million for the three months ended September 30, 2023 and 2022, respectively, and less than $0.1 million for each of the nine months ended September 30, 2023 and 2022. Subscription Agreements On July 21, 2022, the Company entered into a subscription agreement with its Executive Chairman. Pursuant to this subscription agreement, on August 11, 2022, the Company issued and sold 355 shares of Common Stock to Par Chadha for an aggregate purchase price of $0.1 million. Payable and Receivable/Prepaid Balances with Affiliates Payable and receivable/prepaid balances with affiliates as of September 30, 2023 and December 31, 2022 were as follows: September 30, 2023 December 31, 2022 Receivables and Prepaid Expenses Payables Receivables and Prepaid Expenses Payables HOV Services, Ltd $ 50 $ — $ 412 $ — Rule 14 — 2,499 — 2,473 HGM 67 — 347 — $ 117 $ 2,499 $ 759 $ 2,473 |
Segment and Geographic Area Inf
Segment and Geographic Area Information | 9 Months Ended |
Sep. 30, 2023 | |
Segment and Geographic Area Information | |
Segment and Geographic Area Information | 13. Segment and Geographic Area Information The Company’s operating segments are significant strategic business units that align its products and services with how it manages its business, approaches the markets and interacts with customers. The Company is organized into three segments: ITPS, HS, and LLPS. ITPS: HS: LLPS: The chief operating decision maker reviews segment profit to evaluate operating segment performance and determine how to allocate resources to operating segments. “Segment profit” is defined as revenue less cost of revenue (exclusive of depreciation and amortization). The Company does not allocate selling, general, and administrative expenses, depreciation and amortization, interest expense, net and sundry expenses (income), net. The Company manages assets on a total company basis, not by operating segment, and therefore asset information and capital expenditures by operating segments are not presented. A reconciliation of segment profit to net loss before income taxes is presented below. Three months ended September 30, 2023 ITPS HS LLPS Total Revenue $ 172,150 $ 62,090 $ 18,885 $ 253,125 Cost of revenue (exclusive of depreciation and amortization) 141,808 45,430 11,212 198,450 Segment profit 30,342 16,660 7,673 54,675 Selling, general and administrative expenses (exclusive of depreciation and amortization) 35,367 Depreciation and amortization 14,398 Related party expense 2,845 Interest expense, net 24,708 Debt modification and extinguishment costs (gain), net (571) Sundry expense, net 298 Other income, net (1,069) Net loss before income taxes $ (21,301) Three months ended September 30, 2022 ITPS HS LLPS Total Revenue $ 185,309 $ 60,955 $ 17,774 $ 264,038 Cost of revenue (exclusive of depreciation and amortization) 157,269 48,316 12,257 217,842 Segment profit 28,040 12,639 5,517 46,196 Selling, general and administrative expenses (exclusive of depreciation and amortization) 44,369 Depreciation and amortization 17,737 Impairment of goodwill and other intangible assets 29,565 Related party expense 2,016 Interest expense, net 40,897 Debt modification and extinguishment costs (gain), net (4,696) Sundry expense, net 781 Other income, net (1,115) Net loss before income taxes $ (83,358) Nine months ended September 30, 2023 ITPS HS LLPS Total Revenue $ 550,848 $ 188,740 $ 60,095 $ 799,683 Cost of revenue (exclusive of depreciation and amortization) 450,353 139,182 37,441 626,976 Segment profit 100,495 49,558 22,654 172,707 Selling, general and administrative expenses (exclusive of depreciation and amortization) 111,774 Depreciation and amortization 45,848 Related party expense 8,696 Interest expense, net 113,980 Debt modification and extinguishment costs (gain), net (16,129) Sundry expense, net 2,546 Other income, net (1,583) Net loss before income taxes $ (92,425) Nine months ended September 30, 2022 ITPS HS LLPS Total Revenue $ 580,320 $ 173,940 $ 55,946 $ 810,206 Cost of revenue (exclusive of depreciation and amortization) 477,559 140,767 40,297 658,623 Segment profit 102,761 33,173 15,649 151,583 Selling, general and administrative expenses (exclusive of depreciation and amortization) 137,604 Depreciation and amortization 53,942 Impairment of goodwill and other intangible assets 29,565 Related party expense 6,189 Interest expense, net 122,928 Debt modification and extinguishment costs (gain), net 4,305 Sundry expense, net 347 Other expense, net 12,419 Net loss before income taxes $ (215,716) |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events. | |
Subsequent Events | 14. Subsequent Events The Company has evaluated all events that occurred after the balance sheet date through the date when these condensed consolidated financial statements were issued to determine if they must be reported. Special Voting Preferred Stock On October 9, 2023, the Company entered into the Subscription, Voting and Redemption Agreement with GP-HGM LLC (“GP-HGM”), an entity controlled by our Executive Chairman, pursuant to which GP-HGM purchased 1,000,000 shares of a new class of preferred stock designated as “Special Voting Stock” for an aggregate purchase price of $100 and agreed to vote all of the shares of Special Voting Stock at the annual meeting of stockholders, scheduled for December 5, 2023 (the “Annual Meeting"), in proportion to the votes cast at the Annual Meeting. Each share of Special Voting Stock is entitled to 20,000 votes per share. The Company has further agreed to redeem the shares of Special Voting Stock for an aggregate price of $100 on the first business day following the date on which the voting on the Amendment to Series B Certificate of Designations Proposal has concluded. At the Annual Meeting, stockholders will be asked to approve an amendment to the Certificate of Designations of the Company’s Series B Preferred Stock to allow the Company to have the ability to (a) pay dividends in shares of Common Stock, (b) pay less than all of the accrued dividends, and (c) pay dividends on any date designated by the Company’s board of directors for the payment of dividends. Completion of the Merger On November 29, 2023, the Company completed the merger of its European business with CFFE. The combined company now operates as XBP Europe and, beginning on November 30, 2023, XBP Europe shares started trading on the Nasdaq Stock Market under the ticker symbol “XBP” and its warrants started trading on the Nasdaq Stock Market under the ticker symbol “XBPEW”. The business combination will be accounted for as a reverse capitalization in accordance with FASB’s ASC Topic 805, Business Combinations Insurance Claim The Company received an insurance claim settlement amount of $10.0 million in December 2023 under the business interruption claim filed for the cyber security incident which occurred during the second half of 2022. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Significant Accounting Policies | |
Revenue Recognition | Revenue Recognition We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers Nature of Services Our primary performance obligations are to stand ready to provide various forms of business processing services, consisting of a series of distinct services, but that are substantially the same, and have the same pattern of transfer over time, and accordingly are combined into a single performance obligation. Our promise to our customers is typically to perform an unknown or unspecified quantity of tasks and the consideration received is contingent upon the customers’ use (i.e., number of transactions processed, requests fulfilled, etc.); as such, the total transaction price is variable. We allocate variable fees to the single performance obligation charged to the distinct service period in which we have the contractual right to bill under the contract. Disaggregation of Revenues The Company is organized into three segments: Information & Transaction Processing Solutions (“ITPS”), Healthcare Solutions (“HS”), and Legal & Loss Prevention Services (“LLPS”) (See Note 13 – Segment and Geographic Area Information Three Months Ended September 30, 2023 2022 ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 127,074 $ 62,090 $ 18,885 $ 208,049 $ 141,904 $ 60,955 $ 17,774 $ 220,633 EMEA 40,035 — — 40,035 39,053 — — 39,053 Other 5,041 — — 5,041 4,352 — — 4,352 Total $ 172,150 $ 62,090 $ 18,885 $ 253,125 $ 185,309 $ 60,955 $ 17,774 $ 264,038 Nine Months Ended September 30, 2023 2022 ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 410,598 $ 188,740 $ 60,095 $ 659,433 $ 429,979 $ 173,940 $ 55,946 $ 659,865 EMEA 125,107 — — 125,107 136,722 — — 136,722 Other 15,143 — — 15,143 13,619 — — 13,619 Total $ 550,848 $ 188,740 $ 60,095 $ 799,683 $ 580,320 $ 173,940 $ 55,946 $ 810,206 Contract Balances The following table presents contract assets, contract liabilities and contract costs recognized at September 30, 2023 and December 31, 2022: September 30, December 31, January 1, 2023 2022 2022 Accounts receivable, net $ 96,867 $ 101,616 $ 184,102 Deferred revenues 14,881 17,585 17,518 Customer deposits 16,319 16,955 17,707 Costs to obtain and fulfill a contract $ 1,485 $ 1,674 $ 2,328 Accounts receivable, net includes $29.7 million and $25.7 million as of September 30, 2023 and December 31, 2022, respectively, representing amounts not yet billed to customers. We have accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers. Deferred revenues relate to payments received in advance