Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 10, 2021 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-38186 | |
Entity Registrant Name | CUSTOM TRUCK ONE SOURCE, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 84-2531628 | |
Entity Address, Address Line One | 7701 Independence Ave | |
Entity Address, City or Town | Kansas City | |
Entity Address, State or Province | MO | |
Entity Address, Postal Zip Code | 64125 | |
City Area Code | 816 | |
Local Phone Number | 241-4888 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 247,305,663 | |
Entity Central Index Key | 0001709682 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.0001 par value | |
Trading Symbol | CTOS | |
Security Exchange Name | NYSE | |
Redeemable Warrants | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Redeemable warrants, exercisable for Common Stock, $0.0001 par value | |
Trading Symbol | CTOS.WS | |
Security Exchange Name | NYSE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash and cash equivalents | $ 21,086 | $ 3,412 |
Accounts receivable, net | 165,161 | 60,933 |
Financing receivables, net | 25,963 | 0 |
Inventory | 381,159 | 31,367 |
Prepaid expenses and other | 11,777 | 7,530 |
Total current assets | 605,146 | 103,242 |
Property and equipment, net | 111,178 | 6,269 |
Rental equipment, net | 879,025 | 335,812 |
Goodwill | 684,796 | 238,052 |
Intangible assets, net | 341,160 | 67,579 |
Deferred income taxes | 0 | 16,952 |
Operating lease assets | 37,117 | 0 |
Other assets | 22,799 | 498 |
Total Assets | 2,681,221 | 768,404 |
Current Liabilities | ||
Accounts payable | 82,538 | 31,829 |
Accrued expenses | 68,797 | 31,991 |
Deferred revenue and customer deposits | 21,605 | 975 |
Floor plan payables - trade | 78,505 | 0 |
Floor plan payables - non-trade | 150,694 | 0 |
Operating lease liabilities - current | 5,006 | 0 |
Current maturities of long-term debt | 4,997 | 1,280 |
Current portion of finance lease obligations | 4,471 | |
Current portion of finance lease obligations | 5,276 | |
Total current liabilities | 416,613 | 71,351 |
Long-term debt, net | 1,323,671 | 715,858 |
Finance leases | 5,391 | |
Finance leases | 5,250 | |
Operating lease liabilities - noncurrent | 32,425 | 0 |
Deferred income taxes | 19,752 | 0 |
Derivative and warrants liabilities | 25,874 | 7,012 |
Total long-term liabilities | 1,407,113 | 728,120 |
Commitments and contingencies | ||
Stockholders' Equity (Deficit) | ||
Common stock — $0.0001 par value, 250,000,000 shares authorized, 247,305,663 and 49,156,753 shares issued and outstanding, at September 30, 2021 and December 31, 2020, respectively | 25 | 5 |
Treasury stock, at cost — 316,446 shares at September 30, 2021 | (3,007) | 0 |
Additional paid-in capital | 1,504,254 | 434,917 |
Accumulated deficit | (643,777) | (465,989) |
Total stockholders' equity (deficit) | 857,495 | (31,067) |
Total Liabilities and Stockholders' Equity (Deficit) | $ 2,681,221 | $ 768,404 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (unaudited) (Parentheticals) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, issued (in shares) | 247,305,663 | 49,156,753 |
Common stock, outstanding (in shares) | 247,305,663 | 49,156,753 |
Treasury stock (in shares) | 316,446 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue | ||||
Total revenue | $ 357,305 | $ 69,260 | $ 810,715 | $ 219,484 |
Cost of Revenue | ||||
Depreciation of rental equipment | 50,153 | 19,467 | 111,176 | 59,275 |
Total cost of revenue | 292,053 | 53,629 | 678,554 | 166,108 |
Gross Profit | 65,252 | 15,631 | 132,161 | 53,376 |
Operating Expenses | ||||
Selling, general and administrative expenses | 48,625 | 9,319 | 111,939 | 33,512 |
Amortization | 13,334 | 771 | 27,420 | 2,234 |
Non-rental depreciation | 873 | 21 | 1,845 | 74 |
Transaction expenses and other | 7,742 | 561 | 42,765 | 3,282 |
Total operating expenses | 70,574 | 10,672 | 183,969 | 39,102 |
Operating Income (Loss) | (5,322) | 4,959 | (51,808) | 14,274 |
Other Expense | ||||
Loss on extinguishment of debt | 0 | 0 | 61,695 | 0 |
Interest expense, net | 19,045 | 15,853 | 53,674 | 47,816 |
Financing and other expense (income) | (3,656) | (559) | 143 | 6,245 |
Total other expense | 15,389 | 15,294 | 115,512 | 54,061 |
Income (Loss) Before Income Taxes | (20,711) | (10,335) | (167,320) | (39,787) |
Income Tax Expense (Benefit) | (186) | (25,508) | 10,468 | (25,841) |
Net Income (Loss) | $ (20,525) | $ 15,173 | $ (177,788) | $ (13,946) |
Basic Earnings (Loss) Per Share (USD per share) | $ (0.08) | $ 0.31 | $ (0.99) | $ (0.28) |
Weighted-Average Common Shares Outstanding (in shares) | 244,292,357 | 49,033,903 | 179,785,056 | 49,033,903 |
Diluted Earnings (Loss) Per Share (USD per share) | $ (0.08) | $ 0.31 | $ (0.99) | $ (0.28) |
Weighted-Average-Common Shares Outstanding (in shares) | 244,292,357 | 49,307,811 | 179,785,056 | 49,033,903 |
Revenue | ||||
Revenue | ||||
Total revenue | $ 109,108 | $ 46,125 | $ 255,936 | $ 144,103 |
Cost of Revenue | ||||
Cost of rental revenue | 25,932 | 13,307 | 71,873 | 42,699 |
Equipment sales | ||||
Revenue | ||||
Total revenue | 217,163 | 11,558 | 482,825 | 38,628 |
Cost of Revenue | ||||
Cost of rental revenue | 191,991 | 10,600 | 434,995 | 33,295 |
Parts sales and services | ||||
Revenue | ||||
Total revenue | 31,034 | 11,577 | 71,954 | 36,753 |
Cost of Revenue | ||||
Cost of rental revenue | $ 23,977 | $ 10,255 | $ 60,510 | $ 30,839 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Operating Activities | ||
Net income (loss) | $ (177,788) | $ (13,946) |
Adjustments to reconcile net income (loss) to net cash flow from operating activities: | ||
Depreciation and amortization | 145,967 | 63,819 |
Amortization of debt issuance costs | 3,416 | 2,188 |
Loss on extinguishment of debt | 61,695 | 0 |
Provision for losses on accounts receivable | 8,391 | 1,813 |
Share-based compensation | 12,716 | 1,669 |
Gain on sales and disposals of rental equipment | (8,636) | (4,945) |
Change in fair value of derivative and warrants | 5,453 | 6,149 |
Deferred tax expense (benefit) | 10,003 | (24,417) |
Changes in assets and liabilities: | ||
Accounts and financing receivables | (33,217) | 9,258 |
Inventories | 79,040 | (3,797) |
Prepaids, operating leases and other | (2,115) | (953) |
Accounts payable | (2,450) | (8,920) |
Accrued expenses and other liabilities | 16,955 | (11,782) |
Floor plan payables - trade, net | (12,485) | 0 |
Customer deposits and deferred revenue | 5,810 | (1,270) |
Net cash flow from operating activities | 112,755 | 14,866 |
Investing Activities | ||
Acquisition of business, net of cash acquired | (1,337,686) | 0 |
Purchases of rental equipment | (141,142) | (59,197) |
Proceeds from sales and disposals of rental equipment | 62,617 | 29,855 |
Other investing activities, net | (3,404) | (527) |
Net cash flow from investing activities | (1,419,615) | (29,869) |
Financing Activities | ||
Proceeds from debt | 947,420 | 0 |
Proceeds from issuance of common stock | 883,000 | 0 |
Payment of common stock issuance costs | (6,386) | 0 |
Payment of premiums on debt extinguishment | (53,469) | 0 |
Share-based payments | (652) | 0 |
Borrowings under revolving credit facilities | 461,084 | 74,042 |
Repayments under revolving credit facilities | (307,056) | (55,019) |
Repayments of notes payable | (497,047) | (964) |
Finance lease payments | (4,382) | |
Finance lease payments | (7,718) | |
Acquisition of inventory through floor plan payables - non-trade | 184,950 | 0 |
Repayment of floor plan payables - non-trade | (248,234) | 0 |
Payment of debt issuance costs | (34,694) | 0 |
Net cash flow from financing activities | 1,324,534 | 10,341 |
Net Change in Cash and Cash Equivalents | 17,674 | (4,662) |
Cash and Cash Equivalents at Beginning of Period | 3,412 | 6,302 |
Cash and Cash Equivalents at End of Period | 21,086 | 1,640 |
Supplemental Cash Flow Information | ||
Interest paid | 44,786 | 56,815 |
Income taxes paid | 217 | 156 |
Non-Cash Investing and Financing Activities | ||
Non-cash consideration - acquisition of business | 187,935 | 0 |
Rental equipment and property and equipment purchases in accounts payable | 0 | 4,217 |
Rental equipment sales in accounts receivable | $ 1,429 | $ 902 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity (Deficit) (unaudited) - USD ($) $ in Thousands | Total | Reclassification Adjustment | Common Stock | Treasury Stock | Additional Paid-in Capital | Additional Paid-in CapitalReclassification Adjustment | Accumulated Deficit |
Balance (in shares) at Dec. 31, 2019 | 49,033,903 | 0 | |||||
Balance at Dec. 31, 2019 | $ (12,130) | $ 5 | $ 0 | $ 432,577 | $ (444,712) | ||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||||
Net income (loss) | (15,969) | (15,969) | |||||
Share-based payments | 559 | 559 | |||||
Balance (in shares) at Mar. 31, 2020 | 49,033,903 | 0 | |||||
Balance at Mar. 31, 2020 | (27,540) | $ 5 | $ 0 | 433,136 | (460,681) | ||
Balance (in shares) at Dec. 31, 2019 | 49,033,903 | 0 | |||||
Balance at Dec. 31, 2019 | (12,130) | $ 5 | $ 0 | 432,577 | (444,712) | ||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||||
Net income (loss) | (13,946) | ||||||
Balance (in shares) at Sep. 30, 2020 | 49,033,903 | 0 | |||||
Balance at Sep. 30, 2020 | (24,407) | $ 5 | $ 0 | 434,246 | (458,658) | ||
Balance (in shares) at Mar. 31, 2020 | 49,033,903 | 0 | |||||
Balance at Mar. 31, 2020 | (27,540) | $ 5 | $ 0 | 433,136 | (460,681) | ||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||||
Net income (loss) | (13,150) | (13,150) | |||||
Share-based payments | 453 | 453 | |||||
Balance (in shares) at Jun. 30, 2020 | 49,033,903 | 0 | |||||
Balance at Jun. 30, 2020 | (40,237) | $ 5 | $ 0 | 433,589 | (473,831) | ||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||||
Net income (loss) | 15,173 | 15,173 | |||||
Share-based payments | 657 | 657 | |||||
Balance (in shares) at Sep. 30, 2020 | 49,033,903 | 0 | |||||
Balance at Sep. 30, 2020 | $ (24,407) | $ 5 | $ 0 | 434,246 | (458,658) | ||
Balance (in shares) at Dec. 31, 2020 | 49,156,753 | 49,156,753 | 0 | ||||
Balance at Dec. 31, 2020 | $ (31,067) | $ (10,290) | $ 5 | $ 0 | 434,917 | $ (10,290) | (465,989) |
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||||
Net income (loss) | (27,907) | (27,907) | |||||
Share-based payments (in shares) | 62,630 | ||||||
Share-based payments | 597 | 597 | |||||
Balance (in shares) at Mar. 31, 2021 | 49,219,383 | 0 | |||||
Balance at Mar. 31, 2021 | $ (68,667) | $ 5 | $ 0 | 425,224 | (493,896) | ||
Balance (in shares) at Dec. 31, 2020 | 49,156,753 | 49,156,753 | 0 | ||||
Balance at Dec. 31, 2020 | $ (31,067) | $ (10,290) | $ 5 | $ 0 | 434,917 | $ (10,290) | (465,989) |
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||||
Net income (loss) | $ (177,788) | ||||||
Balance (in shares) at Sep. 30, 2021 | 247,305,663 | 247,305,663 | (316,446) | ||||
Balance at Sep. 30, 2021 | $ 857,495 | $ 25 | $ (3,007) | 1,504,254 | (643,777) | ||
Balance (in shares) at Mar. 31, 2021 | 49,219,383 | 0 | |||||
Balance at Mar. 31, 2021 | (68,667) | $ 5 | $ 0 | 425,224 | (493,896) | ||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||||
Net income (loss) | (129,356) | (129,356) | |||||
Share-based payments (in shares) | 1,118,846 | (235,856) | |||||
Share-based payments | 7,362 | $ (2,256) | 9,618 | ||||
Shares issued in business combination (in shares) | 196,700,000 | ||||||
Shares issued in business combination | 1,064,549 | $ 20 | 1,064,529 | ||||
Balance (in shares) at Jun. 30, 2021 | 247,038,229 | (235,856) | |||||
Balance at Jun. 30, 2021 | 873,888 | $ 25 | $ (2,256) | 1,499,371 | (623,252) | ||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||||
Net income (loss) | (20,525) | (20,525) | |||||
Share-based payments (in shares) | 267,434 | (80,590) | |||||
Share-based payments | $ (751) | ||||||
Share-based payments | $ 4,132 | 4,883 | |||||
Balance (in shares) at Sep. 30, 2021 | 247,305,663 | 247,305,663 | (316,446) | ||||
Balance at Sep. 30, 2021 | $ 857,495 | $ 25 | $ (3,007) | $ 1,504,254 | $ (643,777) |
Business and Organization
Business and Organization | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | Note 1: Business and Organization Organization Custom Truck One Source, Inc., formerly Nesco Holdings, Inc., a Delaware corporation, and its wholly owned subsidiaries are engaged in the business of providing a range of services and products to customers through rentals and sales of specialty equipment, rentals and sales of aftermarket parts and services related to the specialty equipment, and repair, maintenance and customization services related to that equipment. Immediately following the acquisition by Nesco Holdings II, Inc. of Custom Truck One Source, L.P. (“Custom Truck LP”) as discussed in Note 3: Business Combination, on April 1, 2021 (the “Acquisition”), Nesco Holdings, Inc. (“Nesco Holdings”) changed its name to “Custom Truck One Source, Inc.” and changed The New York Stock Exchange ticker for its shares of common stock (“Common Stock”) from “NSCO” to “CTOS,” and the ticker of its redeemable warrants from “NSCO.WS” to “CTOS.WS.” Terms such as, “we,” “our,” “us,” or “the Company” refer to Nesco Holdings prior to the Acquisition, and to the combined company after the Acquisition. Unless the context otherwise requires, the term “Nesco” or “Nesco Holdings” as used in these financial statements means Nesco Holdings and its consolidated subsidiaries prior to the Acquisition, and the term “Custom Truck LP” means Custom Truck LP and its consolidated subsidiaries prior to and on the date of the Acquisition. We are a specialty equipment provider to the electric utility transmission and distribution, telecommunications, rail and other infrastructure-related industries in North America. Our core business relates to our new equipment inventory and rental fleet of specialty equipment that is utilized by service providers in infrastructure development and improvement work. We offer our specialized equipment to a diverse customer base, including utilities and contractors, for the maintenance, repair, upgrade, and installation of critical infrastructure assets, including distribution and transmission electric lines, telecommunications networks and rail systems, as well as for lighting and signage. We rent, produce, sell and service a broad range of new and used equipment, including bucket trucks, digger derricks, dump trucks, cranes, service trucks, and heavy-haul trailers. Following the Acquisition, we changed our reportable segments to be consistent with how we currently manage the business, representing three reporting segments: Equipment Rental Solutions (“ERS”), Truck and Equipment Sales (“TES”) and Aftermarket Parts and Services (“APS”). Segment information provided within this Quarterly Report on Form 10-Q, including Note 19: Segments, has been adjusted for all prior periods to be consistent with the current reportable segment presentation. Equipment Rental Solutions (“ERS”) Segment We own a broad range of new and used specialty equipment, including truck-mounted aerial lifts, cranes, service trucks, dump trucks, trailers, digger derricks and other machinery and equipment. The majority of our rental fleet can be used across a variety of end-markets, which coincides with the needs of many of our customers who operate in multiple end-markets. As is customary for equipment rental companies, we sell used equipment out of our rental fleet to end user customers. These sales are often made in response to specific customer requests. These sales offer customers an opportunity to buy well-maintained equipment with long remaining useful lives and enable us to effectively manage the age and mix of our rental fleet to match current market demand. We also employ rental purchase options on a select basis, which provide a buyout option with an established purchase price that decreases over time as rental revenue is collected. Customers are given credit against such purchase price for a portion of the amounts paid over the life of the rental, allowing customers the flexibility of a rental with the option to purchase at any time at a known price. Activities in our ERS segment consist of the rental and sale from the rental fleet, of the foregoing products. Truck and Equipment Sales (“TES”) Segment We offer a broad variety of new equipment for sale to be used across our end-markets, which can be modified to meet our customers’ specific needs. We believe that our integrated production capabilities and extensive knowledge gained over a long history of selling equipment have established us as a trusted partner for customers seeking tailored solutions with short lead times. In support of these activities, we primarily employ a direct-to-customer sales model, leveraging our dedicated salesforce of industry and product managers, who are focused on driving national and local sales. We also opportunistically engage in the sale of used equipment purchased from third parties or received via trade-ins from new equipment sales customers. In all of these cases, we will sell used equipment directly to customers, rather than relying on auctions. Activities in our TES segment consist of the production and sale of new and used specialty equipment and vocational trucks, which includes equipment from leading original equipment manufacturers (“OEMs”) across our end-markets, as well as our Load King© brand. Aftermarket Parts and Services (“APS”) Segment The APS segment includes the sale of specialized aftermarket parts, including captive parts related to our Load King© brand, used in the maintenance and repair of the equipment we sell and rent. Specialized tools, including stringing blocks, insulated hot stick, and rigging equipment, are sold or rented to customers on an individual basis or in packaged specialty kits. We also provide truck and equipment maintenance and repair services, which is executed throughout our nationwide branch network and fleet of mobile technicians supported by our 24/7 call center based in Kansas City, Missouri. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Polices | Note 2: Summary of Significant Accounting Policies Basis of Presentation The preparation of financial statements in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) requires that these Condensed Consolidated Financial Statements and most of the disclosures in these Notes be presented on a historical basis, as of or for the current interim period ended or comparable prior periods. The consolidated financial position and results of operations and cash flows (including segment information) presented herein include those of Custom Truck LP as of September 30, 2021 and since the date of the Acquisition. Financial information presented for periods prior to the Acquisition represent those of Nesco Holdings and its subsidiaries. The accompanying interim statements of the Company have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and the Condensed Consolidated Balance Sheet at December 31, 2020, has been derived from the audited consolidated financial statements of Nesco Holdings at that date. Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments and disclosures necessary for a fair statement of these interim statements, have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year or for any other period. These interim statements should be read in conjunction with the Nesco Holdings audited consolidated financial statements included in the Nesco Holdings Annual Report on Form 10-K for the year ended December 31, 2020. Use of Estimates We prepare our consolidated financial statements in conformity with GAAP, which requires us to use judgment to make estimates that directly affect the amounts reported in our consolidated financial statements and accompanying notes. Significant estimates are used for items including, but not limited to, the useful lives and residual values of our rental equipment, business combinations, and determining the valuation allowance related to deferred income taxes. In addition, estimates are used to test both long-lived assets, goodwill, and indefinite-lived assets for impairment, and to determine the fair value of impaired assets, if any impairment exists. These estimates are based on our historical experience and on various other assumptions we believe to be reasonable under the circumstances. We review our estimates on an ongoing basis using information currently available, and we revise our recorded estimates as updated information becomes available, facts and circumstances change, or actual amounts become determinable. Actual results could differ from our estimates. Recently Adopted Accounting Standards Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance to account for leases (“Topic 842”). This guidance revised prior practice related to accounting for leases under Topic 840, for both lessees and lessors. Topic 842 requires that lessees recognize: (a) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Effective January 1, 2021, the Company adopted Topic 842. In connection with the adoption of Topic 842, the Company recognized lease liabilities and ROU assets as of January 1, 2021, as further described in Note 10: Leases as Lessee. The comparative prior period financial statement information has not been restated and continues to be reported under the accounting standards in effect for those periods (e.g., under Topic 840). Additionally, pursuant to Topic 842, accounting and recognition for leases qualifying as finance leases is unchanged from the prior accounting and recognition requirements under Topic 840, which referred to such leases as capital leases. As of January 1, 2021, we had capital lease obligations of approximately $10.5 million which became “finance leases” under Topic 842. The adoption of Topic 842 did not have a significant impact on the recognition of leasing revenue; however, pursuant to the requirements of Topic 842, the Company records changes in estimated collectability of operating lease trade receivables directly against rental revenue. Such amounts were previously classified as selling, general and administrative expenses. The Company elected the package of practical expedients permitted under the transition guidance within the new standard that allows it to not reassess: (a) whether any expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases and (c) initial direct costs for any expired or existing leases. Historical financial information was not updated, and the financial disclosures required under Topic 842 are not provided for periods prior to January 1, 2021. Measurement of Current Expected Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments , which amended ASC Topic No. 326 (“Topic 326”). Topic 326 follows an impairment model (known as the current expected credit loss, or “CECL,” model) that is based on expected losses rather than incurred losses. Under the CECL model, we estimate credit losses over the contractual term of our non-operating lease trade receivables and our financing receivables based on relevant historical information from historical experience and adjusted for current conditions and reasonable and supportable forecasts that affect collectability. Credit losses relating to these financial assets are recorded through the allowance for doubtful accounts. Topic 326 was adopted effective January 1, 2021, and the effect of this guidance was immaterial to the Company’s consolidated results of operations, financial position and cash flows. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment , intended to simplify the subsequent accounting for goodwill acquired in a business combination. Prior guidance required utilizing a two-step process to review goodwill for impairment. A second step was required if there was an indication that an impairment may exist, and the second step required calculating the potential impairment by comparing the implied fair value of a reporting unit’s goodwill (as if purchase accounting were performed on the testing date) to the carrying amount of the goodwill. The new guidance eliminates the second step from the goodwill impairment test. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value (although the loss should not exceed the total amount of goodwill allocated to the reporting unit). We adopted this guidance effective January 1, 2021; however, as discussed in Note 11: Goodwill and Intangible Assets, there was no impairment of goodwill in the three and nine months ended September 30, 2021 and 2020. Accordingly, the adoption of this standard did not have any impact on our consolidated financial statements. Cash and Cash Equivalents Cash and cash equivalents consists of cash and short-term investments with remaining maturities of three months or less when acquired. The carrying amount of cash and cash equivalents approximates its fair value. The Company maintains deposits at financial institutions in excess of federally insured limits. Revenue Recognition We recognize revenue in accordance with two different accounting standards: (1) Topic 606 and Topic 842 for periods after January 1, 2021, and (2) Topic 606 and Topic 840, for periods prior to January 1, 2021. Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A “performance obligation” is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account under Topic 606. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for such products or services. Our contracts with customers generally do not include multiple performance obligations. Rental Revenue . Rental revenue is primarily comprised of revenues from rental agreements and freight charges billed to customers. We also charge customers for damaged equipment, which is assessed and billed at the time a rental asset is returned to the Company and recorded within Parts Sales and Services revenue. In connection with our adoption of Topic 842, beginning January 1, 2021, we record changes in the estimated collectability of operating lease trade receivables against rental revenue. Such amounts were previously classified as selling, general and administrative expenses. Our rental contracts are for various equipment, aftermarket parts and services under 28-day or monthly agreements which include automatic renewal provisions. The majority of our rental payments are due upon receipt, with a majority billed at the end of each 28-day or monthly period. Revenue is recognized ratably over the rental agreement period and in accordance with Topic 842, and, for periods prior to January 1, 2021, Topic 840. Unearned revenue is reported in deferred revenue and customer deposits in our consolidated balance sheets. We require our rental customers to maintain liability and property insurance covering the units during the rental term and to indemnify us from losses caused by the negligence of the customer, their employees or contractors. We also provide rental customers the opportunity to enter into contracts containing a rental purchase option (“RPO”). The RPO allows the customer to earn credit towards the purchase price of the leased equipment. The earned credit is based on rental payments made. Certain leases containing these purchase options are classified as sales-type leases because the RPO purchase price related to the leased equipment is considered to be a “bargain purchase option” in the lease. Revenue on these lease contracts is recognized at the point in time when the customer’s net purchase price for the equipment meets or falls below the fair value of the equipment. Revenue from these leases is recorded as equipment sales in the Condensed Consolidated Statements of Operations. Equipment Sales. We sell both new and used equipment. The contractual sales price for each individual product represents the standalone selling price. Our used equipment is of a sufficiently unique nature, based on specific characteristics such as its age and usage, that it does not have an observable standalone selling price. Equipment sales revenue is recognized when equipment is delivered, which is when the transfer of control is considered passed to the customer. Payment is usually due within 30 days subsequent to transfer of control of the asset. There are no rights of return or warranties offered on equipment sales. Parts Sales and Services. We sell aftermarket parts and services. We derive our services revenue primarily from maintenance, repair and upfit services on heavy-duty trucks and cranes. Revenue from these services includes parts sales needed to complete the service work. We recognize services revenue as the service work is completed. We record revenue on a point in time basis as parts are delivered. The amount of consideration we receive for parts is based upon a list price net of discounts and incentives, and the impact of such variable consideration is factored into the amount of revenue we recognize at any point in time. The amount of consideration received for services is based upon labor hours expended and parts utilized to perform and complete the necessary services for our customers. There are no rights of return or warranties offered on parts sales. Payment is usually due and collected within 30 days subsequent to delivery of parts or performance of service. We record sales tax billed to customers and remitted to governmental authorities on a net basis and, consequently, these amounts are excluded from revenues and expenses. Sales taxes are recorded as accrued expenses when billed. Shipping and Handling Costs. We classify shipping and handling fees billed to customers related to the placement of rental units as rental revenues in our Condensed Consolidated Statements of Operations. We include the related shipping and handling costs in cost of rental revenue, excluding depreciation, in our Condensed Consolidated Statements of Operations. Shipping and handling fees billed to customers related to the sale of equipment and parts are recorded as equipment sales or parts sales and services revenue, respectively. The related shipping and handling costs are recorded in cost of equipment sales or cost of parts sales and services, respectively. Trade Receivables and Allowance for Credit Losses We are exposed to credit losses from trade receivables generated through our leasing, sales and service businesses. We assess each customer’s ability to pay for the products and services by conducting a credit review. The credit review considers expected billing exposure and timing for payment and the customer’s established credit rating. We perform a credit review of new customers at inception of the customer relationship and, for existing customers, when the customer transacts new leases or product orders after a period of dormancy. We also consider contract terms and conditions, country risk and business strategy in the evaluation. We monitor ongoing credit exposure through an active review of customer balances against contract terms and due dates. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. The allowances for credit losses reflect the estimate of the amount of receivables that management assesses will be unable to be collected based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. This estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase or decrease the allowances. We review the adequacy of the allowance on a quarterly basis. The allowance for doubtful accounts was $13.2 million and $6.4 million as of September 30, 2021 and December 31, 2020, respectively, and is included in accounts receivable, net on our Condensed Consolidated Balance Sheets. In accordance with the adoption of Topic 842, effective January 1, 2021, specifically identifiable lease revenue receivables not deemed probable of collection are recorded as a reduction of revenue. The remaining provision for credit losses, which relates to product sales and services, is recorded in selling, general and administrative expense. For periods prior to January 1, 2021, the entire provision for credit losses was recorded in selling, general and administrative expense. Inventory Inventory is carried at the lower of cost or net realizable value. The Company periodically reviews inventories on hand and maintains reserves for slow-moving, excess, or obsolete inventories. Whole goods inventory is comprised of chassis, attachments (i.e., boom cranes, aerial lifts, digger derricks, dump bodies, etc.), and the in-process costs incurred in the final assembly of those units. As part of our business model, we sell unassembled individual whole goods and whole goods with varying levels of customization direct to consumers or dealers. Whole goods inventory also includes new equipment purchased specifically for resale to customers, which purchases are recorded directly to inventory when received. Cost is determined by specific identification for whole goods inventory. Aftermarket parts and services inventories are recorded at weighted average cost. Rental and Property and Equipment Rental Equipment Rental equipment is primarily comprised of the cost of truck-mounted aerial lifts, cranes, trucks, trailers, digger derricks, line equipment, cranes, pressure diggers, underground and other machinery and equipment. The rental equipment we purchase is recorded at cost and depreciated over the estimated rentable life of the equipment using the straight-line method over useful lives, depending on product categories, ranging from 5 to 7 years, to an estimated residual value, depending on product categories, ranging from 15% to 35%. Depreciation of rental equipment commences when a rental unit is placed into the rental fleet and becomes available to rent and the cost is depreciated whether or not the equipment is on rent. We reevaluate the estimated rentable life as rental equipment is purchased, estimating the period that the asset will be held, considering factors such as historical rental activity and expectations of future rental activity. We also reevaluate the estimated residual values of the applicable rental equipment. The residual value of equipment is affected by factors that include equipment age, amount of usage and market conditions. Market conditions for used equipment sales can also be affected by external factors such as the economy, natural disasters, fuel prices, supply of similar used equipment, the market price for similar new equipment and incentives offered by manufacturers of new equipment. These factors are considered when estimating future residual values and depreciation periods. Expenditures for repair and maintenance that extend the useful life of the equipment and are necessary to keep an equipment unit in rentable condition are capitalized and depreciated over the estimated remaining useful life of the equipment, which is the period the repair and maintenance is expected to provide future economic benefit. When making repairs, we dispose of damaged and replaced components at their net carrying values. The cost of these disposed components is expensed as depreciation in the Condensed Consolidated Statements of Operations. The cost of routine and recurring maintenance activities related to the rental fleet are charged to expense as incurred. Property and Equipment Property and equipment is primarily comprised of land, buildings and improvements, machinery and equipment, and vehicles, and is carried at cost, net of accumulated depreciation. Depreciation is provided using the straight-line method based on useful lives ranging from four Cloud Computing Arrangement Implementation Costs The Company has entered into certain cloud-based hosting agreements that are accounted for as service contracts. For internal-use software obtained through a hosting arrangement that is a service contract, the Company capitalizes certain implementation costs, such as costs incurred to integrate, configure, and customize internal-use software, which are consistent with costs incurred during the application development stage for on-premise software. These capitalized development costs are recorded in other assets on the Condensed Consolidated Balance Sheets. Implementation costs capitalized during the three- and nine-month periods ended September 30, 2021 were $2.7 million and $4.8 million, respectively. Capitalized implementation costs are amortized straight-line over the term of the hosting arrangement plus any reasonably certain renewal periods, which range from three years to 10 years. Amortization expense for these assets is included in selling, general, and administrative expenses in the Condensed Consolidated Statements of Operations. For the three- and nine-month periods ended September 30, 2021, amortization of these costs was not material. Leases as Lessee We determine if an arrangement is a lease at inception of an arrangement. Operating and finance lease assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Lease assets represent the Company’s right to use an underlying asset for the lease term, while lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As most leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the lease commencement date, in determining the present value of lease payments. The length of a lease term includes options to extend or terminate the lease when it is reasonably certain that we will exercise those options. The Company made an accounting policy election to not recognize lease assets or liabilities for leases with a term of 12 months or less. Additionally, when accounting for leases, we combine payments for leased assets, related services and other components of a lease. Finally, we apply a portfolio approach to determine the discount rate for leases with similar characteristics. For our leases classified as operating, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus unamortized initial direct costs, plus/(minus) any unamortized prepaid/(accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | Note 3: Business Combination Acquisition of Custom Truck One Source, L.P. On December 3, 2020, Nesco Holdings and Nesco Holdings II, Inc., a subsidiary of Nesco Holdings (the “Buyer” or the “Issuer”), entered into a Purchase and Sale Agreement (as amended, the “Purchase Agreement”) with certain affiliates of The Blackstone Group (“Blackstone”) and other direct and indirect equity holders (collectively, “Sellers”) of Custom Truck One Source, L.P., Blackstone Capital Partners VI-NQ L.P., and PE One Source Holdings, LLC, an affiliate of Platinum Equity, LLC (“Platinum”), pursuant to which Buyer agreed to acquire 100% of the partnership interests of Custom Truck LP. In connection with the Acquisition, Nesco Holdings and certain Sellers entered into Rollover and Contribution Agreements (the “Rollover Agreements”), pursuant to which such Sellers agreed to contribute a portion of their equity interests in Custom Truck LP (the “Rollovers”) with an aggregate value of $100.5 million in exchange for shares of Common Stock, valued at $5.00 per share. We believe the Acquisition creates a leading, one-stop shop for specialty equipment serving highly attractive and growing infrastructure end markets, including transmission and distribution, telecom, rail and other national infrastructure initiatives. Also on December 3, 2020, Nesco Holdings entered into a Common Stock Purchase Agreement (the “Investment Agreement”) with Platinum, relating to, among other things, the issuance and sale to Platinum (the “Subscription”) of shares of Common Stock, for an aggregate purchase price in the range of $700 million to $763 million, with the specific amount calculated in accordance with the Investment Agreement based upon the total equity funding required to fund the consideration paid pursuant to the terms of the Purchase Agreement. The shares of Common Stock issued and sold to Platinum had a purchase price of $5.00 per share. In accordance with the Investment Agreement, on December 21, 2020, Nesco Holdings entered into Subscription Agreements (the “Subscription Agreements”) with certain investors (the “PIPE Investors”) to finance, in part, the Acquisition. Pursuant to the Subscription Agreements, concurrently with the closing of the transactions contemplated by the Investment Agreement, the PIPE Investors agreed to purchase an aggregate of 28,000,000 shares of Common Stock at $5.00 per share for an aggregate purchase price of $140 million (the “Supplemental Equity Financing”). On April 1, 2021 (the “Closing Date”), in connection with (i) the Rollovers, the Company issued, in the aggregate, 20,100,000 shares of Common Stock to the parties to the Rollover Agreements, (ii) the Subscription, the Company issued 148,600,000 shares of Common Stock to Platinum, and (iii) the Supplemental Equity Financing, the Company issued, in the aggregate, 28,000,000 shares of Common Stock to the PIPE Investors. Purchase Price The Company issued 20,100,000 shares of Common Stock to Custom Truck LP equity interest holders, as well as paid cash and repaid debt obligations as consideration for the Acquisition. The trading price of the Common Stock was $9.35 per share on the Closing Date. The purchase price has been determined to be as follows: (in $000s, except share and per share data) Common stock issued 20,100,000 Common stock per share price as of April 1, 2021 $ 9.35 Fair value of common stock issued $ 187,935 Cash consideration paid to equity interest holders 790,324 Repayment of debt obligations 552,600 Total purchase price $ 1,530,859 During the three months ended September 30, 2021, the Company transferred an additional $3.4 million of cash consideration to the Sellers related to certain customary closing adjustments set forth in the Purchase Agreement. Opening Balance Sheet The Acquisition has been accounted for using the acquisition method of accounting, and the Company is considered the accounting acquirer. Under the acquisition method of accounting, we are required to assign the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of the Closing Date. The excess of the purchase price over those fair values is recorded as goodwill. The total purchase price has been assigned to the underlying assets acquired and liabilities assumed based upon their fair values as of the Closing Date, and the estimated fair values have been recorded based on independent valuations, discounted cash flow analysis, quoted market prices, contributory asset charges, and estimates made by management, which estimates fall under “Level 3” of the fair value hierarchy (as defined in Note 14: Fair Value Measurements). The following table summarizes the April 1, 2021 preliminary fair values of the assets acquired and liabilities assumed. During the three months ended September 30, 2021, the Company identified and recorded certain measurement period adjustments to the preliminary purchase price allocation, which are reflected in the table below. These adjustments were not significant and related primarily to rental equipment and current liabilities. The measurement period adjustments, coupled with the additional cash consideration discussed above, increased goodwill by approximately $4.5 million during the three months ended September 30, 2021. Measurement period adjustments impacting the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended September 30, 2021 were not significant. The final assessment of the fair value of the Custom Truck LP assets acquired and liabilities assumed, including estimates of fair values for inventory, property and equipment, rental equipment, certain intangible assets, deferred income taxes and the final assignment of goodwill to reporting units, was not complete as of September 30, 2021. The preliminary fair values are subject to change pending a final determination of the fair values of assets acquired and liabilities assumed as more information is received about their respective values. (in $000s) Accounts and financing receivables (a) $ 109,681 Inventory 434,328 Other current assets 14,080 Property and equipment (b) 105,113 Rental equipment 567,366 Intangible assets (c) 301,000 Operating lease assets 23,766 Other assets 18,223 Total identifiable assets acquired 1,573,557 Current liabilities (410,276) Long-term debt (28,607) Operating lease liabilities-noncurrent (21,308) Deferred tax and other liabilities (29,251) Total identifiable liabilities assumed (489,442) Total net assets 1,084,115 Goodwill (d) 446,744 Net assets acquired (purchase price) $ 1,530,859 a. The preliminary estimated fair value of accounts and financing receivables is $109.7 million, with the gross contractual amount being $116.7 million. The Company estimates $7.0 million to be uncollectible. b. Acquired property and equipment is primarily comprised of land, buildings and improvements with a preliminary estimated fair value of $67.9 million, and machinery, equipment and vehicles, with a preliminary estimated fair value of $31.1 million, as well as other property with a preliminary estimated fair value of $6.1 million. c. The acquired identified intangible assets are comprised of trade names, with a preliminary estimated fair value of $151.0 million, and customer relationships, with a preliminary estimated fair value of $150.0 million. The weighted average useful lives of the trade names and the customer relationships are estimated to be 15 years and 12 years, respectively. d. The goodwill recognized is attributable primarily to synergies and economies of scale provided by the acquired rental and new equipment sales businesses, as well as the assembled workforce of Custom Truck LP. A portion of the goodwill is expected to be deductible for income tax purposes. Custom Truck LP has generated $612.3 million of revenue and $29.0 million of pre-tax loss since the Closing Date, which are included in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021. Financing Transactions On the Closing Date, the Issuer issued $920 million in aggregate principal amount of 5.50% senior secured second lien notes due 2029 (the “2029 Secured Notes”). The 2029 Secured Notes were issued pursuant to an indenture, dated as of April 1, 2021, by and among the Issuer, Wilmington Trust, National Association, as trustee, and the guarantors party thereto (the “Indenture”). The Issuer will pay interest on the Notes semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2021. Unless earlier redeemed, the 2029 Secured Notes will mature on April 15, 2029. The notes were offered pursuant to a private placement exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons outside of the United States in reliance on Regulation S under the Securities Act. The proceeds from the issuance and sale of the 2029 Secured Notes were used to consummate the Acquisition and to repay the Senior Secured Notes due 2024 (see Note 9: Debt), repay certain indebtedness of Custom Truck LP and pay certain fees and expenses related to the Acquisition and financing transactions. Also on the Closing Date, the Buyer, its direct parent, and certain of its direct and indirect subsidiaries entered into a senior secured asset-based revolving credit agreement (the “ABL Credit Agreement”) with Bank of America, N.A., as administrative agent and collateral agent, and certain other lenders party thereto, consisting of a $750.0 million first lien senior secured asset-based revolving credit facility with a maturity of five years (the “ABL Facility”), which includes borrowing capacity for revolving loans (with a swingline sub-facility) and the issuance of letters of credit. Proceeds from the ABL Facility were used to finance the repayment of certain indebtedness of (i) Custom Truck LP under that certain Credit Agreement, dated as of April 18, 2017 (the “Custom Truck LP Credit Facility”), by and among Custom Truck LP, the other entities party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent, and (ii) Buyer under that certain Credit Agreement, dated as of July 31, 2019 (the “2019 Credit Facility”), by and among Capitol Investment Merger Sub 2, LLC, the other entities party thereto and JPMorgan Chase Bank, N.A., as administrative agent, as well as to pay fees and expenses related to the Acquisition and the financing transactions. Pro Forma Information The below pro forma information is presented for the three- and nine-month periods ended September 30, 2021 and 2020 and uses the estimated fair value of assets and liabilities on the Closing Date, and makes the following assumptions: (1) removes acquisition-related costs and charges that were recognized in the Company's condensed consolidated financial statements in the three-month period ended June 30, 2021 (the quarter the Acquisition occurred) from the nine months ended September 30, 2021 and applies these costs and charges to the nine-month period ended September 30, 2020, as if the Acquisition and related financing transactions had occurred on January 1, 2020; (2) removes the loss on the extinguishment of debt that was recognized in the Company's condensed consolidated financial statements in the nine month-period ended September 30, 2021 and applies the charge to the nine-month period ended September 30, 2020, as if the debt extinguishment giving rise to the loss had occurred on January 1, 2020; (3) adjusts for the impacts of purchase accounting in the three and nine months ended September 30, 2021 and 2020; (4) adjusts interest expense, including amortization of debt issuance costs, to reflect borrowings on the ABL Facility and issuance of the 2029 Secured Notes, as if the funds had been borrowed and the notes had been issued on January 1, 2020 and used to repay Nesco’s 2019 Credit Facility, Nesco’s Senior Secured Notes due 2024 (both as defined in Note 9: Debt) and the Custom Truck LP Credit Facility and term loan; and (5) adjusts for the income tax effect using a tax rate of 25%. The pro forma information is not necessarily indicative of the Company’s results of operations had the Acquisition been completed on January 1, 2020, nor is it necessarily indicative of the Company’s future results. The pro forma information does not reflect any cost savings from operating efficiencies, synergies, or revenue opportunities that could result from the Acquisition. Three Months Ended September 30, Nine Months Ended September 30, (in $000s) 2021 2020 2021 2020 Revenue $ 357,305 $ 302,657 $ 1,127,186 $ 951,002 Net income (loss) $ (14,956) $ 19,296 $ (87,884) $ (104,097) The following presents a summary of the pro forma adjustments that are directly attributable to the business combination: Three Months Ended September 30, Nine Months Ended September 30, (in $000s) 2021 2020 2021 2020 Increase (decrease) net income/loss: Impact of fair value mark-ups on inventory a $ 7,426 $ 725 $ 17,752 $ (14,725) Impact of fair value mark-ups on rental fleet depreciation b — (2,576) (3,817) (6,156) Intangible asset amortization and other depreciation expense c — (3,349) (3,377) (9,609) Transaction expenses d — — 40,277 (40,277) Interest expense and amortization of debt issuance costs e — 7,172 3,919 21,521 Loss on extinguishment of debt refinanced f — — 61,695 (61,695) Income tax expense g (1,857) (493) (29,112) 27,735 a. Represents adjustments to cost of revenue for the run-off of the mark-up in fair value of inventory acquired and applied to the three- and nine-month periods ended September 30, 2020. b. Represents the adjustment for depreciation of rental fleet relating to the estimated increase in the value of the rental fleet to its fair value. c. Represents the differential in amortization and depreciation of non-rental equipment related to the respective fair values of the assets. d. Represents adjustments for transaction expenses that are applied to the nine-month period ended September 30, 2020. e. Reflects the differential in interest expense, inclusive of amortization of capitalized debt issuance costs, related to our debt structure after the Acquisition as though the following had occurred on January 1, 2020: (i) borrowings under the ABL Facility; (ii) repayment of the 2019 Credit Facility; (iii) repayment of the Senior Secured Notes due 2024; (iv) repayment of the Custom Truck LP Credit Facility; and (v) the issuance of the 2029 Secured Notes. f. Represents the adjustment of the loss on extinguishment of debt applied to the nine-month period ended September 30, 2020 as though the repayment of the 2019 Credit Facility and Senior Secured Notes due 2024 had occurred on January 1, 2020. g. Reflects the adjustment to recognize the tax impacts of the pro forma adjustments for which a tax expense is recognized using a statutory tax rate of 25%. This rate may vary from the actual effective rate of the historical and combined businesses. Transaction Costs The Company expensed approximately $7.7 million and $42.8 million in transaction and post-acquisition integration costs related to the Acquisition within transaction expenses and other in the three- and nine-month periods ended September 30, 2021, respectively. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 4: Revenue Revenue Disaggregation Geographic Areas The Company had total revenue in the following geographic areas in the three- and nine-month periods ended September 30, 2021 and 2020: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (in $000s) United States $ 351,391 $ 67,506 $ 798,372 $ 213,576 Canada 5,914 1,754 12,343 4,121 Mexico — — — 1,787 Total revenue $ 357,305 $ 69,260 $ 810,715 $ 219,484 Major Product Lines and Services Equipment leasing and equipment sales are the core businesses of the Company, with leasing complimented by the sale of rental units from the rental fleet. The Company’s revenue by major product and service line for the three- and nine-month periods ended September 30, 2021 and 2020 are presented in the tables below. Three Months Ended September 30, Three Months Ended September 30, 2021 2020 (in $000s) Topic 842 Topic 606 Total Topic 840 Topic 606 Total Rental: Rental $ 105,165 $ — $ 105,165 $ 44,468 $ — $ 44,468 Shipping and handling — 3,943 3,943 — 1,657 1,657 Total rental revenue 105,165 3,943 109,108 44,468 1,657 46,125 Sales and services: Equipment sales 6,905 210,258 217,163 — 11,558 11,558 Parts and services 1,940 29,094 31,034 — 11,577 11,577 Total sales and services 8,845 239,352 248,197 — 23,135 23,135 Total revenue $ 114,010 $ 243,295 $ 357,305 $ 44,468 $ 24,792 $ 69,260 Nine Months Ended September 30, Nine Months Ended September 30, 2021 2020 (in $000s) Topic 842 Topic 606 Total Topic 840 Topic 606 Total Rental: Rental $ 246,064 $ — $ 246,064 $ 138,429 $ — $ 138,429 Shipping and handling — 9,872 9,872 — 5,674 5,674 Total rental revenue 246,064 9,872 255,936 138,429 5,674 144,103 Sales and services: Equipment sales 13,711 469,114 482,825 — 38,628 38,628 Parts and services 4,740 67,214 71,954 — 36,753 36,753 Total sales and services 18,451 536,328 554,779 — 75,381 75,381 Total revenue $ 264,515 $ 546,200 $ 810,715 $ 138,429 $ 81,055 $ 219,484 Rental revenue is primarily comprised of revenues from rental agreements and freight charges billed to customers. Equipment sales recognized pursuant to sales-type leases are recorded within equipment sales revenue. Charges to customers for damaged equipment are recorded within parts and services revenue. Receivables, Contract Assets and Liabilities The Company manages credit risk associated with its accounts receivable at the customer level. Because the same customers generate the revenues that are accounted for under both Topic 606 and Topic 842 (or Topic 840 for periods prior to January 1, 2021), the discussions below on credit risk and the Company's allowance for credit losses address the Company's total revenues. Concentration of credit risk with respect to the Company's receivables is limited because of a large number of geographically diverse customers who operate in a variety of end user markets. The Company manages credit risk through credit approvals, credit limits, and other monitoring procedures. The Company’s allowance for credit losses reflects its estimate of the amount of receivables that it will be unable to collect. The estimated losses are based upon a review of outstanding receivables, the related aging, including specific accounts if deemed necessary, and on the Company’s historical collection experience. The estimated losses are calculated using the loss rate method based upon a review of outstanding receivables, related aging, and historical collection experience. The Company's estimates reflect changing circumstances, including changes in the economy or in the particular circumstances of individual customers, and, as a result, the Company may be required to increase or decrease its allowance. During the three- and nine-month periods ended September 30, 2021, the Company recognized bad debt expense of $0.7 million and $6.8 million, respectively, as reductions of rental revenue in accordance with the collectability provisions of Topic 842. During the three- and nine-month periods ended September 30, 2021, the Company recognized $0.2 million and $1.5 million, respectively (compared to bad debt expense in the three- and nine-month periods ended September 30, 2020 of $0.4 million and $1.8 million, respectively), within selling, general and administrative expense in its Condensed Consolidated Statements of Operations, which included changes in its allowances for credit losses. When customers are billed for rentals in advance of the rental period, the Company defers recognition of revenue. As of September 30, 2021 and December 31, 2020, the Company had approximately $2.4 million and $1.0 million, respectively, of deferred rental revenue. Additionally, the Company collects deposits from customers for orders placed for equipment and rentals. The Company had approximately $19.2 million in deposits as of September 30, 2021. The Company does not have material contract assets, and it did not recognize any material impairments of any contract assets. The primary costs to obtain contracts for new and rental unit sales with the Company's customers are commissions. The Company pays its salesforce commissions related to the sale and rental of new and used units. For new unit and rental unit sales, the period benefited by each commission is less than one year. As a result, the Company has applied the practical expedient for incremental costs of obtaining a sales contract and expenses commissions as incurred. |
Financing Receivables
Financing Receivables | 9 Months Ended |
Sep. 30, 2021 | |
Receivables [Abstract] | |
Financing Receivables | Note 5: Financing Receivables The Company’s financing receivables are related to sales-type leases and are collateralized by a security interest in the underlying equipment. Financing receivables, net of unearned income of $0.4 million, were $26.0 million as of September 30, 2021. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 6: Inventory Inventory consisted of the following: (in $000s) September 30, 2021 December 31, 2020 Whole goods $ 298,968 $ 3,276 Aftermarket parts and services inventory 82,191 28,091 Inventory $ 381,159 $ 31,367 |
Floor Plan Financing
Floor Plan Financing | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Floor Plan Financing | Note 7: Floor Plan Financing Floor plan payables were assumed in connection with the Acquisition and represent financing arrangements to facilitate the Company’s purchase of new and used trucks, cranes, and construction equipment inventory. All floor plan payables are collateralized by the inventory financed. These payables become due and payable upon the sale, transfer, or reclassification of each unit of inventory. Certain floor plan arrangements require the Company to satisfy various financial ratios consistent with those under the ABL Facility. As of September 30, 2021, the Company was in compliance with these covenants. The amounts owed under floor plan payables are summarized as follows (in thousands): (in $000s) September 30, 2021 Trade: Daimler Truck Financial $ 52,817 PACCAR Financial Services 25,688 Trade floor plan payables $ 78,505 Non-trade: PNC Equipment Finance, LLC $ 150,694 Non-trade floor plan payables $ 150,694 Interest on outstanding floor plan payable balances is due and payable monthly. Floor plan interest expense was $1.7 million and $3.8 million for the three- and nine-month periods ended September 30, 2021, respectively. Trade Floor Plan Financing: Daimler Truck Financial The Wholesale Financing Agreement with Daimler Truck Financial (the “Daimler Facility”) bears interest at a rate of Prime plus 0.80% after an initial interest free period of up to 150 days. The total capacity under the Daimler Facility is $175.0 million. PACCAR The Company has an Inventory Financing Agreement with PACCAR Financial Corp that provides the Company with a line of credit of $50.0 million to finance inventory purchases of new Peterbilt and/or Kenworth trucks, tractors, and chassis. Amounts borrowed against this line of credit incur interest at a rate of the London Interbank Offered Rate (“LIBOR”) plus 2.4%. Non-Trade Floor Plan Financing: PNC Equipment Finance, LLC The Company has an Inventory Loan, Guaranty and Security Agreement (the “Loan Agreement”) with PNC Equipment Finance, LLC. The Loan Agreement provides the Company with a $295.0 million revolving credit facility, which matures on August 25, 2022 and bears interest at a rate of LIBOR plus 3.05%. Note 9: Debt Debt obligations and associated interest rates consisted of the following: September 30, December 31, September 30, December 31, (in $000s) 2021 2020 2021 2020 ABL Facility $ 405,000 $ — 1.8% 2019 Credit Facility — 250,971 3.4% 2029 Secured Notes 920,000 — 5.5% Senior Secured Notes due 2024 — 475,000 10.0% Notes payable 37,934 2,379 3.0%-5.0% 5.0% Total debt outstanding 1,362,934 728,350 Deferred finance fees (34,266) (11,212) Net debt 1,328,668 717,138 Less: current maturities (4,997) (1,280) Long-term debt $ 1,323,671 $ 715,858 In connection with the Acquisition and related financing transactions, on April 1, 2021, the Company entered into the ABL Facility and repaid the Custom Truck LP Credit Facility and Nesco’s 2019 Credit Facility as described in Note 3: Business Combination. Additionally, on April 1, 2021, the Company redeemed all of Nesco’s Senior Secured Notes due 2024 and paid a make-whole premium. The terms of the ABL Facility and 2029 Secured Notes are described below. The financing transactions related to the Acquisition resulted in the recognition of a loss on the extinguishment of debt in the three- and nine-month periods ended September 30, 2021, comprised of (i) the elimination of unamortized deferred financing fees related to the 2019 Credit Facility and the Senior Secured Notes due 2024 of $8.2 million and, (ii) the payment of the make-whole premium to holders of the Senior Secured Notes due 2024 of $38.5 million. Additionally, prior to the consummation of the Acquisition, on December 3, 2020, the Company entered into a bridge financing commitment that was available to be used to provide a portion of the financing necessary to fund the consideration to be paid pursuant to the terms of the Acquisition. Because the Company entered into the ABL Facility and issued the 2029 Secured Notes, financing under the bridge facility was not used; however, on the Closing Date, the Company paid $15.0 million in fees to the bridge financing parties, which fees are included in loss on extinguishment of debt, in the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended September 30, 2021. ABL Facility In connection with the Acquisition, Buyer, as borrower, and the ABL Guarantors (as defined below) entered into the ABL Credit Agreement. The ABL Facility provides for revolving loans, in an amount equal to the lesser of the then-current borrowing base (described below) and the committed maximum borrowing capacity of $750.0 million, with a $75.0 million swingline sublimit, and letters of credit in an amount equal to the lesser of (a) $50.0 million and (b) the aggregate unused amount of commitments under the ABL Facility then in effect. The ABL Facility permits the Buyer to incur additional capacity under the ABL Facility in an aggregate amount equal to the greater of (x) $200.0 million and (y) 60.0% of Consolidated EBITDA (as defined in the ABL Credit Agreement) in additional commitments. As of the Closing Date, Buyer had no commitments from any lender to provide incremental commitments. Borrowings under the ABL Facility are limited by a borrowing base calculation based on the sum of, without duplication: (a) 90.0% of book value of eligible accounts of Buyer and certain ABL Guarantors; plus (b) the lesser of (i) 75.0% of book value of eligible parts inventory of Buyer and certain ABL Guarantors (subject to certain exceptions) and (ii) 90.0% of the net orderly liquidation value of eligible parts inventory of Buyer and certain ABL Guarantors; plus (c) the sum of (i) 95.0% of the net book value of the eligible fleet inventory of Buyer and certain ABL Guarantors that has not been appraised and (ii) 85.0% of the net orderly liquidation value of the eligible fleet inventory of Buyer and certain ABL Guarantors that has been appraised; plus (d) 100.0% of eligible cash of Buyer and certain ABL Guarantors; minus (e) any reserves established by the administrative agent from time to time. As of September 30, 2021, borrowing availability under the ABL Facility was $337.0 million, and outstanding standby letters of credit were $4.0 million. Borrowings under the ABL Facility will bear interest at a floating rate, which, at Buyer’s election, will be (a) in the case of U.S. dollar denominated loans, either (i) LIBOR plus an applicable margin or (ii) the base rate plus an applicable margin; or (b) in the case of Canadian dollar denominated loans, the CDOR rate plus an applicable margin. The applicable margin varies based on Average Availability (as defined in the ABL Credit Agreement) from (a) with respect to base rate loans, 0.50% to 1.00% and (b) with respect to LIBOR loans and CDOR rate loans, 1.50% to 2.00%. The ability to draw under the ABL Facility or issue letters of credit thereunder is conditioned upon, among other things, delivery of prior written notice of a borrowing or issuance, as applicable, the ability to reaffirm the representations and warranties contained in the ABL Credit Agreement and the absence of any default or event of default under the ABL Facility. Buyer is required to pay a commitment fee to the lenders under the ABL Facility in respect of the unutilized commitments thereunder at a rate equal to 0.375% per annum, which may be reduced following the first full fiscal quarter to 0.250% per annum based on average daily usage. Buyer must also pay customary letter of credit and agency fees. The balance outstanding under the ABL Facility will be due and payable on April 1, 2026. Buyer may, at any time and from time to time, prepay, without premium or penalty, any borrowing under the ABL Facility and terminate, or from time to time reduce, the commitments under the ABL Facility. The obligations under the ABL Facility are guaranteed by Capitol Investment Merger Sub 2, LLC, Buyer and each of Buyer’s existing and future direct and indirect wholly owned domestic restricted subsidiaries, subject to certain exceptions, as well as certain of Buyer’s material Canadian subsidiaries (the “ABL Guarantors”). The obligations under the ABL Facility and the guarantees of those obligations are secured by (subject to certain exceptions): (i) a first priority pledge by each ABL Guarantor of all of the equity interests of restricted subsidiaries directly owned by such ABL Guarantors (limited to 65% of voting capital stock in the case of foreign subsidiaries owned directly by a U.S. subsidiary and to certain other exceptions and subject to certain exceptions in the case of non-wholly owned subsidiaries) and (ii) a first priority security interest in substantially all of the ABL Guarantors’ present and after-acquired assets (subject to certain exceptions). The ABL Facility contains customary negative covenants for transactions of this type, including covenants that, among other things, limit Buyer’s and its restricted subsidiaries’ ability to: incur additional indebtedness; pay dividends, redeem stock, or make other distributions; repurchase, prepay, or redeem subordinated indebtedness; make investments; create restrictions on the ability of Buyer’s restricted subsidiaries to pay dividends to Buyer; create liens; transfer or sell assets; consolidate, merge, sell, or otherwise dispose of all or substantially all of Buyer’s assets; enter into certain transactions with Buyer’s affiliates; and designate subsidiaries as unrestricted subsidiaries, in each case subject to certain exceptions, as well as a restrictive covenant applicable to each Specified Floor Plan Company (as defined in the ABL Credit Agreement) limiting its ability to own certain assets and engage in certain lines of business. In addition, the ABL Facility contains a springing financial covenant that requires Buyer and its restricted subsidiaries to maintain a Consolidated Fixed Charge Coverage Ratio (as defined in the ABL Credit Agreement) of at least 1.00 to 1.00; provided that the financial covenant shall only be tested when Specified Excess Availability (as defined in the ABL Credit Agreement) under the ABL Facility is less than the greater of (i) 10.0% of the Line Cap (as defined in the ABL Credit Agreement) and (ii) $60.0 million (the “FCCR Test Amount”), in which case it shall be tested at the end of each succeeding fiscal quarter thereafter until the date on which Specified Excess Availability has exceeded the FCCR Test Amount for 30 consecutive calendar days. The ABL Facility provides for a number of customary events of default, including, among others, and in each case subject to an applicable grace period: payment defaults to the lenders; covenant defaults; material inaccuracies of representations and warranties; failure to pay certain other indebtedness after final maturity or acceleration of other indebtedness exceeding a specified amount; voluntary and involuntary bankruptcy proceedings; material judgments for payment of money exceeding a specified amount; and certain change of control events. The occurrence of an event of default could result in the acceleration of obligations and the termination of revolving commitments under the ABL Facility. 2029 Secured Notes On the Closing Date, the Issuer issued $920.0 million in aggregate principal amount of 5.50% senior secured second lien notes due 2029. The 2029 Secured Notes were issued pursuant to an Indenture, dated as of April 1, 2021, between the Issuer, Wilmington Trust, National Association, as trustee and the guarantors party thereto. The Issuer will pay interest on the 2029 Secured Notes semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2021. Unless earlier redeemed, the 2029 Secured Notes will mature on April 15, 2029. Ranking and Security The 2029 Secured Notes are jointly and severally guaranteed on a senior secured basis by Capitol Investment Merger Sub 2, LLC and, subject to certain exceptions, each of the Issuer’s existing and future wholly owned domestic restricted subsidiaries that is an obligor under the ABL Credit Agreement or certain other capital markets indebtedness. Under the terms of the Indenture, the 2029 Secured Notes and the related guarantees rank senior in right of payment to all of the Issuer’s and the guarantors’ subordinated indebtedness and are effectively senior to all of the Issuer’s and the guarantors’ unsecured indebtedness, and indebtedness secured by liens junior to the liens securing the 2029 Secured Notes, in each case, to the extent of the value of the collateral securing the 2029 Secured Notes. The 2029 Secured Notes and the related guarantees rank equally in right of payment with all of the Issuer’s and the guarantors’ senior indebtedness, without giving effect to collateral arrangements, and effectively equal to all of the Issuer’s and the guarantors’ senior indebtedness secured on the same priority basis as the 2029 Secured Notes. The 2029 Secured Notes and the related guarantees are effectively subordinated to any of the Issuer’s and the guarantors’ indebtedness that is secured by assets that do not constitute collateral for the 2029 Secured Notes to the extent of the value of the assets securing such indebtedness, and indebtedness that is secured by a senior-priority lien, including the ABL Credit Agreement to the extent of the value of the collateral securing such indebtedness, and are structurally subordinated to the liabilities of the Issuer’s non-guarantor subsidiaries. Optional Redemption Provisions and Repurchase Rights At any time, upon not less than 10 nor more than 60 days’ notice, the 2029 Secured Notes are redeemable at the Issuer’s option, in whole or in part, at a price equal to 100% of the principal amount of the 2029 Secured Notes redeemed, plus a make-whole premium as set forth in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date. Beginning April 15, 2024, the Issuer may redeem the 2029 Secured Notes, at its option, in whole or in part, at any time, subject to the payment of a redemption price together with accrued and unpaid interest, if any, to, but not including, the applicable redemption date. The redemption price includes a call premium that varies (from 2.750% to 0.000%) depending on the year of redemption. In addition, at any time prior to April 15, 2024, the Issuer may redeem up to 40% of the aggregate principal amount of the 2029 Secured Notes, at a redemption price equal to 105.5% of the principal amount thereof, together with accrued and unpaid interest, if any, to, but not including, the applicable redemption date, with the net cash proceeds of sales of one or more equity offerings by the Issuer or any direct or indirect parent of the Issuer, subject to certain exceptions. In addition, at any time prior to April 15, 2024, the Issuer may redeem during each calendar year up to 10% of the aggregate principal amount of the 2029 Secured Notes at a redemption price equal to 103% of the aggregate principal amount of the 2029 Secured Notes to be redeemed, together with accrued and unpaid interest, if any, to, but not including, the applicable redemption date; provided that, in any given calendar year, any amount not previously utilized in any calendar year may be carried forward to subsequent calendar years. Subject to certain exceptions, the holders of the 2029 Secured Notes also have the right to require the Issuer to repurchase their 2029 Secured Notes upon the occurrence of a change in control, as defined in the Indenture, at an offer price equal to 101% of the principal amount of the 2029 Secured Notes plus accrued and unpaid interest, if any, to, but not including, the date of repurchase. In addition, if the Issuer or any of its restricted subsidiaries sells assets, under certain circumstances, the Issuer is required to use the net proceeds to make an offer to purchase the 2029 Secured Notes at an offer price in cash equal to 100% of the principal amount of the 2029 Secured Notes plus accrued and unpaid interest to, but not including, the repurchase date. In connection with any offer to purchase all or any of the 2029 Secured Notes (including a change of control offer and any tender offer), if holders of no less than 90% of the aggregate principal amount of the 2029 Secured Notes validly tender their 2029 Secured Notes, the Issuer or a third party is entitled to redeem any remaining 2029 Secured Notes at the price offered to each holder. Restrictive Covenants The Indenture contains covenants that limit the Issuer’s (and certain of its subsidiaries’) ability to, among other things: (i) incur additional debt or issue certain preferred stock; (ii) pay dividends, redeem stock, or make other distributions; (iii) make other restricted payments or investments; (iv) create liens on assets; (v) transfer or sell assets; (vi) create restrictions on payment of dividends or other amounts by the Issuer to the Issuer’s restricted subsidiaries; (vii) engage in mergers or consolidations; (viii) engage in certain transactions with affiliates; or (ix) designate the Issuer’s subsidiaries as unrestricted subsidiaries. Events of Default The Indenture provides for customary events of default, including non-payment, failure to comply with covenants or other agreements in the Indenture, and certain events of bankruptcy or insolvency. If an event of default occurs and continues with respect to the 2029 Secured Notes, the trustee or the holders of at least 30% in aggregate principal amount of the outstanding 2029 Secured Notes of such series may declare the entire principal amount of all the 2029 Secured Notes to be due and payable immediately (except that if such event of default is caused by certain events of bankruptcy or insolvency, the entire principal of the 2029 Secured Notes will become due and payable immediately without further action or notice). Notes Payable Our notes payable require the Company to pay monthly and quarterly interest payments and have maturities beginning in 2022 through 2026. Notes payable includes (i) debt assumed from the Acquisition related to borrowings for facilities renovations and to support general business activities, (ii) notes payable related to past businesses acquired, and (iii) term loans. Subsequent to the Acquisition, the Company consolidated certain notes payable assumed from the Acquisition into a $23.9 million loan agreement with Security Bank of Kansas City (“SBKC”) that bears interest at a rate of 3.125% per annum, and a $3.5 million loan agreement with SBKC that bears interest at a rate of 3.5% per annum. |
Rental Equipment
