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 June 30, 2020 and December 31, 2019
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Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019
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Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2020 and 2019
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Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019
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Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the three and six months ended June 30, 2020 and 2019
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June 30, 2020
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December 31, 2019
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||||
ASSETS
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||||
Current assets:
|
|
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|
||||
Cash and cash equivalents
|
$
|
59,926
|
|
|
$
|
100,575
|
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Restricted cash
|
664
|
|
|
663
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $1,383 and $1,527 at June 30, 2020 and December 31, 2019, respectively
|
8,108
|
|
|
15,638
|
|
||
Inventories, net
|
23,338
|
|
|
23,210
|
|
||
Income taxes receivable
|
6,846
|
|
|
631
|
|
||
Other current assets
|
2,407
|
|
|
13,191
|
|
||
Total current assets
|
101,289
|
|
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153,908
|
|
||
Property and equipment, net
|
8,017
|
|
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39,829
|
|
||
Operating lease right-of-use assets
|
2,422
|
|
|
16,388
|
|
||
Goodwill
|
17,522
|
|
|
—
|
|
||
Deferred tax assets, net
|
152
|
|
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152
|
|
||
Other intangible assets, net
|
12,777
|
|
|
20,323
|
|
||
Other long-term assets
|
17
|
|
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—
|
|
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TOTAL ASSETS
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$
|
142,196
|
|
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$
|
230,600
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
7,876
|
|
|
$
|
16,231
|
|
Accrued liabilities
|
10,474
|
|
|
24,552
|
|
||
Income taxes payable
|
12
|
|
|
—
|
|
||
Current portion of long-term debt
|
2,527
|
|
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—
|
|
||
Current portion of operating lease liabilities
|
654
|
|
|
486
|
|
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Current portion of finance lease liabilities
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57
|
|
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55
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Total current liabilities
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21,600
|
|
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41,324
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||
Long-term debt, less current portion
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3,144
|
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—
|
|
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Deferred revenue, long-term
|
111
|
|
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—
|
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Long-term operating lease liabilities
|
8,497
|
|
|
16,973
|
|
||
Long-term finance lease liabilities
|
127
|
|
|
158
|
|
||
Deferred tax liabilities, net
|
11
|
|
|
116
|
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Total liabilities
|
33,490
|
|
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58,571
|
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Commitments and contingencies (See Note 19)
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|
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||||
Stockholders’ equity:
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||||
Preferred stock, $0.0001 par value, 100,000 shares authorized; no shares issued and outstanding
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—
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—
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Common stock, $0.0001 par value, 140,000,000 shares authorized; 77,626,135 shares issued and 73,166,719 shares outstanding at June 30, 2020; 63,656,897 shares issued and 59,511,416 shares outstanding at December 31, 2019
|
7
|
|
|
6
|
|
||
Additional paid-in capital
|
357,980
|
|
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347,564
|
|
||
Accumulated other comprehensive income
|
51
|
|
|
181
|
|
||
Retained earnings (accumulated deficit)
|
(215,766
|
)
|
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(142,238
|
)
|
||
Treasury stock, at cost; 4,459,416 and 4,145,481 shares at June 30, 2020 and December 31, 2019, respectively
|
(33,566
|
)
|
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(33,484
|
)
|
||
Total stockholders’ equity
|
108,706
|
|
|
172,029
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$
|
142,196
|
|