of performance under a contract. A significant portion of this balance relates to maintenance contracts or other service contracts where we received payments for upfront conversions or implementation activities which do not transfer a service to the customer but rather are used in fulfilling the related performance obligations that transfer over time. The advance consideration received from customers is deferred over the contract term. We recognized revenue of $1.6 million and $16.4 million during the three and nine months ended September 30, 2023, respectively that had been deferred as of December 31, 2022. We recognized revenue of $1.8 million and $15.3 million during the three and nine months ended September 30, 2022, respectively that had been deferred as of January 1, 2022. We recognized revenue of $16.5 million during the year ended December 31, 2022 that had been deferred as of January 1, 2022. Costs incurred to obtain and fulfill contracts are deferred and presented as part of intangible assets, net and expensed on a straight-line basis over the estimated benefit period. We recognized $0.2 million and $0.2 million of amortization for these costs for the three months ended September 30, 2023 and 2022, respectively, within depreciation and amortization expense. We recognized $0.6 million and $0.8 million of amortization for these costs for the nine months ended September 30, 2023 and 2022, respectively, within depreciation and amortization expense. We recognized $1.1 million of amortization for these costs in 2022 within depreciation and amortization expense. These costs represent incremental external costs or certain specific internal costs that are directly related to the contract acquisition or fulfillment and can be separated into two principal categories: contract commissions and fulfillment costs. Applying the practical expedient in ASC 340-40-25-4, we recognize the incremental costs of obtaining contracts as an expense when incurred, if the amortization period would have been one year or less. These costs are included in selling, general and administrative expenses. The effect of applying this practical expedient was not material. Customer deposits consist primarily of amounts received from customers in advance for postage. These advanced postage deposits are used to cover the costs associated with postage, with the corresponding postage revenue being recognized as services are performed. Performance Obligations At the inception of each contract, we assess the goods and services promised in our contracts and identify each distinct performance obligation. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts. For the majority of our business and transaction processing service contracts, revenues are recognized as services are provided based on an appropriate input or output method, typically based on the related labor or transactional volumes. Certain of our contracts have multiple performance obligations, including contracts that combine software implementation services with post-implementation customer support. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we estimate our expected costs of satisfying a performance obligation and add an appropriate margin for that distinct good or service. We also use the adjusted market approach whereby we estimate the price that customers in the market would be willing to pay. In assessing whether to allocate variable consideration to a specific part of the contract, we consider the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract. Certain of our software implementation performance obligations are satisfied at a point in time, typically when customer acceptance is obtained. When evaluating the transaction price, we analyze, on a contract-by-contract basis, all applicable variable consideration. The nature of our contracts gives rise to variable consideration, including volume discounts, contract penalties, and other similar items that generally decrease the transaction price. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We do not anticipate significant changes to our estimates of variable consideration. We include reimbursements from customers, such as postage costs, in revenue, while the related costs are included in cost of revenue. Transaction Price Allocated to the Remaining Performance Obligations In accordance with optional exemptions available under ASC 606, we did not disclose the value of unsatisfied performance obligations for (a) contracts with an original expected length of one year or less, and (b) contracts for which variable consideration relates entirely to an unsatisfied performance obligation, which comprise the majority of our contracts. We have certain non-cancellable contracts where we receive a fixed monthly fee in exchange for a series of distinct services that are substantially the same and have the same pattern of transfer over time, with the corresponding remaining performance obligations as of September 30, 2023 in each of the future periods below: Estimated Remaining Fixed Consideration for Unsatisfied Performance Obligations Remainder of 2023 $ 10,169 2024 35,699 2025 30,338 2026 3,663 2027 2,041 2028 and thereafter 1,226 Total $ 83,136 |
General (Tables)
General (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
General | |
Schedule of components of basic and diluted EPS | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net loss attributable to common stockholders (A) $ (25,298) $ (87,326) $ (105,865) $ (226,613) Weighted average common shares outstanding – basic and diluted (B) 6,365,353 315,725 5,854,840 176,875 Loss Per Share: Basic and diluted (A/B) $ (3.97) $ (276.59) $ (18.08) $ (1,281.20) |
New Accounting Pronouncements (
New Accounting Pronouncements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
New Accounting Pronouncements | |
Schedule of new accounting standard adoption | The following table describes the changes in the allowance for expected credit losses for the nine months ended September 30, 2023 (all related to accounts receivables): Balance at January 1, 2023 of the allowance for expected credit losses $ 6,402 Change in the provision for expected credit losses for the period (724) Balance at September 30, 2023 of the allowance for expected credit losses $ 5,678 |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Significant Accounting Policies | |
Schedule of disaggregated revenue from contracts by geographic region and by segment | Three Months Ended September 30, 2023 2022 ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 127,074 $ 62,090 $ 18,885 $ 208,049 $ 141,904 $ 60,955 $ 17,774 $ 220,633 EMEA 40,035 — — 40,035 39,053 — — 39,053 Other 5,041 — — 5,041 4,352 — — 4,352 Total $ 172,150 $ 62,090 $ 18,885 $ 253,125 $ 185,309 $ 60,955 $ 17,774 $ 264,038 Nine Months Ended September 30, 2023 2022 ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 410,598 $ 188,740 $ 60,095 $ 659,433 $ 429,979 $ 173,940 $ 55,946 $ 659,865 EMEA 125,107 — — 125,107 136,722 — — 136,722 Other 15,143 — — 15,143 13,619 — — 13,619 Total $ 550,848 $ 188,740 $ 60,095 $ 799,683 $ 580,320 $ 173,940 $ 55,946 $ 810,206 |
Schedule of contract balances | September 30, December 31, January 1, 2023 2022 2022 Accounts receivable, net $ 96,867 $ 101,616 $ 184,102 Deferred revenues 14,881 17,585 17,518 Customer deposits 16,319 16,955 17,707 Costs to obtain and fulfill a contract $ 1,485 $ 1,674 $ 2,328 |
Schedule of estimated remaining fixed consideration for unsatisfied performance obligations | Estimated Remaining Fixed Consideration for Unsatisfied Performance Obligations Remainder of 2023 $ 10,169 2024 35,699 2025 30,338 2026 3,663 2027 2,041 2028 and thereafter 1,226 Total $ 83,136 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Assets and Goodwill | |
Schedule of intangible assets | September 30, 2023 Gross Carrying Accumulated Intangible Amount (a) Amortization Asset, net Customer relationships $ 507,675 $ (373,656) $ 134,019 Developed technology 88,553 (88,026) 527 Patent 15 (14) 1 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 17,616 (16,131) 1,485 Internally developed software 55,107 (40,786) 14,321 Purchased software 26,749 (8,471) 18,278 Intangibles, net $ 704,115 $ (530,184) $ 173,931 December 31, 2022 Gross Carrying Accumulated Intangible Amount (a) Amortization Asset, net Customer relationships $ 507,723 $ (351,240) $ 156,483 Developed technology 88,553 (88,000) 553 Patent 15 (6) 9 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 17,184 (15,509) 1,675 Internally developed software 52,441 (35,095) 17,346 Purchased software 26,749 (7,133) 19,616 Intangibles, net $ 701,065 $ (500,083) $ 200,982 (a) Amounts include intangible assets acquired in business combinations and asset acquisitions. (b) The carrying amount of trade names for 2023 and 2022 is net of accumulated impairment losses of $44.1 million. Carrying amount of $5.3 million as at September 30, 2023 represents indefinite-lived intangible assets. |
