Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Consolidated Balance Sheets | ||
| Allowance for credit losses | $ 534 | $ 550 |
| Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized | 400,000,000 | 400,000,000 |
| Common stock, shares issued | 112,248,984 | 111,091,266 |
| Common stock, shares outstanding | 98,952,054 | 101,660,601 |
| Treasury stock, shares | 13,296,930 | 9,430,665 |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies |
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| Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | 1. Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies Organization and Nature of Operations Target Hospitality Corp. (“Target Hospitality” and, together with its subsidiaries, the “Company”) was formed on March 15, 2019 and is one of North America’s largest providers of vertically integrated specialty rental and value-added hospitality services. The Company provides vertically integrated specialty rental and comprehensive hospitality services including: catering and food services, maintenance, housekeeping, grounds-keeping, security, health and recreation services, overall workforce community management, and laundry service. Target Hospitality serves clients in natural resources development and government sectors principally located in the West Texas, South Texas, New Mexico, and Midwest regions. The Company, whose securities are listed on the Nasdaq Capital Market, together with its wholly owned subsidiaries, Topaz Holdings LLC, a Delaware limited liability company (“Topaz”), and Arrow Bidco, LLC, a Delaware limited liability company (“Arrow Bidco”), serve as the holding companies for the businesses of Target Logistics Management, LLC and its subsidiaries (“Target” or “TLM”) and RL Signor Holdings, LLC (“Signor”). TDR Capital LLP (“TDR Capital” or “TDR”) indirectly owns approximately 65% of Target Hospitality and the remaining ownership is broken out among the founders of the Company’s legal predecessor, Platinum Eagle Acquisition Corp. (“Platinum Eagle” or “PEAC”), investors who purchased the shares of Platinum Eagle in a private placement transaction, and other public shareholders. Basis of Presentation The accompanying consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Use of Estimates The preparation of financial statements in conformity with US GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. If the underlying estimates and assumptions upon which the financial statements are based change in future periods, actual amounts may differ from those included in the accompanying consolidated financial statements. Principles of Consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries that it controls due to ownership of a majority voting interest or if the subsidiary is a variable interest entity (“VIE”) where the Company has been determined to be the primary beneficiary. For controlled subsidiaries that are not wholly-owned, the third-party ownership interest represents a noncontrolling interest, which is presented separately in the consolidated financial statements. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. All intercompany balances and transactions are eliminated. Summary of Significant Accounting Policies Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents. Receivables and Allowances for Credit Losses Receivables primarily consist of amounts due from customers from the delivery of specialty rental services. The trade accounts receivable is recorded net of an allowance for credit losses. The allowance for credit losses is based upon the amount of losses expected to be incurred in the collection of these accounts pursuant to the guidance outlined in ASU 2016-13, Financial Instruments – Credit Losses (ASU 2016-13, Topic 326, or ASC 326), which the Company adopted effective January 1, 2023. The estimated losses are calculated using the loss rate method based upon a review of outstanding receivables, including specific accounts, related aging, and on historical collection experience. These allowances reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. Our estimate could require a change based on changing circumstances, including changes in the economy or in the circumstances of individual customers. In addition, specific accounts are written off against the allowance when management determines the account is uncollectible. Activity in the allowance for credit losses was as follows:
Provision for credit losses, net of recoveries for the period are included within selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income. Prepaid Expenses and Other Assets Prepaid expenses of approximately $5.4 million and $5.5 million at December 31, 2024 and 2023, respectively, primarily consist of insurance, rent, deposits and permits. Prepaid insurance, rent, and permits are amortized over the related term of the respective agreements. Other assets of approximately $4 million and $4 million at December 31, 2024 and 2023, respectively, primarily consist of $1.9 million and $1.9 million of deposits as of December 31, 2024 and 2023, respectively, and $1.9 million and $2.1 million of hospitality inventory as of December 31, 2024 and 2023, respectively. Inventory, primarily consisting of food and beverages, is accounted for by the first-in, first-out method and is stated at the lower of cost and net realizable value. Concentrations of Credit Risk In the normal course of business, the Company grants credit to its customers based on credit evaluations of their financial condition and generally requires no collateral or other security. Major customers are defined as those individually comprising more than 10.0% of the Company’s revenues or accounts receivable. For the year ended December 31, 2024, the Company had one customer who accounted for 48% of revenues. The largest customer accounted for 43% of accounts receivable, while no other customer accounted for more than 10% of the accounts receivable balance as of December 31, 2024. For the year ended December 31, 2023, the Company had one customer who accounted for 62% of revenues. The largest customer accounted for 45% of accounts receivable, while no other customer accounted for more than 10% of the accounts receivable balance as of December 31, 2023. For the year ended December 31, 2022, the Company had two customers representing 60.6% and 11.1% of total revenues, respectively. Major suppliers are defined as those individually comprising more than 10.0% of the annual goods purchased. For the years ended December 31, 2024, 2023 and 2022, the Company had one major supplier representing 19.4%, 16.8%, and 13.4% of goods purchased, respectively. We provide services almost entirely to customers in the government and natural resource development sectors and as such, are almost entirely dependent upon the continued activity of such customers. Interest Capitalization Interest costs for the construction of certain long-term assets are capitalized by applying the weighted average interest rate applicable to the borrowings of the Company to the average amount of accumulated expenditures outstanding during the construction period. Such capitalized interest costs are depreciated over the related assets’ estimated useful lives. Specialty Rental Assets Specialty rental assets (units, site work and furniture and fixtures comprising lodges) are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Costs of improvements and betterments to units are capitalized when such costs extend the useful life of the unit or increase the rental value of the unit. Costs incurred for units to meet a particular customer specification are capitalized and depreciated over the lease term. Maintenance and repair costs are expensed as incurred. Depreciation is computed using the straight-line method over estimated useful lives and considering the residual value of those assets. The estimated useful life of buildings is -15 years. The estimated useful life of modular units is 15 years. The estimated useful life of site work (above ground and below ground infrastructure) is 5 years. The estimated useful life of furniture and fixtures is 7 years. Depreciation methods, useful lives and residual values are adjusted prospectively, if a revision is determined to be appropriate. Other Property, Plant, and Equipment Other property, plant, and equipment is stated at cost, net of accumulated depreciation and impairment losses. Assets leased under finance leases are depreciated over the shorter of the lease term or their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Land is not depreciated. Maintenance and repair costs are expensed as incurred. Depreciation is computed using the straight-line method over estimated useful lives, as follows:
Depreciation methods, useful lives and residual values are reviewed and adjusted prospectively, if appropriate. Business Combinations Business combinations are accounted for using the acquisition method. Consideration transferred for acquisitions is measured at fair value at the acquisition date and includes assets transferred, liabilities assumed and equity issued. Acquisition costs incurred are expensed and included in selling, general and administrative expenses. When the Company acquires a business, the financial assets and liabilities assumed are assessed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date. Any contingent consideration transferred by the acquirer is recognized at fair value at the acquisition date. Any subsequent changes to the fair value of contingent consideration are recognized in profit or loss. If the contingent consideration is classified as equity, it is not re-measured and subsequent settlement is accounted for within equity. Goodwill The Company evaluates goodwill for impairment at least annually at the reporting unit level. A reporting unit is the operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management. However, components are aggregated as a single reporting unit if they have similar economic characteristics. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the Company’s reporting units that are expected to benefit from the combination. The Company evaluates changes in its reporting structure to assess whether that change impacts the composition of one or more of its reporting units. If the composition of the Company’s reporting units’ changes, goodwill is reassigned between reporting units using the relative fair value allocation approach. The Company performs the annual impairment test of goodwill at October 1. In addition, the Company performs impairment tests during any reporting period in which events or changes in circumstances indicate that impairment may have occurred. To test goodwill for impairment, the Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, the Company then performs a quantitative impairment test. Otherwise, the quantitative impairment test is not required. Under the quantitative impairment test, the Company would compare the estimated fair value of each reporting unit to its carrying value. In assessing the fair value of the reporting units, the Company considers the market approach, the income approach, or a combination of both. Under the market approach, the fair value of the reporting unit is based on quoted market prices of companies comparable to the reporting unit being valued. Under the income approach, the fair value of the reporting unit is based on the present value of estimated cash flows. The income approach is dependent on several significant management assumptions, including estimated future revenue growth rates, gross margin on sales, operating margins, capital expenditures, tax rates and discount rates. If the carrying amount of the reporting unit exceeds the calculated fair value, a loss on impairment is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Additionally, the Company considers the income tax effect from any tax-deductible goodwill on the carrying amount of the reporting unit, if applicable, when measuring the goodwill impairment charge. Intangible Assets Other Than Goodwill Intangible assets that are acquired by the Company and determined to have an indefinite useful life are not amortized, but are tested for impairment at least annually. The Company’s indefinite-lived intangible assets consist of a trade name. The Company calculates fair value by comparing a relief-from-royalty method to the carrying amount of the indefinite-lived intangible asset. This method is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. A loss on impairment would be recorded to the extent the carrying value of the indefinite-lived intangible asset exceeds the fair value. Other intangible assets that have finite useful lives are measured at cost less accumulated amortization and impairment losses, if any. Subsequent expenditures for intangible assets are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate. Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets. The Company has customer relationship assets with lives ranging from 5 to 9 years. Amortization of intangible assets is included in other depreciation and amortization on the consolidated statements of comprehensive income. Impairment of Long-Lived and Amortizable Intangible Assets Fixed assets including rental equipment and other property, plant and equipment and amortizable intangible assets are reviewed for impairment as events or changes in circumstances occur indicating that the carrying value of the asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to future undiscounted cash flows, without interest charges, expected to be generated by the asset group. If future undiscounted cash flows, without interest charges, exceed the carrying amount of an asset, no impairment is recognized. If management determines that the carrying value cannot be recovered based on estimated future undiscounted cash flows, without interest charges, over the shorter of the asset’s estimated useful life or the expected holding period, an impairment loss would be recorded based on the estimated fair value of the asset. Assets Held for Sale Management considers an asset to be held for sale when management approves and commits to a formal plan to actively market the asset for sale and it is probable that the sale will be completed within twelve months. A sale may be considered probable when a signed sales contract and significant non-refundable deposit or contract break-up fee exist. Upon designation as held for sale, management records the carrying value of the asset at the lower of its carrying value or its estimated fair value, less estimated costs to sell, and management stops recording depreciation expense. As of December 31, 2024, no assets were considered held for sale. Other Non-Current Assets Other non-current assets primarily consist of capitalized software implementation costs for the implementation of cloud computing systems primarily during 2020 and 2019. The Company capitalizes expenditures related to the implementation of cloud computing software as incurred during the application development stage. Such capitalized costs are amortized to selling, general, and administrative expenses over the term of the cloud computing hosting arrangement, including reasonably certain renewals, beginning when the module or component of the hosting arrangement is ready for its intended use. Deferred Financing Costs Revolver, net Deferred financing costs revolver are associated with the issuance of the ABL Facility discussed in Note 8. Such costs are amortized over the contractual term of the line-of-credit through initial maturity using the straight-line method. Amortization expense of deferred financing costs revolver is included in interest expense, net in the consolidated statement of comprehensive income. Term Loan Deferred Financing Costs Term loan deferred financing costs are associated with the issuance of the 2025 Senior Secured Notes discussed in Note 8. The Company presents unamortized deferred financing costs as a direct deduction from the principal amount of the 2025 Senior Secured Notes on the consolidated balance sheets. Such costs are deferred and amortized over the term of the debt based on the effective interest rate method. Original Issuance Discounts Debt original issue discounts are associated with the issuances of the 2025 Senior Secured Notes discussed in Note 8 and are recorded as direct deductions to the principal amount of the 2025 Senior Secured Notes on the consolidated balance sheets. Debt discounts are deferred and amortized over the term of the debt based on the effective interest rate method. Finance and Operating Leases The Company determines if a contract is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Expense for these short-term leases is recognized on a straight-line basis over the lease term. For leases with an initial term greater than 12 months, the Company records a right-of-use (“ROU”) asset and a corresponding lease obligation. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s obligation to make fixed lease payments as stipulated by the lease. The Company has elected the lessee practical expedient to make an accounting policy election by class of underlying asset to not separate non-lease components from lease components and instead to account for each separate lease component and non-lease components associated with that lease component as a single lease component. As a lessee in a lease contract, the Company recognizes a ROU asset and a lease liability on the consolidated balance sheet. The Company is a lessee in a variety of lease contracts, such as land, building, modular units, equipment and vehicle leases. The Company classifies its leases as either an operating or a finance lease based on the principle of whether or not the lease is effectively a financed purchase of the leased asset. For operating leases, the Company recognizes lease expense on a straight-line basis over the term of the lease. For finance leases, the Company recognizes lease expense using the effective interest method, which results in the interest component of each lease payment being recognized as interest expense and the lease right-of-use asset being amortized into other depreciation and amortization expense in the accompanying consolidated statement of comprehensive income using the straight-line method over the term of the lease. Operating lease obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate (“IBR”) based on information available at the commencement date in determining the present value of lease payments over the lease term. The IBR is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company determined its IBR for each lease by using the IBR in effect as of the start of the quarter of the lease commencement date. In order to estimate the Company’s IBR, the Company first looks to its own unsecured debt offerings, and adjusts the rate for both length of term and secured borrowing using available market data as well as consultations with leading national financial institutions that are active in the issuance of both secured and unsecured notes. Operating ROU assets are recognized at the lease commencement date, and include the amount of the initial operating lease obligation, any lease payments made at or before the commencement date, excluding any lease incentives received, and any initial direct costs incurred. For leases that have extension options that the Company can exercise at its discretion, management uses judgment to determine if it is reasonably certain that the Company will in fact exercise such option. If the extension option is reasonably certain to occur, the Company includes the extended term’s lease payments in the calculation of the respective lease liability. Certain lease contracts may include an option to purchase the leased property, which is at the Company's sole discretion. None of the Company’s leases contain any material residual value guarantees or material restrictive covenants. The Company reviews its right-of-use assets for indicators of impairment. If such assets are considered to be impaired, the related assets are adjusted to their estimated fair value and an impairment loss is recognized. The impairment loss recognized is measured at the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Based on the Company’s review, no operating or finance lease ROU assets were impaired during any of the years presented in these accompanying consolidated financial statements. The Company's leases include a base lease payment, which is recognized as lease expense on a straight-line basis over the lease term. In addition, certain of the Company's leases may include an additional lease payment for items such as common area maintenance, real estate taxes, utilities, operating expenses, insurance, personal property expense, or other related charges all of which are recognized as variable lease expense, when incurred, in the consolidated statement of comprehensive income. The variable lease expense incurred by the Company was not based on an index or rate. For lease modifications, the Company evaluates whether the lease modifications may be accounted for as either two leases – the original lease and a separate new lease, or, one modified lease. When a lease modification is accounted for as one modified lease, the Company must reconsider the lease classification and may need to remeasure the lease liability and adjust the related ROU asset. Such assessments may require reconsideration of certain assumptions made at the lease commencement date, such as whether the exercise of a renewal option is reasonably certain, which may result in a change to the original expected lease term. Triggering events that may result in a lease modification may include a modification of a related customer contract that depends on leased assets to service the customer contract over the related term. Lessor Perspective: For lease agreements in which the Company is the lessor, the Company analyzed the lease and non-lease components of its lease agreements and determined that the timing and pattern of transfer for both components are the same. In addition, the leases will continue to qualify as operating leases and the Company will account for and present the lease component under ASC 842 and the non-lease component under ASC 606. Refer to Note 2 for the breakout of revenue under each standard. Refer to Notes 13 and 14 for additional lease disclosures. Asset Retirement Obligations The Company recognizes asset retirement obligations (“AROs”) related to legal obligations associated with the operation of the Company’s specialty rental assets. The fair values of these AROs are recorded on a discounted basis, at the time the obligation is incurred and accreted over time for the change in present value over the expected timing of settlement. Changes in the expected timing or amount of settlement are recognized in the period of change as an increase or decrease in the carrying amount of the ARO and related asset retirement costs with decreases in excess of the carrying value of the related asset retirement cost being recognized in the consolidated statement of comprehensive income. The Company capitalizes asset retirement costs by increasing the carrying amount of the related long-lived assets and depreciating these costs over the remaining useful life. The carrying amount of AROs included in the consolidated balance sheets were $2.6 million and $2.4 million as of December 31, 2024 and 2023, respectively, which represents the present value of the estimated future cost of these AROs of approximately $2.9 million. Accretion expense of approximately $0.1 million, $0.2 million, and $0.2 million was recognized in specialty rental costs in the accompanying consolidated statements of comprehensive income for the years ended December 31, 2024, 2023 and 2022, respectively. Foreign Currency Transactions and Translation The Company’s reporting currency is the US Dollar (USD). Exchange rate adjustments resulting from foreign currency transactions are recognized in profit or loss, whereas effects resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive loss, a component of equity. The assets and liabilities of subsidiaries whose functional currency is different from the USD are translated into USD at exchange rates at the reporting date and revenue and expenses are translated using average exchange rates for the respective period. Foreign exchange gains and losses arising from a receivable or payable to a consolidated Company entity, the settlement of which is neither planned nor anticipated in the foreseeable future, are considered to form part of a net investment in the Company entity and are included within accumulated other comprehensive loss. Revenue Recognition The Company derives revenue from specialty rental and hospitality services, specifically lodging and related ancillary services. Revenue is recognized in the period in which lodging and services are provided pursuant to the terms of contractual relationships with the customers. Certain arrangements contain a lease of lodging facilities to customers. The leases are accounted for as operating leases under the authoritative guidance for leases (“ASC 842”) and are recognized as income is earned over the term of the lease agreement. Upon lease commencement, the Company evaluates leases to determine if they meet criteria set forth in lease accounting guidance for classification as sales-type or direct financing leases; if a lease meets none of these criteria, the Company classifies the lease as an operating lease. As previously mentioned, the arrangements that contain a lease of the Company’s lodging facilities are accounted for as operating leases, whereby the underlying asset remains on our balance sheet and is depreciated consistently with other owned assets, with income recognized as it is earned over the term of the lease agreement. For contracts that contain both a lease component and a services or non-lease component, the Company has adopted an accounting policy to account for and present the lease component under ASC 842 and the non-lease component under the authoritative guidance for revenue recognition (“ASC 606” or “Topic 606”). Refer to Note 2 for the breakout of revenue under each standard. The Company estimates the transaction price, including variable consideration, at contract inception. Then the consideration in the contract is allocated to each separate lease component and non-lease component of the contract. When assessing the recognition of services and specialty rental revenue, judgement is required in contemplating the determination of the transaction price. When allocating the contract consideration to the lease component under ASC 842 and the services or non-lease component under ASC 606, the Company uses judgement in contemplating how to initially measure one or more parts of the contract, to apply the separation and measurement guidance. Factors the Company considers in making this allocation include relative standalone price of lease and services or non-lease components. The Company recognizes minimum rents on operating leases over the term of the customer operating lease. A lease term commences when: (1) the customer has control of the leased space (legal right to use the property); and (2) the Company has delivered the premises to the customer as required under the terms of the lease. The term of a lease includes the noncancellable periods of the lease along with periods covered by: (1) a customer option to extend the lease if the customer is reasonably certain to exercise that option; (2) a customer option to terminate the lease if the customer is reasonably certain not to exercise that option; and (3) an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the Company as the lessor. When assessing the expected lease end date, judgment is required in contemplating the significance of: any penalties a customer may incur should it choose not to exercise any existing options to extend the lease or exercise any existing options to terminate the lease; and economic incentives for the customer in the lease. Furthermore, when assessing the expected end date of a contract under ASC 606 with an extension option, judgment is required to determine whether the option contains a material right. Because performance obligations related to specialty rental and hospitality services are satisfied over time, the majority of our revenue is recognized evenly over the contractual term of the arrangement, based on a contractual fixed minimum amount and defined period of performance. Some of our revenue is recognized on a daily basis, for each night a customer stays, at a contractual day rate. Our customers typically contract for accommodation services under committed contracts with terms that most often range from several months to multiple years. Our payment terms vary by type and location of our customer and the service offered. The time between invoicing and when payment is due is not significant. When lodging and services are billed and collected in advance, recognition of revenue is deferred until services are rendered. Cost of services includes labor, food, utilities, supplies, leasing and other direct costs associated with operating the lodging units as well as repair and maintenance expenses. Cost of rental includes leasing costs, utilities, and other direct costs of maintaining the lodging units. Costs associated with contracts include sales commissions which are expensed as incurred and reflected in selling, general and administrative expenses in the consolidated statements of comprehensive income. Additionally, the Company collects sales, use, occupancy and similar taxes, which the Company presents on a net basis (excluded from revenues) in the consolidated statements of comprehensive income. Fair Value Measurements A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The inputs are prioritized into three levels that may be used to measure fair value: Level 1: Inputs that reflect quoted prices for identical assets or liabilities in active markets that are observable. Level 2: Inputs that reflect quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3: Inputs that are unobservable to the extent that observable inputs are not available for the asset or liability at the measurement date. Income Taxes The Company’s operations are subject to U.S. federal, state and local, and foreign income taxes. The Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company records net deferred tax assets to the extent that it is more likely than not that these assets will be realized. In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent results of operations. Valuation allowances are recorded to reduce the deferred tax assets to an amount that will more likely than not be realized. When