FORM
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10-Q
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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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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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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8846 N. Sam Houston Parkway W.
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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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Large accelerated filer
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☐
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Accelerated Filer
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☒
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Non-accelerated filer
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☐
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Smaller reporting company
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☒
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Emerging growth company
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☐
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Unaudited Condensed Consolidated Balance Sheets at March 31, 2020 and December 31, 2019
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Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019
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Unaudited Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019
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Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019
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Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2020 and 2019
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March 31, 2020
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December 31, 2019
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||||
ASSETS
|
|
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|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
80,263
|
|
|
$
|
100,575
|
|
Restricted cash
|
664
|
|
|
663
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $1,642 and $1,527 at March 31, 2020 and December 31, 2019, respectively
|
13,297
|
|
|
15,638
|
|
||
Inventories, net
|
16,322
|
|
|
23,210
|
|
||
Income taxes receivable
|
6,635
|
|
|
631
|
|
||
Other current assets
|
9,005
|
|
|
13,191
|
|
||
Total current assets
|
126,186
|
|
|
153,908
|
|
||
Property and equipment, net
|
7,946
|
|
|
39,829
|
|
||
Operating lease right-of-use assets
|
2,473
|
|
|
16,388
|
|
||
Deferred tax assets, net
|
169
|
|
|
152
|
|
||
Other intangible assets, net
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—
|
|
|
20,323
|
|
||
TOTAL ASSETS
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$
|
136,774
|
|
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$
|
230,600
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
8,556
|
|
|
$
|
16,231
|
|
Accrued liabilities
|
8,320
|
|
|
24,552
|
|
||
Income taxes payable
|
72
|
|
|
—
|
|
||
Current portion of operating lease liabilities
|
1,167
|
|
|
486
|
|
||
Current portion of finance lease liabilities
|
56
|
|
|
55
|
|
||
Total current liabilities
|
18,171
|
|
|
41,324
|
|
||
Long-term operating lease liabilities
|
9,754
|
|
|
16,973
|
|
||
Long-term finance lease liabilities
|
144
|
|
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158
|
|
||
Deferred tax liabilities, net
|
—
|
|
|
116
|
|
||
Total liabilities
|
28,069
|
|
|
58,571
|
|
||
Commitments and contingencies “See Note 16”
|
|
|
|
||||
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; 64,338,087 shares issued and 59,942,270 shares outstanding at March 31, 2020; 63,656,897 shares issued and 59,511,416 shares outstanding at December 31, 2019
|
6
|
|
|
6
|
|
||
Additional paid-in capital
|
348,375
|
|
|
347,564
|
|
||
Accumulated other comprehensive loss
|
(1,089
|
)
|
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(966
|
)
|
||
Retained earnings (accumulated deficit)
|
(205,058
|
)
|
|
(141,091
|
)
|
||
Treasury stock, at cost; 4,395,817 and 4,145,481 shares at March 31, 2020 and December 31, 2019, respectively
|
(33,529
|
)
|
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(33,484
|
)
|
||
Total stockholders’ equity
|
108,705
|
|
|
172,029
|
|
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
136,774
|
|
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$
|
230,600
|
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenue
|
$
|
19,416
|
|
|
$
|
43,256
|
|
Costs and expenses:
|
|
|
|
||||
Operating expenses (excluding depreciation and amortization)
|
22,841
|
|
|
43,968
|
|
||
Corporate general and administrative