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$
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230,600
|
|
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Three months ended June 30,
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Six months ended June 30,
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||||||||||||
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2020
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2019
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2020
|
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2019
|
||||||||
Revenue
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$
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8,880
|
|
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$
|
34,692
|
|
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$
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28,296
|
|
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$
|
77,949
|
|
Costs and expenses:
|
|
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|
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|
|
||||||||
Operating expenses (excluding depreciation and amortization)
|
11,632
|
|
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38,121
|
|
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34,473
|
|
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82,089
|
|
||||
Corporate general and administrative
|
5,395
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6,054
|
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9,888
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13,335
|
|
||||
Depreciation and amortization
|
468
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|
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2,119
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2,659
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4,379
|
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||||
Research and development
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1,638
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2,076
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4,193
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|
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4,360
|
|
||||
(Gain) loss on disposal of long-lived assets
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(22
|
)
|
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(4
|
)
|
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(55
|
)
|
|
1,093
|
|
||||
Impairment of fixed and long-lived assets
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—
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—
|
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57,454
|
|
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—
|
|
||||
Total costs and expenses
|
19,111
|
|
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48,366
|
|
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108,612
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|
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105,256
|
|
||||
Loss from operations
|
(10,231
|
)
|
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(13,674
|
)
|
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(80,316
|
)
|
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(27,307
|
)
|
||||
Other (expense) income:
|
|
|
|
|
|
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||||||||
Gain on lease termination
|
576
|
|
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—
|
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576
|
|
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—
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|
||||
Interest expense
|
(16
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)
|
|
(16
|
)
|
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(20
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)
|
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(2,013
|
)
|
||||
Other income, net
|
78
|
|
|
693
|
|
|
31
|
|
|
800
|
|
||||
Total other expense, net
|
638
|
|
|
677
|
|
|
587
|
|
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(1,213
|
)
|
||||
Loss before income taxes
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(9,593
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)
|
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(12,997
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)
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(79,729
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)
|
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(28,520
|
)
|
||||
Income tax benefit
|
32
|
|
|
192
|
|
|
6,201
|
|
|
503
|
|
||||
Loss from continuing operations
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(9,561
|
)
|
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(12,805
|
)
|
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(73,528
|
)
|
|
(28,017
|
)
|
||||
(Loss) income from discontinued operations, net of tax
|
—
|
|
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(1,608