a valuation allowance is established or there is an increase in an allowance in a reporting period, tax expense is generally recorded in the Company’s consolidated statements of comprehensive income. In accordance with applicable authoritative guidance, the Company accounts for uncertain income tax positions using a benefit recognition model with a two-step approach; a more-likely-than-not recognition criterion; and a measurement approach that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. If it is not more-likely-than-not that the benefit of the tax position will be sustained on its technical merits, no benefit is recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company classifies interest and penalties related to uncertain tax positions within income tax expense. Warrant Liabilities We evaluated the warrants issued by Platinum Eagle, our legal predecessor, to purchase its common stock in a private placement concurrently with its initial public offering (the “Private Warrants”) under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and concluded that they do not meet the criteria to be classified in stockholders’ equity. Specifically, the provisions in the Private Warrant agreement provide for potential changes to the settlement amounts dependent upon the characteristics of the warrant holder and because the holder of a warrant is not an input into the pricing of a fixed-for-fixed option on equity shares, such a provision would preclude the warrant from being classified in equity. Since the Private Warrants meet the definition of a derivative under ASC 815, we recorded these Private Warrants as liabilities on the balance sheet at fair value, with subsequent changes in their respective fair values recognized in the consolidated statements of comprehensive income at each reporting date. The fair value adjustments were determined by using a Black-Scholes option-pricing model based on inputs less observable in the marketplace as described in Note 11. The Private Warrants are deemed equity instruments for income tax purposes, and accordingly, there is no tax accounting related to changes in the fair value of the Private Warrants recognized. The Private Warrants expired unexercised on March 15, 2024 and are no longer outstanding. Stock-Based Compensation The Company sponsors an equity incentive plan, the Target Hospitality Corp. 2019 Incentive Award Plan, as amended (the “Plan”), in which certain employees and non-employee directors participate. The Plan is administered by the compensation committee of the board of directors of the Company (the “Compensation Committee”). The Company measures the cost of services received in exchange for an award of equity instruments (typically restricted stock unit awards (“RSUs”), performance stock unit awards (“PSUs”) and stock options) based on the grant-date fair value of the awards issued under the Plan that are equity classified. The fair value of the stock options is calculated using the Black-Scholes option-pricing model and the fair value of the PSUs that are based on market conditions (“Market-Based PSUs”) are calculated using a Monte Carlo simulation while the fair value of the RSUs and performance-based PSUs not based on market conditions (“Performance-Based PSUs”) are calculated based on the Company’s share price on the grant-date and the assessment of the probability of achieving defined performance measures for Performance-Based PSUs. The resulting compensation expense is recognized over the period during which an employee or non-employee director is required to provide service in exchange for the awards, usually the vesting period. Similarly, for time-based awards subject to graded vesting, compensation expense is recognized on a straight-line basis over the service period. For Market-Based PSUs, the probability of satisfying a market condition is considered in the estimation of the grant-date fair value for Market-Based PSUs and the compensation cost is not reversed if the market condition is not achieved, provided the requisite service has been provided. Forfeitures are accounted for as they occur. The Plan also includes Stock Appreciation Rights awards (“SARs”) issued to certain of the Company’s executive officers and other employees. Each SAR represents a contingent right to receive, upon vesting, payment in cash or the Company’s Common Stock, as determined by the compensation committee, in an amount equal to the difference between (a) the fair market value of a Common Share on the date of exercise, over (b) the grant date price. Under the authoritative guidance for stock-based compensation, these SARs are considered liability-based awards that are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets at fair value and are remeasured at fair value each reporting period until the date of settlement using the Black-Scholes option pricing model. Changes in the estimated fair value of the SARs along with the resulting cost is recognized as increases or decreases in stock-based compensation expense in the accompanying consolidated statements of comprehensive income each reporting period over the period during which an employee is required to provide service in exchange for the SARs, usually the vesting period. Forfeitures are accounted for as they occur. As of December 31, 2024, there were no SAR awards outstanding as all were either exercised and paid in cash or forfeited as of December 31, 2024. Refer to Note 17 for further details of activity related to the Plan. Treasury Stock Treasury stock is reflected as a reduction of stockholders’ equity at cost. In August 2022, the Inflation Reduction Act of 2022 was enacted into law and imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. The Company reflects the applicable excise tax in equity as part of the cost basis of the stock repurchased classified as treasury stock and a corresponding liability for the excise taxes payable in accrued expenses in the accompanying consolidated balance sheets until paid. We use the weighted average purchase price to determine the cost of treasury stock that is reissued, if any. Recently Adopted Accounting Standards In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in the ASU require, among other things, disclosure of significant segment expenses that are regularly provided to an entity's chief operating decision maker (“CODM”) and a description of other segment items (the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss) by reportable segment, as well as disclosure of the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Annual disclosures are required for fiscal years beginning after December 15, 2023 and interim disclosures are required for periods within fiscal years beginning after December 15, 2024. Retrospective application is required, and early adoption is permitted. These requirements did not have an impact on amounts recognized in our financial statements, but resulted in expanded reportable segment disclosures as shown in Note 19 of these financial statements. The Company adopted ASU 2023-07, on the effective date of January1, 2024. Results for reporting periods prior to 2024 are presented in accordance with ASU 2023-07. Refer to Note 19 for these expanded disclosures. Recently Issued Accounting Standards Improvements to Income Tax Disclosures. In December 2023, the FASB issued ASU 2023-09, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, may be applied prospectively or retrospectively, and allows for early adoption. These requirements are not expected to have an impact on the recorded amounts in our financial statements, but will impact our income tax disclosures. The Company does not intend to early adopt ASU 2023-09. Improvements to Expense Disaggregation Disclosures. In November 2024, the FASB issued ASU 2024-03, which requires additional information about specific expense categories in the notes to financial statements for both interim and annual reporting periods. The update requires disaggregated information about certain prescribed expense categories underlying any relevant income statement expense caption. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The ASU 2024-03 may be applied prospectively or retrospectively, and allows for early adoption. The Company is currently evaluating the impacts of this update and does not intend to early adopt ASU 2024-03. Recent Developments On March 25, 2024, the Company announced that the Board of Directors of the Company (“the Board”) received an unsolicited non-binding proposal from Arrow Holdings S.à r.l. (“Arrow”), an affiliate of TDR, to acquire all of the outstanding shares of Common Stock of the Company that are not owned by any of Arrow, any investment fund managed by TDR or any of their respective affiliates (the “Unaffiliated Shares”), for cash consideration of $10.80 per share (the “Proposal”). The Board established a special committee of independent directors (the “Special Committee”), and the Special Committee retained Centerview Partners LLC and Ardea Partners LP as its financial advisors and Cravath, Swaine & Moore LLP as its legal advisor. The Special Committee was established to consider and evaluate the Proposal, and explore and consider strategic alternatives thereto. In connection with its review of the Proposal, the Special Committee launched a formal process to solicit offers for the Company and invited Arrow to participate in such a process. Following the previously announced loss of a contract, no formal offers were received, and Arrow did not reaffirm the Proposal or advance any alternative proposal that the Special Committee could conclude, in consultation with its independent financial and legal advisors, would be more attractive to the holders of the Unaffiliated Shares than the Company’s standalone prospects. Accordingly, the Board determined to disband the Special Committee, as previously announced on September 25, 2024. As discussed in Note 20, the New PCC Contract discussed in Note 2, which related to the Company’s Government segment (See Note 19), was terminated effective February 21, 2025. |
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| Revenue | 2. Revenue Total revenue under contracts recognized under ASC 606 was approximately $265.9 million for the year ended December 31, 2024, while $120.4 million was specialty rental income subject to the guidance of ASC 842 for the year ended December 31, 2024. Total revenue under contracts recognized under ASC 606 was $365.6 million for the year ended December 31, 2023, while $198 million was specialty rental income subject to the guidance of ASC 842 for the year ended December 31, 2023. Total revenue under contracts recognized under ASC 606 was $333.7 million for the year ended December 31, 2022, while $168.3 million was specialty rental income subject to the guidance of ASC 842 for the year ended December 31, 2022. The following table disaggregates our services income by our two reportable segments as well as the All Other category: Hospitality and Facility Services-South (“HFS – South”), Government, and All Other for the years indicated below:
During the year ended December 31, 2024, the STFRC Contract in the Company’s Government segment was terminated effective August 9, 2024. The STFRC Contract was based on a fixed minimum lease revenue amount and for the years ended December 31, 2022 and 2023, contributed approximately $55.9 million and $55.9 million, respectively, in total consolidated revenue compared to approximately $38.3 million of revenue for the year ended December 31, 2024. As discussed in Note 20, the assets associated with the STFRC Contract were reactivated under the DIPC Contract effective March 5, 2025. During the year ended December 31, 2023, the NP Partner executed the New PCC Contract that became effective on November 16, 2023, and included a term with a one-year base period through November 15, 2024, with an option to extend for up to additional one-year periods and an option to extend for up to six months upon the conclusion of the base period or any of the option periods. The New PCC Contract did not result in any advanced payments that required an assessment of the amortization period. The New PCC Contract operates with similar structure to the Company’s prior government services contracts, which centered around minimum revenue amounts supported by the U.S. government. Additionally, this New PCC Contract includes occupancy-based variable services revenue that may fluctuate with active community population fluctuations. During the year ended December 31, 2024, the Company executed the first of four one-year extension options on the New PCC Contract along with an amendment, effective November 16, 2024, which supports a community capable of serving up to 6,000 individuals. The minimum revenue amount provides for a minimum annual revenue contribution of approximately $168 million, which decreased from $178 million pursuant to the amendment on November 16, 2024. The New PCC contract contains both a lease component under ASC 842 and a service or non-lease component under ASC 606. The November 16, 2024 amendment of the New PCC Contract resulted in a re-assessment of the allocation of the contract consideration to the lease component under ASC 842 and the services or non-lease component under ASC 606, which did not result in a material change from the previous allocation of contract consideration done at the origination date of the New PCC Contract on November 15, 2023, other than allocating a lower minimum annual revenue contribution of $168 million compared to the prior $178 million amount. All revenue associated with the New PCC contract and the related amendment, is attributable to the Government reportable segment. In February 2025, the Company received notice that the U.S. government terminated the New PCC Contract with the NP Partner and the NP Partner terminated the New PCC Contract as discussed in Note 20. Allowance for Credit Losses The Company maintains allowances for credit losses. These allowances reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. Our estimate could require a change based on changing circumstances, including changes in the economy or in the circumstances of individual customers. Contract Assets and Liabilities We do not have any contract assets. Contract liabilities primarily consist of deferred revenue that represent payments for room nights that the customer may use in the future as well as an advanced payments for community builds, and mobilization of asset activities related to community expansions that are being recognized over the related contract period. Activity in the deferred revenue accounts as of the dates indicated below was as follows:
As a result of the termination of the STFRC Contract effective August 9, 2024 in the Company’s Government Segment, the Company recognized the $4.9 million of deferred revenue remaining at December 31, 2023 associated with this contract during the year ended December 31, 2024 as is reflected in the above table, as no further service obligations exist. As of December 31, 2024, the following table discloses the estimated revenues under ASC 606 related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue, and only represents revenue expected to be recognized from contracts where the price and quantity of the product or service are fixed (in thousands):
The Company applied some of the practical expedients in ASC 606, including the “right to invoice” practical expedient, and does not disclose consideration for remaining performance obligations for contracts without minimum revenue amounts or for variable consideration related to unsatisfied (or partially unsatisfied) performance obligations. Due to the application of these practical expedients as well as excluding rental income revenue subject to the guidance included in ASC 842, the table above represents only a portion of the Company’s expected future consolidated revenues and it is not necessarily indicative of the expected trend in total revenues. |
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| Specialty Rental Assets, Net | 3. Specialty Rental Assets, Net Specialty rental assets, net at the dates indicated below consisted of the following:
There were no specialty rental assets under finance lease as of December 31, 2024 and 2023, respectively. Depreciation expense of these assets is presented in depreciation of specialty rental assets in the accompanying consolidated statements of comprehensive income. During the year ended December 31, 2024, the Company disposed of assets with accumulated depreciation of approximately $0.5 million along with the related gross cost of approximately $0.7 million. These asset disposals resulted in a net gain on sale of specialty rental assets of approximately $0.1 million (net of sale proceeds of approximately $0.3 million) and is reported within other expense (income), net in the accompanying consolidated statement of comprehensive income for the year ended December 31, 2024. During the year ended December 31, 2024, there was also a non-cash change in specialty rental assets and related accumulated depreciation due to the effect of exchange rate changes in the amount of approximately $1 million with no net impact to specialty rental assets, net. During the year ended December 31, 2023, the Company disposed of assets with accumulated depreciation of approximately $8.7 million along with the related gross cost of approximately $9.1 million. These disposals were primarily associated with fully depreciated asset retirement costs as well as a sale of assets. These asset disposals resulted in disposal costs of approximately $1.2 million and a net loss on the sales and disposal of assets of approximately $0.2 million (net of sale proceeds of approximately $0.2 million) and is reported within other expense (income), net in the accompanying consolidated statement of comprehensive income for the year ended December 31, 2023. In January of 2023, the Company purchased a group of assets consisting of land, specialty rental assets (modular units, site work, and furniture & fixtures) and intangibles for approximately $18.6 million, of which approximately $13.2 million is included within this asset group, to support growth of the HFS – South segment discussed in Note 19, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible and intangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land, specialty rental assets, and intangible assets. In April of 2023, the Company purchased a group of assets consisting of land and specialty rental assets (modular units, site work, and furniture & fixtures) for approximately $5.0 million, of which, approximately $4.6 million is included within this asset group, to support growth of the Government segment discussed in Note 19, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land and specialty rental assets. |
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| Other Property, Plant and Equipment, Net | 4. Other Property, Plant and Equipment, Net Other property, plant, and equipment, net at the dates indicated below, consisted of the following:
Depreciation expense related to other property, plant and equipment was approximately $2.2 million, $1.9 million and $1.5 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is included in other depreciation and amortization in the consolidated statements of comprehensive income. During the year ended December 31, 2024 the Company disposed of land with a gross cost of approximately $0.8 million as well as fully depreciated finance lease assets with gross cost and related accumulated depreciation of approximately $0.3 million. These asset disposals resulted in a net gain on sale of other property, plant and equipment of approximately $0.3 million (net of sale proceeds of approximately $1.1 million) and is reported within other expense (income), net in the accompanying consolidated statement of comprehensive income for the year ended December 31, 2024. Included in other property, plant and equipment, net are certain assets under finance lease. The gross cost of the assets under finance lease was approximately $8.5 million and $6.3 million as of December 31, 2024 and 2023, respectively. The accumulated depreciation related to finance lease assets totaled approximately $5.2 million and $3.8 million as of December 31, 2024 and 2023, respectively. Such amounts under finance lease are included in the other category in the above table as of December 31, 2024 and 2023, respectively. In January of 2023, the Company purchased a group of assets consisting of land, specialty rental assets (modular units, site work, and furniture & fixtures) and intangibles for approximately $18.6 million, of which approximately $0.9 million is included within this asset group related to the land portion of the acquisition, to support growth of the HFS – South segment discussed in Note 19, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible and intangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land, specialty rental assets and intangible assets. In April of 2023, the Company purchased a group of assets consisting of land and specialty rental assets (modular units, site work, and furniture & fixtures) for approximately $5.0 million, of which approximately $0.4 million is included within this asset group, to support growth of the Government segment discussed in Note 19, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land and specialty rental assets. In July of 2023, the Company purchased land for approximately $1.3 million, all of which is included within this asset group, to support growth in the Government segment discussed in Note 19, which was funded by cash on hand. During the year ended December 31, 2024, the Company purchased land previously leased to support customer activity in the HFS-South segment discussed in Note 19. |
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| Goodwill and Other Intangible Assets, net | 5. Goodwill and Other Intangible Assets, net The financial statements reflect goodwill from previous acquisitions that is all attributable to the HFS – South business segment and reporting unit. Changes in the carrying amount of goodwill were as follows:
In connection with our annual assessment on October 1, we performed a qualitative assessment based on information currently available in determining if it was more likely than not that the fair value of the Company’s HFS – South reporting unit was less than the carrying amount. This assessment considered various factors, including changes in the carrying value of the reporting unit, forecasted operating results, other qualitative key events and circumstances, including the macroeconomic environment, the industry, market conditions, cost factors, and events specific to the reporting unit. Based on the results of this qualitative assessment, management concluded that it is not more likely than not that the fair value of the Company's HFS – South reporting unit was less than its carrying amount. Intangible assets other than goodwill at the dates indicated below consisted of the following:
The aggregate amortization expense for intangible assets subject to amortization was $13.5 million, $13.4 million and $13.3 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is included in other depreciation and amortization in the consolidated statements of comprehensive income. In January of 2023, the Company purchased a group of assets consisting of land, specialty rental assets (modular units, site work, and furniture & fixtures) and intangibles for approximately $18.6 million, of which approximately $4.5 million is included within this intangible asset group comprised of approximately $4.2 million of customer relationships and approximately $0.3 million related to a non-compete agreement. This acquisition was completed in order to support growth of the HFS – South segment discussed in Note 19, which was funded by cash on hand. The acquisition was accounted for as an asset acquisition. The Company allocated the total purchase price to identifiable tangible and intangible assets based on their relative fair values, which resulted in the entire purchase price being allocated to land, specialty rental assets and intangible assets. The estimated aggregate amortization expense as of December 31, 2024 for each of the next five years and thereafter is as follows:
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| Other Non-Current Assets | 6. Other Non-Current Assets Other non-current assets includes capitalized software implementation costs for the implementation of cloud computing systems. As of the dates indicated below, capitalized implementation costs and related accumulated amortization in other non-current assets on the consolidated balance sheets amounted to the following:
The majority of such systems were placed into service beginning January of 2020 at which time the Company began to amortize these capitalized costs on a straight-line basis over the period of the remaining service arrangements of between 2 and 4 years. Such amortization expense amounted to approximately $0.7 million, $1.4 million, and $1.5 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is included in selling, general and administrative expense in the accompanying consolidated statements of comprehensive income. All capitalized costs were fully amortized as of December 31, 2024 as scheduled. |
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| Accrued Liabilities | 7. Accrued Liabilities Accrued liabilities as of the dates indicated below consists of the following:
Other accrued liabilities in the above table relates primarily to accrued utilities, real estate and sales taxes, state and federal income taxes, liability-based stock compensation awards as of December 31, 2023 with $0 outstanding as of December 31, 2024 (see Note 17), and other accrued operating expenses. |
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| Debt | 8. Debt Senior Secured Notes 2024 On March 15, 2019, Arrow Bidco issued $340 million in aggregate principal amount of 9.50% senior secured notes due March 15, 2024 (the “2024 Senior Secured Notes”) under an indenture dated March 15, 2019 (the “2024 Notes Indenture”). The 2024 Notes Indenture was entered into by and among Arrow Bidco, the guarantors named therein (the “2024 Senior Secured Note Guarantors”), and Deutsche Bank Trust Company Americas, as trustee and as collateral agent. Interest was payable semiannually on September 15 and March 15 and began September 15, 2019. During the year ended December 31, 2022, the Company made an elective repayment of approximately $5.5 million on the 2024 Senior Secured Notes. On March 15, 2023, Arrow Bidco redeemed $125 million in aggregate principal amount of the outstanding 2024 Senior Secured Notes. The redemption was accounted for as a partial extinguishment of debt. In connection with the Notes Exchange Offer (defined below), approximately $181.4 million of 2024 Senior Secured Notes were exchanged by Arrow Bidco on November 1, 2023 for new 10.75% Senior Secured Notes due 2025 (the “2025 Senior Secured Notes”). Following this exchange and related transactions, approximately $28.1 million aggregate principal amount of 2024 Senior Secured Notes remained outstanding, which were subsequently redeemed on November 21, 2023 resulting in an outstanding balance of $0 as of December 31, 2023. As such, none of the 2024 Senior Secured Notes remain outstanding. Refer to the “Notes Exchange Offer” section within this Note 8 for further discussion regarding the exchange and subsequent pay off of the remaining 2024 Senior Secured Notes. Notes Exchange Offer On September 29, 2023, Arrow Bidco commenced (i) an offer to exchange (the “Notes Exchange Offer”) any and all of its outstanding 2024 Senior Secured Notes for cash and for the 2025 Senior Secured Notes and (ii) a solicitation of consents (the “Consent Solicitation”) to certain proposed amendments to the indenture governing the 2024 Senior Secured Notes. The primary purpose of the Notes Exchange Offer was to extend the maturity date of the indebtedness represented by the 2024 Senior Secured Notes from 2024 to 2025. The Notes Exchange Offer and the Consent Solicitation expired on October 30, 2023. Approximately $181.4 million of 2024 Senior Secured Notes were exchanged by Arrow Bidco on November 1, 2023 (the “Notes Exchange Offer Settlement Date”) representing a non-cash decrease in cash flows from financing activities. Additionally, in connection with the 2024 Senior Secured Notes that were exchanged, the Company paid accrued interest on the 2024 Senior Secured Notes through the Notes Exchange Offer Settlement Date of approximately $2.2 million. On the Notes Exchange Offer Settlement Date, Arrow Bidco issued approximately $181.4 million in 2025 Senior Secured Notes pursuant to an indenture, dated November 1, 2023, by and among Arrow Bidco, the guarantors from time to time party thereto and Deutsche Bank Trust Company Americas, as trustee and collateral agent (the “2025 Senior Secured Notes Indenture”), and paid approximately $2.7 million in cash to eligible holders whose 2024 Senior Secured Notes were accepted for exchange in the Notes Exchange Offer, which was capitalized as part of the original issue discount discussed below. The issuance of the 2025 Senior Secured Notes represented a non-cash increase in cash flows from financing activities. The exchange of a portion of the 2024 Senior Secured Notes and corresponding issuance of the 2025 Senior Secured Notes was considered a modification of debt for accounting purposes and generated approximately $3.1 million in third party transaction costs, which were expensed as incurred within selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income for the year ended December 31, 2023. Following these transactions, approximately $28.1 million aggregate principal amount of 2024 Senior Secured Notes remained outstanding, which were subsequently redeemed on November 21, 2023 resulting in an outstanding balance of $0 as of December 31, 2023. This redemption was accounted for as an extinguishment of debt. In connection with the redemption of the remaining 2024 Senior Secured Notes that were not exchanged, the Company paid off approximately $0.5 million of related accrued interest. Senior Secured Notes 2025 The 2025 Senior Secured Notes will mature on June 15, 2025. Interest on the 2025 Senior Secured Notes will accrue at 10.75% per annum, payable semi-annually on March 15 and September 15 of each year, and began March 15, 2024. Refer to the table below for a description of the amounts related to the 2025 Senior Secured Notes, which are recognized within current portion of long-term debt, net in the accompanying consolidated balance sheet as of December 31, 2024.
