Accounts Receivable Securitization

3 Months Ended

Mar. 31, 2022

Transfers and Servicing [Abstract]

Accounts Receivable Securitization

Note 12: Accounts Receivable Securitization

The Company's A/R Securitization has an investment limit of $125.0 million and terminates on August 20, 2022. Under the A/R Securitization, certain of the Company’s wholly owned subsidiaries continuously sell (or contribute) receivables to certain wholly owned special purpose entities at fair market value. The special purpose entities then sell 100% of the receivables to an unaffiliated financial institution (the "Purchaser”). Although the special purpose entities are wholly owned subsidiaries of the Company, they are separate legal entities with their own separate creditors who will be entitled, upon their liquidation, to be satisfied out of their assets prior to any assets or value in such special purpose entities becoming available to their equity holders and their assets are not available to pay

other creditors of the Company. As of March 31, 2022 and December 31, 2021 the Company had $80.0 million and $0.0 million, respectively, drawn on the investment limit.

All transactions under the A/R Securitization are accounted for as a true sale in accordance with ASC 860, Transfers and Servicing ("Topic 860"). Following the sale and transfer of the receivables to the Purchaser, the receivables are legally isolated from the Company and its subsidiaries, and the Company sells, conveys, transfers and assigns to the Purchaser all its rights, title and interest in the receivables. Receivables sold are derecognized from the statement of financial position. The Company continues to service, administer and collect the receivables on behalf of the Purchaser, and recognizes a servicing liability in accordance with Topic 860. Any financial statement impact associated with the servicing liability was immaterial for all periods presented.

This program allows the Company to receive a cash payment and a DPP for sold receivables. The DPP is paid to the Company in cash on behalf of the Purchaser as the receivables are collected; however, due to the revolving nature of the A/R Securitization, cash collected from the Company’s customers is reinvested by the Purchaser daily in new receivable purchases under the A/R Securitization. For the three months ended March 31, 2022 and 2021, receivables sold under the A/R securitization were $344.4 million and $320.2 million, respectively, and cash collections from customers on receivables sold were $316.9 million and $315.0 million, respectively, all of which were reinvested in new receivables purchases and are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. As of March 31, 2022 and December 31, 2021, the outstanding principal on receivables sold under the A/R Securitization was $186.2 million and $158.7 million, respectively. Refer to Note 11: Fair Value Measurements for additional discussion on the fair value of the DPP as of March 31, 2022 and December 31, 2021.