Schedule of goodwill by reporting segment | Balances as at January 1, 2023 (a) Additions Deletions Impairments Currency Translation Adjustments Balances as at September 30, 2023 (a) ITPS $ 81,151 $ — $ (16,500) (b) $ — $ (40) $ 64,611 HS 86,786 — — — — 86,786 LLPS 18,865 — — — — 18,865 Total $ 186,802 $ — $ (16,500) $ — $ (40) $ 170,262 Balances as at January 1, 2022 (a) Additions Deletions Impairments Currency Translation Adjustments Balances as at December 31, 2022 (a) ITPS $ 252,672 $ — $ — $ (171,182) $ (339) $ 81,151 HS 86,786 — — — — 86,786 LLPS 18,865 — — — — 18,865 Total $ 358,323 $ — $ — $ (171,182) $ (339) $ 186,802 (a) The goodwill amount for all periods presented is net of accumulated impairment amounts. Accumulated impairment relating to ITPS was $487.7 million, $487.7 million and $316.5 million as at September 30, 2023, December 31, 2022 and December 31, 2021, respectively. Accumulated impairment relating to LLPS was $243.4 million as at September 30, 2023, December 31, 2022 and December 31, 2021, respectively. (b) The deletion in goodwill is due to derecognition of allocated goodwill on sale of the high-speed scanner business in the second quarter of 2023. Refer to Note 1 —General . |
Long-Term Debt and Credit Fac_2
Long-Term Debt and Credit Facilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Long-Term Debt and Credit Facilities | |
Schedule of outstanding long-term debt instruments | September 30, December 31, 2023 2022 Other (a) $ 34,561 $ 25,117 2023 term loans (b) — 71,470 Senior secured term loan maturing July 11, 2026 (c) 38,264 — 2023 notes (d) — 22,762 2026 notes maturing July 12, 2026 (e) 22,693 908,959 New notes maturing April 15, 2026 (f) 943,642 — Secured borrowings under BRCC Facility matured on June 10, 2023 25,899 68,529 Second lien note maturing June 17, 2025 (g) 26,937 — Total debt 1,091,996 1,096,837 Less: Current portion of long-term debt (48,221) (154,802) Long-term debt, net of current maturities $ 1,043,775 $ 942,035 (a) Other debt represents outstanding loan balances associated with various hardware, software purchases, maintenance and leasehold improvements along with loans and receivables factoring arrangement entered into by subsidiaries of the Company. (b) Net of unamortized original issue discount and debt issuance costs of $0.2 million and $0.9 million as of December 31, 2022. (c) Net of unamortized debt issuance costs of $1.7 million as of September 30, 2023. (d) Net of unamortized original issue discount and debt issuance costs of $0.1 million and less than $0.1 million as of December 31, 2022. (e) Net of unamortized net original issue discount and debt issuance costs of $0.3 million and $1.0 million as of September 30, 2023, respectively; and unamortized net original issue discount and debt issuance costs of $58.8 million and $12.1 million as of December 31, 2022, respectively. (f) Net of unamortized net debt exchange premium of $131.7 million as of September 30, 2023. (g) Net of unamortized debt issuance costs of $4.6 million as of September 30, 2023. |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Employee Benefit Plans | |
Schedule of components of the net periodic benefit cost | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Service cost $ 10 $ 15 $ 30 $ 45 Interest cost 766 486 2,275 1,458 Expected return on plan assets (682) (724) (2,025) (2,172) Amortization: Amortization of prior service cost 89 53 266 159 Amortization of net loss 395 646 1,171 1,938 Net periodic benefit cost $ 578 $ 476 $ 1,717 $ 1,428 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurement | |
Schedule of fair value of financial instruments | Carrying Fair Fair Value Measurements As of September 30, 2023 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,043,775 $ 219,537 $ — $ 219,537 $ — Current portion of long-term debts 48,221 48,221 — 48,221 — Carrying Fair Fair Value Measurements As of December 31, 2022 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 942,035 $ 184,968 $ — $ 184,968 $ — Current portion of long-term debts 154,802 121,893 — 121,893 — |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stock-Based Compensation | |
Summary of the status of restricted stock units | Average Weighted Remaining Number Average Grant Contractual Life of Units Date Fair Value (Years) Outstanding Balance as of December 31, 2022 8 $ 6,600.00 1.00 Granted — — Forfeited — — Vested — — Outstanding Balance as of September 30, 2023 8 $ 6,600.00 0.25 |
Schedule of stock option activity | Average Weighted Weighted Remaining Average Grant Average Vesting Period Outstanding Date Fair Value Exercise Price (Years) Outstanding Balance as of December 31, 2022 352 $ 22,554.25 $ 47,117.77 0.20 Granted — — Exercised — — Forfeited (14) 27,703.04 Expired — — Outstanding Balance as of September 30, 2023 (1) 338 $ 22,347.33 $ 46,554.52 0.03 (1) 329 of the outstanding options are exercisable as of September 30, 2023. |
Summary of activity for the market performances of RSU | Weighted Average Weighted Period Over Number Average Which Expected of Units Fair Value to be Recognized Outstanding Balance as of December 31, 2022 2,125 $ 1,820.00 2.98 Granted — — Forfeited — — Vested — — Outstanding Balance as of September 30, 2023 2,125 $ 1,820.00 2.98 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity | |
Schedule of sales of shares of Common Stock | Supplement Period Number of Shares Sold Weighted Average Price Per Share Gross Proceeds Net Proceeds Prospectus supplement dated May 27, 2021 with an aggregate offering price of up to $100.0 million (“Common ATM Program–1”) May 28, 2021 through July 1, 2021 12,356 $8,032.74 $99.3 million $95.7 million Prospectus supplement dated June 30, 2021 with an aggregate offering price of up to $150.0 million (“Common ATM Program–2”) June 30, 2021 through September 2, 2021 14,395 $10,413.79 $149.9 million $144.4 million Prospectus supplement dated September 30, 2021 with an aggregate offering price of up to $250.0 million (“Common ATM Program–3”) October 6, 2021 through March 31, 2022 83,719 $2,986.18 $250.0 million $241.0 million Prospectus supplement dated May 23, 2022 with an aggregate offering price of up to $250.0 million (“Common ATM Program–4”) May 24, 2022 through March 31, 2023 6,262,182 $36.15 $226.4 million $219.3 million |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Related-Party Transactions | |
Schedule of payable and receivable balances with affiliates | September 30, 2023 December 31, 2022 Receivables and Prepaid Expenses Payables Receivables and Prepaid Expenses Payables HOV Services, Ltd $ 50 $ — $ 412 $ — Rule 14 — 2,499 — 2,473 HGM 67 — 347 — $ 117 $ 2,499 $ 759 $ 2,473 |
Segment and Geographic Area I_2
Segment and Geographic Area Information (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment and Geographic Area Information | |
Schedule of reconciliation of segment profit to net loss before income taxes by segment information | Three months ended September 30, 2023 ITPS HS LLPS Total Revenue $ 172,150 $ 62,090 $ 18,885 $ 253,125 Cost of revenue (exclusive of depreciation and amortization) 141,808 45,430 11,212 198,450 Segment profit 30,342 16,660 7,673 54,675 Selling, general and administrative expenses (exclusive of depreciation and amortization) 35,367 Depreciation and amortization 14,398 Related party expense 2,845 Interest expense, net 24,708 Debt modification and extinguishment costs (gain), net (571) Sundry expense, net 298 Other income, net (1,069) Net loss before income taxes $ (21,301) Three months ended September 30, 2022 ITPS HS LLPS Total Revenue $ 185,309 $ 60,955 $ 17,774 $ 264,038 Cost of revenue (exclusive of depreciation and amortization) 157,269 48,316 12,257 217,842 Segment profit 28,040 12,639 5,517 46,196 Selling, general and administrative expenses (exclusive of depreciation and amortization) 44,369 Depreciation and amortization 17,737 Impairment of goodwill and other intangible assets 29,565 Related party expense 2,016 Interest expense, net 40,897 Debt modification and extinguishment costs (gain), net (4,696) Sundry expense, net 781 Other income, net (1,115) Net loss before income taxes $ (83,358) Nine months ended September 30, 2023 ITPS HS LLPS Total Revenue $ 550,848 $ 188,740 $ 60,095 $ 799,683 Cost of revenue (exclusive of depreciation and amortization) 450,353 139,182 37,441 626,976 Segment profit 100,495 49,558 22,654 172,707 Selling, general and administrative expenses (exclusive of depreciation and amortization) 111,774 Depreciation and amortization 45,848 Related party expense 8,696 Interest expense, net 113,980 Debt modification and extinguishment costs (gain), net (16,129) Sundry expense, net 2,546 Other income, net (1,583) Net loss before income taxes $ (92,425) Nine months ended September 30, 2022 ITPS HS LLPS Total Revenue $ 580,320 $ 173,940 $ 55,946 $ 810,206 Cost of revenue (exclusive of depreciation and amortization) 477,559 140,767 40,297 658,623 Segment profit 102,761 33,173 15,649 151,583 Selling, general and administrative expenses (exclusive of depreciation and amortization) 137,604 Depreciation and amortization 53,942 Impairment of goodwill and other intangible assets 29,565 Related party expense 6,189 Interest expense, net 122,928 Debt modification and extinguishment costs (gain), net 4,305 Sundry expense, net 347 Other expense, net 12,419 Net loss before income taxes $ (215,716) |
General (Details)
General (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||||||
Jul. 11, 2023 USD ($) | Jun. 08, 2023 USD ($) | May 12, 2023 $ / shares shares | Dec. 09, 2021 USD ($) | Sep. 30, 2023 USD ($) $ / shares | Jun. 30, 2023 USD ($) | Mar. 31, 2023 USD ($) | Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) | Sep. 30, 2023 USD ($) $ / shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) $ / shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||
Reverse stock split | 0.005 | ||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||
Conversion of shares (in shares) | shares | 1 | ||||||||||||