|
4,493
|
|
|
7,281
|
|
||
Depreciation and amortization
|
2,191
|
|
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2,260
|
|
||
Research and development
|
2,555
|
|
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2,285
|
|
||
(Gain) loss on disposal of long-lived assets
|
(33
|
)
|
|
1,097
|
|
||
Impairment of fixed and long-lived assets
|
57,454
|
|
|
—
|
|
||
Total costs and expenses
|
89,501
|
|
|
56,891
|
|
||
Loss from operations
|
(70,085
|
)
|
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(13,635
|
)
|
||
Other (expense) income:
|
|
|
|
||||
Interest expense
|
(4
|
)
|
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(1,998
|
)
|
||
Other (expense) income, net
|
(47
|
)
|
|
110
|
|
||
Total other expense
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(51
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)
|
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(1,888
|
)
|
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Loss before income taxes
|
(70,136
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)
|
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(15,523
|
)
|
||
Income tax benefit
|
6,169
|
|
|
311
|
|
||
Loss from continuing operations
|
(63,967
|
)
|
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(15,212
|
)
|
||
Income from discontinued operations, net of tax
|
—
|
|
|
46,074
|
|
||
Net (loss) income
|
$
|
(63,967
|
)
|
|
$
|
30,862
|
|
|
|
|
|
||||
Amounts attributable to Flotek shareholders:
|
|
|
|
||||
Loss from continuing operations
|
$
|
(63,967
|
)
|
|
$
|
(15,212
|
)
|
Income from discontinued operations, net of tax
|
—
|
|
|
46,074
|
|
||
Net (loss) income attributable to Flotek
|
$
|
(63,967
|
)
|
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$
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30,862
|
|
|
|
|
|
||||
Basic earnings (loss) per common share:
|
|
|
|
||||
Continuing operations
|
$
|
(1.07
|
)
|
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$
|
(0.26
|
)
|
Discontinued operations, net of tax
|
—
|
|
|
0.79
|
|
||
Basic earnings (loss) per common share
|
$
|
(1.07
|
)
|
|
$
|
0.53
|
|
|
|
|
|
||||
Diluted earnings (loss) per common share:
|
|
|
|
||||
Continuing operations
|
$
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(1.07
|
)
|
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$
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(0.26
|
)
|
Discontinued operations, net of tax
|
—
|
|
|
0.79
|
|
||
Diluted earnings (loss) per common share
|
$
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(1.07
|
)
|
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$
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0.53
|
|
|
|
|
|
||||
Weighted average common shares:
|
|
|
|
||||
Weighted average common shares used in computing basic earnings (loss) per common share
|
59,836
|
|
|
58,373
|
|
||
Weighted average common shares used in computing diluted earnings (loss) per common share
|
59,836
|
|
|
58,373
|
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Loss from continuing operations
|
$
|
(63,967
|
)
|
|
$
|
(15,212
|
)
|
Income from discontinued operations, net of tax
|
—
|
|
|
46,074
|
|
||
Net (loss) income
|
(63,967
|
)
|
|
30,862
|
|
||
Other comprehensive (loss) income:
|
|
|
|
||||
Foreign currency translation adjustment
|
(123
|
)
|
|
94
|
|
||
Comprehensive (loss) income
|
$
|
(64,090
|
)
|
|
$
|
30,956
|
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net (loss) income attributable to Flotek Industries, Inc. (Flotek)
|
$
|
(63,967
|
)
|
|
$
|
30,862
|
|
Less: Income from discontinued operations, net of tax
|
—
|
|
|
46,074
|
|
||
Loss from continuing operations
|
(63,967
|
)
|
|
(15,212
|
)
|
||
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
2,191
|
|
|
2,260
|
|
||
Amortization of deferred financing costs
|
—
|
|
|
1,428
|
|
||
Provision for doubtful accounts
|
597
|
|
|
366
|
|
||
Provision for excess and obsolete inventory
|
529
|
|
|
—
|
|
||
Impairment of right-of-use assets
|
7,434
|
|
|
—
|
|
||
Impairment of fixed assets
|
30,178
|
|
|
—
|
|
||
Impairment of intangible assets
|
19,842
|
|
|
—
|
|
||
Loss on disposal of long-lived assets
|
(33
|
)
|
|
1,097
|
|
||
Non-cash lease expense
|
184
|
|
|
230
|
|
||
Stock compensation expense
|
462
|
|
|
456
|
|
||
Deferred income tax provision
|
(133
|
)
|
|
17,860
|
|
||
Reduction in tax benefit related to share-based awards
|
—
|
|
|
24
|
|
||
Changes in current assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
1,675
|
|
|
(420
|
)
|
||
Inventories, net
|
4,793
|
|
|
(7,661
|
)
|
||
Income taxes receivable
|
(6,212
|
)
|
|
(247
|
)
|
||
Other current assets
|
6,926
|
|
|
(18,199
|
)
|
||
Accounts payable
|
(7,666