Rental Equipment | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Rental Equipment | Note 8: Rental Equipment Rental equipment consisted of the following: (in $000s) September 30, 2021 December 31, 2020 Rental equipment $ 1,261,313 $ 654,547 Less: accumulated depreciation (382,288) (318,735) Rental equipment, net $ 879,025 $ 335,812 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Note 7: Floor Plan Financing Floor plan payables were assumed in connection with the Acquisition and represent financing arrangements to facilitate the Company’s purchase of new and used trucks, cranes, and construction equipment inventory. All floor plan payables are collateralized by the inventory financed. These payables become due and payable upon the sale, transfer, or reclassification of each unit of inventory. Certain floor plan arrangements require the Company to satisfy various financial ratios consistent with those under the ABL Facility. As of September 30, 2021, the Company was in compliance with these covenants. The amounts owed under floor plan payables are summarized as follows (in thousands): (in $000s) September 30, 2021 Trade: Daimler Truck Financial $ 52,817 PACCAR Financial Services 25,688 Trade floor plan payables $ 78,505 Non-trade: PNC Equipment Finance, LLC $ 150,694 Non-trade floor plan payables $ 150,694 Interest on outstanding floor plan payable balances is due and payable monthly. Floor plan interest expense was $1.7 million and $3.8 million for the three- and nine-month periods ended September 30, 2021, respectively. Trade Floor Plan Financing: Daimler Truck Financial The Wholesale Financing Agreement with Daimler Truck Financial (the “Daimler Facility”) bears interest at a rate of Prime plus 0.80% after an initial interest free period of up to 150 days. The total capacity under the Daimler Facility is $175.0 million. PACCAR The Company has an Inventory Financing Agreement with PACCAR Financial Corp that provides the Company with a line of credit of $50.0 million to finance inventory purchases of new Peterbilt and/or Kenworth trucks, tractors, and chassis. Amounts borrowed against this line of credit incur interest at a rate of the London Interbank Offered Rate (“LIBOR”) plus 2.4%. Non-Trade Floor Plan Financing: PNC Equipment Finance, LLC The Company has an Inventory Loan, Guaranty and Security Agreement (the “Loan Agreement”) with PNC Equipment Finance, LLC. The Loan Agreement provides the Company with a $295.0 million revolving credit facility, which matures on August 25, 2022 and bears interest at a rate of LIBOR plus 3.05%. Note 9: Debt Debt obligations and associated interest rates consisted of the following: September 30, December 31, September 30, December 31, (in $000s) 2021 2020 2021 2020 ABL Facility $ 405,000 $ — 1.8% 2019 Credit Facility — 250,971 3.4% 2029 Secured Notes 920,000 — 5.5% Senior Secured Notes due 2024 — 475,000 10.0% Notes payable 37,934 2,379 3.0%-5.0% 5.0% Total debt outstanding 1,362,934 728,350 Deferred finance fees (34,266) (11,212) Net debt 1,328,668 717,138 Less: current maturities (4,997) (1,280) Long-term debt $ 1,323,671 $ 715,858 In connection with the Acquisition and related financing transactions, on April 1, 2021, the Company entered into the ABL Facility and repaid the Custom Truck LP Credit Facility and Nesco’s 2019 Credit Facility as described in Note 3: Business Combination. Additionally, on April 1, 2021, the Company redeemed all of Nesco’s Senior Secured Notes due 2024 and paid a make-whole premium. The terms of the ABL Facility and 2029 Secured Notes are described below. The financing transactions related to the Acquisition resulted in the recognition of a loss on the extinguishment of debt in the three- and nine-month periods ended September 30, 2021, comprised of (i) the elimination of unamortized deferred financing fees related to the 2019 Credit Facility and the Senior Secured Notes due 2024 of $8.2 million and, (ii) the payment of the make-whole premium to holders of the Senior Secured Notes due 2024 of $38.5 million. Additionally, prior to the consummation of the Acquisition, on December 3, 2020, the Company entered into a bridge financing commitment that was available to be used to provide a portion of the financing necessary to fund the consideration to be paid pursuant to the terms of the Acquisition. Because the Company entered into the ABL Facility and issued the 2029 Secured Notes, financing under the bridge facility was not used; however, on the Closing Date, the Company paid $15.0 million in fees to the bridge financing parties, which fees are included in loss on extinguishment of debt, in the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended September 30, 2021. ABL Facility In connection with the Acquisition, Buyer, as borrower, and the ABL Guarantors (as defined below) entered into the ABL Credit Agreement. The ABL Facility provides for revolving loans, in an amount equal to the lesser of the then-current borrowing base (described below) and the committed maximum borrowing capacity of $750.0 million, with a $75.0 million swingline sublimit, and letters of credit in an amount equal to the lesser of (a) $50.0 million and (b) the aggregate unused amount of commitments under the ABL Facility then in effect. The ABL Facility permits the Buyer to incur additional capacity under the ABL Facility in an aggregate amount equal to the greater of (x) $200.0 million and (y) 60.0% of Consolidated EBITDA (as defined in the ABL Credit Agreement) in additional commitments. As of the Closing Date, Buyer had no commitments from any lender to provide incremental commitments. Borrowings under the ABL Facility are limited by a borrowing base calculation based on the sum of, without duplication: (a) 90.0% of book value of eligible accounts of Buyer and certain ABL Guarantors; plus (b) the lesser of (i) 75.0% of book value of eligible parts inventory of Buyer and certain ABL Guarantors (subject to certain exceptions) and (ii) 90.0% of the net orderly liquidation value of eligible parts inventory of Buyer and certain ABL Guarantors; plus (c) the sum of (i) 95.0% of the net book value of the eligible fleet inventory of Buyer and certain ABL Guarantors that has not been appraised and (ii) 85.0% of the net orderly liquidation value of the eligible fleet inventory of Buyer and certain ABL Guarantors that has been appraised; plus (d) 100.0% of eligible cash of Buyer and certain ABL Guarantors; minus (e) any reserves established by the administrative agent from time to time. As of September 30, 2021, borrowing availability under the ABL Facility was $337.0 million, and outstanding standby letters of credit were $4.0 million. Borrowings under the ABL Facility will bear interest at a floating rate, which, at Buyer’s election, will be (a) in the case of U.S. dollar denominated loans, either (i) LIBOR plus an applicable margin or (ii) the base rate plus an applicable margin; or (b) in the case of Canadian dollar denominated loans, the CDOR rate plus an applicable margin. The applicable margin varies based on Average Availability (as defined in the ABL Credit Agreement) from (a) with respect to base rate loans, 0.50% to 1.00% and (b) with respect to LIBOR loans and CDOR rate loans, 1.50% to 2.00%. The ability to draw under the ABL Facility or issue letters of credit thereunder is conditioned upon, among other things, delivery of prior written notice of a borrowing or issuance, as applicable, the ability to reaffirm the representations and warranties contained in the ABL Credit Agreement and the absence of any default or event of default under the ABL Facility. Buyer is required to pay a commitment fee to the lenders under the ABL Facility in respect of the unutilized commitments thereunder at a rate equal to 0.375% per annum, which may be reduced following the first full fiscal quarter to 0.250% per annum based on average daily usage. Buyer must also pay customary letter of credit and agency fees. The balance outstanding under the ABL Facility will be due and payable on April 1, 2026. Buyer may, at any time and from time to time, prepay, without premium or penalty, any borrowing under the ABL Facility and terminate, or from time to time reduce, the commitments under the ABL Facility. The obligations under the ABL Facility are guaranteed by Capitol Investment Merger Sub 2, LLC, Buyer and each of Buyer’s existing and future direct and indirect wholly owned domestic restricted subsidiaries, subject to certain exceptions, as well as certain of Buyer’s material Canadian subsidiaries (the “ABL Guarantors”). The obligations under the ABL Facility and the guarantees of those obligations are secured by (subject to certain exceptions): (i) a first priority pledge by each ABL Guarantor of all of the equity interests of restricted subsidiaries directly owned by such ABL Guarantors (limited to 65% of voting capital stock in the case of foreign subsidiaries owned directly by a U.S. subsidiary and to certain other exceptions and subject to certain exceptions in the case of non-wholly owned subsidiaries) and (ii) a first priority security interest in substantially all of the ABL Guarantors’ present and after-acquired assets (subject to certain exceptions). The ABL Facility contains customary negative covenants for transactions of this type, including covenants that, among other things, limit Buyer’s and its restricted subsidiaries’ ability to: incur additional indebtedness; pay dividends, redeem stock, or make other distributions; repurchase, prepay, or redeem subordinated indebtedness; make investments; create restrictions on the ability of Buyer’s restricted subsidiaries to pay dividends to Buyer; create liens; transfer or sell assets; consolidate, merge, sell, or otherwise dispose of all or substantially all of Buyer’s assets; enter into certain transactions with Buyer’s affiliates; and designate subsidiaries as unrestricted subsidiaries, in each case subject to certain exceptions, as well as a restrictive covenant applicable to each Specified Floor Plan Company (as defined in the ABL Credit Agreement) limiting its ability to own certain assets and engage in certain lines of business. In addition, the ABL Facility contains a springing financial covenant that requires Buyer and its restricted subsidiaries to maintain a Consolidated Fixed Charge Coverage Ratio (as defined in the ABL Credit Agreement) of at least 1.00 to 1.00; provided that the financial covenant shall only be tested when Specified Excess Availability (as defined in the ABL Credit Agreement) under the ABL Facility is less than the greater of (i) 10.0% of the Line Cap (as defined in the ABL Credit Agreement) and (ii) $60.0 million (the “FCCR Test Amount”), in which case it shall be tested at the end of each succeeding fiscal quarter thereafter until the date on which Specified Excess Availability has exceeded the FCCR Test Amount for 30 consecutive calendar days. The ABL Facility provides for a number of customary events of default, including, among others, and in each case subject to an applicable grace period: payment defaults to the lenders; covenant defaults; material inaccuracies of representations and warranties; failure to pay certain other indebtedness after final maturity or acceleration of other indebtedness exceeding a specified amount; voluntary and involuntary bankruptcy proceedings; material judgments for payment of money exceeding a specified amount; and certain change of control events. The occurrence of an event of default could result in the acceleration of obligations and the termination of revolving commitments under the ABL Facility. 2029 Secured Notes On the Closing Date, the Issuer issued $920.0 million in aggregate principal amount of 5.50% senior secured second lien notes due 2029. The 2029 Secured Notes were issued pursuant to an Indenture, dated as of April 1, 2021, between the Issuer, Wilmington Trust, National Association, as trustee and the guarantors party thereto. The Issuer will pay interest on the 2029 Secured Notes semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2021. Unless earlier redeemed, the 2029 Secured Notes will mature on April 15, 2029. Ranking and Security The 2029 Secured Notes are jointly and severally guaranteed on a senior secured basis by Capitol Investment Merger Sub 2, LLC and, subject to certain exceptions, each of the Issuer’s existing and future wholly owned domestic restricted subsidiaries that is an obligor under the ABL Credit Agreement or certain other capital markets indebtedness. Under the terms of the Indenture, the 2029 Secured Notes and the related guarantees rank senior in right of payment to all of the Issuer’s and the guarantors’ subordinated indebtedness and are effectively senior to all of the Issuer’s and the guarantors’ unsecured indebtedness, and indebtedness secured by liens junior to the liens securing the 2029 Secured Notes, in each case, to the extent of the value of the collateral securing the 2029 Secured Notes. The 2029 Secured Notes and the related guarantees rank equally in right of payment with all of the Issuer’s and the guarantors’ senior indebtedness, without giving effect to collateral arrangements, and effectively equal to all of the Issuer’s and the guarantors’ senior indebtedness secured on the same priority basis as the 2029 Secured Notes. The 2029 Secured Notes and the related guarantees are effectively subordinated to any of the Issuer’s and the guarantors’ indebtedness that is secured by assets that do not constitute collateral for the 2029 Secured Notes to the extent of the value of the assets securing such indebtedness, and indebtedness that is secured by a senior-priority lien, including the ABL Credit Agreement to the extent of the value of the collateral securing such indebtedness, and are structurally subordinated to the liabilities of the Issuer’s non-guarantor subsidiaries. Optional Redemption Provisions and Repurchase Rights At any time, upon not less than 10 nor more than 60 days’ notice, the 2029 Secured Notes are redeemable at the Issuer’s option, in whole or in part, at a price equal to 100% of the principal amount of the 2029 Secured Notes redeemed, plus a make-whole premium as set forth in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date. Beginning April 15, 2024, the Issuer may redeem the 2029 Secured Notes, at its option, in whole or in part, at any time, subject to the payment of a redemption price together with accrued and unpaid interest, if any, to, but not including, the applicable redemption date. The redemption price includes a call premium that varies (from 2.750% to 0.000%) depending on the year of redemption. In addition, at any time prior to April 15, 2024, the Issuer may redeem up to 40% of the aggregate principal amount of the 2029 Secured Notes, at a redemption price equal to 105.5% of the principal amount thereof, together with accrued and unpaid interest, if any, to, but not including, the applicable redemption date, with the net cash proceeds of sales of one or more equity offerings by the Issuer or any direct or indirect parent of the Issuer, subject to certain exceptions. In addition, at any time prior to April 15, 2024, the Issuer may redeem during each calendar year up to 10% of the aggregate principal amount of the 2029 Secured Notes at a redemption price equal to 103% of the aggregate principal amount of the 2029 Secured Notes to be redeemed, together with accrued and unpaid interest, if any, to, but not including, the applicable redemption date; provided that, in any given calendar year, any amount not previously utilized in any calendar year may be carried forward to subsequent calendar years. Subject to certain exceptions, the holders of the 2029 Secured Notes also have the right to require the Issuer to repurchase their 2029 Secured Notes upon the occurrence of a change in control, as defined in the Indenture, at an offer price equal to 101% of the principal amount of the 2029 Secured Notes plus accrued and unpaid interest, if any, to, but not including, the date of repurchase. In addition, if the Issuer or any of its restricted subsidiaries sells assets, under certain circumstances, the Issuer is required to use the net proceeds to make an offer to purchase the 2029 Secured Notes at an offer price in cash equal to 100% of the principal amount of the 2029 Secured Notes plus accrued and unpaid interest to, but not including, the repurchase date. In connection with any offer to purchase all or any of the 2029 Secured Notes (including a change of control offer and any tender offer), if holders of no less than 90% of the aggregate principal amount of the 2029 Secured Notes validly tender their 2029 Secured Notes, the Issuer or a third party is entitled to redeem any remaining 2029 Secured Notes at the price offered to each holder. Restrictive Covenants The Indenture contains covenants that limit the Issuer’s (and certain of its subsidiaries’) ability to, among other things: (i) incur additional debt or issue certain preferred stock; (ii) pay dividends, redeem stock, or make other distributions; (iii) make other restricted payments or investments; (iv) create liens on assets; (v) transfer or sell assets; (vi) create restrictions on payment of dividends or other amounts by the Issuer to the Issuer’s restricted subsidiaries; (vii) engage in mergers or consolidations; (viii) engage in certain transactions with affiliates; or (ix) designate the Issuer’s subsidiaries as unrestricted subsidiaries. Events of Default The Indenture provides for customary events of default, including non-payment, failure to comply with covenants or other agreements in the Indenture, and certain events of bankruptcy or insolvency. If an event of default occurs and continues with respect to the 2029 Secured Notes, the trustee or the holders of at least 30% in aggregate principal amount of the outstanding 2029 Secured Notes of such series may declare the entire principal amount of all the 2029 Secured Notes to be due and payable immediately (except that if such event of default is caused by certain events of bankruptcy or insolvency, the entire principal of the 2029 Secured Notes will become due and payable immediately without further action or notice). Notes Payable Our notes payable require the Company to pay monthly and quarterly interest payments and have maturities beginning in 2022 through 2026. Notes payable includes (i) debt assumed from the Acquisition related to borrowings for facilities renovations and to support general business activities, (ii) notes payable related to past businesses acquired, and (iii) term loans. Subsequent to the Acquisition, the Company consolidated certain notes payable assumed from the Acquisition into a $23.9 million loan agreement with Security Bank of Kansas City (“SBKC”) that bears interest at a rate of 3.125% per annum, and a $3.5 million loan agreement with SBKC that bears interest at a rate of 3.5% per annum. |
Leases as Lessee
Leases as Lessee | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Leases as Lessee | Note 10: Leases as Lessee Our operating lease agreements primarily consist of real estate property, such as warehouses and office buildings, in addition to personal property, such as vehicles and equipment. The majority of our lease arrangements are comprised of fixed payments and a limited number of these arrangements include a variable payment component based on certain index fluctuations. We also lease certain rental equipment under master lease agreements, which are classified as finance leases. The master lease agreements are typically for a five-year period, at the end of which we are entitled to return or purchase the equipment, or extend the life of the lease. The adoption of Topic 842 resulted in the recording of assets and lease liabilities of approximately $12.4 million and $12.4 million, respectively, as of January 1, 2021. The adoption did not have a material impact on our Condensed Consolidated Statements of Operations or Cash Flows. Components of Lease Expense The components of lease expense are as follows: (in $000s) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 Operating lease cost $ 2,036 $ 4,824 Finance lease cost: Amortization of lease assets $ 800 $ 2,158 Interest on lease liabilities $ 281 $ 876 Short-term lease cost $ 1,111 $ 3,034 Sublease income $ (2,219) $ (4,787) Total lease cost $ 2,009 $ 6,105 Supplemental Cash Flow Information Supplemental cash flow information related to leases is as follows: (in $000s) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows - payments on operating leases $ 2,036 $ 4,824 Operating cash outflows - interest payments on finance leases $ 281 $ 876 Finance cash outflows - payments on finance lease obligations $ 1,803 $ 4,382 Supplemental Balance Sheet Information Supplemental balance sheet information related to leases is as follows: (in $000s) September 30, 2021 Operating leases Operating lease assets $ 37,117 Operating lease liabilities - current $ (5,006) Operating lease liabilities - noncurrent (32,425) Total operating lease liabilities $ (37,431) Finance leases Property and equipment $ 3,535 Accumulated depreciation (62) Property and equipment, net $ 3,473 Rental equipment $ 18,715 Accumulated depreciation (8,083) Rental equipment, net $ 10,632 Future Maturities and Payment Information Maturities of lease liabilities as of September 30, 2021 are as follows: (in $000s) Operating Leases Finance Leases 2021 (October 1 - December 31) $ 1,807 $ 1,067 2022 6,857 4,326 2023 6,521 1,901 2024 5,765 3,224 2025 5,051 9 Thereafter 24,820 — Total lease payments 50,821 10,527 Less: imputed interest (13,390) (665) Total present value of lease liabilities $ 37,431 $ 9,862 The weighted average discount rate under operating and finance leases was 6% and 9%, respectively, as of September 30, 2021. The weighted average remaining lease term under operating and finance leases was 9.4 years and 1.9 years, respectively, as of September 30, 2021. |
Leases as Lessee | Note 10: Leases as Lessee Our operating lease agreements primarily consist of real estate property, such as warehouses and office buildings, in addition to personal property, such as vehicles and equipment. The majority of our lease arrangements are comprised of fixed payments and a limited number of these arrangements include a variable payment component based on certain index fluctuations. We also lease certain rental equipment under master lease agreements, which are classified as finance leases. The master lease agreements are typically for a five-year period, at the end of which we are entitled to return or purchase the equipment, or extend the life of the lease. The adoption of Topic 842 resulted in the recording of assets and lease liabilities of approximately $12.4 million and $12.4 million, respectively, as of January 1, 2021. The adoption did not have a material impact on our Condensed Consolidated Statements of Operations or Cash Flows. Components of Lease Expense The components of lease expense are as follows: (in $000s) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 Operating lease cost $ 2,036 $ 4,824 Finance lease cost: Amortization of lease assets $ 800 $ 2,158 Interest on lease liabilities $ 281 $ 876 Short-term lease cost $ 1,111 $ 3,034 Sublease income $ (2,219) $ (4,787) Total lease cost $ 2,009 $ 6,105 Supplemental Cash Flow Information Supplemental cash flow information related to leases is as follows: (in $000s) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows - payments on operating leases $ 2,036 $ 4,824 Operating cash outflows - interest payments on finance leases $ 281 $ 876 Finance cash outflows - payments on finance lease obligations $ 1,803 $ 4,382 Supplemental Balance Sheet Information Supplemental balance sheet information related to leases is as follows: (in $000s) September 30, 2021 Operating leases Operating lease assets $ 37,117 Operating lease liabilities - current $ (5,006) Operating lease liabilities - noncurrent (32,425) Total operating lease liabilities $ (37,431) Finance leases Property and equipment $ 3,535 Accumulated depreciation (62) Property and equipment, net $ 3,473 Rental equipment $ 18,715 Accumulated depreciation (8,083) Rental equipment, net $ 10,632 Future Maturities and Payment Information Maturities of lease liabilities as of September 30, 2021 are as follows: (in $000s) Operating Leases Finance Leases 2021 (October 1 - December 31) $ 1,807 $ 1,067 2022 6,857 4,326 2023 6,521 1,901 2024 5,765 3,224 2025 5,051 9 Thereafter 24,820 — Total lease payments 50,821 10,527 Less: imputed interest (13,390) (665) Total present value of lease liabilities $ 37,431 $ 9,862 The weighted average discount rate under operating and finance leases was 6% and 9%, respectively, as of September 30, 2021. The weighted average remaining lease term under operating and finance leases was 9.4 years and 1.9 years, respectively, as of September 30, 2021. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 11: Goodwill and Intangible Assets Goodwill and intangible assets consisted of the following: (in $000s) Weighted Average Remaining Life (Years) September 30, 2021 December 31, 2020 Goodwill $ 684,796 $ 238,052 Intangible assets: Trade names 16.0 180,780 29,780 Customer relationships 26.0 202,170 52,170 Non-compete agreements and other 0.5 520 520 Intangible assets 383,470 82,470 Less: accumulated amortization (42,310) (14,891) Intangible assets, net $ 341,160 $ 67,579 Supplemental Goodwill Information We recognize goodwill when the purchase price of an acquired business exceeds the fair value of net assets acquired. The increase in goodwill as of September 30, 2021 compared to December 31, 2020 relates to the Acquisition of Custom Truck LP (see Note 3: Business Combination, for additional information). Goodwill is not amortized for financial reporting purposes. We perform our goodwill impairment analysis annually on October 1 or more frequently if an event or circumstance (such as a significant adverse change in the business climate, operating performance metrics, or legal factors) indicates that an impairment may have occurred. Goodwill is impaired when its carrying value exceeds its implied fair value. Recognized goodwill is assigned to our reporting units using an income approach based on the present value of estimated future cash flows. Additionally, intangible assets with indefinite lives that are not amortized are tested annually for impairment on October 1, or more frequently if an event or circumstance indicates that an impairment loss may have occurred. During the three and nine months ended September 30, 2021, there were no triggering events necessitating an interim impairment test of goodwill. As discussed in Note 3: Business Combination, the Company acquired Custom Truck LP on April 1, 2021 and the allocation of the purchase price is preliminary. Accordingly, goodwill has been assigned to our ERS segment, TES segment and APS segment on a preliminary basis. The preliminary goodwill allocation by segment as of September 30, 2021 was: $484.3 million to the ERS segment, $163.3 million to the TES segment and $37.2 million to the APS segment. As of December 31, 2020, goodwill related to our ERS segment and APS segment was $229.4 million and $8.7 million, respectively. Supplemental Intangible Asset Information Amortization Expense As of September 30, 2021, estimated amortization expense for intangible assets for each of the next five years and thereafter is estimated to be as follows: (in $000s) Amortization 2021 (October 1 - December 31) $ 18,912 2022 32,332 2023 25,325 2024 25,314 2025 25,314 Thereafter 213,963 Total estimated future amortization expense $ 341,160 NESCO Trade Name In connection with the Acquisition and the combination of the businesses of Nesco Holdings and Custom Truck LP, the Company’s products and services will no longer be marketed under the “NESCO” brand. Accordingly, management began the process of discontinuing the brand, which includes the use of trade names such as, “NESCO Specialty” and “NESCO Sales and Rentals.” Prior to the Acquisition, the trade name intangible asset was carried as an indefinite-lived intangible asset. As a result of the decommissioning of the brand, we determined that the trade name intangible asset should be reclassified to a definite-lived asset. Accordingly, the |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Note 12: Earnings (Loss) Per Share Diluted net earnings (loss) per share includes the effects of potentially dilutive shares of Common Stock. Potentially dilutive effects include the exercise of warrants, contingently issuable shares, and share-based compensation, all of which have been excluded from the calculation of diluted net earnings (loss) per share for the applicable periods because earnings are at a net loss and therefore, the potentially dilutive effect would be anti-dilutive. Our potentially dilutive shares aggregated 25.0 million and 26.0 million for the three and nine months ended September 30, 2021, respectively. For the three and nine months ended September 30, 2020, our potentially dilutive shares aggregated 27.8 million and 27.3 million, respectively. The following tables set forth the computation of basic and dilutive loss per share: Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 (in $000s, except share and per share data) Net Income (Loss) Weighted Average Shares Per Share Amount Net Income (Loss) Weighted Average Shares Per Share Amount Basic earnings (loss) per share $ (20,525) 244,292,357 $ (0.08) $ 15,173 49,033,903 $ 0.31 Dilutive common share equivalents — — — 273,908 Diluted earnings (loss) per share $ (20,525) 244,292,357 $ (0.08) $ 15,173 49,307,811 $ 0.31 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 (in $000s, except share and per share data) Net Income (Loss) Weighted Average Shares Per Share Amount Net Income (Loss) Weighted Average Shares Per Share Amount Basic earnings (loss) per share $ (177,788) 179,785,056 $ (0.99) $ (13,946) 49,033,903 $ (0.28) Dilutive common share equivalents — — — — Diluted earnings (loss) per share $ (177,788) 179,785,056 $ (0.99) $ (13,946) 49,033,903 $ (0.28) |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Note 13: Share-Based Compensation On July 8, 2021, the Company's stockholders approved the Amended and Restated 2019 Omnibus Incentive Plan, which increased the total authorized shares of Common Stock to 14,650,000 (the “Plan”). The purpose of the Plan is to provide the Company and its subsidiaries’ officers, directors, employees and consultants who, by their position, ability and diligence, are able to make important contributions to the Company’s growth and profitability, with an incentive to assist the Company in achieving its long-term corporate objectives, to attract and retain executive officers and other employees of outstanding competence and to provide such persons with an opportunity to acquire an equity interest in the Company. To accomplish these objectives, the Plan provides for awards of equity-based incentives through granting of restricted stock units, stock options, stock appreciation rights and other stock or cash-based awards. At September 30, 2021, there were approximately 6,743,800 shares in the share reserve still available for issuance. The Company records share-based compensation awards using a fair value method and recognizes compensation expense for an amount equal to the fair value of the share-based payment issued in its financial statements. The Company’s share-based compensation plans include programs for stock options, restricted stock units (“RSUs”), performance share units (“PSUs”) and deferred compensation. Compensation expense for equity awards recognized in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations was $4.9 million and $12.7 million for the three and nine months ended September 30, 2021, respectively ($0.7 million and $1.7 million for the for the three and nine months ended September 30, 2020, respectively). Restricted Stock Units and Performance Stock Units The following table summarizes the Company’s RSU and PSU award activity: RSUs PSUs Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Outstanding, December 31, 2020 1,177,592 $ 4.05 — $ — Granted 2,227,692 $ 9.57 2,135,000 $ 5.74 Forfeited/cancelled/expired (24,300) $ 2.13 — $ — Vested (988,910) $ 4.40 — $ — Outstanding, September 30, 2021 2,392,074 $ 9.07 2,135,000 $ 5.74 At September 30, 2021, unrecognized compensation expense related to these awards was $28.6 million and is expected to be recognized over a remaining period of approximately 3.1 years. Stock Options The following table summarizes the Company’s stock option activity: Number of Options Weighted Average Exercise Price Outstanding stock options, December 31, 2020 2,391,916 $ 6.43 Granted — $ — Exercised (460,000) $ 5.08 Forfeited/cancelled/expired (6,700) $ 3.81 Outstanding stock options, September 30, 2021 1,925,216 $ 6.76 At September 30, 2021, unrecognized compensation expense related to stock options was $0.1 million and is expected to be recognized over a remaining period of approximately 2.1 years. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 14: Fair Value Measurements FASB accounting standards provide a comprehensive framework for measuring fair value and sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. Levels within the hierarchy are defined as follows: • Level 1 – Unadjusted quoted prices for identical assets and liabilities in active markets; • Level 2 – Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable for the asset or liability, either directly or indirectly; and • Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The following table sets forth the carrying values (exclusive of deferred financing fees) and fair values of our financial liabilities: Carrying Value Fair Value (in $000s) Level 1 Level 2 Level 3 September 30, 2021 ABL Facility $ 405,000 $ — $ 405,000 $ — 2029 Secured Notes 920,000 — 949,900 — Other notes payable 37,934 — 37,934 — Derivative and warrant liabilities 25,874 — 4,352 18,902 December 31, 2020 2019 Credit Facility $ 250,971 $ — $ 250,971 $ — Senior Secured Notes due 2024 475,000 — 519,379 — Other notes payable 2,379 — 2,379 — Derivative and warrant liabilities 7,012 — 7,012 — |
Financial Instruments
Financial Instruments | May 01, 2017 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial Instruments | Note 15: Financial Instruments In the normal course of business, the Company uses various financial instruments, including derivative instruments, to manage the risks associated with interest rate exposure. These financial instruments are not used for trading or speculative purposes. Warrants During the quarter ended March 31, 2021, the Company identified an immaterial error in its historical accounting for certain of its issued and outstanding warrants, as further described below. The Company’s predecessor, Capitol Investment Corp. IV, an entity formed on May 1, 2017, as a special purpose acquisition company (“Capitol” or the “SPAC”), issued warrants for the purchase of approximately 7.5 million shares of the Company’s Common Stock pursuant to a private placement agreement (the “Non-Public Warrants”). In connection with the SPAC’s initial public offering, warrants for the purchase of approximately 13.4 million shares of the Company’s Common Stock were issued to public investors (the “Public Warrants”). The Public Warrants together with the Non-Public Warrants may hereafter be referred to collectively as the “Warrants.” The Warrants provide for the purchase of approximately 20.9 million shares of the Company’s Common Stock. Each Warrant entitles the holder to purchase one share of Common Stock at a price of $11.50 per share, subject to certain adjustments. The Warrants are currently exercisable and terminate on the earlier to occur of (i) July 31, 2024, and (ii) the redemption date. The Company may redeem the Public Warrants at a price of $0.01 per Public Warrant upon providing 30-days’ notice, only in the event that the last sale price of the Common Stock is at least $18.00 per share for any 20 trading days within a 30-trading day period ending on the third day prior to the date on which notice of redemption is given. If the Company elects to redeem the Public Warrants as described above, the Public Warrant may be exercised on a “cashless basis.” The redemption rights do not apply to the Non-Public Warrants if, at the time of the redemption, such Non-Public Warrants continue to be held by the initial holders as of July 31, 2019, or their affiliates or permitted transferees; however, once such Non-Public Warrants are transferred (other than to an affiliate or permitted transferee), the Company may redeem those Non-Public Warrants that have been transferred in a manner similar to any Public Warrants. In periods prior to the quarter ended March 31, 2021, the Company accounted for both the Public Warrants and Non-Public Warrants as freestanding equity-classified instruments. On April 12, 2021, the Securities and Exchange Commission issued Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (the “Statement”). The Statement indicated that, if warrant agreements can provide for potential changes to the settlement amounts that depend on the characteristics of the holder of the warrant, such provisions would preclude the warrants from being indexed to the entity’s stock, and, therefore, result in classification of the warrants as a liability measured at fair value, with changes in fair value each period reported in earnings. The Company’s warrant agreement provides for a different settlement amount in a cashless exercise for holders of the Non-Public Warrants upon exercise at any time as compared to holders of the Public Warrants upon the Company's election to redeem; therefore, the Non-Public Warrants are precluded from being indexed to the Company’s stock and should have been classified as liabilities. The Public Warrants continue to be accounted for as freestanding equity-classified instruments because the Company has the ability to settle with holders of the Public Warrants either by net-share or physical settlement. Because the Non-Public Warrants do not meet the “indexed to the entity’s stock” condition, they should have been accounted for as a derivative liability and remeasured at their estimated fair value each period. The change in fair value each period should have been reported in the Company’s consolidated statement of operations. The effect of correcting the accounting for the Non-Public Warrants from an equity-classified instrument to a liability instrument resulted in the reclassification of $10.3 million from Additional paid-in capital to Derivative and warrant liabilities on the Company’s consolidated balance sheet as of January 1, 2021, which represents the initial value of the Non-Public Warrants that should have been recognized on July 31, 2019, the date on which the Company merged with the SPAC. For the three and nine months ended September 30, 2021, the Company recognized an expense of $(0.9) million and $8.1 million, respectively, in Other (income) expense in its consolidated statement of operations related to the fair value remeasurement. Included in the remeasurement amount is an income amount of $1.4 million in the nine-month period ended September 30, 2021 representing the net change in the fair value of the Non-Public Warrants from July 31, 2019 (the issue date of the Non-Public Warrants) to December 31, 2019, of $6.1 million in income, partially offset by $4.7 million in expense from the change in fair value for the year ended December 31, 2020. In evaluating whether the Company’s previously issued consolidated financial statements were materially misstated for the interim or annual periods prior to January 1, 2021, the Company applied the guidance of ASC 250, Accounting Changes and Error Corrections , SEC Staff Accounting Bulletin (“SAB”) Topic 1.M, Assessing Materiality and SAB Topic 1.N, E , and concluded that the effect of the error on prior period financial statements was not material. The Company also evaluated if the cumulative effect of correcting the prior period misstatement in its consolidated financial statements would be material to either the quarter, or annual period, in the nine months ended September 30, 2021, and the forecasted year ending December 31, 2021, respectively. The guidance states that prior-year misstatements which, if corrected in the current year would materially misstate the current year’s financial statements, must be corrected by adjusting prior year financial statements, even though such correction previously was and continues to be immaterial to the prior-year financial statements. The Company concluded the impact of correcting the accounting for the Non-Public Warrants on the Company’s consolidated statement of operations for the nine-months ended September 30, 2021, and the forecasted year ending December 31, 2021, is immaterial. Derivatives Not Designated as Hedges On July 17, 2019, we entered into an interest rate collar (the “Collar”) agreement to mitigate the risk of changes in the interest rate paid during the contract period for $170.0 million of the Company’s variable rate loans. Under the Collar, we are required to pay the counterparty to the agreement an amount equal to the difference between a monthly LIBOR-based interest rate and a defined interest rate floor; conversely, we are entitled to receive from the counterparty an amount equal to the excess of a LIBOR-based interest rate and a defined interest rate cap. The required payments due to or due from the counterparty are calculated by applying the interest rate differential to the notional amount ($170.0 million) and are determined monthly through July 31, 2024. The Collar expires in July 2024 and has not been designated as a cash flow hedge. The Collar is carried at fair value and reported in Derivative and warrant liabilities on the Company's Condensed Consolidated Balance Sheets ($4.4 million and $7.0 million as of September 30, 2021 and December 31, 2020, respectively) as a Level 2 measurement (see Note 14: Fair Value Measurements). The change in fair value of the Collar is recognized in Other expense (income), net in our Condensed Consolidated Statements of Operations and totaled ($0.5 million) and ($0.6 million) in the three months ended September 30, 2021 and 2020, respectively, and ($2.7 million) and $6.1 million in the nine months ended September 30, 2021 and 2020, respectively. The counterparty to the Collar is an investment grade major international financial institution. The Company could be exposed to losses in the event of nonperformance by the counterparty; however, the credit rating and the concentration of risk in this financial institution are monitored on a continuous basis and present no significant credit risk to the Company. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 16: Income Taxes We are subject to taxation in all jurisdictions in which we operate within the United States and Canada. Substantially all of our income before income taxes for all periods presented is U.S. sourced. As a result of the Acquisition, the Company expects to be able to amortize for U.S. tax purposes, a portion of the goodwill recognized from the Acquisition. For U.S. income taxes, the Acquisition was partly a taxable acquisition and partly a non-taxable acquisition. Accordingly, the taxable component is expected to give rise to increases in the tax bases for a portion of the net assets acquired, while the non-taxable component will result in a carryforward of pre-acquisition tax bases (referred as, “carryover basis”) for a portion of the net assets acquired. The differential between the fair values of |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 17: Commitments and Contingencies We record a liability when we believe that it is both probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. We review these provisions at least quarterly and adjust these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Legal Matters In the normal course of business, there are various claims in process, matters in litigation, and other contingencies. At this time, no claims of these types, certain of which are covered by insurance policies, have had a material effect on the Company. For matters pertaining to the pre-Acquisition activities of Custom Truck LP, Sellers have agreed to indemnify Nesco and Buyer for losses arising out of the breach of Sellers’ pre-closing covenants in the Purchase Agreement and certain indemnified tax matters, with recourse limited to a $10 million and $8.5 million escrow account, respectively. From time to time, the Company is audited by state and local taxing authorities. These audits typically focus on the Company’s withholding of state-specific sales tax and rental-related taxes. Custom Truck LP’s withholdings of federal excise taxes for each of the four quarterly periods during 2015 are currently under audit by the Internal Revenue Service (the “IRS”). The IRS issued an assessment on October 28, 2020 in an aggregate amount of $2.4 million for the 2015 periods, alleging that certain types of sold equipment are not eligible for the Mobile Machinery Exemption set forth in the Code. An appeal was filed on January 28, 2021. Based on management’s understanding of the facts and circumstances, including the relevant provisions of the Code, and historical precedent, including previous successful appeals of similar assessments in prior years, management does not believe the likelihood of a loss resulting from the IRS assessment to be probable at this time. While it is not possible to predict the outcome of the foregoing matters with certainty, it is the opinion of management, that the final outcome of these matters will not have a material effect on the Company’s consolidated financial condition, results of operations and cash flows. Purchase Commitments |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 18: Related Party Transactions The Company has transactions with related parties as summarized below. Rentals and Sales — Energy Capital Partners (“ECP”), a stockholder in the Company, and their affiliates have ownership interests in a broad range of companies. The Company has entered into commercial transactions with subsidiaries of PLH Group, Inc., a company partially owned by an affiliate of ECP. The Company rents and sells equipment and provides services to R&M Equipment Rental, a business partially owned by members of the Company’s management. The Company also rents equipment and purchases inventory, from R&M Equipment Rental. During the three months ended September 30, 2021, the Company purchased approximately $19.4 million in rental equipment from R&M Equipment Rental. Facilities Leases and Other — The Company leases certain facilities, as well as purchases aircraft charter services, from entities owned by members of the Company’s management and their immediate families. Payments to the related parties for these transactions are immaterial. Rent and air travel expenses are recorded in selling, general, and administrative expenses. Management Fees — The Company entered into the Corporate Advisory Services Agreement with Platinum effective as of the Closing Date, under which management fees are payable to Platinum quarterly. A summary of the transactions with the foregoing related parties included in the Condensed Consolidated Statements of Operations is as follows: Three Months Ended September 30, Nine Months Ended September 30, (in $000s) 2021 2020 2021 2020 Total revenues from transactions with related parties $ 6,594 $ 6,022 $ 16,332 $ 5,181 Expenses incurred from transactions with related parties included in cost of revenue $ 451 $ — $ 1,625 $ — Expenses incurred from transactions with related parties included in operating expenses $ 1,497 $ — $ 3,127 $ — Amounts receivable from/payable to related parties included in the Condensed Consolidated Balance Sheets are as follows: (in $000s) September 30, 2021 December 31, 2020 Accounts receivable from related parties $ 6,422 $ 3,506 Accounts payable to related parties $ 2,500 $ — |
Segments
Segments | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Segments | Note 19: Segments Our operations are primarily organized and managed by operating segment. Operating segment performance and resource allocations are primarily based on gross profit. The accounting policies of the reportable segments are consistent with those described in Note 2: Summary of Significant Accounting Policies to the financial statements. Intersegment sales and any related profits are eliminated in consolidation. In the second quarter of 2021, we changed our reportable segments, consistent with how we currently manage the business, in three reporting segments: Equipment Rental Solutions (“ERS”), Truck and Equipment Sales (“TES”) and Aftermarket Parts and Services (“APS”). The segment operations are described in Note 1: Business and Organization to these financial statements. Segment information presented below has been adjusted for all prior periods, consistent with the current reportable segment presentation. The Company’s segment results for the three- and nine-month periods ended September 30, 2021 and 2020 are presented in the tables below: Three Months Ended September 30, Three Months Ended September 30, 2021 2020 (in $000s) ERS TES APS Total ERS TES APS Total Revenue: Rental $ 105,124 $ — $ 3,984 $ 109,108 $ 42,615 $ — $ 3,510 $ 46,125 Equipment sales 27,101 190,062 — 217,163 5,510 6,048 — 11,558 Parts and services — — 31,034 31,034 — — 11,577 11,577 Total revenue 132,225 190,062 35,018 357,305 48,125 6,048 15,087 69,260 Cost of revenue: Rentals/parts and services 24,622 — 25,287 49,909 12,742 — 10,820 23,562 Equipment sales 19,546 172,445 — 191,991 5,190 5,410 — 10,600 Depreciation of rental equipment 49,125 — 1,028 50,153 18,530 — 937 19,467 Total cost of revenue 93,293 172,445 26,315 292,053 36,462 5,410 11,757 53,629 Gross profit $ 38,932 $ 17,617 $ 8,703 $ 65,252 $ 11,663 $ 638 $ 3,330 $ 15,631 Nine Months Ended September 30, Nine Months Ended September 30, 2021 2020 (in $000s) ERS TES APS Total ERS TES APS Total Revenue: Rental $ 244,935 $ — $ 11,001 $ 255,936 $ 132,693 $ — $ 11,410 $ 144,103 Equipment sales 70,141 412,684 — 482,825 19,585 19,043 — 38,628 Parts and services — — 71,954 71,954 — — 36,753 36,753 Total revenue 315,076 412,684 82,955 810,715 152,278 19,043 48,163 219,484 Cost of revenue: Rentals/parts and services 67,683 — 64,700 132,383 38,916 — 34,622 73,538 Equipment sales 60,815 374,180 — 434,995 16,454 16,841 — 33,295 Depreciation of rental equipment 108,202 — 2,974 111,176 56,065 — 3,210 59,275 Total cost of revenue 236,700 374,180 67,674 678,554 111,435 16,841 37,832 166,108 Gross profit $ 78,376 $ 38,504 $ 15,281 $ 132,161 $ 40,843 $ 2,202 $ 10,331 $ 53,376 Total assets by operating segment are not disclosed herein because asset by operating segment data is not reviewed by the chief operating decision-maker (“CODM”) to assess performance and allocate resources. Gross profit is the primary operating result whereby our segments are evaluated for performance and resource allocation. The following table presents a reconciliation of consolidated gross profit to consolidated loss before income taxes: Three Months Ended September 30, Nine Months Ended September 30, (in $000s) 2021 2020 2021 2020 Gross profit $ 65,252 $ 15,631 $ 132,161 $ 53,376 Selling, general and administrative 48,625 9,319 111,939 33,512 Amortization 13,334 771 27,420 2,234 Non-rental depreciation 873 21 1,845 74 Transaction expenses and other 7,742 561 42,765 3,282 Loss on extinguishment of debt — — 61,695 — Interest expense, net 19,045 15,853 53,674 47,816 Financing and other expense (income) (3,656) (559) 143 6,245 Loss before income taxes $ (20,711) $ (10,335) $ (167,320) $ (39,787) The following table presents total assets by country: (in $000s) September 30, 2021 December 31, 2020 Assets: United States $ 2,651,901 $ 762,696 Canada 29,320 5,447 Mexico — 261 $ 2,681,221 $ 768,404 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The preparation of financial statements in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) requires that these Condensed Consolidated Financial Statements and most of the disclosures in these Notes be presented on a historical basis, as of or for the current interim period ended or comparable prior periods. The consolidated financial position and results of operations and cash flows (including segment information) presented herein include those of Custom Truck LP as of September 30, 2021 and since the date of the Acquisition. Financial information presented for periods prior to the Acquisition represent those of Nesco Holdings and its subsidiaries. The accompanying interim statements of the Company have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and the Condensed Consolidated Balance Sheet at December 31, 2020, has been derived from the audited consolidated financial statements of Nesco Holdings at that date. Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments and disclosures necessary for a fair statement of these interim statements, have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year or for any other period. These interim statements should be read in conjunction with the Nesco Holdings audited consolidated financial statements included in the Nesco Holdings Annual Report on Form 10-K for the year ended December 31, 2020. |
