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x
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ANNUAL 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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Delaware
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80-0759121
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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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, par value $0.01 per share
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NINE
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New York Stock Exchange
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Large accelerated filer
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o
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Accelerated filer
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x
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Emerging growth company
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x
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Item 1.
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Business
|
Item 1A.
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Risk Factors
|
•
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the level of prices, and expectations about future prices, for oil and natural gas;
|
•
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the domestic and foreign supply of, and demand for, oil and natural gas and related products;
|
•
|
the level of global and domestic oil and natural gas production;
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•
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the supply of, and demand for, hydraulic fracturing and other oilfield services and equipment;
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•
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governmental regulations, including the policies of governments regarding the exploration for and production and development of their oil and natural gas reserves;
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•
|
the cost of exploring for, developing, producing, and delivering oil and natural gas;
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•
|
available pipeline, storage, and other transportation capacity;
|
•
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worldwide political, military, and economic conditions;
|
•
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global or national health epidemics or concerns, such as the recent coronavirus outbreaks, which may reduce demand for oil, natural gas, and related products because of reduced global or national economic activity;
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•
|
lead times associated with acquiring equipment and products and availability of qualified personnel;
|
•
|
the discovery rates of new oil and natural gas reserves;
|
•
|
federal, state, and local regulation of hydraulic fracturing and other oilfield service activities, as well as E&P activities, including public pressure on governmental bodies and regulatory agencies to regulate our industry;
|
•
|
economic and political conditions in oil and natural gas producing countries;
|
•
|
actions of the Organization of the Petroleum Exporting Countries (“OPEC”), its members, and other state-controlled oil companies relating to oil price and production levels, including announcements of potential changes to such levels;
|
•
|
advances in exploration, development, and production technologies or in technologies affecting energy consumption;
|
•
|
activities by non-governmental organizations to restrict the exploration, development, and production of oil and natural gas so as to minimize emissions of carbon dioxide, a greenhouse gas;
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•
|
the price and availability of alternative fuels and energy sources;
|
•
|
global weather conditions and natural disasters; and
|
•
|
uncertainty in capital and commodities markets and the ability of oil and natural gas producers to access capital.
|
•
|
requiring us to dedicate a substantial portion of our cash flow from operations to service our existing debt, thereby reducing the cash available to finance our operations and other business activities;
|
•
|
limiting management’s discretion in operating our business and our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
|
•
|
increasing our vulnerability to downturns and adverse developments in our business and the economy generally;
|
•
|
limiting our ability to access the capital markets to raise capital on favorable terms or to obtain additional financing for working capital, capital expenditures, or acquisitions or to refinance existing indebtedness;
|
•
|
making us vulnerable to increases in interest rates as our indebtedness under the 2018 ABL Credit Facility may vary with prevailing interest rates;
|
•
|
placing us at a competitive disadvantage relative to competitors with lower levels of indebtedness in relation to their overall size or less restrictive terms governing their indebtedness; and
|
•
|
making it more difficult for us to satisfy our obligations under our debt instruments and increase the risk that we may default on our debt obligations.
|
•
|
equipment defects;
|
•
|
liabilities arising from accidents or damage involving our fleet of trucks and other equipment;
|
•
|
explosions and uncontrollable flows of gas or well fluids;
|
•
|
unusual or unexpected geological formations or pressures and industrial accidents;
|
•
|
blowouts;
|
•
|
fires;
|
•
|
cratering;
|
•
|
loss of well control;
|
•
|
collapse of the borehole; and
|
•
|
damaged or lost equipment.
|
•
|
incur additional indebtedness and guarantee indebtedness;
|
•
|
pay dividends or make other distributions or repurchase or redeem our capital stock;
|
•
|
transfer or sell assets;
|
•
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make loans and investments;
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•
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incur liens;
|
•
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enter into agreements that restrict dividends or other payments from any non-guarantor restricted subsidiaries to us;
|
•
|
consolidate, merge, or sell all or substantially all of our assets;
|
•
|
prepay, redeem, or repurchase certain debt;
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•
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issue certain preferred stock or similar equity securities;
|
•
|
make certain acquisitions and investments;
|
•
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engage in transactions with affiliates; and
|
•
|
create unrestricted subsidiaries.
|
•
|
unanticipated costs and assumption of liabilities and exposure to unforeseen liabilities of acquired businesses, including, but not limited to, environmental liabilities;
|
•
|
difficulties in integrating the businesses, assets and financial accounting, operating, information and other systems of the acquired business, and the acquired personnel;
|
•
|
limitations on our ability to properly assess and maintain an effective internal control environment over an acquired business in order to comply with public reporting requirements;
|
•
|
potential losses of key employees and customers of the acquired businesses;
|
•
|
inability to commercially develop acquired technologies;
|
•
|
risks of entering markets in which we have limited prior experience; and
|
•
|
increases in our expenses and working capital requirements.
|
•
|
volatility in political, social, and economic conditions;
|
•
|
social unrest, acts of terrorism, war, or other armed conflicts;
|
•
|
confiscatory taxation or other adverse tax policies;
|
•
|
deprivation of contract rights;
|
•
|
trade and economic sanctions or other restrictions imposed by the European Union, the United States, or other countries;
|
•
|
exposure under the U.S. Foreign Corrupt Practices Act (the “FCPA”) or similar legislation, as discussed in the below risk factor; and
|
•
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currency exchange controls.
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Item 1B.
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Unresolved Staff Comments
|
Item 2.
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Properties
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Segment
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Location
|
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Basin/ Region
|
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Leased or Owned
|
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Principal/Most
Significant Use
|
Headquarters
|
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Houston, TX
|
|
—
|
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Leased
|
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Corporate Headquarters/Administrative
|
Completion
|
|
Athens, TX
|
|
—
|
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Leased
|
|
Operations
|
Completion
|
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Baker, MT
|
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Bakken
|
|
Owned
|
|
Operations/Administrative
|
Completion
|
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Canadian County, OK
|
|
SCOOP/STACK
|
|
Leased
|
|
Operations
|
Completion
|
|
Calgary, AB, Canada
|
|
—
|
|
Leased
|
|
Administrative
|
Completion
|
|
Charleroi, PA
|
|
Marcellus/Utica
|
|
Leased
|
|
Operations
|
Completion
|
|
Corpus Christi, TX
|
|
—
|
|
Leased
|
|
Operations/Administrative
|
Completion
|
|
Dickinson, ND
|
|
Bakken
|
|
Leased
|
|
Operations/Administrative
|
Completion
|
|
Enid, OK
|
|
SCOOP/STACK
|
|
Leased
|
|
Operations/Administrative
|
Completion
|
|
Fort Worth, TX
|
|
—
|
|
Leased
|
|
Administrative
|
Completion
|
|
Hobbs, NM
|
|
Permian
|
|
Leased
|
|
Operations
|
Completion
|
|
Jacksboro, TX
|
|
Barnett
|
|
Leased
|
|
Operations
|
Completion
|
|
Marietta, OH
|
|
Marcellus/Utica
|
|
Leased
|
|
Operations/Administrative
|
Completion
|
|
Mead, CO
|
|
Rockies
|
|
Leased
|
|
Operations
|
Completion
|
|
Midland, TX
|
|
Permian
|
|
Leased
|
|
Operations
|
Completion
|
|
Midland, TX
|
|
Permian
|
|
Owned
|
|
Operations/Administrative
|
Completion
|
|
Midland, TX
|
|
Permian
|
|
Leased
|
|
Operations/Administrative
|
Completion
|
|
Midland, TX
|
|
Permian
|
|
Leased
|
|
Operations
|
Completion
|
|
Monahans, TX
|
|
Permian
|
|
Leased
|
|
Operations/Administrative
|
Completion
|
|
Oklahoma City, OK
|
|
SCOOP/STACK
|
|
Leased
|
|
Operations
|
Completion
|
|
Pleasanton, TX
|
|
Eagle Ford
|
|
Leased
|
|
Operations
|
Completion
|
|
Poolville, TX
|
|
—
|
|
Owned
|
|
Operations
|
Completion
|
|
Red Deer, AB, Canada
|
|
WCSB
|
|
Leased
|
|
Operations
|
Completion
|
|
San Antonio, TX
|
|
Eagle Ford
|
|
Leased
|
|
Operations/Administrative
|
Completion
|
|
Shawnee, OK
|
|
SCOOP/STACK
|
|
Leased
|
|
Operations
|
Completion
|
|
Sweetwater, TX
|
|
Permian
|
|
Leased
|
|
Operations
|
Completion
|
|
Ulster, PA
|
|
Marcellus/Utica
|
|
Leased
|
|
Operations
|
Completion
|
|
Tyler, TX
|
|
Haynesville
|
|
Leased
|
|
Operations
|
Completion
|
|
Williston, ND
|
|
Bakken
|
|
Owned
|
|
Operations
|
Completion
|
|
Williston, ND
|
|
Bakken
|
|
Owned
|
|
Operations/Administrative
|
Item 3.
|
Legal Proceeding
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity and Related Shareholder Matters and Issuer Purchases of Equity Securities
|
Item 6.