If Arrow Bidco undergoes a change of control or sells certain of its assets, Arrow Bidco may be required to offer to repurchase the 2025 Senior Secured Notes. On and after September 15, 2024, Arrow Bidco, at its option, may redeem any outstanding 2025 Senior Secured Notes, in whole or in part, upon not less than (15) nor more than (60) days’ prior written notice to holders and not less than (20) days’ prior written notice to the Trustee (or such shorter timeline as the Trustee may agree), at the redemption prices (expressed as percentages of the principal amount of the 2025 Senior Secured Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to but not including the applicable redemption date (subject to the right of holders on the relevant record date to receive interest due on an interest payment date falling on or prior to the redemption date), if redeemed during the 6-month period beginning on the dates set forth below at the redemption prices listed below:
The 2025 Senior Secured Notes are unconditionally guaranteed by Topaz and each of Arrow Bidco’s direct and indirect wholly-owned domestic subsidiaries (collectively, the “2025 Note Guarantors”). Target Hospitality is not an issuer or a guarantor of the 2025 Senior Secured Notes. The 2025 Note Guarantors are either borrowers or guarantors under the ABL Facility. To the extent lenders under the ABL Facility release the guarantee of any 2025 Note Guarantor, such 2025 Note Guarantor is also released from obligations under the 2025 Senior Secured Notes. These guarantees are secured by a second priority security interest in substantially all of the assets of Arrow Bidco and the 2025 Note Guarantors (subject to customary exclusions). The guarantees of the 2025 Senior Secured Notes by TLM Equipment, LLC, a Delaware limited liability company which holds certain of Target Hospitality’s assets, are subordinated to its obligations under the ABL Facility (as defined below). The 2025 Senior Secured Notes Indenture contains covenants that limit Arrow Bidco’s and its subsidiaries’ ability to, among other things, (i) incur or guarantee additional debt and issue certain types of stock, (ii) create or incur certain liens, (iii) make certain payments, including dividends or other distributions, (iv) prepay or redeem junior debt, (v) make certain investments or acquisitions, including participating in joint ventures, (vi) engage in certain transactions with affiliates and (vii) sell assets, consolidate or merge with or into other companies. These covenants are subject to a number of important limitations and exceptions. In addition, upon the occurrence of specified change of control events, Arrow Bidco must offer to repurchase the 2025 Senior Secured Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, but excluding, the applicable repurchase date. The 2025 Senior Secured Notes Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all of the then outstanding 2025 Senior Secured Notes to be due and payable immediately. Arrow Bidco’s ultimate parent, Target Hospitality, has no significant independent assets or operations except as included in the guarantors of the 2025 Senior Secured Notes, the guarantees under the 2025 Senior Secured Notes are full and unconditional and joint and several, and any subsidiaries of Target Hospitality that are not subsidiary guarantors of the 2025 Senior Secured Notes are minor. There are also no significant restrictions on the ability of Target Hospitality or any guarantor to obtain funds from its subsidiaries by dividend or loan. See discussion of certain negative covenants above. Therefore, pursuant to the SEC Rules, no individual guarantor financial statement disclosures are deemed necessary. In connection with the issuance of the 2025 Senior Secured Notes, there was an original issue discount of $2.7 million and the unamortized balance of $0.9 million as of December 31, 2024 is presented as a reduction of the principal within current portion of long-term debt, net in the accompanying consolidated balance sheet. The discount is amortized over the life of the 2025 Senior Secured Notes using the effective interest method. As discussed in Note 20, on March 10 2025, the Company issued a notice of redemption to redeem all $181.4 million in aggregate principal amount of the 2025 Senior Secured Notes, which were redeemed in full on March 25, 2025. Finance Lease and Other Financing Obligations The Company’s finance lease and other financing obligations as of December 31, 2024 consisted of $3.3 million of finance leases. The finance leases pertain to leases entered into during 2022 through December 31, 2024, for commercial-use vehicles with 48 to terms (and continue on a month-to-month basis thereafter) expiring through 2028. Refer to Note 13 for further discussion of finance leases, including the weighted average discount rate applicable to these finance leases. The Company’s finance lease and other financing obligations as of December 31, 2023, primarily consisted of $2.4 million of finance leases related to commercial-use vehicles with the same terms as described above. ABL Facility On March 15, 2019, Topaz, Arrow Bidco, Target, Signor and each of their domestic subsidiaries entered into an ABL credit agreement that provided for a senior secured asset based revolving credit facility in the aggregate principal amount of up to $125 million (the “ABL Facility”), which was increased to $175 million with the Third Amendment discussed below. During the year ended December 31, 2022, $70 million was drawn and $70 million was repaid on the ABL Facility. During the years ended December 31, 2024 and 2023 respectively, no amounts were drawn or repaid on the ABL Facility resulting in an outstanding balance of $0 as of December 31, 2024 and 2023, respectively. In accordance with the First Amendment to the ABL Facility on February 1, 2023 (the “First Amendment”), the reference interest rate for LIBOR borrowings changed from LIBOR to Term SOFR (commencing as of the effective date of the First Amendment). Borrowings under the ABL Facility, at the relevant borrower’s (the borrowers under the ABL Facility, the “Borrowers”) option, bear interest at either (1) Term SOFR or (2) a base rate, in each case plus an applicable margin. The applicable margin is 4.25% to 4.75% with respect to Term SOFR borrowings and 3.25% to 3.75% with respect to base rate borrowings based on achieving certain excess availability levels. The rates of the applicable margin were determined in connection with the Third Amendment to the ABL Facility on October 12, 2023 (the “Third Amendment”). Pursuant to the Third Amendment, the ABL Facility provides borrowing availability of an amount equal to the lesser of (a) $175 million and (b) the Borrowing Base (defined below) (the “Line Cap”). The Borrowing Base is, at any time of determination, an amount (net of reserves) equal to the sum of:
The ABL Facility includes borrowing capacity available for standby letters of credit of up to $25 million and for ‘‘swingline’’ loan borrowings of up to $15 million. Any issuance of letters of credit or making of a swingline loan will reduce the amount available under the ABL Facility. In addition, the ABL Facility will provide the Borrowers with the option to increase commitments under the ABL Facility in an aggregate amount not to exceed $25 million plus any voluntary prepayments that are accompanied by permanent commitment reductions under the ABL Facility. As a result of the First Amendment, the termination date of the ABL Facility was extended from September 15, 2023 to February 1, 2028, which extended termination date was subject to a springing maturity that would have accelerated the maturity of the ABL Facility. On August 10, 2023, Arrow Bidco and certain of the Company’s other subsidiaries entered into a second amendment (the “Second Amendment”) to the ABL Facility. The Second Amendment amended the ABL Facility to, among other things, modify the springing maturity that would have accelerated the maturity of the ABL Facility if any of the 2024 Senior Secured Notes remained outstanding from the date that was six months prior to the stated maturity date thereof to the date that was ninety-one days prior to the stated maturity date thereof. Finally, the Third Amendment amended the ABL Facility to, among other things, set the termination date of the ABL Facility to February 1, 2028, subject to springing maturity triggers that will accelerate the maturity of the ABL Facility if: (i) any of the 2024 Senior Secured Notes remain outstanding on the date that is ninety-one days prior to the stated maturity date thereof or (ii) any of the 2025 Senior Secured Notes (or any indebtedness incurred to refinance the 2025 Senior Secured Notes) remain outstanding on the date that is ninety-one days prior to the stated maturity date thereof. As previously mentioned, none of the 2024 Senior Secured Notes remain outstanding. On February 24, 2025 and February 27, 2025, Arrow Bidco, LLC entered into a fourth amendment (the “Fourth Amendment”) and a fifth amendment (the “Fifth Amendment”), respectively, to the ABL Facility. The Fourth Amendment amends the ABL Facility to modify the springing maturity provision that will accelerate the maturity of the facility if any of the 2025 Senior Secured Notes remain outstanding on the date that is ninety-one days prior to the stated maturity date thereof (March 15, 2025) to March 18, 2025, which was further modified by the Fifth Amendment to March 31, 2025 The obligations under the ABL Facility are unconditionally guaranteed by Topaz and each existing and subsequently acquired or organized direct or indirect wholly-owned U.S. organized restricted subsidiary of Arrow Bidco (together with Topaz, the “ABL Guarantors”), other than certain excluded subsidiaries. The ABL Facility is secured by (i) a first priority pledge of the equity interests of Topaz, Arrow Bidco, Target, and Signor (the “Borrowers) and of each direct, wholly-owned US organized restricted subsidiary of any Borrower or any ABL Guarantor, (ii) a first priority pledge of up to 65% of the voting equity interests in each non-US restricted subsidiary of any Borrower or ABL Guarantor and (iii) a first priority security interest in substantially all of the assets of the Borrower and the ABL Guarantors (in each case, subject to customary exceptions). As stated in the Third Amendment, the ABL Facility requires the Borrowers to maintain a (i) minimum fixed charge coverage ratio of not less than 1.00:1.00 and (ii) maximum total leverage ratio of 2.50:1.00. The ABL Facility also contains a number of customary negative covenants. Such covenants, among other things, limit or restrict the ability of each of the Borrowers, their restricted subsidiaries, and where applicable, Topaz, to:
The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that grant the ABL Borrowers continued flexibility to operate and develop their businesses. The ABL Facility also contains certain customary representations and warranties, affirmative covenants and events of default. The carrying value of debt outstanding as of the dates indicated below consist of the following:
Interest expense, net The components of interest expense, net (which includes interest expense incurred) recognized in the consolidated statements of comprehensive income for the periods indicated below consist of the following, including the components of interest expense, net on the 2024 and 2025 Senior Secured Notes (collectively, the “Notes”):
Deferred Financing Costs and Original Issue Discount The Company presents unamortized deferred financing costs and unamortized original issue discount as a direct deduction from the principal amount of the 2025 Senior Secured Notes on the consolidated balance sheets as of December 31, 2024 and December 31, 2023, respectively. In connection with the Notes Exchange Offer and issuance of the 2025 Senior Secured Notes in 2023, the Company incurred and deferred approximately $0.8 million of deferred financing costs and approximately $2.7 million of original issue discount, which are included, net of accumulated amortization in the carrying value of the 2025 Senior Secured Notes as of December 31, 2023 and 2024. The Company presents unamortized deferred financing costs and unamortized original issue discount as a direct deduction from the principal amount of the 2025 Senior Secured Notes on the consolidated balance sheets as of December 31, 2024 and 2023, respectively. Accumulated amortization expense related to the deferred financing costs was approximately $14.0 million and $13.5 million as of December 31, 2024 and 2023, respectively. Accumulated amortization of the original issue discount was approximately $4.8 million and $3.1 million as of December 31, 2024 and 2023, respectively. As previously mentioned, the partial redemption of the 2024 Senior Secured Notes on March 15, 2023 was accounted for as a partial extinguishment of debt and consequently, a portion of the unamortized deferred financing costs and unamortized original issue discount were expensed through loss on extinguishment of debt on the consolidated statement of comprehensive income as of the prepayment date. The Company recognized a charge of approximately $1.7 million in loss on extinguishment of debt related to the write-off of unamortized deferred financing costs and unamortized original issue discount for the year ended December 31, 2023. As previously mentioned, the exchange of a portion of the 2024 Senior Secured Notes and the issuance of the 2025 Senior Secured Notes on November 1, 2023 was accounted for as a modification of debt and consequently, the unamortized deferred financing costs and unamortized original issue discount at the time of the modification of approximately $1.0 million associated with the portion of 2024 Senior Secured Notes that were exchanged for the 2025 Senior Secured Notes was deferred and will be amortized over the term of the 2025 Senior Secured Notes. Alternatively, the remaining unamortized deferred financing costs and unamortized original issue discount associated with the portion of the 2024 Senior Secured Notes that were redeemed on November 21, 2023 (not exchanged) were expensed through loss on extinguishment of debt on the consolidated statement of comprehensive income as of the redemption date. The Company recognized a charge of approximately $0.2 million in loss on extinguishment of debt related to the write-off of unamortized deferred financing costs and unamortized original issue discount during 2023 related to the Notes Exchange Offer and the redemption of the remaining balance of the 2024 Senior Secured Notes on November 21, 2023. The Company also incurred deferred financing costs associated with the ABL Facility, which are capitalized and presented net of accumulated amortization on the consolidated balance sheets as of December 31, 2024 and 2023, respectively, within deferred financing costs revolver, net. These costs are amortized over the contractual term of the line-of-credit through the initial maturity date using the straight-line method. In connection with the First Amendment, which was considered a modification for accounting purposes, any unamortized deferred financing costs from the ABL Facility that pertained to non-continuing lenders were expensed through loss on extinguishment of debt on the consolidated statement of comprehensive income as of the amendment date. As such, the Company recognized a charge of approximately $0.4 million in loss on extinguishment of debt related to the write-off of unamortized deferred financing costs pertaining to non-continuing lenders during the year ended December 31, 2023. As the borrowing capacity of each of the continuing lenders on the amended ABL Facility was greater than the borrowing capacity of the ABL Facility before the amendment, the unamortized deferred financing costs at the time of the modification of approximately $0.4 million associated with the continuing lenders was deferred and amortized over the remaining term of the ABL Facility. Additionally, the Company incurred and paid approximately $1.4 million and $1.0 million of deferred financing costs as a result of the First Amendment and Third Amendment, respectively, which are capitalized and presented on the consolidated balance sheet as of December 31, 2024 and 2023 within deferred financing costs revolver, net. These costs are amortized over the contractual term of the line-of-credit through the maturity date using the straight-line method. Accumulated amortization related to revolver deferred financing costs for the ABL Facility was approximately $5.9 million and $5.3 million as of December 31, 2024 and 2023, respectively. Refer to the components of interest expense table in Note 8 for the amounts of the amortization expense related to the deferred financing costs and original issue discount recognized for each of these debt instruments for the years ended December 31, 2024, 2023 and 2022, respectively. Future maturities The aggregate annual principal maturities of debt and finance lease obligations for each of the next five years, based on contractual terms are listed in the table below. Refer to Note 13 for additional information on our finance lease obligations, including contractual terms. The schedule of future maturities as of December 31, 2024 consists of the following:
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| Warrant Liabilities | 9. Warrant Liabilities On January 17, 2018, Harry E. Sloan, Joshua Kazam, Fredric D. Rosen, the Sara L. Rosen Trust and the Samuel N. Rosen 2015 Trust, purchased from Platinum Eagle an aggregate of 5,333,334 Private Warrants at a price of $1.50 per warrant (for an aggregate purchase price of $8.0 million) in a private placement that occurred simultaneously with the completion of its initial public offering. Each Private Warrant entitles the holder to purchase one share of common stock at $11.50 per share. The purchase price of the Private Warrants was added to the proceeds from Platinum Eagle’s initial public offering and was held in the Trust Account until the formation of the Company on March 15, 2019. The Private Warrants (including the shares of Common Stock issuable upon exercise of the Private Warrants) were not transferable, assignable or salable until 30 days after the formation of the Company on March 15, 2019, and they may be exercised on a cashless basis and are non-redeemable so long as they are held by the initial purchasers of the Private Warrants or their permitted transferees. The Company evaluated Private Warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and concluded that they do not meet the criteria to be classified in stockholders’ equity and should be classified as liabilities. Since the Private Warrants meet the definition of a derivative under ASC 815, the Company recorded the Private Warrants as liabilities on the balance sheet at their estimated fair value. Subsequent changes in the estimated fair value of the Private Warrants are reflected in the change in fair value of warrant liabilities in the accompanying consolidated statements of comprehensive income. The change in the estimated fair value of the Private Warrants resulted in a loss (gain) of approximately ($0.7) million, ($9.1) million, and $31.7 million during the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024 and 2023, the Company had 0 and 1,533,334 Private Warrants issued and outstanding, respectively. The Private Warrants expired unexercised on March 15, 2024 and are no longer outstanding. The Company determined the following estimated fair values for the outstanding Private Warrants as of the dates indicated below:
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| Income Taxes | 10. Income Taxes The components of the provision for income taxes are comprised of the following for the years ended December 31:
Income tax results differed from the amount computed by applying the U.S. statutory income tax rate to income before income taxes for the following reasons for the years ended December 31:
Income tax expense was $21.4 million, $51.1 million and $32.4 million for the years ended December 31, 2024, 2023 and 2022, respectively. The effective tax rate for the years ended December 31, 2024, 2023, and 2022 was 23.1%, 22.7% and 30.4%, respectively. The fluctuation in the rate for the years ended December 31, 2024, 2023 and 2022, respectively, results primarily from the relationship of year-to-date income before income tax, the fluctuation in the permanent add-back related to the change in fair value of warrant liabilities on the Company’s warrants, the impact of state tax expense based off of gross receipts, and a compensation deduction limitation during each of the years ended December 31, 2024, 2023 and 2022. Deferred Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating losses and carryforwards. Significant components of the deferred tax assets and liabilities for the Company are as follows:
Tax loss carryovers for foreign income tax purposes totaled approximately $11.7 million at December 31, 2024 as shown in the below table. Approximately $11.7 million of these foreign income tax loss carryovers expire between 2031 and 2044. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. A valuation allowance has been established against the deferred tax assets to the extent it is not more likely than not they will be realized.
Unrecognized Tax Positions No amounts have been accrued for uncertain tax positions as of December 31, 2024 and 2023. However, management's conclusion regarding uncertain tax positions may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations, and interpretations thereof and other factors. The Company does not have any unrecognized tax benefits as of December 31, 2024 and 2023 and does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. Additionally, no interest or penalty related to uncertain taxes has been recognized in the accompanying consolidated financial statements. The Company is subject to taxation in US, Canada, Mexico and state jurisdictions. The Company’s tax returns are subject to examination by the applicable tax authorities prior to the expiration of the statute of limitations for assessing additional taxes, which generally ranges from to five years. Therefore, as of December 31, 2024, tax years for 2017 through 2024 generally remain subject to examination by the tax authorities. In addition, in the case of certain tax jurisdictions in which the Company has loss carryforwards, the tax authority in some of these jurisdictions may examine the amount of the tax loss carryforward based on when the loss is utilized rather than when it arises. |
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| Fair Value of Financial Instruments | 11. Fair Value of Financial Instruments The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Company has assessed that the fair value of cash and cash equivalents, trade receivables, trade payables, other current liabilities, and other debt approximates their carrying amounts largely due to the short-term maturities or recent commencement of these instruments. The fair value of the ABL Facility is primarily based upon observable market data, such as market interest rates, for similar debt. The fair value of the Notes is based upon observable market data. Level 1 & 2 Disclosures: The carrying amounts and fair values of financial assets and liabilities, which are either Level 1 or Level 2, are as follows:
Recurring fair value measurements Level 3 Disclosures: There were 1,533,334 Private Warrants outstanding as of December 31, 2023. As there were no Private Warrants outstanding as of December 31, 2024 due to the expiration of the Private Warrants as noted below, a fair value assessment was not performed as it was not needed as of December 31, 2024. Based on the fair value assessment that was performed, the Company determined a fair value price per Private Warrant $0.44 as of December 31, 2023. The fair value is classified as Level 3 in the fair value hierarchy due to the use of pricing inputs that are less observable in the marketplace combined with management judgment required for the assumptions underlying the calculation of value. The Company determined the estimated fair value of the Private Warrants using the Black-Scholes option-pricing model. The table below summarizes the inputs used to calculate the fair value of the warrant liabilities at each of the dates indicated below:
The following table presents changes in Level 3 liabilities measured at fair value for the year ended December 31, 2023:
The following table presents changes in Level 3 liabilities measured at fair value for the year ended December 31, 2024:
There were no transfers of financial instruments between the three levels of the fair value hierarchy during the years ended December 31, 2024 and 2023, respectively. The Private Warrants expired unexercised on March 15, 2024 and are no longer outstanding. |
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Commitments and Contingencies |
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Dec. 31, 2024 | |
| Commitments and Contingencies. | |
| Commitments and Contingencies | 12. Commitments and Contingencies The Company is involved in various lawsuits or claims in the ordinary course of business. Management is of the opinion that there is no pending claim or lawsuit which, if adversely determined, would have a material impact on the financial condition of the Company. Refer to Note 13 for disclosure regarding future minimum lease payments over the next five years at December 31, 2024, by year and in the aggregate, under non-cancelable operating leases. |
Leases |
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| Leases | 13. Leases Lessee Accounting The Company has both finance and operating leases. The finance leases are solely comprised of the Company’s commercial-use vehicles, maturing in dates ranging from 2025 to 2028, including expected renewal options. Including all renewal options available to the Company, the lease maturity date may extend on a month-to-month basis for an unlimited period of time. Operating leases consist of land, building, office, certain community units, and equipment leases, maturing in dates ranging from 2025 to 2029, including expected renewal options. Including all renewal options available to the Company, the lease maturity date extends to 2118. Leases were included on the Company’s consolidated balance sheet as follows:
The components of lease expense were as follows:
Supplemental cash flow information related to leases was as follows:
Future maturities of the Company’s finance and operating lease obligations at December 31, 2024 were as follows:
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| Rental Income | 14. Rental Income Lessor Accounting Certain arrangements contain a lease of lodging facilities (“Lodges”) to customers. Rental income from these leases for the years ended December 31, 2024, 2023 and 2022 was approximately $120.4 million, $198.0 million and $168.3 million, respectively. Each Lodge is leased exclusively to one customer and is accounted for as an operating lease under the authoritative guidance for leases. Revenue related to these lease arrangements is reflected as specialty rental income in the consolidated statements of comprehensive income. Future minimum lease payments for our operating leases on an undiscounted basis to be received by the Company as of December 31, 2024 for each of the next five years is as follows:
The leased assets consists primarily of specialty rental assets with a gross cost of approximately $126.3 million and $209.2 million as of December 31, 2024 and 2023, respectively, with accumulated depreciation of approximately $61.8 million and $113.9 million as of December 31, 2024 and 2023, respectively. The leased assets have a balance net of accumulated depreciation of approximately $64.5 million and $95.3 million as of December 31, 2024 and 2023, respectively, and are included within specialty rental assets, net in the accompanying consolidated balance sheets. Such assets are depreciated consistent with the depreciation methods discussed in Note 1 for specialty rental assets. The corresponding depreciation expense was $14.5 million in 2024, $23.1 million in 2023, and $14.0 million in 2022 and is recognized within depreciation of specialty rental assets in the accompanying consolidated statements of comprehensive income.
