UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
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10-K/A
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Amendment No. 1
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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
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December 31, 2019
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or
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Commission File Number
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1-13270
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FLOTEK INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
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Delaware
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90-0023731
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(State of other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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10603 W. Sam Houston Parkway N.
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Suite 300
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Houston,
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TX
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77064
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(Address of principal executive offices)
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(Zip Code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.0001 par value
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FTK
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New York Stock Exchange
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17
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•
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the severity and duration of winter temperatures in North America, which impacts natural gas storage levels, drilling activity, and commodity prices;
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•
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the timing and duration of the Canadian spring thaw and resulting restrictions that impact activity levels;
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•
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the timing and impact of hurricanes upon coastal and offshore operations; and
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•
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the adverse weather and disease that affect citrus crops in Florida and Brazil which can negatively impact the availability of citrus oils and increase raw material costs for the ECT segment.
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•
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global demand for energy as a result of population growth, economic development, and general economic and business conditions;
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•
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the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and the impact of non-OPEC producers on global supply;
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•
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availability and quantity of natural gas storage;
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•
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import and export volumes and pricing of liquefied natural gas;
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•
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pipeline capacity to critical markets and out of producing regions;
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•
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political and economic uncertainty and socio-political unrest;
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•
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cost of exploration, production and transport of oil and natural gas;
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•
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technological advances impacting energy production and consumption; and
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•
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weather conditions.
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•
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failure to effectively integrate acquisitions, joint ventures or strategic alliances;
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•
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failure to effectively plan for risks associated with expansion into areas in which management lacks prior experience;
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•
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lack of experienced management personnel;
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•
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increased administrative burdens;
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•
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lack of customer retention;
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•
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technological obsolescence; and
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•
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infrastructure, technological, communication and logistical problems associated with large, expansive operations.
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•
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governmental instability;
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•
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corruption;
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•
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war and other international conflicts;
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•
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civil and labor disturbances;
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•
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requirements of local ownership;
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•
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cartel behavior;
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•
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partial or total expropriation or nationalization;
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•
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currency devaluation; and
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•
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foreign laws and policies, each of which can limit the movement of assets or funds or result in the deprivation of contractual rights or appropriation of property without fair compensation.
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•
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variations in the Company’s quarterly results of operations;
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•
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changes in market valuations of companies in the Company’s industry;
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•
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fluctuations in stock market prices and volume;
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•
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fluctuations in oil and natural gas prices;
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•
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issuances of common stock or other securities in the future;
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•
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additions or departures of key personnel;
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•
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announcements by the Company or the Company’s competitors of new business, acquisitions, or joint ventures; and
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•
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negative statements made by external parties about the Company’s business in public forums.
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•
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permit the Company to issue, without stockholder approval, up to 100,000 shares of preferred stock, in one or more series and, with respect to each series, to
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•
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prohibit stockholders from calling special meetings;
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•
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limit the ability of stockholders to act by written consent;
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•
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prohibit cumulative voting; and
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•
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require advance notice for stockholder proposals and nominations for election to the board of directors to be acted upon at meetings of stockholders.
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Segment
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Owned/Leased
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Location
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Energy Chemistry
Technologies |
Owned
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Marlow, Oklahoma
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Owned
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Monahans, Texas
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Owned
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Raceland, Louisiana
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Owned
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Waller, Texas
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Leased
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Dubai, United Arab Emirates
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Leased
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Houston, Texas
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Leased
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Midland, Texas
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Leased
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Oklahoma City, Oklahoma
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Leased
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Raceland, Louisiana
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Leased
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Calgary, Alberta
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Leased
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Denver, Colorado
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Plan Category
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Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights(1)
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Weighted-Average Exercise
Price of Outstanding
Options, Warrants and Rights(2)
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Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column(a))
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(a)
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(b)
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(c)
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Equity compensation plans approved by security holders
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2,097,494
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$
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1.22
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3,858,783
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Equity compensation plans not approved by security holders
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4,141,168
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$
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1.33
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—
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Total
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6,238,662
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$
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1.29
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3,858,783
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(1)
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Includes shares for outstanding stock options (3,000,000 shares), restricted stock awards (1,629,020 shares), restricted stock unit share equivalents (1,038,474 shares), and the right to purchase (572,168 shares).
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(2)
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The weighted-average exercise price is for outstanding stock options only and does not include outstanding restricted stock awards. restricted stock unit equivalents, and rights that have no exercise price.
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Total Number
of Shares
Purchased (1)
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Average Price
Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Maximum Dollar Value
of Shares that May Yet be
Purchased Under the
Plans or Programs
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||||||
October 1 to October 31, 2019
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3,410
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$
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2.09
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—
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$
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49,704,947
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November 1 to November 30, 2019
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—
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$
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—
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—
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$
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49,704,947
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December 1 to December 31, 2019
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16,336
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$
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2.00
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—
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$
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49,704,947
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Total
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19,746
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$
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2.02
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—
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(1)
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The Company purchases shares of its common stock (a) to satisfy tax withholding requirements and payment remittance obligations related to period vesting of restricted shares and exercise of non-qualified stock options, (b) to satisfy payments required for common stock upon the exercise of stock options, and (c) as part of a publicly announced repurchase program on the open market.
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•
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Historical, current, and anticipated future oil and gas prices,
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•
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Federal, state, and local governmental actions that may encourage or discourage drilling activity,
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•
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Customers’ strategies relative to capital funds allocations,
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•
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Weather conditions, and
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•
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Technological changes to drilling and completion methods and economics.
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•
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Chemistries that improve the economics of their oil and gas operations, and
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•
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Chemistries that are economically viable, socially responsible, and ecologically sound.
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•
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Historical, current, and anticipated future production levels of the global citrus (primarily orange) crops,
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•
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Weather related risks,
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•
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Health and condition of citrus trees (e.g., disease and pests),
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•
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International competition and pricing pressures resulting from natural and artificial pricing influences, and
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•
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market demand for orange juice.
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•
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Oil and gas drilling and completion operations,
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•
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Oil and gas production operations, and
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•
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Non-oil and gas industrial solvents.
