Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 05, 2022 | |
Entity Listings [Line Items] | ||
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2022 | |
Entity Registrant Name | TARGET HOSPITALITY CORP. | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 96,936,785 | |
Entity Central Index Key | 0001712189 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-38343 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 98-1378631 | |
Entity Address, Address Line One | 9320 Lakeside Boulevard, Suite 300 | |
Entity Address, City or Town | The Woodlands | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77381 | |
City Area Code | 800 | |
Local Phone Number | 832-4242 | |
Common Stock [Member] | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Common stock, par value $0.0001 per share | |
Trading Symbol | TH | |
Security Exchange Name | NASDAQ | |
Warrants to purchase common stock [Member] | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Warrants to purchase common stock | |
Trading Symbol | THWWW | |
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 5,824 | $ 23,406 |
Accounts receivable, less allowance for doubtful accounts of $206 and $43, respectively | 41,463 | 28,780 |
Prepaid expenses and other assets | 7,292 | 8,350 |
Total current assets | 54,579 | 60,536 |
Specialty rental assets, net | 281,837 | 291,792 |
Other property, plant and equipment, net | 11,524 | 11,252 |
Goodwill | 41,038 | 41,038 |
Other intangible assets, net | 84,849 | 88,485 |
Deferred tax asset | 13,985 | 14,710 |
Deferred financing costs revolver, net | 1,846 | 2,159 |
Other non-current assets | 2,880 | 3,420 |
Total assets | 492,538 | 513,392 |
Current liabilities: | ||
Accounts payable | 12,249 | 11,803 |
Accrued liabilities | 17,774 | 33,126 |
Deferred revenue and customer deposits | 1,960 | 27,138 |
Current portion of capital lease and other financing obligations (Note 8) | 816 | 729 |
Total current liabilities | 32,799 | 72,796 |
Long-term debt (Note 8): | ||
Principal amount | 340,000 | 340,000 |
Less: unamortized original issue discount | (1,511) | (1,681) |
Less: unamortized term loan deferred financing costs | (7,284) | (8,107) |
Long-term debt, net | 331,205 | 330,212 |
Revolving credit facility (Note 8) | 16,000 | |
Long-term capital lease and other financing obligations | 903 | 696 |
Other non-current liabilities | 1,567 | 1,465 |
Deferred revenue and customer deposits | 6,825 | 7,273 |
Asset retirement obligations | 2,105 | 2,079 |
Warrant liabilities | 2,827 | 1,600 |
Total liabilities | 394,231 | 416,121 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Common Stock, $0.0001 par, 400,000,000 authorized, 106,367,450 issued and 96,936,785 outstanding as of March 31, 2022 and 106,367,450 issued and 101,952,683 outstanding as of December 31, 2021. | 10 | 10 |
Common Stock in treasury at cost, 9,430,665 shares as of March 31, 2022 and 4,414,767 shares as of December 31, 2021. | (23,559) | (23,559) |
Additional paid-in-capital | 110,098 | 109,538 |
Accumulated other comprehensive loss | (2,480) | (2,462) |
Accumulated earnings | 14,238 | 13,744 |
Total stockholders' equity | 98,307 | 97,271 |
Total liabilities and stockholders' equity | $ 492,538 | $ 513,392 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Consolidated Balance Sheets | ||
Allowance for doubtful accounts | $ 206 | $ 43 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock shares authorized | 400,000,000 | 400,000,000 |
Common stock shares issued | 106,367,450 | 106,367,450 |
Common stock, Number of share outstanding | 96,936,785 | 101,952,683 |
Treasury stock, shares | 9,430,665 | 4,414,767 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue: | ||
Revenue, Topic 606 | $ 58,675 | $ 33,872 |
Revenue | 80,335 | 45,492 |
Costs: | ||
Depreciation of specialty rental assets | 12,800 | 12,440 |
Gross profit | 27,916 | 11,461 |
Selling, general and administrative | 11,759 | 11,332 |
Other depreciation and amortization | 3,995 | 3,996 |
Other expense (income), net | (219) | 246 |
Operating income (loss) | 12,381 | (4,113) |
Interest expense, net | 9,572 | 9,849 |
Change in fair value of warrant liabilities | 1,227 | 640 |
Income (loss) before income tax | 1,582 | (14,602) |
Income tax expense (benefit) | 1,088 | (1,464) |
Net income (loss) | 494 | (13,138) |
Other comprehensive loss | ||
Foreign currency translation | (18) | (19) |
Comprehensive income (loss) | $ 476 | $ (13,157) |
Two Class Method: | ||
Weighted average number shares outstanding - basic | 96,936,785 | 96,168,425 |
Weighted average number shares outstanding - diluted | 96,936,785 | 96,168,425 |
Net income (loss) per share - basic | $ 0.01 | $ (0.14) |
Net income (loss) per share - diluted | $ 0.01 | $ (0.14) |
Services | ||
Revenue: | ||
Revenue, Topic 606 | $ 58,675 | $ 32,938 |
Costs: | ||
Costs | 34,691 | 19,349 |
Specialty rental | ||
Revenue: | ||
Revenue, subject to ASC 840 | 21,660 | 11,620 |
Costs: | ||
Costs | $ 4,928 | 2,242 |
Construction fee | ||
Revenue: | ||
Revenue, Topic 606 | $ 934 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Earnings | Total |
Beginning Balances at Dec. 31, 2020 | $ 10 | $ (23,559) | $ 106,551 | $ (2,434) | $ 18,320 | $ 98,888 |
Beginning Balances (In Shares) at Dec. 31, 2020 | 101,170,915 | 4,414,767 | ||||
Net income (loss) | (13,138) | (13,138) | ||||
Stock-based compensation | 761 | 761 | ||||
Stock-based compensation (in shares) | 65,338 | |||||
Shares used to settle payroll tax withholding | (51) | (51) | ||||
Cumulative translation adjustment | (19) | (19) | ||||
Ending Balances at Mar. 31, 2021 | $ 10 | $ (23,559) | 107,261 | (2,453) | 5,182 | 86,441 |
Ending Balances (In shares) at Mar. 31, 2021 | 101,236,253 | 4,414,767 | ||||
Beginning Balances at Dec. 31, 2021 | $ 10 | $ (23,559) | 109,538 | (2,462) | 13,744 | 97,271 |
Beginning Balances (In Shares) at Dec. 31, 2021 | 101,952,683 | 4,414,767 | ||||
Net income (loss) | 494 | 494 | ||||
Stock-based compensation | 560 | 560 | ||||
Cumulative translation adjustment | (18) | (18) | ||||
Ending Balances at Mar. 31, 2022 | $ 10 | $ (23,559) | $ 110,098 | $ (2,480) | $ 14,238 | $ 98,307 |
Ending Balances (In shares) at Mar. 31, 2022 | 96,936,785 | 9,430,665 | ||||
Cancelled common stock | (5,015,898) | 5,015,898 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 494 | $ (13,138) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation | 13,159 | 12,777 |
Amortization of intangible assets | 3,636 | 3,658 |
Accretion of asset retirement obligation | 25 | 50 |
Amortization of deferred financing costs | 1,136 | 1,050 |
Amortization of original issue discount | 171 | 153 |
Change in fair value of warrant liabilities | 1,227 | 640 |
Stock-based compensation expense | 3,337 | 761 |
Gain on disposal of specialty rental assets and other property, plant and equipment | (125) | |
Deferred income taxes | 725 | (1,735) |
Provision for loss on receivables, net of recoveries | 60 | 220 |
Changes in operating assets and liabilities | ||
Accounts receivable | (12,780) | (2,979) |
Related party receivable | 1,225 | |
Prepaid expenses and other assets | 1,060 | 676 |
Accounts payable and other accrued liabilities | (17,591) | (11,146) |
Deferred revenue and customer deposits | (25,626) | (642) |
Other non-current assets and liabilities | 512 | 431 |
Net cash used in operating activities | (30,580) | (7,999) |
Cash flows from investing activities: | ||
Purchase of specialty rental assets | (2,843) | (3,173) |
Purchase of property, plant, and equipment | (117) | (29) |
Proceeds from sale of specialty rental assets and other property, plant and equipment | 125 | |
Net cash used in investing activities | (2,835) | (3,202) |
Cash flows from financing activities: | ||
Principal payments on finance and capital lease obligations | (169) | (1,361) |
Principal payments on borrowings from ABL Facility | (6,000) | |
Proceeds from borrowings on ABL Facility | 16,000 | 18,000 |
Restricted shares surrendered to pay tax liabilities | (51) | |
Net cash provided by financing activities | 15,831 | 10,588 |
Effect of exchange rate changes on cash and cash equivalents | 2 | 7 |
Net decrease in cash and cash equivalents | (17,582) | (606) |
Cash and cash equivalents - beginning of period | 23,406 | 6,979 |
Cash and cash equivalents - end of period | 5,824 | $ 6,373 |
Non-cash investing and financing activity: | ||
Non-cash change in accrued capital expenditures | (52) | |
Non-cash change in capital lease obligations | $ (463) |
Organization and Nature of Oper
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | 1. Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies Organization and Nature of Operations Target Hospitality Corp. (“Target Hospitality” and, together with its subsidiaries, the “Company”) was formed on March 15, 2019 and is one of North America’s largest providers of vertically integrated specialty rental and value-added hospitality services. The Company provides vertically integrated specialty rental and comprehensive hospitality services including: catering and food services, maintenance, housekeeping, grounds-keeping, security, health and recreation services, overall workforce community management, and laundry service. Target Hospitality serves clients in energy and natural resources and government sectors principally located in the West Texas, South Texas, Oklahoma and Midwest regions. The Company, whose securities are listed on the Nasdaq Capital Market, serves as the holding company for the businesses of Target Logistics Management, LLC and its subsidiaries (“Target”) and RL Signor Holdings, LLC and its subsidiaries (“Signor”). TDR Capital LLP (“TDR Capital” or “TDR”) indirectly owns approximately 64% of Target Hospitality and the remaining ownership is broken out among the founders of the Company’s legal predecessor, Platinum Eagle Acquisition Corp. (“Platinum Eagle” or “PEAC”), investors in Platinum Eagle’s private placement transaction completed substantially and concurrently with the Business Combination (as defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 11, 2022 (the “2021 Form 10-K”)), and other public shareholders. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Certain information in footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) has been condensed or omitted pursuant to those rules and regulations. The financial statements included in this report should be read in conjunction with the Target Hospitality 2021 Form 10-K. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2022 or any future period. The accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of financial position as of March 31, 2022, and results of operations for the three months ended March 31, 2022 and 2021, and cash flows for the three months ended March 31, 2022 and 2021. The consolidated balance sheet as of December 31, 2021, was derived from the audited consolidated balance sheets of Target Hospitality but does not contain all of the footnote disclosures from those annual financial statements. Use of Estimates The preparation of financial statements in conformity with US GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. If the underlying estimates and assumptions upon which the financial statements are based change in future periods, actual amounts may differ from those included in the accompanying unaudited consolidated financial statements. Principles of Consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries that it controls due to ownership of a majority voting interest. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. All intercompany balances and transactions are eliminated. Revenue Recognition The Company derives revenue from specialty rental and hospitality services, specifically lodging and related ancillary services. Revenue is recognized in the period in which lodging and services are provided pursuant to the terms of contractual relationships with the customers. Certain arrangements contain a lease of lodging facilities to customers. The leases are accounted for as an operating lease under the authoritative guidance for leases and are recognized as income using the straight-line method over the term of the lease agreement. Because performance obligations related to specialty rental and hospitality services are satisfied over time, the majority of our revenue is recognized on a daily basis, for each night a customer stays, at a contractual day rate. Our customers typically contract for accommodation services under committed contracts with terms that most often range from several months to three years. Our payment terms vary by type and location of our customer and the service offered. The time between invoicing and when payment is due is not significant. When lodging and services are billed and collected in advance, recognition of revenue is deferred until services are rendered. Certain of the Company’s contractual arrangements allow customers the ability to use paid but unused lodging and services for a specified period. The Company recognizes revenue for these paid but unused lodging and services as they are consumed, as it becomes probable the lodging and services will not be used, or upon expiration of the specified term. Cost of services includes labor, food, utilities, supplies, rent and other direct costs associated with operating the lodging units as well as costs associated with construction services. Cost of rental includes leasing costs and other direct costs of maintaining the lodging units. Costs associated with contracts include sales commissions which are expensed as incurred and reflected in selling, general and administrative expenses in the consolidated statements of comprehensive income (loss). Additionally, the Company collects sales, use, occupancy and similar taxes, which the Company presents on a net basis (excluded from revenues) in the consolidated statements of comprehensive income (loss). Recently Issued Accounting Standards and Disclosure Guidance The Company meets the definition of an emerging growth company (“EGC”) as defined under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). In reliance on exemptions provided under the JOBS Act for EGCs, the Company has elected to defer compliance with new or revised financial accounting standards until a company that is not an issuer (as defined under section 2(a) of the Sarbanes-Oxley Act of 2002) is required to comply with such standards. As such, compliance dates included below pertain to non-issuers, and as permitted, early adoption dates are indicated. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (ASC 840) 840, the new standard reflects updates to, among other things, align with certain changes to the lessee model. In June 2020, the FASB issued ASU No. 2020-05 to delay the effective date for the new standard for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022 for non-issuers (including EGCs). Early application continues to be allowed. Topic 842 allows an entity to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach or to adopt under the new optional transition method that allows an entity to recognize a cumulative-effect adjustment to the opening balance of retained earnings as of the adoption date. The Company is currently evaluating the impact of the pronouncement on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses ASU 2016-13 or Topic 326 Codification Improvements to Topic 326, Financial Instruments - Credit Losses Disclosure guidance adopted in 2021 Amendments to Management's Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2022 | |