|
Selected Financial Data
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands, except share and per share amounts)
|
||||||||||||||||||
Statement of operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Revenues
|
$
|
832,937
|
|
|
$
|
827,174
|
|
|
$
|
543,660
|
|
|
$
|
282,354
|
|
|
$
|
478,522
|
|
Cost and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below)
|
669,979
|
|
|
639,298
|
|
|
448,467
|
|
|
246,109
|
|
|
373,191
|
|
|||||
General and administrative expenses
|
81,327
|
|
|
73,078
|
|
|
49,505
|
|
|
37,652
|
|
|
43,155
|
|
|||||
Depreciation
|
50,544
|
|
|
54,257
|
|
|
53,422
|
|
|
55,260
|
|
|
58,894
|
|
|||||
Amortization of intangibles
|
18,367
|
|
|
9,558
|
|
|
8,799
|
|
|
9,083
|
|
|
8,650
|
|
|||||
Impairment of property and equipment
|
66,200
|
|
|
45,694
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impairment of goodwill
|
20,273
|
|
|
12,986
|
|
|
31,530
|
|
|
12,207
|
|
|
35,540
|
|
|||||
Impairment of intangibles
|
114,804
|
|
|
19,065
|
|
|
3,800
|
|
|
—
|
|
|
—
|
|
|||||
(Gain) loss on revaluation of contingent liabilities
|
(21,187
|
)
|
|
3,262
|
|
|
415
|
|
|
1,735
|
|
|
(293
|
)
|
|||||
Loss on sale of subsidiaries
|
15,896
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
(Gain) loss on sale of property and equipment
|
(538
|
)
|
|
(1,731
|
)
|
|
4,688
|
|
|
3,320
|
|
|
2,004
|
|
|||||
Loss from operations
|
(182,728
|
)
|
|
(28,293
|
)
|
|
(56,966
|
)
|
|
(83,012
|
)
|
|
(42,619
|
)
|
|||||
Interest expense
|
39,770
|
|
|
22,939
|
|
|
16,252
|
|
|
14,720
|
|
|
10,247
|
|
|||||
Interest income
|
(860
|
)
|
|
(624
|
)
|
|
(549
|
)
|
|
(535
|
)
|
|
(361
|
)
|
|||||
Loss from continuing operations before income taxes
|
(221,638
|
)
|
|
(50,608
|
)
|
|
(72,669
|
)
|
|
(97,197
|
)
|
|
(52,505
|
)
|
|||||
Provision (benefit) for income taxes
|
(3,887
|
)
|
|
2,375
|
|
|
(4,987
|
)
|
|
(26,286
|
)
|
|
(14,323
|
)
|
|||||
Loss from continuing operations, net of tax
|
(217,751
|
)
|
|
(52,983
|
)
|
|
(67,682
|
)
|
|
(70,911
|
)
|
|
(38,182
|
)
|
|||||
Loss from discontinued operations, net of tax of $0, $0, $0, $0, and $513
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(935
|
)
|
|||||
Net loss
|
(217,751
|
)
|
|
(52,983
|
)
|
|
(67,682
|
)
|
|
(70,911
|
)
|
|
(39,117
|
)
|
|||||
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Foreign currency translation adjustments, net of $0 tax in each period
|
376
|
|
|
(1,159
|
)
|
|
(198
|
)
|
|
210
|
|
|
(4,067
|
)
|
|||||
Total other comprehensive income (loss), net of tax
|
376
|
|
|
(1,159
|
)
|
|
(198
|
)
|
|
210
|
|
|
(4,067
|
)
|
|||||
Total comprehensive loss
|
$
|
(217,375
|
)
|
|
$
|
(54,142
|
)
|
|
$
|
(67,880
|
)
|
|
$
|
(70,701
|
)
|
|
$
|
(43,184
|
)
|
Historical earnings per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average shares outstanding – basic
|
29,308,107
|
|
|
24,411,213
|
|
|
14,887,006
|
|
|
13,268,540
|
|
|
13,193,380
|
|
|||||
Loss from continuing operations per share – basic
|
$
|
(7.43
|
)
|
|
$
|
(2.17
|
)
|
|
$
|
(4.55
|
)
|
|
$
|
(5.34
|
)
|
|
$
|
(2.89
|
)
|
Loss from discontinued operations per share – basic
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.07
|
)
|
|||||
Loss per share – basic
|
$
|
(7.43
|
)
|
|
$
|
(2.17
|
)
|
|
$
|
(4.55
|
)
|
|
$
|
(5.34
|
)
|
|
$
|
(2.96
|
)
|
Weighted average shares outstanding – fully diluted
|
29,308,107
|
|
|
24,411,213
|
|
|
14,887,006
|
|
|
13,268,540
|
|
|
13,193,380
|
|
|||||
Loss from continuing operations – fully diluted
|
$
|
(7.43
|
)
|
|
$
|
(2.17
|
)
|
|
$
|
(4.55
|
)
|
|
$
|
(5.34
|
)
|
|
$
|
(2.89
|
)
|
Loss from discontinued operations per share – fully diluted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.07
|
)
|
|||||
Loss per share – fully diluted
|
$
|
(7.43
|
)
|
|
$
|
(2.17
|
)
|
|
$
|
(4.55
|
)
|
|
$
|
(5.34
|
)
|
|
$
|
(2.96
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance sheet data at period end:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
92,989
|
|
|
$
|
63,615
|
|
|
$
|
17,513
|
|
|
$
|
4,074
|
|
|
$
|
18,877
|
|
Property and equipment, net
|
128,604
|
|
|
211,644
|
|
|
259,039
|
|
|
273,210
|
|
|
325,894
|
|
|||||
Total assets
|
850,895
|
|
|
1,141,172
|
|
|
578,859
|
|
|
576,094
|
|
|
658,434
|
|
|||||
Long-term debt
|
392,059
|
|
|
424,978
|
|
|
—
|
|
|
244,262
|
|
|
249,641
|
|
|||||
Total stockholders’ equity
|
$
|
389,877
|
|
|
$
|
594,823
|
|
|
$
|
287,358
|
|
|
$
|
288,186
|
|
|
$
|
352,676
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Statement of cash flows data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net cash provided by (used in) operating activities
|
$
|
101,305
|
|
|
$
|
89,577
|
|
|
$
|
5,671
|
|
|
$
|
(3,290
|
)
|
|
$
|
140,367
|
|
Net cash used in investing activities
|
(34,121
|
)
|
|
(389,765
|
)
|
|
(44,464
|
)
|
|
(4,176
|
)
|
|
(19,251
|
)
|
|||||
Net cash provided by (used in) financing activities
|
$
|
(37,905
|
)
|
|
346,691
|
|
|
$
|
52,342
|
|
|
$
|
(7,315
|
)
|
|
$
|
(126,878
|
)
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Revenue: We compare actual revenue achieved each month to the most recent projection for that month and to the annual plan for the month established at the beginning of the year. We monitor our revenue to analyze trends in the performance of our operations compared to historical revenue drivers or market metrics. We are particularly interested in identifying positive or negative trends and investigating to understand the root causes.
|
•
|
Adjusted Gross Profit (Excluding Depreciation and Amortization): Adjusted gross profit (excluding depreciation and amortization) is a key metric that we use to evaluate operating performance. We define adjusted gross profit (excluding depreciation and amortization) as revenues less direct and indirect costs of revenues (excluding depreciation and amortization). Costs of revenues include direct and indirect labor costs, costs of materials, maintenance of equipment, fuel and transportation freight costs, contract services, crew cost, and other miscellaneous expenses. For additional information, see “Non-GAAP Financial Measures” below.
|
•
|
Adjusted EBITDA: We define Adjusted EBITDA as net income (loss) before interest, taxes, and depreciation and amortization, further adjusted for (i) property and equipment, goodwill, and/or intangible asset impairment charges, (ii) transaction and integration costs related to acquisitions and our IPO, (iii) loss or gain on equity method investment, (iv) loss or gain on revaluation of contingent liabilities, (v) loss or gain on the sale of subsidiaries, (vi) restructuring charges, (vii) stock-based compensation expense, (viii) loss or gain on sale of property and equipment, (ix) other expenses or charges to exclude certain items which we believe are not reflective of ongoing performance of our business, such as legal expenses and settlement costs related to litigation outside the ordinary course of business. For additional information, see “Non-GAAP Financial Measures” below.
|
•
|
Return on Invested Capital (“ROIC”): We define ROIC as after-tax net operating profit (loss), divided by average total capital. We define after-tax net operating profit (loss) as net income (loss) plus (i) property and equipment, goodwill, and/or intangible asset impairment charges, (ii) transaction and integration costs related to acquisitions and our IPO, (iii) interest expense (income), (iv) restructuring charges, (v) loss or gain on the sale of subsidiaries, and (vi) the provision or benefit for deferred income taxes. We define total capital as book value of equity plus the book value of debt less balance sheet cash and cash equivalents. We compute the average of the current and prior year-end total capital for use in this analysis. For additional information, see “Non-GAAP Financial Measures” below.
|
•
|
Safety: We measure safety by tracking the total recordable incident rate (“TRIR”), which is reviewed on a monthly basis. TRIR is a measure of the rate of recordable workplace injuries, defined below, normalized and stated on the basis of 100 workers for an annual period. The factor is derived by multiplying the number of recordable injuries in a calendar year by 200,000 (i.e., the total hours for 100 employees working 2,000 hours per year) and dividing this value by the total hours actually worked in the year. A recordable injury includes occupational death, nonfatal occupational illness, and other occupational injuries that involve loss of
|
•
|
As a result of the Magnum Acquisition and the application of purchase accounting, these identifiable net assets have been adjusted to their estimated fair value as of October 25, 2018, the Magnum Closing Date. These adjusted valuations increase our operating expenses in periods after the Magnum Closing Date, primarily due to an increase in the amortization of intangible assets with definite lives.
|
•
|
Transaction and integration costs associated with the Magnum Acquisition increase operating expenses in periods after the Magnum Closing Date.
|
•
|
Our completion tools line constitutes a larger portion of our business, due in large part to the Magnum Acquisition.
