QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | o | ☒ | ||||||||||||
Non-accelerated filer | o | Smaller reporting company | ||||||||||||
Emerging growth company |
PART I | FINANCIAL INFORMATION | Page Number | ||||||||||||
Item 1. | Unaudited Condensed Consolidated Financial Statements | |||||||||||||
Unaudited Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 | ||||||||||||||
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 | ||||||||||||||
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2020 and 2019 | ||||||||||||||
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 | ||||||||||||||
Unaudited Condensed Consolidated Statements of Stockholders' Deficit for the Three and Nine Months Ended September 30, 2020 and 2019 | ||||||||||||||
Notes to Unaudited Condensed Consolidated Financial Statements | ||||||||||||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |||||||||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |||||||||||||
Item 4. | Controls and Procedures | |||||||||||||
PART II | OTHER INFORMATION | |||||||||||||
Item 1. | Legal Proceedings | |||||||||||||
Item 1A. | Risk Factors | |||||||||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||||||||
Item 3. | Defaults Upon Senior Securities | |||||||||||||
Item 4. | Mine Safety Disclosures | |||||||||||||
Item 5. | Other Information | |||||||||||||
Item 6. | Exhibits | |||||||||||||
SIGNATURES |
(in $000s, except share data) | September 30, 2020 | December 31, 2019 | |||||||||
Assets | |||||||||||
Current Assets | |||||||||||
Cash | $ | $ | |||||||||
Accounts receivable, net of allowance of $ | |||||||||||
Inventory | |||||||||||
Prepaid expenses and other | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Rental equipment, net | |||||||||||
Goodwill and other intangibles, net | |||||||||||
Deferred income taxes | |||||||||||
Notes receivable | |||||||||||
Total Assets | $ | $ | |||||||||
Liabilities and Stockholders' Deficit | |||||||||||
Current Liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses | |||||||||||
Deferred rent income | |||||||||||
Current maturities of long-term debt | |||||||||||
Current portion of capital lease obligations | |||||||||||
Total current liabilities | |||||||||||
Long-term debt, net | |||||||||||
Capital leases | |||||||||||
Deferred income taxes | |||||||||||
Interest rate collar | |||||||||||
Total long-term liabilities | |||||||||||
Commitments and contingencies (see Note 11) | |||||||||||
Stockholders' Deficit | |||||||||||
Common stock - $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Total stockholders' deficit | ( | ( | |||||||||
Total Liabilities and Stockholders' Deficit | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(in $000s, except share and per share data) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
Rental revenue | $ | $ | $ | $ | ||||||||||||||||||||||
Sales of rental equipment | ||||||||||||||||||||||||||
Sales of new equipment | ||||||||||||||||||||||||||
Parts sales and services | ||||||||||||||||||||||||||
Total Revenue | ||||||||||||||||||||||||||
Cost of Revenue | ||||||||||||||||||||||||||
Cost of rental revenue | ||||||||||||||||||||||||||
Depreciation of rental equipment | ||||||||||||||||||||||||||
Cost of rental equipment sales | ||||||||||||||||||||||||||
Cost of new equipment sales | ||||||||||||||||||||||||||
Cost of parts sales and services | ||||||||||||||||||||||||||
Major repair disposals | ||||||||||||||||||||||||||
Total cost of revenue | ||||||||||||||||||||||||||
Gross Profit | ||||||||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Licensing and titling expenses | ||||||||||||||||||||||||||
Amortization and non-rental depreciation | ||||||||||||||||||||||||||
Transaction expenses | ||||||||||||||||||||||||||
Asset impairment | ||||||||||||||||||||||||||
Other operating expenses | ||||||||||||||||||||||||||
Total Operating Expenses | ||||||||||||||||||||||||||
Operating Income | ||||||||||||||||||||||||||
Other Expense | ||||||||||||||||||||||||||
Loss on extinguishment of debt | ||||||||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||||||||
Other (income) expense, net | ( | |||||||||||||||||||||||||
Total other expense | ||||||||||||||||||||||||||
Loss Before Income Taxes | ( | ( | ( | ( | ||||||||||||||||||||||
Income Tax Expense (Benefit) | ( | ( | ||||||||||||||||||||||||
Net Income (Loss) | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
Basic Earnings (Loss) Per Share | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
Weighted-Average Common Shares Outstanding | ||||||||||||||||||||||||||
Diluted Earnings (Loss) Per Share | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
Weighted-Average Common Shares Outstanding |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(in $000s) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Net income (loss) | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||||||||
Interest rate collar (net of taxes of $ | ( | |||||||||||||||||||||||||
Other comprehensive loss | ( | |||||||||||||||||||||||||
Comprehensive income (loss) | $ | $ | ( | $ | ( | $ | ( |
Nine Months Ended September 30, | ||||||||||||||
(in $000s) | 2020 | 2019 | ||||||||||||
Operating Activities | ||||||||||||||
Net loss | $ | ( | $ | ( | ||||||||||
Adjustments to reconcile net loss to net cash flow from operating activities: | ||||||||||||||
Depreciation | ||||||||||||||
Amortization - intangibles | ||||||||||||||
Amortization - financing costs | ||||||||||||||
Provision for losses on accounts receivable | ||||||||||||||
Share-based payments | ||||||||||||||
Gain on sale of rental equipment and parts | ( | ( | ||||||||||||
Gain on insurance proceeds - damaged equipment | ( | ( | ||||||||||||
Major repair disposal | ||||||||||||||
Loss on extinguishment of debt | ||||||||||||||
Change in fair value of derivative | ||||||||||||||
Asset impairment | ||||||||||||||
Deferred tax (benefit) expense | ( | |||||||||||||
Accounts receivable | ( | |||||||||||||
Inventory | ( | ( | ||||||||||||
Prepaid expenses and other | ( | ( | ||||||||||||
Accounts payable | ( | |||||||||||||
Accrued expenses and other liabilities | ( | ( | ||||||||||||
Unearned income | ( | ( | ||||||||||||
Net cash flow from operating activities | ||||||||||||||
Investing Activities | ||||||||||||||
Purchase of equipment - rental fleet | ( | ( | ||||||||||||
Proceeds from sale of rental equipment and parts | ||||||||||||||
Insurance proceeds from damaged equipment | ||||||||||||||
Purchase of other property and equipment | ( | ( | ||||||||||||
Other | ( | |||||||||||||
Net cash flow from investing activities | ( | ( | ||||||||||||
Financing Activities | ||||||||||||||
Proceeds from debt | ||||||||||||||
Borrowings under revolving credit facilities | ||||||||||||||
Repayments under revolving credit facilities | ( | ( | ||||||||||||
Repayments of notes payable | ( | ( | ||||||||||||
Capital lease payments | ( | ( | ||||||||||||
Proceeds from merger and recapitalization | ||||||||||||||
Finance fees paid | ( | |||||||||||||
Net cash flow from financing activities | ||||||||||||||
Net Change in Cash | ( | ( | ||||||||||||
Cash at Beginning of Period | ||||||||||||||
Cash at End of Period | $ | $ | ||||||||||||
(in $000s) | ||||||||||||||
Supplemental Cash Flow Information | ||||||||||||||
Cash paid for interest | $ | $ | ||||||||||||
Cash paid for income taxes | ||||||||||||||
Non-Cash Investing and Financing Activities | ||||||||||||||
Transfer of inventory to leased equipment | ||||||||||||||
Rental equipment and property and equipment purchases in accounts payable | ||||||||||||||
Rental equipment sales in accounts receivable | ||||||||||||||
Settlement of note payable with common stock | ||||||||||||||
Insurance recoveries accrued in accounts receivable | ||||||||||||||
Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders' Deficit | ||||||||||||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||||||||||||||
(in $000s, except share data) | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | $ | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Share-based payments | — | — | — | — | |||||||||||||||||||||||||||||||
Balance, March 31, 2020 | $ | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Share-based payments | — | — | — | — | |||||||||||||||||||||||||||||||
Balance, June 30, 2020 | $ | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | |||||||||||||||||||||||||||||||
Share-based payments | — | — | — | — | |||||||||||||||||||||||||||||||
Interest rate collar | — | — | — | — | — | ||||||||||||||||||||||||||||||
Balance, September 30, 2020 | $ | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||
Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders' Deficit | ||||||||||||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2018 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Share-based payments | — | — | — | — | |||||||||||||||||||||||||||||||
Interest rate collar | — | — | — | — | |||||||||||||||||||||||||||||||
Balance, March 31, 2019 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Share-based payments | — | — | — | — | |||||||||||||||||||||||||||||||
Interest rate collar | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balance, June 30, 2019 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Net loss prior to reverse recapitalization | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Net loss post reverse recapitalization | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Reverse capitalization | — | — | |||||||||||||||||||||||||||||||||
Share-based payments | — | — | — | — | |||||||||||||||||||||||||||||||
Interest rate collar | — | — | — | — | |||||||||||||||||||||||||||||||
Balance, September 30, 2019 | $ | $ | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||||||||
(in $000s) | Topic 840 | Topic 606 | Total | Topic 840 | Topic 606 | Total | |||||||||||||||||||||||||||||
Rental: | |||||||||||||||||||||||||||||||||||
Rental revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Shipping and handling | |||||||||||||||||||||||||||||||||||
Total rental revenue | |||||||||||||||||||||||||||||||||||
Sales and services: | |||||||||||||||||||||||||||||||||||
Sales of rental equipment | |||||||||||||||||||||||||||||||||||
Sales of new equipment | |||||||||||||||||||||||||||||||||||
Parts and services | |||||||||||||||||||||||||||||||||||
Total sales and services | |||||||||||||||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||||||||
(in $000s) | Topic 840 | Topic 606 | Total | Topic 840 | Topic 606 | Total | |||||||||||||||||||||||||||||
Rental: | |||||||||||||||||||||||||||||||||||
Rental revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Shipping and handling | |||||||||||||||||||||||||||||||||||