|
)
|
|
(1,306
|
)
|
||
Accrued liabilities
|
(17,522
|
)
|
|
(8,157
|
)
|
||
Income taxes payable
|
226
|
|
|
2,428
|
|
||
Interest payable
|
—
|
|
|
(8
|
)
|
||
Net cash used in operating activities
|
(20,496
|
)
|
|
(25,061
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(42
|
)
|
|
(461
|
)
|
||
Proceeds from sale of business
|
—
|
|
|
169,722
|
|
||
Proceeds from sale of assets
|
34
|
|
|
132
|
|
||
Abandoned/(purchase) of patents and other intangible assets
|
49
|
|
|
(103
|
)
|
||
Net cash (used in) provided by investing activities
|
41
|
|
|
169,290
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings on revolving credit facility
|
—
|
|
|
42,984
|
|
||
Repayments on revolving credit facility
|
—
|
|
|
(92,715
|
)
|
||
Purchase of treasury stock related to share-based awards
|
(45
|
)
|
|
(131
|
)
|
||
Proceeds from sale of common stock
|
349
|
|
|
—
|
|
||
Payments for finance leases
|
(51
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
253
|
|
|
(49,862
|
)
|
||
Discontinued operations:
|
|
|
|
||||
Net cash used in operating activities
|
—
|
|
|
(337
|
)
|
||
Net cash provided by investing activities
|
—
|
|
|
337
|
|
||
Net cash flows provided by discontinued operations
|
—
|
|
|
—
|
|
||
Effect of changes in exchange rates on cash and cash equivalents
|
(109
|
)
|
|
2
|
|
||
Net (decrease) increase in cash and cash equivalents and restricted cash
|
(20,311
|
)
|
|
94,369
|
|
||
Cash and cash equivalents at the beginning of period
|
100,575
|
|
|
3,044
|
|
||
Restricted cash at the beginning of period
|
663
|
|
|
—
|
|
||
Cash and cash equivalents and restricted cash at beginning of period
|
101,238
|
|
|
3,044
|
|
||
Cash and cash equivalents at end of period
|
80,263
|
|
|
96,753
|
|
||
Restricted cash at the end of period
|
664
|
|
|
660
|
|
||
Cash and cash equivalents and restricted cash at the end of period
|
$
|
80,927
|
|
|
$
|
97,413
|
|
|
Three months ended March 31, 2020
|
||||||||||||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained Earnings (Accumulated Deficit)
|
|
Total Stockholders’ Equity
|
||||||||||||||||||
|
Shares
Issued
|
|
Par
Value
|
|
Shares
|
|
Cost
|
|
|||||||||||||||||||||
Balance, December 31, 2019
|
63,657
|
|
|
$
|
6
|
|
|
4,145
|
|
|
$
|
(33,484
|
)
|
|
$
|
347,564
|
|
|
$
|
(966
|
)
|
|
$
|
(141,091
|
)
|
|
$
|
172,029
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(63,967
|
)
|
|
(63,967
|
)
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
|
—
|
|
|
(123
|
)
|
||||||
Stock issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||||
Restricted stock granted
|
681
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
338
|
|
|
—
|
|
|
—
|
|
|
338
|
|
||||||
Restricted stock forfeited
|
—
|
|
|
—
|
|
|
241
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Treasury stock purchased
|
—
|
|
|
—
|
|
|
22
|
|
|
(45
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45
|
)
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
462
|
|
|
—
|
|
|
—
|
|
|
462
|
|
||||||
Balance, March 31, 2020
|
64,338
|
|
|
$
|
6
|
|
|
4,395
|
|
|
$
|
(33,529
|
)
|
|
$
|
348,375
|
|
|
$
|
(1,089
|
)
|
|
$
|
(205,058
|
)
|
|
$
|
108,705
|
|
|
Three months ended March 31, 2019
|
||||||||||||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained Earnings (Accumulated Deficit)
|
|
Total Stockholders’ Equity
|
||||||||||||||||||
|
Shares
Issued
|
|
Par
Value
|
|
Shares
|
|
Cost
|
|
|||||||||||||||||||||
Balance, December 31, 2018
|
62,163
|
|
|
$
|
6
|
|
|
3,770
|
|
|
$
|
(33,237
|
)
|
|
$
|
343,536
|
|
|
$
|
(1,116
|
)
|
|
$
|
(107,176
|
)
|
|
$
|
202,013
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,862
|
|
|
30,862
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
||||||
Restricted stock granted
|
36
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock forfeited
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Treasury stock purchased
|
—
|
|
|
—
|
|
|
41
|
|
|
(131
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(131
|
)
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
468
|
|
|
—
|
|
|
—
|
|
|
468
|
|
||||||
Balance, March 31, 2019
|
62,199
|
|
|
$
|
6
|
|
|
3,845
|
|
|
$
|
(33,368
|
)
|
|
$
|
344,004
|
|
|
$
|
(1,022
|
)
|
|
$
|
(76,314
|
)
|
|
$
|
233,306
|
|
•
|
Reduced Chief Executive Officer’s salary by 20% and other executive officers by 10% in exchange for restricted stock,
|
•
|
Reduced Board of Directors compensation by 20%,
|
•
|
Reduced workforce by 35%,
|
•
|
Finalized plan to consolidate office space to occur in the second quarter 2020, relocating the Houston corporate headquarters personnel to the Company’s Houston Global Resource and Innovation facility, and
|
•
|
Decreased discretionary spending across all business operations.