Net loss | $ 23,108 | $ 30,886 | $ 45,436 | $ 85,282 | $ 79,199 | $ 56,956 | $ 99,430 | $ 221,437 | |||||
Net operating cash outflow | 29,220 | $ 86,951 | |||||||||||
Working Capital Deficit | 195,400 | 195,400 | |||||||||||
Accumulated deficit | $ 2,058,388 | 2,058,388 | $ 1,948,009 | ||||||||||
High Speed Scanner Business | Disposed of by sale not discontinued operations | |||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||
Purchase price | $ 30,100 | ||||||||||||
Disposed of goodwill | $ 16,500 | ||||||||||||
Pre-tax gain | $ 7,200 | ||||||||||||
New Notes issued under the 2023 Exchange | |||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||
Percentage of interest paid in cash | 50% | ||||||||||||
Debt instrument face amount exchanged | $ 764,800 | ||||||||||||
2023 notes | |||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||
Debt instrument, repayment made in cash | 9,000 | ||||||||||||
Debt instrument face amount exchanged | 3,000 | ||||||||||||
2026 notes | |||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||
Debt instrument face amount exchanged | 956,000 | $ 662,700 | |||||||||||
Senior Term Loan | |||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||
Debt instrument, repayment made in cash | 48,400 | ||||||||||||
Senior Term Loan | Blue Torch Finance LLC | |||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 40,000 |
General - Net Loss per Share (D
General - Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 18, 2021 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Net loss per share | |||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 2,471 | 2,486 | |||
Net loss attributable to common stockholders | $ (25,298) | $ (87,326) | $ (105,865) | $ (226,613) | |
Weighted average common shares outstanding - basic | 6,365,353 | 315,725 | 5,854,840 | 176,875 | |
Weighted average common shares outstanding - diluted | 6,365,353 | 315,725 | 5,854,840 | 176,875 | |
Basic (in dollars per share) | $ (3.97) | $ (276.59) | $ (18.08) | $ (1,281.20) | |
Diluted (in dollars per share) | $ (3.97) | $ (276.59) | $ (18.08) | $ (1,281.20) | |
Series A Preferred Stock | |||||
Net loss per share | |||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 393 | ||||
Series B Preferred Stock | |||||
Net loss per share | |||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 16,079 | ||||
Warrant | Private Placement | |||||
Net loss per share | |||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 9,731,819 | ||||
Common Stock | |||||
Net loss per share | |||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 2,433 |
New Accounting Pronouncements -
New Accounting Pronouncements - Changes in the allowance for expected credit losses (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Changes in allowance for expected credit losses | |
Allowance for Doubtful Accounts Receivable, Current, Beginning Balance | $ 6,402 |
Change in the provision for expected credit losses for the period | (724) |
Allowance for Doubtful Accounts Receivable, Current, Ending Balance | $ 5,678 |
Significant Accounting Polici_4
Significant Accounting Policies - Segment Reporting (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Significant Accounting Policies | |
Number of segments | 3 |
Significant Accounting Polici_5
Significant Accounting Policies - Disaggregation of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenues | ||||
Revenue | $ 253,125 | $ 264,038 | $ 799,683 | $ 810,206 |
United States | ||||
Disaggregation of Revenues | ||||
Revenue | 208,049 | 220,633 | 659,433 | 659,865 |
EMEA | ||||
Disaggregation of Revenues | ||||
Revenue | 40,035 | 39,053 | 125,107 | 136,722 |
Other. | ||||
Disaggregation of Revenues | ||||
Revenue | 5,041 | 4,352 | 15,143 | 13,619 |
ITPS | ||||
Disaggregation of Revenues | ||||
Revenue | 172,150 | 185,309 | 550,848 | 580,320 |
ITPS | United States | ||||
Disaggregation of Revenues | ||||
Revenue | 127,074 | 141,904 | 410,598 | 429,979 |
ITPS | EMEA | ||||
Disaggregation of Revenues | ||||
Revenue | 40,035 | 39,053 | 125,107 | 136,722 |
ITPS | Other. | ||||
Disaggregation of Revenues | ||||
Revenue | 5,041 | 4,352 | 15,143 | 13,619 |
HS | ||||
Disaggregation of Revenues | ||||
Revenue | 62,090 | 60,955 | 188,740 | 173,940 |
HS | United States | ||||
Disaggregation of Revenues | ||||
Revenue | 62,090 | 60,955 | 188,740 | 173,940 |
LLPS | ||||
Disaggregation of Revenues | ||||
Revenue | 18,885 | 17,774 | 60,095 | 55,946 |
LLPS | United States | ||||
Disaggregation of Revenues | ||||
Revenue | $ 18,885 | $ 17,774 | $ 60,095 | $ 55,946 |
Significant Accounting Polici_6
Significant Accounting Policies - Contract Balances (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) category | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Jan. 01, 2022 USD ($) | |
Significant Accounting Policies | |||||||
Accounts receivable, net | $ 96,867 | $ 96,867 | $ 101,616 | $ 184,102 | |||
Deferred revenues | 14,881 | 14,881 | 17,585 | 17,518 | |||
Customer deposits | 16,319 | 16,319 | 16,955 | 17,707 | |||
Costs to obtain and fulfill a contract | 1,485 | 1,485 | 1,674 | $ 2,328 | |||
Unbilled receivables, net | 29,700 | 29,700 | 25,700 | ||||
Revenue recognized from deferred revenue | 1,600 | $ 1,800 | $ 15,300 | 16,400 | 16,500 | ||
Amortization of contract costs | $ 200 | $ 200 | $ 600 | $ 800 | $ 1,100 | ||
Practical expedient on incremental costs of obtaining contracts | true | ||||||
Number of principal categories | category | 2 |
Significant Accounting Polici_7
Significant Accounting Policies - Performance Obligations (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Significant Accounting Policies | |
Contracts with an original expected length | true |
Remainder of 2023 | $ 10,169 |
2024 | 35,699 |
2025 | 30,338 |
2026 | 3,663 |
2027 | 2,041 |
2028 and thereafter | 1,226 |
Total | $ 83,136 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Intangibles (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Intangibles | ||
Gross Carrying Amount | $ 704,115 | $ 701,065 |
Accumulated Amortization | (530,184) | (500,083) |
Intangible Asset, net | 173,931 | 200,982 |
Carrying amount of indefinite-lived trade names which are not amortizable | 5,300 | |
Customer relationships | ||
Intangibles | ||
Gross Carrying Amount | 507,675 | 507,723 |
Accumulated Amortization | (373,656) | (351,240) |
Intangible Asset, net | 134,019 | 156,483 |
Developed technology | ||
Intangibles | ||
Gross Carrying Amount | 88,553 | 88,553 |
Accumulated Amortization | (88,026) | (88,000) |
Intangible Asset, net | 527 | 553 |
Patent | ||
Intangibles | ||
Gross Carrying Amount | 15 | 15 |
Accumulated Amortization | (14) | (6) |
Intangible Asset, net | 1 | 9 |
Trade names | ||
Intangibles | ||
Gross Carrying Amount | 8,400 | 8,400 |
Accumulated Amortization | (3,100) | (3,100) |
Intangible Asset, net | 5,300 | 5,300 |
Accumulated impairment losses | 44,100 | 44,100 |
Outsource contract costs | ||
Intangibles | ||
Gross Carrying Amount | 17,616 | 17,184 |
Accumulated Amortization | (16,131) | (15,509) |
Intangible Asset, net | 1,485 | 1,675 |
Internally developed software | ||
Intangibles | ||
Gross Carrying Amount | 55,107 | 52,441 |
Accumulated Amortization | (40,786) | (35,095) |
Intangible Asset, net | 14,321 | 17,346 |
Purchased software | ||
Intangibles | ||
Gross Carrying Amount | 26,749 | 26,749 |
Accumulated Amortization | (8,471) | (7,133) |
Intangible Asset, net | $ 18,278 | $ 19,616 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Goodwill (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Goodwill | |||||
Number of segments | segment | 3 | ||||
Beginning of Year Balance | $ 186,802 | $ 358,323 | $ 358,323 | ||
Deletions | (16,500) | ||||
Impairments | (171,182) | ||||
Currency Translation Adjustments | (40) | (339) | |||
End of Year Balance | 170,262 | 186,802 | |||
Impairment of goodwill and other intangible assets | $ 29,565 | 29,565 | |||
ITPS | |||||
Goodwill | |||||
Beginning of Year Balance | 81,151 | 252,672 | 252,672 | ||
Deletions | (16,500) | ||||
Impairments | (171,182) | ||||
Currency Translation Adjustments | (40) | (339) | |||
End of Year Balance | 64,611 | 81,151 | |||
Accumulated impairment losses | 487,700 | 487,700 | $ 316,500 | ||
HS | |||||
Goodwill | |||||
Beginning of Year Balance | 86,786 | 86,786 | 86,786 | ||
End of Year Balance | 86,786 | 86,786 | |||
LLPS | |||||
Goodwill | |||||
Beginning of Year Balance | 18,865 | $ 18,865 | 18,865 | ||
End of Year Balance | 18,865 | 18,865 | |||
Accumulated impairment losses | $ 243,400 | $ 243,400 | $ 243,400 |
Long-Term Debt and Credit Fac_3
Long-Term Debt and Credit Facilities - Senior Credit Facilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||||
Jul. 12, 2023 | Jul. 11, 2023 | Dec. 09, 2021 | Jul. 13, 2018 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2019 | Jul. 12, 2017 | |
Long-Term Debt and Credit Facilities. | |||||||||||
Outstanding debt | $ 1,091,996 | $ 1,091,996 | $ 1,096,837 | ||||||||
Amount of cash payment | 48,529 | $ 59,209 | |||||||||
Gain on early extinguishment of debt, net | 571 | $ 4,696 | 16,129 | $ (4,305) | |||||||
2026 notes | |||||||||||
Long-Term Debt and Credit Facilities. | |||||||||||
Principal amount | $ 1,000,000 | ||||||||||
Outstanding debt | $ 24,000 | $ 0 | $ 0 | $ 980,000 | |||||||
Amount exchanged | $ 956,000 | $ 662,700 | |||||||||
Interest rate (in percent) | 11.50% | 11.50% | |||||||||
New 11.500% First-Priority Senior Secured Notes Due 2026 | |||||||||||
Long-Term Debt and Credit Facilities. | |||||||||||