Revenue | |
Revenue | 2. Revenue Total revenue recognized under Topic 606 was $58.7 million and $33.9 million for the three months ended March 31, 2022 and 2021, respectively, while specialty rental income was $21.7 million and $11.6 million subject to the guidance of ASC 840 for the three months ended March 31, 2022 and 2021, respectively. The following table disaggregates our revenue by our four reportable segments as well as the All Other category: Hospitality & Facilities Services – South (“HFS – South”), Hospitality & Facilities Services – Midwest (“HFS – Midwest”), Government, TCPL Keystone, and All Other for the dates indicated below: For the Three Months Ended March 31, 2022 2021 HFS - South Services income $ 30,123 $ 23,202 Total HFS - South revenues 30,123 23,202 HFS - Midwest Services income $ 977 $ 597 Total HFS - Midwest revenues 977 597 Government Services income $ 26,583 $ 8,310 Total Government revenues 26,583 8,310 TCPL Keystone Services income $ - $ 537 Construction fee income - 934 Total TCPL Keystone revenues - 1,471 All Other Services income $ 992 $ 292 Total All Other revenues 992 292 Total revenues $ 58,675 $ 33,872 On July 23, 2021, the Company executed a Termination and Settlement Agreement with TC Energy (the “Termination and Settlement Agreement”), which effectively terminated the Company’s contract with TC Energy that was originated in 2013. The Termination and Settlement Agreement also released the Company from any outstanding work performance obligations under the 2013 contract (including all change orders, limited notices to proceed, and amendments). Additionally, the Termination and Settlement Agreement resulted in an agreed upon termination fee of approximately $5 million that was collected in cash on July 27, 2021. This Termination and Settlement Agreement also resulted in the recognition of approximately $4.9 million of deferred revenue as of the effective date of the Termination and Settlement Agreement. No further revenue will be generated from the 2013 contract and as of March 31, 2022, there are no unrecognized deferred revenue amounts or costs for incomplete projects related to this contract following such termination. The Company routinely monitors the financial stability of our customers, which involves a high degree of judgment in assessing customers’ historical time to pay, financial condition and various customer-specific factors. Contract Assets and Liabilities We do not have any contract assets. Contract liabilities primarily consist of deferred revenue that represent payments for room nights that the customer may use in the future as well as an advanced payment for a community build that is being recognized over the related contract period. Activity in the deferred revenue accounts as of the dates indicated below was as follows: For Three Months Ended March 31, 2022 2021 Balances at Beginning of the Period $ 34,411 $ 18,371 Additions to deferred revenue 1,711 614 Revenue recognized (27,337) (1,256) Balances at End of the Period $ 8,785 $ 17,729 As of March 31, 2022, for contracts greater than one year, the following table discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue, and only represents revenue expected to be recognized from contracts where the price and quantity of the product or service are fixed: For the Years Ended December 31, 2022 2023 2024 2025 2026 Total Revenue expected to be recognized as of March 31, 2022 $ 36,363 $ 22,731 $ 18,873 $ 18,775 $ 14,044 $ 110,786 The Company applied some of the practical expedients in Topic 606, including the “right to invoice” practical expedient, and does not disclose consideration for remaining performance obligations with an original expected duration of one year or less or for variable consideration related to unsatisfied (or partially unsatisfied) performance obligations for contracts without minimum revenue commitments. Due to the application of these practical expedients, the table above represents only a portion of the Company’s expected future consolidated revenues and it is not necessarily indicative of the expected trend in total revenues. |
Specialty Rental Assets, Net
Specialty Rental Assets, Net | 3 Months Ended |
Mar. 31, 2022 | |
Specialty Rental Assets, Net | |
Specialty Rental Assets, Net | 3. Specialty Rental Assets, Net Specialty rental assets, net at the dates indicated below consisted of the following: March 31, December 31, 2022 2021 Specialty rental assets $ 584,511 $ 582,527 Construction-in-process 4,351 3,557 Less: accumulated depreciation (307,025) (294,292) Specialty rental assets, net $ 281,837 $ 291,792 Depreciation expense related to specialty rental assets was $12.8 million and $12.4 million for three months ended March 31, 2022 and 2021, respectively, and is included in depreciation of specialty rental assets in the consolidated statements of comprehensive income (loss). |
Other Property, Plant and Equip
Other Property, Plant and Equipment, Net | 3 Months Ended |
Mar. 31, 2022 | |
Other Property, Plant and Equipment, Net | |
Other Property, Plant and Equipment, Net | 4. Other Property, Plant and Equipment, Net Other property, plant and equipment, net at the dates indicated below, consisted of the following: March 31, December 31, 2022 2021 Land $ 9,163 $ 9,163 Buildings and leasehold improvements 248 191 Machinery and office equipment 1,360 1,300 Software and other 5,861 5,347 16,632 16,001 Less: accumulated depreciation (5,108) (4,749) Total other property, plant and equipment, net $ 11,524 $ 11,252 Depreciation expense related to other property, plant and equipment was $0.4 million and $0.3 million for the three months ended March 31, 2022 and 2021, respectively, and is included in other depreciation and amortization in the consolidated statements of comprehensive income (loss). |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets, net | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Other Intangible Assets, net | |
Goodwill and Other Intangible Assets, net | 5. Goodwill and Other Intangible Assets, net The financial statements reflect goodwill from previous acquisitions that is all attributable to the HFS – South business segment and reporting unit. Changes in the carrying amount of goodwill were as follows: HFS - South Balance at January 1, 2021 $ 41,038 Changes in Goodwill - Balance at December 31, 2021 41,038 Changes in Goodwill - Balance at March 31, 2022 $ 41,038 Intangible assets other than goodwill at the dates indicated below consisted of the following: March 31, 2022 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 5.3 $ 128,907 $ (60,458) $ 68,449 Total 128,907 (60,458) 68,449 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 145,307 $ (60,458) $ 84,849 December 31, 2021 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 5.6 $ 128,907 $ (56,822) $ 72,085 Total 128,907 (56,822) 72,085 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 145,307 $ (56,822) $ 88,485 For the three months ended March 31, 2022 and 2021, amortization expense related to intangible assets was $3.6 million and $3.7 million, respectively, and is included in other depreciation and amortization in the consolidated statements of comprehensive income (loss). The estimated aggregate amortization expense as of March 31, 2022 for each of the next five years and thereafter is as follows: Rest of 2022 $ 9,666 2023 12,881 2024 12,881 2025 12,881 2026 12,285 Thereafter 7,855 Total $ 68,449 |
Other Non-Current Assets
Other Non-Current Assets | 3 Months Ended |
Mar. 31, 2022 | |
Other Non-Current Assets | |
Other Non-Current Assets | 6. Other Non-Current Assets Other non-current assets include capitalized software implementation costs for the implementation of cloud computing systems. As of the dates indicated below, capitalized implementation costs and related accumulated amortization in other non-current assets on the consolidated balance sheets amounted to the following: March 31, December 31, 2022 2021 Cloud computing implementation costs $ 7,198 $ 7,198 Less: accumulated amortization (4,385) (3,844) Other non-current assets $ 2,813 $ 3,354 Such systems were placed into service beginning January of 2020 at which time the Company began to amortize these capitalized costs on a straight-line basis over the period of the remaining service arrangements of between 2 and 4 years. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2022 | |
Accrued Liabilities | |
Accrued Liabilities | 7. Accrued Liabilities Accrued liabilities as of the dates indicated below consists of the following: March 31, December 31, 2022 2021 Employee accrued compensation expense $ 3,277 $ 12,473 Other accrued liabilities 12,962 11,033 Accrued interest on debt 1,535 9,620 Total accrued liabilities $ 17,774 $ 33,126 Other accrued liabilities in the above table relates primarily to accrued utilities, rent, real estate and sales taxes, state income taxes, and other accrued operating expenses. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2022 | |
Debt | |
Debt | 8. Debt Senior Secured Notes 2024 In connection with the closing of the Business Combination, Arrow Bidco, LLC, a Delaware limited liability company (“Bidco”) issued $340 million in aggregate principal amount of 9.50% senior secured notes due March 15, 2024 (the “2024 Senior Secured Notes” or “Notes”) under an indenture dated March 15, 2019 (the “Indenture”). The Indenture was entered into by and among Bidco, the guarantors named therein (the “Note Guarantors”), and Deutsche Bank Trust Company Americas, as trustee and as collateral agent. Interest is payable semi-annually on September 15 and March 15 and began September 15, 2019. Refer to table below for a description of the amounts related to the Notes. Principal Unamortized Original Issue Discount Unamortized Deferred Financing Costs 9.50% Senior Secured Notes, due 2024 $ 340,000 $ 1,511 $ 7,284 If Bidco undergoes a change of control or sells certain of its assets, Bidco may be required to offer to repurchase the Notes. On or after March 15, 2021, Bidco at its option, may redeem the Notes, in whole or part, upon not less than fifteen (15) and not more than sixty (60) days’ prior written notice to holders and not less than twenty (20) days’ prior written notice to the trustee (or such shorter timeline as the trustee may agree), at the redemption price expressed as a percentage of principal amount set forth below, plus accrued and unpaid interest thereon but not including the applicable redemption date (subject to the right of Note holders on the relevant record date to receive interest due on an interest payment date falling on or prior to the redemption date), if redeemed during the 12-month period beginning August 15 of each of the years set below. Redemption Year Price 2022 102.375% 2023 and thereafter 100.000% The Notes are unconditionally guaranteed by Topaz Holdings LLC, a Delaware limited liability company (“Topaz”) and each of Bidco’s direct and indirect wholly-owned domestic subsidiaries (collectively, the “Note Guarantors”). Target Hospitality is not an issuer or a guarantor of the Notes. The Note Guarantors are either borrowers or guarantors under the ABL Facility. To the extent lenders under the ABL Facility release the guarantee of any Note Guarantor, such Note Guarantor is also released from obligations under the Notes. These guarantees are secured by a second priority security interest in substantially all of the assets of Bidco and the Note Guarantors (subject to customary exclusions). The guarantees of the Notes by TLM Equipment, LLC, a Delaware limited liability company (“TLM Equipment LLC”) which holds certain of Target Hospitality’s assets, are subordinated to its obligations under the ABL Facility (as defined below). The Notes contain certain negative covenants, including limitations that restrict Bidco’s ability and the ability of certain of its subsidiaries, to directly or indirectly, create additional financial obligations. With certain specified exceptions, these negative covenants prohibit Bidco and certain of its subsidiaries from: creating or incurring additional debt; paying dividends or making any other distributions with respect to its capital stock; making loans or advances to Bidco or any restricted subsidiary of Bidco; selling, leasing or transferring any of its property or assets to Bidco or any restricted subsidiary of Bidco; directly or indirectly creating, incurring or assuming any lien of any kind securing debt on the collateral; or entering into any sale and leaseback transaction. In connection with the issuance of the Notes, there was an original issue discount of approximately $3.3 million and the unamortized balance of approximately $1.5 million is presented on the face of the consolidated balance