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Years ended December 31,
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||||||||||
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2019
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2018
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2017
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||||||
Revenue
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$
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119,353
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$
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177,773
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$
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243,106
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Operating expenses (excluding depreciation and amortization)
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149,225
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159,808
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188,744
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Operating expenses %
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125.0
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%
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89.9
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%
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77.6
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%
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Corporate general and administrative costs
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27,975
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|
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31,467
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41,492
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Corporate general and administrative costs %
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23.4
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%
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17.7
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%
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17.1
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%
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Depreciation and amortization
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8,465
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9,216
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9,768
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Research and development costs
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8,863
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10,356
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13,130
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(Gain) loss on disposal of long-lived assets
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1,450
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|
(443
|
)
|
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292
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|
|||
Impairment of goodwill
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—
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|
|
37,180
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|
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—
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|||
Loss from operations
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(76,625
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)
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|
(69,811
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)
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(10,320
|
)
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Operating margin %
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(64.2
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)%
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(39.3
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)%
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|
(4.2
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)%
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Loss on sale of business
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—
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|
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(360
|
)
|
|
—
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Loss on write-down of assets held for sale
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—
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(2,580
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)
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—
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|
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Interest and other expense, net
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(311
|
)
|
|
(7,906
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)
|
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(1,072
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)
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Loss before income taxes
|
(76,936
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)
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|
(80,657
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)
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(11,392
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)
|
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Income tax benefit (expense)
|
201
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7,216
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(6,112
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)
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Loss from continuing operations
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(76,735
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)
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(73,441
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)
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(17,504
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)
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Income (loss) from discontinued operations, net of tax
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44,456
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|
|
2,743
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|
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(9,891
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)
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Net loss
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$
|
(32,279
|
)
|
|
$
|
(70,698
|
)
|
|
$
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(27,395