|
)
|
|
—
|
|
|
44,466
|
|
||||
Net (loss) income
|
$
|
(9,561
|
)
|
|
$
|
(14,413
|
)
|
|
$
|
(73,528
|
)
|
|
$
|
16,449
|
|
|
|
|
|
|
|
|
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||||||||
Basic earnings (loss) per common share:
|
|
|
|
|
|
|
|||||||||
Continuing operations
|
$
|
(0.14
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(1.17
|
)
|
|
$
|
(0.48
|
)
|
Discontinued operations, net of tax
|
—
|
|
|
(0.03
|
)
|
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—
|
|
|
0.76
|
|
||||
Basic earnings (loss) per common share
|
$
|
(0.14
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(1.17
|
)
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per common share:
|
|
|
|
|
|
|
|||||||||
Continuing operations
|
$
|
(0.14
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(1.17
|
)
|
|
$
|
(0.48
|
)
|
Discontinued operations, net of tax
|
—
|
|
|
(0.03
|
)
|
|
—
|
|
|
0.76
|
|
||||
Diluted earnings (loss) per common share
|
$
|
(0.14
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(1.17
|
)
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares used in computing basic earnings (loss) per common share
|
66,035
|
|
|
58,608
|
|
|
62,828
|
|
|
58,491
|
|
||||
Weighted average common shares used in computing diluted earnings (loss) per common share
|
66,035
|
|
|
58,608
|
|
|
62,828
|
|
|
58,491
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Loss from continuing operations
|
$
|
(9,561
|
)
|
|
$
|
(12,805
|
)
|
|
$
|
(73,528
|
)
|
|
$
|
(28,017
|
)
|
(Loss) income from discontinued operations, net of tax
|
—
|
|
|
(1,608
|
)
|
|
—
|
|
|
44,466
|
|
||||
Net (loss) income
|
(9,561
|
)
|
|
(14,413
|
)
|
|
(73,528
|
)
|
|
16,449
|
|
||||
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
(7
|
)
|
|
24
|
|
|
(130
|
)
|
|
118
|
|
||||
Comprehensive (loss) income
|
$
|
(9,568
|
)
|
|
$
|
(14,389
|
)
|
|
$
|
(73,658
|
)
|
|
$
|
16,567
|
|
|
Six months ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net (loss) income attributable to Flotek Industries, Inc.
|
$
|
(73,528
|
)
|
|
$
|
16,449
|
|
Less: Income from discontinued operations, net of tax
|
—
|
|
|
44,466
|
|
||
Loss from continuing operations
|
(73,528
|
)
|
|
(28,017
|
)
|
||
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
2,659
|
|
|
4,379
|
|
||
Amortization of deferred financing costs
|
—
|
|
|
1,428
|
|
||
Provision for doubtful accounts
|
474
|
|
|
102
|
|
||
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
|
|
|
—
|
|
||
(Gain)/loss on disposal of long-lived assets
|
(631
|
)
|
|
1,093
|
|
||
Non-cash lease expense
|
242
|
|
|
464
|
|
||
Stock compensation expense
|
1,521
|
|
|
1,669
|
|
||
Deferred income tax provision
|
(105
|
)
|
|
17,855
|
|
||
Reduction in tax benefit related to share-based awards
|
—
|
|
|
24
|
|
||
Changes in current assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
7,252
|
|
|
6,289
|
|
||
Inventories, net
|
6,418
|
|
|
554
|
|
||
Income taxes receivable
|
(6,351
|
)
|
|
(281
|
)
|
||
Other current assets
|
1,715
|
|
|
(1,990
|
)
|
||
Other long-term assets
|
—
|
|
|
3,286
|
|
||
Accounts payable
|
(10,229
|
)
|
|
(4,157
|
)
|
||
Accrued liabilities
|
(16,755
|
)
|
|
(10,216
|
)
|
||
Income taxes payable
|
119
|
|
|
1,182
|
|
||
Interest payable
|
—
|
|
|
(8
|
)
|
||
Net cash used in operating activities
|
(29,216
|
)
|
|
(6,344
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(42
|
)
|
|
(767
|
)
|
||
Proceeds from sale of business
|
9,844
|
|
|
152,217
|
|
||
Proceeds from sale of assets
|
66
|
|
|
140
|
|
||
Purchase of JP3, net of cash acquired
|
(26,284
|
)
|
|
—
|
|
||
Purchase of patents and other intangible assets
|
(8
|
)
|
|
(227
|
)
|
||
Net cash (used in) provided by investing activities
|
(16,424
|
)
|
|
151,363
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings on revolving credit facility
|
—
|
|
|
42,984
|
|
||
Repayments on revolving credit facility
|
—
|
|
|
(92,715
|
)
|
||
Proceeds from Paycheck Protection Program loan
|
4,798
|
|
|
—
|
|
||
Purchase of treasury stock related to share-based awards
|
(82
|
)
|
|
(142
|
)
|
||
Proceeds from sale of common stock
|
358
|
|
|
—
|
|
||
Payments for finance leases
|
(51
|
)
|
|
(38
|
)
|
||
Net cash provided by (used in) financing activities
|
5,023
|
|
|
(49,911
|
)
|
||
Discontinued operations:
|
|
|
|
||||
Net cash used in operating activities
|
—
|
|
|
(321
|
)
|
||
Net cash provided by investing activities
|
—
|
|
|
337
|
|
||
Net cash flows provided by discontinued operations
|
—
|
|
|
16
|
|
||
Effect of changes in exchange rates on cash and cash equivalents
|
(31
|
)
|
|
2
|
|
Net (decrease) increase in cash and cash equivalents and restricted cash
|
(40,648
|
)
|
|
95,126
|
|
||
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
|
59,926
|
|
|
97,509
|
|
||
Restricted cash at the end of period
|
664
|
|
|
661
|
|
||
Cash and cash equivalents and restricted cash at the end of period
|
$
|
60,590
|
|
|
$
|
98,170
|
|
|
Three months ended June 30, 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, March 31, 2020