Use of Estimates | Use of Estimates We prepare our consolidated financial statements in conformity with GAAP, which requires us to use judgment to make estimates that directly affect the amounts reported in our consolidated financial statements and accompanying notes. Significant estimates are used for items including, but not limited to, the useful lives and residual values of our rental equipment, business combinations, and determining the valuation allowance related to deferred income taxes. In addition, estimates are used to test both long-lived assets, goodwill, and indefinite-lived assets for impairment, and to determine the fair value of impaired assets, if any impairment exists. These estimates are based on our historical experience and on various other assumptions we believe to be reasonable under the circumstances. We review our estimates on an ongoing basis using information currently available, and we revise our recorded estimates as updated information becomes available, facts and circumstances change, or actual amounts become determinable. Actual results could differ from our estimates. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance to account for leases (“Topic 842”). This guidance revised prior practice related to accounting for leases under Topic 840, for both lessees and lessors. Topic 842 requires that lessees recognize: (a) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Effective January 1, 2021, the Company adopted Topic 842. In connection with the adoption of Topic 842, the Company recognized lease liabilities and ROU assets as of January 1, 2021, as further described in Note 10: Leases as Lessee. The comparative prior period financial statement information has not been restated and continues to be reported under the accounting standards in effect for those periods (e.g., under Topic 840). Additionally, pursuant to Topic 842, accounting and recognition for leases qualifying as finance leases is unchanged from the prior accounting and recognition requirements under Topic 840, which referred to such leases as capital leases. As of January 1, 2021, we had capital lease obligations of approximately $10.5 million which became “finance leases” under Topic 842. The adoption of Topic 842 did not have a significant impact on the recognition of leasing revenue; however, pursuant to the requirements of Topic 842, the Company records changes in estimated collectability of operating lease trade receivables directly against rental revenue. Such amounts were previously classified as selling, general and administrative expenses. The Company elected the package of practical expedients permitted under the transition guidance within the new standard that allows it to not reassess: (a) whether any expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases and (c) initial direct costs for any expired or existing leases. Historical financial information was not updated, and the financial disclosures required under Topic 842 are not provided for periods prior to January 1, 2021. Measurement of Current Expected Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments , which amended ASC Topic No. 326 (“Topic 326”). Topic 326 follows an impairment model (known as the current expected credit loss, or “CECL,” model) that is based on expected losses rather than incurred losses. Under the CECL model, we estimate credit losses over the contractual term of our non-operating lease trade receivables and our financing receivables based on relevant historical information from historical experience and adjusted for current conditions and reasonable and supportable forecasts that affect collectability. Credit losses relating to these financial assets are recorded through the allowance for doubtful accounts. Topic 326 was adopted effective January 1, 2021, and the effect of this guidance was immaterial to the Company’s consolidated results of operations, financial position and cash flows. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment , intended to simplify the subsequent accounting for goodwill acquired in a business combination. Prior guidance required utilizing a two-step process to review goodwill for impairment. A second step was required if there was an indication that an impairment may exist, and the second step required calculating the potential impairment by comparing the implied fair value of a reporting unit’s goodwill (as if purchase accounting were performed on the testing date) to the carrying amount of the goodwill. The new guidance eliminates the second step from the goodwill impairment test. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value (although the loss should not exceed the total amount of goodwill allocated to the reporting unit). We adopted this guidance effective January 1, 2021; however, as discussed in Note 11: Goodwill and Intangible Assets, there was no impairment of goodwill in the three and nine months ended September 30, 2021 and 2020. Accordingly, the adoption of this standard did not have any impact on our consolidated financial statements. |
Cash and Cash Equivalents | Cash and Cash EquivalentsCash and cash equivalents consists of cash and short-term investments with remaining maturities of three months or less when acquired. The carrying amount of cash and cash equivalents approximates its fair value. The Company maintains deposits at financial institutions in excess of federally insured limits. |
Revenue Recognition | Revenue Recognition We recognize revenue in accordance with two different accounting standards: (1) Topic 606 and Topic 842 for periods after January 1, 2021, and (2) Topic 606 and Topic 840, for periods prior to January 1, 2021. Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A “performance obligation” is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account under Topic 606. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for such products or services. Our contracts with customers generally do not include multiple performance obligations. Rental Revenue . Rental revenue is primarily comprised of revenues from rental agreements and freight charges billed to customers. We also charge customers for damaged equipment, which is assessed and billed at the time a rental asset is returned to the Company and recorded within Parts Sales and Services revenue. In connection with our adoption of Topic 842, beginning January 1, 2021, we record changes in the estimated collectability of operating lease trade receivables against rental revenue. Such amounts were previously classified as selling, general and administrative expenses. Our rental contracts are for various equipment, aftermarket parts and services under 28-day or monthly agreements which include automatic renewal provisions. The majority of our rental payments are due upon receipt, with a majority billed at the end of each 28-day or monthly period. Revenue is recognized ratably over the rental agreement period and in accordance with Topic 842, and, for periods prior to January 1, 2021, Topic 840. Unearned revenue is reported in deferred revenue and customer deposits in our consolidated balance sheets. We require our rental customers to maintain liability and property insurance covering the units during the rental term and to indemnify us from losses caused by the negligence of the customer, their employees or contractors. We also provide rental customers the opportunity to enter into contracts containing a rental purchase option (“RPO”). The RPO allows the customer to earn credit towards the purchase price of the leased equipment. The earned credit is based on rental payments made. Certain leases containing these purchase options are classified as sales-type leases because the RPO purchase price related to the leased equipment is considered to be a “bargain purchase option” in the lease. Revenue on these lease contracts is recognized at the point in time when the customer’s net purchase price for the equipment meets or falls below the fair value of the equipment. Revenue from these leases is recorded as equipment sales in the Condensed Consolidated Statements of Operations. Equipment Sales. We sell both new and used equipment. The contractual sales price for each individual product represents the standalone selling price. Our used equipment is of a sufficiently unique nature, based on specific characteristics such as its age and usage, that it does not have an observable standalone selling price. Equipment sales revenue is recognized when equipment is delivered, which is when the transfer of control is considered passed to the customer. Payment is usually due within 30 days subsequent to transfer of control of the asset. There are no rights of return or warranties offered on equipment sales. Parts Sales and Services. We sell aftermarket parts and services. We derive our services revenue primarily from maintenance, repair and upfit services on heavy-duty trucks and cranes. Revenue from these services includes parts sales needed to complete the service work. We recognize services revenue as the service work is completed. We record revenue on a point in time basis as parts are delivered. The amount of consideration we receive for parts is based upon a list price net of discounts and incentives, and the impact of such variable consideration is factored into the amount of revenue we recognize at any point in time. The amount of consideration received for services is based upon labor hours expended and parts utilized to perform and complete the necessary services for our customers. There are no rights of return or warranties offered on parts sales. Payment is usually due and collected within 30 days subsequent to delivery of parts or performance of service. We record sales tax billed to customers and remitted to governmental authorities on a net basis and, consequently, these amounts are excluded from revenues and expenses. Sales taxes are recorded as accrued expenses when billed. |
Trade Receivables and Allowance for Credit Losses | Trade Receivables and Allowance for Credit Losses We are exposed to credit losses from trade receivables generated through our leasing, sales and service businesses. We assess each customer’s ability to pay for the products and services by conducting a credit review. The credit review considers expected billing exposure and timing for payment and the customer’s established credit rating. We perform a credit review of new customers at inception of the customer relationship and, for existing customers, when the customer transacts new leases or product orders after a period of dormancy. We also consider contract terms and conditions, country risk and business strategy in the evaluation. We monitor ongoing credit exposure through an active review of customer balances against contract terms and due dates. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. The allowances for credit losses reflect the estimate of the amount of receivables that management assesses will be unable to be collected based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. This estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase or decrease the allowances. We review the adequacy of the allowance on a quarterly basis. The allowance for doubtful accounts was $13.2 million and $6.4 million as of September 30, 2021 and December 31, 2020, respectively, and is included in accounts receivable, net on our Condensed Consolidated Balance Sheets. In accordance with the adoption of Topic 842, effective January 1, 2021, specifically identifiable lease revenue receivables not deemed probable of collection are recorded as a reduction of revenue. The remaining provision for credit losses, which relates to product sales and services, is recorded in selling, general and administrative expense. For periods prior to January 1, 2021, the entire provision for credit losses was recorded in selling, general and administrative expense. |
Inventory | Inventory Inventory is carried at the lower of cost or net realizable value. The Company periodically reviews inventories on hand and maintains reserves for slow-moving, excess, or obsolete inventories. |
Rental and Property and Equipment | Rental and Property and Equipment Rental Equipment Rental equipment is primarily comprised of the cost of truck-mounted aerial lifts, cranes, trucks, trailers, digger derricks, line equipment, cranes, pressure diggers, underground and other machinery and equipment. The rental equipment we purchase is recorded at cost and depreciated over the estimated rentable life of the equipment using the straight-line method over useful lives, depending on product categories, ranging from 5 to 7 years, to an estimated residual value, depending on product categories, ranging from 15% to 35%. Depreciation of rental equipment commences when a rental unit is placed into the rental fleet and becomes available to rent and the cost is depreciated whether or not the equipment is on rent. We reevaluate the estimated rentable life as rental equipment is purchased, estimating the period that the asset will be held, considering factors such as historical rental activity and expectations of future rental activity. We also reevaluate the estimated residual values of the applicable rental equipment. The residual value of equipment is affected by factors that include equipment age, amount of usage and market conditions. Market conditions for used equipment sales can also be affected by external factors such as the economy, natural disasters, fuel prices, supply of similar used equipment, the market price for similar new equipment and incentives offered by manufacturers of new equipment. These factors are considered when estimating future residual values and depreciation periods. Expenditures for repair and maintenance that extend the useful life of the equipment and are necessary to keep an equipment unit in rentable condition are capitalized and depreciated over the estimated remaining useful life of the equipment, which is the period the repair and maintenance is expected to provide future economic benefit. When making repairs, we dispose of damaged and replaced components at their net carrying values. The cost of these disposed components is expensed as depreciation in the Condensed Consolidated Statements of Operations. The cost of routine and recurring maintenance activities related to the rental fleet are charged to expense as incurred. Property and Equipment Property and equipment is primarily comprised of land, buildings and improvements, machinery and equipment, and vehicles, and is carried at cost, net of accumulated depreciation. Depreciation is provided using the straight-line method based on useful lives ranging from four |
Cloud Computing Arrangement Implementation Costs | Cloud Computing Arrangement Implementation Costs The Company has entered into certain cloud-based hosting agreements that are accounted for as service contracts. For internal-use software obtained through a hosting arrangement that is a service contract, the Company capitalizes certain implementation costs, such as costs incurred to integrate, configure, and customize internal-use software, which are consistent with costs incurred during the application development stage for on-premise software. These capitalized development costs are recorded in other assets on the Condensed Consolidated Balance Sheets. Implementation costs capitalized during the three- and nine-month periods ended September 30, 2021 were $2.7 million and $4.8 million, respectively. Capitalized implementation costs are amortized straight-line over the term of the hosting arrangement plus any reasonably certain renewal periods, which range from three years to 10 years. Amortization expense for these assets is included in selling, general, and administrative expenses in the Condensed Consolidated Statements of Operations. For the three- and nine-month periods ended September 30, 2021, amortization of these costs was not material. |
Leases as Lessee | Leases as Lessee We determine if an arrangement is a lease at inception of an arrangement. Operating and finance lease assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Lease assets represent the Company’s right to use an underlying asset for the lease term, while lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As most leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the lease commencement date, in determining the present value of lease payments. The length of a lease term includes options to extend or terminate the lease when it is reasonably certain that we will exercise those options. The Company made an accounting policy election to not recognize lease assets or liabilities for leases with a term of 12 months or less. Additionally, when accounting for leases, we combine payments for leased assets, related services and other components of a lease. Finally, we apply a portfolio approach to determine the discount rate for leases with similar characteristics. For our leases classified as operating, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus unamortized initial direct costs, plus/(minus) any unamortized prepaid/(accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Summary of Purchase Price | The purchase price has been determined to be as follows: (in $000s, except share and per share data) Common stock issued 20,100,000 Common stock per share price as of April 1, 2021 $ 9.35 Fair value of common stock issued $ 187,935 Cash consideration paid to equity interest holders 790,324 Repayment of debt obligations 552,600 Total purchase price $ 1,530,859 |
Summary of Assets Acquired and Liabilities Assumed | The following table summarizes the April 1, 2021 preliminary fair values of the assets acquired and liabilities assumed. During the three months ended September 30, 2021, the Company identified and recorded certain measurement period adjustments to the preliminary purchase price allocation, which are reflected in the table below. These adjustments were not significant and related primarily to rental equipment and current liabilities. The measurement period adjustments, coupled with the additional cash consideration discussed above, increased goodwill by approximately $4.5 million during the three months ended September 30, 2021. Measurement period adjustments impacting the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended September 30, 2021 were not significant. The final assessment of the fair value of the Custom Truck LP assets acquired and liabilities assumed, including estimates of fair values for inventory, property and equipment, rental equipment, certain intangible assets, deferred income taxes and the final assignment of goodwill to reporting units, was not complete as of September 30, 2021. The preliminary fair values are subject to change pending a final determination of the fair values of assets acquired and liabilities assumed as more information is received about their respective values. (in $000s) Accounts and financing receivables (a) $ 109,681 Inventory 434,328 Other current assets 14,080 Property and equipment (b) 105,113 Rental equipment 567,366 Intangible assets (c) 301,000 Operating lease assets 23,766 Other assets 18,223 Total identifiable assets acquired 1,573,557 Current liabilities (410,276) Long-term debt (28,607) Operating lease liabilities-noncurrent (21,308) Deferred tax and other liabilities (29,251) Total identifiable liabilities assumed (489,442) Total net assets 1,084,115 Goodwill (d) 446,744 Net assets acquired (purchase price) $ 1,530,859 a. The preliminary estimated fair value of accounts and financing receivables is $109.7 million, with the gross contractual amount being $116.7 million. The Company estimates $7.0 million to be uncollectible. b. Acquired property and equipment is primarily comprised of land, buildings and improvements with a preliminary estimated fair value of $67.9 million, and machinery, equipment and vehicles, with a preliminary estimated fair value of $31.1 million, as well as other property with a preliminary estimated fair value of $6.1 million. c. The acquired identified intangible assets are comprised of trade names, with a preliminary estimated fair value of $151.0 million, and customer relationships, with a preliminary estimated fair value of $150.0 million. The weighted average useful lives of the trade names and the customer relationships are estimated to be 15 years and 12 years, respectively. |
Summary of Pro Forma Information | The pro forma information does not reflect any cost savings from operating efficiencies, synergies, or revenue opportunities that could result from the Acquisition. Three Months Ended September 30, Nine Months Ended September 30, (in $000s) 2021 2020 2021 2020 Revenue $ 357,305 $ 302,657 $ 1,127,186 $ 951,002 Net income (loss) $ (14,956) $ 19,296 $ (87,884) $ (104,097) |
Summary of Pro Forma Adjustments | The following presents a summary of the pro forma adjustments that are directly attributable to the business combination: Three Months Ended September 30, Nine Months Ended September 30, (in $000s) 2021 2020 2021 2020 Increase (decrease) net income/loss: Impact of fair value mark-ups on inventory a $ 7,426 $ 725 $ 17,752 $ (14,725) Impact of fair value mark-ups on rental fleet depreciation b — (2,576) (3,817) (6,156) Intangible asset amortization and other depreciation expense c — (3,349) (3,377) (9,609) Transaction expenses d — — 40,277 (40,277) Interest expense and amortization of debt issuance costs e — 7,172 3,919 21,521 Loss on extinguishment of debt refinanced f — — 61,695 (61,695) Income tax expense g (1,857) (493) (29,112) 27,735 a. Represents adjustments to cost of revenue for the run-off of the mark-up in fair value of inventory acquired and applied to the three- and nine-month periods ended September 30, 2020. b. Represents the adjustment for depreciation of rental fleet relating to the estimated increase in the value of the rental fleet to its fair value. c. Represents the differential in amortization and depreciation of non-rental equipment related to the respective fair values of the assets. d. Represents adjustments for transaction expenses that are applied to the nine-month period ended September 30, 2020. e. Reflects the differential in interest expense, inclusive of amortization of capitalized debt issuance costs, related to our debt structure after the Acquisition as though the following had occurred on January 1, 2020: (i) borrowings under the ABL Facility; (ii) repayment of the 2019 Credit Facility; (iii) repayment of the Senior Secured Notes due 2024; (iv) repayment of the Custom Truck LP Credit Facility; and (v) the issuance of the 2029 Secured Notes. f. Represents the adjustment of the loss on extinguishment of debt applied to the nine-month period ended September 30, 2020 as though the repayment of the 2019 Credit Facility and Senior Secured Notes due 2024 had occurred on January 1, 2020. g. Reflects the adjustment to recognize the tax impacts of the pro forma adjustments for which a tax expense is recognized using a statutory tax rate of 25%. This rate may vary from the actual effective rate of the historical and combined businesses. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Revenue by Country | The Company had total revenue in the following geographic areas in the three- and nine-month periods ended September 30, 2021 and 2020: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (in $000s) United States $ 351,391 $ 67,506 $ 798,372 $ 213,576 Canada 5,914 1,754 12,343 4,121 Mexico — — — 1,787 Total revenue $ 357,305 $ 69,260 $ 810,715 $ 219,484 |