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)
|
Net loss attributable to noncontrolling interests
|
—
|
|
|
358
|
|
|
—
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|
|||
Net loss attributable to Flotek Industries, Inc. (Flotek)
|
$
|
(32,279
|
)
|
|
$
|
(70,340
|
)
|
|
$
|
(27,395
|
)
|
Energy Chemistry Technologies (“ECT”)
|
|
|
|
|
|
||||||
(dollars in thousands)
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
119,353
|
|
|
$
|
177,773
|
|
|
$
|
243,106
|
|
(Loss) income from operations
|
(46,485
|
)
|
|
(36,817
|
)
|
|
33,611
|
|
|||
Income from operations - excluding impairment
|
(46,485
|
)
|
|
363
|
|
|
33,611
|
|
|||
Operating margin % - excluding impairment
|
(38.9
|
)%
|
|
0.2
|
%
|
|
13.8
|
%
|
Drilling Technologies
|
|
|
|
|
|
|
||||||
(dollars in thousands)
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,534
|
|
Loss from operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,646
|
)
|
Loss from operations - excluding impairment
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,646
|
)
|
Operating margin % - excluding impairment
|
|
—
|
%
|
|
—
|
%
|
|
(22.9
|
)%
|
Production Technologies
|
|
|
|
|
|
|
||||||
(dollars in thousands)
|
|
Years ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,002
|
|
Loss from operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,357
|
)
|
Loss from operations - excluding impairment
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,357
|
)
|
Operating margin % - excluding impairment
|
|
—
|
%
|
|
—
|
%
|
|
(33.9
|
)%
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Cash and cash equivalents
|
$
|
100,575
|
|
|
$
|
3,044
|
|
Current portion of long-term debt
|
—
|
|
|
(49,731
|
)
|
||
Net debt
|
$
|
100,575
|
|
|
$
|
(46,687
|
)
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash (used in) provided by operating activities
|
$
|
(18,769
|
)
|
|
$
|
(20,816
|
)
|
|
$
|
12,345
|
|
Net cash provided (used in) by investing activities
|
166,937
|
|
|
(2,109
|
)
|
|
14,526
|
|
|||
Net cash (used in) provided financing activities
|
(49,994
|
)
|
|
21,480
|
|
|
(27,285
|
)
|
|||
Net cash flows provided by (used in) provided by discontinued operations
|
15
|
|
|
(7
|
)
|
|
24
|
|
|||
Effect of changes in exchange rates on cash and cash equivalents
|
5
|
|
|
(88
|
)
|
|
151
|
|
|||
Net change in cash, cash equivalents and restricted cash
|
$
|
98,194
|
|
|
$
|
(1,540
|
)
|
|
$
|
(239
|
)
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1 - 3 years
|
|
3 -5 years
|
|
More than
5 years
|
||||||||||
Finance lease obligation
|
$
|
249
|
|
|
$
|
70
|
|
|
$
|
117
|
|
|
$
|
62
|
|
|
$
|
—
|
|
Operating lease obligations
|
33,599
|
|
|
2,036
|
|
|
3,878
|
|
|
3,993
|
|
|
23,692
|
|
|||||
Supply commitments for raw materials
|
72,020
|
|
|
18,005
|
|
|
54,015
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
105,868
|
|
|
$
|
20,111
|
|
|
$
|
58,010
|
|
|
$
|
4,055
|
|
|
$
|
23,692
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
100,575
|
|
|
$
|
3,044
|
|
Restricted cash
|
663
|
|
|
—
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $1,527 and
$1,190 at December 31, 2019 and 2018, respectively
|
15,638
|
|
|
37,047
|
|
||
Inventories, net
|
21,697
|
|
|
27,289
|
|
||
Income taxes receivable
|
631
|
|
|
3,161
|
|
||
Assets held for sale
|
—
|
|
|
118,470
|
|
||
Other current assets
|
13,191
|
|
|
5,771
|
|
||
Total current assets
|
152,395
|
|
|
194,782
|
|
||
Property and equipment, net
|
39,829
|
|
|
45,485
|
|
||
Operating lease right-of-use assets
|
16,388
|
|
|
—
|
|
||
Deferred tax assets, net
|
152
|
|
|
18,663
|
|
||
Other intangible assets, net
|
23,083
|
|
|
26,827
|
|
||
Other long-term assets
|
—
|
|
|
126
|
|
||
TOTAL ASSETS
|
$
|
231,847
|
|
|
$
|
285,883
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
16,231
|
|
|
$
|
15,011
|
|
Accrued liabilities
|
24,552
|
|
|
10,335
|
|
||
Interest payable
|
—
|
|
|
8
|
|
||
Liabilities held for sale
|
—
|
|
|
9,174
|
|
||
Current portion of lease liabilities
|
541
|
|
|
—
|
|
||
Long-term debt, classified as current
|
—
|
|
|
49,731
|
|
||
Total current liabilities and total liabilities
|
41,324
|
|
|
84,259
|
|
||
Long-term operating lease liabilities
|
16,973
|
|
|
|
|||
Long-term finance lease liabilities
|
158
|
|
|
—
|
|
||
Deferred tax liabilities, net
|
116
|
|
|
—
|
|
||
TOTAL LIABILITIES
|
58,571
|
|
|
84,259
|
|
||
Commitments and contingencies (Note16)
|
|
|
|
||||
Stockholders’ Equity:
|
|
|
|
||||
Preferred stock, $0.0001 par value, 100,000 shares authorized; no shares
issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 par value, 80,000,000 shares authorized; 63,656,897
shares issued and 57,882,396 shares outstanding at December 31, 2019;
62,162,875 shares issued and 57,342,279 shares outstanding at
December 31, 2018
|
6
|
|
|
6
|
|
||
Additional paid-in capital
|
347,564
|
|
|
343,536
|
|
||
Accumulated other comprehensive income (loss)
|
(966
|
)
|
|
(1,116
|
)
|
||
Retained earnings (accumulated deficit)
|
(139,844
|
)
|
|
(107,565
|
)
|
||
Treasury stock, at cost; 4,145,481 and 3,770,224 shares at December 31, 2019
and 2018, respectively
|
(33,484
|
)
|
|
(33,237
|
)
|
||
Total stockholders’ equity
|
173,276
|
|
|
201,624
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
231,847
|
|
|
$
|
285,883
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
119,353
|
|
|
$
|
177,773
|
|
|
$
|
243,106
|
|
Costs and expenses:
|
|
|
|
|
|
||||||
Operating expenses (excluding depreciation and amortization)
|
149,225
|
|
|
159,808
|
|
|
188,744
|
|
|||
Corporate general and administrative
|
27,975
|
|
|
31,467
|
|
|
41,492
|
|
|||
Depreciation and amortization
|
8,465
|
|
|
9,216
|
|
|
9,768
|
|
|||
Research and development
|
8,863
|
|
|
10,356
|
|
|
13,130
|
|
|||
(Gain) loss on disposal of long-lived assets
|
1,450
|
|
|
(443
|
)
|
|
292
|
|
|||
Impairment of goodwill
|
—
|
|
|
37,180
|
|
|
—
|
|
|||
Total costs and expenses
|
195,978
|
|
|
247,584
|
|
|
253,426
|
|
|||
Loss from operations
|
(76,625
|
)
|
|
(69,811
|
)
|
|
(10,320
|
)
|
|||
Other (expense) income:
|
|
|
|
|
|
||||||
Interest expense
|
(2,019
|
)
|
|
(2,866
|
)
|
|
(2,168
|
)
|
|||
Loss on sale of business
|
—
|
|
|
(360
|
)
|
|
—
|
|
|||
Loss on write-down of assets held for sale
|
—
|
|
|
(2,580
|
)
|
|
—
|
|
|||
Other (expense) income, net
|
1,708
|
|
|
(5,040
|
)
|
|
1,096
|
|
|||
Total other expense
|
(311
|
)
|
|
(10,846
|
)
|
|
(1,072
|
)
|
|||
Loss before income taxes
|
(76,936
|
)
|
|
(80,657
|
)
|
|
(11,392
|
)
|
|||
Income tax benefit (expense)
|
201
|
|
|
7,216
|
|
|
(6,112
|
)
|
|||
Loss from continuing operations
|
(76,735
|
)
|
|
(73,441
|
)
|
|
(17,504
|
)
|
|||
Income (loss) from discontinued operations, net of tax
|
44,456
|
|
|
2,743
|
|
|
(9,891
|
)
|
|||
Net loss
|
(32,279
|
)
|
|
(70,698