|
64,338
|
|
|
$
|
6
|
|
|
4,395
|
|
|
$
|
(33,529
|
)
|
|
$
|
348,375
|
|
|
$
|
58
|
|
|
$
|
(206,205
|
)
|
|
$
|
108,705
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,561
|
)
|
|
(9,561
|
)
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
||||||
Stock issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||||
Restricted stock granted
|
1,788
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock forfeited
|
—
|
|
|
—
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Treasury stock purchased
|
—
|
|
|
—
|
|
|
39
|
|
|
(37
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,059
|
|
|
—
|
|
|
—
|
|
|
1,059
|
|
||||||
Stock issued in JP3 acquisition
|
11,500
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
8,537
|
|
|
—
|
|
|
—
|
|
|
8,538
|
|
||||||
Balance, June 30, 2020
|
77,626
|
|
|
$
|
7
|
|
|
4,459
|
|
|
$
|
(33,566
|
)
|
|
$
|
357,980
|
|
|
$
|
51
|
|
|
$
|
(215,766
|
)
|
|
$
|
108,706
|
|
|
Three months ended June 30, 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, March 31, 2019
|
62,199
|
|
|
$
|
6
|
|
|
3,845
|
|
|
$
|
(33,368
|
)
|
|
$
|
344,004
|
|
|
$
|
125
|
|
|
$
|
(77,461
|
)
|
|
$
|
233,306
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,413
|
)
|
|
(14,413
|
)
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||||||
Restricted stock granted
|
757
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock forfeited
|
—
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Treasury stock purchased
|
—
|
|
|
—
|
|
|
4
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,213
|
|
|
—
|
|
|
—
|
|
|
1,213
|
|
||||||
Balance, June 30, 2019
|
62,956
|
|
|
$
|
6
|
|
|
3,948
|
|
|
$
|
(33,378
|
)
|
|
$
|
345,217
|
|
|
$
|
149
|
|
|
$
|
(91,874
|
)
|
|
$
|
220,120
|
|
|
Six months ended June 30, 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
|
|
|
$
|
181
|
|
|
$
|
(142,238
|
)
|
|
$
|
172,029
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(73,528
|
)
|
|
(73,528
|
)
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(130
|
)
|
|
—
|
|
|
(130
|
)
|
||||||
Stock issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||||
Restricted stock granted
|
2,469
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
338
|
|
|
—
|
|
|
—
|
|
|
338
|
|
||||||
Restricted stock forfeited
|
—
|
|
|
—
|
|
|
278
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Treasury stock purchased
|
—
|
|
|
—
|
|
|
61
|
|
|
(82
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(82
|
)
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,521
|
|
|
—
|
|
|
—
|
|
|
1,521
|
|
||||||
Stock issued in JP3 acquisition
|
11,500
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
8,537
|
|
|
—
|
|
|
—
|
|
|
8,538
|
|
||||||
Balance, June 30, 2020
|
77,626
|
|
|
$
|
7
|
|
|
4,459
|
|
|
$
|
(33,566
|
)
|
|
$
|
357,980
|
|
|
$
|
51
|
|
|
$
|
(215,766
|
)
|
|
$
|
108,706
|
|
|
Six months ended June 30, 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
|
|
|
$
|
31
|
|
|
$
|
(108,323
|
)
|
|
$
|
202,013
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,449
|
|
|
16,449
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
118
|
|
|
—
|
|
|
118
|
|
||||||
Restricted stock granted
|
793
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock forfeited
|
—
|
|
|
—
|
|
|
133
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Treasury stock purchased
|
—
|
|
|
—
|
|
|
45
|
|
|
(141
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(141
|
)
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,681
|
|
|
—
|
|
|
—
|
|
|
1,681
|
|
||||||
Balance, June 30, 2019
|
62,956
|
|
|
$
|
6
|
|
|
3,948
|
|
|
$
|
(33,378
|
)
|
|
$
|
345,217
|
|
|
$
|
149
|
|
|
$
|
(91,874
|
)
|
|
$
|
220,120
|
|
Tradenames and trademarks
|
|
$
|
1,100
|
|
Technology and know-how
|
|
5,000
|
|
|
Customer relationships
|
|
6,800
|
|
|
Inventory
|
|
7,100
|
|
|
Cash
|
|
604
|
|
|
Net working capital, net of cash and inventory
|
|
(1,063
|
)
|
|
Fixed assets
|
|
426
|
|
|
Long-term debt assumed and other assets (liabilities)
|
|
(893
|
)
|
|
Goodwill
|
|
17,522
|
|
|
Net assets acquired
|
|
$
|
36,596
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Consumer and Industrial Chemistry Technologies
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,877
|
|
Operating expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,447
|
)
|
||||
Research and development
|
—
|
|
|
—
|
|
|
—
|
|
|
(69
|
)
|
||||
(Loss) income from operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(639
|
)
|
||||
Other income
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||
Gain on sale of business
|
—
|
|
|
(2,100
|
)
|
|
—
|
|
|
64,934
|
|
||||
(Loss) Income before income taxes
|
—
|
|
|
(2,100
|
)
|
|
—
|
|
|
64,330
|
|
||||
Income tax benefit (expense)
|
—
|
|
|
492
|
|
|
—
|
|
|
(19,864
|
)
|
||||
Net (loss) income from discontinued operations
|
$
|
—
|
|
|
$
|
(1,608
|
)
|
|
$
|
—
|
|
|
$
|
44,466
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Operating lease expense
|
$
|
283
|
|
|
$
|
653
|
|
|
$
|
854
|
|
|
$
|
1,306
|
|