sheet as of March 31, 2022 as a reduction of the principal. The discount is amortized over the life of the Notes using the effective interest method. Bidco’s ultimate parent, Target Hospitality, has no significant independent assets or operations except as included in the guarantors of the Senior Secured Notes, the guarantees under the Notes are full and unconditional and joint and several, and any subsidiaries of Target Hospitality that are not subsidiary guarantors of the Notes are minor. There are also no significant restrictions on the ability of Target Hospitality or any guarantor to obtain funds from its subsidiaries by dividend or loan. See discussion of certain negative covenants above. Therefore, pursuant to the SEC Rules, no individual guarantor financial statement disclosures are deemed necessary. Capital Lease and Other Financing Obligations The Company’s capital lease and other financing obligations as of March 31, 2022 consisted of approximately $1.6 million of capital leases. The capital leases pertain to leases entered into during 2019 through 2022, for commercial-use vehicles with 36-month The Company’s capital lease and other financing obligations as of December 31, 2021 consisted of approximately $1.4 million of capital leases related to commercial-use vehicles with the same terms as described above. ABL Facility On the Closing Date, in connection with the closing of the Business Combination, Topaz, Bidco, Target, Signor and each of their domestic subsidiaries entered into an ABL credit agreement that provides for a senior secured asset based revolving credit facility in the aggregate principal amount of up to $125 million (the “ABL Facility”). The historical debt of Bidco, Target and their respective subsidiaries under the former ABL facility of Algeco Seller was settled at the time of the consummation of the Business Combination on the Closing Date. Approximately $40 million of proceeds from the ABL Facility were used to finance a portion of the consideration payable and fees and expenses incurred in connection with the Business Combination. During 2021, the Company repaid a net amount of $48 million of borrowings under the ABL Facility from excess cash available which reduced the outstanding balance to $0 as of December 31, 2021. During the three months ended March 31, 2022, a net amount of $16 million was drawn on the ABL Facility. Borrowings under the ABL Facility, at the relevant borrower’s (the borrowers under the ABL Facility, the “ABL Borrowers”) option, bear interest at either (1) an adjusted LIBOR or (2) a base rate, in each case plus an applicable margin. The applicable margin is 2.50% with respect to LIBOR borrowings and 1.50% with respect to base rate borrowings. Commencing at the completion of the first full fiscal quarter after the Closing Date, the applicable margin for borrowings under the ABL Facility is subject to one step-down of 0.25% and one step-up of 0.25%, based on achieving certain excess availability levels with respect to the ABL Facility. The ABL Facility provides borrowing availability of an amount equal to the lesser of (i) (a) $125 million and (b) the Borrowing Base (defined below) (the “Line Cap”). The Borrowing Base is, at any time of determination, an amount (net of reserves) equal to the sum of: ● 85% of the net book value of the Borrowers’ eligible accounts receivables, plus ● the lesser of (i) 95% of the net book value of the Borrowers’ eligible rental equipment and (ii) 85% of the net orderly liquidation value of the Borrowers’ eligible rental equipment, minus ● customary reserves The ABL Facility includes borrowing capacity available for standby letters of credit of up to $15 million and for ‘‘swingline’’ loan borrowings of up to $15 million. Any issuance of letters of credit or making of a swingline loan will reduce the amount available under the ABL Facility. In addition, the ABL Facility will provide the Borrowers with the option to increase commitments under the ABL Facility in an aggregate amount not to exceed $75 million plus any voluntary prepayments that are accompanied by permanent commitment reductions under the ABL Facility. The termination date of the ABL Facility is September 15, 2023. The obligations under the ABL Facility are unconditionally guaranteed by Topaz and each existing and subsequently acquired or organized direct or indirect wholly-owned U.S. organized restricted subsidiary of Bidco (together with Topaz, the “ABL Guarantors”), other than certain excluded subsidiaries. The ABL Facility is secured by (i) a first priority pledge of the equity interests of Topaz, Bidco, Target, and Signor (the “Borrowers) and of each direct, wholly-owned US organized restricted subsidiary of any Borrower or any ABL Guarantor, (ii) a first priority pledge of up to 65% of the voting equity interests in each non-US restricted subsidiary of any Borrower or ABL Guarantor and (iii) a first priority security interest in substantially all of the assets of the Borrower and the ABL Guarantors (in each case, subject to customary exceptions). The ABL Facility requires the Borrowers to maintain a (i) minimum fixed charge coverage ratio of 1.00:1.00 and (ii) maximum total net leverage ratio of 4.00:1.00, at any time when the excess availability under the ABL Facility is less than the greater of (a) $15.625 million and (b) 12.5% of the Line Cap. The ABL Facility also contains a number of customary negative covenants. Such covenants, among other things, limit or restrict the ability of each of the Borrowers, their restricted subsidiaries, and where applicable, Topaz, to: ● incur additional indebtedness, issue disqualified stock and make guarantees; ● incur liens on assets; ● engage in mergers or consolidations or fundamental changes; ● sell assets; ● pay dividends and distributions or repurchase capital stock; ● make investments, loans and advances, including acquisitions; ● amend organizational documents and master lease documents; ● enter into certain agreements that would restrict the ability to pay dividends; ● repay certain junior indebtedness; and ● change the conduct of its business. The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that grant the ABL Borrowers continued flexibility to operate and develop their businesses. The ABL Facility also contains certain customary representations and warranties, affirmative covenants and events of default. The carrying value of debt outstanding as of the dates indicated below consist of the following: March 31, December 31, 2022 2021 Capital lease and other financing obligations $ 1,719 $ 1,425 ABL Facility 16,000 — 9.50% Senior Secured Notes due 2024, face amount 340,000 340,000 Less: unamortized original issue discount (1,511) (1,681) Less: unamortized term loan deferred financing costs (7,284) (8,107) Total debt, net 348,924 331,637 Less: current maturities (816) (729) Total long-term debt $ 348,108 $ 330,908 Interest expense, net The components of interest expense, net (which includes interest expense incurred) recognized in the unaudited consolidated statements of comprehensive income (loss) for the periods indicated below consist of the following: For the three months ended March 31, March 31, 2022 2021 Interest incurred on capital lease and other financing obligations $ 14 $ 30 Interest expense incurred on ABL Facility and Notes 8,251 8,616 Amortization of deferred financing costs on ABL facilities and Notes 1,136 1,050 Amortization of original issue discount on Notes 171 153 Interest expense, net $ 9,572 $ 9,849 Deferred Financing Costs and Original Issue Discount The Company presents unamortized deferred financing costs and unamortized original issue discount as a direct deduction from the principal amount of the Notes on the consolidated balance sheets as of March 31, 2022 and December 31, 2021. Accumulated amortization expense related to the deferred financing costs was approximately $8.6 million and $7.8 million as of March 31, 2022 and December 31, 2021, respectively. Accumulated amortization of the original issue discount was approximately $1.8 million and $1.6 million as of March 31, 2022 and December 31, 2021, respectively. Accumulated amortization related to revolver deferred financing costs for both the former Algeco ABL facility and ABL Facility was approximately $3.8 million and $3.7 million as of March 31, 2022 and December 31, 2021, respectively. Revolver deferred financing costs are presented on the consolidated balance sheet as of March 31, 2022 and December 31, 2021 within deferred financing costs revolver, net. Refer to the components of interest expense in the table above for the amounts of the amortization expense related to the deferred financing costs and original issue discount recognized for each of these debt instruments for the three months ended March 31, 2022 and 2021, respectively. Future maturities The aggregate annual principal maturities of debt and capital lease obligations for each of the next five years and thereafter, based on contractual terms are listed in the table below. The schedule of future maturities as of March 31, 2022, consists of the following: Rest of 2022 $ 627 2023 16,638 2024 340,354 2025 19 Total $ 357,638 |
Warrant Liabilities
Warrant Liabilities | 3 Months Ended |
Mar. 31, 2022 | |
Warrant Liabilities | |
Warrant Liabilities | 9. Warrant Liabilities On January 17, 2018, Harry E. Sloan, Joshua Kazam, Fredric D. Rosen, the Sara L. Rosen Trust and the Samuel N. Rosen 2015 Trust, purchased from PEAC an aggregate of 5,333,334 warrants at a price of $1.50 per warrant (for an aggregate purchase price of $8.0 million) in a private placement (the “Private Warrants”) that occurred simultaneously with the completion of the Public Offering as defined in Note 15. Each Private Warrant entitles the holder to purchase one share of common stock at $11.50 per share. The purchase price of the Private Warrants was added to the proceeds from the Public Offering and was held in the Trust Account until the closing of the Business Combination. The Private Warrants (including the shares of Common Stock issuable upon exercise of the Private Warrants) were not transferable, assignable or salable until 30 days after the closing date of the Business Combination, and they may be exercised on a cashless basis and are non-redeemable so long as they are held by the initial purchasers of the Private Warrants or their permitted transferees. The Company evaluated the Private Warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity Subsequent changes in the estimated fair value of the Private Warrants are reflected in the change in fair value of warrant liabilities in the accompanying consolidated statement of comprehensive income (loss). The change in the estimated fair value of the Private Warrants resulted in a loss of approximately $1.2 million and $0.6 million for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022 and 2021, 5,333,334 Private Warrants were outstanding, which expire no later than five years after the completion of the Business Combination (March 15, 2024) if they remain unredeemed. The Company determined the following estimated fair values for the outstanding Private Warrants as of the dates indicated below: March 31, December 31, 2022 2021 Warrant liabilities $ 2,827 $ 1,600 Total $ 2,827 $ 1,600 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Taxes | |
Income Taxes | 10. Income Taxes Income tax expense (benefit) was approximately $1.1 The effective tax rates for the three months ended March 31, 2022 and 2021, respectively, significantly differs from the US federal statutory rate of 21% primarily due to nonrecognition of tax benefits for loss jurisdictions, the permanent add-back related to the change in fair value of warrant liabilities on the Company’s warrants, the impact of state tax expense based off of gross receipts, and a compensation deduction limitation during the three months ended March 31, 2022. The Company accounts for income taxes in interim periods under ASC 740-270, Income Taxes – Interim Reporting |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 11. Fair Value of Financial Instruments The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Company has assessed that the fair value of cash and cash equivalents, trade receivables, trade payables, other current liabilities, and other debt approximates their carrying amounts largely due to the short-term maturities or recent commencement of these instruments. The fair value of the ABL Facility is primarily based upon observable market data, such as market interest rates, for similar debt. The fair value of the Notes is based upon observable market data. The Company measured the Private Warrant liabilities at fair value on a recurring basis at each reporting period end as more fully discussed below. Changes in the fair value of the Level 1 & 2 Disclosures: The carrying amounts and fair values of financial assets and liabilities, which are either Level 1 or Level 2, are as follows: March 31, 2022 December 31, 2021 Financial Assets (Liabilities) Not Measured at Fair Value Carrying Amount Fair Value Carrying Amount Fair Value ABL Facility (See Note 8) - Level 2 $ (16,000) $ (16,000) $ — $ — Senior Secured Notes (See Note 8) - Level 1 $ (331,205) $ (346,793) $ (330,212) $ (348,075) Recurring fair value measurements Level 3 Disclosures: There were 5,333,334 Private Warrants outstanding as of March 31, 2022 and December 31, 2021. Based on the fair value assessment that was performed, the Company determined a fair value price per Private Warrant of $0.53 and $0.30 as of March 31, 2022 and December 31, 2021, respectively. The fair value is classified as Level 3 in the fair value hierarchy due to the use of pricing inputs that are less observable in the marketplace combined with management judgment required for the assumptions underlying the calculation of value. The Company determined the estimated fair value of the Private Warrants using the Black-Scholes option-pricing model. March 31, December 31, 2022 2021 Exercise Price $ 11.50 $ 11.50 Stock Price $ 6.00 $ 3.56 Dividend Yield % 0.00 % 0.00 Expected Term (in Years) 1.96 2.20 Risk-Free Interest Rate % 2.23 % 0.78 Expected Volatility % 48.00 % 64.00 Per Share Value of Warrants $ 0.53 $ 0.30 The following table presents changes in Level 3 liabilities measured at fair value for the three months ended March 31, 2022: Private Placement Warrants Balance at December 31, 2021 $ 1,600 Change in fair value of warrant liabilities 1,227 Balance at March 31, 2022 $ 2,827 There were no transfers of financial instruments between the three levels of the fair value hierarchy during the three months ended March 31, 2022 and 2021 and the year ended December 31, 2021. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 12. Commitments and Contingencies The Company is involved in various lawsuits or claims in the ordinary course of business. Management is of the opinion that there is no pending claim or lawsuit which, if adversely determined, would have a material impact on the financial condition of the Company. |