Interest rate (in percent) | 11.50% | ||||||||||
Amount of minimum unrestricted cash remaining after the interest payment | $ 15,000 | ||||||||||
2023 Term Loans | |||||||||||
Long-Term Debt and Credit Facilities. | |||||||||||
Principal amount | 350,000 | ||||||||||
Original issue discount | 7,000 | ||||||||||
Outstanding debt | $ 48,400 | ||||||||||
Amount exchanged | 212,100 | ||||||||||
Amount exchanged for cash | 84,300 | ||||||||||
Amount of cash payment | 44,800 | ||||||||||
Gain on early extinguishment of debt, net | $ 600 | $ 600 | |||||||||
2023 Term Loans | 2026 notes | |||||||||||
Long-Term Debt and Credit Facilities. | |||||||||||
Applicable margin rate | 5.50% | ||||||||||
2023 Term Loans | New 11.500% First-Priority Senior Secured Notes Due 2026 | |||||||||||
Long-Term Debt and Credit Facilities. | |||||||||||
Principal amount | $ 3,000 | ||||||||||
Interest rate (in percent) | 11.50% | ||||||||||
2023 Term Loans | LIBOR | |||||||||||
Long-Term Debt and Credit Facilities. | |||||||||||
Floor interest rate (in percent) | 1% | ||||||||||
Adjustment rate on variable rate (in percent) | 6.50% | ||||||||||
2023 Term Loans | Federal funds | |||||||||||
Long-Term Debt and Credit Facilities. | |||||||||||
Applicable margin rate | 0.50% | ||||||||||
2023 Term Loans | Base rate | New 11.500% First-Priority Senior Secured Notes Due 2026 | |||||||||||
Long-Term Debt and Credit Facilities. | |||||||||||
Amount exchanged for Notes | $ 127,800 | ||||||||||
Interest rate (in percent) | 11.50% | ||||||||||
Repricing Term Loans | |||||||||||
Long-Term Debt and Credit Facilities. | |||||||||||
Outstanding debt | $ 343,400 | ||||||||||
2018 Incremental Term Loans | |||||||||||
Long-Term Debt and Credit Facilities. | |||||||||||
Amount borrowed | 30,000 | ||||||||||
2019 Incremental Term Loans | |||||||||||
Long-Term Debt and Credit Facilities. | |||||||||||
Amount borrowed | $ 30,000 | ||||||||||
Senior secured revolving facility | |||||||||||
Long-Term Debt and Credit Facilities. | |||||||||||
Maximum borrowing capacity | $ 100,000 | $ 100,000 | |||||||||
Letters of credit outstanding | $ 500 |
Long-Term Debt and Credit Fac_4
Long-Term Debt and Credit Facilities - Securitization (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Jun. 17, 2022 | Mar. 07, 2022 | Apr. 11, 2021 | Dec. 17, 2020 | Dec. 31, 2020 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Jul. 31, 2022 | Jun. 17, 2020 | Dec. 31, 2019 | Jul. 12, 2017 | |
Securitization Facility, Prepayment Premium | $ 2,700 | ||||||||||||
Proceeds from initial borrowings | $ 9,600 | $ 20,000 | |||||||||||
Senior secured revolving facility | |||||||||||||
Available facility amount | $ 100,000 | $ 100,000 | |||||||||||
A/R Facility | |||||||||||||
Accounts Receivable from Securitization | $ 160,000 | ||||||||||||
Securitization facility, payment of accrued interest and fees | 83,000 | ||||||||||||
Securitization Facility | |||||||||||||
Variable interest rate (as a percent) | 8.75% | ||||||||||||
Write off of previously recognized debt issuance costs | 3,300 | ||||||||||||
Repayment of principal, accrued interest and fees | 500 | ||||||||||||
Securitization facility, payment of accrued interest and fees | 1,300 | ||||||||||||
Outstanding borrowings under the facility | 91,900 | $ 91,900 | |||||||||||
Facility term (years) | 5 years | ||||||||||||
Available facility amount | 145,000 | ||||||||||||
Initial funding supported by receivables | 92,000 | ||||||||||||
Accounts Receivable, Sale | $ 85,000 | ||||||||||||
Accounts receivable de-recognized | $ 119,300 | 382,200 | $ 408,900 | ||||||||||
Percentage of face value of accounts receivable | 100% | ||||||||||||
Further funding supported by inventory and intellectual property | $ 53,000 | ||||||||||||
Proceeds from additional borrowings | $ 53,000 | ||||||||||||
Remitted amount | 119,000 | 385,500 | 308,700 | ||||||||||
Accounts receivable, Unsold, Pledged as collateral | 47,100 | 47,100 | $ 46,500 | ||||||||||
Pre-tax loss | $ 2,000 | $ 5,900 | |||||||||||
Securitization Facility | Federal funds rate | |||||||||||||
Variable interest rate (as a percent) | 0.50% | ||||||||||||
Securitization Facility | One-month adjusted LIBOR | |||||||||||||
Variable interest rate (as a percent) | 1% | ||||||||||||
Securitization Facility | LIBOR | |||||||||||||
Variable interest rate (as a percent) | 9.75% | ||||||||||||
Revolving Loan Exchange and Prepayment Agreement | |||||||||||||
Principal amount | $ 9,000 | ||||||||||||
Write off of previously recognized debt issuance costs | $ 200 |
Long-Term Debt and Credit Fac_5
Long-Term Debt and Credit Facilities (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||||||
Jul. 11, 2023 USD ($) | Jun. 10, 2023 USD ($) installment | Feb. 27, 2023 USD ($) | May 06, 2022 USD ($) | Mar. 07, 2022 USD ($) | Dec. 09, 2021 USD ($) | Aug. 31, 2022 USD ($) | Jul. 31, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Jul. 15, 2023 USD ($) | Dec. 31, 2022 USD ($) | Mar. 31, 2022 USD ($) | Dec. 07, 2021 USD ($) | Nov. 17, 2021 USD ($) | Jul. 12, 2017 USD ($) | |
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Outstanding debt | $ 1,091,996 | $ 1,091,996 | $ 1,096,837 | |||||||||||||||
Borrowings from senior secured revolving facility and BRCC revolver | 9,600 | $ 20,000 | ||||||||||||||||
Debt modification and extinguishment costs (gain) | 571 | $ 4,696 | 16,129 | (4,305) | ||||||||||||||
Second Lien Secured Term Loan | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Outstanding borrowings under the facility | 31,500 | 31,500 | ||||||||||||||||
2023 notes | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Interest rate (in percent) | 10% | |||||||||||||||||
Debt instrument face amount exchanged | $ 3,000 | |||||||||||||||||
Outstanding debt | $ 9,000 | 9,000 | ||||||||||||||||
Debt instrument, repayment made in cash | 9,000 | |||||||||||||||||
Debt modification and extinguishment costs (gain) | $ 9,900 | |||||||||||||||||
2026 notes | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Principal amount | $ 1,000,000 | |||||||||||||||||
Interest rate (in percent) | 11.50% | 11.50% | ||||||||||||||||
Debt repayment in cash | $ 225,000 | |||||||||||||||||
Debt instrument face amount exchanged | 956,000 | $ 662,700 | ||||||||||||||||
Outstanding debt | 24,000 | $ 0 | $ 0 | $ 980,000 | ||||||||||||||
True-up advance paid | $ 5,000 | |||||||||||||||||
Debt instrument, redemption price percentage | 100% | |||||||||||||||||
Senior Secured New Notes | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Principal amount | 767,800 | $ 44,100 | ||||||||||||||||
Outstanding debt | $ 811,900 | $ 811,900 | ||||||||||||||||
New Notes issued under the 2023 Exchange | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Principal amount | 764,800 | |||||||||||||||||
Public exchange offer per $1,000 of principal amount | 800 | |||||||||||||||||
Debt instrument face amount exchanged | $ 764,800 | |||||||||||||||||
New Notes issued as consideration for the private exchange of 2023 Term Loans | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Interest rate (in percent) | 11.50% | |||||||||||||||||
Redemption price percentage | 100% | |||||||||||||||||
Debt instrument, redemption price percentage | 101% | |||||||||||||||||
BRCC Facility | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Principal amount | $ 115,000 | $ 75,000 | ||||||||||||||||
Interest rate (in percent) | 11.50% | |||||||||||||||||
Default rate (in percent) | 13.50% | |||||||||||||||||
Maximum borrowing capacity | $ 35,000 | $ 51,000 | ||||||||||||||||
Borrowings from senior secured revolving facility and BRCC revolver | 9,600 | |||||||||||||||||
Transaction fee | $ 5,000 | |||||||||||||||||
BRCC Facility | SOFR | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Variable interest rate (as a percent) | 7.50% | |||||||||||||||||
BRCC Term Loan | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Debt instrument, repayment made in cash | 48,500 | |||||||||||||||||
Debt modification and extinguishment costs (gain) | 1,600 | |||||||||||||||||
BRCC Revolver | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Outstanding debt | $ 3,900 | 25,900 | 25,900 | |||||||||||||||
Debt instrument, repayment made in cash | 3,700 | |||||||||||||||||
Number of installments | installment | 11 | |||||||||||||||||
Monthly installments | $ 2,000 | |||||||||||||||||
Proceeds from initial borrowings | 9,600 | |||||||||||||||||
2023 Term Loans | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Debt modification and extinguishment costs (gain) | $ 7,100 | |||||||||||||||||
Exchange Notes | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Debt modification and extinguishment costs (gain) | 5,300 | 5,300 | ||||||||||||||||
Write off of previously recognized debt issuance costs | 100 | 100 | ||||||||||||||||
Revolving Loan Exchange and Prepayment Agreement | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Principal amount | $ 9,000 | |||||||||||||||||
Net proceeds from 2026 notes | 2,600 | |||||||||||||||||
Debt repayment in cash | $ 2,100 | |||||||||||||||||
Outstanding debt | $ 20,200 | |||||||||||||||||
Line of credit facility cash | $ 50,000 | |||||||||||||||||
Debt instruments liability recognized on original issuance discount | 17,400 | |||||||||||||||||
Debt instruments accrued additional true up liability | $ 13,600 | |||||||||||||||||
True-up advance paid | 9,900 | |||||||||||||||||
Write off of previously recognized debt issuance costs | 200 | |||||||||||||||||