Total rental revenue | |||||||||||||||||||||||||||||||||||
Sales and services: | |||||||||||||||||||||||||||||||||||
Sales of rental equipment | |||||||||||||||||||||||||||||||||||
Sales of new equipment | |||||||||||||||||||||||||||||||||||
Parts and services | |||||||||||||||||||||||||||||||||||
Total sales and services | |||||||||||||||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
(in $000s) | September 30, 2020 | December 31, 2019 | |||||||||
Parts, tools and accessories inventory | $ | $ | |||||||||
Equipment inventory | |||||||||||
Inventory | $ | $ |
(in $000s) | September 30, 2020 | December 31, 2019 | |||||||||
Rental equipment | $ | $ | |||||||||
Less: accumulated depreciation | ( | ( | |||||||||
Rental equipment, net | $ | $ |
(in $000s) | September 30, 2020 | December 31, 2019 | |||||||||
Property and equipment | $ | $ | |||||||||
Less: accumulated depreciation | ( | ( | |||||||||
Construction in progress | |||||||||||
Property and equipment, net | $ | $ |
Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||||||||
(in $000s) | ERS | PTA | Total | ERS | PTA | Total | |||||||||||||||||||||||||||||
Rental revenue(1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Sales of rental equipment | |||||||||||||||||||||||||||||||||||
Sales of new equipment | |||||||||||||||||||||||||||||||||||
Parts sales and services | |||||||||||||||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||||||||||||||
Depreciation of rental equipment | |||||||||||||||||||||||||||||||||||
Gross Profit | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||||||||
(in $000s) | ERS | PTA | Total | ERS | PTA | Total | |||||||||||||||||||||||||||||
Rental revenue(1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Sales of rental equipment | |||||||||||||||||||||||||||||||||||
Sales of new equipment | |||||||||||||||||||||||||||||||||||
Parts sales and services | |||||||||||||||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||||||||||||||
Depreciation of rental equipment | |||||||||||||||||||||||||||||||||||
Gross Profit | $ | $ | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in $000s) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Gross profit | $ | $ | $ | $ | |||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Licensing and titling expenses | |||||||||||||||||||||||
Amortization and non-rental depreciation | |||||||||||||||||||||||
Transaction expenses | |||||||||||||||||||||||
Asset impairment | |||||||||||||||||||||||
Other operating expenses | |||||||||||||||||||||||
Other (income) expense | ( | ||||||||||||||||||||||
Loss on extinguishment of debt | |||||||||||||||||||||||
Interest expense, net | |||||||||||||||||||||||
Loss before income taxes | $ | ( | $ | ( | $ | ( | $ | ( |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in $000s) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Revenue: | |||||||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
Canada | |||||||||||||||||||||||
Mexico (1) | |||||||||||||||||||||||
$ | $ | $ | $ |
(in $000s) | September 30, 2020 | December 31, 2019 | |||||||||
Assets: | |||||||||||
United States | $ | $ | |||||||||
Canada | |||||||||||
Mexico | |||||||||||
$ | $ |
(in $000s) | |||||
Current assets, net of current liabilities | $ | ||||
Property and equipment | |||||
Rental equipment | |||||
Customer relationships | |||||
Total identifiable assets acquired | |||||
Goodwill | |||||
Total consideration | $ |
(in $000s) | Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | |||||||||
Total revenue | $ | $ | |||||||||
Net loss | ( | ( | |||||||||
Basic and diluted net loss per share | ( | ( |
September 30, | December 31, | September 30, | December 31, | ||||||||||||||||||||
(in $000s) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
2019 Credit Facility | $ | $ | % | % | |||||||||||||||||||
Senior Secured Notes due 2024 | % | % | |||||||||||||||||||||
Notes Payable | |||||||||||||||||||||||
Total debt outstanding | |||||||||||||||||||||||
Deferred finance fees | ( | ( | |||||||||||||||||||||
Net debt | |||||||||||||||||||||||
Less current maturities | ( | ( | |||||||||||||||||||||
Long-term debt | $ | $ |
(in $000s) | September 30, 2020 | December 31, 2019 | |||||||||
Goodwill | $ | $ | |||||||||
Nesco trade name | |||||||||||
Other intangible assets: | |||||||||||
Trade names | |||||||||||
Non-compete agreements | |||||||||||
Customer relationships | |||||||||||
Less: accumulated amortization | ( | ( | |||||||||
Intangible assets, net | |||||||||||
Goodwill and intangible assets | $ | $ |
Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||||||||
(in $000s, except share and per share data) | Net Income (Loss) | Weighted Average Shares | Per Share Amount | Net Income (Loss) | Weighted Average Shares | Per Share Amount | ||||||||||||||||||||||||||||||||
Basic earnings (loss) per share | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
Dilutive common share equivalents | ||||||||||||||||||||||||||||||||||||||
Diluted earnings (loss) per share | $ | $ | $ | ( | $ | ( |
Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | |||||||||||||||||||||||||||||||||||||
(in $000s, except share and per share data) | Net Income (Loss) | Weighted Average Shares | Per Share Amount | Net Income (Loss) | Weighted Average Shares | Per Share Amount | ||||||||||||||||||||||||||||||||
Basic earnings (loss) per share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||
Dilutive common share equivalents | ||||||||||||||||||||||||||||||||||||||
Diluted earnings (loss) per share | $ | ( | $ | ( | $ | ( | $ | ( |
Carrying Value | Fair Value | ||||||||||||||||||||||
(in $000s) | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
September 30, 2020 | |||||||||||||||||||||||
2019 Credit Facility | $ | $ | $ | $ | |||||||||||||||||||
Senior Secured Notes due 2024 | |||||||||||||||||||||||
Notes Payable | |||||||||||||||||||||||
Derivative | |||||||||||||||||||||||
December 31, 2019 | |||||||||||||||||||||||
2019 Credit Facility | $ | $ | $ | $ | |||||||||||||||||||
Senior Secured Notes due 2024 | |||||||||||||||||||||||
Notes Payable | |||||||||||||||||||||||
Derivative |
Liability Derivatives | |||||||||||
(in $000s) | September 30, 2020 | December 31, 2019 | |||||||||
Derivative instruments: | |||||||||||
Interest rate collar | $ | $ | |||||||||
Total derivative instruments | $ | $ |
(in $000s) | Three Months Ended September 30, 2020 | % of revenue | Three Months Ended September 30, 2019 | % of revenue | Nine Months Ended September 30, 2020 | % of revenue | Nine Months Ended September 30, 2019 | % of revenue | ||||||||||||||||||
Rental revenue | $ | 46,125 | 66.6% | $ | 50,103 | 80.2% | $ | 144,103 | 65.7% | $ | 143,871 | 77.0% | ||||||||||||||
Sales of rental equipment | 5,510 | 8.0% | 3,436 | 5.5% | 19,585 | 8.9% | 15,167 | 8.1% | ||||||||||||||||||
Sales of new equipment | 6,048 | 8.7% | 1,246 | 2.0% | 19,043 | 8.7% | 8,076 | 4.3% | ||||||||||||||||||
Parts sales and services | 11,577 | 16.7% | 7,657 | 12.3% | 36,753 | 16.7% | 19,675 | 10.5% | ||||||||||||||||||
Total Revenue | 69,260 | 100.0% | 62,442 | 100.0% | 219,484 | 100.0% | 186,789 | 100.0% | ||||||||||||||||||
Cost of revenue | 34,162 | 49.3% | 23,484 | 37.6% | 106,833 | 48.7% | 73,159 | 39.2% | ||||||||||||||||||
Depreciation of rental equipment | 19,467 | 28.1% | 17,694 | 28.3% | 59,275 | 27.0% | 51,369 | 27.5% | ||||||||||||||||||
Gross Profit | 15,631 | 22.6% | 21,264 | 34.1% | 53,376 | 24.3% | 62,261 | 33.3% | ||||||||||||||||||
Operating expenses | 10,672 | 15,675 | 39,102 | 38,162 | ||||||||||||||||||||||
Operating Income | 4,959 | 5,589 | 14,274 | 24,099 | ||||||||||||||||||||||
Other Expense | 15,294 | 23,105 | 54,061 | 52,926 | ||||||||||||||||||||||
Loss Before Income Taxes | (10,335) | (17,516) | (39,787) | (28,827) | ||||||||||||||||||||||
Income Tax Expense (Benefit) | (25,508) | 494 | (25,841) | 1,330 | ||||||||||||||||||||||
Net Income (Loss) | $ | 15,173 | $ | (18,010) | $ | (13,946) | $ | (30,157) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
(in $000s, except fleet count and rate per day) | 2020 | 2019 | change | (%) | 2020 | 2019 | change | (%) | |||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA (a) | $28,020 | $30,654 | $(2,634) | (8.6) | $86,249 | $91,900 | $(5,651) | (6.1) | |||||||||||||||||||||||||||||||||||||||
Average equipment on rent (b) | $464,302 | $484,305 | $(20,003) | (4.1) | $475,038 | $467,178 | $7,860 | 1.7 | |||||||||||||||||||||||||||||||||||||||
Average fleet count | 4,542 | 4,221 | 321 | 7.6 | 4,595 | 4,075 | 520 | 12.8 | |||||||||||||||||||||||||||||||||||||||
Average fleet utilization (c) | 72.1% | 79.1% | (7.0)% | (8.8) | 73.1% | 80.4% | (7.3)% | (9.1) | |||||||||||||||||||||||||||||||||||||||
Average rental rate per day (d) | $137.16 | $138.11 | $(0.95) | (0.7) | $137.23 | $137.42 | $(0.19) | (0.1) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in $000s) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Net income (loss) | $ | 15,173 | $ | (18,010) | $ | (13,946) | $ | (30,157) | |||||||||||||||
Interest expense | 15,853 | 16,533 | 47,816 | 46,376 | |||||||||||||||||||
Income tax expense (benefit) | (25,508) | 494 | (25,841) | 1,330 | |||||||||||||||||||
Depreciation expense | 19,711 | 17,928 | 60,080 | 52,104 | |||||||||||||||||||
Amortization expense | 771 | 724 | 2,233 | 2,172 | |||||||||||||||||||
EBITDA | 26,000 | 17,669 | 70,342 | 71,825 | |||||||||||||||||||
Adjustments: | |||||||||||||||||||||||
Non-cash purchase accounting impact (1) | 390 | 126 | 1,485 | 862 | |||||||||||||||||||
Transaction and process improvement costs (2) | 1,380 | 9,648 | 5,098 | 14,676 | |||||||||||||||||||
Major repairs (3) | 211 | 376 | 1,506 | 1,522 | |||||||||||||||||||
Share-based payments (4) | 657 | 283 | 1,669 | 463 | |||||||||||||||||||
Change in fair value of derivative (5) | (618) | 2,552 | 6,149 | 2,552 | |||||||||||||||||||
Adjusted EBITDA | $ | 28,020 | $ | 30,654 | $ | 86,249 | $ | 91,900 |
Nine Months Ended September 30, | |||||||||||
(in $000s) | 2020 | 2019 | |||||||||
Adjusted EBITDA | $ | 86,249 | $ | 91,900 | |||||||
Adjustments: | |||||||||||
Change in fair value of derivative (5) | (6,149) | (2,552) | |||||||||
Share-based payments (4) | (1,669) | (463) | |||||||||
Major repairs (3) | (1,506) | (1,522) | |||||||||
Transaction and process improvement costs (2) | (5,098) | (14,676) | |||||||||
Non-cash purchase accounting impact (1) | (1,485) | (862) | |||||||||
EBITDA | 70,342 | 71,825 | |||||||||
Add: | |||||||||||
Interest expense | (47,816) | (46,376) | |||||||||
Income tax benefit (expense) | 25,841 | (1,330) | |||||||||
Amortization - financing costs | 2,188 | 2,099 | |||||||||
Share-based payments | 1,669 | 463 | |||||||||