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Consumer and Industrial Chemistry Technologies
|
|
|
|
||||
Revenue
|
$
|
—
|
|
|
$
|
11,031
|
|
Operating expenses
|
—
|
|
|
(11,447
|
)
|
||
Depreciation and amortization
|
—
|
|
|
—
|
|
||
Research and development
|
—
|
|
|
(69
|
)
|
||
(Loss) income from operations
|
—
|
|
|
(485
|
)
|
||
Other income
|
—
|
|
|
35
|
|
||
Gain on sale of business
|
—
|
|
|
66,791
|
|
||
Income before income taxes
|
—
|
|
|
66,341
|
|
||
Income tax expense
|
—
|
|
|
(20,267
|
)
|
||
Net income from discontinued operations
|
$
|
—
|
|
|
$
|
46,074
|
|
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Operating lease expense
|
$
|
570
|
|
|
$
|
653
|
|
Short-term lease expense
|
32
|
|
|
43
|
|
||
Interest on lease liabilities
|
4
|
|
|
—
|
|
||
Total lease expense
|
$
|
606
|
|
|
$
|
696
|
|
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash flows from operating leases
|
$
|
584
|
|
|
$
|
582
|
|
Operating cash flows from finance leases
|
3
|
|
|
—
|
|
||
Financing cash flows from finance leases
|
(51
|
)
|
|
—
|
|
Years ending December 31,
|
|
Operating Leases
|
|
Finance Leases
|
||||
2020 (excluding the three months ended March 31, 2020)
|
$
|
1,393
|
|
|
$
|
54
|
|
|
2021
|
|
1,957
|
|
|
71
|
|
||
2022
|
|
1,912
|
|
|
47
|
|
||
2023
|
|
1,488
|
|
|
38
|
|
||
2024
|
|
1,338
|
|
|
23
|
|
||
Thereafter
|
|
8,153
|
|
|
—
|
|
||
Total lease payments
|
|
$
|
16,241
|
|
|
$
|
233
|
|
Less: Interest
|
|
(5,320
|
)
|
|
(33
|
)
|
||
Present value of lease liabilities
|
|
$
|
10,921
|
|
|
$
|
200
|
|
|
March 31, 2020
|
December 31, 2019
|
||||
Operating Leases
|
|
|
||||
Operating lease right-of-use assets
|
$
|
2,473
|
|
$
|
16,388
|
|
|
|
|
||||
Current portion of operating lease liabilities
|
$
|
1,167
|
|
$
|
486
|
|
Long-term operating lease liabilities
|
9,754
|
|
16,973
|
|
||
Total operating lease liabilities
|
$
|
10,921
|
|
$
|
17,459
|
|
|
|
|
||||
Finance Leases
|
|
|
||||
Property and equipment
|
$
|
293
|
|
$
|
293
|
|
Accumulated depreciation
|
(38
|
)
|
(28
|
)
|
||
Property and equipment, net
|
$
|
255
|
|
$
|
265
|
|
|
|
|
||||
Current portion of finance lease liabilities
|
$
|
56
|
|
$
|
55
|
|
Long-term finance lease liabilities
|
144
|
|
158
|
|
||
Total finance lease liabilities
|
$
|
200
|
|
$
|
213
|
|
|
|
|
||||
Weighted Average Remaining Lease Term
|
|
|
||||
Operating leases
|
9.2 years
|
|
16.6 years
|
|
||
Finance leases
|
4.3 years
|
|
4.6 years
|
|
||
|
|
|
||||
Weighted Average Discount Rate
|
|
|
||||
Operating leases
|
8.9
|
%
|
8.9
|
%
|
||
Finance leases
|
8.5
|
%
|
9.0
|
%
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenue:
|
|
|
|
||||
Products
|
$
|
18,800
|
|
|
$
|
42,072
|
|
Services
|
616
|
|
|
1,184
|
|
||
|
$
|
19,416
|
|
|
$
|
43,256
|
|
Operating expenses (excluding depreciation and amortization):
|
|
|
|
||||
Products
|
$
|
22,534
|
|
|
$
|
43,447
|
|
Services
|
307
|
|
|
521
|
|
||
|
$
|
22,841
|
|
|
$
|
43,968
|
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Supplemental cash payment information:
|
|
|
|
||||
Interest paid
|
$
|
4
|
|
|
$
|
578
|
|
Income taxes paid, net of refunds
|
(32
|
)
|
|
22
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Raw materials
|
$
|
3,983
|
|
|
$
|
4,339
|
|
Finished goods
|
17,287
|
|
|
24,569
|
|
||
Inventories
|
21,270
|
|
|
28,908
|
|
||
Less reserve for excess and obsolete inventory
|
(4,948
|
)
|
|
(5,698
|
)
|
||
Inventories, net
|
$
|
16,322
|
|
|
$
|
23,210