|
)
|
|
(27,395
|
)
|
|||
Net loss attributable to noncontrolling interests
|
—
|
|
|
358
|
|
|
—
|
|
|||
Net loss attributable to Flotek Industries, Inc. (Flotek)
|
$
|
(32,279
|
)
|
|
$
|
(70,340
|
)
|
|
$
|
(27,395
|
)
|
|
|
|
|
|
|
||||||
Amounts attributable to Flotek shareholders:
|
|
|
|
|
|
||||||
Loss from continuing operations
|
$
|
(76,735
|
)
|
|
$
|
(73,083
|
)
|
|
$
|
(17,504
|
)
|
Income (loss) from discontinued operations, net of tax
|
44,456
|
|
|
2,743
|
|
|
(9,891
|
)
|
|||
Net loss attributable to Flotek
|
$
|
(32,279
|
)
|
|
$
|
(70,340
|
)
|
|
$
|
(27,395
|
)
|
|
|
|
|
|
|
||||||
Basic earnings (loss) per common share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
(1.31
|
)
|
|
$
|
(1.26
|
)
|
|
$
|
(0.30
|
)
|
Discontinued operations, net of tax
|
0.76
|
|
|
0.05
|
|
|
(0.17
|
)
|
|||
Basic earnings (loss) per common share
|
$
|
(0.55
|
)
|
|
$
|
(1.21
|
)
|
|
$
|
(0.47
|
)
|
|
|
|
|
|
|
||||||
Diluted earnings (loss) per common share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
(1.31
|
)
|
|
$
|
(1.26
|
)
|
|
$
|
(0.30
|
)
|
Discontinued operations, net of tax
|
0.76
|
|
|
0.05
|
|
|
(0.17
|
)
|
|||
Diluted earnings (loss) per common share
|
$
|
(0.55
|
)
|
|
$
|
(1.21
|
)
|
|
$
|
(0.47
|
)
|
|
|
|
|
|
|
||||||
Weighted average common shares:
|
|
|
|
|
|
||||||
Weighted average common shares used in computing basic earnings (loss) per common share
|
58,750
|
|
|
57,995
|
|
|
57,580
|
|
|||
Weighted average common shares used in computing diluted earnings (loss) per common share
|
58,750
|
|
|
57,995
|
|
|
57,580
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Loss from continuing operations
|
$
|
(76,735
|
)
|
|
$
|
(73,441
|
)
|
|
$
|
(17,504
|
)
|
Income (loss) from discontinued operations, net of tax
|
44,456
|
|
|
2,743
|
|
|
(9,891
|
)
|
|||
Net loss
|
(32,279
|
)
|
|
(70,698
|
)
|
|
(27,395
|
)
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
150
|
|
|
(232
|
)
|
|
72
|
|
|||
Comprehensive loss
|
(32,129
|
)
|
|
(70,930
|
)
|
|
(27,323
|
)
|
|||
Net loss attributable to noncontrolling interests
|
—
|
|
|
358
|
|
|
—
|
|
|||
Comprehensive loss attributable to Flotek
|
$
|
(32,129
|
)
|
|
$
|
(70,572
|
)
|
|
$
|
(27,323
|
)
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other Comprehensive
Income (Loss)
|
|
Retained Earnings
(Accumulated
Deficit)
|
|
Non-controlling Interests
|
|
Total Stockholders’ Equity
|
||||||||||||||||||||
|
Shares Issued
|
|
Par Value
|
|
Shares
|
|
Cost
|
|
|||||||||||||||||||||||||
Balance, December 31, 2016
|
59,685
|
|
|
$
|
6
|
|
|
2,029
|
|
|
$
|
(20,269
|
)
|
|
$
|
318,392
|
|
|
$
|
(956
|
)
|
|
$
|
(9,830
|
)
|
|
$
|
358
|
|
|
$
|
287,701
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,395
|
)
|
|
—
|
|
|
(27,395
|
)
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|||||||
Stock issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
(113
|
)
|
|
—
|
|
|
654
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
654
|
|
|||||||
Common stock issued in payment of accrued liability
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
188
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
188
|
|
|||||||
Stock options exercised
|
663
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,884
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,884
|
|
|||||||
Restricted stock awards granted
|
275
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Restricted stock forfeited
|
—
|
|
|
—
|
|
|
122
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Treasury stock purchased
|
—
|
|
|
—
|
|
|
200
|
|
|
(1,729
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,729
|
)
|
|||||||
Stock surrendered for exercise of stock options
|
—
|
|
|
—
|
|
|
478
|
|
|
(5,863
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,863
|
)
|
|||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,949
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,949
|
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
905
|
|
|
(5,203
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,203
|
)
|
|||||||
Balance, December 31, 2017
|
60,623
|
|
|
$
|
6
|
|
|
3,621
|
|
|
$
|
(33,064
|
)
|
|
$
|
336,067
|
|
|
$
|
(884
|
)
|
|
$
|
(37,225
|
)
|
|
$
|
358
|
|
|
$
|
265,258
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(70,340
|
)
|
|
(358
|
)
|
|
(70,698
|
)
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(232
|
)
|
|
—
|
|
|
—
|
|
|
(232
|
)
|
|||||||
Stock issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
(111
|
)
|
|
—
|
|
|
341
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
341
|
|
|||||||
Restricted stock awards granted
|
1,540
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Restricted stock forfeited
|
—
|
|
|
—
|
|
|
158
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Treasury stock purchased
|
—
|
|
|
—
|
|
|
102
|
|
|
(173
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(173
|
)
|
|||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,128
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,128
|
|
|||||||
Balance, December 31, 2018
|
62,163
|
|
|
$
|
6
|
|
|
3,770
|
|
|
$
|
(33,237
|
)
|
|
$
|
343,536
|
|
|
$
|
(1,116
|
)
|
|
$
|
(107,565
|
)
|
|
$
|
—
|
|
|
$
|
201,624
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,279
|
)
|
|
|
|
|
(32,279
|
)
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150
|
|
|
—
|
|
|
—
|
|
|
150
|
|
|||||||
Stock issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|||||||
Restricted stock awards granted
|
924
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Restricted stock forfeited
|
—
|
|
|
—
|
|
|
299
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Restricted stock units granted
|
570
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Treasury stock purchased
|
—
|
|
|
—
|
|
|
94
|
|
|
(247
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(247
|
)
|
|||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,993
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,993
|
|
|||||||
Balance, December 31, 2019
|
63,657
|
|
|
$
|
6
|
|
|
4,145
|
|
|
$
|
(33,484
|
)
|
|
$
|
347,564
|
|
|
$
|
(966
|
)
|
|
$
|
(139,844
|
)
|
|
$
|
—
|
|
|
$
|
173,276
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss attributable to Flotek Industries, Inc. (Flotek)
|
$
|
(32,279
|
)
|
|
$
|
(70,340
|
)
|
|
$
|
(27,395
|
)
|
Income (loss) from discontinued operations, net of tax
|
44,456
|
|
|
2,743
|
|
|
(9,891
|
)
|
|||
Loss from continuing operations
|
(76,735
|
)
|
|
(73,083
|
)
|
|
(17,504
|
)
|
|||
Adjustments to reconcile loss from continuing operations to net cash (used in) provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
8,465
|
|
|
9,216
|
|
|
9,768
|
|
|||
Amortization of deferred financing costs
|
1,428
|
|
|
400
|
|
|
472
|
|
|||
Provision for doubtful accounts