Schedule of Revenue Types Based On Accounting Standard | The Company’s revenue by major product and service line for the three- and nine-month periods ended September 30, 2021 and 2020 are presented in the tables below. Three Months Ended September 30, Three Months Ended September 30, 2021 2020 (in $000s) Topic 842 Topic 606 Total Topic 840 Topic 606 Total Rental: Rental $ 105,165 $ — $ 105,165 $ 44,468 $ — $ 44,468 Shipping and handling — 3,943 3,943 — 1,657 1,657 Total rental revenue 105,165 3,943 109,108 44,468 1,657 46,125 Sales and services: Equipment sales 6,905 210,258 217,163 — 11,558 11,558 Parts and services 1,940 29,094 31,034 — 11,577 11,577 Total sales and services 8,845 239,352 248,197 — 23,135 23,135 Total revenue $ 114,010 $ 243,295 $ 357,305 $ 44,468 $ 24,792 $ 69,260 Nine Months Ended September 30, Nine Months Ended September 30, 2021 2020 (in $000s) Topic 842 Topic 606 Total Topic 840 Topic 606 Total Rental: Rental $ 246,064 $ — $ 246,064 $ 138,429 $ — $ 138,429 Shipping and handling — 9,872 9,872 — 5,674 5,674 Total rental revenue 246,064 9,872 255,936 138,429 5,674 144,103 Sales and services: Equipment sales 13,711 469,114 482,825 — 38,628 38,628 Parts and services 4,740 67,214 71,954 — 36,753 36,753 Total sales and services 18,451 536,328 554,779 — 75,381 75,381 Total revenue $ 264,515 $ 546,200 $ 810,715 $ 138,429 $ 81,055 $ 219,484 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consisted of the following: (in $000s) September 30, 2021 December 31, 2020 Whole goods $ 298,968 $ 3,276 Aftermarket parts and services inventory 82,191 28,091 Inventory $ 381,159 $ 31,367 |
Floor Plan Financing (Tables)
Floor Plan Financing (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Summary of Floor Plan Payables | The amounts owed under floor plan payables are summarized as follows (in thousands): (in $000s) September 30, 2021 Trade: Daimler Truck Financial $ 52,817 PACCAR Financial Services 25,688 Trade floor plan payables $ 78,505 Non-trade: PNC Equipment Finance, LLC $ 150,694 Non-trade floor plan payables $ 150,694 |
Rental Equipment (Tables)
Rental Equipment (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Rental Equipment | Rental equipment consisted of the following: (in $000s) September 30, 2021 December 31, 2020 Rental equipment $ 1,261,313 $ 654,547 Less: accumulated depreciation (382,288) (318,735) Rental equipment, net $ 879,025 $ 335,812 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Obligations | Debt obligations and associated interest rates consisted of the following: September 30, December 31, September 30, December 31, (in $000s) 2021 2020 2021 2020 ABL Facility $ 405,000 $ — 1.8% 2019 Credit Facility — 250,971 3.4% 2029 Secured Notes 920,000 — 5.5% Senior Secured Notes due 2024 — 475,000 10.0% Notes payable 37,934 2,379 3.0%-5.0% 5.0% Total debt outstanding 1,362,934 728,350 Deferred finance fees (34,266) (11,212) Net debt 1,328,668 717,138 Less: current maturities (4,997) (1,280) Long-term debt $ 1,323,671 $ 715,858 |
Leases as Lessee (Tables)
Leases as Lessee (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Summary of Lease Expense | The components of lease expense are as follows: (in $000s) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 Operating lease cost $ 2,036 $ 4,824 Finance lease cost: Amortization of lease assets $ 800 $ 2,158 Interest on lease liabilities $ 281 $ 876 Short-term lease cost $ 1,111 $ 3,034 Sublease income $ (2,219) $ (4,787) Total lease cost $ 2,009 $ 6,105 Supplemental cash flow information related to leases is as follows: (in $000s) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows - payments on operating leases $ 2,036 $ 4,824 Operating cash outflows - interest payments on finance leases $ 281 $ 876 Finance cash outflows - payments on finance lease obligations $ 1,803 $ 4,382 |
Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases is as follows: (in $000s) September 30, 2021 Operating leases Operating lease assets $ 37,117 Operating lease liabilities - current $ (5,006) Operating lease liabilities - noncurrent (32,425) Total operating lease liabilities $ (37,431) Finance leases Property and equipment $ 3,535 Accumulated depreciation (62) Property and equipment, net $ 3,473 Rental equipment $ 18,715 Accumulated depreciation (8,083) Rental equipment, net $ 10,632 |
Summary of Operating Lease Maturity | Maturities of lease liabilities as of September 30, 2021 are as follows: (in $000s) Operating Leases Finance Leases 2021 (October 1 - December 31) $ 1,807 $ 1,067 2022 6,857 4,326 2023 6,521 1,901 2024 5,765 3,224 2025 5,051 9 Thereafter 24,820 — Total lease payments 50,821 10,527 Less: imputed interest (13,390) (665) Total present value of lease liabilities $ 37,431 $ 9,862 |
Summary of Finance Lease Maturity | Maturities of lease liabilities as of September 30, 2021 are as follows: (in $000s) Operating Leases Finance Leases 2021 (October 1 - December 31) $ 1,807 $ 1,067 2022 6,857 4,326 2023 6,521 1,901 2024 5,765 3,224 2025 5,051 9 Thereafter 24,820 — Total lease payments 50,821 10,527 Less: imputed interest (13,390) (665) Total present value of lease liabilities $ 37,431 $ 9,862 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | Goodwill and intangible assets consisted of the following: (in $000s) Weighted Average Remaining Life (Years) September 30, 2021 December 31, 2020 Goodwill $ 684,796 $ 238,052 Intangible assets: Trade names 16.0 180,780 29,780 Customer relationships 26.0 202,170 52,170 Non-compete agreements and other 0.5 520 520 Intangible assets 383,470 82,470 Less: accumulated amortization (42,310) (14,891) Intangible assets, net $ 341,160 $ 67,579 |
Schedule of Future Amortization Expense | As of September 30, 2021, estimated amortization expense for intangible assets for each of the next five years and thereafter is estimated to be as follows: (in $000s) Amortization 2021 (October 1 - December 31) $ 18,912 2022 32,332 2023 25,325 2024 25,314 2025 25,314 Thereafter 213,963 Total estimated future amortization expense $ 341,160 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Dilutive Loss Per Share | The following tables set forth the computation of basic and dilutive loss per share: Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 (in $000s, except share and per share data) Net Income (Loss) Weighted Average Shares Per Share Amount Net Income (Loss) Weighted Average Shares Per Share Amount Basic earnings (loss) per share $ (20,525) 244,292,357 $ (0.08) $ 15,173 49,033,903 $ 0.31 Dilutive common share equivalents — — — 273,908 Diluted earnings (loss) per share $ (20,525) 244,292,357 $ (0.08) $ 15,173 49,307,811 $ 0.31 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 (in $000s, except share and per share data) Net Income (Loss) Weighted Average Shares Per Share Amount Net Income (Loss) Weighted Average Shares Per Share Amount Basic earnings (loss) per share $ (177,788) 179,785,056 $ (0.99) $ (13,946) 49,033,903 $ (0.28) Dilutive common share equivalents — — — — Diluted earnings (loss) per share $ (177,788) 179,785,056 $ (0.99) $ (13,946) 49,033,903 $ (0.28) |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Restricted Stock and Performance Stock | The following table summarizes the Company’s RSU and PSU award activity: RSUs PSUs Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Outstanding, December 31, 2020 1,177,592 $ 4.05 — $ — Granted 2,227,692 $ 9.57 2,135,000 $ 5.74 Forfeited/cancelled/expired (24,300) $ 2.13 — $ — Vested (988,910) $ 4.40 — $ — Outstanding, September 30, 2021 2,392,074 $ 9.07 2,135,000 $ 5.74 |
Summary of Stock Options | The following table summarizes the Company’s stock option activity: Number of Options Weighted Average Exercise Price Outstanding stock options, December 31, 2020 2,391,916 $ 6.43 Granted — $ — Exercised (460,000) $ 5.08 Forfeited/cancelled/expired (6,700) $ 3.81 Outstanding stock options, September 30, 2021 1,925,216 $ 6.76 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Carrying Values and Fair Values of Financial Liabilities | The following table sets forth the carrying values (exclusive of deferred financing fees) and fair values of our financial liabilities: Carrying Value Fair Value (in $000s) Level 1 Level 2 Level 3 September 30, 2021 ABL Facility $ 405,000 $ — $ 405,000 $ — 2029 Secured Notes 920,000 — 949,900 — Other notes payable 37,934 — 37,934 — Derivative and warrant liabilities 25,874 — 4,352 18,902 December 31, 2020 2019 Credit Facility $ 250,971 $ — $ 250,971 $ — Senior Secured Notes due 2024 475,000 — 519,379 — Other notes payable 2,379 — 2,379 — Derivative and warrant liabilities 7,012 — 7,012 — |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | A summary of the transactions with the foregoing related parties included in the Condensed Consolidated Statements of Operations is as follows: Three Months Ended September 30, Nine Months Ended September 30, (in $000s) 2021 2020 2021 2020 Total revenues from transactions with related parties $ 6,594 $ 6,022 $ 16,332 $ 5,181 Expenses incurred from transactions with related parties included in cost of revenue $ 451 $ — $ 1,625 $ — Expenses incurred from transactions with related parties included in operating expenses $ 1,497 $ — $ 3,127 $ — Amounts receivable from/payable to related parties included in the Condensed Consolidated Balance Sheets are as follows: (in $000s) September 30, 2021 December 31, 2020 Accounts receivable from related parties $ 6,422 $ 3,506 Accounts payable to related parties $ 2,500 $ — |
Segments (Tables)
Segments (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Summary of Financial Information by Segment | The Company’s segment results for the three- and nine-month periods ended September 30, 2021 and 2020 are presented in the tables below: Three Months Ended September 30, Three Months Ended September 30, 2021 2020 (in $000s) ERS TES APS Total ERS TES APS Total Revenue: Rental $ 105,124 $ — $ 3,984 $ 109,108 $ 42,615 $ — $ 3,510 $ 46,125 Equipment sales 27,101 190,062 — 217,163 5,510 6,048 — 11,558 Parts and services — — 31,034 31,034 — — 11,577 11,577 Total revenue 132,225 190,062 35,018 357,305 48,125 6,048 15,087 69,260 Cost of revenue: Rentals/parts and services 24,622 — 25,287 49,909 12,742 — 10,820 23,562 Equipment sales 19,546 172,445 — 191,991 5,190 5,410 — 10,600 Depreciation of rental equipment 49,125 — 1,028 50,153 18,530 — 937 19,467 Total cost of revenue 93,293 172,445 26,315 292,053 36,462 5,410 11,757 53,629 Gross profit $ 38,932 $ 17,617 $ 8,703 $ 65,252 $ 11,663 $ 638 $ 3,330 $ 15,631 Nine Months Ended September 30, Nine Months Ended September 30, 2021 2020 (in $000s) ERS TES APS Total ERS TES APS Total Revenue: Rental $ 244,935 $ — $ 11,001 $ 255,936 $ 132,693 $ — $ 11,410 $ 144,103 Equipment sales 70,141 412,684 — 482,825 19,585 19,043 — 38,628 Parts and services — — 71,954 71,954 — — 36,753 36,753 Total revenue 315,076 412,684 82,955 810,715 152,278 19,043 48,163 219,484 Cost of revenue: Rentals/parts and services 67,683 — 64,700 132,383 38,916 — 34,622 73,538 Equipment sales 60,815 374,180 — 434,995 16,454 16,841 — 33,295 Depreciation of rental equipment 108,202 — 2,974 111,176 56,065 — 3,210 59,275 Total cost of revenue 236,700 374,180 67,674 678,554 111,435 16,841 37,832 166,108 Gross profit $ 78,376 $ 38,504 $ 15,281 $ 132,161 $ 40,843 $ 2,202 $ 10,331 $ 53,376 |
Reconciliation of Segment Gross Profit to Consolidated Loss Before Income Taxes | The following table presents a reconciliation of consolidated gross profit to consolidated loss before income taxes: Three Months Ended September 30, Nine Months Ended September 30, (in $000s) 2021 2020 2021 2020 Gross profit $ 65,252 $ 15,631 $ 132,161 $ 53,376 Selling, general and administrative 48,625 9,319 111,939 33,512 Amortization 13,334 771 27,420 2,234 Non-rental depreciation 873 21 1,845 74 Transaction expenses and other 7,742 561 42,765 3,282 Loss on extinguishment of debt — — 61,695 — Interest expense, net 19,045 15,853 53,674 47,816 Financing and other expense (income) (3,656) (559) 143 6,245 Loss before income taxes $ (20,711) $ (10,335) $ (167,320) $ (39,787) |
Summary of Total Assets by Country | The following table presents total assets by country: (in $000s) September 30, 2021 December 31, 2020 Assets: United States $ 2,651,901 $ 762,696 Canada 29,320 5,447 Mexico — 261 $ 2,681,221 $ 768,404 |
Business and Organization (Deta
Business and Organization (Details) - 9 months ended Sep. 30, 2021 | segment | day |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of reportable segments | 3 | 3 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Jan. 01, 2021 | Dec. 31, 2020 | |
Revenue from External Customer [Line Items] | |||||
Finance leases | $ 9,862,000 | $ 9,862,000 | $ 10,500,000 | ||
Impairment of goodwill | $ 0 | $ 0 | |||
Term of operating lease | 28 days | ||||
Allowance for accounts receivable | 13,200,000 | $ 13,200,000 | $ 6,400,000 | ||
Implementation costs capitalized | $ 2,700,000 | $ 4,800,000 | |||
Equipment sales | |||||
Revenue from External Customer [Line Items] | |||||
Lease payment term | 30 days | ||||
Parts sales and services | |||||
Revenue from External Customer [Line Items] | |||||
Lease payment term | 30 days | ||||
Minimum | |||||
Revenue from External Customer [Line Items] | |||||
Useful life | 4 years | ||||
Amortization period | 3 years | ||||
Minimum | Rental equipment | |||||
Revenue from External Customer [Line Items] | |||||
Useful life | 5 years | ||||
Estimated residual value | 15.00% | ||||
Maximum | |||||
Revenue from External Customer [Line Items] | |||||
Useful life | 39 years 6 months | ||||
Amortization period | 10 years | ||||
Maximum | Rental equipment | |||||
Revenue from External Customer [Line Items] | |||||
Useful life | 7 years | ||||
Estimated residual value | 35.00% |
Business Combination - Acquisit
Business Combination - Acquisition of Custom Truck One Source L.P (Details) - USD ($) | Apr. 01, 2021 | Dec. 03, 2020 | Jun. 30, 2021 |
Business Acquisition [Line Items] | |||
Value of shares issued in acquisition | $ 1,064,549,000 | ||
Common stock trading price (in dollars per share) | $ 5 | ||
Private Placement | |||
Business Acquisition [Line Items] | |||
Consideration received on sale of stock | $ 140,000,000 | ||
Price per share (in dollars per share) | $ 5 | ||
Shares purchased (in shares) | 28,000,000 | 28,000,000 | |
Rollover Agreement | |||
Business Acquisition [Line Items] | |||
Shares purchased (in shares) | 20,100,000 | ||
Subscription | |||
Business Acquisition [Line Items] | |||
Shares purchased (in shares) | 148,600,000 | ||
Custom Truck | |||
Business Acquisition [Line Items] | |||
Percentage of voting rights acquired | 100.00% | ||
Value of shares issued in acquisition | $ 100,500,000 | ||
Common stock issued (in shares) | 20,100,000 | ||
PE One Source | |||
Business Acquisition [Line Items] | |||
Price per share (in dollars per share) | $ 5 | ||
PE One Source | Minimum | |||
Business Acquisition [Line Items] | |||
Consideration received on sale of stock | $ 700,000,000 | ||
PE One Source | Maximum | |||
Business Acquisition [Line Items] | |||
Consideration received on sale of stock | $ 763,000,000 |
Business Combination - Purchase
Business Combination - Purchase Price (Details) - Custom Truck - USD ($) $ / shares in Units, $ in Thousands | Apr. 01, 2021 | Sep. 30, 2021 |
Business Acquisition [Line Items] | ||
Common stock issued (in shares) | 20,100,000 | |
Common stock share price (in dollars per share) | $ 9.35 | |
Fair value of common stock issued | $ 187,935 | |
Cash consideration paid to equity interest holders | 790,324 | $ 3,400 |
Repayment of debt obligations | 552,600 | |
Total purchase price | $ 1,530,859 |
Business Combination - Assets A
Business Combination - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2021 | Apr. 01, 2021 | Dec. 31, 2020 | |
Business Acquisition [Line Items] | |||
Total identifiable liabilities assumed | $ (489,442) | ||
Goodwill | $ 684,796 | $ 238,052 | |
Trade names | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets weighted average useful life | 15 years | ||
Customer relationships | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets weighted average useful life | 12 years | ||
Custom Truck | |||
Business Acquisition [Line Items] | |||
Accounts and financing receivables | 109,681 | ||
Inventory | 434,328 | ||
Other current assets | 14,080 | ||
Property and equipment | 105,113 | ||
Rental equipment | 567,366 | ||
Intangible assets | 301,000 | ||
Operating lease assets | 23,766 | ||
Other assets | 18,223 | ||
Total identifiable assets acquired | 1,573,557 | ||
Current liabilities | (410,276) | ||
Long-term debt | (28,607) | ||
Operating lease liabilities-noncurrent | (21,308) | ||
Deferred tax and other liabilities | (29,251) | ||
Total net assets | 1,084,115 | ||
Goodwill | 446,744 | ||
Net assets acquired (purchase price) | 1,530,859 | ||
Gross contractual receivables | 116,700 | ||
Estimated uncollectible receivables | $ 7,000 | ||
Custom Truck | Land, Buildings and Improvements | |||
Business Acquisition [Line Items] | |||
Property and equipment | 67,900 | ||
Custom Truck | Machinery and Equipment and Vehicles | |||
Business Acquisition [Line Items] | |||
Property and equipment | 31,100 | ||
Custom Truck | Other property | |||
Business Acquisition [Line Items] | |||
Property and equipment | $ 6,100 | ||
Custom Truck | Trade names | |||
Business Acquisition [Line Items] | |||
Intangible assets | 151,000 | ||
Custom Truck | Customer relationships | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 150,000 |
Business Combination - Addition
Business Combination - Additional Information (Details) - USD ($) | Apr. 01, 2021 | Sep. 30, 2021 | Sep. 30, 2021 |
Business Acquisition [Line Items] | |||
Statutory tax rate | 25.00% | ||
Custom Truck | |||
Business Acquisition [Line Items] | |||
Goodwill purchase adjustment | $ 4,500,000 | ||
Revenues | $ 612,300,000 | ||
Pre-tax loss | 29,000,000 | ||
Transaction costs | $ 7,700,000 | $ 42,800,000 | |
2029 Secured Notes | Secured Debt | |||
Business Acquisition [Line Items] | |||
Debt instrument, face amount | $ 920,000,000 | ||
Debt interest rate | 5.50% | ||
ABL Facility | Revolving Credit Facility | |||
Business Acquisition [Line Items] | |||
Maximum borrowing capacity | $ 750,000,000 | ||
Debt instrument, term | 5 years |
Business Combination - Pro Form
Business Combination - Pro Forma Information (Details) - Custom Truck - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Business Acquisition [Line Items] | ||||
Revenue | $ 357,305 | $ 302,657 | $ 1,127,186 | $ 951,002 |
Net income (loss) | $ (14,956) | $ 19,296 | $ (87,884) | $ (104,097) |
Business Combination - Pro Fo_2
Business Combination - Pro Forma Adjustments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Increase (decrease) net income/loss: | ||||||||
Net income (loss) | $ (20,525) | $ (129,356) | $ (27,907) | $ 15,173 | $ (13,150) | $ (15,969) | $ (177,788) | $ (13,946) |
Statutory tax rate | 25.00% | |||||||
Impact of fair value mark-ups on inventory | ||||||||
Increase (decrease) net income/loss: | ||||||||
Net income (loss) | 7,426 | 725 | $ 17,752 | (14,725) | ||||
Impact of fair value mark-ups on rental fleet depreciation | ||||||||
Increase (decrease) net income/loss: | ||||||||
Net income (loss) | 0 | (2,576) | (3,817) | (6,156) | ||||
Intangible asset amortization and other depreciation expense | ||||||||
Increase (decrease) net income/loss: | ||||||||
Net income (loss) | 0 | (3,349) | (3,377) | (9,609) | ||||
Transaction expenses | ||||||||
Increase (decrease) net income/loss: | ||||||||
Net income (loss) | 0 | 0 | 40,277 | (40,277) | ||||
Interest expense and amortization of debt issuance costs | ||||||||
Increase (decrease) net income/loss: | ||||||||
Net income (loss) | 0 | 7,172 | 3,919 | 21,521 | ||||
Loss on extinguishment of debt refinanced | ||||||||
Increase (decrease) net income/loss: | ||||||||
Net income (loss) | 0 | 0 | 61,695 | (61,695) | ||||
Income tax expense | ||||||||
Increase (decrease) net income/loss: | ||||||||
Net income (loss) | $ (1,857) | $ (493) | $ (29,112) | $ 27,735 |
Revenue - Geographic Areas (Det
Revenue - Geographic Areas (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 357,305 | $ 69,260 | $ 810,715 | $ 219,484 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 351,391 | 67,506 | 798,372 | 213,576 |
Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 5,914 | 1,754 | 12,343 | 4,121 |
Mexico | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 0 | $ 0 | $ 0 | $ 1,787 |
Revenue - Major Product Lines a
Revenue - Major Product Lines and Services (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Topic 842/840 | $ 114,010 | $ 44,468 | $ 264,515 | $ 138,429 |
Topic 606 | 243,295 | 24,792 | 546,200 | 81,055 |
Total revenue | 357,305 | 69,260 | 810,715 | 219,484 |
Rental Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Topic 842/840 | 105,165 | 44,468 | 246,064 | 138,429 |
Topic 606 | 3,943 | 1,657 | 9,872 | 5,674 |
Total revenue | 109,108 | 46,125 | 255,936 | 144,103 |
Rental Revenue, Excluding Shipping And Handling | ||||
Disaggregation of Revenue [Line Items] | ||||
Topic 842/840 | 105,165 | 44,468 | 246,064 | 138,429 |
Topic 606 | 0 | 0 | 0 | 0 |
Total revenue | 105,165 | 44,468 | 246,064 | 138,429 |
Rental Revenue, Shipping And Handling | ||||
Disaggregation of Revenue [Line Items] | ||||
Topic 842/840 | 0 | 0 | 0 | 0 |
Topic 606 | 3,943 | 1,657 | 9,872 | 5,674 |
Total revenue | 3,943 | 1,657 | 9,872 | 5,674 |
Sales and services | ||||
Disaggregation of Revenue [Line Items] | ||||
Topic 842/840 | 8,845 | 0 | 18,451 | 0 |
Topic 606 | 239,352 | 23,135 | 536,328 | 75,381 |
Total revenue | 248,197 | 23,135 | 554,779 | 75,381 |
Equipment sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Topic 842/840 | 6,905 | 0 | 13,711 | 0 |
Topic 606 | 210,258 | 11,558 | 469,114 | 38,628 |
Total revenue | 217,163 | 11,558 | 482,825 | 38,628 |
Parts and services | ||||
Disaggregation of Revenue [Line Items] | ||||
Topic 842/840 | 1,940 | 0 | 4,740 | 0 |
Topic 606 | 29,094 | 11,577 | 67,214 | 36,753 |
Total revenue | $ 31,034 | $ 11,577 | $ 71,954 | $ 36,753 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||||
Bad debt expense reduction | $ 700 | $ 6,800 | |||
Provision for losses on accounts receivable | 8,391 | $ 1,813 | |||
Deferred rent revenue | 2,400 | 2,400 | $ 1,000 | ||
Customer deposits | 19,200 | 19,200 | |||
Selling, general and administrative expenses | |||||
Disaggregation of Revenue [Line Items] | |||||
Provision for losses on accounts receivable | $ 200 | $ 400 | $ 1,500 | $ 1,800 |
Financing Receivables (Details)
Financing Receivables (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | ||
Unearned income | $ 400 | |
Financing receivables, net | $ 25,963 | $ 0 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Inventory [Line Items] | ||
Inventory | $ 381,159 | $ 31,367 |
Whole goods | ||
Inventory [Line Items] | ||
Inventory | 298,968 | 3,276 |
Aftermarket parts and services inventory | ||
Inventory [Line Items] | ||
Inventory | $ 82,191 | $ 28,091 |
Floor Plan Financing - Summary
Floor Plan Financing - Summary of Floor Plan Payables (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Instrument, Redemption [Line Items] | ||
Trade floor plan payables | $ 78,505 | $ 0 |
Non-trade floor plan payables | 150,694 | $ 0 |
Daimler Truck Financial | ||
Debt Instrument, Redemption [Line Items] | ||
Trade floor plan payables | 52,817 | |
PACCAR Financial Services | ||
Debt Instrument, Redemption [Line Items] | ||
Trade floor plan payables | 25,688 | |
PNC Equipment Finance, LLC | ||
Debt Instrument, Redemption [Line Items] | ||
Non-trade floor plan payables | $ 150,694 |
Floor Plan Financing - Narrativ
Floor Plan Financing - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021USD ($) | Sep. 30, 2021USD ($) | |
Debt Instrument [Line Items] | ||
Interest expense | $ 1.7 | $ 3.8 |
Daimler Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest free period | 150 days | |
Maximum borrowing capacity | 175 | $ 175 |
Daimler Facility | Prime Rate | Line of Credit | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread | 0.80% | |
PACCAR Financial Corp | Line of Credit | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | 50 | $ 50 |
PACCAR Financial Corp | London Interbank Offered Rate (LIBOR) | Line of Credit | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread | 2.40% | |
Loan Agreement | Revolving Credit Facility | Line of Credit | PNC Equipment Finance, LLC | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | $ 295 | $ 295 |
Loan Agreement | London Interbank Offered Rate (LIBOR) | Revolving Credit Facility | Line of Credit | PNC Equipment Finance, LLC | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread | 3.05% |
Rental Equipment - Rental Equip
Rental Equipment - Rental Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Abstract] | ||
Rental equipment | $ 1,261,313 | $ 654,547 |
Less: accumulated depreciation | (382,288) | (318,735) |
Rental equipment, net | $ 879,025 | $ 335,812 |
Debt - Schedule of Debt Obligat
Debt - Schedule of Debt Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Total debt outstanding | $ 1,362,934 | $ 728,350 |
Deferred finance fees | (34,266) | (11,212) |
Net debt | 1,328,668 | 717,138 |
Less: current maturities | (4,997) | (1,280) |
Long-term debt | 1,323,671 | 715,858 |
Notes payable | ||
Debt Instrument [Line Items] | ||
Total debt outstanding | $ 37,934 | $ 2,379 |
Debt interest rate | 500.00% | |
Notes payable | Minimum | ||
Debt Instrument [Line Items] | ||
Debt interest rate | 3.00% | |
Notes payable | Maximum | ||
Debt Instrument [Line Items] | ||
Debt interest rate | 5.00% | |
ABL Facility | Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Total debt outstanding | $ 405,000 | $ 0 |
Debt interest rate | 180.00% | |
2019 Credit Facility | Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Total debt outstanding | $ 0 | $ 250,971 |
Debt interest rate | 340.00% | |
2029 Secured Notes | Senior Notes | ||
Debt Instrument [Line Items] | ||
Total debt outstanding | $ 920,000 | $ 0 |
Debt interest rate | 550.00% | |
Senior Secured Notes due 2024 | Senior Notes | ||
Debt Instrument [Line Items] | ||
Total debt outstanding | $ 0 | $ 475,000 |
Debt interest rate | 1000.00% |
Debt - Narrative (Details)
Debt - Narrative (Details) | Apr. 01, 2021USD ($)day | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) |
Debt Instrument [Line Items] | |||
Payments of debt fees | $ 34,694,000 | $ 0 | |