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Earnings per Share |
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| Earnings per Share | 15. Earnings per Share Basic earnings per share (“EPS”) is calculated by dividing net income attributable to Target Hospitality by the weighted average number of shares of Common Stock outstanding during the period. Diluted EPS is computed similarly to basic net earnings per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. We apply the treasury stock method in the calculation of diluted earnings per share. The following table reconciles net income attributable to common stockholders and the weighted average shares outstanding for the basic calculation to the net income attributable to common stockholders and the weighted average shares outstanding for the diluted calculation for the periods indicated below ($ in thousands, except per share amounts):
When liability-classified warrants are in the money and the impact of their inclusion on diluted EPS is dilutive, diluted EPS also assumes share settlement of such instruments through an adjustment to net income available to common stockholders for the fair value (gain) loss on common stock warrant liabilities and inclusion of the number of dilutive shares in the denominator. The Public and Private Warrants representing 8,061,656 were excluded from the computation of diluted EPS for the year ended December 31, 2022 because they are considered anti-dilutive. Public and Private Warrants representing a total of 8,044,287 shares of the Company’s Common Stock for the year ended December 31, 2023 were included in the computation of diluted EPS because their effect is dilutive. No Public or Private Warrants, which expired in accordance with their terms on March 15, 2024, were outstanding as of December 31, 2024, and because they are considered anti-dilutive for the period they were outstanding; the Public and Private Warrants had no impact on the computation of diluted EPS for the year ended December 31, 2024. As discussed in Note 17, stock-based compensation awards were outstanding for the years ended December 31, 2024, 2023 and 2022, respectively. For the years ended December 31, 2024, 2023 and 2022, stock-based compensation awards were included in the computation of diluted EPS because their effect is dilutive as noted in the above table. However, approximately 716,025 of contingently issuable PSUs were excluded from the computation of diluted EPS for the year ended December 31, 2023 as not all necessary conditions for issuance of these PSUs were satisfied, which includes 91,025 of PSUs that did not meet all of the Company’s Diversification EBITDA and TSR criteria (see Note 17) and 625,000 of PSUs issued in 2022 that did not meet all of the specified share price thresholds as discussed in Note 17. Additionally, approximately 683,406 of contingently issuable PSUs were excluded from the computation of diluted EPS for the year ended December 31, 2024 as not all necessary conditions for issuance of these PSUs were satisfied, which includes 208,406 of PSUs that did not meet all of the Company’s Diversification EBITDA and TSR criteria (see Note 17) and 475,000 of PSUs issued in 2022 that did not meet all of the specified share price thresholds as discussed in Note 17. Shares of treasury stock have been excluded from the computation of EPS. |
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Stockholders' Equity |
12 Months Ended |
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Dec. 31, 2024 | |
| Stockholders' Equity | |
| Stockholders' Equity | 16. Stockholders’ Equity Common Stock As of December 31, 2024, Target Hospitality had 112,248,984 shares of Common Stock, par value $0.0001 per share issued and 98,952,054 outstanding. Each share of Common Stock has one vote, except the voting rights related to the 5,015,898 of Founder Shares that were placed in escrow were suspended subject to release pursuant to the terms of the Earnout Agreement. As of the expiration date of the earnout period (March 15, 2022), the 5,015,898 Founder Shares in escrow had not been released and were cancelled and returned to the Company to be held in treasury pursuant to the terms of the Earnout Agreement. As such, these cancelled Founder Shares were reclassed from Common Stock to common stock in treasury during the year ended December 31, 2022 as presented in the accompanying consolidated statements of changes in stockholders’ equity. Preferred Shares Target Hospitality is authorized to issue 1,000,000 preferred shares with par value of $0.0001 per share. As of December 31, 2024, no preferred shares were or outstanding. Public Warrants On January 17, 2018, PEAC sold 32,500,000 units at a price of $10.00 per unit (the “Units”) in its initial public offering (the “Public Offering”), including the issuance of 2,500,000 Units as a result of the underwriters’ partial exercise of their overallotment option. Each Unit consisted of one Class A ordinary share of PEAC, par value $0.0001 per share (the “Public Shares”), and of one warrant to purchase one ordinary share (the “Public Warrants”). Each Public Warrant entitles the holder to purchase one share of the Company’s Common Stock at a price of $11.50 per share. No fractional shares will be issued upon exercise of the Public Warrants. If upon exercise of the Public Warrants, a holder would be entitled to receive a fractional interest in a share, the Company will upon exercise, round down to the nearest whole number, the number of shares to be issued to the Public Warrant holder. Each Public Warrant became exercisable 30 days after the formation of the Company. During the year ended December 31, 2022, holders of Public Warrants exercised 7,101 Public Warrants for shares of Common Stock resulting in the Company receiving cash proceeds of approximately $0.1 million and issuing 7,101 shares of Common Stock. During the year ended December 31, 2022, holders exchanged 4,297,893 Public Warrants for shares of common stock as part of the Warrant Exchange discussed below. As of December 31, 2022, the Company had 6,528,322 Public Warrants issued and outstanding. During the year ended December 31, 2023, holders of Public Warrants exercised 17,369 Public Warrants for shares of Common Stock resulting in the Company receiving cash proceeds of approximately $0.2 million and issuing 17,369 shares of Common Stock. As of December 31, 2023, the Company had 6,510,953 Public Warrants issued and outstanding. During the year ended December 31, 2024, holders of Public Warrants exercised 1,079 Public Warrants for shares of Common Stock resulting in the Company receiving cash proceeds of less than $0.1 million and issuing 1,079 shares of Common Stock. As of December 31, 2024, the Company had no Public Warrants issued and outstanding, which had expired on March 15, 2024 in accordance with their terms. Warrant Exchange On November 18, 2022, the Company commenced an offer to exchange the Public and Private Warrants for shares of its common stock in a cashless transaction (the “Warrant Exchange”). In the offer, each warrant holder had the opportunity to receive 0.37 shares of Common Stock, par value $0.0001 per share, of the Company in exchange for each warrant tendered by the holder and exchanged pursuant to the offer. The Warrant Exchange offer expired on December 16, 2022 and a total of 8,097,893 of the outstanding Public and Private Warrants were tendered and accepted for exchange, which consisted of 4,297,893 Public Warrants and 3,800,000 Private Warrants. Pursuant to the terms of the Warrant Exchange, the Company issued 2,996,201 shares of Common Stock on December 22, 2022. In lieu of issuing fractional shares of Common Stock, the Company paid $319 in cash to holders of warrants who would otherwise have been entitled to receive fractional shares, after aggregating all such fractional shares of such holder, in an amount equal to such fractional part of a share multiplied by the last sale price of a share of the Company’s Common Stock on December 16, 2022. In connection with the Warrant Exchange, the Company capitalized $2.3 million of offering expenses within additional paid-in capital in December 2022, which resulted in a reduction to additional paid-in capital. In connection with the Warrant Exchange, the 3,800,000 Private Warrants exchanged for Common Stock as discussed above, were marked to their estimated fair value of approximately $23.6 million through the Warrant Exchange closing date on December 22, 2022 with the change in the estimated fair value during the year ended December 31, 2022 recognized as change in fair value of warrant liabilities in the accompanying consolidated statement of comprehensive income for the year ended December 31, 2022. On the closing date of the Warrant Exchange, the estimated fair value of the exchanged Private Warrants of approximately $23.6 million were reclassified to additional paid-in-capital within the stockholders’ equity section from warrant liabilities, which resulted in a reduction to warrant liabilities and an increase to additional paid-in-capital in the accompanying consolidated balance sheet as of December 31, 2022. Common Stock in Treasury In August 2022, the Inflation Reduction Act of 2022 was enacted into law and imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. The Company reflected the applicable excise tax in equity as part of the cost basis of the stock repurchased during the year ended December 31, 2024 and recorded a corresponding liability for the excise taxes payable in accrued expenses on the consolidated balance sheet as of December 31, 2024 in an amount of approximately $0.2 million. On November 3, 2022, the Company’s Board of Directors approved a stock repurchase program that authorizes the Company to repurchase up to $100 million of its outstanding shares of common stock. The stock repurchase program does not obligate the Company to purchase any particular number of shares, and the timing and exact amount of any repurchases will depend on various factors, including market pricing and conditions, business, legal, accounting, and other considerations. Any shares of common stock repurchased under such program will be held as treasury shares. Treasury stock is reflected as a reduction of stockholders’ equity at cost. The Company may repurchase its shares in open market transactions from time to time or through privately negotiated transactions in accordance with federal securities laws, at the Company's discretion. The repurchase program, which has no expiration date, may be increased, suspended, or terminated at any time. The program is expected to be implemented over the course of several years and is conducted subject to the covenants in the agreements governing the Company's indebtedness. No share repurchases were made during the years ended December 31, 2022 and 2023. During the year ended December 31, 2024, the Company repurchased 3,866,265 shares of Common Stock for an aggregated price of approximately $33.4 million (excluding the excise tax discussed above). As of December 31, 2024, the stock repurchase program had a remaining capacity of approximately $66.6 million. Other On December 12, 2024 (the “Settlement Date”), the Company issued an aggregate of 90,000 unregistered, restricted shares of its common stock, par value $0.0001 per share, to Jeff Sagansky, a former director of the Company, in settlement of Mr. Sagansky’s purported exercise of certain warrants held by him. With respect to such issuance, the Company relied on an exemption from the registration requirements under the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereunder. The Company valued these shares on the Settlement Date at approximately $0.8 million based on the traded closing price of the Common Stock on the Settlement Date and recognized this amount as an increase to additional paid-in-capital in the accompanying consolidated balance sheet as of December 31, 2024 and as an expense within selling, general and administrative expenses in the accompanying consolidated statement of comprehensive income for the year ended December 31, 2024.
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Stock-Based Compensation |
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| Stock-Based Compensation | 17. Stock-Based Compensation On March 15, 2019, the Company’s board of directors approved the Plan, under which 4,000,000 of the Company’s shares of Common Stock were reserved for issuance pursuant to future grants of share awards, and on May 19, 2022, the Company’s stockholders approved an amendment to the Plan to increase the number of shares authorized under the Plan by 4,000,000 shares. The expiration date of the Plan, on and after which date no awards may be granted, is March 15, 2029. On March 4, 2020, the Compensation Committee adopted a form of Executive Nonqualified Stock Option Award Agreement (the “2020 Stock Option Agreement”) and a new form of Executive Restricted Stock Unit Agreement (the “2020 RSU Agreement” and together with the 2020 Stock Option Agreement, the “2020 Award Agreements”) with respect to the granting of nonqualified stock options and restricted stock units, respectively, granted under the Plan. The 2020 Award Agreements were used for all awards to executive officers made in 2020. The 2020 Award Agreements have material terms that are substantially similar to those in the forms of award agreements last approved by the Compensation Committee and disclosed by the Company, except for the following: under the new Award Agreements, if the participant’s employment or service terminates due to Retirement (as defined in the Plan), and the participant has been continuously employed by the Company for at least twelve months following the grant date, then any portion of the participant’s awarded securities scheduled to become vested within twelve months after the participant’s termination date shall be vested on his or her termination date. On February 25, 2021, the Compensation Committee adopted a new form Executive Restricted Stock Unit Agreement (the “2021 RSU Agreement”) and a form Executive Stock Appreciation Rights Award Agreement (the “2021 SAR Agreement” and together with the 2021 RSU Agreement, the “2021 Award Agreements”) with respect to the granting of restricted stock units and stock appreciation rights, respectively, under the Plan. The 2021 Award Agreements were used for all awards to executive officers made in 2021. The 2021 RSU Agreement has material terms that are substantially similar to those in the form Executive Restricted Stock Unit Agreement last approved by the Compensation Committee and previously disclosed by the Company, except for the following: (x) 50% of the restricted stock units (each an “RSU”) will vest on the second grant date anniversary and 50% of the RSUs will vest on the third grant date anniversary and (y) if the participant’s employment or service terminates due to Retirement (as defined in the Plan), and the participant has been continuously employed by the Company for at least twelve months following the grant date, then a pro-rata portion of the participant’s RSUs scheduled to vest on the next following vesting date shall vest on his or her termination date based on completed calendar months since either (a) the grant date or (b) the initial vesting date, as applicable. The 2021 SAR Agreement has material terms that are substantially similar to those in the form Executive Nonqualified Stock Option Award Agreement last approved by the Compensation Committee and previously disclosed by the Company, except for the following: (x) the change in the equity instrument to a stock appreciation right (“SAR”), which may be settled in shares or cash, (y) 50% of the SARs will vest on the second grant date anniversary and 50% of the SARs will vest on the third grant date anniversary, and (z) if the participant’s employment or service terminates due to Retirement (as defined in the Plan), then (a) if the participant has been continuously employed by the Company for at least twelve months following the grant date, then a pro-rata portion of the SARs scheduled to become vested on the next vesting date shall be vested on the participant’s termination date based on completed calendar months since either (i) the grant date or (ii) the initial vesting date, as applicable; (b) following the application of clause (a), the unvested portion of the SARs shall expire upon such termination of employment or service and (c) the participant may exercise the vested portion of the SARs, but only within such period of time ending on the earlier of (i) two years following such termination of employment or service, or (ii) the Expiration Date (as defined in the 2021 SAR Agreement). On February 24, 2022, the Compensation Committee adopted a new form Executive Restricted Stock Unit Agreement (the “2022 RSU Agreement”) and a new form Executive Performance Stock Unit Agreement (the “2022 PSU Agreement” and together with the 2022 RSU Agreement, the “2022 Award Agreements”) with respect to the granting of RSUs and PSUs, respectively, under the Plan. The 2022 Award Agreements were used for all awards to executive officers made in 2022. The 2022 RSU Agreement has material terms that are substantially similar to those in the form Executive Restricted Stock Unit Agreement last approved by the Compensation Committee and previously disclosed by the Company, except for the following: (x) the RSUs will vest in four equal installments on each of the first four anniversaries of the grant date and (y) if approval by the Company’s shareholders of the proposed increase in the number of shares available for issuance under the Plan at the 2022 annual meeting of the Company’s shareholders was not received, then all payments under the RSU Agreement would have been made in cash. However, as noted above, such approval to increase the number of shares available for issuance under the Plan was received at the 2022 annual meeting. Each PSU awarded under the 2022 PSU Agreement represents the right to receive one share of the Company’s Common Stock, or, at the Compensation Committee’s sole discretion, cash or part cash and part common stock with the cash amount equal to the fair market value of the common stock as of the date on which the restricted period ends. PSUs vest and become unrestricted on the third anniversary of the grant date. The number of PSUs that vest range from 0% to 150% of the Target Level (as defined in the 2022 PSU Agreement) depending upon the achievement of specified three-year cumulative operating cash flow amounts as determined based on the net cash flow from operations disclosed in the Company’s Annual Reports on Form 10-K for the period from January 1, 2022 through December 31, 2024. Vesting of PSUs is contingent upon the executive’s continued employment through the vesting date, unless the executive’s employment is terminated by reason of death, without Cause, for Good Reason, or in the event of a Change in Control (each term as defined in the Plan). As mentioned above, on May 19, 2022, the Company’s stockholders approved an amendment to the Plan to increase the number of shares authorized under the plan by 4,000,000 shares. As a result of this, the Company reclassified all of the outstanding liability-based RSUs and PSUs from accrued liabilities and other non-current liabilities to additional paid-in capital based on the change in the ability to settle these awards in shares upon vesting as a result of the additional shares added to the Plan. The reclassified amount of these awards at the date of this change was approximately $2.4 million and is included in the accompanying consolidated statements of changes in stockholders’ equity for the year ended December 31, 2022. On May 24, 2022 and July 12, 2022, the Compensation Committee adopted another form of PSU Award Agreement with respect to awarding PSUs (the “May 2022 PSU Agreement”). The May 2022 PSU Agreement is substantially similar to the 2022 PSU Agreement, except for the number of PSUs that vest are determined based upon the achievement of specified share prices over the period between the grant date and June 30, 2025. Participants will earn a corresponding number of PSUs upon the achievement of specified share price thresholds, the first of which is $12.50 per share. If all Performance Goals (as defined in the May 2022 PSU Agreement) are met during the performance period then the participant will be entitled to receive a maximum number of PSUs awarded. On February 28, 2023, the Compensation Committee adopted a new form Executive RSU Agreement (the “2023 RSU Agreement”) and a new form Executive PSU Agreement (the “2023 PSU Agreement”) with respect to the granting of RSUs and PSUs, respectively, under the Plan. The new Award Agreements were used for all awards to executive officers made in 2023. The 2023 RSU Agreement has material terms that are substantially similar to those in the form Executive Restricted Stock Unit Agreement last approved by the Compensation Committee and previously disclosed by the Company. Each PSU awarded under the 2023 PSU Agreement represents the right to receive one share of the Company’s common stock, par value $0.0001 per share. PSUs vest and become unrestricted on the third anniversary of the grant date. The number of PSUs that vest pursuant to the 2023 PSU Agreement is based on the Company’s Total Shareholder Return (the “2023 TSR Based Award”) performance and the Company’s Diversification EBITDA (as defined in the 2023 PSU Agreement) (the “2023 Diversification EBITDA Based Award”), each measured based on the applicable Performance Period specified in the 2023 PSU Agreement. The number of PSUs that vest pursuant to the 2023 TSR Based Award range from 0% to 200% of the Target Level (as defined in the 2023 PSU Agreement) depending upon the achievement of a specified percentile rank during the applicable Performance Period. The number of PSUs that vest pursuant to the 2023 Diversification EBITDA Based Award range from 0% to 200% of the Target Level (as defined in the 2023 PSU Agreement) depending upon the Company’s Qualifying EBITDA (as defined in the 2023 PSU Agreement) during the applicable Performance Period. Vesting of PSUs is contingent upon the executive’s continued employment through the vesting date, unless the executive’s employment is terminated by reason of death, without Cause, for Good Reason, or in the event of a Change in Control (each term as defined in the Plan). On February 29, 2024, the Compensation Committee of the Board of Directors of the Company adopted a new form Executive RSU Agreement (the “2024 RSU Agreement”) and a new form Executive PSU Agreement (the “2024 PSU Agreement”) with respect to the granting of RSUs and PSUs, respectively, under the Plan. The new Award Agreements were used for all awards to executive officers made in 2024. The 2024 RSU Agreement has material terms that are substantially similar to those in the form Executive Restricted Stock Unit Agreement last approved by the Compensation Committee and previously disclosed by the Company. Each PSU awarded under the 2024 PSU Agreement represents the right to receive one share of the Company’s common stock, par value $0.0001 per share. PSUs vest and become unrestricted on the third anniversary of the grant date. The number of PSUs that vest pursuant to the 2024 PSU Agreement is based on the Company’s Total Shareholder Return (the “2024 TSR Based Award”) performance and the Company’s Diversification EBITDA (as defined in the 2024 PSU Agreement) (the “2024 Diversification EBITDA Based Award”), each measured based on the applicable Performance Period specified in the 2024 PSU Agreement. The number of PSUs that vest pursuant to the 2024 TSR Based Award range from 0% to 200% of the Target Level (as defined in the 2024 PSU Agreement) depending upon the achievement of a specified percentile rank during the applicable Performance Period. The number of PSUs that vest pursuant to the Diversification EBITDA Based Award range from 0% to 200% of the Target Level (as defined in the 2024 PSU Agreement) depending upon the Company’s Diversification EBITDA (as defined in the 2024 PSU Agreement) during the applicable Performance Period. Vesting of PSUs is contingent upon the executive’s continued employment through the vesting date, unless the executive’s employment is terminated by reason of death, without Cause, for Good Reason, or in the event of a Change in Control (each term as defined in the Plan). As of December 31, 2024, of the 8,000,000 shares authorized under the plan as previously discussed, assuming all PSUs granted are achieved at the maximum payout, we had 953,569 shares remaining for future issuance under the Plan, Restricted Stock Units Beginning on May 21, 2019, the Compensation Committee began granting time-based RSUs to the Company’s executive officers, certain other employees, and non-employee directors. Each RSU represents a contingent right to receive, upon vesting, one share of the Company’s Common Stock or its cash equivalent, as determined by the Compensation Committee. These RSU awards granted to executive officers and other employees generally vest in four equal installments on each of the first four anniversaries of the grant date, except for 1,134,524 of RSUs granted on February 25, 2021, whereby 50% vest on the second grant date anniversary and 50% vest on the third grant date anniversary. The RSU awards granted to non-employee directors of the board, except as noted below, generally vest over one year on the anniversary of the date of grant or the date of the first annual meeting of the stockholders following the grant date, whichever is sooner. However, with respect to RSU awards granted to non-employee directors that resign prior to vesting, the Board may approve acceleration of vesting of RSUs granted as permitted by the Plan. For the years ended December 31, 2022, 2023, and 2024, respectively, certain of the Company's employees surrendered RSUs owned by them to satisfy their statutory minimum federal and state tax obligations associated with the vesting of RSUs issued under the Plan. The table below represents the changes in RSUs for the years indicated below:
