Divestitures

9 Months Ended

Sep. 30, 2021

Discontinued Operations And Disposal Groups [Abstract]

(3) Divestitures

Crane Sale

On July 19, 2021, the Company entered into a definitive agreement to sell its crane business to a wholly-owned subsidiary of The Manitowoc Company, Inc. for $130 million in cash, subject to adjustment based on actual amounts of net working capital and crane rental fleet net book value delivered at transaction closing. This sale represents the Company’s strategic shift to a pure-play rental business. In accordance with ASC 360, Property, Plant, and Equipment, the Company ceased recording depreciation and amortization for Crane Sale related rental fleet, property, plant and equipment, and right of use lease assets upon qualifying as held for sale. In accordance with ASC 205-20, the Company determined that discontinued operations presentation were met during the third quarter of fiscal year 2021. As part of the divestiture, we entered into a transition services agreement with the buyer to assist them in the transition of certain functions, including, but not limited to, information technology, accounting and human resources for a period of sixty days up to six months. Aside from these customary transition services, there will be no continuing involvement with the crane business after its disposal.

The Company reports financial results of the crane business within all of our segments: equipment rentals, used equipment sales, new equipment sales, parts sales and service revenues. Additionally, the crane business is included within five of our six goodwill reporting units: equipment rental component 2, used equipment sales, new equipment sales, parts sales and service revenues.

The Company executed the transaction closing on October 1, 2021, subject to customary closing conditions, including regulatory approval under the Hart-Scott-Rodino Act. The Company will record a gain on the Crane Sale during the fourth quarter of 2021.

As a result of the agreement to sell its crane business, its results are reported separately as discontinued operations in our condensed consolidated statements of operations for all periods presented and its assets and liabilities have been presented in our condensed consolidated balance sheets as assets and liabilities held for sale. As permitted, the Company elected not to adjust the condensed consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020 to exclude cash flows attributable to discontinued operations. Accordingly, we disclosed the depreciation, capital expenditures and significant operating and investing non-cash items related to the Crane Sale below.

The following tables (amounts in thousands) present the Crane Sale results as reported in income from discontinued operations within our condensed consolidated statements of operations and the carrying value of assets and liabilities as presented within assets and liabilities held for sale on our condensed consolidated balance sheets. The amounts presented below are preliminary and are subject to change.

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2021			2020		2021		2020
Revenues:
Equipment rentals	$	3,890		$	4,388	$	10,321	$	14,599
Used equipment sales		3,096			3,784		11,545		10,341
New equipment sales		15,428			9,421		52,286		32,111
Parts sales		12,668			11,562		33,268		33,645
Services revenues		7,438			7,148		20,855		20,871
Other		1,411			1,044		3,755		2,696
Total revenues		43,931			37,347		132,030		114,263
Cost of revenues:
Rental depreciation		—			2,111		3,720		6,325
Rental expense		752			622		1,947		1,891
Rental other		430			279		1,000		964
		1,182			3,012		6,667		9,180
Used equipment sales		2,383			2,668		8,713		7,473
New equipment sales		13,737			8,355		46,725		28,611
Parts sales		9,691			8,871		25,288		25,672
Services revenues		2,474			2,442		6,767		7,216
Other		898			941		3,168		2,437
Total cost of revenues		30,365			26,289		97,328		80,589
Gross profit		13,566			11,058		34,702		33,674
Selling, general and administrative expenses		6,769			5,500		18,872		17,083
Impairment of goodwill		—			—		—		6,330
Merger and other		384			—		1,695		—
Gain on sales of property and equipment, net		—			55		49		2,442
Income from discontinued operations		6,413			5,613		14,184		12,703
Other, net		(2	)		1		62		6
Income before provision for income taxes		6,411			5,614		14,246		12,709
Provision for income taxes		1,602			3,494		3,626		5,696
Net income from discontinued operations	$	4,809		$	2,120	$	10,620	$	7,013

	Balances at
	September 30,		December 31,
	2021		2020
	(Unaudited)
Assets:
Receivables, net of allowance for doubtful accounts of $252 and $252, respectively	$	16,872	$	28,356
Inventories, net of reserves for obsolescence of $116 and $120, respectively		35,001		30,598
Prepaid expenses and other assets		86		86
Rental equipment, net of accumulated depreciation of $29,076 and $34,143, respectively		34,405		39,322
Property and equipment, net of accumulated depreciation and amortization of $14,288 and $13,381, respectively		7,223		7,821
Operating lease right-of-use assets, net of accumulated amortization of $706 and $652, respectively		11,599		9,558
Goodwill (1)		5,714		5,714
Total assets held for sale	$	110,900	$	121,455

Liabilities:
Accounts payable	$	4,899	$	14,033
Accrued expenses payable and other liabilities		200		170
Operating lease right-of-use liabilities		11,896		9,639
Total liabilities held for sale	$	16,995	$	23,842

(1)

We have allocated $5.7 million of goodwill in the following two reporting units to the crane product line based on the relative fair value of the crane product line and the portion of the reporting units that will be retained. The allocation is as follows (amounts in thousands):

Used Equipment	$	506
Parts		5,208
	$	5,714

Cash flows from discontinued operations was as follows (amounts in thousands):

	Nine Months Ended
	September 30,
	2021			2020
Operating activities of discontinued operations:
Depreciation and amortization of property and equipment	$	1,083		$	1,715
Depreciation of rental equipment		3,720			6,325
Gain from sales of property and equipment, net		(49	)		(2,442	)
Gain from sales of rental equipment, net		(2,203	)		(2,634	)

Investing activities of discontinued operations:
Purchases of rental equipment		(2,431	)		(7,624	)
Proceeds from sales of property and equipment		43			4,781
Proceeds from sales of rental equipment		5,929			6,965

Arkansas Sale

On September 17, 2021, the Company sold our Little Rock, Arkansas and Springdale, Arkansas owned-branches to Bramco, Inc. (“Bramco”) for $9.0 million (the “Arkansas Sale”). The Arkansas Sale includes the land, building, building improvements, office equipment, furniture and fixtures, and shop equipment for the two branches with a current net book value of approximately $3.7 million. As a condition of closing, we relinquished our territory distribution rights with equipment manufacturers Komatsu, Wirtgen Group and Takeuchi. Our current distribution territory for these two branches includes the entire state of Arkansas, with the exception of five counties in southeast Arkansas (Miller, Lafayette, Columbia, Union and Little River). These five excluded counties are currently served by our Shreveport, Louisiana branch and we have no intention in the foreseeable future of relinquishing the Louisiana distribution territory. The Arkansas Sale does not qualify for discontinued operations as the divestiture does not meet the definition of a component.

The Company has purchased a site in Little Rock, Arkansas to operate a rental-focused branch location in the area. The branch opening coincided with the sale to Bramco.