Related Parties
Related Parties | 3 Months Ended |
Mar. 31, 2022 | |
Related Parties | |
Related Parties | 13. Related Parties During the three months ended March 31, 2022 and 2021, the Company incurred $ 0 and $0.2 million, respectively, in commissions owed to related parties, included in selling, general and administrative expense in the accompanying consolidated statements of comprehensive income (loss). of March 31, 2022 and December 31, 2021. |
Earnings (Loss) per Share
Earnings (Loss) per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings (Loss) per Share | |
Earnings (Loss) per Share | 14. Earnings (Loss) per Share Basic earnings (loss) per share (“EPS” or “LPS”) is calculated by dividing net income or loss attributable to Target Hospitality by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed similarly to basic net income per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. During periods when net losses are incurred, potential dilutive securities would be anti-dilutive and are excluded from the calculation of diluted loss per share for that period. Net income was recorded for the three months ended March 31, 2022 and a net loss was recorded for the three months ended March 31, 2021. The following table presents basic and diluted EPS (LPS) for the periods indicated below ($ in thousands, except per share amounts): For the Three Months Ended March 31, March 31, 2022 2021 Numerator Net income (loss) attributable to Common Stockholders $ 494 $ (13,138) Denominator Weighted average shares outstanding - basic and diluted 96,936,785 96,168,425 Net income (loss) per share - basic and diluted $ 0.01 $ (0.14) 5,015,898 shares of the 8,050,000 shares of common stock held by the Founders, were placed into escrow subject to release pursuant to the terms of the earnout agreement entered into at the closing of the Business Combination by and between Harry E. Sloan, Jeff Sagansky, Eli Baker and the Company (the “Earnout Agreement”). Upon being placed into escrow, the voting and economic rights of the shares were suspended for the period they are in escrow. Given that the Founders are not entitled to vote or participate in the economic rewards available to the other shareholders with respect to these shares, these shares are not included in the EPS calculation for the three months ended March 31, 2021. In accordance with the Earnout Agreement, as of the expiration date of the earnout period (March 15, 2022), the 5,015,898 Founder Shares in escrow had not been released and were cancelled and returned to the Company to be held in treasury. As such, these cancelled shares were reclassed from common stock to common stock in treasury and continued to be excluded from the computation of EPS for the three months ended March 31, 2022. The Public and Private Warrants representing a total of 16,166,650 shares of the Company’s common stock for the three months ended March 31, 2022 and 2021, respectively, were excluded from the computation of EPS and LPS because they are considered anti-dilutive as the exercise price exceeds the average market price of the common stock during the applicable periods. As discussed in Note 16, stock-based compensation awards were outstanding for the three months ended March 31, 2022 and 2021, respectively. These stock-based compensation awards were excluded from the computation of EPS because their effect would have been anti-dilutive. Shares of treasury stock have been excluded from the computation of EPS. |
Stockholders Equity
Stockholders Equity | 3 Months Ended |
Mar. 31, 2022 | |
Stockholders Equity | |
Stockholders' Equity | 15. Stockholders’ Equity Common Stock As of March 31, 2022 and December 31, 2021, Target Hospitality had 106,367,450 shares of Common Stock, par value $0.0001 per share issued with 96,936,785 and 101,952,683 outstanding, respectively. Each share of Common Stock has one vote, except the voting rights related to the 5,015,898 of Founder Shares that were placed in escrow which were suspended subject to release pursuant to the terms of the Earnout Agreement. As of the expiration date of the earnout period (March 15, 2022), the 5,015,898 Founder Shares in escrow had not been released and were cancelled and returned to the Company to be held in treasury pursuant to the terms of the Earnout Agreement. As such, these cancelled Founder Shares were reclassed from common stock to common stock in treasury during the three months ended March 31, 2022 as presented in the accompanying unaudited consolidated statements of changes in stockholders’ equity. Preferred Shares Target Hospitality is authorized to issue 1,000,000 preferred shares at $0.0001 par value. As of March 31, 2022, no preferred shares were issued and outstanding. Public Warrants On January 17, 2018, PEAC sold 32,500,000 units at a price of $10.00 per unit (the “Units”) in its initial public offering (the “Public Offering”), including the issuance of 2,500,000 Units as a result of the underwriters’ partial exercise of their overallotment option. Each Unit consisted of one Class A ordinary share of PEAC, par value $0.0001 per share (the “Public Shares”), and one Each Public Warrant entitles the holder to purchase one share of the Company’s Common Stock at a price of $11.50 per share. No fractional shares will be issued upon exercise of the Public Warrants. If upon exercise of the Public Warrants, a holder would be entitled to receive a fractional interest in a share, the Company will upon exercise, round down to the nearest whole number, the number of shares to be issued to the Public Warrant holder. Each Public Warrant became exercisable 30 days after the completion of the Business Combination. As of March 31, 2022, the Company had 10,833,316 Public Warrants issued and outstanding. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2022 | |
Stock-Based Compensation | |
Stock-Based Compensation | 16. Stock-Based Compensation On February 24, 2022, the Compensation Committee (the “Compensation Committee”) of the Board adopted a new form Executive Restricted Stock Unit Agreement (the “RSU Agreement”) and a new form Executive Performance Stock Unit Agreement (the “PSU Agreement” and together with the RSU Agreement, the “Award Agreements”) with respect to the granting of restricted stock units (“RSUs”) and performance restricted stock units (“PSUs”), respectively, under the Target Hospitality Corp. 2019 Incentive Plan (the “Plan”). The new Award Agreements will be used for all awards to executive officers made on or after February 24, 2022. The RSU Agreement has material terms that are substantially similar to those in the form Executive Restricted Stock Unit Agreement last approved by the Compensation Committee and previously disclosed by the Company, except for the following: (x) the RSUs will vest in four equal installments on each of the first four anniversaries of the grant date and (y) if approval by the Company’s shareholders of the proposed increase in the number of shares available for issuance under the Plan at the 2022 annual meeting of the Company’s shareholders is not received, then all payments under the RSU Agreement will be made in cash. Each PSU awarded under the PSU Agreement represents the right to receive one share of the Company’s common stock, par value $0.0001 per share, or, at the Compensation Committee’s sole discretion, cash or part cash and part common stock with the cash amount equal to the fair market value of the common stock as of the date on which the restricted period ends. PSUs vest and become unrestricted on the third anniversary of the grant date. The number of PSUs that vest range from 0% to 150% of the Target Level (as defined in the PSU Agreement) depending upon the achievement of specified three-year Restricted Stock Units On January 3, 2022, the Compensation Committee awarded an aggregate of 10,861 time-based RSUs to one of the Company’s non-employee directors, which vest in full on May 18, 2022 or, if earlier, the date of the 2022 annual meeting of the stockholders. On February 24, 2022, the Compensation Committee awarded an aggregate of 1,085,548-time-based RSUs to certain of the Company’s executive officers and other employees, which vest ratably over a four-year period. For the three months ended March 31, 2022, as approved by the Compensation Committee, the employee related vested RSUs shown in the below table were paid in cash in the amount of approximately $0.4 million based on the closing stock price on the vesting date. The table below represents the changes in RSUs: Number of Shares Weighted Average Grant Date Fair Value per Share Balance at December 31, 2021 1,862,590 $ 3.00 Granted 1,096,409 3.01 Vested (116,837) 4.67 Balance at March 31, 2022 2,842,162 $ 2.94 Stock-based compensation expense for these RSUs recognized in selling, general and administrative expense in the consolidated statement of comprehensive income (loss) for the three months ended March 31, 2022 and 2021, was approximately $1.6 million and $0.6 million, respectively, with an associated tax benefit of approximately $0.4 million and $0.1 million, respectively. At March 31, 2022, unrecognized compensation expense related to RSUs totaled approximately $10.4 million and is expected to be recognized over a remaining term of approximately 3.06 years. Under the authoritative guidance for stock-based compensation, a portion of the RSUs outstanding at March 31, 2022 are considered liability-based awards due to an insufficient number of shares available under the plan to service these awards upon vesting. As such, the Company recognized a liability associated with these RSUs of approximately $1.7 million as of March 31, 2022, of which approximately $1.5 million is included in accrued liabilities and approximately $0.2 million is included in other non-current liabilities in the accompanying consolidated balance sheet as of March 31, 2022. As of December 31, 2021, the Company recognized a liability associated with these RSUs of approximately $0.8 million, of which approximately $0.5 million was included in accrued liabilities and approximately $0.3 million was included in other non-current liabilities in the accompanying consolidated balance sheet as of December 31, 2021. The estimated fair value of these liability-based awards was $3.56/RSU and $6.00/RSU as of December 31, 2021 and March 31, 2022, respectively. The fair value of these liability awards will be remeasured at each reporting period until the date of settlement or transferred to equity if there becomes an intent and ability to issue shares to service these RSUs upon vesting. Performance Stock Units On February 24, 2022, the Company awarded an aggregate of 245,017 time and performance-based PSUs to certain of the Company’s executive officers and management, which vest upon satisfaction of continued service with the Company until the third anniversary of the Grant Date and attainment of Company cash flow performance criteria. The table below represents the changes in PSUs: Number of Shares Weighted Average Grant Date Fair Value per Share Balance at December 31, 2021 — $ — Granted 245,017 3.01 Forfeited — — Vested — — Balance at March 31, 2022 245,017 $ 3.01 Stock-based compensation expense for these PSUs recognized in selling, general and administrative expense in the consolidated statement of comprehensive income (loss) for the three months ended March 31, 2022 was approximately $0.1 million with no material associated tax benefit. At March 31, 2022, unrecognized compensation expense related to PSUs totaled approximately $1.4 million and is expected to be recognized over a remaining term of approximately 2.91 years. Under the authoritative guidance for stock-based compensation, all of the PSUs granted during 2022 are considered liability-based awards due to an insufficient number of shares available under the plan to service these awards upon vesting. As such, the Company recognized a liability associated with these PSUs of approximately $0.05 million as of March 31, 2022, all of which is included in other non-current liabilities in the accompanying balance sheets. The estimated fair value of these liability-based awards was $6.00/PSU as of March 31, 2022. The fair value of these liability awards will be remeasured at each reporting period until the date of settlement. Stock Option Awards During the three months ended March 31, 2022, there were no new grants or other changes in the stock options outstanding. 