Revolving Loan Exchange and Prepayment Agreement | Other expense | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Amount of accrued true up liability expense | $ 1,100 | |||||||||||||||||
Revolving Loan Exchange and Prepayment Agreement | Senior secured revolving facility | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Debt instrument face amount exchanged | 100,000 | |||||||||||||||||
Revolving Loan Exchange and Prepayment Agreement | 2026 notes | ||||||||||||||||||
Long-Term Debt and Credit Facilities. | ||||||||||||||||||
Principal amount | $ 21,000 | |||||||||||||||||
Line of credit facility on notes | 50,000 | |||||||||||||||||
Collateral amount | $ 20,000 | $ 10,000 |
Long-Term Debt and Credit Fac_6
Long-Term Debt and Credit Facilities - Repurchases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 07, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Net cash consideration | $ 11,858 | $ 4,712 | ||||
Gain on early extinguishment of debt, net | $ 571 | $ 4,696 | 16,129 | (4,305) | ||
Revolving Loan Exchange and Prepayment Agreement | ||||||
Debt issuance costs | $ 200 | |||||
2023 Term Loans | ||||||
Repurchase of principal amount | 15,100 | 15,100 | ||||
Net cash consideration | 8,000 | |||||
Gain on early extinguishment of debt, net | 7,100 | |||||
2023 Term Loans | Maximum | ||||||
Debt issuance costs | 100 | |||||
Exchange Notes | ||||||
Repurchase of principal amount | $ 15,000 | |||||
Net cash consideration | $ 4,700 | |||||
Gain on early extinguishment of debt, net | 5,300 | 5,300 | ||||
Write off of original issue discount | 5,000 | 5,000 | ||||
Debt issuance costs | $ 100 | $ 100 | ||||
2023 notes | ||||||
Repurchase of principal amount | 13,800 | 13,800 | ||||
Net cash consideration | 4,400 | |||||
Gain on early extinguishment of debt, net | 9,900 | |||||
2023 notes | Maximum | ||||||
Debt issuance costs | 100 | |||||
2023 Term Loans | ||||||
Gain on early extinguishment of debt, net | $ 600 | $ 600 |
Long-Term Debt and Credit Fac_7
Long-Term Debt and Credit Facilities - Long-Term Debt Outstanding (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Jul. 11, 2023 | Dec. 31, 2022 |
Long-Term Debt and Credit Facilities. | |||
Total debt | $ 1,091,996 | $ 1,096,837 | |
Less: Current portion of long-term debt | (48,221) | (154,802) | |
Long-term debt, net of current maturities | 1,043,775 | 942,035 | |
Senior Secured Term Loan | |||
Long-Term Debt and Credit Facilities. | |||
Total debt | 38,264 | ||
Unamortized debt issuance costs | 1,700 | ||
New notes | |||
Long-Term Debt and Credit Facilities. | |||
Total debt | 943,642 | ||
Debt exchange premium | 131,700 | ||
Other | |||
Long-Term Debt and Credit Facilities. | |||
Total debt | 34,561 | 25,117 | |
First lien credit agreement | |||
Long-Term Debt and Credit Facilities. | |||
Total debt | 71,470 | ||
Debt discount | 200 | ||
Unamortized debt issuance costs | 900 | ||
Second Lien Secured Term Loan | |||
Long-Term Debt and Credit Facilities. | |||
Unamortized debt issuance costs | 4,600 | ||
Second Lien Secured Term Loan | New notes | |||
Long-Term Debt and Credit Facilities. | |||
Total debt | 26,937 | ||
New notes | |||
Long-Term Debt and Credit Facilities. | |||
Debt exchange premium | $ 142,300 | ||
Senior secured notes | |||
Long-Term Debt and Credit Facilities. | |||
Debt discount | 100 | ||
Unamortized debt issuance costs | 100 | ||
2023 notes | |||
Long-Term Debt and Credit Facilities. | |||
Total debt | 9,000 | ||
2023 notes | Senior secured notes | |||
Long-Term Debt and Credit Facilities. | |||
Total debt | 22,762 | ||
2026 notes | |||
Long-Term Debt and Credit Facilities. | |||
Total debt | 0 | $ 24,000 | 980,000 |
2026 notes | Senior secured notes | |||
Long-Term Debt and Credit Facilities. | |||
Total debt | 22,693 | 908,959 | |
Debt discount | 300 | ||
Debt exchange premium | 58,800 | ||
Unamortized debt issuance costs | 1,000 | 12,100 | |
BRCC Facility | New notes | |||
Long-Term Debt and Credit Facilities. | |||
Total debt | $ 25,899 | $ 68,529 |
Long-Term Debt and Credit Fac_8
Long-Term Debt and Credit Facilities - Senior Secured Term Loan (Details) | Jul. 11, 2023 USD ($) item | Dec. 09, 2023 USD ($) | Sep. 30, 2023 | Jul. 12, 2017 USD ($) |
Long-Term Debt and Credit Facilities. | ||||
Minimum business days elect to have interest on all or a portion of the loans be charged | 3 days | |||
Senior Secured Term Loan | ||||
Long-Term Debt and Credit Facilities. | ||||
Amount of facility | $ 40,000,000 | |||
Adjustment rate on variable rate (in percent) | 1% | |||
Interest rate (in percent) | 10.39% | |||
Number of business days prior to the first day of interest period considered for calculation of interest rate | 2 days | |||
Period considered for calculation of interest rate | 3 months | |||
Maximum number of loans in effect at any given time | item | 5 | |||
Minimum amount of loan may exercise | $ 500,000 | |||
Integral multiples of loan for exercise of loan | $ 100,000 | |||
Number of installments | item | 11 | |||
Monthly installments | $ 500,000 | |||
Outstanding borrowings under the facility | $ 34,500,000 | |||
Number of days prior to the earliest maturity considered for maturity | 91 days | |||
Senior Secured Term Loan | Federal funds | ||||
Long-Term Debt and Credit Facilities. | ||||
Applicable margin rate | 0.50% | |||
Senior Secured Term Loan | SOFR | ||||
Long-Term Debt and Credit Facilities. | ||||
Adjustment rate on variable rate (in percent) | 0.26161% | |||
Interest rate (in percent) | 11.39% | |||
Deemed rate, if rate less than 4.00% | 4% | |||
Reference Rate Loan | ||||
Long-Term Debt and Credit Facilities. | ||||
Applicable margin rate | 4% | |||
2023 notes | ||||
Long-Term Debt and Credit Facilities. | ||||
Interest rate (in percent) | 10% | |||
Outstanding balance of debt | $ 912,700,000 | |||
2026 notes | ||||
Long-Term Debt and Credit Facilities. | ||||
Amount of facility | $ 1,000,000,000 | |||
Interest rate (in percent) | 11.50% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Taxes | ||||
Income tax expense | $ 1,807 | $ 1,924 | $ 7,005 | $ 5,721 |
Annual effective tax rate | (8.50%) | (2.30%) | (7.60%) | (2.70%) |
Statutory tax rate | 21% |
Employee Benefit Plans - German
Employee Benefit Plans - Germany & UK (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
German Pension Plan | |
Pension plans | |
Plan assets | $ 0 |
German Pension Plan | Minimum | |
Pension plans | |
Qualifying period | 10 years |
German Pension Plan | Maximum | |
Pension plans | |
Defined Benefit Plan, Funding Status [Extensible Enumeration] | us-gaap:UnfundedPlanMember |
U.K. Pension Plan | Minimum | |
Pension plans | |
Minimum required years prior to retirement for eligibility | 3 years |
Asterion Pension Plan | Minimum | |
Pension plans | |
Minimum required years prior to retirement for eligibility | 3 years |
Norway Pension Plan | Minimum | |
Pension plans | |
Minimum required years prior to retirement for eligibility | 3 years |
Employee Benefit Plans - Tax Ef
Employee Benefit Plans - Tax Effect on Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Amounts in Accumulated Other Comprehensive Loss Expected to be Recognized in Net Periodic Benefit Costs | ||
Net actuarial loss | $ 3.6 | $ 3.6 |
Deferred tax benefit | $ 2 | $ 2 |
Employee Benefit Plans - Pensio
Employee Benefit Plans - Pension Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Net periodic benefit cost | ||||
Employer contributions | $ 1,900 | $ 1,900 | ||
Pension | ||||
Net periodic benefit cost | ||||
Service cost | $ 10 | $ 15 | 30 | 45 |
Interest cost | $ 766 | $ 486 | $ 2,275 | $ 1,458 |
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Interest Cost, Statement of Income or Comprehensive Income [Extensible Enumeration] | Interest Income (Expense), Nonoperating, Net | Interest Income (Expense), Nonoperating, Net | Interest Income (Expense), Nonoperating, Net | Interest Income (Expense), Nonoperating, Net |
Expected return on plan assets | $ (682) | $ (724) | $ (2,025) | $ (2,172) |
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Expected Return (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Amortization of prior service cost | $ 89 | $ 53 | $ 266 | $ 159 |
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Amortization of Prior Service Cost (Credit), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Amortization of net loss | $ 395 | $ 646 | $ 1,171 | $ 1,938 |
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Amortization of Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Net periodic benefit cost | $ 578 | $ 476 | $ 1,717 | $ 1,428 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ / shares in Units, € in Millions, $ in Millions | 1 Months Ended | |||||
Jul. 23, 2023 USD ($) | May 28, 2021 USD ($) | Mar. 23, 2020 claim $ / shares shares | Nov. 30, 2020 USD ($) | Sep. 30, 2020 EUR (€) | Sep. 30, 2023 USD ($) | |
Commitments and Contingencies | ||||||
Number of claims | claim | 2 | |||||
The plaintiff (Bo Shen) | ||||||
Commitments and Contingencies | ||||||
Number of shares owned | shares | 4,000 | |||||
Argued fair value per share | $ / shares | $ 1.34 | |||||
Amount paid towards judgement | $ 5 | |||||
Adverse Arbitration Order | ||||||
Commitments and Contingencies | ||||||
Accrued liability | $ 0.9 | |||||
Amount awarded to customer | $ 13 | |||||
Amount paid towards judgement | $ 8.8 | |||||
Earnout sought | € | € 10 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Carrying amounts and estimated fair values of financial instruments | |||