Loss (gain) on sale of rental equipment and parts | (4,231) | (3,930) | |||||||||
Gain on insurance proceeds - damaged equipment | (714) | (570) | |||||||||
Major repair disposal | 1,506 | 1,522 | |||||||||
Loss on extinguishment of debt | — | 4,005 | |||||||||
Change in fair value of derivative | 6,149 | 2,552 | |||||||||
Asset impairment | — | 657 | |||||||||
Deferred tax (benefit) expense | (24,417) | 816 | |||||||||
Provision for losses on accounts receivable | 1,813 | 3,472 | |||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | 9,258 | (13,728) | |||||||||
Inventory | (3,797) | (13,742) | |||||||||
Prepaid expenses and other | (953) | (2,211) | |||||||||
Accounts payable | (8,920) | 4,792 | |||||||||
Accrued expenses | (11,782) | (4,770) | |||||||||
Deferred rental income | (1,270) | (4,832) | |||||||||
Net cash flow from operating activities | $ | 14,866 | $ | 714 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
(in $000s) | 2020 | 2019 | $ change | % change | 2020 | 2019 | $ change | % change | |||||||||||||||||||||||||||||||||||||||
Rental revenue | $ | 42,615 | $ | 46,922 | $ | (4,307) | (9.2) | % | $ | 132,693 | $ | 134,684 | $ | (1,991) | (1.5) | % | |||||||||||||||||||||||||||||||
Sales of rental equipment | 5,510 | 3,436 | 2,074 | 60.4 | % | 19,585 | 15,167 | 4,418 | 29.1 | % | |||||||||||||||||||||||||||||||||||||
Sales of new equipment | 6,048 | 1,246 | 4,802 | 385.4 | % | 19,043 | 8,076 | 10,967 | 135.8 | % | |||||||||||||||||||||||||||||||||||||
Total revenues | 54,173 | 51,604 | 2,569 | 5.0 | % | 171,321 | 157,927 | 13,394 | 8.5 | % | |||||||||||||||||||||||||||||||||||||
Cost of revenue | 23,342 | 17,091 | 6,251 | 36.6 | % | 72,211 | 55,306 | 16,905 | 30.6 | % | |||||||||||||||||||||||||||||||||||||
Depreciation of rental equipment | 18,530 | 16,636 | 1,894 | 11.4 | % | 56,065 | 48,186 | 7,879 | 16.4 | % | |||||||||||||||||||||||||||||||||||||
Gross Profit | $ | 12,301 | $ | 17,877 | $ | (5,576) | (31.2) | % | $ | 43,045 | $ | 54,435 | $ | (11,390) | (20.9) | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
(in $000s) | 2020 | 2019 | $ change | % change | 2020 | 2019 | $ change | % change | |||||||||||||||||||||||||||||||||||||||
Rental revenue | $ | 3,510 | $ | 3,181 | $ | 329 | 10.3 | % | $ | 11,410 | $ | 9,187 | $ | 2,223 | 24.2 | % | |||||||||||||||||||||||||||||||
Parts sales and services | 11,577 | 7,657 | 3,920 | 51.2 | % | 36,753 | 19,675 | 17,078 | 86.8 | % | |||||||||||||||||||||||||||||||||||||
Total revenues | 15,087 | 10,838 | 4,249 | 39.2 | % | 48,163 | 28,862 | 19,301 | 66.9 | % | |||||||||||||||||||||||||||||||||||||
Cost of revenue | 10,820 | 6,393 | 4,427 | 69.2 | % | 34,622 | 17,853 | 16,769 | 93.9 | % | |||||||||||||||||||||||||||||||||||||
Depreciation of rental equipment | 937 | 1,058 | (121) | (11.4) | % | 3,210 | 3,183 | 27 | 0.8 | % | |||||||||||||||||||||||||||||||||||||
Gross Profit | $ | 3,330 | $ | 3,387 | $ | (57) | (1.7) | % | $ | 10,331 | $ | 7,826 | $ | 2,505 | 32.0 | % |
Nine Months Ended September 30, | ||||||||||||||
(in $000s) | 2020 | 2019 | ||||||||||||
Net cash flow from operating activities | $ | 14,866 | $ | 714 | ||||||||||
Net cash flow from investing activities | (29,869) | (62,260) | ||||||||||||
Net cash flow from financing activities | 10,341 | 59,607 | ||||||||||||
Net change in cash | $ | (4,662) | $ | (1,939) |
Exhibit No. | Description | |||||||
31.1 + | ||||||||
31.2 + | ||||||||
32 + | ||||||||
101.INS + | XBRL Instance Document | |||||||
101.SCH + | XBRL Taxonomy Extension Schema Document | |||||||
101.CAL + | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF + | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB + | XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE + | XBRL Taxonomy Extension Presentation Linkbase Document |
NESCO HOLDINGS, INC. (Registrant) | ||||||||
Date: | 11/9/2020 | /s/ Lee Jacobson | ||||||
Lee Jacobson, Chief Executive Officer | ||||||||
Date: | 11/9/2020 | /s/ Joshua A. Boone | ||||||
Joshua A. Boone, Chief Financial Officer and Secretary |
1 | I have reviewed the Quarterly Report on Form 10-Q of Nesco Holdings, Inc. for the three and nine months ended September 30, 2020; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Nesco Holdings, Inc. as of, and for, the periods presented in this report; |
4 | Nesco Holdings I, Inc.’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Nesco Holdings, Inc. and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Nesco Holdings, Inc., including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of Nesco Holdings, Inc.’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in Nesco Holdings, Inc.’s internal control over financial reporting that occurred during Nesco Holdings, Inc.’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5 | Nesco Holdings, Inc.'s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Nesco Holdings, Inc.'s auditors and the audit committee of the Nesco Holdings, Inc.’s board of directors: |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Nesco Holdings, Inc.’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Nesco Holdings, Inc.’s internal control over financial reporting. |
Date: | 11/9/2020 | /s/ Lee Jacobson | |||||||||
Lee Jacobson | |||||||||||
Chief Executive Officer |
1 | I have reviewed the Quarterly Report on Form 10-Q of Nesco Holdings, Inc. for the three and nine months ended September 30, 2020; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Nesco Holdings, Inc. as of, and for, the periods presented in this report; |
4 | Nesco Holdings, Inc.’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Nesco Holdings, Inc. and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Nesco Holdings, Inc., including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of Nesco Holdings, Inc.’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in Nesco Holdings, Inc.’s internal control over financial reporting that occurred during Nesco Holdings, Inc.’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5 | Nesco Holdings, Inc.'s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Nesco Holdings, Inc.'s auditors and the audit committee of the Nesco Holdings, Inc.’s board of directors: |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Nesco Holdings, Inc.’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Nesco Holdings, Inc.’s internal control over financial reporting. |
Date: | 11/9/2020 | /s/ Joshua A. Boone | |||||||||
Joshua A. Boone | |||||||||||
Chief Financial Officer |
November 9, 2020 | /s/ Lee Jacobson | ||||
Lee Jacobson | |||||
Chief Executive Officer | |||||
November 9, 2020 | /s/ Joshua A. Boone | ||||
Joshua A. Boone | |||||
Chief Financial Officer | |||||
Condensed Consolidated Balance Sheets (unaudited) (Parentheticals) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for accounts receivable | $ 4,821 | $ 4,654 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, issued (in shares) | 49,033,903 | 49,033,903 |
Common stock, outstanding (in shares) | 49,033,903 | 49,033,903 |
Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Revenue | ||||
Total Revenue | $ 69,260 | $ 62,442 | $ 219,484 | $ 186,789 |
Cost of Revenue | ||||
Cost of rental revenue | 34,162 | 23,484 | 106,833 | 73,159 |
Depreciation of rental equipment | 19,467 | 17,694 | 59,275 | 51,369 |
Total cost of revenue | 53,629 | 41,178 | 166,108 | 124,528 |
Gross Profit | 15,631 | 21,264 | 53,376 | 62,261 |
Operating Expenses | ||||
Selling, general and administrative expenses | 8,633 | 9,824 | 31,269 | 24,708 |
Licensing and titling expenses | 686 | 690 | 2,243 | 1,926 |
Amortization and non-rental depreciation | 792 | 745 | 2,308 | 2,264 |
Transaction expenses | 110 | 3,325 | 1,073 | 7,394 |
Asset impairment | 0 | 657 | 0 | 657 |
Other operating expenses | 451 | 434 | 2,209 | 1,213 |
Total Operating Expenses | 10,672 | 15,675 | 39,102 | 38,162 |
Operating Income | 4,959 | 5,589 | 14,274 | 24,099 |
Other Expense | ||||
Loss on extinguishment of debt | 0 | 4,005 | 0 | 4,005 |
Interest expense, net | 15,853 | 16,533 | 47,816 | 46,376 |
Other (income) expense, net | (559) | 2,567 | 6,245 | 2,545 |
Total other expense | 15,294 | 23,105 | 54,061 | 52,926 |
Loss Before Income Taxes | (10,335) | (17,516) | (39,787) | (28,827) |
Income Tax Expense (Benefit) | (25,508) | 494 | (25,841) | 1,330 |
Net Income (Loss) | $ 15,173 | $ (18,010) | $ (13,946) | $ (30,157) |
Basic Earnings | ||||
Basic Earnings (Loss) Per Share (USD per share) | $ 0.31 | $ (0.45) | $ (0.28) | $ (1.09) |
Weighted-Average-Common Shares Outstanding (in shares) | 49,033,903 | 39,909,481 | 49,033,903 | 27,743,586 |
Diluted Earnings | ||||
Diluted Earnings (Loss) Per Share (USD per share) | $ 0.31 | $ (0.45) | $ (0.28) | $ (1.09) |
Weighted-Average-Common Shares Outstanding (in shares) | 49,307,811 | 39,909,481 | 49,033,903 | 27,743,586 |
Revenue | ||||
Revenue | ||||
Total Revenue | $ 46,125 | $ 50,103 | $ 144,103 | $ 143,871 |
Cost of Revenue | ||||
Cost of rental revenue | 13,096 | 13,545 | 41,193 | 37,445 |
Rental Equipment | ||||
Revenue | ||||
Total Revenue | 5,510 | 3,436 | 19,585 | 15,167 |
Cost of Revenue | ||||
Cost of rental revenue | 5,190 | 2,847 | 16,454 | 12,653 |
New Equipment | ||||
Revenue | ||||
Total Revenue | 6,048 | 1,246 | 19,043 | 8,076 |
Cost of Revenue | ||||
Cost of rental revenue | 5,410 | 1,116 | 16,841 | 6,618 |
Parts sales and services | ||||
Revenue | ||||
Total Revenue | 11,577 | 7,657 | 36,753 | 19,675 |
Cost of Revenue | ||||
Cost of rental revenue | 10,255 | 5,600 | 30,839 | 14,921 |
Major repair disposals | ||||
Cost of Revenue | ||||
Cost of rental revenue | $ 211 | $ 376 | $ 1,506 | $ 1,522 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net Income (Loss) | $ 15,173 | $ (18,010) | $ (13,946) | $ (30,157) |
Other comprehensive loss: | ||||
Interest rate collar (net of taxes of $285 in the nine months ended September 30, 2019) | 0 | 0 | 0 | (388) |
Other comprehensive loss | 0 | 0 | 0 | (388) |
Comprehensive income (loss) | $ 15,173 | $ (18,010) | $ (13,946) | $ (30,545) |
Condensed Consolidated Statements of Comprehensive Loss (unaudited) Parenthetical |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Statement of Comprehensive Income [Abstract] | |
Interest rate collar, taxes | $ 285,000 |
Reclassifications from AOCI | 800,000 |
Cash flow hedge, tax expense reclassified | $ 300,000 |
Business and Organization |
9 Months Ended |
---|---|