821,569 stock options were exercisable at March 31, 2022. Stock-based compensation expense for these stock option awards recognized in selling, general and administrative expense in the unaudited consolidated statement of comprehensive income (loss) for the three months ended March 31, 2022 and 2021, was approximately $0.2 million and $0.3 million, respectively, with an associated tax benefit of approximately $0.1 million and $0.1 million, respectively. At March 31, 2022, unrecognized compensation expense related to stock options totaled $1.2 million and is expected to be recognized over a remaining term of approximately 1.64 years. The fair value of each option award at the grant date was estimated using the Black-Scholes option-pricing model with the following assumptions: Assumptions Weighted average expected stock volatility (range) % 25.94 - 30.90 Expected dividend yield % 0.00 Expected term (years) 6.25 Risk-free interest rate (range) % 0.82 - 2.26 Exercise price (range) $ 4.51 - 10.83 Weighted-average grant date fair value $ 1.42 The volatility assumption used in the Black-Scholes option-pricing model is based on peer group volatility as the Company does not have a sufficient trading history as a stand-alone public company to calculate volatility. Additionally, due to an insufficient history with respect to stock option activity and post vesting cancellations, the expected term assumption is based on the simplified method permitted under SEC rules, whereby, the simple average of the vesting period for each tranche of award and its contractual term is aggregated to arrive at a weighted average expected term for the award. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a dividend on its shares of common stock. Stock-based payments are subject to service-based vesting requirements and expense is recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur. No stock options were forfeited during the three months ended March 31, 2022. Stock Appreciation Right Awards On February 25, 2021 and August 5, 2021, the Compensation Committee granted SARs to certain of the Company’s executive officers and other employees. Each SAR represents a contingent right to receive, upon vesting, payment in cash or the Company’s Common Stock, as determined by the Compensation Committee, in an amount equal to the difference between (a) the fair market value of a Common Share on the date of exercise, over (b) the grant date price. The number of SARs granted to certain named executive officers and certain other employees totaled 1,578,537. During the three months ended March 31, 2022, there were no new grants or changes in the SARs outstanding. Under the authoritative guidance for stock-based compensation, these SARs are considered liability-based awards. The Company recognized a liability, associated with its SARs of approximately $2.6 million as of March 31, 2022, of which approximately $1.3 million is included in accrued liabilities and approximately $1.3 million is included in other non-current liabilities in the accompanying consolidated balance sheet as of March 31, 2022. The liability associated with these SAR awards recognized as of December 31, 2021, was approximately $1.2 million, all of which was included in other non-current liabilities in the accompanying consolidated balance sheet as of December 31, 2021. These SARs were valued using the Black-Scholes option pricing model with the following assumptions on the grant date: the expected volatility was approximately 43.5%, the term was 6.25 years, the dividend rate was 0.0% and the risk-free interest rate was approximately 1.07%, which resulted in a calculated fair value of approximately $0.78 per SAR as of the grant date. The estimated weighted-average fair value of each SAR as of December 31, 2021 and March 31, 2022 was $2.69 and $4.65, respectively. The fair value of these liability awards will be remeasured at each reporting period until the date of settlement. Increases and decreases in stock-based compensation expense are recognized over the vesting period, or immediately for vested awards. For the three months ended March 31, 2022 and 2021, the Company recognized compensation expense related to these awards of approximately $1.5 million and $0.04 million, respectively, in selling, general and administrative expense in the unaudited consolidated statements of comprehensive income (loss). At March 31, 2022, unrecognized compensation expense related to SARs totaled approximately $4.7 million and is expected to be recognized over a remaining weighted-average term of approximately 1.91 years. The volatility assumption used in the Black-Scholes option-pricing model is based on peer group volatility as the Company does not have a sufficient trading history as a stand-alone public company to calculate volatility. Additionally, due to an insufficient history with respect to stock appreciation right activity and post vesting cancellations, the expected term assumption is based on the simplified method permitted under SEC rules, whereby, the simple average of the vesting period for each tranche of award and its contractual term is aggregated to arrive at a weighted average expected term for the award. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a dividend on its shares of common stock. Stock-based payments are subject to service-based vesting requirements and expense is recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur. No SARs were forfeited for three months ended March 31, 2022. |
Retirement Plans
Retirement Plans | 3 Months Ended |
Mar. 31, 2022 | |
Retirement Plans | |
Retirement Plans | 17. Retirement plans We offer a defined contribution 401(k) retirement plan to substantially all of our U.S. employees. Participants may contribute from 1% to 90% of eligible compensation, inclusive of pretax and/or Roth deferrals (subject to Internal Revenue Service limitations), and we make matching contributions under this plan on the first 6% of the participant’s compensation (100% match of the first 3% employee contribution and 50% match on the next 3% contribution). Our matching contributions vest at a rate of 20% per year for each of the employee’s first five years of service and then are fully vested thereafter. For the three months ended March 31, 2022 and 2021, we recognized expense of $0.2 million and $0.2 million, respectively, related to these matching contributions. |
Business Segments
Business Segments | 3 Months Ended |
Mar. 31, 2022 | |
Business Segments | |
Business Segments | 18. Business Segments The Company is organized primarily on the basis of geographic region and customer industry group and operates in four reportable segments. Our remaining operating segments have been consolidated and included in an “All Other” category. The following is a brief description of our reportable segments and a description of business activities conducted by All Other. HFS – South — HFS – Midwest Government TCPL Keystone All Other — The table below presents information about reported segments for the three months ended March 31 (except for asset information for 2021 that is presented as of December 31): 2022 HFS - South HFS - Midwest Government TCPL Keystone All Other Total For the Three Months Ended March 31, 2022 Revenue $ 31,576 $ 977 $ 46,790 $ - $ 992 (a) $ 80,335 Adjusted gross profit $ 13,318 $ (500) $ 27,876 $ - $ 22 $ 40,716 Total Assets $ 206,724 $ 42,333 $ 78,871 $ 3,007 $ 2,399 $ 333,334 2021 HFS – South HFS – Midwest Government TCPL Keystone All Other Total For the Three Months Ended March 31, 2021 Revenue $ 25,093 $ 597 $ 18,039 $ 1,471 $ 292 (a) $ 45,492 Adjusted gross profit $ 10,658 $ (549) $ 13,802 $ 208 $ (218) $ 23,901 Total Assets (as of December 31, 2021) $ 206,774 $ 43,504 $ 87,308 $ 3,007 $ 2,412 $ 343,005 (a) Revenues from segments below the quantitative thresholds are attributable to three operating segments of the Company and are reported in the “All Other” category previously described. A reconciliation of total segment adjusted gross profit to total consolidated income (loss) before income taxes for the dates indicated below, is as follows: For the Three Months Ended March 31, 2022 March 31, 2021 Total reportable segment adjusted gross profit $ 40,694 $ 24,119 Other adjusted gross profit 22 (218) Depreciation and amortization (16,795) (16,436) Selling, general, and administrative expenses (11,759) (11,332) Other expense (income), net 219 (246) Interest expense, net (9,572) (9,849) Change in fair value of warrant liabilities (1,227) (640) Consolidated income (loss) before income taxes $ 1,582 $ (14,602) A reconciliation of total segment assets to total consolidated assets as of the dates indicated below, is as follows: March 31, 2022 December 31, 2021 Total reportable segment assets $ 330,935 $ 340,593 Other assets 3,464 3,489 Other unallocated amounts 158,139 169,310 Total Assets $ 492,538 $ 513,392 Other unallocated assets consist of the following as reported in the consolidated balance sheets of the Company as of the dates indicated below: March 31, 2022 December 31, 2021 Total current assets $ 54,579 $ 60,536 Other intangible assets, net 84,849 88,485 Deferred tax asset 13,985 14,710 Deferred financing costs revolver, net 1,846 2,159 Other non-current assets 2,880 3,420 Total other unallocated amounts of assets $ 158,139 $ 169,310 |
Organization and Nature of Op_2
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | |
Organization and Nature of Operations | Organization and Nature of Operations Target Hospitality Corp. (“Target Hospitality” and, together with its subsidiaries, the “Company”) was formed on March 15, 2019 and is one of North America’s largest providers of vertically integrated specialty rental and value-added hospitality services. The Company provides vertically integrated specialty rental and comprehensive hospitality services including: catering and food services, maintenance, housekeeping, grounds-keeping, security, health and recreation services, overall workforce community management, and laundry service. Target Hospitality serves clients in energy and natural resources and government sectors principally located in the West Texas, South Texas, Oklahoma and Midwest regions. The Company, whose securities are listed on the Nasdaq Capital Market, serves as the holding company for the businesses of Target Logistics Management, LLC and its subsidiaries (“Target”) and RL Signor Holdings, LLC and its subsidiaries (“Signor”). TDR Capital LLP (“TDR Capital” or “TDR”) indirectly owns approximately 64% of Target Hospitality and the remaining ownership is broken out among the founders of the Company’s legal predecessor, Platinum Eagle Acquisition Corp. (“Platinum Eagle” or “PEAC”), investors in Platinum Eagle’s private placement transaction completed substantially and concurrently with the Business Combination (as defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 11, 2022 (the “2021 Form 10-K”)), and other public shareholders. |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Certain information in footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) has been condensed or omitted pursuant to those rules and regulations. The financial statements included in this report should be read in conjunction with the Target Hospitality 2021 Form 10-K. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2022 or any future period. The accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of financial position as of March 31, 2022, and results of operations for the three months ended March 31, 2022 and 2021, and cash flows for the three months ended March 31, 2022 and 2021. The consolidated balance sheet as of December 31, 2021, was derived from the audited consolidated balance sheets of Target Hospitality but does not contain all of the footnote disclosures from those annual financial statements. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. If the underlying estimates and assumptions upon which the financial statements are based change in future periods, actual amounts may differ from those included in the accompanying unaudited consolidated financial statements. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries that it controls due to ownership of a majority voting interest. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. All intercompany balances and transactions are eliminated. |
Revenue Recognition | Revenue Recognition The Company derives revenue from specialty rental and hospitality services, specifically lodging and related ancillary services. Revenue is recognized in the period in which lodging and services are provided pursuant to the terms of contractual relationships with the customers. Certain arrangements contain a lease of lodging facilities to customers. The leases are accounted for as an operating lease under the authoritative guidance for leases and are recognized as income using the straight-line method over the term of the lease agreement. Because performance obligations related to specialty rental and hospitality services are satisfied over time, the majority of our revenue is recognized on a daily basis, for each night a customer stays, at a contractual day rate. Our customers typically contract for accommodation services under committed contracts with terms that most often range from several months to three years. Our payment terms vary by type and location of our customer and the service offered. The time between invoicing and when payment is due is not significant. When lodging and services are billed and collected in advance, recognition of revenue is deferred until services are rendered. Certain of the Company’s contractual arrangements allow customers the ability to use paid but unused lodging and services for a specified period. The Company recognizes revenue for these paid but unused lodging and services as they are consumed, as it becomes probable the lodging and services will not be used, or upon expiration of the specified term. Cost of services includes labor, food, utilities, supplies, rent and other direct costs associated with operating the lodging units as well as costs associated with construction services. Cost of rental includes leasing costs and other direct costs of maintaining the lodging units. Costs associated with contracts include sales commissions which are expensed as incurred and reflected in selling, general and administrative expenses in the consolidated statements of comprehensive income (loss). Additionally, the Company collects sales, use, occupancy and similar taxes, which the Company presents on a net basis (excluded from revenues) in the consolidated statements of comprehensive income (loss). |