Finance lease expense:
|
|
|
|
|
|
|
|
||||||||
Amortization of right-of-use assets
|
4
|
|
|
220
|
|
|
9
|
|
|
220
|
|
||||
Interest on lease liabilities
|
5
|
|
|
3
|
|
|
9
|
|
|
3
|
|
||||
Total finance lease expense
|
9
|
|
|
223
|
|
|
18
|
|
|
223
|
|
||||
Short-term lease expense
|
54
|
|
|
32
|
|
|
86
|
|
|
75
|
|
||||
Total lease expense
|
$
|
346
|
|
|
$
|
908
|
|
|
$
|
958
|
|
|
$
|
1,604
|
|
|
|
|
|
|
|
|
|
||||||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
|
||||||||
Operating cash flows from operating leases
|
$
|
1,411
|
|
|
$
|
583
|
|
|
$
|
1,024
|
|
|
$
|
1,165
|
|
Operating cash flows from finance leases
|
5
|
|
|
3
|
|
|
9
|
|
|
3
|
|
||||
Financing cash flows from finance leases
|
14
|
|
|
38
|
|
|
51
|
|
|
38
|
|
Years ending December 31,
|
|
Operating Leases
|
|
Finance Leases
|
||||
2020 (excluding the six months ended June 30, 2020)
|
$
|
617
|
|
|
$
|
33
|
|
|
2021
|
|
1,330
|
|
|
70
|
|
||
2022
|
|
1,283
|
|
|
47
|
|
||
2023
|
|
1,311
|
|
|
39
|
|
||
2024
|
|
1,341
|
|
|
23
|
|
||
Thereafter
|
|
8,185
|
|
|
—
|
|
||
Total lease payments
|
|
$
|
14,067
|
|
|
$
|
212
|
|
Less: Interest
|
|
(4,916
|
)
|
|
(28
|
)
|
||
Present value of lease liabilities
|
|
$
|
9,151
|
|
|
$
|
184
|
|
|
June 30, 2020
|
December 31, 2019
|
||||
Operating Leases
|
|
|
||||
Operating lease right-of-use assets
|
$
|
2,422
|
|
$
|
16,388
|
|
|
|
|
||||
Current portion of operating lease liabilities
|
$
|
654
|
|
$
|
486
|
|
Long-term operating lease liabilities
|
8,497
|
|
16,973
|
|
||
Total operating lease liabilities
|
$
|
9,151
|
|
$
|
17,459
|
|
|
|
|
||||
Finance Leases
|
|
|
||||
Property and equipment
|
$
|
147
|
|
$
|
293
|
|
Accumulated depreciation
|
(18
|
)
|
(28
|
)
|
||
Property and equipment, net
|
$
|
129
|
|
$
|
265
|
|
|
|
|
||||
Current portion of finance lease liabilities
|
$
|
57
|
|
$
|
55
|
|
Long-term finance lease liabilities
|
127
|
|
158
|
|
||
Total finance lease liabilities
|
$
|
184
|
|
$
|
213
|
|
|
|
|
||||
Weighted Average Remaining Lease Term
|
|
|
||||
Operating leases
|
10.1 years
|
|
16.6 years
|
|
||
Finance leases
|
4.1 years
|
|
4.6 years
|
|
||
|
|
|
||||
Weighted Average Discount Rate
|
|
|
||||
Operating leases
|
8.9
|
%
|
8.9
|
%
|
||
Finance leases
|
8.5
|
%
|
9.0
|
%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Products
|
$
|
8,176
|
|
|
$
|
33,632
|
|
|
$
|
26,976
|
|
|
$
|
75,703
|
|
Services
|
704
|
|
|
1,060
|
|
|
1,320
|
|
|
2,246
|
|
||||
|
$
|
8,880
|
|
|
$
|
34,692
|
|
|
$
|
28,296
|
|
|
$
|
77,949
|
|
Operating expenses (excluding depreciation and amortization):
|
|
|
|
|
|
|
|||||||||
Products
|
$
|
11,278
|
|
|
$
|
37,613
|
|
|
$
|
33,825
|
|
|
$
|
81,062
|
|
Services
|
354
|
|
|
508
|
|
|
648
|
|
|
1,027
|
|
||||
|
$
|
11,632
|
|
|
$
|
38,121
|
|
|
$
|
34,473
|
|
|
$
|
82,089
|
|
|
Six months ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Supplemental cash payment information:
|
|
|
|
||||
Interest paid
|
$
|
20
|
|
|
$
|
594
|
|
Income taxes paid, net of refunds
|
149
|
|
|
627
|
|
||
Supplemental schedule of non-cash investing and financing activities:
|
|
|
|
||||
Equity issued - acquisition of JP3
|
8,538
|
|
|
—
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Raw materials
|
$
|
4,810
|
|
|
$
|
4,339
|
|
Finished goods
|
20,155
|
|
|
24,569
|
|
||
Inventories
|
24,965
|
|
|
28,908
|
|
||
Less reserve for excess and obsolete inventory
|
(1,627
|
)
|
|
(5,698
|
)
|
||
Inventories, net
|
$
|
23,338
|
|
|
$
|
23,210
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Land
|
$
|
3,282
|
|
|
$
|
4,440
|
|
Buildings and leasehold improvements
|
6,048
|
|
|
38,741
|
|
||
Machinery and equipment
|
7,227
|
|
|
27,694
|
|
||
Furniture and fixtures
|
643
|
|
|
1,671
|
|
||
Transportation equipment
|
1,190
|
|
|
1,440
|
|
||
Computer equipment and software
|
1,296
|
|
|
3,348
|
|
||
Property and equipment
|
19,686
|
|
|
77,334
|
|
||
Less accumulated depreciation
|
(11,669
|
)
|
|
(37,505
|
)
|
||
Property and equipment, net
|
$
|
8,017
|
|
|
$
|
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 Impairment of fixed and long-lived assets
|
$
|
57,454
|
|
Goodwill at December 31, 2019
|
|
$
|
—
|
|
Goodwill from acquisition of JP3
|
|
17,522
|
|
|
Goodwill at June 30, 2020
|
|
$
|
17,522
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||
|
Cost
|
|
Accumulated Amortization
|
|
Cost
|
|
Accumulated Amortization
|
||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||||
Patents and technology
|
$
|
5,000
|
|
|
$
|
55
|
|
|
$
|
17,493
|
|
|
$
|
6,715
|
|
Customer lists
|
6,800
|
|
|
55
|
|
|
15,367
|
|
|
6,013
|
|
||||
Trademarks and brand names
|
1,100
|
|
|
13
|
|
|
1,351
|
|
|
1,160
|
|
||||
Total finite-lived intangible assets
|
$
|
12,900
|
|
|
123
|
|
|
$
|
34,211
|
|
|
13,888
|
|
||
|
|
|
|
|
|
|
|
||||||||
Carrying value:
|
|
|
|
|
|
|
|
||||||||
Other intangible assets, net
|
$
|
12,777
|
|
|
|
|
$
|
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.
|
|
|
|
|
|
|
Balance at June 30,
|
|
|
|
|
|
|
|
Balance at December 31,
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