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Land
|
$
|
3,261
|
|
|
$
|
4,440
|
|
Buildings and leasehold improvements
|
6,045
|
|
|
38,741
|
|
||
Machinery and equipment
|
6,848
|
|
|
27,694
|
|
||
Fixed assets in progress
|
21
|
|
|
—
|
|
||
Furniture and fixtures
|
1,359
|
|
|
1,671
|
|
||
Transportation equipment
|
1,292
|
|
|
1,440
|
|
||
Computer equipment and software
|
1,464
|
|
|
3,348
|
|
||
Property and equipment
|
20,290
|
|
|
77,334
|
|
||
Less accumulated depreciation
|
(12,344
|
)
|
|
(37,505
|
)
|
||
Property and equipment, net
|
$
|
7,946
|
|
|
$
|
39,829
|
|
Property and equipment, net
|
$
|
30,178
|
|
Operating lease right-of-use assets
|
7,434
|
|
|
|
|
||
Other Intangibles:
|
|
||
Patents
|
9,902
|
|
|
Customer Lists
|
9,165
|
|
|
Intangibles assets in progress
|
596
|
|
|
Trademarks and brand names
|
179
|
|
|
Total Other Intangibles
|
19,842
|
|
|
|
|
||
Total Long-lived Assets
|
$
|
57,454
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
Cost (1)
|
|
Accumulated Amortization
|
|
Cost
|
|
Accumulated Amortization
|
||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||||
Patents and technology
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,493
|
|
|
$
|
6,715
|
|
Customer lists
|
—
|
|
|
—
|
|
|
15,367
|
|
|
6,013
|
|
||||
Trademarks and brand names
|
—
|
|
|
—
|
|
|
1,351
|
|
|
1,160
|
|
||||
Intangible assets in progress
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total finite-lived intangible assets
|
$
|
—
|
|
|
—
|
|
|
$
|
34,211
|
|
|
13,888
|
|
||
|
|
|
|
|
|
|
|
||||||||
Carrying value:
|
|
|
|
|
|
|
|
||||||||
Other intangible assets, net
|
$
|
—
|
|
|
|
|
$
|
20,323
|
|
|
|
•
|
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.
|
|
Three months ended March 31,
|
||||
|
2020
|
|
2019
|
||
U.S. federal statutory tax rate
|
21.0
|
%
|
|
21.0
|
%
|
State income taxes, net of federal benefit
|
(0.1
|
)
|
|
0.5
|
|
Non-U.S. income taxed at different rates
|
0.1
|
|
|
1.3
|
|
Reduction in tax benefit related to stock-based awards
|
(0.2
|
)
|
|
(2.3
|
)
|
Non-deductible expenses
|
(0.1
|
)
|
|
(0.6
|
)
|
Research and development credit (expense)
|
0.1
|
|
|
0.8
|
|
Increase in valuation allowance
|
(15.0
|
)
|
|
(18.5
|
)
|
Effect of tax rate differences of NOL carryback
|
3.0
|
|
|
—
|
|
Other
|
—
|
|
|
(0.2
|
)
|
Effective income tax rate
|
8.8
|
%
|
|
2.0
|
%
|
Shares issued at December 31, 2019
|
63,656,897
|
|
Issued as restricted stock award grants
|
681,190
|
|
Shares issued at March 31, 2020
|
64,338,087
|
|
For the three months ended March 31,
|
Energy Chemistry Technologies
|
|
Corporate and Other
|
|
Total
|
||||||
2020
|
|
|
|
|
|
||||||
Net revenue from external customers
|
$
|
19,416
|
|
|
$
|
—
|
|
|
$
|
19,416
|
|
Loss from operations, including impairment
|
(70,269
|
)
|
|
184
|
|
|
(70,085
|
)
|
|||
Depreciation and amortization
|
1,809
|
|
|
382
|
|
|
2,191
|
|
|||
Capital expenditures
|
42
|
|
|
—
|
|
|
42
|
|
|||
|
|
|
|
|
|
||||||
2019
|
|
|
|
|
|
||||||
Net revenue from external customers
|
$
|
43,256
|
|
|
$
|
—
|
|
|
$
|
43,256
|
|
Loss from operations
|
(4,703
|
)
|
|
(8,932
|
)
|
|
(13,635
|
)
|
|||
Depreciation and amortization
|
1,785
|
|
|
475
|
|
|
2,260
|
|
|||
Capital expenditures
|
461
|
|
|
—
|
|
|
461
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Energy Chemistry Technologies
|
$
|
45,883
|
|
|
$
|
116,110
|
|
Corporate and Other
|
90,891
|
|
|
114,490
|
|
||
Total assets
|
136,774
|
|
|
230,600
|
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
U.S.