Recently Issued Accounting Standards | Recently Issued Accounting Standards and Disclosure Guidance The Company meets the definition of an emerging growth company (“EGC”) as defined under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). In reliance on exemptions provided under the JOBS Act for EGCs, the Company has elected to defer compliance with new or revised financial accounting standards until a company that is not an issuer (as defined under section 2(a) of the Sarbanes-Oxley Act of 2002) is required to comply with such standards. As such, compliance dates included below pertain to non-issuers, and as permitted, early adoption dates are indicated. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (ASC 840) 840, the new standard reflects updates to, among other things, align with certain changes to the lessee model. In June 2020, the FASB issued ASU No. 2020-05 to delay the effective date for the new standard for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022 for non-issuers (including EGCs). Early application continues to be allowed. Topic 842 allows an entity to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach or to adopt under the new optional transition method that allows an entity to recognize a cumulative-effect adjustment to the opening balance of retained earnings as of the adoption date. The Company is currently evaluating the impact of the pronouncement on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses ASU 2016-13 or Topic 326 Codification Improvements to Topic 326, Financial Instruments - Credit Losses Disclosure guidance adopted in 2021 Amendments to Management's Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue | |
Summary of disaggregation of revenue by reportable segments as well as the all other category | For the Three Months Ended March 31, 2022 2021 HFS - South Services income $ 30,123 $ 23,202 Total HFS - South revenues 30,123 23,202 HFS - Midwest Services income $ 977 $ 597 Total HFS - Midwest revenues 977 597 Government Services income $ 26,583 $ 8,310 Total Government revenues 26,583 8,310 TCPL Keystone Services income $ - $ 537 Construction fee income - 934 Total TCPL Keystone revenues - 1,471 All Other Services income $ 992 $ 292 Total All Other revenues 992 292 Total revenues $ 58,675 $ 33,872 |
Summary of contract liabilities | For Three Months Ended March 31, 2022 2021 Balances at Beginning of the Period $ 34,411 $ 18,371 Additions to deferred revenue 1,711 614 Revenue recognized (27,337) (1,256) Balances at End of the Period $ 8,785 $ 17,729 |
Summary of revenue expected to be recognized from contracts where the price and quantity of the product or service are fixed | As of March 31, 2022, for contracts greater than one year, the following table discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue, and only represents revenue expected to be recognized from contracts where the price and quantity of the product or service are fixed: For the Years Ended December 31, 2022 2023 2024 2025 2026 Total Revenue expected to be recognized as of March 31, 2022 $ 36,363 $ 22,731 $ 18,873 $ 18,775 $ 14,044 $ 110,786 |
Specialty Rental Assets, Net (T
Specialty Rental Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Specialty Rental Assets, Net | |
Schedule of Specialty rental assets | March 31, December 31, 2022 2021 Specialty rental assets $ 584,511 $ 582,527 Construction-in-process 4,351 3,557 Less: accumulated depreciation (307,025) (294,292) Specialty rental assets, net $ 281,837 $ 291,792 |
Other Property, Plant and Equ_2
Other Property, Plant and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Other Property, Plant and Equipment, Net | |
Schedule of other property, plant and equipment, net | March 31, December 31, 2022 2021 Land $ 9,163 $ 9,163 Buildings and leasehold improvements 248 191 Machinery and office equipment 1,360 1,300 Software and other 5,861 5,347 16,632 16,001 Less: accumulated depreciation (5,108) (4,749) Total other property, plant and equipment, net $ 11,524 $ 11,252 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets, net (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Other Intangible Assets, net | |
Schedule of changes in carrying amount of goodwill | HFS - South Balance at January 1, 2021 $ 41,038 Changes in Goodwill - Balance at December 31, 2021 41,038 Changes in Goodwill - Balance at March 31, 2022 $ 41,038 |
Schedule of intangible assets other than goodwill | March 31, 2022 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 5.3 $ 128,907 $ (60,458) $ 68,449 Total 128,907 (60,458) 68,449 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 145,307 $ (60,458) $ 84,849 December 31, 2021 Weighted Gross average Carrying Accumulated Net Book remaining lives Amount Amortization Value Intangible assets subject to amortization Customer relationships 5.6 $ 128,907 $ (56,822) $ 72,085 Total 128,907 (56,822) 72,085 Indefinite lived assets: Tradenames 16,400 — 16,400 Total intangible assets other than goodwill $ 145,307 $ (56,822) $ 88,485 |
Schedule of estimated aggregate amortization expense | Rest of 2022 $ 9,666 2023 12,881 2024 12,881 2025 12,881 2026 12,285 Thereafter 7,855 Total $ 68,449 |
Other Non-Current Assets (Table
Other Non-Current Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Other Non-Current Assets | |
Schedule of other non-current assets | March 31, December 31, 2022 2021 Cloud computing implementation costs $ 7,198 $ 7,198 Less: accumulated amortization (4,385) (3,844) Other non-current assets $ 2,813 $ 3,354 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accrued Liabilities | |
Schedule of accrued liabilities | March 31, December 31, 2022 2021 Employee accrued compensation expense $ 3,277 $ 12,473 Other accrued liabilities 12,962 11,033 Accrued interest on debt 1,535 9,620 Total accrued liabilities $ 17,774 $ 33,126 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt | |
Summary of carrying value of debt outstanding | March 31, December 31, 2022 2021 Capital lease and other financing obligations $ 1,719 $ 1,425 ABL Facility 16,000 — 9.50% Senior Secured Notes due 2024, face amount 340,000 340,000 Less: unamortized original issue discount (1,511) (1,681) Less: unamortized term loan deferred financing costs (7,284) (8,107) Total debt, net 348,924 331,637 Less: current maturities (816) (729) Total long-term debt $ 348,108 $ 330,908 |
Components of interest expense | For the three months ended March 31, March 31, 2022 2021 Interest incurred on capital lease and other financing obligations $ 14 $ 30 Interest expense incurred on ABL Facility and Notes 8,251 8,616 Amortization of deferred financing costs on ABL facilities and Notes 1,136 1,050 Amortization of original issue discount on Notes 171 153 Interest expense, net $ 9,572 $ 9,849 |
Schedule of future maturities | Rest of 2022 $ 627 2023 16,638 2024 340,354 2025 19 Total $ 357,638 |
Senior Secured Notes 2024 | |
Debt | |
Summary of carrying value of debt outstanding | Principal Unamortized Original Issue Discount Unamortized Deferred Financing Costs 9.50% Senior Secured Notes, due 2024 $ 340,000 $ 1,511 $ 7,284 |
Schedule of debt redemption | Redemption Year Price 2022 102.375% 2023 and thereafter 100.000% |
Warrant Liabilities (Tables)
Warrant Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Warrant Liabilities | |
Schedule of warrant liabilities | March 31, December 31, 2022 2021 Warrant liabilities $ 2,827 $ 1,600 Total $ 2,827 $ 1,600 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value of Financial Instruments | |
Summary of carrying amounts and fair values of financial assets and liabilities | March 31, 2022 December 31, 2021 Financial Assets (Liabilities) Not Measured at Fair Value Carrying Amount Fair Value Carrying Amount Fair Value ABL Facility (See Note 8) - Level 2 $ (16,000) $ (16,000) $ — $ — Senior Secured Notes (See Note 8) - Level 1 $ (331,205) $ (346,793) $ (330,212) $ (348,075) |
Summary of inputs used to calculate the fair value of the warrant liabilities | March 31, December 31, 2022 2021 Exercise Price $ 11.50 $ 11.50 Stock Price $ 6.00 $ 3.56 Dividend Yield % 0.00 % 0.00 Expected Term (in Years) 1.96 2.20 Risk-Free Interest Rate % 2.23 % 0.78 Expected Volatility % 48.00 % 64.00 Per Share Value of Warrants $ 0.53 $ 0.30 |
Schedule of changes in Level 3 liabilities measured at fair value | Private Placement Warrants Balance at December 31, 2021 $ 1,600 Change in fair value of warrant liabilities 1,227 Balance at March 31, 2022 $ 2,827 |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings (Loss) per Share | |
Schedule of reconciliation of net loss and weighted-average shares of common stock outstanding | For the Three Months Ended March 31, March 31, 2022 2021 Numerator Net income (loss) attributable to Common Stockholders $ 494 $ (13,138) Denominator Weighted average shares outstanding - basic and diluted 96,936,785 96,168,425 Net income (loss) per share - basic and diluted $ 0.01 $ (0.14) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Stock-Based Compensation | |
Schedule of changes in restricted stock units | Number of Shares Weighted Average Grant Date Fair Value per Share Balance at December 31, 2021 1,862,590 $ 3.00 Granted 1,096,409 3.01 Vested (116,837) 4.67 Balance at March 31, 2022 2,842,162 $ 2.94 |
Schedule of changes in performance stock units | Number of Shares Weighted Average Grant Date Fair Value per Share Balance at December 31, 2021 — $ — Granted 245,017 3.01 Forfeited — — Vested — — Balance at March 31, 2022 245,017 $ 3.01 |
Schedule of assumptions using Black-scholes option-pricing model | Assumptions Weighted average expected stock volatility (range) % 25.94 - 30.90 Expected dividend yield % 0.00 Expected term (years) 6.25 Risk-free interest rate (range) % 0.82 - 2.26 Exercise price (range) $ 4.51 - 10.83 Weighted-average grant date fair value $ 1.42 |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Business Segments | |
Schedule of Segment Reporting Information | The table below presents information about reported segments for the three months ended March 31 (except for asset information for 2021 that is presented as of December 31): 2022 HFS - South HFS - Midwest Government TCPL Keystone All Other Total For the Three Months Ended March 31, 2022 Revenue $ 31,576 $ 977 $ 46,790 $ - $ 992 (a) $ 80,335 Adjusted gross profit $ 13,318 $ (500) $ 27,876 $ - $ 22 $ 40,716 Total Assets $ 206,724 $ 42,333 $ 78,871 $ 3,007 $ 2,399 $ 333,334 2021 HFS – South HFS – Midwest Government TCPL Keystone All Other Total For the Three Months Ended March 31, 2021 Revenue $ 25,093 $ 597 $ 18,039 $ 1,471 $ 292 (a) $ 45,492 Adjusted gross profit $ 10,658 $ (549) $ 13,802 $ 208 $ (218) $ 23,901 Total Assets (as of December 31, 2021) $ 206,774 $ 43,504 $ 87,308 $ 3,007 $ 2,412 $ 343,005 (a) Revenues from segments below the quantitative thresholds are attributable to three operating segments of the Company and are reported in the “All Other” category previously described. |
Schedule of reconciliation of total segment adjusted gross profit | For the Three Months Ended March 31, 2022 March 31, 2021 Total reportable segment adjusted gross profit $ 40,694 $ 24,119 Other adjusted gross profit 22 (218) Depreciation and amortization (16,795) (16,436) Selling, general, and administrative expenses (11,759) (11,332) Other expense (income), net 219 (246) Interest expense, net (9,572) (9,849) Change in fair value of warrant liabilities (1,227) (640) Consolidated income (loss) before income taxes $ 1,582 $ (14,602) |
Schedule of reconciliation of total segment assets to total combined assets | March 31, 2022 December 31, 2021 Total reportable segment assets $ 330,935 $ 340,593 Other assets 3,464 3,489 Other unallocated amounts 158,139 169,310 Total Assets $ 492,538 $ 513,392 |
Schedule of unallocated assets consist of the following as reported in the combined balance sheets | March 31, 2022 December 31, 2021 Total current assets $ 54,579 $ 60,536 Other intangible assets, net 84,849 88,485 Deferred tax asset 13,985 14,710 Deferred financing costs revolver, net 1,846 2,159 Other non-current assets 2,880 3,420 Total other unallocated amounts of assets $ 158,139 $ 169,310 |
Organization and Nature of Op_3
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies (Details) | Mar. 31, 2022 |
TDR Capital | Target Hospitality | |
Ownership interest in an affiliate | 64.00% |
Organization and Nature of Op_4
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies - Revenue Recognition (Details) | 3 Months Ended |
Mar. 31, 2022 | |
Maximum | |
Contract for accommodation services under take-or-pay contracts term | 3 years |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | Jul. 27, 2021 | Jul. 23, 2021 | Mar. 31, 2022 | Mar. 31, 2021 |
Disaggregation of Revenue [Line Items] | ||||
Revenue, Topic 606 | $ 58,675 | $ 33,872 | ||
Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Topic 606 | 58,675 | 32,938 | ||
Specialty rental | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue Not from Contract with Customer | $ 21,660 | $ 11,620 | ||
Termination And Settlement Agreement [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Gain (Loss) on Contract Termination | $ 5,000 | $ 4,900 |
Revenue - Disaggregation Revenu
Revenue - Disaggregation Revenue (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022USD ($)segment | Mar. 31, 2021USD ($) | |
Disaggregation of Revenue [Line Items] | ||
Number of Reportable Segments | segment | 4 | |
Total Revenue | $ 58,675 | $ 33,872 |
HFS - South | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 30,123 | 23,202 |
HFS - Midwest | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 977 | 597 |
Government | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 26,583 | 8,310 |
TCPL Keystone | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 1,471 | |
All Other | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 992 | 292 |
Services | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 58,675 | 32,938 |
Services | HFS - South | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 30,123 | 23,202 |
Services | HFS - Midwest | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 977 | 597 |
Services | Government | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 26,583 | 8,310 |
Services | TCPL Keystone | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 537 | |