|
512
|
|
|
839
|
|
|
157
|
|
|||
Provision for excess and obsolete inventory
|
5,659
|
|
|
2,418
|
|
|
388
|
|
|||
Loss on sale of business
|
—
|
|
|
360
|
|
|
—
|
|
|||
Loss on write-down of assets held for sale
|
—
|
|
|
2,580
|
|
|
—
|
|
|||
(Gain) loss on sale of assets
|
1,450
|
|
|
(443
|
)
|
|
292
|
|
|||
Impairment of goodwill
|
—
|
|
|
37,180
|
|
|
—
|
|
|||
Stock compensation expense
|
4,235
|
|
|
7,050
|
|
|
10,643
|
|
|||
Deferred income tax (benefit) provision
|
18,307
|
|
|
(5,950
|
)
|
|
181
|
|
|||
Reduction in tax benefit related to share-based awards
|
24
|
|
|
709
|
|
|
1,989
|
|
|||
Non-cash lease expense
|
740
|
|
|
—
|
|
|
—
|
|
|||
Changes in current assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
20,993
|
|
|
(2,606
|
)
|
|
4,076
|
|
|||
Inventories
|
(65
|
)
|
|
2,597
|
|
|
(3,442
|
)
|
|||
Income taxes receivable
|
2,546
|
|
|
(1,116
|
)
|
|
8,008
|
|
|||
Other current assets
|
(8,359
|
)
|
|
3,177
|
|
|
12,001
|
|
|||
Accounts payable
|
1,131
|
|
|
4,631
|
|
|
(8,528
|
)
|
|||
Accrued liabilities
|
908
|
|
|
(8,740
|
)
|
|
(6,175
|
)
|
|||
Interest payable
|
(8
|
)
|
|
(35
|
)
|
|
19
|
|
|||
Net cash (used in) provided by operating activities
|
(18,769
|
)
|
|
(20,816
|
)
|
|
12,345
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(2,411
|
)
|
|
(3,559
|
)
|
|
(4,197
|
)
|
|||
Proceeds from sale of businesses
|
169,722
|
|
|
1,665
|
|
|
18,490
|
|
|||
Proceeds from sale of assets
|
240
|
|
|
1,387
|
|
|
689
|
|
|||
Purchase of patents and other intangible assets
|
(614
|
)
|
|
(1,602
|
)
|
|
(456
|
)
|
|||
Net cash provided (used in) by investing activities
|
166,937
|
|
|
(2,109
|
)
|
|
14,526
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Repayments of indebtedness
|
—
|
|
|
—
|
|
|
(9,833
|
)
|
|||
Borrowings on revolving credit facility
|
42,984
|
|
|
277,599
|
|
|
383,160
|
|
|||
Repayments on revolving credit facility
|
(92,715
|
)
|
|
(255,818
|
)
|
|
(393,776
|
)
|
|||
Debt issuance costs
|
—
|
|
|
(111
|
)
|
|
(579
|
)
|
|||
Payments for finance leases
|
(51
|
)
|
|
—
|
|
|
—
|
|
|||
Purchase of treasury stock
|
(247
|
)
|
|
(173
|
)
|
|
(1,729
|
)
|
|||
Proceeds from sale of common stock
|
35
|
|
|
341
|
|
|
654
|
|
|||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(5,203
|
)
|
|||
Proceeds from exercise of stock options
|
—
|
|
|
—
|
|
|
21
|
|
|||
Loss from noncontrolling interest
|
—
|
|
|
(358
|
)
|
|
—
|
|
|||
Net cash (used in) provided financing activities
|
(49,994
|
)
|
|
21,480
|
|
|
(27,285
|
)
|
|||
Discontinued operations:
|
|
|
|
|
|
||||||
Net cash provided by (used in) operating activities
|
(322
|
)
|
|
1,296
|
|
|
4,102
|
|
|||
Net cash provided by (used in) investing activities
|
337
|
|
|
(1,303
|
)
|
|
(4,078
|
)
|
|||
Net cash flows provided by (used in) provided by discontinued operations
|
15
|
|
|
(7
|
)
|
|
24
|
|
|||
Effect of changes in exchange rates on cash and cash equivalents
|
5
|
|
|
(88
|
)
|
|
151
|
|
|||
Net change in cash, cash equivalents and restricted cash
|
98,194
|
|
|
(1,540
|
)
|
|
(239
|
)
|
|||
Cash, cash equivalents and restricted cash at beginning of year
|
3,044
|
|
|
4,584
|
|
|
4,823
|
|
|||
Cash, cash equivalents and restricted cash at end of year
|
$
|
101,238
|
|
|
$
|
3,044
|
|
|
$
|
4,584
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance, beginning of year
|
$
|
1,190
|
|
|
$
|
673
|
|
|
$
|
579
|
|
Charged to provision for doubtful accounts, net of recoveries
|
512
|
|
|
839
|
|
|
157
|
|
|||
Write-offs
|
(175
|
)
|
|
(322
|
)
|
|
(63
|
)
|
|||
Balance, end of year
|
$
|
1,527
|
|
|
$
|
1,190
|
|
|
$
|
673
|
|
|
Consumer and Industrial Chemistry Technologies
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Discontinued operations:
|
|
|
|
|
|
||||||
Revenue
|
$
|
11,031
|
|
|
$
|
72,344
|
|
|
$
|
73,992
|
|
Operating expenses
|
(11,572
|
)
|
|
(65,940
|
)
|
|
(63,621
|
)
|
|||
Depreciation and amortization
|
—
|
|
|
(2,760
|
)
|
|
(2,391
|
)
|
|||
Research and development
|
(69
|
)
|
|
(590
|
)
|
|
(515
|
)
|
|||
Income from operations
|
(610
|
)
|
|
3,054
|
|
|
7,465
|
|
|||
Other income (expense)
|
35
|
|
|
341
|
|
|
(284
|
)
|
|||
Gain on sale of businesses
|
64,160
|
|
|
—
|
|
|
—
|
|
|||
Income before income taxes
|
63,585
|
|
|
3,395
|
|
|
7,181
|
|
|||
Income tax expense
|
(19,129
|
)
|
|
(652
|
)
|
|
(2,730
|
)
|
|||
Net income (loss) from discontinued operations
|
$
|
44,456
|
|
|
$
|
2,743
|
|
|
$
|
4,451
|
|
|
Consumer and Industrial Chemistry Technologies
|
||||||
|
2019
|
|
2018
|
||||
Assets:
|
|
|
|
||||
Accounts receivable, net
|
$
|
—
|
|
|
$
|
10,547
|
|
Inventories, net
|
—
|
|
|
52,069
|
|
||
Other current assets
|
—
|
|
|
446
|
|
||
Property and equipment, net
|
—
|
|
|
15,899
|
|
||
Goodwill
|
—
|
|
|
19,480
|
|
||
Other intangible assets, net
|
—
|
|
|
20,029
|
|
||
Assets held for sale
|
—
|
|
|
118,470
|
|
||
Liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
—
|
|
|
$
|
8,883
|
|
Accrued liabilities
|
—
|
|
|
291
|
|
||
Liabilities held for sale
|
$
|
—
|
|
|
$
|
9,174
|
|
|
Drilling Technologies
|
|
Production Technologies
|
||||||||||||||
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
11,534
|
|
|
|
$
|
—
|
|
|
$
|
4,002
|
|
|
Cost of revenue
|
—
|
|
|
(7,309
|
)
|
|
|
—
|
|
|
(3,236
|
)
|
|
||||
Selling, general and administrative
|
—
|
|
|
(6,963
|
)
|
|
|
—
|
|
|
(1,759
|
)
|
|
||||
Research and development
|
—
|
|
|
(5
|
)
|
|
|
—
|
|
|
(364
|
)
|
|
||||
Gain (loss) on disposal of long-lived assets
|
—
|
|
|
97
|
|
|
|
—
|
|
|
—
|
|
|
||||
Loss from operations
|
—
|
|
|
(2,646
|
)
|
|
|
—
|
|
|
(1,357
|
)
|
|
||||
Other expense
|
—
|
|
|
(96
|
)
|
|
|
—
|
|
|
(52
|
)
|
|
||||
Loss on sale of businesses
|
—
|
|
|
(1,600
|
)
|
|
|
—
|
|
|
(479
|
)
|
|
||||
Loss on write-down of assets held for sale
|
—
|
|
|
(6,831
|
)
|
|
|
—
|
|
|
(9,718
|
)
|
|
||||
Loss before income taxes
|
—
|
|
|
(11,173
|
)
|
|
|
—
|
|
|
(11,606
|
)
|
|
||||
Income tax benefit
|
—
|
|
|
4,138
|
|
|
|
—
|
|
|
4,299
|
|
|
||||
Net loss from discontinued operations
|
$
|
—
|
|
|
$
|
(7,035
|
)
|
|
|
$
|
—
|
|
|
$
|
(7,307
|
)
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Products
|
$
|
115,471
|
|
|
$
|
172,412
|
|
|
$
|
237,211
|
|
Services
|
3,882
|
|
|
5,361
|
|
|
5,895
|
|
|||
|
$
|
119,353
|
|
|
$
|
177,773
|
|
|
$
|
243,106
|
|
Operating expenses (excluding depreciation and amortization):
|
|
|
|
|
|
||||||
Products
|
$
|
147,709
|
|
|
$
|
152,846
|
|
|
$
|
182,330
|
|
Services
|
1,516
|
|
|
6,962
|
|
|
6,414
|
|
|||
|
$
|
149,225
|
|
|
$
|
159,808
|
|
|
$
|
188,744
|
|
•
|
Sales commissions are expensed when incurred because the amortization period would have been one year or less. These costs are recorded within segment selling and administrative expenses.
|
•
|
