Discontinued Operations

12 Months Ended

Dec. 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

NOTE 5. DISCONTINUED OPERATIONS

On February 1, 2023, the Company completed the sale of Adler Tank Rentals, LLC to Ironclad Environmental Solutions, Inc. ("Ironclad"), a portfolio company of Kinderhook Industries, for a sale price of $268.0 million. The total transaction costs incurred from the divestiture was $6.7 million and $2.1 million during the years ended December 31, 2023 and 2022, respectively. The divestiture of the Company's Adler Tanks business represents the Company's strategic shift to concentrate its operations on its core modular and storage businesses. The sale price was subject to certain adjustments, including net working capital, certain qualified capital expenditures and certain transaction expenses to be borne by the Company. In connection with the sale, the Company entered into a number of ancillary agreements, including an escrow agreement associated with net working capital adjustments, a restricted covenant agreement, a transition services agreement, and a number of leases whereby Ironclad or one of its affiliates would be a lessee to certain properties owned by the Company that the Adler Tanks business would continue to utilize after the sale. These ancillary agreements do not provide for continued involvement by the Company in Adler Tanks. In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations and ASC 360, Property, Plant and Equipment, the Company determined that the criteria for the presentation of discontinued operations and held-for-sale, respectively, were met during the first quarter of 2023.

The following table presents the results of Adler Tanks as reported in income from discontinued operations within the Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021:

(dollar amounts in thousands)	Year Ended December 31,
	2023			2022			2021
Revenues
Rental	$	6,520		$	66,366		$	56,025
Rental related services		2,584			27,654			22,851
Rental operations		9,104			94,020			78,876
Sales		269			2,933			2,930
Other		65			1,205			436
Total revenues		9,438			98,158			82,242
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment		1,325			16,004			16,442
Rental related services		2,020			20,947			18,534
Other		1,270			12,422			11,492
Total direct costs of rental operations		4,614			49,373			46,468
Costs of sales		159			2,085			2,075
Total costs of revenues		4,773			51,458			48,543
Gross Profit
Rental		3,926			37,940			28,091
Rental related services		564			6,707			4,317
Rental operations		4,490			44,647			32,408
Sales		110			848			855
Other		65			1,205			436
Total gross profit		4,665			46,700			33,699
Selling and administrative expenses		(2,582	)		(28,428	)		(25,542	)
Income from operations		2,083			18,272			8,157
Interest expense allocation		(374	)		(2,938	)		(2,211	)
Income from discontinued operations before provision for income taxes		1,709			15,334			5,946
Provision for income taxes from discontinued operations		453			3,505			1,326
Income from discontinued operations	$	1,256		$	11,829		$	4,620

The following table presents the carrying value of the divested business' assets and liabilities as presented within assets and liabilities of discontinued operations on the Consolidated Balance Sheets as of December 31, 2022:

	December 31,
(in thousands)	2022
Assets
Accounts receivable, net of allowance for credit losses of $450	$	20,086
Rental equipment, net		137,738
Property, plant and equipment, net		6,632
Prepaid expenses and other assets		191
Intangible assets, net		5,700
Goodwill		25,902
Total assets of discontinued operations	$	196,249
Liabilities
Accounts payable and accrued liabilities	$	9,621
Deferred income taxes, net		43,550
Total liabilities of discontinued operations	$	53,171

For the years ended December 31, 2023 and 2022, significant operating and investing items related to Adler Tanks were as follows:

	December 31,			December 31,
(in thousands)	2023			2022
Operating activities of discontinued operations:
Depreciation and amortization	$	1,457		$	17,704
Gain on sale of used rental equipment		(111	)		(704	)
Investing activities of discontinued operations:
Proceeds from sales of used rental equipment		269			2,374
Purchases of rental equipment		(25	)		(3,624	)
Purchases of property, plant and equipment		(40	)		(10,255	)