Services | All Other | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 992 | 292 |
Construction fee | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 934 | |
Construction fee | TCPL Keystone | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 934 |
Revenue - Contract Liabilities
Revenue - Contract Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Change in Contract with Customer, Liability [Abstract] | ||
Balances at Beginning of the Period | $ 34,411 | $ 18,371 |
Additions to deferred revenue | 1,711 | 614 |
Revenue recognized | (27,337) | (1,256) |
Balances at End of the Period | $ 8,785 | $ 17,729 |
Revenue - Revenue Expected to b
Revenue - Revenue Expected to be Recognized (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue expected to be recognized | $ 110,786 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue expected to be recognized | $ 36,363 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue expected to be recognized | $ 22,731 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue expected to be recognized | $ 18,873 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue expected to be recognized | $ 18,775 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue expected to be recognized | $ 14,044 |
Specialty Rental Assets, Net (D
Specialty Rental Assets, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Less: accumulated depreciation | $ (307,025) | $ (294,292) | |
Specialty rental assets, net | 281,837 | 291,792 | |
Depreciation | 12,800 | $ 12,440 | |
Specialty rental assets | |||
Property, Plant and Equipment [Line Items] | |||
Specialty rental assets, gross | 584,511 | 582,527 | |
Depreciation | 12,800 | $ 12,400 | |
Construction-in-process | |||
Property, Plant and Equipment [Line Items] | |||
Specialty rental assets, gross | $ 4,351 | $ 3,557 |
Other Property, Plant and Equ_3
Other Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Other property, plant and equipment | |||
Other property, plant and equipment, gross | $ 16,632 | $ 16,001 | |
Less: accumulated depreciation | (5,108) | (4,749) | |
Property, Plant and Equipment, Other, Net, Total | 11,524 | 11,252 | |
Depreciation on Other PPE | 3,995 | $ 3,996 | |
Land | |||
Other property, plant and equipment | |||
Other property, plant and equipment, gross | 9,163 | 9,163 | |
Buildings and leasehold improvements | |||
Other property, plant and equipment | |||
Other property, plant and equipment, gross | 248 | 191 | |
Machinery and office equipment | |||
Other property, plant and equipment | |||
Other property, plant and equipment, gross | 1,360 | 1,300 | |
Software and other | |||
Other property, plant and equipment | |||
Other property, plant and equipment, gross | 5,861 | $ 5,347 | |
Property, Plant and Equipment Other Types | |||
Other property, plant and equipment | |||
Depreciation on Other PPE | $ 400 | $ 300 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets, net - Goodwill (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Goodwill and Other Intangible Assets, net | ||
Goodwill, Beginning Balance | $ 41,038 | $ 41,038 |
Goodwill, Ending Balance | $ 41,038 | $ 41,038 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets, net - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Intangible assets subject to amortization | |||
Gross Carrying Amount | $ 128,907 | $ 128,907 | |
Accumulated Amortization | (60,458) | (56,822) | |
Net Book Value | 68,449 | 72,085 | |
Total intangible assets other than goodwill | |||
Gross Carrying Amount | 145,307 | 145,307 | |
Net Book Value | 84,849 | 88,485 | |
Aggregate amortization expense of intangible assets | 3,636 | $ 3,658 | |
Tradenames | |||
Indefinite lived assets: | |||
Net Book Value | 16,400 | ||
Total intangible assets other than goodwill | |||
Gross Carrying Amount | 16,400 | $ 16,400 | |
Net Book Value | $ 16,400 | ||
Customer relationships | |||
Intangible assets subject to amortization | |||
Weighted average remaining lives | 5 years 3 months 18 days | 5 years 7 months 6 days | |
Gross Carrying Amount | $ 128,907 | $ 128,907 | |
Accumulated Amortization | (60,458) | (56,822) | |
Net Book Value | $ 68,449 | $ 72,085 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets, net - Future Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Estimated aggregate amortization expense: | ||
Rest of 2022 | $ 9,666 | |
2023 | 12,881 | |
2024 | 12,881 | |
2025 | 12,881 | |
2026 | 12,285 | |
Thereafter | 7,855 | |
Total | $ 68,449 | $ 72,085 |
Other Non-Current Assets (Narra
Other Non-Current Assets (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Amortization of Intangible Assets | $ 3,636 | $ 3,658 |
Capitalized software | ||
Amortization of Intangible Assets | $ 600 | $ 600 |
Capitalized software | Maximum | ||
Finite-Lived Intangible Asset, Useful Life | 4 years | |
Capitalized software | Minimum | ||
Finite-Lived Intangible Asset, Useful Life | 2 years |
Other Non-Current Assets (Other
Other Non-Current Assets (Other non-current assets) (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Other Non-Current Assets | ||
Cloud computing implementation costs | $ 7,198 | $ 7,198 |
Less: accumulated amortization | (4,385) | (3,844) |
Other non-current assets | $ 2,813 | $ 3,354 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Accrued Liabilities | ||
Employee accrued compensation expense | $ 3,277 | $ 12,473 |
Other accrued liabilities | 12,962 | 11,033 |
Accrued interest on debt | 1,535 | 9,620 |
Total accrued liabilities | $ 17,774 | $ 33,126 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Mar. 15, 2019 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 |
Debt | ||||
Unamortized Original Issue Discount | $ 1,511 | $ 1,681 | ||
Unamortized Deferred Financing Costs | 7,284 | $ 8,107 | ||
Amortization | $ 171 | $ 153 | ||
Minimum | ||||
Debt | ||||
Period for prior written notice to trustee for redemption | 20 days | |||
Senior Secured Notes 2024 | ||||
Debt | ||||
Aggregate principal amount | $ 340,000 | $ 340,000 | ||
Interest rate (as a percent) | 9.50% | 9.50% | ||
Unamortized Original Issue Discount | $ 3,300 | $ 1,511 | ||
Unamortized Deferred Financing Costs | $ 7,284 | |||
Senior Secured Notes 2024 | Minimum | ||||
Debt | ||||
Period for prior written notice to holders for redemption | 15 days | |||
Senior Secured Notes 2024 | Maximum | ||||
Debt | ||||
Period for prior written notice to holders for redemption | 60 days | |||
2022 | Senior Secured Notes 2024 | ||||
Debt | ||||
Redemption price | 102.375% | |||
2023 and thereafter | Senior Secured Notes 2024 | ||||
Debt | ||||
Redemption price | 100.00% |
Debt - Capital Lease and Other
Debt - Capital Lease and Other Financing Obligations (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Lessee, Lease, Description [Line Items] | ||
Capital leases | $ 1.6 | $ 1.4 |
Commercial-use vehicles | ||
Lessee, Lease, Description [Line Items] | ||
Capital lease term | 36 months | |
Weighted average interest rate of capital lease | 3.83% |
Debt - ABL Facility (Details)
Debt - ABL Facility (Details) - USD ($) | Mar. 15, 2019 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 |
ABL Facility | ||||
Proceeds from line of credit | $ 16,000,000 | $ 18,000,000 | ||
Outstanding amount | 16,000,000 | |||
ABL Facility | ||||
ABL Facility | ||||
Borrowing capacity | $ 125,000,000 | |||
Proceeds from line of credit | $ 40,000,000 | |||
Repayment of line of credit | $ 48,000,000 | |||
Proceeds from lines of credit | $ 16,000,000 | |||
Outstanding amount | $ 0 | |||
Borrowing base, line cap (as a percent) | 12.50% | |||
Applicable margin - one step-down (as a percent) | 0.25% | |||
Applicable margin - one step-up (as a percent) | 0.25% | |||
Percentage of net book value of borrowers' eligible accounts receivables | 85.00% | |||
Percentage of net book value of borrowers' eligible rental equipment | 95.00% | |||
Percentage of net orderly liquidation value of borrowers' eligible rental equipment | 85.00% | |||
Options to increase commitments | $ 75,000,000 | |||
Percentage of voting equity interests in non-US restricted subsidiary pledge | 65.00% | |||
Minimum fixed charge coverage ratio | 100.00% | |||
Maximum total net leverage ratio | 400.00% | |||
Borrowing base | $ 15,625,000 | |||
Line cap (as a percent) | 12.50% | |||
ABL Facility | Libor | ||||
ABL Facility | ||||
Variable rate (as a percent) | 2.50% | |||
ABL Facility | Base rate | ||||
ABL Facility | ||||
Variable rate (as a percent) | 1.50% | |||
Standby letters of credit | ||||
ABL Facility | ||||
Borrowing capacity | $ 15,000,000 | |||
Swingline | ||||
ABL Facility | ||||
Borrowing capacity | $ 15,000,000 |
Debt - Carrying Value of Debt O
Debt - Carrying Value of Debt Outstanding (Details) - USD ($) $ in Thousands | Mar. 15, 2019 | Mar. 31, 2022 | Dec. 31, 2021 |
Carrying value of debt outstanding | |||
Capital lease and other financing obligations | $ 1,600 | $ 1,400 | |
Long-term debt, net | 357,638 | ||
Principal amount | 340,000 | 340,000 | |
Less: unamortized original issue discount | (1,511) | (1,681) | |
Less: unamortized term loan deferred financing costs | (7,284) | (8,107) | |
Total debt, net | 348,924 | 331,637 | |
Less: current maturities | (816) | (729) | |
Total long-term debt | 348,108 | 330,908 | |
ABL Facility | |||
Carrying value of debt outstanding | |||
Long-term debt, net | 16,000 | ||
Capital lease and other financing obligations | |||
Carrying value of debt outstanding | |||
Capital lease and other financing obligations | 1,719 | 1,425 | |
Senior Secured Notes 2024 | |||
Carrying value of debt outstanding | |||
Principal amount | 340,000 | $ 340,000 | |
Less: unamortized original issue discount | $ (3,300) | (1,511) | |
Less: unamortized term loan deferred financing costs | $ (7,284) | ||
Interest rate (as a percent) | 9.50% | 9.50% |
Debt - Components of interest e
Debt - Components of interest expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Debt Instrument [Line Items] | ||
Interest incurred on capital lease and other financing obligations | $ 14 | $ 30 |
Interest expense incurred on ABL facilities and Notes | 8,251 | 8,616 |
Amortization of deferred financing costs | 1,136 | 1,050 |
Amortization of original issue discount | 171 | 153 |
Interest expense, net | 9,572 | 9,849 |
ABL Facility | ||
Debt Instrument [Line Items] | ||
Amortization of deferred financing costs | $ 1,136 | $ 1,050 |
Debt - Interest Expense and Def
Debt - Interest Expense and Deferred Financing Costs (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Senior Secured Notes 2024 | ||
Debt | ||
Accumulated amortization of deferred financing costs | $ 8.6 | $ 7.8 |
Accumulated amortization of debt issuance costs | 1.8 | 1.6 |
ABL Facility | Algeco ABL facility | ||
Debt | ||
Accumulated amortization related to revolver deferred financing costs | $ 3.8 | $ 3.7 |
Debt - Future Maturities (Detai
Debt - Future Maturities (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Future maturities of long term debt | |
Rest of 2022 | $ 627 |
2023 | 16,638 |
2024 | 340,354 |
2025 | 19 |
Long-term debt, net | $ 357,638 |
Warrant Liabilities - Narrative
Warrant Liabilities - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 17, 2018 | Mar. 31, 2022 | Mar. 31, 2021 |
Warrants to issue shares of common stock | 5,333,334 | 10,833,316 | |
Aggregate purchase price per warrant | $ 1.50 | ||
Aggregate purchase price | $ 8,000 | ||
Number of stock issued for each warrant | 1 | ||
Share price | $ 11.50 | ||
Warrant exercisable term | 30 days | ||
Fair Value Adjustment of Warrants | $ 1,227 | $ 640 | |
Expiration year | 5 years | ||
Private Placement Warrants [Member] | |||
Warrants to issue shares of common stock | 5,333,334 | 5,333,334 | |
Fair Value Adjustment of Warrants | $ 1,200 | $ 600 |
Warrant Liabilities - Estimated
Warrant Liabilities - Estimated fair value Private Warrants (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Warranty Liability Non Current | $ 2,827 | $ 1,600 |
Private Placement Warrants [Member] | ||
Warranty Liability Non Current | $ 2,827 | $ 1,600 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Taxes | ||
Income tax expense (benefit) | $ 1,088 | $ (1,464) |
Effective tax rate | 68.80% | 10.00% |
Effective Income Tax Rate | 21.00% |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022USD ($)$ / sharesshares | Dec. 31, 2021USD ($)$ / sharesshares | Jan. 17, 2018shares | |
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants to issue shares of common stock | shares | 10,833,316 | 5,333,334 | |
Level 3 | Private Placement Warrants [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants to issue shares of common stock | shares | 5,333,334 | 5,333,334 | |
Warrant Liabilities Fair Value Per Share | $ / shares | $ 0.53 | $ 0.30 | |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value, Beginning Balance | $ 1,600 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings | 1,227 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value, Ending Balance | $ 2,827 | ||
Level 3 | Private Placement Warrants [Member] | Measurement Input, Exercise Price [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants and Rights Outstanding, Measurement Input | $ / shares | 11.50 | 11.50 | |
Level 3 | Private Placement Warrants [Member] | Measurement Input, Share Price [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants and Rights Outstanding, Measurement Input | $ / shares | 6 | 3.56 | |
Level 3 | Private Placement Warrants [Member] | Measurement Input, Expected Dividend Rate [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants and Rights Outstanding, Measurement Input | 0 | 0 | |
Level 3 | Private Placement Warrants [Member] | Measurement Input, Expected Term [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants and Rights Outstanding, Measurement Input | 1.96 | 2.20 | |
Level 3 | Private Placement Warrants [Member] | Measurement Input, Risk Free Interest Rate [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants and Rights Outstanding, Measurement Input | 2.23 | 0.78 | |
Level 3 | Private Placement Warrants [Member] | Measurement Input, Price Volatility [Member] | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Warrants and Rights Outstanding, Measurement Input | 48 | 64 | |