The total fair value of RSUs vested during the years ended December 31, 2024, 2023 and 2022 was $9.5 million, $17.7 million, and $2.0 million, respectively. Stock-based compensation expense for these RSUs recognized in selling, general and administrative expense in the consolidated statement of comprehensive income for the year ended December 31, 2024 was approximately $3.8 million, with an associated tax benefit of approximately $0.9 million. Stock-based compensation expense for these RSUs recognized in selling, general and administrative expense in the consolidated statement of comprehensive income for the year ended December 31, 2023 was approximately $5.2 million, with an associated tax benefit of approximately $1.3 million. Stock-based compensation expense for these RSUs recognized in selling, general and administrative expense in the consolidated statement of comprehensive income for the year ended December 31, 2022 was approximately $5.4 million, with an associated tax benefit of approximately $1.4 million. At December 31, 2024, unrecognized compensation expense related to RSUs totaled approximately $6.0 million and is expected to be recognized over a remaining term of approximately 2.25 years. Performance Stock Units On February 24, 2022, the Company awarded an aggregate of 245,017 time and performance-based PSUs to certain of the Company’s executive officers and management, which vest upon satisfaction of continued service with the Company until the third anniversary of the grant date and attainment of Company cash flow performance criteria as previously defined. As of December 31, 2024, 174,419 of these awards were outstanding and are expected to vest at 150% of the Target Level. On May 24, 2022, the Company and the Company’s President and Chief Executive Officer, James B. Archer, entered into the Executive Performance Stock Unit Agreement (the “Archer PSU Agreement”) in connection with Mr. Archer’s previously disclosed intention to continue to serve as President and Chief Executive Officer of the Company and as a member of the Company’s Board of Directors. Each PSU awarded under the Agreement represents the right to receive one share of the Company’s common stock. The PSUs awarded pursuant to the Archer PSU Agreement vest and become unrestricted on June 30, 2025. The number of PSUs that vest are determined based upon the achievement of specified share prices over the period between the grant date and June 30, 2025 (the “Archer Performance Period”). Mr. Archer will earn a corresponding number of PSUs upon the achievement of specified share price thresholds, the first of which is $12.50 per share. If all Performance Goals (as defined in the Archer PSU Agreement) are met during the Archer Performance Period, Mr. Archer will be entitled to receive a maximum of 500,000 PSUs. Vesting is contingent upon Mr. Archer’s continued employment through the vesting date, unless Mr. Archer’s employment is terminated by reason of death or Disability, without Cause, for Good Reason, or in the event of a Qualifying Termination in connection with a Change in Control (each term as defined in the Plan, as amended, or Mr. Archer’s employment agreement with the Company, as amended). These PSUs were valued using a Monte Carlo simulation with the following assumptions on the grant date: the expected volatility was approximately 53.82%, the term was 3.10 years, the dividend rate was 0.0% and the risk-free interest rate was approximately 2.65%, which resulted in a calculated fair value of approximately $2.21 per PSU as of the grant date. As of December 31, 2024, 500,000 of these awards were outstanding and had achieved 50% of the vesting Target Level. On July 12, 2022, the Compensation Committee granted 750,000 PSUs aimed at retaining, motivating and incentivizing certain of the Company’s executive officers, including its named executive officers (“NEOs”), under and pursuant to the Plan. The form of agreement with respect to the granting of the PSUs has material terms that are substantially similar to those in the Archer PSU Agreement. Such PSUs represent the right to receive one share of the Company’s common stock, par value $0.0001 per share. PSUs vest and become unrestricted on June 30, 2025. The number of PSUs that vest is determined based upon the achievement of specified share prices over the Performance Period. The executives will each earn a corresponding number of PSUs upon the achievement of specified share price thresholds, the first of which is $12.50 per share. If all Performance Goals (as defined in the applicable award agreement) are met during the Performance Period, the executives will be entitled to receive the maximum PSUs granted to them. Vesting is contingent upon the applicable executive’s continued employment through the vesting date, unless the applicable executive’s employment is terminated by reason of death or Disability, without Cause, for Good Reason, or in the event of a Qualifying Termination in connection with a Change in Control (each term as defined in the Plan, or each executive’s employment agreement, as amended, with the Company). These PSUs were valued using a Monte Carlo simulation with the following assumptions on the grant date: the expected volatility was approximately 55.76%, the term was 2.97 years, the dividend rate was 0.0% and the risk-free interest rate was approximately 3.05%, which resulted in a calculated fair value of approximately $6.96 per PSU as of the grant date. As of December 31, 2024, 450,000 of these awards were outstanding and had achieved 50% of the vesting Target Level. On March 1, 2023, the Company awarded an aggregate of 91,025 time and performance-based PSUs to certain of the Company’s employees, which vest upon satisfaction of continued service with the Company until the third anniversary of the grant date and attainment of Company Diversification EBITDA and TSR criteria. These PSUs were valued using a Monte Carlo simulation with the following assumptions on the grant date: the expected volatility was approximately 45.86%, the term was 2.84 years, the correlation coefficient was 0.6210, the dividend rate was 0.0% and the risk-free interest rate was approximately 4.60%, which resulted in a calculated fair value of approximately $20.66 per PSU as of the grant date. With respect to the performance criteria, half of these awards are subject to attainment of the Company Diversification EBITDA criteria and the other half are subject to attainment of the TSR criteria. As of December 31, 2024, 73,931of these awards were outstanding and none of the awards had met the Diversification EBITDA and TSR criteria. On February 29, 2024, the Company awarded an aggregate of 203,057 PSUs to certain of the Company’s executive officers and employees, which vest upon satisfaction of continued service with the Company until the third anniversary of the grant date and attainment of the Company’s Diversification EBITDA and TSR criteria. These PSUs were valued using a Monte Carlo simulation with the following assumptions on the grant date: the expected volatility was approximately 36.30%, the term was 2.84 years, the correlation coefficient was 0.5832, the dividend rate was 0.0% and the risk-free interest rate was approximately 4.41%, which resulted in a calculated fair value of approximately $13.50 per PSU as of the grant date. With respect to the performance criteria, half of these awards are subject to attainment of the Company Diversification EBITDA criteria and the other half are subject to attainment of the TSR criteria. As of December 31, 2024, 203,057 of these awards were outstanding and a portion of the TSR criteria was achieved that would result in 68,582 of these awards meeting the TSR criteria as of December 31, 2024, subject to continued satisfaction of the continued service criteria discussed above. The following table represents changes in PSUs for the years indicated below:
Stock-based compensation expense for these PSUs recognized in selling, general and administrative expense in the consolidated statement of comprehensive income for the year ended December 31, 2024 was approximately $2.5 million with an associated tax benefit of $0.7 million. Stock-based compensation expense for these PSUs recognized in selling, general and administrative expense in the consolidated statement of comprehensive income for the year ended December 31, 2023 was approximately $2.6 million with an associated tax benefit of $0.8 million. Stock-based compensation expense for these PSUs recognized in selling, general and administrative expense in the consolidated statement of comprehensive income for the year ended December 31, 2022 was approximately $1.5 million with an associated tax benefit of $0.3 million. At December 31, 2024, unrecognized compensation expense related to PSUs totaled approximately $2.8 million and is expected to be recognized over a remaining term of approximately 1.60 years. Stock Option Awards Beginning on May 21, 2019, the Compensation Committee began granting time-based stock option awards to the Company’s executive officers and certain other employees. The last date such stock option awards were granted was March 4, 2020. Each option represents the right upon vesting, to buy one share of the Company’s common stock, par value $0.0001 per share, for $4.51 to $10.83 per share. The stock options vest in four equal installments on each of the first four anniversaries of the grant date and expire ten years from the grant date. The following table represents changes in stock options for the years indicated below:
362,109 shares were exercisable at December 31, 2024 with a weighted average exercise price per share of $7.38 and an intrinsic value of $1.02 million. The total fair value of stock option awards vested during the years ended December 31, 2024, 2023 and 2022 was $0.4 million, $0.8 million, and $0.8 million, respectively. Stock-based compensation expense for these stock option awards recognized in selling, general and administrative expense in the consolidated statement of comprehensive income for the year ended December 31, 2024 was approximately $0.1 million with an associated tax benefit of less than $0.1 million. Stock-based compensation expense for these stock option awards recognized in selling, general and administrative expense in the consolidated statement of comprehensive income for the year ended December 31, 2023 was approximately $0.5 million with an associated tax benefit of approximately $0.1 million. Stock-based compensation expense for these stock option awards recognized in selling, general and administrative expense in the consolidated statement of comprehensive income for the year ended December 31, 2022 was approximately $0.8 million with an associated tax benefit of approximately $0.2 million. As of December 31, 2024, there was no unrecognized compensation expense related to stock options. The fair value of each option award at the grant date was estimated using the Black-Scholes option-pricing model with the following assumptions:
The volatility assumption used in the Black-Scholes option-pricing model is based on peer group volatility as the Company did not have a sufficient trading history as a stand-alone public company to calculate volatility at the grant date. Additionally, due to an insufficient history with respect to stock option activity and post vesting cancellations, the expected term assumption was based on the simplified method permitted under SEC rules, whereby, the simple average of the vesting period for each tranche of award and its contractual term is aggregated to arrive at a weighted average expected term for the award. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a dividend on its shares of common stock. Stock-based payments are subject to service based vesting requirements and expense is recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur. Stock Appreciation Right Awards On February 25, 2021, the Compensation Committee granted SARs to certain of the Company’s executive officers and other employees. Each SAR represents a contingent right to receive, upon vesting, payment in cash or the Company’s Common Stock, as determined by the Compensation Committee, in an amount equal to the difference between (a) the fair market value of a Common Share on the date of exercise, over (b) the grant date price. The number of SARs granted to certain named executive officers and certain other employees totaled 1,578,537 (including 26,906 granted on August 5, 2021). As approved by the Compensation Committee, all exercised SARs shown in the table below were paid in cash in the amount of $6.2 million and $10.0 million during the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, no SARs remained outstanding. The following table represents changes in SARs for the years indicated below:
Under the authoritative guidance for stock-based compensation, these SARs are considered liability-based awards. The Company recognized a liability, associated with its SARs of $0 as of December 31, 2024 as there were no SARs outstanding and unexercised as of December 31, 2024. The liability associated with these SAR awards recognized as of December 31, 2023 was approximately $5.4 million, all of which is included in accrued liabilities in the accompanying consolidated balance sheet as of December 31, 2023. These SARs were valued using the Black-Scholes option pricing model with the following assumptions on the grant date: the expected volatility was approximately 43.5%, the term was 6.25 years, the dividend yield was 0.0% and the risk-free rate was approximately 1.07%, which resulted in a calculated fair value of approximately $0.78 per SAR as of the grant date. The fair value of these liability awards was remeasured at each reporting period until the date of settlement. At December 31, 2023, these SARs were valued using the Black-Scholes option pricing model with the following assumptions for awards granted on February 25, 2021 and August 5, 2021, respectively: the expected volatility was approximately 35.78% and 53.39%, the term was 0.08 years and 0.30 years, the dividend yield was 0.0% and 0.0%, the risk-free rate was approximately 5.52% and 5.33%, and the exercise price was $1.79 and $3.54, which resulted in a calculated fair value of approximately $7.95 and $6.25 per SAR, respectively, as of December 31, 2023. The estimated weighted-average fair value of each SAR as of December 31, 2024 and December 31, 2023 was $0 and $7.96, respectively. Increases and decreases in stock-based compensation expense were recognized over the vesting period, or immediately for vested awards. For the years ended December 31, 2024, 2023 and 2022, the Company recognized compensation expense related to these awards in selling, general and administrative expense in the accompanying consolidated statements of comprehensive income of approximately $0.9 million, $2.9 million, and $11.4 million, respectively. As of December 31, 2024, there was no unrecognized compensation expense related to SARs as there are no SARs outstanding as of December 31, 2024. At December 31, 2024 and December 31, 2023, the intrinsic value of the SARs was $0 and $5.6 million, respectively. The volatility assumption used in the Black-Scholes option-pricing model for purposes of estimating the fair value as of December 31, 2023 and the grant date, was based on peer group volatility as the Company did not have a sufficient trading history as a stand-alone public company to calculate volatility as of December 31, 2023 and as of the grant date. Additionally, due to an insufficient history with respect to stock appreciation right activity and post vesting cancellations, the expected term assumption on the grant date was based on the simplified method permitted under SEC rules, whereby, the simple average of the vesting period for each tranche of award and its contractual term is aggregated to arrive at a weighted average expected term for the award. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a dividend on its shares of common stock. Stock-based payments are subject to service based vesting requirements and expense is recognized on a straight-line basis over the vesting period. Forfeitures are accounted for as they occur. |
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| Retirement Plans | 18. Retirement Plans We offer a defined contribution 401(k) retirement plan to substantially all of our U.S. employees. Participants may contribute from 1% to 90% of eligible compensation, inclusive of pretax and/or Roth deferrals (subject to Internal Revenue Service limitations), and we make matching contributions under this plan on the first 5% of the participant’s compensation (100% match of the first 3% employee contribution and 50% match on the next 2% contribution). Our matching contributions fully vest upon participation. We recognized expense of $1.0 million, $1.1 million and $0.9 million related to matching contributions under our various defined contribution plans during the years ended December 31, 2024, 2023 and 2022, respectively. |
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| Business Segments | 19. Business Segments The Company has two reportable operating segments as defined below. The aggregate external revenues of these reportable segments exceeded 75% of the Company’s consolidated revenues for all periods presented. The remaining operating segments were combined in the “All Other” category. The Company is organized primarily on the basis of geographic region and customer industry group and operates in two reportable segments. These reportable segments are also operating segments. Resources are allocated, and performance is assessed by our CEO, whom we have determined to be our Chief Operating Decision Maker (CODM). Our remaining operating segments have been consolidated and included in an “All Other” category. The following is a brief description of our reportable segments and a description of business activities conducted by All Other. HFS – South — Segment operations consist primarily of specialty rental and vertically integrated hospitality services revenue from customers in the natural resources and development industry located primarily in Texas and New Mexico. Government — Segment operations consist primarily of specialty rental and vertically integrated hospitality services revenue from customers with Government contracts located in Texas. All Other — Segment operations consist primarily of revenue from specialty rental and vertically integrated hospitality services revenue from customers primarily in the natural resources and development industry located outside of the HFS – South segment. The accounting policies of the segments are the same as those described in the “Summary of Significant Accounting Policies” for the Company in Note 1. The Company evaluates performance of their segments and allocates resources to them based on revenue and adjusted gross profit. Adjusted gross profit and Adjusted cost of sales for the CODM’s analysis includes the services and specialty rental costs in the financial statements and excludes depreciation, loss on impairment, and certain severance costs. As discussed in Note 1, the Company adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. As such, the below information about our reportable segments now reflects significant expense categories based on the requirements of this newly adopted ASU 2023-07. The table below presents information about reported segments for the years ended December 31:
(a)Revenues from operating segments below the quantitative thresholds are reported in the “All Other” category previously described. (b)The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. There are no intersegment expenses. Note that community operating costs consist primarily of catering food purchases, lodge supplies, apparel and uniform expenses, linen expenses, operating lease expense for land, facilities, and equipment to service certain communities, property taxes, and utility costs. Other costs includes transportation and travel expenses, including the cost of relocating community assets. A reconciliation of total segment adjusted gross profit to total consolidated income before income taxes for years ended as of the dates indicated below, is as follows:
A reconciliation of total segment assets to total consolidated assets as of the dates indicated below is as follows:
Other unallocated assets are not included in the measure of segment assets provided to or reviewed by the CODM for assessing performance and allocating resources, and as such, are not allocated. Other unallocated assets consist of the following as reported in the consolidated balance sheets of the Company as of the dates indicated below:
For 2024, 2023, and 2022, revenues from the Company’s Government segment were from two customers and represented approximately $224.7 million, $403.7 million, and $360.3 million of the Company’s consolidated revenues for the years ended December 31, 2024, 2023 and 2022, respectively. Revenues from one customer within the Government segment represented approximately 48%, 62%, and 61% of the Company’s consolidated revenues for the years ended December 31, 2024, 2023 and 2022, respectively. Revenues from another customer within the Government segment represented approximately 9.9%, 9.9%, and 11% of the Company’s consolidated revenues for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, the Government segment was comprised of a single customer following the termination of the STFRC Contract effective August 9, 2024 as discussed in Note 2. As discussed in Note 20, the contract associated with the remaining customer included in the Government segment as of December 31, 2024, was terminated on February 21, 2025. Additionally, as discussed in Note 20, the community of assets associated with the prior STFRC Contract within the Government segment were reactivated on March 5, 2025 under the new DIPC Contract defined in Note 20 and the operating results and related assets associated with the new DIPC Contract will continue to be reported within the Governmenmt segment. There were no single customers from the HFS – South segment for the years ended December 31, 2024, 2023 and 2022 that represented 10% or more of the Company’s consolidated revenues. There were no revenues generated from transactions between reportable operating segments for the years ended December 31, 2024, 2023, and 2022, respectively. |
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Subsequent Events |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Subsequent Events | |
| Subsequent Events | 20. Subsequent Events In January 2025, the Company used cash on hand to purchase a community of assets for $15.5 million located in Winnemucca, Nevada to establish new regional workforce hub network capacity for lithium and related critical mineral development. The additional capacity will be utilized to support the development of a premium workforce hub, while simultaneously creating a strategic regional footprint focused on potential additional growth opportunities. The Company believes this newly established regional network capacity will serve as a cornerstone as it pursues other potential growth initiatives within this expanding region for lithium and related critical mineral development. In February 2025, the Company entered into a multi-year construction and services agreement (“Workforce Housing Contract”) to provide construction of workforce housing, comprehensive facility services, and premium hospitality solutions to Lithium Americas Corp. (“Lithium Americas”) in support of Lithium Americas development of Thacker Pass (“Thacker Pass Project” or the “Project”) and a North American critical minerals supply chain. The all-inclusive workforce housing community, located in Winnemucca, Nevada (“Workforce Hub”) is near Thacker Pass, the world’s largest known measured lithium resource. The Thacker Pass Project is expected to play a major role in the domestic production of lithium batteries. Lithium Americas has commenced site preparation and the Company is actively engaged in the contruction of the Workforce Hub, which will be capable of supporting a population of approximately 2,000 individuals. The Workforce Housing Contract has an initial term through 2027 with first occupancy anticipated by mid-2025 and completion of the Workforce Hub by the end of 2025. The Company will construct and provide full turnkey support for the Workforce Hub, including premium culinary offerings, facilities management, and comprehensive support services. The Workforce Housing Contract, which consists of construction and services revenue, is expected to generate approximately $140 million of revenue over its initial term. In February 2025, the Company received notice that the U.S. government terminated the New PCC Contract with the Company’s NP Partner, effective immediately, or on or about February 21, 2025 (“Effective Date”). The Company provided facility and hospitality solutions to the NP Partner under the New PCC Contract utilizing the Company’s owned modular assets and real property, capable of supporting up to 6,000 individuals. As previously disclosed and discussed in Note 2, the U.S. government may terminate this contract with the NP Partner for convenience; in the event this should occur, the NP Partner may terminate its agreement with the Company for convenience. The NP Partner provided notice to the Company of their intention to terminate the New PCC Contract as of the Effective Date. As discussed in Note 2, the New PCC Contract included a minimum annual revenue contribution amount of approximately $168 million, all of which was attributable to the Government reportable segment discussed in Note 19. The New PCC Contract generated total revenue of approximately $186.4 million for the year ended December 31, 2024. The Company will retain ownership of these assets, enabling the Company to continue utilizing these modular solutions and real property to support customer demand across its operating segments and other potential growth opportunities. The Company is actively engaged in re-marketing these assets, along with other existing modular solutions, as it pursues a strong pipeline of growth opportunities. These opportunities include a growing number of potential solutions supporting the U.S. government’s current immigration policies. In February of 2025, Arrow Bidco and certain other subsidiaries of the Company entered into a fourth amendment (“Fourth Amendment”) and a fifth amendment ("Fifth Amendment”), respectively, to the ABL Facility discussed in Note 8. The Fourth Amendment amends the ABL Facility to modify the springing maturity provision that will accelerate the maturity of the ABL Facility if any of the 2025 Senior Secured Notes (as defined in Note 8) remain outstanding on the date that is ninety-one days prior to the stated maturity date thereof (March 15, 2025) to March 18, 2025, which was further modified by the Fifth Amendment to March 31, 2025. On February 27, 2025, the Compensation Committee, and the Board, in the case of James B. Archer, the Company’s President and Chief Executive Officer, approved agreements granting PSUs aimed at retaining, motivating and incentivizing certain of the Company’s executive officers under and pursuant to the Plan. Settlement upon vesting of the awards in the form of Common Stock is contingent on stockholder approval of the Amendment at the Company’s 2025 annual meeting of stockholders, otherwise such awards will settle in cash upon vesting. These awards include 2,000,000 PSUs to James B. Archer and 600,000 PSUs to Jason Vlacich, Chief Accounting Officer and Chief Financial Officer. Each PSU represents the right to receive one share of Common Stock. PSUs vest and become unrestricted on June 30, 2028. The number of PSUs that vest is determined based upon the achievement of specified share prices over the period between the grant date and June 30, 2028 (the “Performance Period”). The executives will each earn a corresponding number of PSUs upon the achievement of specified share price thresholds, the first of which is $20.00 per share and the highest of which is $30.00 per share. If all Performance Goals (as defined in the applicable award agreements) are met during the Performance Period, Mr. Archer will be entitled to receive a maximum of 2,000,000 PSUs and Mr. Vlacich will be entitled to receive a maximum of 600,000 PSUs. Vesting is contingent upon the applicable executive’s continued employment through the vesting date, unless the applicable executive’s employment is terminated by reason of death or Disability, without Cause, for Good Reason, or in the event of a Qualifying Termination in connection with a Change in Control (each term as defined in the Plan, or each executive’s employment agreement, as amended, with the Company). In March 2025, the Company entered into a five-year lease and services agreement with CoreCivic, Inc. (the “DIPC Contract”) to resume operations utilizing the Company’s existing assets located in Dilley, Texas (the “Dilley Immigration Processing Center” or “DIPC”) within the Company’s Government reportable segment discussed in Note 19. These assets formerly operated from September 2014 to August 2024 as the South Texas Family Residential Center under the STFRC Contract discussed in Note 2, where the Company provided facility and hospitality solutions to CoreCivic, Inc.. Upon reactivation, the DIPC retains a similar facility size and operational scope as the prior operations. The DIPC will be capable of supporting up to 2,400 individuals and provide an open and safe environment to appropriately care for the community population. The consistency of the community layout will require no capital investment, allowing for seamless community reactivation. The Company will provide facility and hospitality solutions to CoreCivic under the DIPC Contract, which has a similar economic structure to the previous STFRC Contract, including fixed minimum revenue regardless of occupancy. The DIPC Contract is expected to provide over $246 million of revenue over its anticipated five-year term, to March 2030. The DIPC Contract is supported by an amended intergovernmental services agreement (“IGSA”) between the city of Dilley, Texas and U.S. Immigration and Customs Enforcement (“ICE”). As is customary for U.S. government contracts and subcontracts, the IGSA and the DIPC Contract are subject to annual U.S. government appropriations and can be canceled for convenience with a prior notice. The seamless reactivation of this community illustrates the benefits of the Company’s flexible operating model and unique capabilities. These elements consistently support the Company’s ability to appropriately respond to customer demand, while providing unmatched customized solutions. The Company believes these distinct core competencies form a strong foundation as the Company continues evaluating additional growth opportunities supporting the U.S government’s immigration policies. On March 10, 2025, the Company issued a notice of redemption (the “Redemption”) to redeem all $181.4 million in aggregate principal amount of its 10.75% 2025 Senior Secured Notes discussed in Note 8 on March 25, 2025 (the “Redemption Date”). The 2025 Senior Secured Notes redeemed pursuant to the Redemption were redeemed for a redemption price equal to 101.000% of the principal amount of the 2025 Senior Secured Notes redeemed plus accrued and unpaid interest to but not including the Redemption Date. As of March 25, 2025, the 2025 Senior Secured Notes were paid in full and are no longer outstanding.