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | Note 1: Business and Organization Organization Nesco Holdings, Inc. (“Holdings”), a Delaware corporation, serves as the parent for our primary operating company, NESCO, LLC, an Indiana limited liability company, and its wholly owned subsidiaries (collectively, with Holdings, “we,” “our,” “us,” “Nesco,” or the "Company"), and is engaged in the business of providing a range of services and products to customers through rentals of specialty equipment, sales of parts related to the specialty equipment, and repair and maintenance services related to that equipment. The wholly-owned subsidiaries of Holdings include: NESCO, LLC, an Indiana limited liability company, NESCO Holdings I, Inc., a Delaware corporation, NESCO Finance Corporation, a Delaware corporation, NESCO Investments, LLC, a Delaware limited liability company, NESCO International, LLC, a Delaware limited liability company, and NESCO El Alquiler S. de R.L. de C.V., an operating company in Mexico. We are a specialty equipment rental provider to the electric utility transmission and distribution, telecommunications and rail industries in North America. Our core business relates to our fleet of specialty rental equipment that is utilized by service providers in infrastructure improvement work. Specifically, we offer our specialized equipment to a diverse customer base, including utilities and primarily contractors, for the maintenance, repair, upgrade and installation of critical infrastructure assets, including distribution and transmission electric lines, telecommunications networks and rail systems, as well as a small percentage for lighting and signage. We rent and sell a broad range of new and used equipment, including bucket trucks, digger derricks, line equipment, cranes, pressure diggers, and underground equipment, which forms our Equipment Rental and Sales ("ERS") segment. To complement our fleet, we also provide a one-stop shop for existing and prospective Nesco customers in the same end markets of electric lines, telecommunications networks and rail systems; to purchase or rent parts, tools, and accessories needed to outfit their specialty truck fleet. These activities form our Parts, Tools, and Accessories (“PTA”) segment. We are positioned to serve all 50 U.S. states and 13 Canadian provinces and territories via our network of over 70 locations in the United States and Canada.
|
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Polices | Note 2: Summary of Significant Accounting Policies Basis of Presentation The accompanying interim statements of the Company have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments and disclosures necessary for a fair statement of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year or for any other period. These interim statements should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Use of Estimates We prepare our consolidated financial statements in conformity with GAAP, which requires us to use judgment to make estimates that directly affect the amounts reported in our consolidated financial statements and accompanying notes. Significant estimates are used for items including, but not limited to, the useful lives and residual values of our rental equipment, and business combinations. In addition, estimates are used to test both long-lived assets, goodwill and indefinite-lived assets for impairment, and to determine the fair value of impaired assets, if any impairment exists. These estimates are based on our historical experience and on various other assumptions we believe to be reasonable under the circumstances. We review our estimates on an ongoing basis using information currently available, and we revise our recorded estimates as updated information becomes available, facts and circumstances change, or actual amounts become determinable. Actual results could differ from our estimates. In the opinion of management, these financial statements reflect all normal recurring adjustments necessary for a fair presentation of the interim period results. Recently Issued Accounting Pronouncements We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012. Accordingly, we have elected to comply with certain reduced public company reporting requirements related to effective dates for the adoption of newly issued standards issued by the Financial Accounting Standards Board (the “FASB”). An emerging growth company is permitted to apply the effective dates applicable to non-public entities, which generally are delayed in comparison to public entities that are non-emerging growth entities. Leases The FASB’s new guidance to account for leases (“Topic 842”) by entities that are lessees, requires (1) recognition of lease assets and lease liabilities on the balance sheet and (2) disclosure of key information about leasing arrangements. Topic 842 provides two classifications for leases: financing or operating. Finance leases - The accounting and recognition for leases qualifying as finance leases is similar to the accounting and recognition required under ASC Topic 840, "Leases (“Topic 840”)," for capital leases. As of September 30, 2020, we have capital lease obligations of approximately $19.8 million. When we make our contractually required payments under the capital leases, we allocate a portion to reduce the capital lease obligation and a portion is recognized as interest expense. The assets leased under the capital leases are included in rental equipment, and depreciation thereon is recognized in cost of rental revenue. Operating leases - Under Topic 842, operating leases result in the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments. Under Topic 842, operating lease ROU assets and liabilities are recognized at the lease commencement date and measured based on the present value of lease payments over the lease term. The operating lease ROU assets will also include any lease payments made and exclude lease incentives. Our lease terms may include options to extend or terminate the lease that we are reasonably certain to exercise. Lease expense under Topic 842 will be recognized on a straight-line basis over the lease term. Upon adoption of Topic 842, we expect to recognize operating lease ROU assets and lease liabilities that reflect the present value of these future payments, which we currently estimate to be in the range of $8.0 million to $10.0 million. The FASB issued new guidance with respect to deferring the effective date of Topic 842 by one year. Accordingly, we will adopt Topic 842 effective January 1, 2022, using the transition method that allows us to recognize a cumulative-effect adjustment to the opening balance of accumulated deficit in the period of adoption. A modified retrospective approach is required for adoption for all leases that exist at or commence after the date of initial application with an option to use certain practical expedients. We expect to use the package of practical expedients that allows us to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. Under Topic 842, lessor accounting will remain substantially similar to the current accounting; however, certain refinements were made to conform the standard with the recently issued revenue recognition guidance in ASC Topic 606," Revenue from Contracts with Customers (“Topic 606”)," specifically related to the allocation and recognition of contract consideration earned from lease and non-lease revenue components. On July 30, 2018, the FASB issued ASU 2018-11, which created a practical expedient that provides lessors an option not to separate lease and non-lease components when certain criteria are met and instead account for those components as a single lease component. We are currently in the process of evaluating whether our lease arrangements will meet the criteria under the practical expedient to account for lease and non-lease components as a single lease component, which would alleviate the requirement upon adoption of Topic 842 that we reallocate or separately present lease and non-lease components. Measurement of Current Expected Credit Losses In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," to update the methodology used to measure current expected credit losses (“CECL”). This ASU applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investments in leases, and trade accounts receivable as well as certain off-balance sheet credit exposures, such as loan commitments. This ASU replaces the current incurred loss impairment methodology with a methodology to reflect CECL and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. The guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings (deficit) in the period of adoption. For emerging growth companies electing the modified transition dates of non-public entities, this ASU is effective for fiscal years beginning after December 15, 2022. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment (Topic 350)," intended to simplify the subsequent accounting for goodwill acquired in a business combination. Prior guidance required utilizing a two-step process to review goodwill for impairment. A second step was required if there was an indication that an impairment may exist, and the second step required calculating the potential impairment by comparing the implied fair value of a reporting unit’s goodwill (as if purchase accounting were performed on the testing date) to the carrying amount of the goodwill. The new guidance eliminates the second step from the goodwill impairment test. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value (although the loss should not exceed the total amount of goodwill allocated to the reporting unit). The guidance requires prospective adoption and will be effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2021. Early adoption of this guidance is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently assessing the expected impact on our financial statements. Revenue Recognition Following the adoption of Topic 606, as of January 1, 2018, we recognized revenue in accordance with two different accounting standards: 1) Topic 606 and 2) Topic 840, which addresses lease accounting, for which we will adopt an update to this standard using the modified retrospective approach, as described herein. For the three and nine months ended September 30, 2020 and 2019, we recognized rental revenue in accordance with Topic 840, Leases, which is the lease accounting standard. Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A “performance obligation” is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account under Topic 606. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for such products or services. As reflected below, most of our revenue is accounted for under Topic 840. Our contracts with customers generally do not include multiple performance obligations. The inset below presents our revenue types based on the accounting standard used to determine the accounting.