The majority of the Company’s services are short-term in nature with a contract term of one year or less. For those contracts, the Company has utilized the practical expedient in ASC 606-10-50-14, exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the
|
•
|
The Company’s payment terms are short-term in nature with settlements of one year or less. The Company has utilized the practical expedient in ASC 606-10-32-18, exempting the Company from adjusting the promised amount of consideration for the effects of a significant financing component given that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.
|
•
|
In most service contracts, the Company has the right to consideration from a customer in an amount that
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Supplemental non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Value of common stock issued in payment of accrued liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
188
|
|
Exercise of stock options by common stock surrender
|
—
|
|
|
—
|
|
|
5,863
|
|
|||
|
|
|
|
|
|
||||||
Supplemental cash payment information:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
599
|
|
|
$
|
2,502
|
|
|
$
|
1,851
|
|
Income taxes (received, net of payments) paid, net of refunds
|
(699
|
)
|
|
(139
|
)
|
|
(10,195
|
)
|
|
For the years ending
|
||||||
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Operating lease expense
|
$
|
2,609
|
|
|
$
|
—
|
|
Finance lease expense:
|
|
|
|
||||
Amortization of right-of-use assets
|
1,237
|
|
|
—
|
|
||
Interest on lease liabilities
|
10
|
|
|
—
|
|
||
Total finance lease expense
|
1,247
|
|
|
—
|
|
||
Short-term lease expense
|
123
|
|
|
—
|
|
||
Total lease expense
|
$
|
3,979
|
|
|
$
|
—
|
|
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash flows from operating leases
|
2,336
|
|
|
—
|
|
||
Operating cash flows from finance leases
|
10
|
|
|
—
|
|
||
Financing cash flows from finance leases
|
51
|
|
|
—
|
|
Years ending December 31,
|
|
Operating Leases
|
|
Finance Leases
|
||||
2020
|
|
2,012
|
|
|
70
|
|
||
2021
|
|
1,962
|
|
|
70
|
|
||
2022
|
|
1,916
|
|
|
47
|
|
||
2023
|
|
1,976
|
|
|
40
|
|
||
2024
|
|
2,017
|
|
|
23
|
|
||
Thereafter
|
|
23,692
|
|
|
—
|
|
||
Total lease payments
|
|
$
|
33,575
|
|
|
$
|
250
|
|
Less: Interest
|
|
(16,116
|
)
|
|
(37
|
)
|
||
Present value of lease liabilities
|
|
$
|
17,459
|
|
|
$
|
213
|
|
|
December 31, 2019
|
||
Operating Leases
|
|
||
Operating lease right-of-use assets
|
$
|
16,388
|
|
|
|
||
Current portion of lease liabilities
|
$
|
486
|
|
Long-term operating lease liabilities
|
16,973
|
|
|
Total operating lease liabilities
|
$
|
17,459
|
|
|
|
||
Finance Leases
|
|
||
Property and equipment
|
$
|
293
|
|
Accumulated depreciation
|
(28
|
)
|
|
Property and equipment, net
|
$
|
265
|
|
|
|
||
Current portion of lease liabilities
|
$
|
55
|
|
Long-term finance lease liabilities
|
158
|
|
|
Total finance lease liabilities
|
$
|
213
|
|
|
|
||
Weighted Average Remaining Lease Term
|
|
||
Operating leases
|
16.6 years
|
|
|
Finance leases
|
4.6 years
|
|
|
|
|
||
Weighted Average Discount Rate
|
|
||
Operating leases
|
8.9
|
%
|
|
Finance leases
|
9.0
|
%
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Raw materials
|
$
|
4,339
|
|
|
$
|
10,608
|
|
Work-in-process
|
—
|
|
|
—
|
|
||
Finished goods
|
23,056
|
|
|
18,798
|
|
||
Inventories
|
27,395
|
|
|
29,406
|
|
||
Less reserve for excess and obsolete inventory
|
(5,698
|
)
|
|
(2,117
|
)
|
||
Inventories, net
|
$
|
21,697
|
|
|
$
|
27,289
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance, beginning of year
|
$
|
2,117
|
|
|
$
|
368
|
|
|
$
|
50
|
|
Charged to provisions
|
5,659
|
|
|
2,418
|
|
|
388
|
|
|||
Deductions for disposals
|
(2,078
|
)
|
|
(669
|
)
|
|
(70
|
)
|
|||
Balance, end of the year
|
$
|
5,698
|
|
|
$
|
2,117
|
|
|
$
|
368
|
|
|
December 31
|
||||||
|
2019
|
|
2018
|
||||
Land
|
$
|
4,440
|
|
|
$
|
4,372
|
|
Buildings and leasehold improvements
|
38,741
|
|
|
37,719
|
|
||
Machinery and equipment
|
27,694
|
|
|
26,995
|
|
||
Fixed assets in progress
|
—
|
|
|
581
|
|
||
Furniture and fixtures
|
1,671
|
|
|
1,573
|
|
||
Transportation equipment
|
1,440
|
|
|
1,852
|
|
||
Computer equipment and software
|
3,348
|
|
|
9,370
|
|
||
Property and equipment
|
77,334
|
|
|
82,462
|
|
||
Less accumulated depreciation
|
(37,505
|
)
|
|
(36,977
|
)
|
||
Property and equipment, net
|
$
|
39,829
|
|
|
$
|
45,485
|
|
Balance at December 31, 2017:
|
|
||
Goodwill
|
$
|
37,180
|
|
Accumulated impairment losses
|
—
|
|
|
Goodwill balance, net
|
37,180
|
|
|
Activity during the year 2018:
|
|
||
Goodwill impairment recognized
|
(37,180
|
)
|
|
Acquisition goodwill recognized
|
—
|
|
|
Balance at December 31, 2018:
|
|
||
Goodwill
|
37,180
|
|
|
Accumulated impairment losses
|
(37,180
|
)
|
|
Goodwill balance, net
|
—
|
|
|
Activity during the year 2019:
|
|
||
Goodwill impairment recognized
|
—
|
|
|
Acquisition goodwill recognized
|
—
|
|
|
Balance at December 31, 2019:
|
|
||
Goodwill
|
—
|
|
|
Accumulated impairment losses
|
—
|
|
|
Goodwill balance, net
|
$
|
—
|
|
|
December 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Cost
|
|
Accumulated
Amortization
|
||||||||
Finite lived intangible assets:
|
|
|
|
|
|
|
|
||||||||
Patents and technology
|
$
|
17,493
|
|
|
$
|
6,715
|
|
|
$
|
18,884
|
|
|
$
|
6,689
|
|
Customer lists
|
15,367
|
|
|
6,013
|
|
|
15,367
|
|
|
5,259
|
|
||||
Trademarks and brand names
|
1,351
|
|
|
1,160
|
|
|
1,485
|
|
|
1,149
|
|
||||
Total finite lived intangible assets acquired
|
34,211
|
|
|
13,888
|
|
|
35,736
|
|
|
13,097
|
|
||||
Deferred financing costs
|
—
|
|
|
—
|
|
|
1,924
|
|
|
496
|
|
||||
Total amortizable intangible assets
|
34,211
|
|
|
$
|
13,888
|
|
|
37,660
|
|
|
$
|
13,593
|
|
||
Indefinite lived intangible assets:
|
|
|
|
|
|
|
|
||||||||
Trademarks and brand names
|
2,760
|
|
|
|
|
2,760
|
|
|
|
||||||
Total other intangible assets
|
$
|
36,971
|
|
|
|
|
$
|
40,420
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Carrying amount:
|
|
|
|
|
|
|
|
||||||||
Other intangible assets, net
|
$
|
23,083
|
|
|
|
|
$
|
26,827
|
|
|
|
Year ending December 31,
|
|
|
||
2020
|
|
$
|
1,941
|
|
2021
|
|
1,935
|
|
|
2022
|
|
1,915
|
|
|
2023
|
|
1,858
|
|
|
2024
|
|
1,854
|
|
|
Thereafter
|
|
10,109
|
|
|
Other amortizable intangible assets, net
|
|
$
|
19,612
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Long-term debt, classified as current:
|
|
|
|
||||
Borrowings under revolving credit facility
|
$
|
—
|
|
|
$
|
49,731
|
|
•
|
Level 1 — Quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2 — Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
|
•
|
Level 3 — Significant unobservable inputs that are supported by little or no market activity or that are based on the reporting entity’s assumptions about the inputs.