Goodwill | $ 170,262 | $ 186,802 | $ 358,323 |
2023 Term Loans | |||
Assets and liabilities measured at fair value | |||
Fair value percentage | 64% | ||
2023 notes | |||
Assets and liabilities measured at fair value | |||
Fair value percentage | 65% | ||
2026 notes | |||
Assets and liabilities measured at fair value | |||
Fair value percentage | 17% | 15.50% | |
New notes | |||
Assets and liabilities measured at fair value | |||
Fair value percentage | 17% | ||
Carrying Amount | Recurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Long-term debt | $ 1,043,775 | $ 942,035 | |
Current portion of long-term debts | 48,221 | 154,802 | |
Fair Value | Recurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Long-term debt | 219,537 | 184,968 | |
Current portion of long-term debts | 48,221 | 121,893 | |
Fair Value | Recurring assets and liabilities | Level 2 | |||
Carrying amounts and estimated fair values of financial instruments | |||
Long-term debt | 219,537 | 184,968 | |
Current portion of long-term debts | $ 48,221 | $ 121,893 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Incentive Plan (Details) - shares | Sep. 30, 2023 | Dec. 31, 2022 | Jun. 27, 2022 | Jan. 17, 2018 |
Exela 2018 Stock Incentive Plan | ||||
Common stock shares authorized | 1,600,000,000 | 1,600,000,000 | ||
2018 Plan | ||||
Exela 2018 Stock Incentive Plan | ||||
Common stock shares authorized | 4,462 | 694 | ||
2018 Plan | Maximum | ||||
Exela 2018 Stock Incentive Plan | ||||
Common stock shares authorized | 694 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Unit (Details) - RSU's - 2018 Plan - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Number of Units | ||
Balance at the beginning of the period | 8 | |
Balance at the end of the period | 8 | 8 |
Weighted Average Grant Date Fair Value | ||
Balance at the beginning of the period | $ 6,600 | |
Balance at the end of the period | $ 6,600 | $ 6,600 |
Average Remaining Contractual Life (Years) | ||
Weighted average remaining contractual life (in years) | 3 months | 1 year |
Minimum | ||
Stock-Based Compensation | ||
Vesting period | 1 year | |
Maximum | ||
Stock-Based Compensation | ||
Vesting period | 2 years |
Stock-Based Compensation - Opti
Stock-Based Compensation - Options (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jan. 18, 2018 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
2013 Plan and 2018 Plan | Selling, general and administrative expense | ||||||
Unrecognized compensation expense | ||||||
Compensation expense | $ 0.2 | $ 0.6 | ||||
Reversed compensation expense | $ (0.1) | |||||
2013 Plan and 2018 Plan | Selling, general and administrative expense | Maximum | ||||||
Unrecognized compensation expense | ||||||
Reversed compensation expense | $ (0.1) | |||||
Stock options | ||||||
Outstanding | ||||||
Exercised (in shares) | 329 | |||||
Stock options | 2013 Plan and 2018 Plan | Maximum | ||||||
Unrecognized compensation expense | ||||||
Unrecognized compensation expense | $ 0.1 | $ 0.1 | ||||
Stock options | 2018 Plan | ||||||
Stock-based compensation | ||||||
Minimum fair market value per share of underlying stock used to determine option grant price, as a percent | 100% | |||||
Expiration of stock options | 10 years | |||||
Outstanding | ||||||
Outstanding Balance at beginning of the year (in shares) | 352 | |||||
Forfeited (in shares) | (14) | |||||
Outstanding Balance at the end of the year (in shares) | 338 | 338 | 352 | |||
Weighted average Grant Date fair Value | ||||||
Outstanding balance at the beginning of the period | $ 22,554.25 | |||||
Forfeited | 27,703.04 | |||||
Outstanding balance at the end of the period | $ 22,347.33 | 22,347.33 | $ 22,554.25 | |||
Weighted Average Exercise Price | ||||||
Outstanding Balance at the beginning of the year | 47,117.77 | |||||
Outstanding Balance at the end of the year (in shares) | $ 46,554.52 | $ 46,554.52 | $ 47,117.77 | |||
Additional information | ||||||
Average Remaining Vesting Period | 10 days | 2 months 12 days | ||||
Stock options | 2018 Plan | Minimum | ||||||
Stock-based compensation | ||||||
Vesting period | 2 years | |||||
Stock options | 2018 Plan | Maximum | ||||||
Stock-based compensation | ||||||
Vesting period | 4 years |
Stock-Based Compensation - Mark
Stock-Based Compensation - Market Performance Units (Details) - Market Performance Units - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 14, 2021 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Fair value of the awards | $ 1,820 | $ 1,820 | $ 1,820 | |||
Unrecognized compensation expense | $ 1.1 | $ 1.1 | ||||
Compensation expense | $ 0.2 | $ 0.2 | $ 0.7 | $ 0.7 | ||
Share Price (Equal to or Less than $8,000.00 per share) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 0% | |||||
Share Price | $ 8,000 | $ 8,000 | ||||
Tranche 1 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 50% | |||||
Share Price | $ 40,000 | |||||
Number of consecutive trading days | 60 days | |||||
Number of non-consecutive trading days | 90 days | |||||
Number of trading days under arrangement | 180 days | |||||
Fair value of the awards | 5,920 | 5,920 | ||||
Modification date fair value | 1,760 | 1,760 | ||||
Tranche 1 | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share Price | 8,000 | 8,000 | ||||
Tranche 1 | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share Price | 40,000 | $ 40,000 | ||||
Tranche 1 | Share Price (Equal to or Greater than $40,000.00 per share) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 100% | |||||
Share Price | 40,000 | $ 40,000 | ||||
Tranche 2 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 50% | |||||
Share Price | $ 80,000 | |||||
Number of consecutive trading days | 60 days | |||||
Number of non-consecutive trading days | 90 days | |||||
Number of trading days under arrangement | 180 days | |||||
Consideration for forfeited unearned shares | $ 0 | |||||
Fair value of the awards | 6,040 | $ 6,040 | ||||
Modification date fair value | 1,880 | 1,880 | ||||
Tranche 2 | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share Price | 80,000 | $ 80,000 | ||||
Tranche 2 | Share Price (Equal to or Greater than $80,000.00 per share) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percentage | 100% | |||||
Share Price | $ 80,000 | $ 80,000 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of activity for the Market Performance RSUs (Details) - Market Performance Units - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Number of Units | ||
Balance at the beginning of the period | 2,125 | |
Balance at the end of the period | 2,125 | 2,125 |
Weighted Average Grant Date Fair Value | ||
Balance at the beginning of the period | $ 1,820 | |
Balance at the end of the period | $ 1,820 | $ 1,820 |
Weighted Average Period Over Which Expected to be Recognized | ||
Weighted average remaining contractual life (in years) | 2 years 11 months 23 days | 2 years 11 months 23 days |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock (Details) | 9 Months Ended | |
Sep. 30, 2023 Vote shares | Dec. 31, 2022 shares | |
Common Stock | ||
Common Stock, shares authorized | 1,600,000,000 | 1,600,000,000 |
Number of voting rights entitled for each share of Common Stock held | Vote | 1 | |
Common stock, shares outstanding | 6,365,353 | 1,393,276 |
Stockholders' Equity - Reverse
Stockholders' Equity - Reverse Stock Split (Details) | May 12, 2023 shares | Sep. 30, 2023 shares | Dec. 31, 2022 shares |
STOCKHOLDERS' EQUITY | |||
Reverse stock split | 0.005 | ||
Conversion of shares (in shares) | 1 | ||
Common stock, shares issued | 6,365,353 | 1,393,889 | |
Common stock, shares outstanding | 6,365,353 | 1,393,276 | |
Prior To Stock Split [Member] | |||
STOCKHOLDERS' EQUITY | |||
Common stock, shares outstanding | 278,655,235 |
Stockholders' Equity - Sales of
Stockholders' Equity - Sales of Shares of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | |
Class of Stock [Line Items] | |||||
Aggregate offering price | $ 67,028 | $ 65,641 | $ 56,364 | $ 114,533 | |
Common ATM Program-1 | |||||
Class of Stock [Line Items] | |||||
Aggregate offering price | $ 100,000 | ||||
Number of Shares Sold | 12,356 | ||||
Weighted Average Price Per Share | $ 8,032.74 | ||||
Gross proceeds | $ 99,300 | ||||
Net proceeds | 95,700 | ||||
Common ATM Program-2 | |||||
Class of Stock [Line Items] | |||||
Aggregate offering price | $ 150,000 | ||||
Number of Shares Sold | 14,395 | ||||
Weighted Average Price Per Share | $ 10,413.79 | ||||
Gross proceeds | $ 149,900 | ||||
Net proceeds | 144,400 | ||||
Common ATM Program-3 | |||||
Class of Stock [Line Items] | |||||
Aggregate offering price | $ 250,000 | ||||
Number of Shares Sold | 83,719 | ||||
Weighted Average Price Per Share | $ 2,986.18 | ||||
Gross proceeds | $ 250,000 | ||||
Net proceeds | 241,000 | ||||
Common ATM Program-4 | |||||
Class of Stock [Line Items] | |||||
Aggregate offering price | $ 250,000 | ||||
Number of Shares Sold | 6,262,182 | ||||
Weighted Average Price Per Share | $ 36.15 | ||||
Gross proceeds | $ 226,400 | ||||
Net proceeds | $ 219,300 |
Stockholders' Equity - Share Bu
Stockholders' Equity - Share Buyback Program (Details) - shares | 9 Months Ended | ||
Sep. 29, 2023 | Aug. 10, 2022 | Sep. 30, 2023 | |
Share Buyback Program | |||
Shares repurchased (in shares) | 232 | ||
2022 Share Buyback Program | |||
Share Buyback Program | |||
Authorized amount (in shares) | 50,000 | ||
Term of share buyback program | 2 years | ||
Shares repurchased (in shares) | 0 | ||