|
Pay vs Performance Disclosure - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
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| Pay vs Performance Disclosure | |||
| Net Income (Loss) | $ 71,265 | $ 173,700 | $ 73,939 |
Insider Trading Arrangements - James B. Archer |
3 Months Ended |
|---|---|
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Dec. 31, 2024
shares
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| Trading Arrangements, by Individual | |
| Material Terms of Trading Arrangement | Security Trading Plans of Directors and Executive Officers During the three months ended December 31, 2024, the following Section 16 officer of the Company adopted a "Rule 10b5-1 trading arrangement" as the term is defined in Item 408(a) of Regulation S-K: On November 18, 2024, James B. Archer, President and Chief Executive Officer and member of the Company’s Board of Directors, entered into a stock trading plan designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934. Under the terms of the plan, Mr. Archer may sell an aggregate 250,000 shares of Common Stock. The plan will terminate on December 31, 2025. During the three months ended December 31, 2024, no other director or Section 16 officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K. |
| Name | James B. Archer |
| Title | President and Chief Executive Officer |
| Rule 10b5-1 Arrangement Adopted | true |
| Adoption Date | November 18, 2024 |
| Rule 10b5-1 Arrangement Terminated | true |
| Termination Date | December 31, 2025 |
| Aggregate Available | 250,000 |
Insider Trading Policies and Procedures |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Insider Trading Policies and Procedures [Line Items] | |
| Insider Trading Policies and Procedures Adopted | true |
Cybersecurity Risk Management and Strategy Disclosure |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Cybersecurity Risk Management, Strategy, and Governance [Line Items] | |
| Cybersecurity Risk Management Processes for Assessing, Identifying, and Managing Threats [Text Block] | Risk Management and Strategy Information technology (“IT”), digital information and automation are essential components of the Company’s operations and growth strategy. The Company recognizes the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard information systems and protect the availability, integrity and confidentiality of our data. The Cybersecurity Risk Management & Oversight Committee (consisting of the Senior Vice President of Business Applications & Digital Transformation, Vice President of IT, a member of our IT department, a senior member of our Legal department, and a member of Operations) sets IT risk strategy and makes risk-informed decisions related to our technology, which includes the assessment and response to cybersecurity risk. The Company has integrated cybersecurity into its broader internal controls framework. The Company maintains a cybersecurity program overseen by the Cybersecurity Risk Management & Oversight Committee and aligns with key industry frameworks including the National Institute of Standards and Technology (“NIST”). In addition, we have set Company-wide policies and procedures concerning transactional workflow approvals, multifactor authentication, antivirus protection, confidential information and the use of the internet, social media, email, and wireless devices. These policies go through an internal review process and are approved by appropriate members of senior management. The Company has continued to expand investments in IT security, including end user-training, using layered defenses, identifying and protecting critical assets, strengthening monitoring and alerting, and engaging experts. Further, we conduct periodic external penetration tests, vulnerability assessments and maturity testing. These tests and assessments are useful tools for maintaining a robust cybersecurity program to protect our investors, customers, employees, vendors and intellectual property. Additionally, we perform and document user and administrative access reviews of all domains, networks, applications, and systems at least quarterly. We view cybersecurity as a shared responsibility. The Company maintains a formal information security training program for all employees that includes training on matters such as phishing and email security best practices. Employees are also required to complete compulsory training on data privacy. Security training is specialized based on employee roles. Personnel The Cybersecurity Risk Management & Oversight Committee is responsible for assessing and managing cybersecurity risk, which includes prevention, mitigation, detection, and remediation of cybersecurity incidents. The Cybersecurity Risk Management & Oversight Committee members collectively have relevant expertise in cybersecurity with the appropriate experience, education, and industry standard cybersecurity certifications. The Cybersecurity Risk Management & Oversight Committee works closely with other members of executive management to ensure that the Company has effective communication and understanding of its cybersecurity risk management. The members of the Cybersecurity Risk Management & Oversight Committee work together to inform the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) on cybersecurity risks. These reports include, among other things, current cybersecurity risk posture, status of projects to strengthen the Company’s information security systems, the effectiveness of our cybersecurity policies, procedures, and strategies, and any significant cybersecurity incidents that have occurred. Third Party Engagement The Company engages third-party expertise as part of the broader internal controls framework. These experts include independent cybersecurity assessors, consultants, and our internal audit team to evaluate and stress-test the Company’s networks, policies, cybersecurity technologies and preventative measures. The Company also engages an independent managed detection and response provider as an extension of the Company’s cybersecurity team. Oversight of Third-Party Risk The Company implements stringent processes to oversee and manage risks associated with third-party service providers. Upon initial engagement with third-party providers, the Company researches the vendor’s cybersecurity and threat reputation. We then require a completed security questionnaire and any relevant documentation including System and Organization Controls (“SOC”) 1 or SOC 2 reports, non-disclosure agreements where applicable, and proof of cybersecurity insurance, if necessary. This documentation is compiled and assessed by the Cybersecurity Risk Management & Oversight Committee and documented in a workflow approval process. Existing vendors are evaluated bi-annually, and any updates to their cyber posture are documented in the same fashion. The internal business owners of cloud-based applications are required to perform and document user access reviews at least quarterly. Risks from Cybersecurity Threats We are exposed to, and may be adversely affected by, interruptions to our computer and IT systems and sophisticated cyber-attacks, including third-party compromise. We have not experienced cybersecurity threats that have materially affected the Company’s results of operations or financial condition. For more information about the cybersecurity risks we face, refer to the section titled “Risk Factors” in Part I Item 1A of this Annual Report on Form 10-K. |
| Cybersecurity Risk Management Processes Integrated [Flag] | true |
| Cybersecurity Risk Management Processes Integrated [Text Block] | The Company has integrated cybersecurity into its broader internal controls framework. The Company maintains a cybersecurity program overseen by the Cybersecurity Risk Management & Oversight Committee and aligns with key industry frameworks including the National Institute of Standards and Technology (“NIST”). In addition, we have set Company-wide policies and procedures concerning transactional workflow approvals, multifactor authentication, antivirus protection, confidential information and the use of the internet, social media, email, and wireless devices. These policies go through an internal review process and are approved by appropriate members of senior management. The Company has continued to expand investments in IT security, including end user-training, using layered defenses, identifying and protecting critical assets, strengthening monitoring and alerting, and engaging experts. Further, we conduct periodic external penetration tests, vulnerability assessments and maturity testing. These tests and assessments are useful tools for maintaining a robust cybersecurity program to protect our investors, customers, employees, vendors and intellectual property. Additionally, we perform and document user and administrative access reviews of all domains, networks, applications, and systems at least quarterly. We view cybersecurity as a shared responsibility. The Company maintains a formal information security training program for all employees that includes training on matters such as phishing and email security best practices. Employees are also required to complete compulsory training on data privacy. Security training is specialized based on employee roles. |
| Cybersecurity Risk Management Third Party Engaged [Flag] | true |
| Cybersecurity Risk Third Party Oversight and Identification Processes [Flag] | true |
| Cybersecurity Risk Materially Affected or Reasonably Likely to Materially Affect Registrant [Flag] | false |
| Cybersecurity Risk Board of Directors Oversight [Text Block] | Governance Our Audit Committee is actively engaged in the oversight of the Company’s information security program. The Audit Committee receives reports on these matters from management, which includes discussion of management’s actions to identify and respond to threats, key performance indicators reflecting cybersecurity posture, and status of recent cybersecurity related initiatives. In addition, the Audit Committee periodically evaluates our cybersecurity strategy to ensure its effectiveness and, if appropriate, includes a review from third-party experts. Cybersecurity Risk Management & Oversight Committee’s Role Managing Risk The Cybersecurity Risk Management & Oversight Committee continuously updates its approach on cybersecurity to safeguard the Company’s sensitive information and assets based on assessments mentioned above. The program is supported by an organizational structure that reflects support from across the business. While processes and technologies are in place to minimize the chance of a successful cyber-attack, the Company has established incident response procedures to address a cybersecurity threat should one occur. The Company’s cybersecurity incident response plan (the “Response Plan”) provides for a timely and consistent response to actual or attempted cybersecurity incidents impacting the Company. The Response Plan includes (1) detection, (2) analysis, which may include timely notice to our Board and public disclosure if deemed material or appropriate, (3) containment, (4) eradication, (5) recovery and (6) post-incident review. |
| Cybersecurity Risk Board Committee or Subcommittee Responsible for Oversight [Text Block] | Audit Committee |
| Cybersecurity Risk Process for Informing Board Committee or Subcommittee Responsible for Oversight [Text Block] | The Audit Committee receives reports on these matters from management, which includes discussion of management’s actions to identify and respond to threats, key performance indicators reflecting cybersecurity posture, and status of recent cybersecurity related initiatives. In addition, the Audit Committee periodically evaluates our cybersecurity strategy to ensure its effectiveness and, if appropriate, includes a review from third-party experts. |
| Cybersecurity Risk Role of Management [Text Block] | The Cybersecurity Risk Management & Oversight Committee is responsible for assessing and managing cybersecurity risk, which includes prevention, mitigation, detection, and remediation of cybersecurity incidents. The Cybersecurity Risk Management & Oversight Committee members collectively have relevant expertise in cybersecurity with the appropriate experience, education, and industry standard cybersecurity certifications. The Cybersecurity Risk Management & Oversight Committee works closely with other members of executive management to ensure that the Company has effective communication and understanding of its cybersecurity risk management. The members of the Cybersecurity Risk Management & Oversight Committee work together to inform the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) on cybersecurity risks. These reports include, among other things, current cybersecurity risk posture, status of projects to strengthen the Company’s information security systems, the effectiveness of our cybersecurity policies, procedures, and strategies, and any significant cybersecurity incidents that have occurred. The Cybersecurity Risk Management & Oversight Committee continuously updates its approach on cybersecurity to safeguard the Company’s sensitive information and assets based on assessments mentioned above. The program is supported by an organizational structure that reflects support from across the business. While processes and technologies are in place to minimize the chance of a successful cyber-attack, the Company has established incident response procedures to address a cybersecurity threat should one occur. The Company’s cybersecurity incident response plan (the “Response Plan”) provides for a timely and consistent response to actual or attempted cybersecurity incidents impacting the Company. The Response Plan includes (1) detection, (2) analysis, which may include timely notice to our Board and public disclosure if deemed material or appropriate, (3) containment, (4) eradication, (5) recovery and (6) post-incident review. |
| Cybersecurity Risk Management Positions or Committees Responsible [Flag] | true |
| Cybersecurity Risk Management Positions or Committees Responsible [Text Block] | Cybersecurity Risk Management & Oversight Committee |
| Cybersecurity Risk Management Expertise of Management Responsible [Text Block] | The Cybersecurity Risk Management & Oversight Committee members collectively have relevant expertise in cybersecurity with the appropriate experience, education, and industry standard cybersecurity certifications. |
| Cybersecurity Risk Process for Informing Management or Committees Responsible [Text Block] | The members of the Cybersecurity Risk Management & Oversight Committee work together to inform the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) on cybersecurity risks. These reports include, among other things, current cybersecurity risk posture, status of projects to strengthen the Company’s information security systems, the effectiveness of our cybersecurity policies, procedures, and strategies, and any significant cybersecurity incidents that have occurred. |
| Cybersecurity Risk Management Positions or Committees Responsible Report to Board [Flag] | true |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies (Policies) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization and Nature of Operations | Organization and Nature of Operations Target Hospitality Corp. (“Target Hospitality” and, together with its subsidiaries, the “Company”) was formed on March 15, 2019 and is one of North America’s largest providers of vertically integrated specialty rental and value-added hospitality services. The Company provides vertically integrated specialty rental and comprehensive hospitality services including: catering and food services, maintenance, housekeeping, grounds-keeping, security, health and recreation services, overall workforce community management, and laundry service. Target Hospitality serves clients in natural resources development and government sectors principally located in the West Texas, South Texas, New Mexico, and Midwest regions. The Company, whose securities are listed on the Nasdaq Capital Market, together with its wholly owned subsidiaries, Topaz Holdings LLC, a Delaware limited liability company (“Topaz”), and Arrow Bidco, LLC, a Delaware limited liability company (“Arrow Bidco”), serve as the holding companies for the businesses of Target Logistics Management, LLC and its subsidiaries (“Target” or “TLM”) and RL Signor Holdings, LLC (“Signor”). TDR Capital LLP (“TDR Capital” or “TDR”) indirectly owns approximately 65% of Target Hospitality and the remaining ownership is broken out among the founders of the Company’s legal predecessor, Platinum Eagle Acquisition Corp. (“Platinum Eagle” or “PEAC”), investors who purchased the shares of Platinum Eagle in a private placement transaction, and other public shareholders. |
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| Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). |
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| Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. If the underlying estimates and assumptions upon which the financial statements are based change in future periods, actual amounts may differ from those included in the accompanying consolidated financial statements. |
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| Principles of Consolidation | Principles of Consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries that it controls due to ownership of a majority voting interest or if the subsidiary is a variable interest entity (“VIE”) where the Company has been determined to be the primary beneficiary. For controlled subsidiaries that are not wholly-owned, the third-party ownership interest represents a noncontrolling interest, which is presented separately in the consolidated financial statements. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. All intercompany balances and transactions are eliminated. |
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| Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents. |
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| Receivables and Allowances for Credit Losses | Receivables and Allowances for Credit Losses Receivables primarily consist of amounts due from customers from the delivery of specialty rental services. The trade accounts receivable is recorded net of an allowance for credit losses. The allowance for credit losses is based upon the amount of losses expected to be incurred in the collection of these accounts pursuant to the guidance outlined in ASU 2016-13, Financial Instruments – Credit Losses (ASU 2016-13, Topic 326, or ASC 326), which the Company adopted effective January 1, 2023. The estimated losses are calculated using the loss rate method based upon a review of outstanding receivables, including specific accounts, related aging, and on historical collection experience. These allowances reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. Our estimate could require a change based on changing circumstances, including changes in the economy or in the circumstances of individual customers. In addition, specific accounts are written off against the allowance when management determines the account is uncollectible. Activity in the allowance for credit losses was as follows:
Provision for credit losses, net of recoveries for the period are included within selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income. |
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| Prepaid Expenses and Other Assets | Prepaid Expenses and Other Assets Prepaid expenses of approximately $5.4 million and $5.5 million at December 31, 2024 and 2023, respectively, primarily consist of insurance, rent, deposits and permits. Prepaid insurance, rent, and permits are amortized over the related term of the respective agreements. Other assets of approximately $4 million and $4 million at December 31, 2024 and 2023, respectively, primarily consist of $1.9 million and $1.9 million of deposits as of December 31, 2024 and 2023, respectively, and $1.9 million and $2.1 million of hospitality inventory as of December 31, 2024 and 2023, respectively. Inventory, primarily consisting of food and beverages, is accounted for by the first-in, first-out method and is stated at the lower of cost and net realizable value. |
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| Concentrations of Credit Risk | Concentrations of Credit Risk In the normal course of business, the Company grants credit to its customers based on credit evaluations of their financial condition and generally requires no collateral or other security. Major customers are defined as those individually comprising more than 10.0% of the Company’s revenues or accounts receivable. For the year ended December 31, 2024, the Company had one customer who accounted for 48% of revenues. The largest customer accounted for 43% of accounts receivable, while no other customer accounted for more than 10% of the accounts receivable balance as of December 31, 2024. For the year ended December 31, 2023, the Company had one customer who accounted for 62% of revenues. The largest customer accounted for 45% of accounts receivable, while no other customer accounted for more than 10% of the accounts receivable balance as of December 31, 2023. For the year ended December 31, 2022, the Company had two customers representing 60.6% and 11.1% of total revenues, respectively. Major suppliers are defined as those individually comprising more than 10.0% of the annual goods purchased. For the years ended December 31, 2024, 2023 and 2022, the Company had one major supplier representing 19.4%, 16.8%, and 13.4% of goods purchased, respectively. We provide services almost entirely to customers in the government and natural resource development sectors and as such, are almost entirely dependent upon the continued activity of such customers. |
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| Interest Capitalization | Interest Capitalization Interest costs for the construction of certain long-term assets are capitalized by applying the weighted average interest rate applicable to the borrowings of the Company to the average amount of accumulated expenditures outstanding during the construction period. Such capitalized interest costs are depreciated over the related assets’ estimated useful lives. |
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| Specialty Rental Assets | Specialty Rental Assets Specialty rental assets (units, site work and furniture and fixtures comprising lodges) are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Costs of improvements and betterments to units are capitalized when such costs extend the useful life of the unit or increase the rental value of the unit. Costs incurred for units to meet a particular customer specification are capitalized and depreciated over the lease term. Maintenance and repair costs are expensed as incurred. Depreciation is computed using the straight-line method over estimated useful lives and considering the residual value of those assets. The estimated useful life of buildings is -15 years. The estimated useful life of modular units is 15 years. The estimated useful life of site work (above ground and below ground infrastructure) is 5 years. The estimated useful life of furniture and fixtures is 7 years. Depreciation methods, useful lives and residual values are adjusted prospectively, if a revision is determined to be appropriate. |
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| Other Property, Plant, and Equipment | Other Property, Plant, and Equipment Other property, plant, and equipment is stated at cost, net of accumulated depreciation and impairment losses. Assets leased under finance leases are depreciated over the shorter of the lease term or their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Land is not depreciated. Maintenance and repair costs are expensed as incurred. Depreciation is computed using the straight-line method over estimated useful lives, as follows:
Depreciation methods, useful lives and residual values are reviewed and adjusted prospectively, if appropriate. |
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| Business Combinations | Business Combinations Business combinations are accounted for using the acquisition method. Consideration transferred for acquisitions is measured at fair value at the acquisition date and includes assets transferred, liabilities assumed and equity issued. Acquisition costs incurred are expensed and included in selling, general and administrative expenses. When the Company acquires a business, the financial assets and liabilities assumed are assessed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date. Any contingent consideration transferred by the acquirer is recognized at fair value at the acquisition date. Any subsequent changes to the fair value of contingent consideration are recognized in profit or loss. If the contingent consideration is classified as equity, it is not re-measured and subsequent settlement is accounted for within equity. |
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| Goodwill | Goodwill The Company evaluates goodwill for impairment at least annually at the reporting unit level. A reporting unit is the operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management. However, components are aggregated as a single reporting unit if they have similar economic characteristics. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the Company’s reporting units that are expected to benefit from the combination. The Company evaluates changes in its reporting structure to assess whether that change impacts the composition of one or more of its reporting units. If the composition of the Company’s reporting units’ changes, goodwill is reassigned between reporting units using the relative fair value allocation approach. The Company performs the annual impairment test of goodwill at October 1. In addition, the Company performs impairment tests during any reporting period in which events or changes in circumstances indicate that impairment may have occurred. To test goodwill for impairment, the Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, the Company then performs a quantitative impairment test. Otherwise, the quantitative impairment test is not required. Under the quantitative impairment test, the Company would compare the estimated fair value of each reporting unit to its carrying value. In assessing the fair value of the reporting units, the Company considers the market approach, the income approach, or a combination of both. Under the market approach, the fair value of the reporting unit is based on quoted market prices of companies comparable to the reporting unit being valued. Under the income approach, the fair value of the reporting unit is based on the present value of estimated cash flows. The income approach is dependent on several significant management assumptions, including estimated future revenue growth rates, gross margin on sales, operating margins, capital expenditures, tax rates and discount rates. If the carrying amount of the reporting unit exceeds the calculated fair value, a loss on impairment is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Additionally, the Company considers the income tax effect from any tax-deductible goodwill on the carrying amount of the reporting unit, if applicable, when measuring the goodwill impairment charge. |
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| Intangible Assets Other Than Goodwill | Intangible Assets Other Than Goodwill Intangible assets that are acquired by the Company and determined to have an indefinite useful life are not amortized, but are tested for impairment at least annually. The Company’s indefinite-lived intangible assets consist of a trade name. The Company calculates fair value by comparing a relief-from-royalty method to the carrying amount of the indefinite-lived intangible asset. This method is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. A loss on impairment would be recorded to the extent the carrying value of the indefinite-lived intangible asset exceeds the fair value. Other intangible assets that have finite useful lives are measured at cost less accumulated amortization and impairment losses, if any. Subsequent expenditures for intangible assets are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate. Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets. The Company has customer relationship assets with lives ranging from 5 to 9 years. Amortization of intangible assets is included in other depreciation and amortization on the consolidated statements of comprehensive income. |
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| Impairment of Long-Lived and Amortizable Intangible Assets | Impairment of Long-Lived and Amortizable Intangible Assets Fixed assets including rental equipment and other property, plant and equipment and amortizable intangible assets are reviewed for impairment as events or changes in circumstances occur indicating that the carrying value of the asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to future undiscounted cash flows, without interest charges, expected to be generated by the asset group. If future undiscounted cash flows, without interest charges, exceed the carrying amount of an asset, no impairment is recognized. If management determines that the carrying value cannot be recovered based on estimated future undiscounted cash flows, without interest charges, over the shorter of the asset’s estimated useful life or the expected holding period, an impairment loss would be recorded based on the estimated fair value of the asset. |
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| Assets Held for Sale | Assets Held for Sale Management considers an asset to be held for sale when management approves and commits to a formal plan to actively market the asset for sale and it is probable that the sale will be completed within twelve months. A sale may be considered probable when a signed sales contract and significant non-refundable deposit or contract break-up fee exist. Upon designation as held for sale, management records the carrying value of the asset at the lower of its carrying value or its estimated fair value, less estimated costs to sell, and management stops recording depreciation expense. As of December 31, 2024, no assets were considered held for sale. |
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| Other Non-Current Assets | Other Non-Current Assets Other non-current assets primarily consist of capitalized software implementation costs for the implementation of cloud computing systems primarily during 2020 and 2019. The Company capitalizes expenditures related to the implementation of cloud computing software as incurred during the application development stage. Such capitalized costs are amortized to selling, general, and administrative expenses over the term of the cloud computing hosting arrangement, including reasonably certain renewals, beginning when the module or component of the hosting arrangement is ready for its intended use. |
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| Deferred Financing Costs Revolver, net | Deferred Financing Costs Revolver, net Deferred financing costs revolver are associated with the issuance of the ABL Facility discussed in Note 8. Such costs are amortized over the contractual term of the line-of-credit through initial maturity using the straight-line method. Amortization expense of deferred financing costs revolver is included in interest expense, net in the consolidated statement of comprehensive income. |
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| Term Loan Deferred Financing Costs | Term Loan Deferred Financing Costs Term loan deferred financing costs are associated with the issuance of the 2025 Senior Secured Notes discussed in Note 8. The Company presents unamortized deferred financing costs as a direct deduction from the principal amount of the 2025 Senior Secured Notes on the consolidated balance sheets. Such costs are deferred and amortized over the term of the debt based on the effective interest rate method. |
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| Original Issuance Discounts | Original Issuance Discounts Debt original issue discounts are associated with the issuances of the 2025 Senior Secured Notes discussed in Note 8 and are recorded as direct deductions to the principal amount of the 2025 Senior Secured Notes on the consolidated balance sheets. Debt discounts are deferred and amortized over the term of the debt based on the effective interest rate method. |