|
|
December 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Borrowings under revolving credit facility
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
49,731
|
|
|
$
|
49,731
|
|
|
Years ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Weighted average common shares outstanding - Basic
|
58,750
|
|
|
57,995
|
|
|
57,580
|
|
Assumed conversions:
|
|
|
|
|
|
|||
Incremental common shares from stock options
|
—
|
|
|
—
|
|
|
—
|
|
Incremental common shares from restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
Weighted average common shares outstanding - Diluted
|
58,750
|
|
|
57,995
|
|
|
57,580
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(22,923
|
)
|
|
$
|
—
|
|
|
$
|
(1,126
|
)
|
State
|
(2,295
|
)
|
|
97
|
|
|
587
|
|
|||
Foreign
|
(238
|
)
|
|
(740
|
)
|
|
488
|
|
|||
Total current
|
(25,456
|
)
|
|
(643
|
)
|
|
(51
|
)
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
23,910
|
|
|
(6,585
|
)
|
|
5,994
|
|
|||
State
|
1,345
|
|
|
(89
|
)
|
|
214
|
|
|||
Foreign
|
—
|
|
|
101
|
|
|
(45
|
)
|
|||
Total deferred
|
25,255
|
|
|
(6,573
|
)
|
|
6,163
|
|
|||
Income tax (benefit) expense
|
$
|
(201
|
)
|
|
$
|
(7,216
|
)
|
|
$
|
6,112
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
(76,758
|
)
|
|
$
|
(80,034
|
)
|
|
$
|
(10,025
|
)
|
Foreign
|
(178
|
)
|
|
(623
|
)
|
|
(1,367
|
)
|
|||
Loss before income taxes
|
$
|
(76,936
|
)
|
|
$
|
(80,657
|
)
|
|
$
|
(11,392
|
)
|
|
Year ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Federal statutory tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
0.6
|
|
|
0.8
|
|
|
(3.2
|
)
|
Non-U.S. income taxed at different rates
|
0.5
|
|
|
0.8
|
|
|
(4.3
|
)
|
(Increase) decrease in valuation allowance
|
(19.9
|
)
|
|
(3.6
|
)
|
|
0.1
|
|
Impact of 2017 Tax Cuts and Jobs Act
|
—
|
|
|
—
|
|
|
(64.2
|
)
|
Net operating loss carryback adjustment
|
—
|
|
|
—
|
|
|
—
|
|
Reduction in tax benefit related to stock-based awards
|
(0.1
|
)
|
|
(1.0
|
)
|
|
(16.9
|
)
|
Non-deductible expenditures and goodwill
|
—
|
|
|
(9.0
|
)
|
|
(3.9
|
)
|
Research and development credit
|
0.2
|
|
|
0.3
|
|
|
3.6
|
|
Other
|
(2.0
|
)
|
|
(0.4
|
)
|
|
0.1
|
|
Effective income tax rate
|
0.3
|
%
|
|
8.9
|
%
|
|
(53.7
|
)%
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
17,248
|
|
|
$
|
30,241
|
|
Allowance for doubtful accounts
|
1,037
|
|
|
1,073
|
|
||
Inventory valuation reserves
|
629
|
|
|
1,057
|
|
||
Equity compensation
|
353
|
|
|
548
|
|
||
Goodwill
|
965
|
|
|
1,089
|
|
||
Accrued compensation
|
587
|
|
|
342
|
|
||
Foreign tax credit carryforward
|
3,894
|
|
|
4,041
|
|
||
Settlement liability
|
3,530
|
|
|
—
|
|
||
Lease liability
|
3,992
|
|
|
—
|
|
||
Interest expense limitation
|
—
|
|
|
534
|
|
||
Other
|
96
|
|
|
50
|
|
||
Total gross deferred tax assets
|
32,331
|
|
|
38,975
|
|
||
Valuation allowance
|
(19,878
|
)
|
|
(4,042
|
)
|
||
Total deferred tax assets, net
|
12,453
|
|
|
34,933
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property and equipment
|
(3,696
|
)
|
|
(6,613
|
)
|
||
Intangible assets
|
(4,597
|
)
|
|
(9,657
|
)
|
||
ROU asset
|
(3,793
|
)
|
|
—
|
|
||
Prepaid insurance and other
|
(331
|
)
|
|
—
|
|
||
Total gross deferred tax liabilities
|
(12,417
|
)
|
|
(16,270
|
)
|
||
Net deferred tax assets
|
$
|
36
|
|
|
$
|
18,663
|
|
|
Year ended December 31,
|
||||
|
2019
|
|
2018
|
||
Shares issued at the beginning of the year
|
62,162,875
|
|
|
60,622,986
|
|
Issued as restricted stock award grants
|
924,022
|
|
|
1,539,889
|
|
Issued as restricted stock unit grants
|
570,000
|
|
|
—
|
|
Shares issued at the end of the year
|
63,656,897
|
|
|
62,162,875
|
|
Stock Options
|
Shares
|
|
Weighted-Average
Exercise Price |
|||
Outstanding as of January 1, 2019
|
—
|
|
|
$
|
—
|
|
Granted
|
3,000,000
|
|
|
1.22
|
|
|
Exercised
|
—
|
|
|
—
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Expired
|
—
|
|
|
—
|
|
|
Outstanding as of
|
|
|
|
|||
December 31, 2019
|
3,000,000
|
|
|
$
|
1.22
|
|
Vested or expected to vest at
|
|
|
|
|||
December 31, 2019
|
—
|
|
|
$
|
—
|
|
Options exercisable as of
|
|
|
|
|||
December 31, 2019
|
—
|
|
|
$
|
—
|
|
|
Time-Vested Options
|
|
Performance-Based Options
|
||
Risk-free interest rate
|
1.81
|
%
|
|
1.84
|
%
|
Expected volatility of common stock
|
73.59
|
%
|
|
71.57
|
%
|
Expected life of options in years
|
5.0
|
|
|
7.0
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
Vesting period in years
|
5.0
|
|
|
7.0
|
|
Restricted Stock Shares
|
|
Shares
|
|
Weighted-
Average Fair
Value at Date of
Grant
|
|||
Non-vested at January 1, 2019
|
|
1,050,372
|
|
|
$
|
3.47
|
|
Granted to employees
|
|
1,494,022
|
|
|
2.62
|
|
|
Vested
|
|
(615,941
|
)
|
|
3.72
|
|
|
Forfeited
|
|
(299,433
|
)
|
|
3.16
|
|
|
Non-vested at December 31, 2019
|
|
1,629,020
|
|
|
$
|
2.66
|
|
Restricted Stock Units
|
|
Units
|
|
Weighted-
Average Fair
Value at Date of
Grant
|
|||
RSU equivalents at January 1, 2019
|
|
301,766
|
|
|
$
|
3.94
|
|
2018 equivalents forfeited
|
|
(272,046
|
)
|
|
6.39
|
|
|
Total equivalents
|
|
29,720
|
|
|
—
|
|
|
2019 equivalents granted
|
|
1,071,530
|
|
|
3.75
|
|
|
2019 equivalents forfeited
|
|
(62,776
|
)
|
|
1.66
|
|
|
RSU equivalents at December 31, 2019
|
|
1,038,474
|
|
|
$
|
3.24
|
|
As of and for the years ended December 31,
|
|
Energy Chemistry Technologies
|
|
Corporate and
Other
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
2019
|
|
|
|
|
|
|
||||||
Net revenue from external customers
|
|
$
|
119,353
|
|
|
$
|
—
|
|
|
$
|
119,353
|
|
Loss from operations
|
|
(46,485
|
)
|
|
(30,140
|
)
|
|
(76,625
|
)
|
|||
Depreciation and amortization
|
|
7,439
|
|
|
1,026
|
|
|
8,465
|
|
|||
Capital expenditures
|
|
2,411
|
|
|
—
|
|
|
2,411
|
|
|||
|
|
|
|
|
|
|
||||||
2018
|
|
|
|
|
|
|
||||||
Net revenue from external customers
|
|
$
|
177,773
|
|
|
$
|
—
|
|
|
$
|
177,773
|
|
Income (loss) from operations
|
|
(36,817
|
)
|
|
(32,994
|
)
|
|
(69,811
|
)
|
|||
Depreciation and amortization
|
|
7,107
|
|
|
2,109
|
|
|
9,216
|
|
|||
Capital expenditures
|
|
2,733
|
|
|
826
|
|
|
3,559
|
|
|||
|
|
|
|
|
|
|
||||||
2017
|
|
|
|
|
|
|
||||||
Net revenue from external customers
|
|
$
|
243,106
|
|
|
$
|
—
|
|
|
$
|
243,106
|
|
Income (loss) from operations
|
|
33,611
|
|
|
(43,931
|
)
|
|
(10,320
|
)
|
|||
Depreciation and amortization
|
|
7,323
|
|
|
2,445
|
|
|
9,768
|
|
|||
Capital expenditures
|
|
3,279
|
|
|
918
|
|
|
4,197
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Energy Chemistry Technologies
|
$
|
117,357
|
|
|
$
|
139,205
|
|
Corporate and Other
|
114,490
|
|
|
28,208
|
|
||
Total segments
|
231,847
|
|
|
167,413
|
|
||
Held for sale
|
—
|
|
|
118,470
|
|
||
Total assets
|
$
|
231,847
|
|
|
$
|
285,883
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
U.S.