|
•
|
We incurred significant indebtedness in connection with the consummation of the Magnum Acquisition, and our related interest expense is expected to be significantly higher than in prior periods
|
|
Year Ended December 31,
|
|
|
||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
|
(in thousands)
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
||||
Completion Solutions
|
$
|
774,665
|
|
|
$
|
745,316
|
|
|
$
|
29,349
|
|
Production Solutions
|
58,272
|
|
|
81,858
|
|
|
(23,586
|
)
|
|||
|
832,937
|
|
|
$
|
827,174
|
|
|
$
|
5,763
|
|
|
Cost of revenues (exclusive of depreciation and amortization shown separately below)
|
|
|
|
|
|
|
|
||||
Completion Solutions
|
620,125
|
|
|
568,497
|
|
|
51,628
|
|
|||
Production Solutions
|
49,854
|
|
|
70,801
|
|
|
(20,947
|
)
|
|||
|
669,979
|
|
|
639,298
|
|
|
30,681
|
|
|||
Adjusted gross profit
|
|
|
|
|
|
|
|
||||
Completion Solutions
|
154,540
|
|
|
176,819
|
|
|
(22,279
|
)
|
|||
Production Solutions
|
8,418
|
|
|
11,057
|
|
|
(2,639
|
)
|
|||
|
162,958
|
|
|
187,876
|
|
|
(24,918
|
)
|
|||
General and administrative expenses
|
81,327
|
|
|
73,078
|
|
|
8,249
|
|
|||
Depreciation
|
50,544
|
|
|
54,257
|
|
|
(3,713
|
)
|
|||
Amortization of intangibles
|
18,367
|
|
|
9,558
|
|
|
8,809
|
|
|||
Impairment of property and equipment
|
66,200
|
|
|
45,694
|
|
|
20,506
|
|
|||
Impairment of goodwill
|
20,273
|
|
|
12,986
|
|
|
7,287
|
|
|||
Impairment of intangibles
|
114,804
|
|
|
19,065
|
|
|
95,739
|
|
|||
(Gain) loss on revaluation of contingent liabilities
|
(21,187
|
)
|
|
3,262
|
|
|
(24,449
|
)
|
|||
Loss on sale of subsidiaries
|
15,896
|
|
|
—
|
|
|
15,896
|
|
|||
(Gain) loss on sale of property and equipment
|
(538
|
)
|
|
(1,731
|
)
|
|
1,193
|
|
|||
Loss from operations
|
(182,728
|
)
|
|
(28,293
|
)
|
|
(154,435
|
)
|
|||
Non-operating expenses
|
38,910
|
|
|
22,315
|
|
|
16,595
|
|
|||
Loss before income taxes
|
(221,638
|
)
|
|
(50,608
|
)
|
|
(171,030
|
)
|
|||
Provision (benefit) for income taxes
|
(3,887
|
)
|
|
2,375
|
|
|
(6,262
|
)
|
|||
Net loss
|
$
|
(217,751
|
)
|
|
$
|
(52,983
|
)
|
|
$
|
(164,768
|
)
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
EBITDA reconciliation:
|
|
|
|
|
|
||
Net loss
|
$
|
(217,751
|
)
|
|
$
|
(52,983
|
)
|
Interest expense
|
39,770
|
|
|
22,939
|
|
||
Interest income
|
(860
|
)
|
|
(624
|
)
|
||
Depreciation
|
50,544
|
|
|
54,257
|
|
||
Amortization of intangibles
|
18,367
|
|
|
9,558
|
|
||
Provision (benefit) for income taxes
|
(3,887
|
)
|
|
2,375
|
|
||
EBITDA
|
$
|
(113,817
|
)
|
|
$
|
35,522
|
|
Adjusted EBITDA reconciliation:
|
|
|
|
|
|
||
EBITDA
|
$
|
(113,817
|
)
|
|
$
|
35,522
|
|
Impairment of property and equipment
|
66,200
|
|
|
45,694
|
|
||
Impairment of goodwill
|
20,273
|
|
|
12,986
|
|
||
Impairment of intangibles
|
114,804
|
|
|
19,065
|
|
||
Transaction and integration costs
|
13,047
|
|
|
10,327
|
|
||
Loss on equity method investment
|
—
|
|
|
347
|
|
||
(Gain) loss on revaluation of contingent liabilities
|
(21,187
|
)
|
|
3,262
|
|
||
Loss on sale of subsidiaries
|
15,896
|
|
|
—
|
|
||
Restructuring charges
|
3,976
|
|
|
—
|
|
||
Stock-based compensation expense
|
14,057
|
|
|
13,221
|
|
||
Loss on sale of property and equipment
|
(538
|
)
|
|
(1,731
|
)
|
||
Legal fees and settlements (2)
|
307
|
|
|
2,358
|
|
||
Adjusted EBITDA
|
$
|
113,018
|
|
|
$
|
141,051
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Net loss
|
$
|
(217,751
|
)
|
|
$
|
(52,983
|
)
|
Add back:
|
|
|
|
|
|||
Impairment of property and equipment
|
66,200
|
|
|
45,694
|
|
||
Impairment of goodwill
|
20,273
|
|
|
12,986
|
|
||
Impairment of intangibles
|
114,804
|
|
|
19,065
|
|
||
Transaction and integration costs
|
13,047
|
|
|
10,327
|
|
||
Interest expense
|
39,770
|
|
|
22,939
|
|
||
Interest income
|
(860
|
)
|
|
(624
|
)
|
||
Restructuring charges
|
3,976
|
|
|
—
|
|
||
Loss on sale of subsidiaries
|
15,896
|
|
|
—
|
|
||
Provision (benefit) for deferred income taxes
|
(4,327
|
)
|
|
898
|
|
||
After-tax net operating profit
|
$
|
51,028
|
|
|
$
|
58,302
|
|
Total capital as of prior year-end:
|
|
|
|
|
|||
Total stockholders’ equity
|
$
|
594,823
|
|
|
$
|
287,358
|
|
Total debt
|
435,000
|
|
|
242,235
|
|
||
Less cash and cash equivalents
|
(63,615
|
)
|
|
(17,513
|
)
|
||
Total capital as of prior year-end
|
$
|
966,208
|
|
|
$
|
512,080
|
|
Total capital as of year-end:
|
|
|
|
|
|||
Total stockholders’ equity
|
$
|
389,877
|
|
|
$
|
594,823
|
|
Total debt
|
400,000
|
|
|
435,000
|
|
||
Less cash and cash equivalents
|
(92,989
|
)
|
|
(63,615
|
)
|
||
Total capital as of year-end
|
$
|
696,888
|
|
|
$
|
966,208
|
|
Average total capital
|
$
|
831,548
|
|
|
$
|
739,144
|
|
ROIC
|
6.1
|
%
|
|
7.9
|
%
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Calculation of gross profit
|
|
|
|
|
|
||
Revenues
|
$
|
832,937
|
|
|
$
|
827,174
|
|
Cost of revenues (exclusive of depreciation and amortization shown separately below)
|
669,979
|
|
|
639,298
|
|
||
Depreciation (related to cost of revenues)
|
47,006
|
|
|
53,358
|
|
||
Amortization of intangibles
|
18,367
|
|
|
9,558
|
|
||
Gross profit
|
$
|
97,585
|
|
|
$
|
124,960
|
|
Adjusted gross profit (excluding depreciation and amortization) reconciliation:
|
|
|
|
|
|
||
Gross profit
|
$
|
97,585
|
|
|
$
|
124,960
|
|
Depreciation (related to cost of revenues)
|
47,006
|
|
|
53,358
|
|
||
Amortization of intangibles
|
18,367
|
|
|
9,558
|
|
||
Adjusted gross profit (excluding depreciation and amortization)
|
$
|
162,958
|
|
|
$
|
187,876
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Operating activities
|
$
|
101,305
|
|
|
$
|
89,577
|
|
Investing activities
|
(34,121
|
)
|
|
(389,765
|
)
|
||
Financing activities
|
(37,905
|
)
|
|
346,691
|
|
||
Impact of foreign exchange rate on cash
|
95
|
|
|
(401
|
)
|
||
Net change in cash and cash equivalents
|
$
|
29,374
|
|
|
$
|
46,102
|
|
|
Payments Due by Period for the Year Ended December 31,
|
|
|
|
|
||||||||||||||||||||||
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||
Senior Notes(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
400,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
400,000
|
|
2018 ABL Credit Facility(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Interest expense(3)
|
35,000
|
|
|
35,000
|
|
|
35,000
|
|
|
28,575
|
|
|
—
|
|
|
—
|
|
|
133,575
|
|
|||||||
Capital leases
|
1,253
|
|
|
1,253
|
|
|
1,099
|
|
|
66
|
|
|
—
|
|
|
—
|
|
|
3,671
|
|
|||||||
Operating leases
|
10,597
|
|
|
8,504
|
|
|
7,485
|
|
|
6,649
|
|
|
4,470
|
|
|
17,105
|
|
|
54,810
|
|
|||||||
Total
|
$
|
46,850
|
|
|
$
|
44,757
|
|
|
$
|
43,584
|
|
|
$
|
435,290
|
|
|
$
|
4,470
|
|
|
$
|
17,105
|
|
|
$
|
592,056
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
|
|
||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
92,989
|
|
|
$
|
63,615
|
|
Accounts receivable, net
|
96,889
|
|
|
154,783
|
|
||
Income taxes receivable
|
660
|
|
|
—
|
|
||
Inventories, net
|
60,945
|
|
|
91,435
|
|
||
Prepaid expenses and other current assets
|
17,434
|
|
|
15,717
|
|
||
Notes receivable from shareholders (Note 15)
|
—
|
|
|
7,626
|
|
||
Total current assets
|
268,917
|
|
|
333,176
|
|
||
Property and equipment, net
|
128,604
|
|
|
211,644
|
|
||
Definite-lived intangible assets, net
|
147,991
|
|
|
173,451
|
|
||
Goodwill
|
296,196
|
|
|
307,804
|
|
||
Indefinite-lived intangible assets
|
1,000
|
|
|
108,711
|
|
||
Other long-term assets
|
8,187
|
|
|
6,386
|
|
||
Total assets
|
$
|
850,895
|
|
|
$
|
1,141,172
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
35,490
|
|
|
$
|
46,132
|
|
Accrued expenses
|
24,730
|
|
|
61,434
|
|
||
Current portion of capital lease obligations
|
995
|
|
|
665
|
|
||
Income taxes payable
|
—
|
|
|
57
|
|
||
Total current liabilities
|
61,215
|
|
|
108,288
|
|
||
Long-term liabilities
|
|
|
|
||||
Long-term debt
|