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| Finance and Operating Leases | Finance and Operating Leases The Company determines if a contract is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Expense for these short-term leases is recognized on a straight-line basis over the lease term. For leases with an initial term greater than 12 months, the Company records a right-of-use (“ROU”) asset and a corresponding lease obligation. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s obligation to make fixed lease payments as stipulated by the lease. The Company has elected the lessee practical expedient to make an accounting policy election by class of underlying asset to not separate non-lease components from lease components and instead to account for each separate lease component and non-lease components associated with that lease component as a single lease component. As a lessee in a lease contract, the Company recognizes a ROU asset and a lease liability on the consolidated balance sheet. The Company is a lessee in a variety of lease contracts, such as land, building, modular units, equipment and vehicle leases. The Company classifies its leases as either an operating or a finance lease based on the principle of whether or not the lease is effectively a financed purchase of the leased asset. For operating leases, the Company recognizes lease expense on a straight-line basis over the term of the lease. For finance leases, the Company recognizes lease expense using the effective interest method, which results in the interest component of each lease payment being recognized as interest expense and the lease right-of-use asset being amortized into other depreciation and amortization expense in the accompanying consolidated statement of comprehensive income using the straight-line method over the term of the lease. Operating lease obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate (“IBR”) based on information available at the commencement date in determining the present value of lease payments over the lease term. The IBR is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company determined its IBR for each lease by using the IBR in effect as of the start of the quarter of the lease commencement date. In order to estimate the Company’s IBR, the Company first looks to its own unsecured debt offerings, and adjusts the rate for both length of term and secured borrowing using available market data as well as consultations with leading national financial institutions that are active in the issuance of both secured and unsecured notes. Operating ROU assets are recognized at the lease commencement date, and include the amount of the initial operating lease obligation, any lease payments made at or before the commencement date, excluding any lease incentives received, and any initial direct costs incurred. For leases that have extension options that the Company can exercise at its discretion, management uses judgment to determine if it is reasonably certain that the Company will in fact exercise such option. If the extension option is reasonably certain to occur, the Company includes the extended term’s lease payments in the calculation of the respective lease liability. Certain lease contracts may include an option to purchase the leased property, which is at the Company's sole discretion. None of the Company’s leases contain any material residual value guarantees or material restrictive covenants. The Company reviews its right-of-use assets for indicators of impairment. If such assets are considered to be impaired, the related assets are adjusted to their estimated fair value and an impairment loss is recognized. The impairment loss recognized is measured at the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Based on the Company’s review, no operating or finance lease ROU assets were impaired during any of the years presented in these accompanying consolidated financial statements. The Company's leases include a base lease payment, which is recognized as lease expense on a straight-line basis over the lease term. In addition, certain of the Company's leases may include an additional lease payment for items such as common area maintenance, real estate taxes, utilities, operating expenses, insurance, personal property expense, or other related charges all of which are recognized as variable lease expense, when incurred, in the consolidated statement of comprehensive income. The variable lease expense incurred by the Company was not based on an index or rate. For lease modifications, the Company evaluates whether the lease modifications may be accounted for as either two leases – the original lease and a separate new lease, or, one modified lease. When a lease modification is accounted for as one modified lease, the Company must reconsider the lease classification and may need to remeasure the lease liability and adjust the related ROU asset. Such assessments may require reconsideration of certain assumptions made at the lease commencement date, such as whether the exercise of a renewal option is reasonably certain, which may result in a change to the original expected lease term. Triggering events that may result in a lease modification may include a modification of a related customer contract that depends on leased assets to service the customer contract over the related term. Lessor Perspective: For lease agreements in which the Company is the lessor, the Company analyzed the lease and non-lease components of its lease agreements and determined that the timing and pattern of transfer for both components are the same. In addition, the leases will continue to qualify as operating leases and the Company will account for and present the lease component under ASC 842 and the non-lease component under ASC 606. Refer to Note 2 for the breakout of revenue under each standard. Refer to Notes 13 and 14 for additional lease disclosures. |
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| Asset Retirement Obligations | Asset Retirement Obligations The Company recognizes asset retirement obligations (“AROs”) related to legal obligations associated with the operation of the Company’s specialty rental assets. The fair values of these AROs are recorded on a discounted basis, at the time the obligation is incurred and accreted over time for the change in present value over the expected timing of settlement. Changes in the expected timing or amount of settlement are recognized in the period of change as an increase or decrease in the carrying amount of the ARO and related asset retirement costs with decreases in excess of the carrying value of the related asset retirement cost being recognized in the consolidated statement of comprehensive income. The Company capitalizes asset retirement costs by increasing the carrying amount of the related long-lived assets and depreciating these costs over the remaining useful life. The carrying amount of AROs included in the consolidated balance sheets were $2.6 million and $2.4 million as of December 31, 2024 and 2023, respectively, which represents the present value of the estimated future cost of these AROs of approximately $2.9 million. Accretion expense of approximately $0.1 million, $0.2 million, and $0.2 million was recognized in specialty rental costs in the accompanying consolidated statements of comprehensive income for the years ended December 31, 2024, 2023 and 2022, respectively. |
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| Foreign Currency Transactions and Translation | Foreign Currency Transactions and Translation The Company’s reporting currency is the US Dollar (USD). Exchange rate adjustments resulting from foreign currency transactions are recognized in profit or loss, whereas effects resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive loss, a component of equity. The assets and liabilities of subsidiaries whose functional currency is different from the USD are translated into USD at exchange rates at the reporting date and revenue and expenses are translated using average exchange rates for the respective period. Foreign exchange gains and losses arising from a receivable or payable to a consolidated Company entity, the settlement of which is neither planned nor anticipated in the foreseeable future, are considered to form part of a net investment in the Company entity and are included within accumulated other comprehensive loss. |
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| Revenue Recognition | Revenue Recognition The Company derives revenue from specialty rental and hospitality services, specifically lodging and related ancillary services. Revenue is recognized in the period in which lodging and services are provided pursuant to the terms of contractual relationships with the customers. Certain arrangements contain a lease of lodging facilities to customers. The leases are accounted for as operating leases under the authoritative guidance for leases (“ASC 842”) and are recognized as income is earned over the term of the lease agreement. Upon lease commencement, the Company evaluates leases to determine if they meet criteria set forth in lease accounting guidance for classification as sales-type or direct financing leases; if a lease meets none of these criteria, the Company classifies the lease as an operating lease. As previously mentioned, the arrangements that contain a lease of the Company’s lodging facilities are accounted for as operating leases, whereby the underlying asset remains on our balance sheet and is depreciated consistently with other owned assets, with income recognized as it is earned over the term of the lease agreement. For contracts that contain both a lease component and a services or non-lease component, the Company has adopted an accounting policy to account for and present the lease component under ASC 842 and the non-lease component under the authoritative guidance for revenue recognition (“ASC 606” or “Topic 606”). Refer to Note 2 for the breakout of revenue under each standard. The Company estimates the transaction price, including variable consideration, at contract inception. Then the consideration in the contract is allocated to each separate lease component and non-lease component of the contract. When assessing the recognition of services and specialty rental revenue, judgement is required in contemplating the determination of the transaction price. When allocating the contract consideration to the lease component under ASC 842 and the services or non-lease component under ASC 606, the Company uses judgement in contemplating how to initially measure one or more parts of the contract, to apply the separation and measurement guidance. Factors the Company considers in making this allocation include relative standalone price of lease and services or non-lease components. The Company recognizes minimum rents on operating leases over the term of the customer operating lease. A lease term commences when: (1) the customer has control of the leased space (legal right to use the property); and (2) the Company has delivered the premises to the customer as required under the terms of the lease. The term of a lease includes the noncancellable periods of the lease along with periods covered by: (1) a customer option to extend the lease if the customer is reasonably certain to exercise that option; (2) a customer option to terminate the lease if the customer is reasonably certain not to exercise that option; and (3) an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the Company as the lessor. When assessing the expected lease end date, judgment is required in contemplating the significance of: any penalties a customer may incur should it choose not to exercise any existing options to extend the lease or exercise any existing options to terminate the lease; and economic incentives for the customer in the lease. Furthermore, when assessing the expected end date of a contract under ASC 606 with an extension option, judgment is required to determine whether the option contains a material right. Because performance obligations related to specialty rental and hospitality services are satisfied over time, the majority of our revenue is recognized evenly over the contractual term of the arrangement, based on a contractual fixed minimum amount and defined period of performance. Some of our revenue is recognized on a daily basis, for each night a customer stays, at a contractual day rate. Our customers typically contract for accommodation services under committed contracts with terms that most often range from several months to multiple years. Our payment terms vary by type and location of our customer and the service offered. The time between invoicing and when payment is due is not significant. When lodging and services are billed and collected in advance, recognition of revenue is deferred until services are rendered. Cost of services includes labor, food, utilities, supplies, leasing and other direct costs associated with operating the lodging units as well as repair and maintenance expenses. Cost of rental includes leasing costs, utilities, and other direct costs of maintaining the lodging units. Costs associated with contracts include sales commissions which are expensed as incurred and reflected in selling, general and administrative expenses in the consolidated statements of comprehensive income. Additionally, the Company collects sales, use, occupancy and similar taxes, which the Company presents on a net basis (excluded from revenues) in the consolidated statements of comprehensive income. |
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| Fair Value Measurements | Fair Value Measurements A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The inputs are prioritized into three levels that may be used to measure fair value: Level 1: Inputs that reflect quoted prices for identical assets or liabilities in active markets that are observable. Level 2: Inputs that reflect quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3: Inputs that are unobservable to the extent that observable inputs are not available for the asset or liability at the measurement date. |
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| Income Taxes | Income Taxes The Company’s operations are subject to U.S. federal, state and local, and foreign income taxes. The Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company records net deferred tax assets to the extent that it is more likely than not that these assets will be realized. In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent results of operations. Valuation allowances are recorded to reduce the deferred tax assets to an amount that will more likely than not be realized. When a valuation allowance is established or there is an increase in an allowance in a reporting period, tax expense is generally recorded in the Company’s consolidated statements of comprehensive income. In accordance with applicable authoritative guidance, the Company accounts for uncertain income tax positions using a benefit recognition model with a two-step approach; a more-likely-than-not recognition criterion; and a measurement approach that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. If it is not more-likely-than-not that the benefit of the tax position will be sustained on its technical merits, no benefit is recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company classifies interest and penalties related to uncertain tax positions within income tax expense. |
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| Warrant Liabilities | Warrant Liabilities We evaluated the warrants issued by Platinum Eagle, our legal predecessor, to purchase its common stock in a private placement concurrently with its initial public offering (the “Private Warrants”) under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and concluded that they do not meet the criteria to be classified in stockholders’ equity. Specifically, the provisions in the Private Warrant agreement provide for potential changes to the settlement amounts dependent upon the characteristics of the warrant holder and because the holder of a warrant is not an input into the pricing of a fixed-for-fixed option on equity shares, such a provision would preclude the warrant from being classified in equity. Since the Private Warrants meet the definition of a derivative under ASC 815, we recorded these Private Warrants as liabilities on the balance sheet at fair value, with subsequent changes in their respective fair values recognized in the consolidated statements of comprehensive income at each reporting date. The fair value adjustments were determined by using a Black-Scholes option-pricing model based on inputs less observable in the marketplace as described in Note 11. The Private Warrants are deemed equity instruments for income tax purposes, and accordingly, there is no tax accounting related to changes in the fair value of the Private Warrants recognized. The Private Warrants expired unexercised on March 15, 2024 and are no longer outstanding. |
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| Stock-Based Compensation | Stock-Based Compensation The Company sponsors an equity incentive plan, the Target Hospitality Corp. 2019 Incentive Award Plan, as amended (the “Plan”), in which certain employees and non-employee directors participate. The Plan is administered by the compensation committee of the board of directors of the Company (the “Compensation Committee”). The Company measures the cost of services received in exchange for an award of equity instruments (typically restricted stock unit awards (“RSUs”), performance stock unit awards (“PSUs”) and stock options) based on the grant-date fair value of the awards issued under the Plan that are equity classified. The fair value of the stock options is calculated using the Black-Scholes option-pricing model and the fair value of the PSUs that are based on market conditions (“Market-Based PSUs”) are calculated using a Monte Carlo simulation while the fair value of the RSUs and performance-based PSUs not based on market conditions (“Performance-Based PSUs”) are calculated based on the Company’s share price on the grant-date and the assessment of the probability of achieving defined performance measures for Performance-Based PSUs. The resulting compensation expense is recognized over the period during which an employee or non-employee director is required to provide service in exchange for the awards, usually the vesting period. Similarly, for time-based awards subject to graded vesting, compensation expense is recognized on a straight-line basis over the service period. For Market-Based PSUs, the probability of satisfying a market condition is considered in the estimation of the grant-date fair value for Market-Based PSUs and the compensation cost is not reversed if the market condition is not achieved, provided the requisite service has been provided. Forfeitures are accounted for as they occur. The Plan also includes Stock Appreciation Rights awards (“SARs”) issued to certain of the Company’s executive officers and other employees. Each SAR represents a contingent right to receive, upon vesting, payment in cash or the Company’s Common Stock, as determined by the compensation committee, in an amount equal to the difference between (a) the fair market value of a Common Share on the date of exercise, over (b) the grant date price. Under the authoritative guidance for stock-based compensation, these SARs are considered liability-based awards that are included in accrued liabilities and other non-current liabilities in the consolidated balance sheets at fair value and are remeasured at fair value each reporting period until the date of settlement using the Black-Scholes option pricing model. Changes in the estimated fair value of the SARs along with the resulting cost is recognized as increases or decreases in stock-based compensation expense in the accompanying consolidated statements of comprehensive income each reporting period over the period during which an employee is required to provide service in exchange for the SARs, usually the vesting period. Forfeitures are accounted for as they occur. As of December 31, 2024, there were no SAR awards outstanding as all were either exercised and paid in cash or forfeited as of December 31, 2024. Refer to Note 17 for further details of activity related to the Plan. |
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| Treasury Stock | Treasury Stock Treasury stock is reflected as a reduction of stockholders’ equity at cost. In August 2022, the Inflation Reduction Act of 2022 was enacted into law and imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. The Company reflects the applicable excise tax in equity as part of the cost basis of the stock repurchased classified as treasury stock and a corresponding liability for the excise taxes payable in accrued expenses in the accompanying consolidated balance sheets until paid. We use the weighted average purchase price to determine the cost of treasury stock that is reissued, if any. |
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| Recently Adopted and Issued Accounting Standards | Recently Adopted Accounting Standards In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in the ASU require, among other things, disclosure of significant segment expenses that are regularly provided to an entity's chief operating decision maker (“CODM”) and a description of other segment items (the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss) by reportable segment, as well as disclosure of the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Annual disclosures are required for fiscal years beginning after December 15, 2023 and interim disclosures are required for periods within fiscal years beginning after December 15, 2024. Retrospective application is required, and early adoption is permitted. These requirements did not have an impact on amounts recognized in our financial statements, but resulted in expanded reportable segment disclosures as shown in Note 19 of these financial statements. The Company adopted ASU 2023-07, on the effective date of January1, 2024. Results for reporting periods prior to 2024 are presented in accordance with ASU 2023-07. Refer to Note 19 for these expanded disclosures. Recently Issued Accounting Standards Improvements to Income Tax Disclosures. In December 2023, the FASB issued ASU 2023-09, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, may be applied prospectively or retrospectively, and allows for early adoption. These requirements are not expected to have an impact on the recorded amounts in our financial statements, but will impact our income tax disclosures. The Company does not intend to early adopt ASU 2023-09. Improvements to Expense Disaggregation Disclosures. In November 2024, the FASB issued ASU 2024-03, which requires additional information about specific expense categories in the notes to financial statements for both interim and annual reporting periods. The update requires disaggregated information about certain prescribed expense categories underlying any relevant income statement expense caption. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The ASU 2024-03 may be applied prospectively or retrospectively, and allows for early adoption. The Company is currently evaluating the impacts of this update and does not intend to early adopt ASU 2024-03. |
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| Recent Developments | Recent Developments On March 25, 2024, the Company announced that the Board of Directors of the Company (“the Board”) received an unsolicited non-binding proposal from Arrow Holdings S.à r.l. (“Arrow”), an affiliate of TDR, to acquire all of the outstanding shares of Common Stock of the Company that are not owned by any of Arrow, any investment fund managed by TDR or any of their respective affiliates (the “Unaffiliated Shares”), for cash consideration of $10.80 per share (the “Proposal”). The Board established a special committee of independent directors (the “Special Committee”), and the Special Committee retained Centerview Partners LLC and Ardea Partners LP as its financial advisors and Cravath, Swaine & Moore LLP as its legal advisor. The Special Committee was established to consider and evaluate the Proposal, and explore and consider strategic alternatives thereto. In connection with its review of the Proposal, the Special Committee launched a formal process to solicit offers for the Company and invited Arrow to participate in such a process. Following the previously announced loss of a contract, no formal offers were received, and Arrow did not reaffirm the Proposal or advance any alternative proposal that the Special Committee could conclude, in consultation with its independent financial and legal advisors, would be more attractive to the holders of the Unaffiliated Shares than the Company’s standalone prospects. Accordingly, the Board determined to disband the Special Committee, as previously announced on September 25, 2024. As discussed in Note 20, the New PCC Contract discussed in Note 2, which related to the Company’s Government segment (See Note 19), was terminated effective February 21, 2025. |
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Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies (Tables) |
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Activity in the allowance for doubtful accounts |
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| Summary of estimated useful lives |
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Revenue (Tables) |
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of disaggregation of revenue by reportable segments as well as the all other category |
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| Summary of contract liabilities |
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| Summary of revenue expected to be recognized from contracts where the price and quantity of the product or service are fixed | As of December 31, 2024, the following table discloses the estimated revenues under ASC 606 related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue, and only represents revenue expected to be recognized from contracts where the price and quantity of the product or service are fixed (in thousands):
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Specialty Rental Assets, Net (Tables) |
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Specialty Rental Assets, Net | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of specialty rental assets |
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Other Property, Plant and Equipment, Net (Tables) |
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Property, Plant and Equipment, Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of other property, plant and equipment, net |
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Goodwill and Other Intangible Assets, net (Tables) |
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Other Intangible Assets, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of changes in carrying amount of goodwill |
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| Schedule of intangible assets other than goodwill |
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| Schedule of estimated aggregate amortization expense | The estimated aggregate amortization expense as of December 31, 2024 for each of the next five years and thereafter is as follows:
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Other Non-Current Assets (Tables) |
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||
| Other Non-Current Assets | |||||||||||||||||||||||||||||||||||||||||||
| Schedule of other non-current assets |
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Accrued Liabilities (Tables) |
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accrued liabilities |
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Debt (Tables) |
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of carrying value of debt outstanding |
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| Components of interest expense |
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| Schedule of maturities of long term debt and finance lease obligations |
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| Senior Secured Notes 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of carrying value of debt outstanding |
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| Schedule of debt redemption |
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Warrant Liabilities (Tables) |
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||
| Warrant Liabilities | ||||||||||||||||||||||||||||||||||||
| Schedule of warrant liabilities |
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Income Taxes (Tables) |
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of components of the provision for income taxes |
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| Schedule of Income tax results differed from the amount computed by applying the U.S. statutory income tax rate to income before income taxes |
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| Schedule of components of the Companies deferred tax assets and liabilities |
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| Schedule of valuation allowance |
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Fair Value of Financial Instruments (Tables) |
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Financial Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of carrying amounts and fair values of financial assets and liabilities |
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| Schedule of inputs used to calculate the fair value of the warrant liabilities |
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| Schedule of changes in Level 3 liabilities measured at fair value | The following table presents changes in Level 3 liabilities measured at fair value for the year ended December 31, 2023:
The following table presents changes in Level 3 liabilities measured at fair value for the year ended December 31, 2024:
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Leases (Tables) |
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of leases balance sheet details |
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| Schedule of lease components |
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| Schedule of Future maturities of operating lease obligations |
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| Schedule of Future maturities of finance lease obligations |
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Rental Income (Tables) |
12 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 | |||||||||||||||||||||
| Rental Income | |||||||||||||||||||||
| Scheduled future minimum lease payments to be received by the Companies |
|
Earnings per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings per Share | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of reconciliation of net loss and weighted-average shares of common stock outstanding | The following table reconciles net income attributable to common stockholders and the weighted average shares outstanding for the basic calculation to the net income attributable to common stockholders and the weighted average shares outstanding for the diluted calculation for the periods indicated below ($ in thousands, except per share amounts):
|
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Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of changes in restricted stock units |
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| Schedule of changes in performance stock units |
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| Schedule of changes in stock options |
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| Schedule of assumptions using Black-scholes option-pricing model |
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| Schedule of stock appreciation right awards |
|
Business Segments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Segments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of segment reporting information |
(a)Revenues from operating segments below the quantitative thresholds are reported in the “All Other” category previously described. (b)The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. There are no intersegment expenses. Note that community operating costs consist primarily of catering food purchases, lodge supplies, apparel and uniform expenses, linen expenses, operating lease expense for land, facilities, and equipment to service certain communities, property taxes, and utility costs. Other costs includes transportation and travel expenses, including the cost of relocating community assets.