Rental revenue is primarily comprised of revenues from rental agreements and freight charges billed to customers as well as charges to customers for damaged equipment. Inventory Parts, tools and accessories inventory is primarily comprised of items purchased for resale or rent to customers. During the second quarter ended June 30, 2020, in connection with a new inventory management system, we elected to change our method for these inventories, which were previously valued using the first-in, first-out (“FIFO”) method, to the moving average cost method. We believe the change is preferable because it better reflects movement of the inventory and the corresponding value which provides a better reflection of periodic income from operations. This change was not applied retrospectively to prior periods, as the effect of the change was not material to our consolidated financial statements, including interim periods. Also included within parts, tools and accessories inventory are materials and components that we carry to service our rental fleet and new equipment held for sale. These materials and components are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Equipment inventory consists of equipment bought specifically for resale to customers. These new purchases are recorded directly to inventory when received. Equipment inventory is stated at the lower of cost or net realizable value, with cost determined on a specific identification basis. Inventory consisted of the following:
Rental and Property and Equipment Rental equipment consisted of the following:
Property and equipment consisted of the following:
On September 27, 2019, we commenced closure of the Company's operations in Mexico due to continued delays in contracts from the Mexican government. In the three and nine month periods ended September 30, 2019, an impairment loss of $0.7 million was recorded to reduce the carrying amount of rental equipment to its fair value, which was determined based on a recent analysis of market activity (i.e., Level 3 fair value as defined in Note 9 herein) for the equipment at these operations. This charge is included in Impairment loss on the Unaudited Condensed Consolidated Statements of Operations.
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Segments | Note 3: Segments We have two reportable business segments, Equipment Rental and Sales (“ERS”) and Parts, Tools, and Accessories (“PTA”). ERS provides rental solutions to utilities and contractors serving multiple infrastructure end-markets, including electric transmission and distribution, telecom, rail, lighting and signage. We rent and sell specialized equipment to utilities and utility contractors that build and maintain critical transmission and distribution infrastructure. Utilizing our national platform and rental fleet, we expanded our focus on equipment rental to the telecom, rail, lighting and signage end-markets. The majority of our existing equipment can be used across multiple end-markets and many of our customers operate in these multiple end-markets. We rent and sell a broad range of new and used equipment including bucket trucks, digger derricks, line equipment, cranes, pressure diggers, rail mounted equipment and underground equipment. Our PTA segment offers customers sale and rental solutions for parts, tools, and accessories to complement our specialty equipment line doing business servicing these same end-markets. Our reportable segments align with the information our chief operating decision maker (“CODM”) receives on a regular basis to evaluate the performance of the business and to allocate resources. The accounting principles applied at the operating segment level in determining gross profit are generally the same as those applied at the consolidated financial statement level. There are no inter-segment revenues, and cost allocations to operating segment cost of revenue are minimal; that is, revenue, cost of equipment and parts sold or rented, depreciation of rental equipment and gross profit are directly attributed to each of the operating segments. The following tables present our financial information by segment:
(1) Amounts for equipment rental revenue of $0.7 million and $1.9 million for the three and nine months ended September 30, 2019, respectively, previously reported in the PTA segment as rental revenue have been reclassified to the ERS segment to align the reportable segment information to the information our CODM began receiving on a regular basis in 2019. Total assets by segment are not disclosed herein because asset by operating segment data is not reviewed by the CODM to assess performance and allocate resources. Gross profit is the primary operating result whereby our segments are evaluated for performance and resource allocation. The following table presents a reconciliation of consolidated gross profit to consolidated loss before income taxes:
We are positioned to serve all 50 U.S. states and 13 Canadian provinces and territories using our network of locations in North America. The following tables present revenue by country and total assets by country:
(1) On September 27, 2019, the Company began commencing activities for the closure of its Mexican operations, which is part of the ERS segment. For the three and nine months ended September, 30, 2020 and 2019, operations in Mexico generated a loss before income taxes of $0.8 million and $2.0 million, and $1.9 million and $3.8 million, respectively.
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Business Combination |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination | Note 4: Business Combination On September 20, 2019, we entered into a stock purchase agreement with Truck Utilities, Inc. (“Truck Utilities”). Truck Utilities is a specialty rentals, parts, tools and accessories sales, service, equipment sales and truck upfitting company serving the electric transmission, distribution, telecom, and other regional end-markets. On November 4, 2019, we closed on the acquisition for a purchase price of approximately $44.7 million (net of cash acquired of $3.1 million), prior to certain capital expenditure adjustments of approximately $3.8 million. Truck Utilities’ rentals, equipment sales and truck upfitting operations were added to our ERS segment, while its parts, tools and accessories sales and service were added to our PTA segment. The transaction was financed by drawing on the 2019 Credit Facility. As of the date of this report, we were in the preliminary phases of preparing the valuation of the assets acquired and liabilities assumed. Accordingly, the purchase price allocation for this acquisition presented below is preliminary. Completion of the purchase price allocation, which will be completed during the fourth quarter of 2020, will encompass the finalization of valuations for acquisition-date working capital, intangible assets, property and equipment, as well as completion of acquisition-related income tax assessments. We have estimated the fair values of the assets acquired and liabilities assumed using the information that was available. Upon completion of the valuation process, amounts recognized could change resulting in additional expenses recognized for depreciation and amortization of long-lived assets in future periods. We accounted for the acquisitions using the acquisition method of accounting. The purchase price has been allocated to the fair value of the tangible and identifiable intangible assets acquired as determined by management with the assistance of independent third parties. The results of operations of Truck Utilities has been included with the Company’s results since the date of the acquisition. Transaction costs associated with the acquisitions were expensed as incurred. The fair value (which remains provisional) of the assets acquired and liabilities assumed as of the acquisition date is presented below.
The preliminary values of intangible assets and goodwill related to the acquisition of Truck Utilities consists largely of the synergies and economies of scale provided by the acquired rental equipment portion of the business, as well as additional service center locations in the central Midwestern region of the United States. During the three and nine months ended September 30, 2020 we recorded adjustments to the preliminary fair values, including the related income tax effect, assigned to certain rental equipment, which reduced goodwill. These adjustments were not significant. Goodwill has been preliminarily allocated to the ERS and PTA reporting units in the amount of $5.4 million and $3.5 million, respectively. The operating results of the acquisition have been reflected in the Company’s consolidated financial statements since the acquisition date. Truck Utilities reported revenue of $9.0 million and pretax income of $0.7 million in the three months ended September 30, 2020 ($31.6 million and $1.6 million, respectively, in the nine months ended September 30, 2020). The following pro forma information is presented for comparison purposes as if the Truck Utilities acquisition was completed as of January 1, 2019:
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Note 5: Debt Debt obligations and associated interest rates consisted of the following as of September 30, 2020 and December 31, 2019:
On March 10, 2020, we entered into an agreement (the “Incremental Agreement”) amending the 2019 Credit Facility. The Incremental Agreement amends the syndicate of banks for a new participant that increased the maximum amount of the facility by $35.0 million to a total of $385.0 million. As of September 30, 2020, there was $67.4 million (excluding cash) of availability under the 2019 Credit Facility. On July 31, 2019, in connection with a series of transactions with Capitol Investment Corp. IV, debt obligations under a revolving credit facility, a revolving credit commitments and senior notes, were extinguished. In connection with the extinguishment, unamortized deferred financing fees were written-off. The loss on extinguishment of debt aggregated $4.0 million.
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets | Note 6: Goodwill and Intangible Assets Goodwill and intangible assets consisted of the following:
Goodwill related to our ERS segment and PTA segment was $228.9 million and $8.8 million, respectively, as of September 30, 2020 and December 31, 2019. We perform our annual goodwill impairment testing in the fourth quarter of each year. In addition to the annual impairment test, we regularly assess whether a triggering event has occurred which would require interim impairment testing. During the first quarter ended March 31, 2020, we qualitatively assessed whether it was more likely than not that the goodwill and indefinite-lived intangible assets were impaired. Based that interim impairment assessment, we determined that our goodwill and indefinite-lived intangible assets were not impaired. During the three months ended September 30, 2020, we did not identify any triggering events that necessitated an impairment test.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Note 7: Earnings per Share As described more fully in our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019, on July 31, 2019, we completed a series of transactions with Capitol Investment Corp. IV that were accounted for as a reverse recapitalization. In connection therewith, the merger and share exchange resulted in $172.3 million, net of transaction costs, of contributed capital. Earnings per share has been recast for all historical periods to reflect the Company's capital structure for all comparative periods. Diluted net income (loss) per share includes the effects of potentially dilutive shares of common stock. Potentially dilutive effects include the exercise of warrants, contingently issuable shares, and share-based compensation, all of which have been excluded from the calculation of diluted net income (loss) per share because earnings are at a net loss and therefore, the potentially dilutive effect would be anti-dilutive. The share amounts of our potentially dilutive shares excluded aggregated 27.8 million and 27.3 million for the three and nine months ended September 30, 2020, respectively. The following tables set forth the computation of basic and dilutive earnings (loss) per share:
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Share-Based Compensation |
9 Months Ended |
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Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Note 8: Share-Based Compensation During the second quarter ended June 30, 2019, the Company's stockholders approved the 2019 Omnibus Incentive Plan, which authorizes up to 3,150,000 shares of common stock of Nesco Holdings, Inc. for issuance in accordance with the plan’s terms, subject to certain adjustments. On June 11, 2020, the Company's stockholders approved the Amended and Restated 2019 Omnibus Incentive Plan, which increased the total authorized shares of common stock of Nesco Holdings, Inc. to 6,150,000 (the "Plan"). The purpose of the Plan is to provide the Company's and its subsidiaries’ officers, directors, employees and consultants who, by their position, ability and diligence, are able to make important contributions to the Company’s growth and profitability, with an incentive to assist the Company in achieving its long-term corporate objectives, to attract and retain executive officers and other employees of outstanding competence and to provide such persons with an opportunity to acquire an equity interest in the Company. To accomplish these objectives, the Plan provides for awards of equity-based incentives through granting of restricted stock units, stock options, stock appreciation rights and other stock or cash based awards. At September 30, 2020, there were 2,587,992 shares in the share reserve still available for issuance. The Company records share-based compensation awards using a fair value method and recognizes compensation expense for an amount equal to the fair value of the share-based payment issued in its financial statements. The Company’s share-based compensation plans include programs for stock options, restricted stock units ("RSUs"), performance share units ("PSUs"), and deferred compensation. Compensation Expense Share-based compensation expense was $0.7 million and $1.7 million for the three and nine months ended September 30, 2020, respectively, and is included in selling, general, and administrative expenses within the unaudited condensed consolidated statements of operations. In the nine months ended September 30, 2020, the Company's board of directors approved and awarded various share grants under the Plan, totaling approximately 1.2 million options and 0.8 million RSUs. As of September 30, 2020, there was approximately $8.0 million of total unrecognized compensation cost related to stock-based compensation arrangements under the Plan. That cost is expected to be recognized over a weighted average period of 3.4 years.