2020
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
2019
|
||||||||||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,200
|
|
$
|
1,200
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Balance - beginning of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Additions / issuances
|
1,200
|
|
|
—
|
|
|
1,200
|
|
|
—
|
|
||||
Gains (losses) recognized in earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Payments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balance - end of period
|
$
|
1,200
|
|
|
$
|
—
|
|
|
$
|
1,200
|
|
|
$
|
—
|
|
|
June 30, 2020
|
||
Current Portion of Long-Term Debt
|
|
||
Flotek PPP Loan
|
$
|
2,138
|
|
JP3 PPP Loan
|
389
|
|
|
Total current portion of long-term debt
|
$
|
2,527
|
|
|
|
||
Long-term debt:
|
|
||
Flotek PPP Loan
|
$
|
2,660
|
|
JP3 PPP Loan
|
484
|
|
|
Total long-term debt
|
$
|
3,144
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
U.S. federal statutory tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
State income taxes, net of federal benefit
|
0.4
|
|
|
1.7
|
|
|
—
|
|
|
1.0
|
|
Non-U.S. income taxed at different rates
|
0.9
|
|
|
0.7
|
|
|
0.2
|
|
|
1.0
|
|
Reduction in tax benefit related to stock-based awards
|
0.9
|
|
|
(1.1
|
)
|
|
(0.1
|
)
|
|
(1.8
|
)
|
Non-deductible expenses
|
0.7
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
Research and development credit
|
0.1
|
|
|
0.4
|
|
|
—
|
|
|
0.6
|
|
Increase in valuation allowance
|
(23.7
|
)
|
|
(20.7
|
)
|
|
(16.0
|
)
|
|
(17.9
|
)
|
Effect of tax rate differences of NOL carryback
|
—
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
Other
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.3
|
)
|
Effective income tax rate
|
0.3
|
%
|
|
1.6
|
%
|
|
7.7
|
%
|
|
3.3
|
%
|
Shares issued at December 31, 2019
|
63,656,897
|
|
Issued to purchase JP3
|
11,500,000
|
|
Issued as restricted stock award grants
|
2,469,238
|
|
Shares issued at June 30, 2020
|
77,626,135
|
|
For the three months ended June 30,
|
Chemistry Technologies
|
|
Data Analytics (1)
|
|
Corporate and Other
|
|
Total
|
||||||||
2020
|
|
|
|
|
|
|
|
||||||||
Net revenue from external customers
|
$
|
7,962
|
|
|
$
|
918
|
|
|
$
|
—
|
|
|
$
|
8,880
|
|
Loss from operations, including impairment
|
(3,596
|
)
|
|
(1,151
|
)
|
|
(5,484
|
)
|
|
(10,231
|
)
|
||||
Depreciation and amortization
|
246
|
|
|
131
|
|
|
91
|
|
|
468
|
|
||||
Capital expenditures
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Net revenue from external customers
|
$
|
34,692
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,692
|
|
Loss from operations
|
(7,651
|
)
|
|
—
|
|
|
(6,023
|
)
|
|
(13,674
|
)
|
||||
Depreciation and amortization
|
1,933
|
|
|
—
|
|
|
186
|
|
|
2,119
|
|
||||
Capital expenditures
|
306
|
|
|
—
|
|
|
—
|
|
|
306
|
|
For the six months ended June 30,
|
Chemistry Technologies
|
|
Data Analytics (1)
|
|
Corporate and Other
|
|
Total
|
||||||||
2020
|
|
|
|
|
|
|
|
||||||||
Net revenue from external customers
|
$
|
27,378
|
|
|
$
|
918
|
|
|
$
|
—
|
|
|
$
|
28,296
|
|
Loss from operations, including impairment
|
(66,257
|
)
|
|
(1,151
|
)
|
|
(12,908
|
)
|
|
(80,316
|
)
|
||||
Depreciation and amortization
|
2,056
|
|
|
131
|
|
|
472
|
|
|
2,659
|
|
||||
Capital expenditures
|
42
|
|
|
—
|
|
|
—
|
|
|
42
|
|
||||
|
|
|
|
|
|
|
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Net revenue from external customers
|
$
|
77,949
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
77,949
|
|
Loss from operations
|
(12,984
|
)
|
|
—
|
|
|
(14,323
|
)
|
|
(27,307
|
)
|
||||
Depreciation and amortization
|
3,718
|
|
|
—
|
|
|
661
|
|
|
4,379
|
|
||||
Capital expenditures
|
767
|
|
|
—
|
|
|
—
|
|
|
767
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Chemistry Technologies
|
$
|
34,439
|
|
|
$
|
116,110
|
|
Data Analytics
|
40,922
|
|
|
—
|
|
||
Corporate and Other
|
66,835
|
|
|
114,490
|
|
||
Total assets
|
$
|
142,196
|
|
|
$
|
230,600
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
U.S.
|
$
|
6,936
|
|
|
$
|
31,114
|
|
|
$
|
22,711
|
|
|
$
|
69,990
|
|
Other countries
|
1,944
|
|
|
3,578
|
|
|
5,585
|
|
|
7,959
|
|
||||
Total
|
$
|
8,880
|
|
|
$
|
34,692
|
|
|
$
|
28,296
|
|
|
$
|
77,949
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Customer A
|
22.6
|
%
|
|
17.6
|
%
|
|
29.4
|
%
|
|
15.4
|
%
|
Customer B
|
14.0
|
%
|
|
11.0
|
%
|
|
12.5
|
%
|
|
11.3
|
%
|
Customer C
|
*
|
|
|
*
|
|
|
12.3
|
%
|
|
10.7
|
%
|
•
|
Currency Translation Adjustment and Other Comprehensive Income of $1.1 million was not recognized in earnings in connection with the dissolution of the Company’s wholly owned foreign entity, PetroValve International in 2015.
|
•
|
Cash flow presentation relating to proceeds received from the sale of FCC (which occurred in the first quarter of 2019) and subsequent release of escrow amounts in subsequent periods that were improperly classified between operating and investing activities.
|
|
|
As of December 31, 2018
|
||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
||||||