|
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| Schedule of reconciliation of total segment adjusted gross profit |
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| Schedule of reconciliation of total segment assets to total consolidated assets |
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| Schedule of unallocated assets consist of the following as reported in the consolidated balance sheets |
|
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Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies (Details) - $ / shares |
1 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
Aug. 31, 2022 |
Dec. 31, 2024 |
Mar. 15, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 16, 2022 |
Dec. 31, 2021 |
Jan. 17, 2018 |
|
| Investment fund, cash consideration price per share | $ 10.8 | |||||||
| Warrants to issue shares of common stock | 0 | 6,510,953 | 6,528,322 | 8,097,893 | ||||
| Nondeductible excise tax | 1.00% | |||||||
| Stock Appreciation Rights (SARs) | ||||||||
| Outstanding Options | 0 | 714,539 | 1,537,776 | 1,578,537 | ||||
| Warrant liabilities | ||||||||
| Warrants to issue shares of common stock | 0 | 0 | 1,533,334 | 5,333,334 | ||||
| TDR Capital | Target Hospitality | ||||||||
| Ownership interest in an affiliate | 65.00% |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies - Receivables and Allowances for Doubtful Accounts (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Receivables and Allowances for Doubtful Accounts | |||
| Balances at Beginning of Year | $ 550 | $ 4 | $ 43 |
| Provision for credit losses | 336 | 599 | 1,052 |
| Recoveries | (79) | (55) | (645) |
| Write-offs | (273) | (266) | (446) |
| Balances at End of Year | 534 | 550 | $ 4 |
| Accounting Standards Update 2016-13 | |||
| Receivables and Allowances for Doubtful Accounts | |||
| Balances at Beginning of Year | $ 268 | ||
| Balances at End of Year | $ 268 | ||
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies - Prepaid Expenses and Other Assets (Details) - USD ($) $ in Millions |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Prepaid Expenses and Other Assets | ||
| Prepaid expenses | $ 5.4 | $ 5.5 |
| Other assets | 4.0 | 4.0 |
| Deposits | 1.9 | 1.9 |
| Hospitality inventory | $ 1.9 | $ 2.1 |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies - Specialty Rental Assets (Details) |
Dec. 31, 2024 |
|---|---|
| Modular Units | |
| Property Plant and Equipment Useful Life | 15 years |
| Site Work | |
| Property Plant and Equipment Useful Life | 5 years |
| Furniture and Fixtures | |
| Property Plant and Equipment Useful Life | 7 years |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies - Other Property, Plant, and Equipment (Details) |
Dec. 31, 2024 |
|---|---|
| Furniture and fixtures | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful lives | 7 years |
| Software | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful lives | 3 years |
| Minimum | Building | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful lives | 5 years |
| Minimum | Machinery and office equipment | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful lives | 3 years |
| Maximum | Building | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful lives | 15 years |
| Maximum | Machinery and office equipment | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful lives | 5 years |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies - Intangible Assets Other Than Goodwill (Details) $ in Thousands |
12 Months Ended |
|---|---|
|
Dec. 31, 2024
USD ($)
| |
| Asset Impairment Charges | $ 0 |
| Minimum | Customer Relationships | |
| Useful life of intangible asset | 5 years |
| Maximum | Customer Relationships | |
| Useful life of intangible asset | 9 years |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies - Assets Held for Sale (Details) $ in Millions |
Dec. 31, 2024
USD ($)
|
|---|---|
| Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | |
| Assets held for sale | $ 0 |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies - Finance and Operating Leases (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | ||
| Impairment loss of operating | $ 0.0 | $ 0.0 |
| Impairment loss of Finance | $ 0.0 | $ 0.0 |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies - Asset Retirement Obligations (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Asset Retirement Obligations | |||
| Asset retirement obligations | $ 2,563 | $ 2,424 | |
| Estimated asset retirement obligations | 2,900 | ||
| Accretion of asset retirement obligation | (139) | (177) | $ (168) |
| Accretion expense | $ 100 | $ 200 | $ 200 |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies - Impact of the Adoption of ASC 326 (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies | ||
| Accounts receivable, less allowance for credit losses of $534 and $550, respectively | $ 49,342 | $ 67,092 |
| Accumulated earnings | $ 332,380 | $ 261,115 |
Revenue - Disaggregation Revenue (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Disaggregation of Revenue [Line Items] | |||
| Total revenue | $ 265,912 | $ 365,627 | $ 333,702 |
| HFS - South | |||
| Disaggregation of Revenue [Line Items] | |||
| Total revenue | 143,846 | 142,666 | 126,135 |
| Government. | |||
| Disaggregation of Revenue [Line Items] | |||
| Total revenue | 110,375 | 211,753 | 198,249 |
| Operating Segments | All Other | |||
| Disaggregation of Revenue [Line Items] | |||
| Total revenue | 11,691 | 11,208 | 9,318 |
| Services | |||
| Disaggregation of Revenue [Line Items] | |||
| Total revenue | 265,912 | 365,627 | 333,702 |
| Fixed Minimum Lease Revenue [Member] | Operating Segments | Government. | |||
| Disaggregation of Revenue [Line Items] | |||
| Total revenue | $ 38,300 | $ 55,900 | $ 55,900 |
Revenue - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Change in Contract with Customer, Liability [Abstract] | |||
| Balances at Beginning of the Period | $ 5,469 | $ 125,519 | $ 34,411 |
| Additions to deferred revenue | 699 | 172,760 | |
| Revenue recognized | 4,933 | 120,050 | 81,652 |
| Balances at End of the Period | $ 1,235 | $ 5,469 | $ 125,519 |
Goodwill and Other Intangible Assets, net - Goodwill (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Goodwill and Other Intangible Assets, net | ||
| Goodwill, Beginning Balance | $ 41,038 | $ 41,038 |
| Goodwill, Ending Balance | $ 41,038 | $ 41,038 |
Goodwill and Other Intangible Assets, net - Future Amortization Expense (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Estimated aggregate amortization expense: | ||
| 2025 | $ 13,475 | |
| 2026 | 12,879 | |
| 2027 | 8,270 | |
| 2028 | 778 | |
| 2029 | 525 | |
| Thereafter | 480 | |
| Total | $ 36,407 | $ 49,882 |
Other Non-Current Assets - Other non-current assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Other Non-Current Assets | ||
| Cloud computing implementation costs | $ 7,436 | $ 7,428 |
| Less: accumulated amortization | $ (7,436) | (6,767) |
| Other non-current assets | $ 661 |
Other Non-Current Assets - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Amortization of intangible assets | $ 13,475 | $ 13,447 | $ 13,302 |
| Computer Software, Intangible Asset | |||
| Amortization of intangible assets | $ 700 | $ 1,400 | $ 1,500 |
| Computer Software, Intangible Asset | Maximum | |||
| Useful life of intangible asset | 4 years | ||
| Computer Software, Intangible Asset | Minimum | |||
| Useful life of intangible asset | 2 years | ||
Accrued Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Accrued Liabilities | ||
| Employee accrued compensation expense | $ 7,732 | $ 9,583 |
| Other accrued liabilities | 12,139 | 20,656 |
| Accrued interest on debt | 5,911 | 3,413 |
| Total accrued liabilities | 25,782 | $ 33,652 |
| Share based arrangement Liability | $ 0 |
Debt - Senior Secured Notes 2024 (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||||
|---|---|---|---|---|---|---|---|
Nov. 01, 2023 |
Mar. 15, 2023 |
Mar. 15, 2019 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Nov. 21, 2023 |
|
| 2024 Senior Secured Notes | |||||||
| Debt | |||||||
| Principal amount of debt | $ 340,000 | ||||||
| Interest rate (as a percent) | 10.75% | 9.50% | |||||
| Repayments of secured debt | $ 5,500 | ||||||
| Extinguishment of debt | $ 125,000 | ||||||
| Amount of debt exchanged | $ 181,400 | ||||||
| Long-Term Debt | $ 0 | $ 0 | $ 28,100 | ||||
| 2025 Senior Secured Notes | |||||||
| Debt | |||||||
| Principal amount of debt | 181,400 | $ 181,446 | $ 181,446 | ||||
| Interest rate (as a percent) | 10.75% | 10.75% | |||||
| Amount of debt exchanged | $ 181,400 | ||||||
Debt - Notes Exchange Offer (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||
|---|---|---|---|---|---|---|
Nov. 01, 2023 |
Sep. 29, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Nov. 21, 2023 |
|
| Debt | ||||||
| Cash paid for interest, net of amounts capitalized | $ 17,975 | $ 29,273 | $ 32,653 | |||
| Secured Debt [Member] | ||||||
| Debt | ||||||
| Paid accrued interest | $ 2,200 | |||||
| Cash paid to holders in exchange of debt | $ 2,700 | |||||
| Long-Term Debt | 0 | $ 28,100 | ||||
| Interest paid | 500 | |||||
| Secured Debt [Member] | Selling, general, and administrative expenses | ||||||
| Debt | ||||||
| Debt for accounting third party transaction cost | $ 3,100 | |||||
| Senior Secured Notes 2025 | ||||||
| Debt | ||||||
| Interest rate (as a percent) | 10.75% | 10.75% | ||||
| Amount of debt exchanged | 181,400 | |||||
| Principal amount of debt | $ 181,400 | $ 181,446 | $ 181,446 | |||
Debt - Finance Lease and Other Financing Obligations (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Lessee, Lease, Description [Line Items] | ||
| Finance lease and other financing obligations, current and long-term | $ 3,311 | $ 2,393 |
| Weighted average discount rate | 11.82% | 10.31% |
| Vehicles [Member] | Minimum | ||
| Lessee, Lease, Description [Line Items] | ||
| Capital lease term | 36 months | |
| Vehicles [Member] | Maximum | ||
| Lessee, Lease, Description [Line Items] | ||
| Capital lease term | 48 months |
Debt - Carrying Value of Debt Outstanding (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Carrying value of debt outstanding | ||
| Finance lease and other financing obligations (Note 13) | $ 3,311 | $ 2,393 |
| Less: unamortized original issue discount | (873) | (2,619) |
| Less: unamortized term loan deferred financing costs | (245) | (734) |
| Total debt, net | 183,639 | 180,486 |
| Less: current maturities, net | (182,188) | (1,369) |
| Total long-term debt | 1,451 | 179,117 |
| Senior Secured Notes 2025 | ||
| Carrying value of debt outstanding | ||
| Less: unamortized original issue discount | (873) | |
| Less: unamortized term loan deferred financing costs | $ (245) | $ (800) |
| Interest rate (as a percent) | 10.75% | 10.75% |
Debt - Components of interest expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Debt Instrument [Line Items] | |||
| Interest incurred on finance lease and other financing obligations | $ 301 | $ 212 | $ 72 |
| Amortization of deferred financing costs on ABL Facility and Notes | 1,098 | 2,881 | 4,689 |
| Amortization of original issue discount on Notes | 1,745 | 750 | 711 |
| Interest capitalized | (983) | ||
| Interest income | (6,698) | (4,139) | (1,546) |
| Interest expense, net | 16,619 | 22,639 | 36,323 |
| ABL Facilities And Notes | |||
| Debt Instrument [Line Items] | |||
| Interest expense incurred on ABL Facility and Notes | 20,173 | 22,935 | 33,464 |
| Amortization of deferred financing costs on ABL Facility and Notes | $ 1,098 | $ 2,881 | $ 4,605 |
Debt - Deferred Financing Costs and Original Issue Discount (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
|---|---|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Oct. 12, 2023 |
Feb. 01, 2023 |
|
| Debt | |||||
| Loss on extinguishment of debt | $ 0 | $ (2,279) | $ 0 | ||
| Debt issuance costs | 245 | 734 | |||
| Algeco ABL facility | |||||
| Debt | |||||
| Debt issuance costs | 400 | ||||
| 2024 Senior Secured Notes | |||||
| Debt | |||||
| Loss on extinguishment of debt | 200 | ||||
| 2025 Senior Secured Notes | |||||
| Debt | |||||
| Debt issuance costs | 245 | 800 | |||
| Senior Secured Notes 2024 | |||||
| Debt | |||||
| Unamortized debt discount | 1,000 | ||||
| Accumulated amortization of deferred financing costs | 14,000 | 13,500 | |||
| Accumulated amortization of debt issuance costs | 4,800 | 3,100 | |||
| Loss on extinguishment of debt | 1,700 | ||||
| ABL Facility | |||||
| Debt | |||||
| Loss on extinguishment of debt | 400 | ||||
| Debt issuance costs | $ 1,000 | $ 1,400 | |||
| ABL Facility | Algeco ABL facility | |||||
| Debt | |||||
| Accumulated amortization related to revolver deferred financing costs | $ 5,900 | $ 5,300 | |||
Debt - Schedule of maturities of long term debt and finance lease obligations (Details) $ in Thousands |
Dec. 31, 2024
USD ($)
|
|---|---|
| Debt | |
| 2025 | $ 183,306 |
| 2026 | 1,003 |
| 2027 | 446 |
| 2028 | 2 |
| Total | $ 184,757 |
Warrant Liabilities - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||||||
|---|---|---|---|---|---|---|---|
Jan. 17, 2018 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Mar. 15, 2024 |
Dec. 16, 2022 |
Nov. 18, 2022 |
|
| Warrants to issue shares of common stock | 0 | 6,510,953 | 6,528,322 | 8,097,893 | |||
| Number of stock issued for each warrant | 0.37 | ||||||
| Loss (gain) on estimated change in fair value of warrants | $ (675) | $ (9,062) | $ 31,735 | ||||
| Warrant liabilities | |||||||
| Warrants to issue shares of common stock | 5,333,334 | 0 | 1,533,334 | 0 | |||
| Aggregate purchase price per warrant | $ 1.5 | ||||||
| Aggregate purchase price | $ 8,000 | ||||||
| Number of stock issued for each warrant | 1 | ||||||
| Share price | $ 11.5 | ||||||
| Warrant exercisable term | 30 days | ||||||
| Loss (gain) on estimated change in fair value of warrants | $ (700) | $ (9,100) | $ 31,700 | ||||
Warrant Liabilities - Estimated fair value Private Warrants (Details) $ in Thousands |
Dec. 31, 2023
USD ($)
|
|---|---|
| Warrant liabilities | $ 675 |
| Private Warrants | |
| Warrant liabilities | $ 675 |
Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Income Taxes | |||
| Income tax expense | $ 21,430 | $ 51,050 | $ 32,370 |
| Effective tax rate | 23.10% | 22.70% | 30.40% |
| Unrecognized tax benefits | $ 0 | $ 0 | |
| Interest or penalty related to uncertain taxes, recognized | $ 0 | $ 0 | |
| Minimum | |||
| Income Taxes | |||
| Term of income tax examination | 2 years | ||
| Maximum | |||
| Income Taxes | |||
| Term of income tax examination | 5 years | ||
Income Taxes - Components of the provision for income taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Domestic | |||
| Current | $ 25,291 | $ 13,147 | $ 2,488 |
| Deferred | (3,861) | 37,903 | 29,882 |
| Total income tax expense | $ 21,430 | $ 51,050 | $ 32,370 |
Income Taxes - Income tax results differed from the amount computed by applying the U.S. statutory income tax rate to income before income taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Income tax results differed from the amount computed by applying the U.S. statutory income tax rate to income before income taxes | |||
| Statutory income tax expense | $ 19,496 | $ 47,198 | $ 22,325 |
| State tax expense | 1,324 | 3,956 | 2,797 |
| Effect of tax rates in foreign jurisdictions | (29) | (46) | (28) |
| Change in fair value of warrant liabilities | (142) | (1,903) | 6,664 |
| Valuation allowances | 307 | 510 | 310 |
| Compensation | 708 | 306 | 383 |
| Other | (234) | 1,029 | (81) |
| Total income tax expense | $ 21,430 | $ 51,050 | $ 32,370 |
Income Taxes - Components of the Companies deferred tax assets and liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Deferred tax assets (liabilities) | ||
| Stock-based compensation | $ 2,240 | $ 3,191 |
| Deferred revenue | 115 | 1,216 |
| Intangible assets | 8,530 | 8,859 |
| Tax loss carryforwards | 3,525 | 2,588 |
| Operating lease obligations | 5,587 | 4,437 |
| Other - net | 225 | 727 |
| Deferred tax assets gross | 20,222 | 21,018 |
| Valuation allowance | (5,239) | (5,023) |
| Net deferred income tax asset | 14,983 | 15,995 |
| Deferred tax liabilities | ||
| Rental equipment and other plant, property and equipment | (57,910) | (63,536) |
| Operating lease right-of-use assets | (5,357) | (4,297) |
| Software | (95) | |
| Prepaid expenses | (987) | (1,141) |
| Deferred tax liability | (64,254) | (69,069) |
| Net deferred income tax liability | $ (49,271) | $ (53,074) |
Income Taxes - Valuation allowance has been established against the deferred tax assets (Details) $ in Thousands |
12 Months Ended |
|---|---|
|
Dec. 31, 2024
USD ($)
| |
| Deferred Tax Assets, Operating Loss Carryforwards, Alternative [Abstract] | |
| Tax loss carryovers | $ 11,704 |
| Tax loss carryovers subject to expiry | 11,700 |
| Canada | |
| Deferred Tax Assets, Operating Loss Carryforwards, Alternative [Abstract] | |
| Tax loss carryovers | $ 11,044 |
| Percentage of valuation allowance | 100.00% |
| Mexico | |
| Deferred Tax Assets, Operating Loss Carryforwards, Alternative [Abstract] | |
| Tax loss carryovers | $ 660 |
| Percentage of valuation allowance | 100.00% |
Leases - Components of lease expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Lease, Cost [Abstract] | |||
| Amortization of right-of-use asset | $ 1,716 | $ 1,454 | |
| Interest on lease obligations | 301 | 212 | $ 72 |
| Total finance lease cost | 2,017 | 1,666 | |
| Operating lease cost | 11,465 | 18,921 | |
| Short-term lease cost | 5 | 222 | |
| Variable lease cost | 1,235 | 2,493 | |
| Variable lease cost related to base rent | 100 | 100 | |
| Minimum lease payment included in variable lease cost | $ 25,000 | $ 25,000 | |
| Weighted average lease term of long term leases | 1 year 6 months | 1 year 4 months 24 days | |
Leases - Supplemental cash flow information related to leases (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Leases | ||
| Operating cash flows from finance leases | $ 301 | $ 212 |
| Operating cash flows from operating leases | 10,958 | 14,602 |
| Financing cash flows from finance leases | 1,695 | 1,404 |
| Finance and operating lease obligation interest | $ 1,400 | $ 1,100 |
Leases - Future maturities of finance and operating lease obligations (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Finance Lease | ||
| 2025 | $ 1,961 | |
| 2026 | 1,201 | |
| 2027 | 563 | |
| 2028 | 3 | |
| Total lease payments | 3,728 | |
| Less: interest | (417) | |
| Finance Lease, Liability | 3,311 | $ 2,393 |
| Operating Leases | ||
| 2025 | 8,927 | |
| 2026 | 9,325 | |
| 2027 | 6,181 | |
| 2028 | 5,467 | |
| 2029 | 1,048 | |
| Total | 30,948 | |
| Less: interest | (4,941) | |
| Total lease obligations | $ 26,007 | $ 20,340 |
Rental Income (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Operating lease, lease rental income | $ 120,400 | $ 198,000 | $ 168,300 |
| Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration] | Revenue Not from Contract with Customer | Revenue Not from Contract with Customer | Revenue Not from Contract with Customer |
| Depreciation | $ 59,331 | $ 70,530 | $ 54,363 |
| Specialty rental assets | |||
| Property, Plant, and Equipment, Lessor Asset under Operating Lease, before Accumulated Depreciation | 126,300 | 209,200 | |
| Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 61,800 | 113,900 | |
| Property, Plant and Equipment, Net | 64,500 | 95,300 | |
| Depreciation | $ 14,500 | $ 23,100 | $ 14,000 |
Rental Income - Future minimum lease payments, operating leases (Details) $ in Thousands |
Dec. 31, 2024
USD ($)
|
|---|---|
| Future minimum lease payments, operating leases | |
| 2025 | $ 78,013 |
| 2026 | 4,539 |
| 2027 | 2,636 |
| Total | $ 85,188 |
Stock-Based Compensation - Assumptions (Details) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Assumptions: | |||
| Weighted average expected stock volatility | 43.50% | ||
| Employee Stock Option | |||
| Assumptions: | |||
| Expected dividend yield | 0.00% | ||
| Expected term (years) | 6 years 3 months | ||
| Risk-free interest rate - minimum | 0.82% | ||
| Risk-free interest rate - maximum | 2.26% | ||
| Exercised (in shares) | 348,389 | 750,381 | 111,980 |
| Stock Appreciation Rights (SARs) | |||
| Assumptions: | |||
| Expected dividend yield | 0.00% | ||
| Expected term (years) | 6 years 3 months | ||
| Risk-free interest rate (range) | 1.07% | ||
| Exercise price (range) | $ 0.78 | ||
| Exercised awards settled in Cash | $ 6.2 | $ 10.0 | |
| Exercised (in shares) | 714,539 | 768,889 | |
| Minimum | Employee Stock Option | |||
| Assumptions: | |||
| Weighted average expected stock volatility | 25.94% | ||
| Exercise price (range) | $ 4.51 | ||
| Maximum | Employee Stock Option | |||
| Assumptions: | |||
| Weighted average expected stock volatility | 30.90% | ||
| Exercise price (range) | $ 10.83 | ||
Retirement Plans (Details) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Retirement Plans | |||
| Minimum percentage of annual eligible compensation by the participants | 1.00% | ||
| Maximum percentage of annual eligible compensation by the participants | 90.00% | ||
| Percentage of contribution matched | 5.00% | ||
| Employer match of employee contributions of first 3% of contributions | 100.00% | ||
| Percentage of contribution, matched 100% by employer | 3.00% | ||
| Employer match of employee contributions of next 3% of contributions | 50.00% | ||
| Percentage of contribution, matched 50% by employer | 2.00% | ||
| Contribution expenses | $ 1.0 | $ 1.1 | $ 0.9 |
Business Segments - Reconciliation of total segment adjusted gross profit to total combined income (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Business Segments | |||
| Total reportable segment adjusted gross profit | $ 236,090 | $ 383,924 | $ 301,156 |
| Other adjusted gross profit | (747) | (1,974) | (1,195) |
| Depreciation and amortization | (72,806) | (83,977) | (67,665) |
| Selling, general and administrative expenses | (54,258) | (56,126) | (57,893) |
| Other income (expense), net | 502 | (1,241) | (36) |
| Loss on extinguishment of debt | 0 | (2,279) | 0 |
| Interest expense, net | (16,619) | (22,639) | (36,323) |
| Change in fair value of warrant liabilities | 675 | 9,062 | (31,735) |
| Income before income tax | $ 92,837 | $ 224,750 | $ 106,309 |
Business Segments - Reconciliation of total segment assets to total combined assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Business Segments | ||
| Total assets | $ 725,774 | $ 694,353 |
| Other unallocated amounts | ||
| Business Segments | ||
| Total assets | 328,949 | 269,620 |
| Other unallocated amounts | Reportable Segments, Excluding Other | ||
| Business Segments | ||
| Total assets | 367,658 | 391,862 |
| Other unallocated amounts | All Other | ||
| Business Segments | ||
| Other Assets | 29,167 | 32,871 |
| Other Unallocated Assets | $ 328,949 | $ 269,620 |
Business Segments - Unallocated assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Total current assets | $ 249,336 | $ 180,500 |
| Other intangible assets, net | 52,807 | 66,282 |
| Operating lease right-of-use assets, net | 24,935 | 19,698 |
| Deferred financing costs revolver, net | 1,871 | 2,479 |
| Other non-current assets | 661 | |
| Total assets | 725,774 | 694,353 |
| Other unallocated amounts | ||
| Total current assets | 249,336 | 180,500 |
| Other intangible assets, net | 52,807 | 66,282 |
| Operating lease right-of-use assets, net | 24,935 | 19,698 |
| Deferred financing costs revolver, net | 1,871 | 2,479 |
| Other non-current assets | 0 | 661 |
| Total assets | $ 328,949 | $ 269,620 |