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Fair Value Measurements |
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Fair Value Measurements | Note 9: Fair Value Measurements FASB accounting standards provide a comprehensive framework for measuring fair value and sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. Levels within the hierarchy are defined as follows: •Level 1 - Unadjusted quoted prices for identical assets and liabilities in active markets; •Level 2 - Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable for the asset or liability, either directly or indirectly; and •Level 3 - Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The following table sets forth the carrying values (exclusive of deferred financing fees) and fair values of our financial liabilities:
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Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Note 10: Financial Instruments In the normal course of business, the Company uses various financial instruments, including derivative instruments, to manage the risks associated with interest rate exposure. These financial instruments are not used for trading or speculative purposes. The fair values of derivative instruments included within the Unaudited Condensed Consolidated Balance Sheets were as follows:
Derivatives Not Designated as Hedges On July 17, 2019, we entered into an interest rate collar agreement to mitigate the risk of changes in the interest rate paid during the contract period for $170.0 million of the Company's variable rate loans under the 2019 Credit Facility. Under the terms of the interest rate collar, we are required to pay the counterparty to the agreement an amount equal to the difference between a monthly LIBOR-based interest rate and a defined interest rate floor; conversely, we are entitled to receive from the counterparty an amount equal to the excess of a LIBOR-based interest rate and a defined interest rate cap. The required payments due to or due from the counterparty are calculated by applying the interest rate differential to the notional amount ($170.0 million) and are determined monthly through July 31, 2024. The interest rate collar expires in July 2024 and has not been designated as a cash flow hedge. Consequently, the change in fair value of the interest rate collar ($0.2 million and $6.1 million in the three and nine months ended September 30, 2020, respectively) is recognized in our Unaudited Condensed Consolidated Statements of Operations within Other (income) expense, net. Derivatives Instruments Designated as Hedges When a derivative contract is entered into, the Company may designate the derivative instrument as a cash flow hedge of a forecasted transaction, a cash flow hedge of a recognized asset or liability or as an undesignated derivative. When a derivative is designated, the Company formally documents its hedge relationships, including identification of the derivative instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. This process includes linking derivative instruments that are designated as hedges to specific assets, liabilities or forecasted transactions. The fair market value of derivative instruments is determined through market-based valuations and may not be representative of the actual gains or losses that will be recorded when these instruments mature due to future fluctuations in the markets in which they are traded. The Company assesses at inception and at least quarterly thereafter, whether the derivatives used in cash flow hedging transactions are effective in offsetting the changes in the cash flows of the hedged item. To the extent the derivative is deemed to be an effective hedge, the fair market value changes of the instrument are recorded to accumulated other comprehensive loss and subsequently reclassified into net loss when the hedged transaction affects earnings. Changes in the fair market value of derivatives not deemed to be an effective hedge are recorded in net loss in the period of change. If the hedging relationship ceases to be effective subsequent to inception, or it becomes probable that a forecasted transaction is no longer expected to occur, the hedging relationship will be undesignated and any future gains and losses on the derivative instrument will be recorded in net loss. We entered into an interest rate collar on December 4, 2018, to hedge the interest rate risk associated with our previous revolving credit facility, which was repaid on the date of the merger with Capitol Investment Corp. IV. The interest rate collar was designated as a cash flow hedge and had a term extending to September 30, 2020. On July 17, 2019, we terminated the interest rate collar, which resulted in the hedge becoming undesignated. Accordingly, $0.8 million (net of income taxes of $0.3 million) was reclassified from accumulated other comprehensive loss to Other income (expense) net, in our Condensed Consolidated Statements of Operations during the year ended December 31, 2019.
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11: Commitments and Contingencies We record a liability when we believe that it is both probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. We review these provisions at least quarterly and adjust these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Legal Matters We are subject to various claims and legal actions that arise primarily in the ordinary course of business. These matters include, but are not limited to, general liability claims (including personal injury, product liability, property, and auto claims), indemnification and guarantee obligations, employee injuries and employment-related claims, and contract and real estate matters. We maintain insurance coverage for our operations and employees. Our major policies include coverage for property, general liability, auto, directors and officers, health, and workers’ compensation insurances. The ultimate legal and financial liability with respect to such matters generally cannot be estimated with certainty and requires the use of estimates in recording liabilities for potential litigation settlements against us. Estimates for losses from litigation are made after consultation with outside legal counsel. In our opinion, after consultation with legal counsel, the disposition or ultimate resolution of such claims and actions will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows. Purchase CommitmentsWe enter into purchase agreements with manufacturers and suppliers of equipment for our rental fleet and inventory. All of these agreements are cancellable within a specified notification period to the supplier.
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Income Taxes |
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Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 12: Income Taxes The Tax Cuts and Jobs Act of 2017 included new rules created to limit the deductibility of interest expense in certain circumstances. Historically, we had maintained a valuation allowance against our deferred tax assets related to federal and state net operating loss carryforwards as well as disallowed interest expense deduction carryforwards under those rules. During the three and nine months ended September 30, 2020, we recorded a reduction of our deferred tax valuation allowance, which resulted in an increase in income tax benefit of approximately $5.0 million. The reduction represents a correction of valuation allowances recorded in prior annual periods. These valuation allowances were recognized based on our prior interpretation of the manner in which the interest limitation rules impact the realizability of certain deferred tax assets. In our revised assessment, we estimate we are more likely than not to realize certain of our federal and state deferred tax assets within the period that the carryforwards expire. In addition, in March 2020, the United States Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) reduced the amount of disallowed interest expense which resulted in a greater amount of interest deduction. Consistent with our historical practice, we had recognized a deferred tax valuation allowance against the incremental net operating loss carryforwards generated as a result of the CARES Act during the first half of 2020. As a result of our revised assessment described in the previous paragraph, during the three and nine months ended September 30, 2020, we recorded an income tax benefit of approximately $8.7 million to correct the deferred tax valuation allowance recorded in prior 2020 interim periods. We determined that the effects of the misstatements, both on an individual and cumulative basis, were not material to our consolidated financial statements for any interim or annual period. Further, on July 27, 2020, the United States Department of Treasury and Internal Revenue Service issued final regulations that provided guidance on the determination of disallowed interest expense. This guidance also resulted in net operating loss carryforwards that are estimated to be realized. As a result, during the three and nine months ended September 30, 2020, we recorded an income tax benefit of approximately $11.8 million.
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COVID-19 |
9 Months Ended |
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Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
COVID-19 | Note 13: COVID-19 During the on-going COVID-19 pandemic, we have undertaken efforts intended to maintain the health and safety of our employees and their families and to ensure the Company's continued financial and operational viability, especially in relation to our position as a supplier to critical industries. Employees whose tasks can be completed offsite have been instructed to work from home. Our service locations remain operational, and we are maintaining social distancing and enhanced cleaning protocols and usage of personal protective equipment, where appropriate. While Nesco’s business is considered critical, we are unable to predict the impact that COVID-19 will have on our financial position and operating results in the future due to numerous uncertainties. Some of our customers are delaying projects, deferring future capital equipment purchases and eliminating in-person sales meetings. As a result, our business has been and will continue to be adversely impacted by the pandemic. Since the pandemic began, management has been focused on delivering for our customers and managing our costs and cash flows while preparing for a future recovery. We have reduced our capital spending, our working capital balances and undertaken cost reduction efforts including limited headcount reductions. At the same time, we have continued to make opportunistic investments in the fleet, systems and personnel to position the Company for long-term growth. We are continually monitoring the markets in which we operate and will take additional actions we believe are appropriate as the situation continues to develop.