|
$
|
104,786
|
|
|
$
|
146,421
|
|
|
$
|
219,517
|
|
Other countries
|
14,567
|
|
|
31,352
|
|
|
23,589
|
|
|||
Total
|
$
|
119,353
|
|
|
$
|
177,773
|
|
|
$
|
243,106
|
|
|
Years ended December 31,
|
||||
|
2019
|
|
2018
|
|
2017
|
Customer A
|
20.4%
|
|
*
|
|
*
|
Customer B
|
10.3%
|
|
12.23%
|
|
*
|
Customer C
|
*
|
|
10.1%
|
|
*
|
Customer D
|
*
|
|
*
|
|
16.7%
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total
|
||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue (1)
|
$
|
43,256
|
|
|
$
|
34,692
|
|
|
$
|
21,879
|
|
|
$
|
19,526
|
|
|
$
|
119,353
|
|
Loss from operations (1)
|
(14,266
|
)
|
|
(13,859
|
)
|
|
(11,853
|
)
|
|
(36,647
|
)
|
|
(76,625
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) income from continuing operations (1)
|
$
|
(15,380
|
)
|
|
$
|
(12,990
|
)
|
|
$
|
(11,227
|
)
|
|
$
|
(37,138
|
)
|
|
$
|
(76,735
|
)
|
Income (loss) from discontinued operations, net of tax
|
48,372
|
|
|
(1,608
|
)
|
|
117
|
|
|
(2,425
|
)
|
|
44,456
|
|
|||||
Net (loss) income
|
32,992
|
|
|
(14,598
|
)
|
|
(11,110
|
)
|
|
(39,563
|
)
|
|
(32,279
|
)
|
|||||
Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net loss attributable to Flotek Industries, Inc. (Flotek)
|
$
|
32,992
|
|
|
$
|
(14,598
|
)
|
|
$
|
(11,110
|
)
|
|
$
|
(39,563
|
)
|
|
$
|
(32,279
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Amounts attributable to Flotek shareholders:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss from continuing operations (1)
|
$
|
(15,380
|
)
|
|
$
|
(12,990
|
)
|
|
$
|
(11,227
|
)
|
|
$
|
(37,138
|
)
|
|
$
|
(76,735
|
)
|
Income (loss) from discontinued operations, net of tax
|
48,372
|
|
|
(1,608
|
)
|
|
117
|
|
|
(2,425
|
)
|
|
44,456
|
|
|||||
Net income (loss) attributable to Flotek
|
$
|
32,992
|
|
|
$
|
(14,598
|
)
|
|
$
|
(11,110
|
)
|
|
$
|
(39,563
|
)
|
|
$
|
(32,279
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings (loss) per common share (2):
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
(0.26
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
(1.31
|
)
|
Discontinued operations
|
0.83
|
|
|
(0.03
|
)
|
|
—
|
|
|
(0.04
|
)
|
|
0.76
|
|
|||||
Basic earnings (loss) per common share
|
$
|
0.57
|
|
|
$
|
(0.25
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.68
|
)
|
|
$
|
(0.55
|
)
|
Diluted earnings (loss) per common share (2):
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
(0.26
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
(1.31
|
)
|
Discontinued operations
|
0.83
|
|
|
(0.03
|
)
|
|
—
|
|
|
(0.04
|
)
|
|
0.76
|
|
|||||
Diluted earnings (loss) per common share
|
$
|
0.57
|
|
|
$
|
(0.25
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.68
|
)
|
|
$
|
(0.55
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue (1)
|
$
|
41,069
|
|
|
$
|
39,546
|
|
|
$
|
53,709
|
|
|
$
|
43,449
|
|
|
$
|
177,773
|
|
(Loss) income from operations (1)
|
(9,223
|
)
|
|
(47,140
|
)
|
|
(4,080
|
)
|
|
(9,368
|
)
|
|
(69,811
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss from continuing operations (1)
|
$
|
(9,528
|
)
|
|
$
|
(68,987
|
)
|
|
$
|
(4,869
|
)
|
|
$
|
9,943
|
|
|
$
|
(73,441
|
)
|
(Loss) income from discontinued operations, net of tax
|
9,595
|
|
|
(6,404
|
)
|
|
937
|
|
|
(1,385
|
)
|
|
2,743
|
|
|||||
Net loss (income)
|
$
|
67
|
|
|
$
|
(75,391
|
)
|
|
$
|
(3,932
|
)
|
|
$
|
8,558
|
|
|
$
|
(70,698
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings (loss) per common share (2):
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
(0.17
|
)
|
|
$
|
(1.19
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.18
|
|
|
$
|
(1.26
|
)
|
Discontinued operations
|
0.17
|
|
|
(0.11
|
)
|
|
0.02
|
|
|
(0.02
|
)
|
|
0.05
|
|
|||||
Basic earnings (loss) per common share
|
$
|
—
|
|
|
$
|
(1.30
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
0.16
|
|
|
$
|
(1.21
|
)
|
Diluted earnings (loss) per common share (2):
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
(0.17
|
)
|
|
$
|
(1.19
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.18
|
|
|
$
|
(1.26
|
)
|
Discontinued operations
|
0.17
|
|
|
(0.11
|
)
|
|
0.02
|
|
|
(0.02
|
)
|
|
0.05
|
|
|||||
Diluted earnings (loss) per common share
|
$
|
—
|
|
|
$
|
(1.30
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
0.16
|
|
|
$
|
(1.21
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(1) Amounts exclude impact of discontinued operations.
|
|||||||||||||||||||
(2) The sum of the quarterly earnings (loss) per share (basic and diluted) may not agree to the earnings (loss) per share for the year due to the timing of common stock issuances.
|
Exhibit
Number
|
|
Exhibit Title
|
2.1
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
4.1
|
|
|
4.2
|
*
|
|
10.1
|
†
|
|
10.2
|
†
|
|
10.3
|
†
|
|
10.4
|
†
|
|
10.5
|
†
|
|
10.6
|
†
|
|
10.7
|
†
|
|
10.8
|
†
|
|
10.9
|
†
|
|
10.10
|
†
|
|
10.11
|
***
|
|
10.12
|
***
|
|
10.13
|
|
|
10.14
|
†
|
|
10.15
|
†
|
|
10.16
|
†
|
|
|
|
FLOTEK INDUSTRIES, INC.
|
||
|
|
|
By:
|
|
/s/ John W. Gibson Jr.
|
|
|
John W. Gibson Jr.
|
|
|
President, Chief Executive Officer and Chairman of the Board
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ JOHN W. GIBSON JR.
|
|
President, Chief Executive Officer and Chairman of the Board
|
|
March 13, 2020
|
John W. Gibson Jr.
|
|
(Principal Executive Officer)
|
|
|
/s/ ELIZABETH T. WILKINSON
|
|
Chief Financial Officer
|
|
March 13, 2020
|
Elizabeth T. Wilkinson
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
|
/s/ MICHELLE M. ADAMS
|
|
Director
|
|
March 13, 2020
|
Michelle M. Adams
|
|
|
|
|
/s/ TED D. BROWN
|
|
Director
|
|
March 13, 2020
|
Ted D. Brown
|
|
|
|
|
/s/ L. MELVIN COOPER
|
|
Director
|
|
March 13, 2020
|
L. Melvin Cooper
|
|
|
|
|
/s/ PAUL W. HOBBY
|
|
Director
|
|
March 13, 2020
|
Paul W. Hobby
|
|
|
|
|
/s/ L.V. “BUD” MCGUIRE
|
|
Director
|
|
March 13, 2020
|
L.V. “Bud” McGuire
|
|
|
|
|
/s/ DAVID NIERENBERG
|
|
Director
|
|
March 13, 2020
|
David Nierenberg
|
|
|
|
|
•
|
80,000,000 shares of common stock, $0.0001 par value; and
|
•
|
100,000 shares of preferred stock, $0.0001 par value.
|
•
|
our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder prior to the date the person attained the status;
|
•
|
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding, for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers and employee stock plans, under which employee participants do not have the right to; or
|
•
|
the business combination is approved by our board of directors on or subsequent to the date the person became an interested stockholder and authorized at an annual or special meeting of the stockholders by the affirmative vote of the holders of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
|
|
/s/ John W. Gibson Jr.
|
John W. Gibson Jr.
|
President, Chief Executive Officer and Chairman of the Board
|
|
/s/ ELIZABETH T. WILKINSON
|
Elizabeth T. Wilkinson
|
Chief Financial Officer
|
|
/s/John W. Gibson Jr.
|
John W. Gibson Jr.
|
President, Chief Executive Officer and Chairman of the Board
|
|
/s/ ELIZABETH T. WILKINSON
|
Elizabeth T. Wilkinson
|
Chief Financial Officer
|