392,059
|
|
|
424,978
|
|
||
Deferred income taxes
|
1,588
|
|
|
5,915
|
|
||
Long-term capital lease obligations
|
2,201
|
|
|
2,330
|
|
||
Other long-term liabilities
|
3,955
|
|
|
4,838
|
|
||
Total liabilities
|
461,018
|
|
|
546,349
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
|
||
Stockholders’ equity
|
|
|
|
||||
Common stock (120,000,000 shares authorized at $.01 par value; 30,555,677 and 30,163,408 shares issued and outstanding at December 31, 2019 and 2018 respectively)
|
306
|
|
|
302
|
|
||
Additional paid-in capital
|
758,853
|
|
|
746,428
|
|
||
Accumulated other comprehensive loss
|
(4,467
|
)
|
|
(4,843
|
)
|
||
Accumulated deficit
|
(364,815
|
)
|
|
(147,064
|
)
|
||
Total stockholders’ equity
|
389,877
|
|
|
594,823
|
|
||
Total liabilities and stockholders’ equity
|
$
|
850,895
|
|
|
$
|
1,141,172
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues (Note 4)
|
|
|
|
|
|
||||||
Service
|
$
|
646,508
|
|
|
$
|
708,750
|
|
|
$
|
483,959
|
|
Product
|
186,429
|
|
|
118,424
|
|
|
59,701
|
|
|||
|
832,937
|
|
|
827,174
|
|
|
543,660
|
|
|||
Cost and expenses
|
|
|
|
|
|
||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below)
|
|
|
|
|
|
||||||
Service
|
528,643
|
|
|
550,840
|
|
|
403,643
|
|
|||
Product
|
141,336
|
|
|
88,458
|
|
|
44,824
|
|
|||
General and administrative expenses
|
81,327
|
|
|
73,078
|
|
|
49,505
|
|
|||
Depreciation
|
50,544
|
|
|
54,257
|
|
|
53,422
|
|
|||
Amortization of intangibles
|
18,367
|
|
|
9,558
|
|
|
8,799
|
|
|||
Impairment of property and equipment
|
66,200
|
|
|
45,694
|
|
|
—
|
|
|||
Impairment of goodwill
|
20,273
|
|
|
12,986
|
|
|
31,530
|
|
|||
Impairment of intangibles
|
114,804
|
|
|
19,065
|
|
|
3,800
|
|
|||
(Gain) loss on revaluation of contingent liabilities
|
(21,187
|
)
|
|
3,262
|
|
|
415
|
|
|||
Loss on sale of subsidiaries
|
15,896
|
|
|
—
|
|
|
—
|
|
|||
(Gain) loss on sale of property and equipment
|
(538
|
)
|
|
(1,731
|
)
|
|
4,688
|
|
|||
Loss from operations
|
(182,728
|
)
|
|
(28,293
|
)
|
|
(56,966
|
)
|
|||
Interest expense
|
39,770
|
|
|
22,939
|
|
|
16,252
|
|
|||
Interest income
|
(860
|
)
|
|
(624
|
)
|
|
(549
|
)
|
|||
Loss before income taxes
|
(221,638
|
)
|
|
(50,608
|
)
|
|
(72,669
|
)
|
|||
Provision (benefit) for income taxes
|
(3,887
|
)
|
|
2,375
|
|
|
(4,987
|
)
|
|||
Net loss
|
$
|
(217,751
|
)
|
|
$
|
(52,983
|
)
|
|
$
|
(67,682
|
)
|
Loss per share
|
|
|
|
|
|
||||||
Basic
|
$
|
(7.43
|
)
|
|
$
|
(2.17
|
)
|
|
$
|
(4.55
|
)
|
Diluted
|
$
|
(7.43
|
)
|
|
$
|
(2.17
|
)
|
|
$
|
(4.55
|
)
|
Weighted average shares outstanding
|
|
|
|
|
|
||||||
Basic
|
29,308,107
|
|
|
24,411,213
|
|
|
14,887,006
|
|
|||
Diluted
|
29,308,107
|
|
|
24,411,213
|
|
|
14,887,006
|
|
|||
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
||||||
Foreign currency translation adjustments, net of $0 tax in each period
|
$
|
376
|
|
|
$
|
(1,159
|
)
|
|
$
|
(198
|
)
|
Total other comprehensive income (loss), net of tax
|
376
|
|
|
(1,159
|
)
|
|
(198
|
)
|
|||
Total comprehensive loss
|
$
|
(217,375
|
)
|
|
$
|
(54,142
|
)
|
|
$
|
(67,880
|
)
|
|
Common Stock
|
|
Additional
Paid-in |
|
Accumulated
Other Comprehensive |
|
Retained
Earnings (Accumulated |
|
Total
Stockholders’ |
|||||||||||||
|
Shares
|
|
Amounts
|
|
Capital
|
|
Income (Loss)
|
|
Deficit)
|
|
Equity
|
|||||||||||
Stockholders’ equity as of December 31, 2016
|
13,386,986
|
|
|
$
|
134
|
|
|
$
|
317,937
|
|
|
$
|
(3,486
|
)
|
|
$
|
(26,399
|
)
|
|
$
|
288,186
|
|
Issuance of common stock
|
2,501,643
|
|
|
25
|
|
|
61,897
|
|
|
—
|
|
|
—
|
|
|
61,922
|
|
|||||
Distribution to non-accredited investors
|
(78,089
|
)
|
|
(1
|
)
|
|
(2,437
|
)
|
|
—
|
|
|
—
|
|
|
(2,438
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
7,568
|
|
|
—
|
|
|
—
|
|
|
7,568
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(198
|
)
|
|
—
|
|
|
(198
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(67,682
|
)
|
|
(67,682
|
)
|
|||||
Stockholders’ equity as of December 31, 2017
|
15,810,540
|
|
|
$
|
158
|
|
|
$
|
384,965
|
|
|
$
|
(3,684
|
)
|
|
$
|
(94,081
|
)
|
|
$
|
287,358
|
|
Issuance of common stock in IPO, net of offering costs
|
8,050,000
|
|
|
81
|
|
|
168,180
|
|
|
—
|
|
|
—
|
|
|
168,261
|
|
|||||
Issuance of common stock under stock compensation plan
|
1,166,587
|
|
|
12
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of common stock for acquisitions
|
5,015,745
|
|
|
50
|
|
|
177,797
|
|
|
—
|
|
|
—
|
|
|
177,847
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
13,221
|
|
|
—
|
|
|
—
|
|
|
13,221
|
|
|||||
Exercise of stock options
|
135,817
|
|
|
1
|
|
|
2,904
|
|
|
—
|
|
|
—
|
|
|
2,905
|
|
|||||
Vesting of restricted stock
|
(28,324
|
)
|
|
—
|
|
|
(927
|
)
|
|
—
|
|
|
—
|
|
|
(927
|
)
|
|||||
Other issuances of common stock
|
13,043
|
|
|
—
|
|
|
300
|
|
|
—
|
|
|
—
|
|
|
300
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,159
|
)
|
|
—
|
|
|
(1,159
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52,983
|
)
|
|
(52,983
|
)
|
|||||
Stockholders’ equity as of December 31, 2018
|
30,163,408
|
|
|
$
|
302
|
|
|
$
|
746,428
|
|
|
$
|
(4,843
|
)
|
|
$
|
(147,064
|
)
|
|
$
|
594,823
|
|
Issuance of common stock under stock compensation plan
|
462,622
|
|
|
5
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
14,057
|
|
|
—
|
|
|
—
|
|
|
14,057
|
|
|||||
Exercise of stock options
|
674
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Vesting of restricted stock
|
(71,027
|
)
|
|
(1
|
)
|
|
(1,642
|
)
|
|
—
|
|
|
—
|
|
|
(1,643
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
376
|
|
|
—
|
|
|
376
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(217,751
|
)
|
|
(217,751
|
)
|
|||||
Stockholders’ equity as of December 31, 2019
|
30,555,677
|
|
|
$
|
306
|
|
|
$
|
758,853
|
|
|
$
|
(4,467
|
)
|
|
$
|
(364,815
|
)
|
|
$
|
389,877
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|||
Net loss
|
$
|
(217,751
|
)
|
|
$
|
(52,983
|
)
|
|
$
|
(67,682
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities
|
|
|
|
|
|
||||||
Depreciation
|
50,544
|
|
|
54,257
|
|
|
53,422
|
|
|||
Amortization of intangibles
|
18,367
|
|
|
9,558
|
|
|
8,799
|
|
|||
Amortization of deferred financing costs
|
2,984
|
|
|
2,966
|
|
|
1,615
|
|
|||
Provision for (recovery of) doubtful accounts
|
849
|
|
|
(268
|
)
|
|
176
|
|
|||
Provision (benefit) for deferred income taxes
|
(4,327
|
)
|
|
898
|
|
|
(5,815
|
)
|
|||
Provision for inventory obsolescence
|
5,148
|
|
|
844
|
|
|
1,359
|
|
|||
Impairment of property and equipment
|
66,200
|
|
|
45,694
|
|
|
—
|
|
|||
Impairment of goodwill
|
20,273
|
|
|
12,986
|
|
|
31,530
|
|
|||
Impairment of intangibles
|
114,804
|
|
|
19,065
|
|
|
3,800
|
|
|||
Stock-based compensation expense
|
14,057
|
|
|
13,221
|
|
|
7,568
|
|
|||
(Gain) loss on sale of property and equipment
|
(538
|
)
|
|
(1,731
|
)
|
|
4,688
|
|
|||
(Gain) loss on revaluation of contingent liabilities (Note 12)
|
(21,187
|
)
|
|
3,262
|
|
|
415
|
|
|||
Loss on sale of subsidiaries
|
15,896
|
|
|
—
|
|
|
—
|
|
|||
Loss on equity method investment
|
—
|
|
|
347
|
|
|
368
|
|
|||
Changes in operating assets and liabilities, net of effects from acquisitions
|
|
|
|
|
|
||||||
Accounts receivable, net
|
41,852
|
|
|
(24,972
|
)
|
|
(52,180
|
)
|
|||
Inventories, net
|
22,545
|
|
|
(15,041
|
)
|
|
(8,212
|
)
|
|||
Prepaid expenses and other current assets
|
2,395
|
|
|
(5,722
|
)
|
|
1,472
|
|
|||
Accounts payable and accrued expenses
|
(27,901
|
)
|
|
27,156
|
|
|
12,530
|
|
|||
Income taxes receivable/payable
|
(294
|
)
|
|
(255
|
)
|
|
15,158
|
|
|||
Other assets and liabilities
|
(2,611
|
)
|
|
295
|
|
|
(3,340
|
)
|
|||
Net cash provided by operating activities
|
101,305
|
|
|
89,577
|
|
|
5,671
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Acquisitions, net of cash acquired
|
1,020
|
|
|
(349,986
|
)
|
|
—
|