|
$
|
15,775
|
|
|
$
|
38,875
|
|
Other countries
|
3,641
|
|
|
4,381
|
|
||
Total
|
$
|
19,416
|
|
|
$
|
43,256
|
|
|
Three months ended March 31,
|
||||
|
2020
|
|
2019
|
||
Customer A
|
39.9
|
%
|
|
*
|
|
Customer B
|
17.9
|
%
|
|
19.0
|
%
|
Customer C
|
*
|
|
|
12.6
|
%
|
•
|
Trademarks and brand names with a carrying value of $2.8 million that were transferred in the sale of Florida Chemical to ADM on February 28, 2019 were not removed from the Consolidated Balance Sheet at the time of the sale.
|
•
|
Gross profit in intercompany inventory was not properly relieved and recorded as a reduction in cost of sales when the related inventory was sold to third parties.
|
|
|
As of March 31, 2019
|
||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
||||||
Inventories, net
|
|
$
|
34,358
|
|
$
|
1,019
|
|
$
|
35,377
|
|
Other intangible assets, net
|
|
24,978
|
|
(2,760
|
)
|
22,218
|
|
|||
Total Assets
|
|
282,792
|
|
(1,741
|
)
|
281,051
|
|
|||
Total Liabilities and Stockholders' Equity
|
|
282,792
|
|
(1,741
|
)
|
281,051
|
|
|
|
For the three months ended March 31, 2019
|
||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
||||||
Operating expenses
|
|
$
|
44,599
|
|
$
|
(631
|
)
|
$
|
43,968
|
|
Income tax benefit
|
|
774
|
|
(463
|
)
|
311
|
|
|||
Loss from continuing operations
|
|
(15,380
|
)
|
168
|
|
(15,212
|
)
|
|||
Income from discontinued operations, net of tax
|
|
48,372
|
|
(2,298
|
)
|
46,074
|
|
|||
Net income
|
|
32,992
|
|
(2,130
|
)
|
30,862
|
|
|
|
As of June 30, 2019
|
||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
||||||
Inventories, net
|
|
$
|
26,442
|
|
$
|
1,204
|
|
$
|
27,646
|
|
Other intangible assets, net
|
|
24,290
|
|
(2,760
|
)
|
21,530
|
|
|||
Total Assets
|
|
263,816
|
|
(1,556
|
)
|
262,260
|
|
|||
Total Liabilities and Stockholders' Equity
|
|
263,816
|
|
(1,556
|
)
|
262,260
|
|
|
|
For the three months ended June 30, 2019
|
|
For the six months ended June 30, 2019
|
||||||||||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
|
As previously reported
|
Revisions
|
As revised
|
||||||||||||
Operating expenses
|
|
$
|
38,306
|
|
$
|
(185
|
)
|
$
|
38,121
|
|
|
$
|
82,905
|
|
$
|
(816
|
)
|
$
|
82,089
|
|
Income tax benefit
|
|
192
|
|
—
|
|
192
|
|
|
966
|
|
(463
|
)
|
503
|
|
||||||
Loss from continuing operations
|
|
(12,990
|
)
|
185
|
|
(12,805
|
)
|
|
(28,370
|
)
|
353
|
|
(28,017
|
)
|
||||||
(Loss) income from discontinued operations, net of tax
|
|
(1,608
|
)
|
—
|
|
(1,608
|
)
|
|
46,764
|
|
(2,298
|
)
|
44,466
|
|
||||||
Net (loss) income
|
|
(14,598
|
)
|
185
|
|
(14,413
|
)
|
|
18,394
|
|
(1,945
|
)
|
16,449
|
|
|
|
As of September 30, 2019
|
||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
||||||
Inventories, net
|
|
$
|
24,333
|
|
$
|
1,271
|
|
$
|
25,604
|
|
Other intangible assets, net
|
|
23,578
|
|
(2,760
|
)
|
20,818
|
|
|||
Total Assets
|
|
249,357
|
|
(1,489
|
)
|
247,868
|
|
|||
Total Liabilities and Stockholders' Equity
|
|
249,357
|
|
(1,489
|
)
|
247,868
|
|
|
|
For the three months ended September 30, 2019
|
|