Common Stock repurchased and retired (in shares) | 1,787 |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
May 12, 2023 shares | May 17, 2017 Vote shares | Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) $ / shares | Sep. 30, 2023 USD ($) director $ / shares shares | Sep. 30, 2022 USD ($) $ / shares | Dec. 31, 2022 $ / shares shares | May 17, 2022 $ / shares | |
Preferred Stock | ||||||||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | |||||
Preferred Stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Dividends, Preferred Stock | $ | $ 1,200 | $ 1,100 | $ 3,500 | $ 2,500 | ||||
Accumulated dividend | $ | 2,532 | |||||||
Conversion of shares (in shares) | 1 | |||||||
Reverse stock split | 0.005 | |||||||
Series A Preferred Stock | ||||||||
Preferred Stock | ||||||||
Preferred stock, shares authorized | 2,800,000 | 2,800,000 | ||||||
Preferred stock, shares outstanding | 2,778,111 | 2,778,111 | 2,778,111 | |||||
Preferred Stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||||
Preferred Stock, cumulative dividends rate (in percentage) | 10% | |||||||
Accumulated preferred stock, Dividends | $ | $ 1,000 | $ 900 | $ 2,900 | $ 2,600 | ||||
Additional common stock issuable upon conversion of remaining convertible shares | 393 | 393 | ||||||
Cumulative accrued but unpaid dividends | $ | $ 18,800 | $ 18,800 | ||||||
Per share average of cumulative preferred dividends (in dollars per share) | $ / shares | $ 0.36 | $ 0.33 | $ 1.05 | $ 0.95 | ||||
Reverse stock split | 0.00014 | |||||||
Series B Preferred Stock | ||||||||
Preferred Stock | ||||||||
Preferred stock, shares authorized | 8,100,000 | 8,100,000 | ||||||
Preferred stock, shares outstanding | 3,029,900 | 3,029,900 | 3,029,900 | |||||
Preferred Stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||||
Conversion of Series A Preferred stock to common shares | 3,029,900 | |||||||
Accumulated dividend | $ | $ 2,500 | |||||||
Conversion of shares (in shares) | 16,079 | |||||||
Cumulative accrued but unpaid dividends | $ | $ 4,600 | $ 4,600 | ||||||
Per share average of cumulative preferred dividends (in dollars per share) | $ / shares | $ 0.39 | $ 0.38 | $ 1.16 | $ 0.83 | ||||
Reverse stock split | 0.00531 | |||||||
Preferred stock cumulative dividend | 6% | |||||||
Number of directors | director | 1 | |||||||
Number of directors in arrears | director | 8 | |||||||
Tandem Preferred Stock | ||||||||
Preferred Stock | ||||||||
Preferred Stock, par value (in dollars per share) | $ / shares | $ 0.0001 | |||||||
Number of Tandem preferred stock issued per Series B Preferred Stock | 1 | |||||||
Number of vote per share entitled to each share of Tandem Preferred stock | Vote | 1 |
Stockholders' Equity - Treasury
Stockholders' Equity - Treasury Stock (Details) - shares | Sep. 30, 2023 | Sep. 29, 2023 | Dec. 31, 2022 |
Stockholders' Equity | |||
Treasury Stock (in shares) | 0 | 612 | 612 |
Shares repurchased (in shares) | 232 | ||
Shares returned in connection with the Appraisal Action following repayment of Margin Loan (in shares) | 380 | ||
Treasury stock, shares retired | 612 |
Stockholders' Equity - Warrants
Stockholders' Equity - Warrants (Details) - USD ($) $ / shares in Units, $ in Millions | Mar. 15, 2021 | Sep. 30, 2023 | Mar. 31, 2021 |
Warrants | |||
Warrants outstanding | 2,433 | ||
Private Placement | |||
Warrants | |||
Warrants sold | 9,731,819 | ||
Exercise price of warrant per one Common Stock (in US$ per share) | $ 16,000 | ||
Shares issued in stock | 2,433 | ||
Common stock issued price | $ 11,000 | ||
Gross proceeds from offering expected | $ 26.8 | ||
Warrant | Private Placement | |||
Warrants | |||
Number of securities called by each warrant or right | 0.00025 | ||
Placement fee Percentage on Gross proceeds | 5.50% |
Related-Party Transactions - Re
Related-Party Transactions - Relationship with HandsOn Global Management (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) agreement | Sep. 30, 2022 USD ($) | Dec. 31, 2016 | |
Related-Party Transactions | |||||
Amount of related party transaction | $ 2,845 | $ 2,016 | $ 8,696 | $ 6,189 | |
Related party expense | 2,845 | 2,016 | 8,696 | 6,189 | |
HGM | Travel Expense | |||||
Related-Party Transactions | |||||
Amount of related party transaction | 0 | ||||
HGM | Travel Expense | Maximum | |||||
Related-Party Transactions | |||||
Amount of related party transaction | 100 | $ 100 | 100 | ||
HGM | Master Service Agreement | |||||
Related-Party Transactions | |||||
Number of master agreements | agreement | 10 | ||||
Entities affiliated with HGM managed funds | Master Service Agreement | |||||
Related-Party Transactions | |||||
Revenue share percentage | 25% | ||||
Affiliate of largest stockholder | |||||
Related-Party Transactions | |||||
Rental expenses | 100 | $ 100 | 200 | ||
Affiliate of largest stockholder | Maximum | |||||
Related-Party Transactions | |||||
Rental expenses | 100 | ||||
HOV Services, Ltd | Data Capture And Technology Services | Cost of revenue | |||||
Related-Party Transactions | |||||
Amount of related party transaction | 500 | 400 | 1,300 | 1,100 | |
SourceHOV | Master Service Agreement | |||||
Related-Party Transactions | |||||
Revenue share percentage | 75% | ||||
SourceHOV | Entities affiliated with HGM managed funds | Master Service Agreement | |||||
Related-Party Transactions | |||||
Related party expense | $ 2,200 | $ 1,500 | $ 6,700 | $ 4,600 |
Related-Party Transactions - Co
Related-Party Transactions - Consulting Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Related-Party Transactions | ||||
Related party expense | $ 2,845 | $ 2,016 | $ 8,696 | $ 6,189 |
Consulting Services | Oakana Holdings Inc | ||||
Related-Party Transactions | ||||
Related party expense | $ 0 | |||
Consulting Services | Oakana Holdings Inc | Maximum | ||||
Related-Party Transactions | ||||
Related party expense | $ 100 | $ 100 | $ 100 |
Related-Party Transactions - Su
Related-Party Transactions - Subscription Agreements (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Aug. 11, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Related Party Transaction [Line Items] | |||
Proceeds from issuance of Common Stock from at the market offerings | $ 69,260 | $ 245,073 | |
Subscription Agreements | Par Chadha [Member] | |||
Related Party Transaction [Line Items] | |||
Issuance of Common Stock from at the market offerings, net of offering costs (in shares) | 355 | ||
Proceeds from issuance of Common Stock from at the market offerings | $ 100 |
Related-Party Transactions - Pa
Related-Party Transactions - Payable and Receivable/Prepayment Balances with Affiliates (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Payable and Receivable Balances with Affiliates | ||
Receivables and Prepaid Expenses | $ 117 | $ 759 |
Payables | 2,499 | 2,473 |
HOV Services, Ltd | ||
Payable and Receivable Balances with Affiliates | ||
Receivables and Prepaid Expenses | 50 | 412 |
Rule 14 | ||
Payable and Receivable Balances with Affiliates | ||
Payables | 2,499 | 2,473 |
HGM | ||
Payable and Receivable Balances with Affiliates | ||
Receivables and Prepaid Expenses | $ 67 | $ 347 |
Segment and Geographic Area I_3
Segment and Geographic Area Information - Revenue by segment information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) | |
Segment information | ||||
Number of segments | segment | 3 | |||
Revenue | $ 253,125 | $ 264,038 | $ 799,683 | $ 810,206 |
Cost of revenue (exclusive of depreciation and amortization) | 198,450 | 217,842 | 626,976 | 658,623 |
Segment profit | 54,675 | 46,196 | 172,707 | 151,583 |
Selling, general and administrative expenses (exclusive of depreciation and amortization) | 35,367 | 44,369 | 111,774 | 137,604 |
Depreciation and amortization | 14,398 | 17,737 | 45,848 | 53,942 |
Impairment of goodwill and other intangible assets | 29,565 | 29,565 | ||
Related party expense | 2,845 | 2,016 | 8,696 | 6,189 |
Interest expense, net | 24,708 | 40,897 | 113,980 | 122,928 |
Debt modification and extinguishment costs (gain), net | (571) | (4,696) | (16,129) | 4,305 |
Sundry expense, net | 298 | 781 | 2,546 | 347 |
Other expense (income), net | (1,069) | (1,115) | (1,583) | 12,419 |
Net loss before income taxes | (21,301) | (83,358) | (92,425) | (215,716) |
I T P S Segment | ||||
Segment information | ||||
Revenue | 172,150 | 185,309 | 550,848 | 580,320 |
Cost of revenue (exclusive of depreciation and amortization) | 141,808 | 157,269 | 450,353 | 477,559 |
Segment profit | 30,342 | 28,040 | 100,495 | 102,761 |
H S Segment | ||||
Segment information | ||||
Revenue | 62,090 | 60,955 | 188,740 | 173,940 |
Cost of revenue (exclusive of depreciation and amortization) | 45,430 | 48,316 | 139,182 | 140,767 |
Segment profit | 16,660 | 12,639 | 49,558 | 33,173 |
L L P S Segment | ||||
Segment information | ||||
Revenue | 18,885 | 17,774 | 60,095 | 55,946 |
Cost of revenue (exclusive of depreciation and amortization) | 11,212 | 12,257 | 37,441 | 40,297 |
Segment profit | $ 7,673 | $ 5,517 | $ 22,654 | $ 15,649 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events $ / shares in Units, $ in Millions | 1 Months Ended | |
Oct. 09, 2023 $ / shares shares | Dec. 31, 2023 USD ($) | |
Subsequent Events | ||
Insurance claim settlement received | $ | $ 10 | |
GP-HGM LLC [Member] | Special Voting Preferred Stock | ||
Subsequent Events | ||
Shares issued in stock | shares | 1,000,000 | |
Common stock issued price | $ 100 | |
Number of votes per share | 20,000 | |
Special Voting Stock for an aggregate price | $ 100 |