Carrying amount | ABL Facility | Level 2 | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Debt Instrument, Fair Value Disclosure, | $ (16,000) | ||
Fair value | ABL Facility | Level 2 | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Debt Instrument, Fair Value Disclosure, | (16,000) | ||
Senior Secured Notes 2024 | Carrying amount | Level 1 | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Debt Instrument, Fair Value Disclosure, | (331,205) | $ (330,212) | |
Senior Secured Notes 2024 | Fair value | Level 1 | |||
Carrying amounts and fair values of financial assets and liabilities | |||
Debt Instrument, Fair Value Disclosure, | $ (346,793) | $ (348,075) |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Related parties | |||
Accrued | $ 0 | $ 0 | |
Selling, general, and administrative expenses | |||
Related parties | |||
Commission | $ 0 | $ 0.2 |
Earnings (Loss) per Share (Deta
Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 15, 2022 | |
Numerator | |||
Net loss | $ 494 | $ (13,138) | |
Denominator | |||
Weighted average shares outstanding - basic | 96,936,785 | 96,168,425 | |
Weighted average shares outstanding - diluted | 96,936,785 | 96,168,425 | |
Net income (loss) per share - basic | $ 0.01 | $ (0.14) | |
Net income (loss) per share - diluted | $ 0.01 | $ (0.14) | |
Founder Shares | |||
Denominator | |||
Treasury stock, shares | 5,015,898 | ||
Shares issued to the Sellers | 8,050,000 | ||
Founder Shares | |||
Denominator | |||
Excluded from computation of loss per share | 5,015,898 | ||
Warrant | |||
Denominator | |||
Excluded from computation of loss per share | 16,166,650 | 16,166,650 | |
Warrant | Founder Shares | |||
Denominator | |||
Treasury stock, shares | 5,015,898 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Jan. 17, 2018 | Mar. 31, 2022 | Mar. 15, 2022 | Dec. 31, 2021 |
Common Stock | ||||
Common stock shares issued | 106,367,450 | 106,367,450 | ||
Common stock, Number of share outstanding | 96,936,785 | 101,952,683 | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||
Common shares placed into escrow | 5,015,898 | |||
Preferred Shares | ||||
Preferred stock, shares authorized | 1,000,000 | |||
Preferred stock, par value | $ 0.0001 | |||
Preferred stock, shares issued | 0 | |||
Preferred stock, shares outstanding | 0 | |||
Warrants | ||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||
Number of stock issued for each warrant | 1 | |||
Share price | $ 11.50 | |||
Warrant exercisable term | 30 days | |||
Warrants to issue shares of common stock | 5,333,334 | 10,833,316 | ||
Founder Shares | ||||
Treasury Stock, Shares [Abstract] | ||||
Treasury stock, shares | 5,015,898 | |||
Public Offering | ||||
Warrants | ||||
Number of units sold | 32,500,000 | |||
Price per unit | $ 10 | |||
Number of warrants per unit | 0.33 | |||
Number of fractional shares issued upon exercise of warrants | 0 | |||
Number of stock issued for each warrant | 1 | |||
Share price | $ 11.50 | |||
Warrant exercisable term | 30 days | |||
Over allotment | ||||
Warrants | ||||
Number of units sold | 2,500,000 | |||
Common Stock [Member] | Public Offering | ||||
Common Stock | ||||
Common stock, par value (in dollars per share) | $ 0.0001 | |||
Warrants | ||||
Number of shares per unit | 1 | |||
Common stock, par value (in dollars per share) | $ 0.0001 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | Feb. 24, 2022installmentitem$ / sharesshares | Jan. 03, 2022shares | Feb. 25, 2021shares | Mar. 31, 2022USD ($)$ / sharesshares | Dec. 31, 2021USD ($)$ / sharesshares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||
Time-based restricted stock unit | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Cash paid at closing stock price on vesting date | $ | $ 400,000 | ||||
Options | |||||
Outstanding Options at beginning of period (in shares) | shares | 1,862,590 | ||||
Granted (in shares) | shares | 1,096,409 | ||||
Vested (in shares) | shares | (116,837) | ||||
Outstanding Options at end of period (in shares) | shares | 2,842,162 | 1,862,590 | |||
Weighted Average Grant Date Fair Value per Share | |||||
Outstanding Options at beginning of period (in shares) | $ / shares | $ 3 | ||||
Granted (in dollars per share) | $ / shares | 3.01 | ||||
Vested (in dollars per share) | $ / shares | 4.67 | ||||
Outstanding Options at end of period (in dollars per share) | $ / shares | $ 2.94 | $ 3 | |||
Time-based restricted stock unit | Non-executive Directors | |||||
Options | |||||
Granted (in shares) | shares | 10,861 | ||||
Time-based restricted stock unit | Executive Officers and Other Employees | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period (in years) | 4 years | ||||
Options | |||||
Granted (in shares) | shares | 1,085,548 | ||||
Time-based stock option awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Forfeited (in shares) | shares | 0 | ||||
Exercisable Options | $ | $ 821,569 | ||||
Stock Appreciation Rights (SARs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ | 4,700,000 | ||||
Deferred Compensation Share-based Arrangements, Liability, Current | $ | $ 2,600,000 | $ 1,200,000 | |||
Estimated Fair Value Per Share | $ / shares | $ 4.65 | $ 2.69 | |||
Options | |||||
Granted (in shares) | shares | 1,578,537 | ||||
Forfeited (in shares) | shares | 0 | ||||
Weighted Average Grant Date Fair Value per Share | |||||
Outstanding Options at end of period (in dollars per share) | $ / shares | $ 0.78 | ||||
Stock Appreciation Rights (SARs) [Member] | Accrued Liabilities [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Deferred Compensation Share-based Arrangements, Liability, Current | $ | $ 1,300,000 | ||||
Stock Appreciation Rights (SARs) [Member] | Other Noncurrent Liabilities [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Deferred Compensation Share-based Arrangements, Liability, Current | $ | 1,300,000 | ||||
Liability Based Restricted Stock Units [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Liability recognized | $ | $ 1,700,000 | $ 800,000 | |||
Weighted Average Grant Date Fair Value per Share | |||||
Granted (in dollars per share) | $ / shares | $ 6 | $ 3.56 | |||
Liability Based Restricted Stock Units [Member] | Accrued Liabilities [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Liability recognized | $ | $ 1,500,000 | $ 500,000 | |||
Liability Based Restricted Stock Units [Member] | Other Noncurrent Liabilities [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Liability recognized | $ | 200,000 | $ 300,000 | |||
Time based and performance stock units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Right to buy number of shares upon vesting | shares | 1 | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | ||||
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ | $ 1,400,000 | ||||
Period to achieve cumulative operating cash flow amounts (in years) | 3 years | ||||
Options | |||||
Granted (in shares) | shares | 245,017 | 245,017 | |||
Outstanding Options at end of period (in shares) | shares | 245,017 | ||||
Weighted Average Grant Date Fair Value per Share | |||||
Granted (in dollars per share) | $ / shares | $ 3.01 | ||||
Outstanding Options at end of period (in dollars per share) | $ / shares | 3.01 | ||||
Liability Based Performance Stock Units [Member] | |||||
Weighted Average Grant Date Fair Value per Share | |||||
Granted (in dollars per share) | $ / shares | $ 6 | ||||
Liability Based Performance Stock Units [Member] | Other Noncurrent Liabilities [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Liability recognized | $ | $ 50,000 | ||||
Employees | Time-based restricted stock unit | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of equal installments | installment | 4 | ||||
Number of anniversaries the awards vest | item | 4 | ||||
Minimum | Time based and performance stock units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 0.00% | ||||
Maximum | Time based and performance stock units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 150.00% |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions (Details) | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Time-based stock option awards | |
Assumptions: | |
Expected dividend yield | 0.00% |
Expected term (years) | 6 years 3 months |
Risk-free interest rate - minimum | 0.82% |
Risk-free interest rate - maximum | 2.26% |
Weighted-average grant date fair value | $ 1.42 |
Forfeited (in shares) | shares | 0 |
Stock Appreciation Rights (SARs) [Member] | |
Assumptions: | |
Weighted average expected stock volatility | 43.50% |
Expected dividend yield | 0.00% |
Expected term (years) | 6 years 3 months |
Risk-free interest rate (range) | 1.07% |
Minimum | Time-based stock option awards | |
Assumptions: | |
Weighted average expected stock volatility | 25.94% |
Exercise price (range) | $ 4.51 |
Maximum | Time-based stock option awards | |
Assumptions: | |
Weighted average expected stock volatility | 30.90% |
Exercise price (range) | $ 10.83 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Time-based restricted stock unit | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based Compensation Expense | $ 1,600 | $ 600 |
Associated tax benefit from stock-based compensation expense | 400 | 100 |
Unrecognized compensation expense | $ 10,400 | |
Period for unrecognized compensation expense expected to be recognized | 3 years 21 days | |
Time-based stock option awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based Compensation Expense | $ 200 | 300 |
Associated tax benefit from stock-based compensation expense | 100 | 100 |
Unrecognized compensation expense | $ 1,200 | |
Period for unrecognized compensation expense expected to be recognized | 1 year 7 months 20 days | |
Stock Appreciation Rights (SARs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based Compensation Expense | $ 1,500 | $ 40 |
Period for unrecognized compensation expense expected to be recognized | 1 year 10 months 28 days | |
Time based and performance stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based Compensation Expense | $ 100 | |
Period for unrecognized compensation expense expected to be recognized | 2 years 10 months 28 days |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Retirement Plans | ||
Minimum percentage of annual eligible compensation by the participants | 1.00% | |
Maximum percentage of annual eligible compensation by the participants | 90.00% | |
Percentage of contribution matched | 6.00% | |
Percentage of contribution, matched 100% by employer | 3.00% | |
Employer match of employee contributions of first 3% of contributions | 100.00% | |
Percentage of contribution, matched 50% by employer | 3.00% | |
Employer match of employee contributions of next 3% of contributions | 50.00% | |
Vesting percentage | 20.00% | |
Vesting period | 5 years | |
Contribution expenses | $ 0.2 | $ 0.2 |
Business Segments (Details)
Business Segments (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022USD ($)segment | Mar. 31, 2021USD ($) | Dec. 31, 2021USD ($) | |
Business segments | |||
Number of reportable segments | segment | 4 | ||
Number of Operating Segments | segment | 3 | ||
Revenue | $ 80,335 | $ 45,492 | |
Adjusted gross profit | 40,694 | 24,119 | |
Total Assets | 492,538 | $ 513,392 | |
Operating Segments | |||
Business segments | |||
Revenue | 80,335 | 45,492 | |
Adjusted gross profit | 40,716 | 23,901 | |
Total Assets | 333,334 | 343,005 | |
Permian Basin | Operating Segments | |||
Business segments | |||
Revenue | 31,576 | 25,093 | |
Adjusted gross profit | 13,318 | 10,658 | |
Total Assets | 206,724 | 206,774 | |
Bakken Basin | Operating Segments | |||
Business segments | |||
Revenue | 977 | 597 | |
Adjusted gross profit | (500) | (549) | |
Total Assets | 42,333 | 43,504 | |
Government | Operating Segments | |||
Business segments | |||
Revenue | 46,790 | 18,039 | |
Adjusted gross profit | 27,876 | 13,802 | |
Total Assets | 78,871 | 87,308 | |
TCPL Keystone | Operating Segments | |||
Business segments | |||
Revenue | 1,471 | ||
Adjusted gross profit | 208 | ||
Total Assets | 3,007 | 3,007 | |
All Other | |||
Business segments | |||
Total Assets | 3,464 | 3,489 | |
All Other | Operating Segments | |||
Business segments | |||
Revenue | 992 | 292 | |
Adjusted gross profit | 22 | $ (218) | |
Total Assets | $ 2,399 | $ 2,412 |
Business Segments - Reconciliat
Business Segments - Reconciliation of total segment adjusted gross profit to total combined income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Business Segments | ||
Total reportable segment adjusted gross profit | $ 40,694 | $ 24,119 |
Other adjusted gross profit | 22 | (218) |
Depreciation and amortization | (16,795) | (16,436) |
Selling, general and administrative expenses | (11,759) | (11,332) |
Other expense (income), net | 219 | (246) |
Interest expense, net | (9,572) | (9,849) |
Change in fair value of warrant liabilities | (1,227) | (640) |
Income (loss) before income tax | $ 1,582 | $ (14,602) |
Business Segments - Reconcili_2
Business Segments - Reconciliation of total segment assets to total combined assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 492,538 | $ 513,392 |
Total reportable segment assets | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 330,935 | 340,593 |
All Other | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 3,464 | 3,489 |
Other unallocated amounts | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 158,139 | $ 169,310 |
Business Segments - Unallocated
Business Segments - Unallocated assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Total current assets | $ 54,579 | $ 60,536 |
Other intangible assets, net | 84,849 | 88,485 |
Deferred tax asset | 13,985 | 14,710 |
Deferred financing costs revolver, net | 1,846 | 2,159 |
Other non-current assets | 2,880 | 3,420 |
Total assets | 492,538 | 513,392 |
Other unallocated amounts | ||
Total current assets | 54,579 | 60,536 |
Other intangible assets, net | 84,849 | 88,485 |
Deferred tax asset | 13,985 | 14,710 |
Deferred financing costs revolver, net | 1,846 | 2,159 |
Other non-current assets | 2,880 | 3,420 |
Total assets | $ 158,139 | $ 169,310 |