For the nine months ended September 30, 2019
|
||||||||||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
|
As previously reported
|
Revisions
|
As revised
|
||||||||||||
Operating expenses
|
|
$
|
23,689
|
|
$
|
(67
|
)
|
$
|
23,622
|
|
|
$
|
106,594
|
|
$
|
(883
|
)
|
$
|
105,711
|
|
Income tax benefit
|
|
191
|
|
—
|
|
191
|
|
|
1,157
|
|
(463
|
)
|
694
|
|
||||||
Loss from continuing operations
|
|
(11,227
|
)
|
67
|
|
(11,160
|
)
|
|
(39,597
|
)
|
420
|
|
(39,177
|
)
|
||||||
Income from discontinued operations, net of tax
|
|
117
|
|
—
|
|
117
|
|
|
46,881
|
|
(2,298
|
)
|
44,583
|
|
||||||
Net (loss) income
|
|
(11,110
|
)
|
67
|
|
(11,043
|
)
|
|
7,284
|
|
(1,878
|
)
|
5,406
|
|
|
|
As of December 31, 2019
|
||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
||||||
Inventories, net
|
|
$
|
21,697
|
|
$
|
1,513
|
|
$
|
23,210
|
|
Other intangible assets, net
|
|
23,083
|
|
(2,760
|
)
|
20,323
|
|
|||
Total Assets
|
|
231,847
|
|
(1,247
|
)
|
230,600
|
|
|||
Total Liabilities and Stockholders' Equity
|
|
231,847
|
|
(1,247
|
)
|
230,600
|
|
|
|
For the three months ended December 31, 2019
|
|
For the year ended December 31, 2019
|
||||||||||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
|
As previously reported
|
Revisions
|
As revised
|
||||||||||||
Operating expenses
|
|
$
|
42,631
|
|
$
|
(242
|
)
|
$
|
42,389
|
|
|
$
|
149,225
|
|
$
|
(1,125
|
)
|
$
|
148,100
|
|
Income tax (expense) benefit
|
|
(956
|
)
|
—
|
|
(956
|
)
|
|
201
|
|
(463
|
)
|
(262
|
)
|
||||||
Loss from continuing operations
|
|
(37,138
|
)
|
242
|
|
(36,896
|
)
|
|
(76,735
|
)
|
662
|
|
(76,073
|
)
|
||||||
(Loss) income from discontinued operations, net of tax
|
|
(2,425
|
)
|
—
|
|
(2,425
|
)
|
|
44,456
|
|
(2,298
|
)
|
42,158
|
|
||||||
Net loss
|
|
(39,563
|
)
|
242
|
|
(39,321
|
)
|
|
(32,279
|
)
|
(1,636
|
)
|
(33,915
|
)
|
•
|
Demand for energy,
|
•
|
Availability of transportation and storage for oil and gas,
|
•
|
Historical, current, and anticipated future oil and gas prices,
|
•
|
Federal, state, and local governmental actions that may encourage or discourage drilling activity, including any shut-downs or lock-downs of economic activities in response to the COVID-19 pandemic,
|
•
|
Customers’ strategies relative to capital funds allocations,
|
•
|
Weather conditions, and
|
•
|
Technological changes to drilling and completion methods and economics.
|
•
|
Chemistries that improve the economics of their oil and gas operations, and
|
•
|
Chemistries that are economically viable, socially responsible, and ecologically sound.
|
•
|
Historical, current, and anticipated future production levels of the global citrus (primarily orange) crops,
|
•
|
Weather related risks,
|
•
|
Health and condition of citrus trees (e.g., disease and pests),
|
•
|
International competition and pricing pressures resulting from natural and artificial pricing influences, and
|
•
|
market demand for orange juice.
|
•
|
Oil and gas drilling and completion operations,
|
•
|
Oil and gas production operations, and
|
•
|
Non-oil and gas industrial solvents.
