Business Segments

3 Months Ended

Mar. 31, 2023

17. Business Segments

The Company has six operating segments, none of which qualify for aggregation. Four of the segments were disclosed as reportable segments in 2022, based on the 10% tests. The aggregate external revenues of these reportable segments exceeded 75% of the Company’s consolidated revenues. The remaining operating segments were combined in the “All Other” category. In 2023, two of the four operating segments (“TCPL Keystone” and “HFS – Midwest”) that were disclosed as reportable segments in 2022 became quantitatively immaterial as they did not exceed the threshold for any of the 10% tests and are now combined in the “All Other” category in 2023. As such, in 2023 and for all comparison periods, the Company has two reportable segments and the aggregate external revenues of these two reportable segments exceed 75% of the Company’s consolidated revenues in all periods presented.

The Company is organized primarily on the basis of geographic region and customer industry group.

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 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 located outside of the HFS – South segment.

The table below presents information about reported segments for the three months ended March 31 (except for asset information for 2022 that is presented as of December 31):

2023


	HFS - South		Government		All Other			Total
For the Three Months Ended March 31, 2023
Revenue	$	35,772	$	109,503	$	2,544	(a)	$	147,819
Adjusted gross profit	$	11,656	$	88,774	$	(870)		$	99,560
Total Assets	$	193,664	$	214,492	$	33,847		$	442,003

2022


	HFS - South		Government		All Other			Total
For the Three Months Ended March 31, 2022
Revenue	$	31,576	$	46,790	$	1,969	(a)	$	80,335
Adjusted gross profit	$	13,318	$	27,876	$	(478)		$	40,716
Total Assets (as of December 31, 2022)	$	176,637	$	217,029	$	34,722		$	428,388

(a)

Revenues from segments below the quantitative thresholds are attributable to four operating segments of the Company and are reported in the “All Other” category previously described.

A reconciliation of total segment adjusted gross profit to total consolidated income (loss) before income taxes for the dates indicated below, is as follows:


	For the Three Months Ended
	March 31, 2023		March 31, 2022

Total reportable segment adjusted gross profit	$	100,430	$	40,694
Other adjusted gross profit		(870)		22
Depreciation and amortization		(21,400)		(16,795)
Selling, general, and administrative expenses		(15,199)		(11,759)
Other expense (income), net		(1,004)		219
Loss on extinguishment of debt		(2,128)		—
Interest expense, net		(7,498)		(9,572)
Change in fair value of warrant liabilities		3,711		(1,227)
Consolidated income before income taxes	$	56,042	$	1,582

A reconciliation of total segment assets to total consolidated assets as of the dates indicated below, is as follows:


	March 31, 2023		December 31, 2022
Total reportable segment assets	$	408,156	$	426,825
Other assets		35,632		3,240
Other unallocated amounts		205,830		341,662
Total Assets	$	649,618	$	771,727

Other unallocated assets consist of the following as reported in the consolidated balance sheets of the Company as of the dates indicated below:


	March 31, 2023		December 31, 2022
Total current assets	$	103,151	$	236,379
Other intangible assets, net		76,394		75,182
Operating lease right-of-use assets, net		23,120		27,298
Deferred financing costs revolver, net		1,604		896
Other non-current assets		1,561		1,907
Total other unallocated amounts of assets	$	205,830	$	341,662

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599

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+ Details