Accumulated other comprehensive loss
|
|
$
|
(1,116
|
)
|
$
|
1,147
|
|
$
|
31
|
|
Retained earnings (accumulated deficit)
|
|
(107,176
|
)
|
(1,147
|
)
|
(108,323
|
)
|
|
|
As of March 31, 2019
|
||||||||
|
|
As previously reported*
|
Revisions
|
As revised
|
||||||
Accumulated other comprehensive loss
|
|
$
|
(1,022
|
)
|
$
|
1,147
|
|
$
|
125
|
|
Retained earnings (accumulated deficit)
|
|
(76,314
|
)
|
(1,147
|
)
|
(77,461
|
)
|
|
|
As of June 30, 2019
|
||||||||
|
|
As previously reported*
|
Revisions
|
As revised
|
||||||
Accumulated other comprehensive loss
|
|
$
|
(998
|
)
|
$
|
1,147
|
|
$
|
149
|
|
Retained earnings (accumulated deficit)
|
|
(90,727
|
)
|
(1,147
|
)
|
(91,874
|
)
|
|
|
As of September 30, 2019
|
||||||||
|
|
As previously reported*
|
Revisions
|
As revised
|
||||||
Accumulated other comprehensive loss
|
|
$
|
(962
|
)
|
$
|
1,147
|
|
$
|
185
|
|
Retained earnings (accumulated deficit)
|
|
(101,770
|
)
|
(1,147
|
)
|
(102,917
|
)
|
|
|
As of December 31, 2019
|
||||||||
|
|
As previously reported*
|
Revisions
|
As revised
|
||||||
Accumulated other comprehensive loss
|
|
$
|
(966
|
)
|
$
|
1,147
|
|
$
|
181
|
|
Retained earnings (accumulated deficit)
|
|
(141,091
|
)
|
(1,147
|
)
|
(142,238
|
)
|
|
|
As of March 31, 2020
|
||||||||
|
|
As previously reported*
|
Revisions
|
As revised
|
||||||
Accumulated other comprehensive loss
|
|
$
|
(1,089
|
)
|
$
|
1,147
|
|
$
|
58
|
|
Retained earnings (accumulated deficit)
|
|
(205,058
|
)
|
(1,147
|
)
|
(206,205
|
)
|
|
|
For the three months ended March 31, 2019
|
||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
||||||
Adjustment to reconcile net cash in operating activities
|
|
|
|
|
|
|
|
|||
Other current assets
|
|
$
|
(18,661
|
)
|
$
|
14,219
|
|
$
|
(4,442
|
)
|
Other long-term assets
|
|
—
|
|
3,286
|
|
3,286
|
|
|||
Net cash used in operating activities
|
|
(25,721
|
)
|
17,505
|
|
(8,216
|
)
|
|||
Proceeds from sale of business
|
|
169,722
|
|
(17,505
|
)
|
152,217
|
|
|||
Net cash provided by investing activities
|
|
169,290
|
|
(17,505
|
)
|
151,785
|
|
|
|
For the six months ended June 30, 2019
|
||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
||||||
Adjustment to reconcile net cash in operating activities
|
|
|
|
|
|
|
|
|||
Other current assets
|
|
$
|
(16,209
|
)
|
$
|
14,219
|
|
$
|
(1,990
|
)
|
Other long-term assets
|
|
—
|
|
3,286
|
|
3,286
|
|
|||
Net cash used in operating activities
|
|
(23,849
|
)
|
17,505
|
|
(6,344
|
)
|
|||
Proceeds from sale of business
|
|
169,722
|
|
(17,505
|
)
|
152,217
|
|
|||
Net cash provided by investing activities
|
|
168,868
|
|
(17,505
|
)
|
151,363
|
|
|
|
For the nine months ended September 30, 2019
|
||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
||||||
Adjustment to reconcile net cash in operating activities
|
|
|
|
|
|
|
|
|||
Other current assets
|
|
$
|
(14,974
|
)
|
$
|
10,938
|
|
$
|
(4,036
|
)
|
Other long-term assets
|
|
—
|
|
3,286
|
|
3,286
|
|
|||
Net cash used in operating activities
|
|
(14,348
|
)
|
14,224
|
|
(124
|
)
|
|||
Proceeds from sale of business
|
|
169,722
|
|
(14,224
|
)
|
155,498
|
|
|||
Net cash provided by investing activities
|
|
167,497
|
|
(14,224
|
)
|
153,273
|
|
|
|
For the year ended December 31, 2019
|
||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
||||||
Adjustment to reconcile net cash in operating activities
|
|
|
|
|
|
|
|
|||
Other current assets
|
|
$
|
(8,359
|
)
|
$
|
10,938
|
|
$
|
2,579
|
|
Other long-term assets
|
|
1,131
|
|
3,286
|
|
4,417
|
|
|||
Net cash used in operating activities
|
|
(18,769
|
)
|
14,224
|
|
(4,545
|
)
|
|||
Proceeds from sale of business
|
|
169,722
|
|
(14,224
|
)
|
155,498
|
|
|||
Net cash provided by investing activities
|
|
166,937
|
|
(14,224
|
)
|
152,713
|
|
|
|
For the three months ended March 31, 2020
|
||||||||
|
|
As previously reported
|
Revisions
|
As revised
|
||||||
Adjustment to reconcile net cash in operating activities
|
|
|
|
|
|
|
|
|||
Other current assets
|
|
$
|
6,926
|
|
$
|
(3,281
|
)
|
$
|
3,645
|
|
Net cash used in operating activities
|
|
(20,496
|
)
|
(3,281
|
)
|
(23,777
|
)
|
|||
Proceeds from sale of business
|
|
—
|
|
3,281
|
|
3,281
|
|
|||
Net cash provided by investing activities
|
|
41
|
|
3,281
|
|
3,322
|
|
•
|
The Company’s CEO, John W. Gibson, Jr., reduced his base salary by 20%, and each of the other executive officers reduced his or her salary by 10%, through December 31, 2020 in exchange for restricted stock, effective as of April 1, 2020.
|
•
|
The board of directors of Flotek approved a 20% reduction in the fees to be paid to the directors, effective as of April 1, 2020.
|
•
|
The Company consolidated office space by moving all employees at its corporate headquarters into its GRIC facility and buying out the remaining term of the corporate headquarters lease for a significant discount, with the move completed by the end of June 2020.
|
•
|
The Company reduced headcount by 35% on March 30, 2020.
|
•
|
The Company decreased discretionary spending across all business operations.