|
|||
Proceeds from sale of subsidiaries
|
16,914
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sales of property and equipment
|
3,702
|
|
|
2,183
|
|
|
1,452
|
|
|||
Proceeds from property and equipment casualty losses
|
1,576
|
|
|
1,743
|
|
|
300
|
|
|||
Proceeds from notes receivable payments
|
7,626
|
|
|
2,941
|
|
|
—
|
|
|||
Purchases of property and equipment
|
(64,959
|
)
|
|
(46,646
|
)
|
|
(45,216
|
)
|
|||
Equity method investment
|
—
|
|
|
—
|
|
|
(1,000
|
)
|
|||
Net cash used in investing activities
|
(34,121
|
)
|
|
(389,765
|
)
|
|
(44,464
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Proceeds from revolving credit facilities
|
10,000
|
|
|
35,000
|
|
|
56,481
|
|
|||
Payments on revolving credit facilities
|
(45,000
|
)
|
|
(96,182
|
)
|
|
(38,287
|
)
|
|||
Proceeds from Senior Notes
|
—
|
|
|
400,000
|
|
|
—
|
|
|||
Proceeds from term loan
|
—
|
|
|
125,000
|
|
|
—
|
|
|||
Payments on term loans
|
—
|
|
|
(270,975
|
)
|
|
(22,475
|
)
|
|||
Payments on notes payable – insurance premium financing
|
—
|
|
|
—
|
|
|
(272
|
)
|
|||
Payments on capital leases
|
(903
|
)
|
|
(128
|
)
|
|
—
|
|
|||
Payments of contingent liabilities
|
(374
|
)
|
|
(3,445
|
)
|
|
(1,325
|
)
|
|||
Proceeds from issuance of common stock in IPO, net of offering costs
|
—
|
|
|
171,450
|
|
|
—
|
|
|||
Proceeds from other issuances of common stock
|
—
|
|
|
300
|
|
|
61,374
|
|
|||
Proceeds from exercise of stock options
|
15
|
|
|
2,905
|
|
|
—
|
|
|||
Vesting of restricted stock
|
(1,643
|
)
|
|
(927
|
)
|
|
—
|
|
|||
Distribution to non-accredited investors
|
—
|
|
|
—
|
|
|
(2,438
|
)
|
|||
Cost of debt issuance
|
—
|
|
|
(16,307
|
)
|
|
(716
|
)
|
|||
Net cash provided by (used in) financing activities
|
(37,905
|
)
|
|
346,691
|
|
|
52,342
|
|
|||
Impact of foreign currency exchange on cash
|
95
|
|
|
(401
|
)
|
|
(110
|
)
|
|||
Net increase in cash and cash equivalents
|
29,374
|
|
|
46,102
|
|
|
13,439
|
|
|||
Cash and cash equivalents
|
|
|
|
|
|
||||||
Cash and cash equivalents at beginning of period
|
63,615
|
|
|
17,513
|
|
|
4,074
|
|
|||
Cash and cash equivalents at end of period
|
$
|
92,989
|
|
|
$
|
63,615
|
|
|
$
|
17,513
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
37,376
|
|
|
$
|
5,981
|
|
|
$
|
14,987
|
|
Cash paid (refunded) for income taxes
|
$
|
517
|
|
|
$
|
1,697
|
|
|
$
|
(14,344
|
)
|
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Issuance of common stock related to business acquisitions
|
$
|
—
|
|
|
$
|
177,847
|
|
|
$
|
547
|
|
Contingent liability related to business acquisitions
|
$
|
—
|
|
|
$
|
23,982
|
|
|
$
|
—
|
|
Capital expenditures in accounts payable and accrued expenses
|
$
|
10
|
|
|
$
|
4,476
|
|
|
$
|
1,675
|
|
Property and equipment obtained by capital leases
|
$
|
1,621
|
|
|
$
|
3,123
|
|
|
$
|
—
|
|
Receivable from property and equipment sale (including insurance)
|
$
|
5,949
|
|
|
$
|
1,199
|
|
|
$
|
—
|
|
•
|
The expected term of stock options represents the period the stock options are expected to remain outstanding and is based on the simplified method, which is the weighted average vesting term plus the original contractual term, divided by two.
|
•
|
Expected volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period. Prior to the Company’s IPO, when its stock was not publicly traded, the Company determined volatility based on an analysis of the PHLX Oil Service Index that tracks publicly traded oilfield service stocks. Subsequent to the IPO and as a publicly traded company, the Company developed its expected volatility based upon a weighted average volatility of its peer group.
|
•
|
At the time of the issuance of the options, the Company did not plan to pay cash dividends in the foreseeable future. Therefore, a zero expected dividend yield was used in the valuation model.
|
•
|
The risk-free interest rate is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options.
|
|
Fair Value
|
||
|
(in thousands)
|
||
Proceeds from newly issued Senior Notes and 2018 ABL Credit Facility(1)
|
$
|
296,622
|
|
Cash provided from operations
|
57,740
|
|
|
Total upfront cash consideration
|
$
|
354,362
|
|
|
|
||
Issuance of the Company’s common shares
|
177,350
|
|
|
Contingent consideration(2)
|
23,029
|
|
|
Total purchase consideration
|
$
|
554,741
|
|
|
Purchase Price Allocation
|
||
|
(in thousands)
|
||
Cash and cash equivalents
|
$
|
8,509
|
|
Accounts receivable, net
|
30,898
|
|
|
Income taxes receivable
|
695
|
|
|
Inventories, net
|
52,249
|
|
|
Prepaid expenses and other current assets
|
1,147
|
|
|
Property and equipment, net
|
3,729
|
|
|
Goodwill
|
234,504
|
|
|
Definite-lived intangible, assets
|
148,000
|
|
|
Indefinite-lived intangible assets, net
|
96,000
|
|
|
Other long-term assets
|
1,055
|
|
|
Accounts payable
|
(3,626
|
)
|
|
Accrued expenses
|
(18,404
|
)
|
|
Other long-term liabilities
|
(15
|
)
|
|
Total net assets acquired
|
$
|
554,741
|
|
|
Customer Relationships
|
|
Non-Compete Agreements
|
|
Technology
|
|
Definite-Lived Intangible Assets Total
|
|
Trade Names
|
|
Other Intangible Assets
|
|
Indefinite-Lived Intangible Assets Total
|
|
(in thousands, except weighted average useful life information)
|
||||||||||||
Fair value
|
$25,000
|
|
$3,000
|
|
$120,000
|
|
$148,000
|
|
$95,000
|
|
$1,000
|
|
$96,000
|
Weighted average useful life
|
9.0
|
|
2.1
|
|
15.0
|
|
|
|
Indefinite
|
|
Indefinite
|
|
|
•
|
The pro forma impact of the amortization of intangible assets and depreciation of property, plant, and equipment based on the estimated fair values of the identifiable assets;
|
•
|
The pro forma impact of the elimination of sales commissions due from or paid by Magnum to an intercompany entity that was not included in the Magnum Acquisition;
|
•
|
The pro forma impact of the elimination of insurance premiums paid by Magnum to a captive insurance entity under common ownership that was not included in the Magnum Acquisition, for additional insurance coverage that was not replaced subsequent to the close of the transaction;
|
•
|
The pro forma impact of interest expense related to the Magnum Acquisition;
|
•
|
The tax benefit of the aforementioned pro forma adjustments; and
|
•
|
The pro forma impact to weighted average shares outstanding to reflect the issuance of 5.0 million shares to the sellers of Magnum as of the beginning of the period presented.
|
|
2018
|
|
2017
|
||||
|
(in thousands, except per share amounts)
|
||||||
Revenues
|
$
|
948,282
|
|
|
$
|
633,248
|
|
Net loss
|
$
|
(55,447
|
)
|
|
$
|
(78,993
|
)
|
Loss per share
|
|
|
|
||||
Basic
|
$
|
(1.89
|
)
|
|
$
|
(3.97
|
)
|
Diluted
|
$
|
(1.89
|
)
|
|
$
|
(3.97
|
)
|
•
|
The conversion of Beckman shares owned by non-accredited shareholders of Beckman at the time of the Beckman Combination into cash at a price of $17.69 per Beckman share;
|
•
|
Payment of cash for Beckman shares that converted into fractional Nine shares at the price of $31.18 per Nine share;
|
•
|
The conversion of options to purchase Beckman common stock into options to purchase Nine common stock;
|
•
|
The conversion of Beckman restricted shares into Nine restricted shares;
|
•
|
The conversion of warrants to purchase Beckman common stock into warrants to purchase Nine common stock;
|
•
|
The issuance of options to purchase Nine common stock;
|
•
|
The issuance, on a pro-rata basis, to the Company’s shareholders of Nine common stock based on a subscription amount equal to the number of common shares issued at a price of $31.18. The subscription was offered to all shareholders of record at the time of the Beckman Combination. Any unsubscribed shares were reallocated among the shareholders; and
|
•
|
The issuance to the Company’s shareholders of Nine warrants equal to one half of the amount of shares issued related to the subscription described above.