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Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of PresentationThe accompanying interim statements of the Company have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments and disclosures necessary for a fair statement of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year or for any other period. These interim statements should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. |
Use of Estimates | Use of EstimatesWe prepare our consolidated financial statements in conformity with GAAP, which requires us to use judgment to make estimates that directly affect the amounts reported in our consolidated financial statements and accompanying notes. Significant estimates are used for items including, but not limited to, the useful lives and residual values of our rental equipment, and business combinations. In addition, estimates are used to test both long-lived assets, goodwill and indefinite-lived assets for impairment, and to determine the fair value of impaired assets, if any impairment exists. These estimates are based on our historical experience and on various other assumptions we believe to be reasonable under the circumstances. We review our estimates on an ongoing basis using information currently available, and we revise our recorded estimates as updated information becomes available, facts and circumstances change, or actual amounts become determinable. Actual results could differ from our estimates. In the opinion of management, these financial statements reflect all normal recurring adjustments necessary for a fair presentation of the interim period results. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012. Accordingly, we have elected to comply with certain reduced public company reporting requirements related to effective dates for the adoption of newly issued standards issued by the Financial Accounting Standards Board (the “FASB”). An emerging growth company is permitted to apply the effective dates applicable to non-public entities, which generally are delayed in comparison to public entities that are non-emerging growth entities. Leases The FASB’s new guidance to account for leases (“Topic 842”) by entities that are lessees, requires (1) recognition of lease assets and lease liabilities on the balance sheet and (2) disclosure of key information about leasing arrangements. Topic 842 provides two classifications for leases: financing or operating. Finance leases - The accounting and recognition for leases qualifying as finance leases is similar to the accounting and recognition required under ASC Topic 840, "Leases (“Topic 840”)," for capital leases. As of September 30, 2020, we have capital lease obligations of approximately $19.8 million. When we make our contractually required payments under the capital leases, we allocate a portion to reduce the capital lease obligation and a portion is recognized as interest expense. The assets leased under the capital leases are included in rental equipment, and depreciation thereon is recognized in cost of rental revenue. Operating leases - Under Topic 842, operating leases result in the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments. Under Topic 842, operating lease ROU assets and liabilities are recognized at the lease commencement date and measured based on the present value of lease payments over the lease term. The operating lease ROU assets will also include any lease payments made and exclude lease incentives. Our lease terms may include options to extend or terminate the lease that we are reasonably certain to exercise. Lease expense under Topic 842 will be recognized on a straight-line basis over the lease term. Upon adoption of Topic 842, we expect to recognize operating lease ROU assets and lease liabilities that reflect the present value of these future payments, which we currently estimate to be in the range of $8.0 million to $10.0 million. The FASB issued new guidance with respect to deferring the effective date of Topic 842 by one year. Accordingly, we will adopt Topic 842 effective January 1, 2022, using the transition method that allows us to recognize a cumulative-effect adjustment to the opening balance of accumulated deficit in the period of adoption. A modified retrospective approach is required for adoption for all leases that exist at or commence after the date of initial application with an option to use certain practical expedients. We expect to use the package of practical expedients that allows us to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. Under Topic 842, lessor accounting will remain substantially similar to the current accounting; however, certain refinements were made to conform the standard with the recently issued revenue recognition guidance in ASC Topic 606," Revenue from Contracts with Customers (“Topic 606”)," specifically related to the allocation and recognition of contract consideration earned from lease and non-lease revenue components. On July 30, 2018, the FASB issued ASU 2018-11, which created a practical expedient that provides lessors an option not to separate lease and non-lease components when certain criteria are met and instead account for those components as a single lease component. We are currently in the process of evaluating whether our lease arrangements will meet the criteria under the practical expedient to account for lease and non-lease components as a single lease component, which would alleviate the requirement upon adoption of Topic 842 that we reallocate or separately present lease and non-lease components. Measurement of Current Expected Credit Losses In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," to update the methodology used to measure current expected credit losses (“CECL”). This ASU applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investments in leases, and trade accounts receivable as well as certain off-balance sheet credit exposures, such as loan commitments. This ASU replaces the current incurred loss impairment methodology with a methodology to reflect CECL and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. The guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings (deficit) in the period of adoption. For emerging growth companies electing the modified transition dates of non-public entities, this ASU is effective for fiscal years beginning after December 15, 2022. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment (Topic 350)," intended to simplify the subsequent accounting for goodwill acquired in a business combination. Prior guidance required utilizing a two-step process to review goodwill for impairment. A second step was required if there was an indication that an impairment may exist, and the second step required calculating the potential impairment by comparing the implied fair value of a reporting unit’s goodwill (as if purchase accounting were performed on the testing date) to the carrying amount of the goodwill. The new guidance eliminates the second step from the goodwill impairment test. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value (although the loss should not exceed the total amount of goodwill allocated to the reporting unit). The guidance requires prospective adoption and will be effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2021. Early adoption of this guidance is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently assessing the expected impact on our financial statements. Revenue Recognition Following the adoption of Topic 606, as of January 1, 2018, we recognized revenue in accordance with two different accounting standards: 1) Topic 606 and 2) Topic 840, which addresses lease accounting, for which we will adopt an update to this standard using the modified retrospective approach, as described herein. For the three and nine months ended September 30, 2020 and 2019, we recognized rental revenue in accordance with Topic 840, Leases, which is the lease accounting standard. Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A “performance obligation” is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account under Topic 606. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for such products or services. As reflected below, most of our revenue is accounted for under Topic 840. Our contracts with customers generally do not include multiple performance obligations.
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Inventory | Inventory Parts, tools and accessories inventory is primarily comprised of items purchased for resale or rent to customers. During the second quarter ended June 30, 2020, in connection with a new inventory management system, we elected to change our method for these inventories, which were previously valued using the first-in, first-out (“FIFO”) method, to the moving average cost method. We believe the change is preferable because it better reflects movement of the inventory and the corresponding value which provides a better reflection of periodic income from operations. This change was not applied retrospectively to prior periods, as the effect of the change was not material to our consolidated financial statements, including interim periods. Also included within parts, tools and accessories inventory are materials and components that we carry to service our rental fleet and new equipment held for sale. These materials and components are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Equipment inventory consists of equipment bought specifically for resale to customers. These new purchases are recorded directly to inventory when received. Equipment inventory is stated at the lower of cost or net realizable value, with cost determined on a specific identification basis.
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Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue Types Based On Accounting Standard | The inset below presents our revenue types based on the accounting standard used to determine the accounting.
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Schedule of Inventory | Inventory consisted of the following:
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Schedule of Rental Equipment | Rental equipment consisted of the following:
Property and equipment consisted of the following:
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Segments (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Information by Segment | The following tables present our financial information by segment:
(1) Amounts for equipment rental revenue of $0.7 million and $1.9 million for the three and nine months ended September 30, 2019, respectively, previously reported in the PTA segment as rental revenue have been reclassified to the ERS segment to align the reportable segment information to the information our CODM began receiving on a regular basis in 2019.
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Reconciliation of Segment Gross Profit to Consolidated Loss Before Income Taxes | The following table presents a reconciliation of consolidated gross profit to consolidated loss before income taxes:
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Summary of Revenue by Country | The following tables present revenue by country and total assets by country:
(1) On September 27, 2019, the Company began commencing activities for the closure of its Mexican operations, which is part of the ERS segment. For the three and nine months ended September, 30, 2020 and 2019, operations in Mexico generated a loss before income taxes of $0.8 million and $2.0 million, and $1.9 million and $3.8 million, respectively.
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Summary of Total Assets by Country |
|
Business Combination (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Acquired and Liabilities Assumed | The fair value (which remains provisional) of the assets acquired and liabilities assumed as of the acquisition date is presented below.
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Business Acquisition, Pro Forma Information | The following pro forma information is presented for comparison purposes as if the Truck Utilities acquisition was completed as of January 1, 2019:
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Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Obligations | Debt obligations and associated interest rates consisted of the following as of September 30, 2020 and December 31, 2019:
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Goodwill and Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Goodwill | Goodwill and intangible assets consisted of the following:
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Dilutive Loss Per Share | The following tables set forth the computation of basic and dilutive earnings (loss) per share:
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Values and Fair Values of Financial Liabilities | The following table sets forth the carrying values (exclusive of deferred financing fees) and fair values of our financial liabilities:
|
Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments Within Condensed and Consolidated Balance Sheets | The fair values of derivative instruments included within the Unaudited Condensed Consolidated Balance Sheets were as follows:
|
Business and Organization (Details) |
9 Months Ended |
---|---|
Sep. 30, 2020
state
location
| |
Business Combination Segment Allocation [Line Items] | |
Number of location in which the entity operates | location | 70 |
United States | |
Business Combination Segment Allocation [Line Items] | |
Number of states positioned to serve | 50 |
Canada | |
Business Combination Segment Allocation [Line Items] | |
Number of states positioned to serve | 13 |
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Jan. 01, 2021 |
|
Revenue from External Customer [Line Items] | |||||
Capital leases | $ 19,800 | $ 19,800 | |||
Asset impairment | $ 0 | $ 657 | $ 0 | $ 657 | |
Assets Leased to Others | |||||
Revenue from External Customer [Line Items] | |||||
Asset impairment | $ 700 | $ 700 | |||
Forecast | Minimum | |||||
Revenue from External Customer [Line Items] | |||||
ROU assets | $ 8,000 | ||||
Operating lease liability | 8,000 | ||||
Forecast | Maximum | |||||
Revenue from External Customer [Line Items] | |||||
ROU assets | 10,000 | ||||
Operating lease liability | $ 10,000 |
Summary of Significant Accounting Policies - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Revenue from External Customer [Line Items] | ||||
Topic 840 | $ 44,468 | $ 47,821 | $ 138,429 | $ 137,194 |
Topic 606 | 24,792 | 14,621 | 81,055 | 49,595 |
Total | 69,260 | 62,442 | 219,484 | 186,789 |
Revenue | ||||
Revenue from External Customer [Line Items] | ||||
Topic 840 | 44,468 | 47,821 | 138,429 | 137,194 |
Topic 606 | 1,657 | 2,282 | 5,674 | 6,677 |
Total | 46,125 | 50,103 | 144,103 | 143,871 |
Rental Revenue, Excluding Shipping And Handling | ||||
Revenue from External Customer [Line Items] | ||||
Topic 840 | 44,468 | 47,821 | 138,429 | 137,194 |
Topic 606 | 0 | 0 | 0 | 0 |
Total | 44,468 | 47,821 | 138,429 | 137,194 |
Rental Revenue, Shipping And Handling | ||||
Revenue from External Customer [Line Items] | ||||
Topic 840 | 0 | 0 | 0 | 0 |
Topic 606 | 1,657 | 2,282 | 5,674 | 6,677 |
Total | 1,657 | 2,282 | 5,674 | 6,677 |
Sales and services | ||||
Revenue from External Customer [Line Items] | ||||
Topic 840 | 0 | 0 | 0 | 0 |
Topic 606 | 23,135 | 12,339 | 75,381 | 42,918 |
Total | 23,135 | 12,339 | 75,381 | 42,918 |
Sales of rental equipment | ||||
Revenue from External Customer [Line Items] | ||||
Topic 840 | 0 | 0 | 0 | 0 |
Topic 606 | 5,510 | 3,436 | 19,585 | 15,167 |
Total | 5,510 | 3,436 | 19,585 | 15,167 |
Sales of new equipment | ||||
Revenue from External Customer [Line Items] | ||||
Topic 840 | 0 | 0 | 0 | 0 |
Topic 606 | 6,048 | 1,246 | 19,043 | 8,076 |
Total | 6,048 | 1,246 | 19,043 | 8,076 |
Parts sales and services | ||||
Revenue from External Customer [Line Items] | ||||
Topic 840 | 0 | 0 | 0 | 0 |
Topic 606 | 11,577 | 7,657 | 36,753 | 19,675 |
Total | $ 11,577 | $ 7,657 | $ 36,753 | $ 19,675 |
Summary of Significant Accounting Policies - Schedule of Inventory (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventory [Line Items] | ||
Inventory | $ 30,623 | $ 33,001 |
Parts, tools and accessories inventory | ||
Inventory [Line Items] | ||
Inventory | 26,781 | 30,174 |
Equipment inventory | ||
Inventory [Line Items] | ||
Inventory | $ 3,842 | $ 2,827 |
Summary of Significant Accounting Policies - Schedule of Rental Equipment (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Accounting Policies [Abstract] | ||
Rental equipment | $ 661,153 | $ 658,564 |
Less: accumulated depreciation | (312,221) | (275,144) |
Rental equipment, net | $ 348,932 | $ 383,420 |
Summary of Significant Accounting Policies - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Less: accumulated depreciation | $ (7,921) | $ (7,168) |
Property and equipment, net | 6,373 | 6,561 |
Property and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 11,575 | 10,082 |
Construction in Progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 2,719 | $ 3,647 |
Segments - Additional Information (Details) |
9 Months Ended |
---|---|
Sep. 30, 2020
state
segment
| |
Segment Reporting Information [Line Items] | |
Number of reportable segments | segment | 2 |
United States | |
Segment Reporting Information [Line Items] | |
Number of states positioned to serve | 50 |
Canada | |
Segment Reporting Information [Line Items] | |
Number of states positioned to serve | 13 |
Segments - Reconciliation of Segment Gross Profit (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jul. 31, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Segment Reporting [Abstract] | |||||
Gross profit | $ 15,631 | $ 21,264 | $ 53,376 | $ 62,261 | |
Selling, general and administrative expenses | 8,633 | 9,824 | 31,269 | 24,708 | |
Licensing and titling expenses | 686 | 690 | 2,243 | 1,926 | |
Amortization and non-rental depreciation | 792 | 745 | 2,308 | 2,264 | |
Transaction expenses | 110 | 3,325 | 1,073 | 7,394 | |
Asset impairment | 0 | 657 | 0 | 657 | |
Other operating expenses | 451 | 434 | 2,209 | 1,213 | |
Other (income) expense | (559) | 2,567 | 6,245 | 2,545 | |
Loss on extinguishment of debt | $ 4,000 | 0 | 4,005 | 0 | 4,005 |
Interest expense, net | 15,853 | 16,533 | 47,816 | 46,376 | |
Loss Before Income Taxes | $ (10,335) | $ (17,516) | $ (39,787) | $ (28,827) |
Segments - Revenue and Assets by Country (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
|
Segment Reporting Information [Line Items] | |||||
Rental revenue | $ 69,260 | $ 62,442 | $ 219,484 | $ 186,789 | |
Loss before income taxes | 10,335 | 17,516 | 39,787 | 28,827 | |
Assets | 769,456 | 769,456 | $ 815,284 | ||
United States | |||||
Segment Reporting Information [Line Items] | |||||
Rental revenue | 67,506 | 60,115 | 213,576 | 181,248 | |
Assets | 763,013 | 763,013 | 802,516 | ||
Canada | |||||
Segment Reporting Information [Line Items] | |||||
Rental revenue | 1,754 | 1,918 | 4,121 | 4,599 | |
Assets | 5,983 | 5,983 | 8,152 | ||
Mexico | |||||
Segment Reporting Information [Line Items] | |||||
Rental revenue | 0 | 409 | 1,787 | 942 | |
Loss before income taxes | 800 | $ 2,000 | 1,900 | $ 3,800 | |
Assets | $ 460 | $ 460 | $ 4,616 |
Business Combination - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Nov. 04, 2019 |
Sep. 30, 2020 |
Sep. 30, 2020 |
Dec. 31, 2019 |
|
Business Acquisition [Line Items] | ||||
Goodwill | $ 237,658 | $ 237,658 | $ 238,195 | |
Truck Utilities, Inc | ||||
Business Acquisition [Line Items] | ||||
Purchase consideration | $ 44,700 | |||
Cash acquired | 3,100 | |||
Capital expenditure adjustment | 3,800 | |||
Goodwill | 8,944 | |||
Revenues | 9,000 | 31,600 | ||
Pretax income | $ 700 | $ 1,600 | ||
Equipment Rental And Sales | Truck Utilities, Inc | ||||
Business Acquisition [Line Items] | ||||
Goodwill | 5,400 | |||
Parts, tools and accessories inventory | Truck Utilities, Inc | ||||
Business Acquisition [Line Items] | ||||
Goodwill | $ 3,500 |
Business Combination - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
Nov. 04, 2019 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 237,658 | $ 238,195 | |
Truck Utilities, Inc | |||
Business Acquisition [Line Items] | |||
Current assets, net of current liabilities | $ 898 | ||
Property and equipment | 78 | ||
Rental equipment | 38,780 | ||
Total identifiable assets acquired | 42,576 | ||
Goodwill | 8,944 | ||
Total consideration | 51,520 | ||
Customer relationships | Truck Utilities, Inc | |||
Business Acquisition [Line Items] | |||
Customer relationships | $ 2,820 |
Business Combination - Pro Forma Information (Details) - Truck Utilities, Inc - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
|
Business Acquisition [Line Items] | ||
Total revenue | $ 74,677 | $ 220,993 |
Net loss | $ (18,719) | $ (29,631) |
Basic and diluted net loss per share (USD per share) | $ (470) | $ (1,070.00) |
Debt Schedule of Debt Obligations (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jul. 31, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Mar. 10, 2020 |
Dec. 31, 2019 |
|
Debt Instrument [Line Items] | |||||||
Total debt outstanding | $ 746,583,000 | $ 746,583,000 | $ 728,525,000 | ||||
Deferred finance fees | (12,033,000) | (12,033,000) | (14,222,000) | ||||
Net debt | 734,550,000 | 734,550,000 | 714,303,000 | ||||
Less current maturities | (1,280,000) | (1,280,000) | (1,280,000) | ||||
Long-term debt | 733,270,000 | 733,270,000 | 713,023,000 | ||||
Loss on extinguishment of debt | $ 4,000,000.0 | 0 | $ 4,005,000 | 0 | $ 4,005,000 | ||
Notes Payable | |||||||
Debt Instrument [Line Items] | |||||||
Total debt outstanding | 2,561,000 | 2,561,000 | 3,525,000 | ||||
2019 Credit Facility | Revolving Credit Facility | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Total debt outstanding | $ 269,022,000 | $ 269,022,000 | $ 250,000,000 | ||||
Debt interest rate | 4.10% | 4.10% | 4.20% | ||||
Increase in maximum borrowing capacity | $ 35,000,000.0 | ||||||
Maximum borrowing capacity | $ 385,000,000.0 | ||||||
Remaining borrowing capacity | $ 67,400,000 | $ 67,400,000 | |||||
Senior Secured Notes due 2024 | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Total debt outstanding | $ 475,000,000 | $ 475,000,000 | $ 475,000,000 | ||||
Debt interest rate | 10.00% | 10.00% | 10.00% |
Goodwill and Intangible Assets - Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 237,658 | $ 238,195 |
Nesco trade name | 28,000 | 28,000 |
Intangible assets, gross | 82,290 | 82,290 |
Less: accumulated amortization | (13,971) | (11,738) |
Intangible assets, net | 68,319 | 70,552 |
Goodwill and intangible assets | 305,977 | 308,747 |
ERS | ||
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | 228,900 | 228,900 |
PTA | ||
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | 8,800 | 8,800 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets | 1,030 | 1,030 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets | 380 | 380 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets | $ 52,880 | $ 52,880 |
Share-Based Compensation - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Jun. 11, 2020 |
Jun. 30, 2019 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares of common stock authorized for issuance (in shares) | 6,150,000 | 3,150,000 | |||
Shares of common stock reserved for issuance (in shares) | 2,587,992 | 2,587,992 | |||
Share-based payments | $ 700 | $ 1,669 | $ 463 | ||
Unrecognized compensation cost | $ 8,000 | $ 8,000 | |||
Weighted average period for recognition | 3 years 4 months 24 days | ||||
Stock Option | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares of common stock authorized for issuance (in shares) | 1,200,000 | 1,200,000 | |||
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares of common stock authorized for issuance (in shares) | 800,000 | 800,000 |
Financial Instruments - Fair Value of Derivative Instruments (Details) - Cash Flow Hedging - Designated as Hedging Instrument - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Derivative [Line Items] | ||
Total derivative instruments | $ 7,858 | $ 1,709 |
Other liabilities | Interest Rate Collar | ||
Derivative [Line Items] | ||
Total derivative instruments | $ 7,858 | $ 1,709 |
Financial Instruments - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
Jul. 17, 2019 |
|
Derivative [Line Items] | ||||||
Derivative instruments not designated as hedges, gain (loss) | $ 200,000 | $ 6,100,000 | ||||
Reclassifications from AOCI | $ 0 | $ 800,000 | $ 0 | $ 800,000 | ||
Cash flow hedge, tax expense reclassified | $ 300,000 | $ 300,000 | ||||
Not Designated as Hedging Instrument | Interest Rate Collar | ||||||
Derivative [Line Items] | ||||||
Interest rate collar amount | $ 170,000,000.0 | |||||
Designated as Hedging Instrument | Interest Rate Collar | Cash Flow Hedging | ||||||
Derivative [Line Items] | ||||||
Reclassifications from AOCI | $ 800,000 | |||||
Cash flow hedge, tax expense reclassified | $ 300,000 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
|
Income Tax Disclosure [Abstract] | ||
Tax cuts and jobs act, measurement period adjustment, income tax benefit | $ 5.0 | $ 5.0 |
Income tax benefit adjustment, CARES Act | 8.7 | 8.7 |
Income tax benefit, net operating loss carry forward, CARES Act | $ 11.8 | $ 11.8 |
Label | Element | Value |
---|---|---|
Retained Earnings [Member] | ||
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | $ (7,022,000) |
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | $ (10,988,000) |
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