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenue
|
$
|
8,880
|
|
|
$
|
34,692
|
|
|
$
|
28,296
|
|
|
$
|
77,949
|
|
Operating expenses (excluding depreciation and amortization)
|
11,632
|
|
|
38,121
|
|
|
34,473
|
|
|
82,089
|
|
||||
Operating expenses %
|
131.0
|
%
|
|
109.9
|
%
|
|
121.8
|
%
|
|
105.3
|
%
|
||||
Corporate general and administrative
|
5,395
|
|
|
6,054
|
|
|
9,888
|
|
|
13,335
|
|
||||
Corporate general and administrative %
|
60.8
|
%
|
|
17.5
|
%
|
|
34.9
|
%
|
|
17.1
|
%
|
||||
Depreciation and amortization
|
468
|
|
|
2,119
|
|
|
2,659
|
|
|
4,379
|
|
||||
Research and development costs
|
1,638
|
|
|
2,076
|
|
|
4,193
|
|
|
4,360
|
|
||||
(Gain) loss on disposal of long-lived assets
|
(22
|
)
|
|
(4
|
)
|
|
(55
|
)
|
|
1,093
|
|
||||
Impairment of fixed assets and long-lived assets
|
—
|
|
|
—
|
|
|
57,454
|
|
|
—
|
|
||||
Loss from operations
|
(10,231
|
)
|
|
(13,674
|
)
|
|
(80,316
|
)
|
|
(27,307
|
)
|
||||
Operating margin %
|
(115.2
|
)%
|
|
(39.4
|
)%
|
|
(283.8
|
)%
|
|
(35.0
|
)%
|
||||
Gain on lease termination
|
576
|
|
|
—
|
|
|
576
|
|
|
—
|
|
||||
Interest and other income (expense), net
|
62
|
|
|
677
|
|
|
11
|
|
|
(1,213
|
)
|
||||
Loss before income taxes
|
(9,593
|
)
|
|
(12,997
|
)
|
|
(79,729
|
)
|
|
(28,520
|
)
|
||||
Income tax benefit
|
32
|
|
|
192
|
|
|
6,201
|
|
|
503
|
|
||||
Loss from continuing operations
|
(9,561
|
)
|
|
(12,805
|
)
|
|
(73,528
|
)
|
|
(28,017
|
)
|
||||
(Loss) income from discontinued operations, net of tax
|
—
|
|
|
(1,608
|
)
|
|
—
|
|
|
44,466
|
|
||||
Net (loss) income
|
$
|
(9,561
|
)
|
|
$
|
(14,413
|
)
|
|
$
|
(73,528
|
)
|
|
$
|
16,449
|
|
Net (loss) income %
|
(107.7
|
)%
|
|
(36.9
|
)%
|
|
(259.9
|
)%
|
|
(35.9
|
)%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|||||||
Revenue
|
7,962
|
|
|
$
|
34,692
|
|
|
$
|
27,378
|
|
|
$
|
77,949
|
|
Gross margin
|
1,301
|
|
|
18,180
|
|
|
2,539
|
|
|
54,609
|
|
|||
Gross margin %
|
16.3
|
%
|
|
52.4
|
%
|
|
9.3
|
%
|
|
70.1
|
%
|
|||
Income from operations
|
(3,596
|
)
|
|
(7,651
|
)
|
|
(66,257
|
)
|
|
(12,984
|
)
|
|||
Income from operations %
|
(45.2
|
)%
|
|
(22.1
|
)%
|
|
(242.0
|
)%
|
|
(16.7
|
)%
|
|
May 18 - June 30
|
||
|
2020
|
||
Revenue
|
$
|
918
|
|
Gross margin
|
370
|
|
|
Gross margin %
|
40.3
|
%
|
|
Income from operations
|
(1,151
|
)
|
|
Income from operations %
|
(125.4
|
)%
|
|
Six months ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Net cash used in operating activities
|
$
|
(29,216
|
)
|
|
$
|
(6,344
|
)
|
Net cash (used in) provided by investing activities
|
(16,424
|
)
|
|
151,363
|
|
||
Net cash provided by (used in) financing activities
|
5,023
|
|
|
(49,911
|
)
|
||
Net cash provided by discontinued operations
|
—
|
|
|
16
|
|
||
Effect of changes in exchange rates on cash and cash equivalents
|
(31
|
)
|
|
2
|
|
||
Net (decrease) increase in cash and cash equivalents and restricted cash
|
$
|
(40,648
|
)
|
|
$
|
95,126
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than 5 years
|
||||||||||
Finance lease obligations
|
$
|
213
|
|
|
$
|
70
|
|
|
$
|
101
|
|
|
$
|
42
|
|
|
$
|
—
|
|
Operating lease obligations
|
13,969
|
|
|
1,371
|
|
|
2,593
|
|
|
2,684
|
|
|
7,321
|
|
|||||
Supply commitments for raw materials
|
17,724
|
|
|
1,974
|
|
|
15,750
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
32,390
|
|
|
$
|
3,899
|
|
|
$
|
18,444
|
|
|
$
|
2,726
|
|
|
$
|
7,321
|
|
•
|
Implementing monitoring controls over the review and validation of intangible assets
|
•
|
Expanding monthly close and consolidation procedures
|
•
|
Modifying the chart of accounts
|
•
|
Expanded monthly management review controls
|
•
|
Expanding controls over impairments of long-lived assets
|
Period
|
Total Number of Shares Purchased (1)
|
|
Average Price Paid per Share
|
|||
April 1, 2020 to April 30, 2020
|
562
|
|
|
$
|
0.81
|
|
May 1, 2020 to May 31, 2020
|
40,040
|
|
|
$
|
0.99
|
|
June 1, 2020 to June 30, 2020
|
1,779
|
|
|
$
|
1.02
|
|
Total
|
42,381
|
|
|
|
(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.
|
Exhibit
Number
|
|
Description of Exhibit
|
2.1
|
|
|
2.2
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
4.1
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
*
|
|
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.
|
**
|
|
This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
|
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:
|
August 17, 2020
|
FLOTEK INDUSTRIES, INC.
|
||
|
|
|
By:
|
|
/s/ Michael Borton
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
Date:
|
August 17, 2020
|
|
/s/ JOHN W. GIBSON, JR.
|
John W. Gibson, Jr.
|
President, Chief Executive Officer and Chairman of the Board
|
|
/s/ MICHAEL BORTON
|
Michael Borton
|
Chief Financial Officer
|
|
/s/ JOHN W. GIBSON, JR.
|
John W. Gibson, Jr.
|
President, Chief Executive Officer and Chairman of the Board
|
|
/s/ MICHAEL BORTON
|
Michael Borton
|
Chief Financial Officer
|