|
|
For the year ended December 31, 2019
|
||||||||||
|
Completion Solutions
|
|
Production Solutions
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Coiled tubing
|
$
|
134,543
|
|
|
$
|
—
|
|
|
$
|
134,543
|
|
Cement
|
217,893
|
|
|
—
|
|
|
217,893
|
|
|||
Tools
|
186,429
|
|
|
—
|
|
|
186,429
|
|
|||
Wireline
|
235,800
|
|
|
—
|
|
|
235,800
|
|
|||
Well service
|
—
|
|
|
58,272
|
|
|
58,272
|
|
|||
Total revenues
|
$
|
774,665
|
|
|
$
|
58,272
|
|
|
$
|
832,937
|
|
|
For the year ended December 31, 2019
|
||||||||||
|
Completion Solutions
|
|
Production Solutions
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Products(1)
|
$
|
186,429
|
|
|
$
|
—
|
|
|
$
|
186,429
|
|
Services(1)
|
588,236
|
|
|
58,272
|
|
|
646,508
|
|
|||
Total
|
$
|
774,665
|
|
|
$
|
58,272
|
|
|
$
|
832,937
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Raw materials
|
$
|
38,823
|
|
|
$
|
38,890
|
|
Work in progress
|
—
|
|
|
130
|
|
||
Finished goods
|
27,555
|
|
|
54,301
|
|
||
Inventories
|
66,378
|
|
|
93,321
|
|
||
Reserve for obsolescence
|
(5,433
|
)
|
|
(1,886
|
)
|
||
Inventories, net
|
$
|
60,945
|
|
|
$
|
91,435
|
|
|
|
|
December 31,
|
||||||
|
Estimated
Useful Lives
|
|
2019
|
|
2018
|
||||
|
|
|
(in thousands)
|
||||||
Operating equipment
|
1 to 12 years
|
|
$
|
293,237
|
|
|
$
|
394,881
|
|
Autos and trucks
|
1 to 7 years
|
|
15,053
|
|
|
30,770
|
|
||
Furniture, fixtures, and equipment
|
2 to 12 years
|
|
4,054
|
|
|
4,330
|
|
||
Shop equipment
|
3 to 15 years
|
|
16,144
|
|
|
17,300
|
|
||
Buildings
|
7 to 39 years
|
|
7,991
|
|
|
9,784
|
|
||
Leasehold improvements
|
3 to 11 years
|
|
1,653
|
|
|
1,488
|
|
||
Land
|
indefinite
|
|
791
|
|
|
1,618
|
|
||
|
|
|
338,923
|
|
|
460,171
|
|
||
Less: Accumulated depreciation
|
|
|
(210,319
|
)
|
|
(248,527
|
)
|
||
Property and equipment, net
|
|
|
$
|
128,604
|
|
|
$
|
211,644
|
|
|
Goodwill
|
||||||||||
|
Gross Value
|
|
Accumulated Impairment Loss
|
|
Net
|
||||||
|
(in thousands)
|
||||||||||
Balance as of December 31, 2017
|
$
|
173,033
|
|
|
$
|
(79,277
|
)
|
|
$
|
93,756
|
|
Additions
|
227,034
|
|
|
—
|
|
|
227,034
|
|
|||
Impairment
|
—
|
|
|
(12,986
|
)
|
|
(12,986
|
)
|
|||
Balance as of December 31, 2018
|
$
|
400,067
|
|
|
$
|
(92,263
|
)
|
|
$
|
307,804
|
|
Purchase price adjustments (1)
|
8,665
|
|
|
—
|
|
|
8,665
|
|
|||
Impairment
|
—
|
|
|
(20,273
|
)
|
|
(20,273
|
)
|
|||
Balance as of December 31, 2019
|
$
|
408,732
|
|
|
$
|
(112,536
|
)
|
|
$
|
296,196
|
|
|
|
Completion Solutions
|
|
Production Solutions
|
|
Total
|
||||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
Balance as of January 1
|
|
$
|
307,804
|
|
|
$
|
80,770
|
|
|
$
|
—
|
|
|
$
|
12,986
|
|
|
$
|
307,804
|
|
|
$
|
93,756
|
|
Additions
|
|
—
|
|
|
227,034
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
227,034
|
|
||||||
Purchase price adjustments (1)
|
|
8,665
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,665
|
|
|
—
|
|
||||||
Impairment
|
|
(20,273
|
)
|
|
—
|
|
|
—
|
|
|
(12,986
|
)
|
|
(20,273
|
)
|
|
(12,986
|
)
|
||||||
Balance as of December 31
|
|
$
|
296,196
|
|
|
$
|
307,804
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
296,196
|
|
|
$
|
307,804
|
|
|
2019
|
||||||||||||||||||||||
|
Customer Relationships
|
|
Non-Compete Agreements
|
|
Technology
|
|
Definite-Lived Intangible Asset Total
|
|
Trade Names and Other
|
|
Indefinite-Lived Intangible Asset Total
|
||||||||||||
|
(in thousands, except weighted average amortization period information)
|
||||||||||||||||||||||
Balance as of December 31, 2018
|
$
|
47,964
|
|
|
$
|
2,850
|
|
|
$
|
122,637
|
|
|
$
|
173,451
|
|
|
$
|
108,711
|
|
|
$
|
108,711
|
|
Amortization expense
|
(8,335
|
)
|
|
(1,316
|
)
|
|
(8,716
|
)
|
|
(18,367
|
)
|
|
—
|
|
|
—
|
|
||||||
Impairment
|
(7,093
|
)
|
|
—
|
|
|
—
|
|
|
(7,093
|
)
|
|
(107,711
|
)
|
|
(107,711
|
)
|
||||||
Balance as of December 31, 2019
|
$
|
32,536
|
|
|
$
|
1,534
|
|
|
$
|
113,921
|
|
|
$
|
147,991
|
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
Weighted average amortization period
|
6.0
|
|
3.8
|
|
13.6
|
|
|
|
Indefinite
|
|
|
|
2018
|
||||||||||||||||||||||
|
Customer Relationships
|
|
Non-Compete Agreements
|
|
Technology
|
|
Definite-Lived Intangible Asset Total
|
|
Trade Names and Other
|
|
Indefinite-Lived Intangible Asset Total
|
||||||||||||
|
(in thousands, except weighted average amortization period information)
|
||||||||||||||||||||||
Balance as of December 31, 2017
|
$
|
39,645
|
|
|
$
|
725
|
|
|
$
|
1,144
|
|
|
$
|
41,514
|
|
|
$
|
22,031
|
|
|
$
|
22,031
|
|
Additions
|
25,000
|
|
|
3,000
|
|
|
123,240
|
|
|
151,240
|
|
|
96,000
|
|
|
96,000
|
|
||||||
Amortization expense
|
(6,962
|
)
|
|
(849
|
)
|
|
(1,747
|
)
|
|
(9,558
|
)
|
|
—
|
|
|
—
|
|
||||||
Impairment
|
(9,719
|
)
|
|
(26
|
)
|
|
—
|
|
|
(9,745
|
)
|
|
(9,320
|
)
|
|
(9,320
|
)
|
||||||
Balance as of December 31, 2018
|
$
|
47,964
|
|
|
$
|
2,850
|
|
|
$
|
122,637
|
|
|
$
|
173,451
|
|
|
$
|
108,711
|
|
|
$
|
108,711
|
|
Weighted average amortization period
|
7.3
|
|
3.5
|
|
14.6
|
|
|
|
Indefinite
|
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Accrued compensation and benefits
|
$
|
7,009
|
|
|
$
|
11,930
|
|
Accrued bonus
|
5,043
|
|
|
13,250
|
|
||
Sales tax payable
|
820
|
|
|
1,185
|
|
||
Contingent liabilities
|
391
|
|
|
20,922
|
|
||
Accrued interest
|
6,091
|
|
|
7,031
|
|
||
Other accrued expenses
|
5,376
|
|
|
7,116
|
|
||
Total accrued expenses
|
$
|
24,730
|
|
|
$
|
61,434
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Senior Notes
|
$
|
400,000
|
|
|
$
|
400,000
|
|
2018 ABL Credit Facility
|
—
|
|
|
35,000
|
|
||
2018 IPO Term Loan Credit Facility
|
—
|
|
|
—
|
|
||
Legacy Term Loans
|
—
|
|
|
—
|
|
||
Legacy Revolving Credit Facilities
|
—
|
|
|
—
|
|
||
Total debt before deferred financing costs
|
$
|
400,000
|
|
|
$
|
435,000
|
|
Deferred financing costs
|
(7,941
|
)
|
|
(10,022
|
)
|
||
Total debt
|
$
|
392,059
|
|
|
$
|
424,978
|
|
Less: Current portion of long-term debt
|
—
|
|
|
—
|
|
||
Long-term debt
|
$
|
392,059
|
|
|
$
|
424,978
|
|
Year
|
Redemption Price
|
|
2020
|
104.375
|
%
|
2021
|
102.188
|
%
|
2022 and thereafter
|
100.000
|
%
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Senior Notes
|
$
|
324,000
|
|
|
$
|
376,000
|
|
2018 ABL Credit Facility
|
$
|
—
|
|
|
$
|
35,000
|
|
2018 IPO Term Loan Credit Facility
|
$
|
—
|
|
|
$
|
—
|
|
Legacy Term Loans
|
$
|
—
|
|
|
$
|
—
|
|
Legacy Revolving Credit Facilities
|
$
|
—
|
|
|
$
|
—
|
|
2019 Activity
|
|
Number of
Shares in Underlying Options |
|
Weighted
Average Exercise Price |
|
Remaining
Weighted Average Contractual Life in Years |
|
Intrinsic Value
|
||||||
|
|
|
|
|
|
|
|
(in thousands)
|
||||||
Beginning balance
|
|
957,659
|
|
|
$
|
31.98
|
|
|
6.9
|
|
|
$
|
6
|
|
Granted
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Exercised
|
|
(674
|
)
|
|
22.63
|
|
|
—
|
|
|
2
|
|
||
Forfeited
|
|
(28,050
|
)
|
|
30.18
|
|
|
—
|
|
|
—
|
|
||
Expired
|
|
(112,508
|
)
|
|
28.66
|
|
|
—
|
|
|
—
|
|
||
Total outstanding
|
|
816,427
|
|
|
$
|
32.51
|
|
|
5.8
|
|
|
$
|
—
|
|
Options exercisable
|
|
704,944
|
|
|
$
|
32.99
|
|
|
5.5
|
|
|
$
|
—
|
|
2018 Activity
|
|
Number of
Shares in Underlying Options |
|
Weighted
Average Exercise Price |
|
Remaining
Weighted Average Contractual Life in Years |
|
Intrinsic Value
|
||||||
|
|
|
|
|
|
|
|
(in thousands)
|
||||||
Beginning balance
|
|
1,068,791
|
|
|
$
|
30.79
|
|
|
7.6
|
|
|
$
|
3,282
|
|
Granted
|
|
32,102
|
|
|
23.01
|
|
|
6.0
|
|
|
—
|
|
||
Exercised
|
|
(121,577
|
)
|
|
20.71
|
|
|
—
|
|
|
1,728
|
|
||
Forfeited
|
|
(14,759
|
)
|
|
29.80
|
|
|
—
|
|
|
5
|
|
||
Expired
|
|
(6,898
|
)
|
|
28.07
|
|
|
—
|
|
|
—
|
|
||
Total outstanding
|
|
957,659
|
|
|
$
|
31.98
|
|
|
6.9
|
|
|
$
|
6
|
|
Options exercisable
|
|
667,922
|
|
|
$
|
33.20
|
|
|
6.2
|
|
|
$
|
3
|
|
|
2018
|
|
2017
|
||||
Weighted average grant-date fair value
|
$
|
13.11
|
|
|
$
|
14.70
|
|
Assumptions
|
|
|
|
||||
Expected life (in years)
|
6.0
|
|
|
6.0
|
|
||
Volatility
|
47.0
|
%
|
|
47.1
|
%
|
||
Dividend yield
|
0.0
|
%
|
|
0.0
|
%
|
||
Risk free interest rate
|
2.47
|
%
|
|
2.16
|
%
|
|
2019
|
|
2018
|
|
2017
|
|||
Nonvested at the beginning of the year
|
1,017,945
|
|
|
373,861
|
|
|
131,179
|
|
Beckman restricted stock converted to Nine restricted stock
|
—
|
|
|
—
|
|
|
91,961
|
|
Granted
|
666,173
|
|
|
805,897
|
|
|
302,797
|
|
Vested
|
(292,326
|
)
|
|
(148,740
|
)
|
|
(77,093
|
)
|
Cancelled
|
(183,167
|
)
|
|
(13,073
|
)
|
|
(74,983
|
)
|
Nonvested at the end of the year
|