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenue
|
$
|
19,416
|
|
|
$
|
43,256
|
|
Operating expenses (excluding depreciation and amortization)
|
22,841
|
|
|
43,968
|
|
||
Operating expenses %
|
117.6
|
%
|
|
101.6
|
%
|
||
Corporate general and administrative
|
4,493
|
|
|
7,281
|
|
||
Corporate general and administrative %
|
23.1
|
%
|
|
16.8
|
%
|
||
Depreciation and amortization
|
2,191
|
|
|
2,260
|
|
||
Research and development costs
|
2,555
|
|
|
2,285
|
|
||
(Gain) loss on disposal of long-lived assets
|
(33
|
)
|
|
1,097
|
|
||
Impairment of fixed assets and long-lived assets
|
57,454
|
|
|
—
|
|
||
Loss from operations
|
(70,085
|
)
|
|
(13,635
|
)
|
||
Operating margin %
|
(361.0
|
)%
|
|
(31.5
|
)%
|
||
Interest and other income (expense), net
|
(51
|
)
|
|
(1,888
|
)
|
||
Loss before income taxes
|
(70,136
|
)
|
|
(15,523
|
)
|
||
Income tax benefit
|
6,169
|
|
|
311
|
|
||
Loss from continuing operations
|
(63,967
|
)
|
|
(15,212
|
)
|
||
Income from discontinued operations, net of tax
|
—
|
|
|
46,074
|
|
||
Net (loss) income
|
$
|
(63,967
|
)
|
|
$
|
30,862
|
|
Net (loss) income %
|
(329.5
|
)%
|
|
(35.2
|
)%
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Net cash used in operating activities
|
$
|
(20,496
|
)
|
|
$
|
(25,061
|
)
|
Net cash (used in) provided by investing activities
|
41
|
|
|
169,290
|
|
||
Net cash provided by (used in) financing activities
|
253
|
|
|
(49,862
|
)
|
||
Effect of changes in exchange rates on cash and cash equivalents
|
(109
|
)
|
|
2
|
|
||
Net (decrease) increase in cash and cash equivalents and restricted cash
|
$
|
(20,311
|
)
|
|
$
|
94,369
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than 5 years
|
||||||||||
Finance lease obligations
|
$
|
233
|
|
|
$
|
71
|
|
|
$
|
110
|
|
|
$
|
52
|
|
|
$
|
—
|
|
Operating lease obligations
|
16,241
|
|
|
2,014
|
|
|
3,855
|
|
|
2,683
|
|
|
7,689
|
|
|||||
Supply commitments for raw materials
|
18,000
|
|
|
2,250
|
|
|
15,750
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
34,474
|
|
|
$
|
4,335
|
|
|
$
|
19,715
|
|
|
$
|
2,735
|
|
|
$
|
7,689
|
|
Period
|
Total Number of Shares Purchased (1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (2)
|
||||||
January 1, 2020 to January 31, 2020
|
22,106
|
|
|
$
|
2.05
|
|
|
—
|
|
|
$
|
49,704,947
|
|
February 1, 2020 to February 29, 2020
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
49,704,947
|
|
March 1, 2020 to March 31, 2020
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
49,704,947
|
|
Total
|
22,106
|
|
|
|
|
|
—
|
|
|
|
|
(1)
|
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.
|
(2)
|
In June 2015, the Company’s Board of Directors authorized the repurchase of up to an additional $50 million of the Company’s common stock. Repurchases may be made in open market or privately negotiated transactions. Through March 31, 2020, the Company has repurchased $0.3 million of its common stock under this authorization. The Company’s Board of Directors rescinded the share repurchase authorization on June 9, 2020.
|
Exhibit
Number
|
|
Description of Exhibit
|
2.1
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
4.1
|
|
|
10.1
|
|
|
10.2
|
|
|
31.1
|
*
|
|
31.2
|
*
|
|
32.1
|
*
|
|
32.2
|
*
|
|
101.INS
|
*
|
XBRL Instance Document.
|
101.SCH
|
*
|
XBRL Schema Document.
|
101.CAL
|
*
|
XBRL Calculation Linkbase Document.
|
101.LAB
|
*
|
XBRL Label Linkbase Document.
|
101.PRE
|
*
|
XBRL Presentation Linkbase Document.
|
101.DEF
|
*
|
XBRL Definition Linkbase Document.
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
*
|
|
Filed herewith.
|
**
|
|
Furnished with this Form 10-Q, not filed.
|
1
|
|
Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.
|
FLOTEK INDUSTRIES, INC.
|
||
|
|
|
By:
|
|
/s/ JOHN W. GIBSON, JR.
|
|
|
John W. Gibson, Jr.
|
|
|
President, Chief Executive Officer and
|
|
|
Chairman of the Board
|
|
|
|
Date:
|
June 12, 2020
|
FLOTEK INDUSTRIES, INC.
|
||
|
|
|
By:
|
|
/s/ ELIZABETH T. WILKINSON
|
|
|
Elizabeth T. Wilkinson
|
|
|
Chief Financial Officer
|
|
|
|
Date:
|
June 12, 2020
|
|
/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
|