2019 Credit Facility and 2024 Senior Secured Notes | |||
Debt Instrument [Line Items] | |||
Elimination of unamortized deferred financing fees | $ 8,200,000 | ||
Senior Secured Notes due 2024 | |||
Debt Instrument [Line Items] | |||
Payment of make-whole premium | 38,500,000 | ||
2029 Secured Notes | Secured Debt | |||
Debt Instrument [Line Items] | |||
Payments of debt fees | 15,000,000 | ||
Debt instrument, face amount | $ 920,000,000 | ||
Debt interest rate | 5.50% | ||
Threshold of principal amount outstanding | 30.00% | ||
2029 Secured Notes | Secured Debt | Anytime redemption with not less than 10 nor more than 60 days notice | |||
Debt Instrument [Line Items] | |||
Debt redemption price percent | 100.00% | ||
2029 Secured Notes | Secured Debt | Any time prior to April 15, 2024 with net cash proceeds of sales of one or more equity offerings | |||
Debt Instrument [Line Items] | |||
Debt redemption price percent | 105.50% | ||
Debt instrument, percent of principal amount redeemed | 40.00% | ||
2029 Secured Notes | Secured Debt | Any time prior to April 15, 2024 redeemable during each calendar year | |||
Debt Instrument [Line Items] | |||
Debt redemption price percent | 103.00% | ||
Debt instrument, percent of principal amount redeemed | 10.00% | ||
2029 Secured Notes | Secured Debt | Anytime redemption related to change in control | |||
Debt Instrument [Line Items] | |||
Debt redemption price percent | 101.00% | ||
2029 Secured Notes | Secured Debt | Net proceeds required to make an offer price in cash | |||
Debt Instrument [Line Items] | |||
Debt redemption price percent | 100.00% | ||
2029 Secured Notes | Secured Debt | Anytime redemption related to change in control and any tender offer | |||
Debt Instrument [Line Items] | |||
Debt instrument, holders percentage | 90.00% | ||
2029 Secured Notes | Secured Debt | Minimum | Anytime redemption with not less than 10 nor more than 60 days notice | |||
Debt Instrument [Line Items] | |||
Debt redemption, call premium percent | 0.00% | ||
2029 Secured Notes | Secured Debt | Maximum | Anytime redemption with not less than 10 nor more than 60 days notice | |||
Debt Instrument [Line Items] | |||
Debt redemption, call premium percent | 2.75% | ||
3.125% Loan Agreement | Notes Payable to Banks | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 23,900,000 | ||
Debt interest rate | 3.125% | ||
3.5% Loan Agreement | Notes Payable to Banks | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 3,500,000 | ||
Debt interest rate | 3.50% | ||
Revolving Credit Facility | ABL Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 750,000,000 | ||
Additional capacity amount | $ 200,000,000 | ||
Additional capacity percentage | 60.00% | ||
Remaining borrowing capacity | $ 337,000,000 | ||
Commitment fee percentage | 0.375% | ||
Future commitment fee percentage based on average daily usage | 0.25% | ||
Voting capital stock limitation | 65.00% | ||
Fixed charge coverage ratio | 1 | ||
Line cap percentage | 10.00% | ||
Test amount | $ 60,000,000 | ||
Consecutive calendar days | day | 30 | ||
Revolving Credit Facility | ABL Facility | Eligible accounts of Buyer and certain ABL Guarantors | |||
Debt Instrument [Line Items] | |||
Percentage of book value | 90.00% | ||
Revolving Credit Facility | ABL Facility | Lesser of book value of eligible parts inventory and net orderly liquidation of Buyer and certain ABL Guarantors | |||
Debt Instrument [Line Items] | |||
Percentage of book value | 75.00% | ||
Percentage of net orderly liquidation value | 90.00% | ||
Revolving Credit Facility | ABL Facility | Lesser of book value of eligible fleet inventory and net orderly liquidation of Buyer and certain ABL Guarantors | |||
Debt Instrument [Line Items] | |||
Percentage of book value | 95.00% | ||
Percentage of net orderly liquidation value | 85.00% | ||
Revolving Credit Facility | ABL Facility | Eligible cash of Buyer and certain ABL Guarantors | |||
Debt Instrument [Line Items] | |||
Percentage of eligible cash | 100.00% | ||
Revolving Credit Facility | ABL Facility | Base Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread | 0.50% | ||
Revolving Credit Facility | ABL Facility | Base Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread | 1.00% | ||
Revolving Credit Facility | ABL Facility | London Interbank Offered Rate (LIBOR) | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread | 1.50% | ||
Revolving Credit Facility | ABL Facility | London Interbank Offered Rate (LIBOR) | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread | 2.00% | ||
Revolving Credit Facility | ABL Facility | Canadian Dollar Offer Rate (CDOR) | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread | 1.50% | ||
Revolving Credit Facility | ABL Facility | Canadian Dollar Offer Rate (CDOR) | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread | 2.00% | ||
Swingline | ABL Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 75,000,000 | ||
Letter of Credit | ABL Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 50,000,000 | ||
Outstanding borrowings | $ 4,000,000 |
Leases as Lessee - Narrative (D
Leases as Lessee - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jan. 01, 2021 | Dec. 31, 2020 |
Leases [Abstract] | |||
Lease term | 5 years | ||
ROU assets | $ 37,117 | $ 12,400 | $ 0 |
Operating lease liability | $ 37,431 | $ 12,400 | |
Operating lease weighted average discount rate | 6.00% | ||
Finance lease weighted average discount rate | 9.00% | ||
Operating lease weighted average remaining term | 9 years 4 months 24 days | ||
Finance lease weighted average remaining term | 1 year 10 months 24 days |
Leases as Lessee - Summary of L
Leases as Lessee - Summary of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
Leases [Abstract] | ||
Operating lease cost | $ 2,036 | $ 4,824 |
Finance lease cost: | ||
Amortization of lease assets | 800 | 2,158 |
Interest on lease liabilities | 281 | 876 |
Short-term lease cost | 1,111 | 3,034 |
Sublease income | (2,219) | (4,787) |
Total lease cost | $ 2,009 | $ 6,105 |
Leases as Lessee - Supplemental
Leases as Lessee - Supplemental Cash Flow (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash outflows - payments on operating leases | $ 2,036 | $ 4,824 |
Operating cash outflows - interest payments on finance leases | 281 | 876 |
Finance cash outflows - payments on finance lease obligations | $ 1,803 | $ 4,382 |
Leases as Lessee - Supplement_2
Leases as Lessee - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jan. 01, 2021 | Dec. 31, 2020 |
Operating leases | |||
ROU assets | $ 37,117 | $ 12,400 | $ 0 |
Operating lease liabilities - current | (5,006) | ||
Operating lease liabilities - noncurrent | (32,425) | $ 0 | |
Operating lease liability | (37,431) | $ (12,400) | |
Property and equipment, net | |||
Finance leases | |||
Equipment | 3,535 | ||
Accumulated depreciation | (62) | ||
Equipment, net | 3,473 | ||
Rental equipment, net | |||
Finance leases | |||
Equipment | 18,715 | ||
Accumulated depreciation | (8,083) | ||
Equipment, net | $ 10,632 |
Leases as Lessee - Maturity (De
Leases as Lessee - Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jan. 01, 2021 |
Operating Leases | ||
2021 (October 1 - December 31) | $ 1,807 | |
2022 | 6,857 | |
2023 | 6,521 | |
2024 | 5,765 | |
2025 | 5,051 | |
Thereafter | 24,820 | |
Total lease payments | 50,821 | |
Less: imputed interest | (13,390) | |
Total present value of lease liabilities | 37,431 | $ 12,400 |
Finance Leases | ||
2021 (October 1 - December 31) | 1,067 | |
2022 | 4,326 | |
2023 | 1,901 | |
2024 | 3,224 | |
2025 | 9 | |
Thereafter | 0 | |
Total lease payments | 10,527 | |
Less: imputed interest | (665) | |
Total present value of lease liabilities | $ 9,862 | $ 10,500 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 684,796 | $ 238,052 |
Intangible assets | 383,470 | 82,470 |
Less: accumulated amortization | (42,310) | (14,891) |
Intangible assets, net | 341,160 | 67,579 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets | $ 180,780 | 29,780 |
Trade names | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 16 years | |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets | $ 202,170 | 52,170 |
Customer relationships | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 26 years | |
Non-compete agreements and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets | $ 520 | $ 520 |
Non-compete agreements and other | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 6 months |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 684,796 | $ 238,052 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization period | 12 months | |
Equipment Rental Solutions | ||
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 484,300 | 229,400 |
Truck Equipment Sales | ||
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | 163,300 | |
Aftermarket Parts and Services | ||
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 37,200 | $ 8,700 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Future Amortization (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2021 (October 1 - December 31) | $ 18,912 |
2022 | 32,332 |
2023 | 25,325 |
2024 | 25,314 |
2025 | 25,314 |
Thereafter | 213,963 |
Total estimated future amortization expense | $ 341,160 |
Earnings (Loss) Per Share - Com
Earnings (Loss) Per Share - Computation of Basic and Dilutive Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Earnings Per Share [Abstract] | ||||
Potentially dilutive shares excluded in aggregate (in shares) | 25,000,000 | 27,800,000 | 26,000,000 | 27,300,000 |
Net Income (Loss) | ||||
Basic earnings (loss) per share | $ (20,525) | $ 15,173 | $ (177,788) | $ (13,946) |
Dilutive common share equivalents | 0 | 0 | 0 | 0 |
Diluted earnings (loss) per share | $ (20,525) | $ 15,173 | $ (177,788) | $ (13,946) |
Weighted Average Shares | ||||
Weighted-average shares, basic (in shares) | 244,292,357 | 49,033,903 | 179,785,056 | 49,033,903 |
Dilutive common share equivalents (in shares) | 0 | 273,908 | 0 | 0 |
Weighted-average shares, diluted (in shares) | 244,292,357 | 49,307,811 | 179,785,056 | 49,033,903 |
Per Share Amount | ||||
Basic earnings (loss) per share (USD per share) | $ (0.08) | $ 0.31 | $ (0.99) | $ (0.28) |
Diluted earnings (loss) per share (USD per share) | $ (0.08) | $ 0.31 | $ (0.99) | $ (0.28) |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jul. 08, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares of common stock authorized for issuance (in shares) | 14,650,000 | ||||
Shares of common stock reserved for issuance (in shares) | 6,743,800 | ||||
Compensation expense | $ 4.9 | $ 0.7 | $ 12.7 | $ 1.7 | |
RSUs and PSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation cost | 28.6 | $ 28.6 | |||
Weighted average period for recognition | 3 years 1 month 6 days | ||||
Stock Option | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation cost | $ 0.1 | $ 0.1 | |||
Weighted average period for recognition | 2 years 1 month 6 days |
Share-Based Compensation - RSUs
Share-Based Compensation - RSUs/PSUs (Details) | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Restricted Stock Units (RSUs) | |
Number of Shares | |
Outstanding, December 31, 2020 (in shares) | shares | 1,177,592 |
Granted (in shares) | shares | 2,227,692 |
Forfeited/cancelled/expired (in shares) | shares | (24,300) |
Vested (in shares) | shares | (988,910) |
Outstanding, September 30, 2021 (in shares) | shares | 2,392,074 |
Weighted Average Grant Date Fair Value | |
Outstanding, December 31, 2020 (in dollars per share) | $ / shares | $ 4.05 |
Granted (in dollars per share) | $ / shares | 9.57 |
Forfeited/cancelled/expired (in dollars per share) | $ / shares | 2.13 |
Vested (in dollars per share) | $ / shares | 4.40 |
Outstanding, September 30, 2021 (in dollars per share) | $ / shares | $ 9.07 |
Performance Stock Units (PSUs) | |
Number of Shares | |
Outstanding, December 31, 2020 (in shares) | shares | 0 |
Granted (in shares) | shares | 2,135,000 |
Forfeited/cancelled/expired (in shares) | shares | 0 |
Vested (in shares) | shares | 0 |
Outstanding, September 30, 2021 (in shares) | shares | 2,135,000 |
Weighted Average Grant Date Fair Value | |
Outstanding, December 31, 2020 (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 5.74 |
Forfeited/cancelled/expired (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 0 |
Outstanding, September 30, 2021 (in dollars per share) | $ / shares | $ 5.74 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Options (Details) | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Number of Options | |
Outstanding stock Options, December 31, 2020 (in shares) | shares | 2,391,916 |
Granted (in shares) | shares | 0 |
Exercised (in shares) | shares | (460,000) |
Forfeited/cancelled/expired (in shares) | shares | (6,700) |
Outstanding stock Options, September 30, 2021 (in shares) | shares | 1,925,216 |
Weighted Average Exercise Price | |
Outstanding stock options, December 31, 2020 (in dollars per share) | $ / shares | $ 6.43 |
Granted (in dollars per share) | $ / shares | 0 |
Exercised (in dollars per share) | $ / shares | 5.08 |
Forfeited/cancelled/expired (in dollars per share) | $ / shares | 3.81 |
Outstanding stock options, September 30, 2021 (in dollars per share) | $ / shares | $ 6.76 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative and warrant liabilities | $ 4,400 | $ 7,000 |
Carrying Value | Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative and warrant liabilities | 25,874 | 7,012 |
Carrying Value | Other notes payable | Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 37,934 | 2,379 |
Carrying Value | 2029 Secured Notes | Senior Notes | Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 920,000 | |
Carrying Value | Senior Secured Notes due 2024 | Senior Notes | Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 475,000 | |
Carrying Value | Revolving Credit Facility | ABL Facility | Line of Credit | Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 405,000 | |
Carrying Value | Revolving Credit Facility | 2019 Credit Facility | Line of Credit | Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 250,971 | |
Fair Value | Fair Value, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative and warrant liabilities | 0 | 0 |
Fair Value | Fair Value, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative and warrant liabilities | 4,352 | 7,012 |
Fair Value | Fair Value, Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative and warrant liabilities | 18,902 | 0 |
Fair Value | Other notes payable | Fair Value, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 0 | 0 |
Fair Value | Other notes payable | Fair Value, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 37,934 | 2,379 |
Fair Value | Other notes payable | Fair Value, Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 0 | 0 |
Fair Value | 2029 Secured Notes | Senior Notes | Fair Value, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 0 | |
Fair Value | 2029 Secured Notes | Senior Notes | Fair Value, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 949,900 | |
Fair Value | 2029 Secured Notes | Senior Notes | Fair Value, Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 0 | |
Fair Value | Senior Secured Notes due 2024 | Senior Notes | Fair Value, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 0 | |
Fair Value | Senior Secured Notes due 2024 | Senior Notes | Fair Value, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 519,379 | |
Fair Value | Senior Secured Notes due 2024 | Senior Notes | Fair Value, Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 0 | |
Fair Value | Revolving Credit Facility | ABL Facility | Line of Credit | Fair Value, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 0 | |
Fair Value | Revolving Credit Facility | ABL Facility | Line of Credit | Fair Value, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 405,000 | |
Fair Value | Revolving Credit Facility | ABL Facility | Line of Credit | Fair Value, Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | $ 0 | |
Fair Value | Revolving Credit Facility | 2019 Credit Facility | Line of Credit | Fair Value, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 0 | |
Fair Value | Revolving Credit Facility | 2019 Credit Facility | Line of Credit | Fair Value, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 250,971 | |
Fair Value | Revolving Credit Facility | 2019 Credit Facility | Line of Credit | Fair Value, Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | $ 0 |
Financial Instruments - Warrant
Financial Instruments - Warrants (Details) $ / shares in Units, $ in Thousands, shares in Millions | May 01, 2017day$ / sharesshares | Sep. 30, 2021USD ($) | Sep. 30, 2021USD ($) | Jun. 30, 2021USD ($) | Mar. 31, 2021USD ($) | Jan. 01, 2021USD ($) | Dec. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Class of Warrant or Right [Line Items] | |||||||||||
Equity reclassification | $ (857,495) | $ (857,495) | $ (873,888) | $ 68,667 | $ 31,067 | $ 24,407 | $ 40,237 | $ 27,540 | $ 12,130 | ||
Fair value adjustment | (900) | 8,100 | |||||||||
Reclassification Adjustment | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Equity reclassification | 10,290 | ||||||||||
Derivative and warrant liabilities | $ 10,300 | ||||||||||
Non-Public Warrants July 2019 | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Fair value adjustment | (1,400) | ||||||||||
Non-Public Warrants December 2019 | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Fair value adjustment | (6,100) | ||||||||||
Non-Public Warrants December 2020 | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Fair value adjustment | 4,700 | ||||||||||
Additional Paid-in Capital | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Equity reclassification | $ (1,504,254) | $ (1,504,254) | $ (1,499,371) | $ (425,224) | (434,917) | $ (434,246) | $ (433,589) | $ (433,136) | $ (432,577) | ||
Additional Paid-in Capital | Reclassification Adjustment | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Equity reclassification | $ 10,300 | $ 10,290 | |||||||||
Common Stock | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Number of securities called by issued warrants (in shares) | shares | 20.9 | ||||||||||
Share price of warrants (in dollars per share) | $ / shares | $ 11.50 | ||||||||||
Common Stock | Private Placement | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Number of securities called by issued warrants (in shares) | shares | 7.5 | ||||||||||
Common Stock | Public Investors | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Number of securities called by issued warrants (in shares) | shares | 13.4 | ||||||||||
Share price of warrants (in dollars per share) | $ / shares | $ 0.01 | ||||||||||
Notice period | 30 days | ||||||||||
Share price required for redemption (in usd per share) | $ / shares | $ 18 | ||||||||||
Trading days threshold for redemption | day | 20 | ||||||||||
Trading day period for redemption | day | 30 |
Financial Instruments - Derivat
Financial Instruments - Derivatives Not Designated as Hedges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Jul. 17, 2019 | |
Level 2 | ||||||
Derivative [Line Items] | ||||||
Derivative and warrant liabilities | $ 4.4 | $ 4.4 | $ 7 | |||
Interest Rate Collar | ||||||
Derivative [Line Items] | ||||||
Derivative instruments not designated as hedges, gain (loss) | $ (0.5) | $ (0.6) | $ (2.7) | $ 6.1 | ||
Interest Rate Collar | Not Designated as Hedging Instrument | ||||||
Derivative [Line Items] | ||||||
Interest rate collar amount | $ 170 |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 6.30% | 64.90% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Oct. 28, 2020 | Sep. 30, 2021 |
Custom Truck | ||
Loss Contingencies [Line Items] | ||
Escrow amount | $ 8.5 | |
Maximum | Custom Truck | ||
Loss Contingencies [Line Items] | ||
Estimate of possible loss | $ 10 | |
Tax Year 2015 | ||
Loss Contingencies [Line Items] | ||
Tax assessment amount | $ 2.4 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) $ in Millions | 3 Months Ended |
Sep. 30, 2021USD ($) | |
Affiliated Entity | R&M Equipment Rental | Rentals and Sales of Equipment | |
Related Party Transaction [Line Items] | |
Purchases with related party | $ 19.4 |
Related Party Transactions - Co
Related Party Transactions - Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Related Party Transactions [Abstract] | ||||
Total revenues from transactions with related parties | $ 6,594 | $ 6,022 | $ 16,332 | $ 5,181 |
Expenses incurred from transactions with related parties included in cost of revenue | 451 | 0 | 1,625 | 0 |
Expenses incurred from transactions with related parties included in operating expenses | $ 1,497 | $ 0 | $ 3,127 | $ 0 |
Related Party Transactions - _2
Related Party Transactions - Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Related Party Transactions [Abstract] | ||
Accounts receivable from related parties | $ 6,422 | $ 3,506 |
Accounts payable | $ 2,500 | $ 0 |
Segments - Additional Informati
Segments - Additional Information (Details) - 9 months ended Sep. 30, 2021 | segment | day |
Segment Reporting [Abstract] | ||
Number of reportable segments | 3 | 3 |
Segments - Financial Informatio
Segments - Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Rental revenue | $ 357,305 | $ 69,260 | $ 810,715 | $ 219,484 |
Depreciation of rental equipment | 50,153 | 19,467 | 111,176 | 59,275 |
Cost of revenue | 292,053 | 53,629 | 678,554 | 166,108 |
Gross Profit | 65,252 | 15,631 | 132,161 | 53,376 |
Equipment Rental Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 132,225 | 48,125 | 315,076 | 152,278 |
Depreciation of rental equipment | 49,125 | 18,530 | 108,202 | 56,065 |
Cost of revenue | 93,293 | 36,462 | 236,700 | 111,435 |
Gross Profit | 38,932 | 11,663 | 78,376 | 40,843 |
Truck Equipment Sales | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 190,062 | 6,048 | 412,684 | 19,043 |
Depreciation of rental equipment | 0 | 0 | 0 | 0 |
Cost of revenue | 172,445 | 5,410 | 374,180 | 16,841 |
Gross Profit | 17,617 | 638 | 38,504 | 2,202 |
Aftermarket Parts and Services | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 35,018 | 15,087 | 82,955 | 48,163 |
Depreciation of rental equipment | 1,028 | 937 | 2,974 | 3,210 |
Cost of revenue | 26,315 | 11,757 | 67,674 | 37,832 |
Gross Profit | 8,703 | 3,330 | 15,281 | 10,331 |
Rental Revenue | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 109,108 | 46,125 | 255,936 | 144,103 |
Cost of rental revenue | 25,932 | 13,307 | 71,873 | 42,699 |
Rental Revenue | Equipment Rental Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 105,124 | 42,615 | 244,935 | 132,693 |
Rental Revenue | Truck Equipment Sales | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 0 | 0 | 0 | 0 |
Rental Revenue | Aftermarket Parts and Services | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 3,984 | 3,510 | 11,001 | 11,410 |
Equipment sales | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 217,163 | 11,558 | 482,825 | 38,628 |
Cost of rental revenue | 191,991 | 10,600 | 434,995 | 33,295 |
Equipment sales | Equipment Rental Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 27,101 | 5,510 | 70,141 | 19,585 |
Cost of rental revenue | 19,546 | 5,190 | 60,815 | 16,454 |
Equipment sales | Truck Equipment Sales | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 190,062 | 6,048 | 412,684 | 19,043 |
Cost of rental revenue | 172,445 | 5,410 | 374,180 | 16,841 |
Equipment sales | Aftermarket Parts and Services | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 0 | 0 | 0 | 0 |
Cost of rental revenue | 0 | 0 | 0 | 0 |
Parts and services | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 31,034 | 11,577 | 71,954 | 36,753 |
Cost of rental revenue | 23,977 | 10,255 | 60,510 | 30,839 |
Parts and services | Equipment Rental Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 0 | 0 | 0 | 0 |
Parts and services | Truck Equipment Sales | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 0 | 0 | 0 | 0 |
Parts and services | Aftermarket Parts and Services | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenue | 31,034 | 11,577 | 71,954 | 36,753 |
Rentals/parts and services | ||||
Segment Reporting Information [Line Items] | ||||
Cost of rental revenue | 49,909 | 23,562 | 132,383 | 73,538 |
Rentals/parts and services | Equipment Rental Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Cost of rental revenue | 24,622 | 12,742 | 67,683 | 38,916 |
Rentals/parts and services | Truck Equipment Sales | ||||
Segment Reporting Information [Line Items] | ||||
Cost of rental revenue | 0 | 0 | 0 | 0 |
Rentals/parts and services | Aftermarket Parts and Services | ||||
Segment Reporting Information [Line Items] | ||||
Cost of rental revenue | $ 25,287 | $ 10,820 | $ 64,700 | $ 34,622 |
Segments - Reconciliation of Se
Segments - Reconciliation of Segment Gross Profit (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting [Abstract] | ||||
Gross profit | $ 65,252 | $ 15,631 | $ 132,161 | $ 53,376 |
Selling, general and administrative | 48,625 | 9,319 | 111,939 | 33,512 |
Amortization | 13,334 | 771 | 27,420 | 2,234 |
Non-rental depreciation | 873 | 21 | 1,845 | 74 |
Transaction expenses and other | 7,742 | 561 | 42,765 | 3,282 |
Loss on extinguishment of debt | 0 | 0 | 61,695 | 0 |
Interest expense, net | 19,045 | 15,853 | 53,674 | 47,816 |
Financing and other expense (income) | (3,656) | (559) | 143 | 6,245 |
Income (Loss) Before Income Taxes | $ (20,711) | $ (10,335) | $ (167,320) | $ (39,787) |
Segments - Assets by Country (D
Segments - Assets by Country (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Segment Reporting Information [Line Items] | ||
Assets | $ 2,681,221 | $ 768,404 |
United States | ||
Segment Reporting Information [Line Items] | ||
Assets | 2,651,901 | 762,696 |
Canada | ||
Segment Reporting Information [Line Items] | ||
Assets | 29,320 | 5,447 |
Mexico | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 0 | $ 261 |