1,208,625
|
|
|
1,017,945
|
|
|
373,861
|
|
2017 Activity
|
|
Number of
Shares in Underlying Options |
|
Weighted
Average Exercise Price |
|
Remaining
Weighted Average Contractual Life in Years |
|
Intrinsic Value
|
||||||
|
|
|
|
|
|
|
|
(in thousands)
|
||||||
Beginning balance
|
|
17,313
|
|
|
$
|
123.02
|
|
|
5.9
|
|
|
$
|
—
|
|
Beckman options converted to Nine options
|
|
(17,313
|
)
|
|
123.02
|
|
|
5.9
|
|
|
—
|
|
||
Granted
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Exercised
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total outstanding
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Options exercisable
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Year Ending December 31,
|
(in thousands)
|
||
2020
|
$
|
10,597
|
|
2021
|
8,504
|
|
|
2022
|
7,485
|
|
|
2023
|
6,649
|
|
|
2024
|
4,470
|
|
|
Thereafter
|
17,105
|
|
|
|
$
|
54,810
|
|
|
Magnum
|
|
Frac Tech
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Balance at January 1, 2019
|
$
|
24,521
|
|
|
$
|
1,008
|
|
|
$
|
25,529
|
|
Payments
|
—
|
|
|
(374
|
)
|
|
(374
|
)
|
|||
Revaluation adjustments
|
(21,912
|
)
|
|
725
|
|
|
(21,187
|
)
|
|||
Balance at December 31, 2019
|
$
|
2,609
|
|
|
$
|
1,359
|
|
|
$
|
3,968
|
|
|
Magnum
|
|
Frac Tech
|
|
Scorpion
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Balance at January 1, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,730
|
|
|
$
|
1,730
|
|
Fair value of contingent earnout liability initially recorded in connection with the acquisitions
|
23,029
|
|
|
953
|
|
|
—
|
|
|
23,982
|
|
||||
Payment
|
—
|
|
|
—
|
|
|
(3,445
|
)
|
|
(3,445
|
)
|
||||
Revaluation adjustments
|
1,492
|
|
|
55
|
|
|
1,715
|
|
|
3,262
|
|
||||
Balance at December 31, 2018
|
$
|
24,521
|
|
|
$
|
1,008
|
|
|
$
|
—
|
|
|
$
|
25,529
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Current
|
|
|
|
|
|
|
|
|
|||
US federal
|
$
|
(22
|
)
|
|
$
|
(93
|
)
|
|
$
|
(50
|
)
|
US state
|
452
|
|
|
1,558
|
|
|
878
|
|
|||
Foreign
|
10
|
|
|
12
|
|
|
—
|
|
|||
Total current provision
|
440
|
|
|
1,477
|
|
|
828
|
|
|||
Deferred
|
|
|
|
|
|
||||||
US federal
|
(4,276
|
)
|
|
767
|
|
|
(5,455
|
)
|
|||
US state
|
(51
|
)
|
|
131
|
|
|
(360
|
)
|
|||
Foreign
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total deferred provision (benefit)
|
(4,327
|
)
|
|
898
|
|
|
(5,815
|
)
|
|||
Total provision (benefit) for income taxes
|
$
|
(3,887
|
)
|
|
$
|
2,375
|
|
|
$
|
(4,987
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Tax benefit at statutory rate
|
$
|
(46,544
|
)
|
|
$
|
(10,628
|
)
|
|
$
|
(25,434
|
)
|
Foreign rate differential
|
(364
|
)
|
|
(56
|
)
|
|
241
|
|
|||
State income taxes, net of federal benefit
|
306
|
|
|
108
|
|
|
70
|
|
|||
Impact on deferred taxes from Beckman Combination
|
—
|
|
|
—
|
|
|
(2,025
|
)
|
|||
Effects of Tax Act(1)
|
|
|
|
|
|
||||||
Effect of tax rate reduction on deferred tax
|
—
|
|
|
—
|
|
|
6,649
|
|
|||
Effect of tax rate reduction on deferred tax valuation
|
—
|
|
|
—
|
|
|
(9,668
|
)
|
|||
Nondeductible expenses
|
1,057
|
|
|
1,426
|
|
|
1,559
|
|
|||
Impact from goodwill impairment
|
—
|
|
|
1,030
|
|
|
—
|
|
|||
Valuation allowance (excluding impact of Tax Act)(1)
|
40,480
|
|
|
10,137
|
|
|
24,066
|
|
|||
Other
|
1,178
|
|
|
358
|
|
|
(445
|
)
|
|||
Total provision (benefit) for income taxes
|
$
|
(3,887
|
)
|
|
$
|
2,375
|
|
|
$
|
(4,987
|
)
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Deferred income tax assets:
|
|
|
|
|
|
||
Inventories
|
$
|
2,094
|
|
|
$
|
626
|
|
Goodwill and intangible assets
|
34,092
|
|
|
13,581
|
|
||
Deferred tax benefit from net losses
|
38,501
|
|
|
30,139
|
|
||
Stock-based compensation
|
5,976
|
|
|
4,635
|
|
||
Tax credit carryforwards
|
680
|
|
|
660
|
|
||
Accrued expenses
|
2,763
|
|
|
4,188
|
|
||
Interest carryover
|
3,459
|
|
|
—
|
|
||
Other
|
163
|
|
|
168
|
|
||
Total deferred income tax assets
|
87,728
|
|
|
53,997
|
|
||
Less: Valuation allowance
|
(79,912
|
)
|
|
(28,862
|
)
|
||
Net deferred income tax assets
|
7,816
|
|
|
25,135
|
|
||
Deferred income tax liabilities:
|
|
|
|
|
|
||
Property and equipment
|
(9,404
|
)
|
|
(31,050
|
)
|
||
Prepaid expenses and other
|
—
|
|
|
—
|
|
||
Total deferred income tax liabilities
|
(9,404
|
)
|
|
(31,050
|
)
|
||
Net deferred income tax liability
|
$
|
(1,588
|
)
|
|
$
|
(5,915
|
)
|
|
2019
|
||
|
(in thousands)
|
||
Balance at January 1, 2019
|
$
|
568
|
|
Additional based on tax positions related to prior years
|
—
|
|
|
Additional based on tax positions related to current year
|
—
|
|
|
Reduction based on tax positions related to prior years
|
—
|
|
|
Lapse of statute of limitations
|
—
|
|
|
Balance at December 31, 2019
|
$
|
568
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands, except for share and per share amounts)
|
||||||||||
Net loss
|
$
|
(217,751
|
)
|
|
$
|
(52,983
|
)
|
|
$
|
(67,682
|
)
|
Average shares outstanding
|
29,308,107
|
|
|
24,411,213
|
|
|
14,887,006
|
|
|||
Loss per share (basic and diluted)
|
$
|
(7.43
|
)
|
|
$
|
(2.17
|
)
|
|
$
|
(4.55
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|||
Completion Solutions
|
$
|
774,665
|
|
|
$
|
745,316
|
|
|
$
|
465,773
|
|
Production Solutions
|
58,272
|
|
|
81,858
|
|
|
77,887
|
|
|||
|
$
|
832,937
|
|
|
$
|
827,174
|
|
|
$
|
543,660
|
|
Cost of revenues (exclusive of depreciation and amortization shown separately below)
|
|
|
|
|
|
||||||
Completion Solutions
|
$
|
620,125
|
|
|
$
|
568,497
|
|
|
$
|
384,641
|
|
Production Solutions
|
49,854
|
|
|
70,801
|
|
|
63,826
|
|
|||
|
$
|
669,979
|
|
|
$
|
639,298
|
|
|
$
|
448,467
|
|
Adjusted gross profit
|
|
|
|
|
|
||||||
Completion Solutions
|
$
|
154,540
|
|
|
$
|
176,819
|
|
|
$
|
81,132
|
|
Production Solutions
|
8,418
|
|
|
11,057
|
|
|
14,061
|
|
|||
|
$
|
162,958
|
|
|
$
|
187,876
|
|
|
$
|
95,193
|
|
General and administrative expenses
|
81,327
|
|
|
73,078
|
|
|
49,505
|
|
|||
Depreciation
|
50,544
|
|
|
54,257
|
|
|
53,422
|
|
|||
Amortization of intangibles
|
18,367
|
|
|
9,558
|
|
|
8,799
|
|
|||
Impairment of property and equipment
|
66,200
|
|
|
45,694
|
|
|
—
|
|
|||
Impairment of goodwill
|
20,273
|
|
|
12,986
|
|
|
31,530
|
|
|||
Impairment of intangibles
|
114,804
|
|
|
19,065
|
|
|
3,800
|
|
|||
(Gain) loss on revaluation of contingent liabilities
|
(21,187
|
)
|
|
3,262
|
|
|
415
|
|
|||
Loss on sale of subsidiaries
|
15,896
|
|
|
—
|
|
|
—
|
|
|||
(Gain) loss on sale of property and equipment
|
(538
|
)
|
|
(1,731
|
)
|
|
4,688
|
|
|||
Loss from operations
|
$
|
(182,728
|
)
|
|
$
|
(28,293
|
)
|
|
$
|
(56,966
|
)
|
Non-operating expenses
|
38,910
|
|
|
22,315
|
|
|
15,703
|
|
|||
Loss before income taxes
|
(221,638
|
)
|
|
(50,608
|
)
|
|
(72,669
|
)
|
|||
Provision (benefit) for income taxes
|
(3,887
|
)
|
|
2,375
|
|
|
(4,987
|
)
|
|||
Net loss
|
$
|
(217,751
|
)
|
|
$
|
(52,983
|
)
|
|
$
|
(67,682
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Completion Solutions
|
$
|
59,231
|
|
|
$
|
48,361
|
|
|
$
|
40,626
|
|
Production Solutions
|
2,790
|
|
|
3,548
|
|
|
4,590
|
|
|||
Corporate
|
93
|
|
|
661
|
|
|
—
|
|
|||
|
$
|
62,114
|
|
|
$
|
52,570
|
|
|
$
|
45,216
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Completion Solutions
|
$
|
739,142
|
|
|
$
|
1,045,643
|
|
Production Solutions
|
—
|
|
|
35,086
|
|
||
Corporate
|
111,753
|
|
|
60,443
|
|
||
|
$
|
850,895
|
|
|
$
|
1,141,172
|
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
Amount
|
Percentage
|
|
Amount
|
Percentage
|
|
Amount
|
Percentage
|
|||||||||
|
(in thousands)
|
|
|
(in thousands)
|
|
|
(in thousands)
|
|
|||||||||
United States
|
$
|
814,639
|
|
97.8
|
%
|
|
$
|
796,221
|
|
96.3
|
%
|
|
$
|
521,914
|
|
96.0
|
%
|
Canada and other
|
18,298
|
|
2.2
|
%
|
|
30,953
|
|
3.7
|
%
|
|
21,746
|
|
4.0
|
%
|
|||
|
$
|
832,937
|
|
100.0
|
%
|
|
$
|
827,174
|
|
100.0
|
%
|
|
$
|
543,660
|
|
100.0
|
%
|
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Revenue
|
$
|
229,705
|
|
|
$
|
237,517
|
|
|
$
|
202,305
|
|
|
$
|
163,410
|
|
Income (loss) from operations
|
26,936
|
|
|
13,955
|
|
|
(10,168
|
)
|
|
(213,451
|
)
|
||||
Income (loss) before income taxes
|
17,770
|
|
|
3,352
|
|
|
(19,900
|
)
|
|
(222,860
|
)
|
||||
Net income (loss)
|
17,310
|
|
|
6,087
|
|
|
(20,627
|
)
|
|
(220,521
|
)
|
||||
Earnings (loss) per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.59
|
|
|
$
|
0.21
|
|
|
$
|
(0.70
|
)
|
|
$
|
(7.51
|
)
|
Diluted
|
$
|
0.59
|
|
|
$
|
0.21
|
|
|
$
|
(0.70
|
)
|
|
$
|
(7.51
|
)
|
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Revenue
|
$
|
173,807
|
|
|
$
|
205,492
|
|
|
$
|
218,427
|
|
|
$
|
229,448
|
|
Income (loss) from operations
|
4,698
|
|
|
11,486
|
|
|
16,356
|
|
|
(60,833
|
)
|
||||
Income (loss) before income taxes
|
1,768
|
|
|
9,671
|
|
|
14,788
|
|
|
(76,835
|
)
|
||||
Net income (loss)
|
1,675
|
|
|
9,019
|
|
|
13,658
|
|
|
(77,335
|
)
|
||||
Earnings (loss) per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.08
|
|
|
$
|
0.38
|
|
|
$
|
0.57
|
|
|
$
|
(2.78
|
)
|
Diluted
|
$
|
0.08
|
|
|
$
|
0.37
|
|
|
$
|
0.56
|
|
|
$
|
(2.78
|
)
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
•
|
Replaced the less sophisticated accounting systems used by the majority of our newly acquired subsidiaries with the enterprise resource planning system used by the majority of our existing subsidiaries.
|
•
|
Hired additional resources, including an experienced Internal Audit Director to lead the Company’s internal audit department, with responsibility for direction and oversight of all internal audit functions.
|
•
|
Continuing to develop and implement additional controls and procedures and enhance existing controls and procedures to ensure the segregation of certain accounting duties related to journal entries, account reconciliations, and other accounting functions.
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Exhibit
Number
|
|
Description
|
2.1†
|
|
|
|
|
|
2.2
|
|
|
|
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|
2.3†^
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
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4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5*
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7*
|
|
|
|
|
|
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+
|
|
|
|
|
|
21.1*
|
|
|
|
|
|
23.1*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
101*
|
|
Interactive Data Files.
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
†
|
Certain schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K and will be provided to the SEC upon request.
|
^
|
Pursuant to Item 601(b)(2) of Regulation S-K, certain immaterial provisions of the agreement that would likely cause competitive harm to the Company if publicly disclosed have been redacted. The Company hereby undertakes to furnish supplementally an unredacted copy of the agreement to the SEC upon request; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any documents so furnished.
|
+
|
Management contract or compensatory plan or arrangement.
|
Item 16.
|
Form 10-K Summary.
|
|
|
NINE ENERGY SERVICE, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Ann G. Fox
|
|
|
|
Ann G. Fox
|
|
|
|
President and Chief Executive Officer
|
|
|
Date: March 9, 2020
|
Signature
|
|
Title
|
|
|
|
/s/ Ann G. Fox
|
|
President, Chief Executive Officer, and Director (Principal Executive Officer)
|
Ann G. Fox
|
|
|
|
|
|
/s/ Clinton Roeder
|
|
Senior Vice President and Chief Financial Officer (Principal Financial Officer)
|
Clinton Roeder
|
|
|
|
|
|
/s/ S. Brett Luz
|
|
Chief Accounting Officer (Principal Accounting Officer)
|
S. Brett Luz
|
|
|
|
|
|
/s/ Ernie L. Danner
|
|
Chairman of the Board
|
Ernie L. Danner
|
|
|
|
|
|
/s/ David C. Baldwin
|
|
Director
|
David C. Baldwin
|
|
|
|
|
|
/s/ Mark E. Baldwin
|
|
Director
|
Mark E. Baldwin
|
|
|
|
|
|
/s/ Curtis F. Harrell
|
|
Director
|
Curtis F. Harrell
|
|
|
|
|
|
/s/ Scott E. Schwinger
|
|
Director
|
Scott E. Schwinger
|
|
|
|
|
|
/s/ Gary L. Thomas
|
|
Director
|
Gary L. Thomas
|
|
|
|
|
|
/s/ Andrew L. Waite
|
|
Director
|
Andrew L. Waite
|
|
|
|
|
|
/s/ Darryl K. Willis
|
|
Director
|
Darryl K. Willis
|
|
|
•
|
establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding year’s annual meeting. Our Bylaws specify the requirements as to form and content of all stockholders’ notices;
|
•
|
authorize our board of directors to issue undesignated preferred stock. This ability makes it possible for our board of directors to issue, without stockholder approval, preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us;
|
•
|
provide that the authorized number of directors may be changed only by resolution of the board of directors;
|
•
|
provide that all vacancies, including newly created directorships, may, except as otherwise required by law or, if applicable, the rights of holders of a series of preferred stock, be filled by the affirmative vote of a majority of the total number of directors then in office, even if less than a quorum;
|
•
|
provide that any action required or permitted to be taken by the stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing in lieu of a meeting of such stockholders, subject to the rights of the holders of any series of preferred stock with respect to such series;
|
•
|
provide that special meetings of our stockholders may only be called by a majority of the total number of directors;
|
•
|
provide that our board of directors be divided into three classes of directors, with each class as nearly equal in number as possible, serving staggered three-year terms, other than directors who may be elected by holders of preferred stock, if any;
|
•
|
provide that we renounce any interest or expectancy in any business opportunity (existing and future) that involves any aspect of the energy business or industry and that may be from time to time presented to SCF or any director or officer of the corporation who is also an employee, partner, member, manager, officer or director of any SCF entity, and that such persons have no obligation to offer us those investments or opportunities;
|
•
|
provide that our Charter and Bylaws may be amended by the affirmative vote of the holders of at least two-thirds of our then outstanding Common Stock (except with respect to provisions relating to the renouncement business opportunities, which require approval of at least 80% of the voting power of the outstanding stock entitled to vote thereon);
|
•
|
a member of our board of directors may only be removed for cause and only by the affirmative vote of the holders of at least two-thirds of our then outstanding Common Stock; and
|
•
|
unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim against us or any director or officer or other employee of ours arising pursuant to any provision of the DGCL, our Charter or our Bylaws, or (iv) any action asserting a claim against us or any director or officer or other employee of ours that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Although we believe these provisions benefit us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, the provisions may have the effect of discouraging lawsuits against our directors, officers, employees and agents. The choice of forum provisions summarized above are not intended to apply to actions arising under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended. The Court of Chancery of the State of Delaware has recently held that a Delaware corporation can only use its constitutive documents to bind a plaintiff to a particular forum where the claim involves rights or relationships that were established by or under Delaware’s corporate law.
|
|
|
|
Name
|
|
Jurisdiction
|
|
|
|
CDK Perforating, LLC
|
|
Texas
|
|
|
|
Crest Pumping Technologies, LLC
|
|
Delaware
|
|
|
|
Dak-Tana Wireline, LLC
|
|
Delaware
|
|
|
|
Frac Technology AS
|
|
Norway
|
|
|
|
Magnum Oil Tools GP, LLC
|
|
Texas
|
|
|
|
Magnum Oil Tools International, LTD
|
|
Texas
|
|
|
|
MOTI Holdco, LLC
|
|
Delaware
|
|
|
|
Nine Downhole Norway AS
|
|
Norway
|
|
|
|
Nine Downhole Technologies, LLC
|
|
Delaware
|
|
|
|
Nine Energy Canada Inc.
|
|
Alberta, Canada
|
|
|
|
Nine Energy Service, LLC
|
|
Delaware
|
|
|
|
Northern States Completions, Inc.
|
|
Delaware
|
|
|
|
Peak Pressure Control, LLC
|
|
Texas
|
|
|
|
RedZone Coil Tubing, LLC
|
|
Texas
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
Date:
|
March 9, 2020
|
/s/ Ann G. Fox
|
|
|
Ann G. Fox
|
|
|
President, Chief Executive Officer and Director
|
|
|
(Principal Executive Officer)
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
Date:
|
March 9, 2020
|
/s/ Clinton Roeder
|
|
|
Clinton Roeder
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
||
|
|
/s/ Ann G. Fox
|
|
|
|
Ann G. Fox
|
|
|
|
President, Chief Executive Officer and Director
|
|
|
|
(Principal Executive Officer)
|
|
|
|
Date:
|
March 9, 2020
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
||
|
/s/ Clinton Roeder
|
||
|
Clinton Roeder
|
||
|
Senior Vice President and Chief Financial Officer
|
||
|
(Principal Financial Officer)
|
||
|
Date:
|
March 9, 2020
|