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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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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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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
|
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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☐
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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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•
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the level of capital spending and well completions by the onshore oil and natural gas industry;
|
•
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oil and natural gas commodity prices;
|
•
|
general economic conditions;
|
•
|
the impact of the coronavirus pandemic and the actions of certain oil and natural gas producing countries on our business and the business of our customers, including the effects of the resulting excess supply of oil;
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•
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our ability to employ, or maintain the employment of, a sufficient number of key employees, technical personnel, and other skilled and qualified workers;
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•
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our ability to implement price increases or maintain existing prices on our products and services;
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•
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pricing pressures, reduced sales, or reduced market share as a result of intense competition in the markets for our composite and dissolvable plug products;
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•
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our ability to accurately predict customer demand;
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•
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conditions inherent in the oilfield services industry, such as equipment defects, liabilities arising from accidents or damage involving our fleet of trucks or other equipment, explosions and uncontrollable flows of gas or well fluids, and loss of well control;
|
•
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our ability to implement new technologies and services;
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•
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seasonal and adverse weather conditions;
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•
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our ability to maintain compliance with the New York Stock Exchange continued listing requirements and avoid the delisting of our common stock;
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•
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changes in laws or regulations regarding issues of health, safety, and protection of the environment, including those relating to hydraulic fracturing, greenhouse gases, and climate change; and
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•
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our ability to successfully integrate the assets and operations that we acquired with our acquisition of Magnum Oil Tools International, LTD and its affiliates (the “Magnum Acquisition”) and realize anticipated revenues, cost savings, or other benefits of such acquisition.
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|
June 30,
2020 |
|
December 31,
2019 |
||||
Assets
|
|
|
|
|
|
||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
88,678
|
|
|
$
|
92,989
|
|
Accounts receivable, net
|
39,376
|
|
|
96,889
|
|
||
Income taxes receivable
|
630
|
|
|
660
|
|
||
Inventories, net
|
59,333
|
|
|
60,945
|
|
||
Prepaid expenses and other current assets
|
19,291
|
|
|
17,434
|
|
||
Total current assets
|
207,308
|
|
|
268,917
|
|
||
Property and equipment, net
|
115,258
|
|
|
128,604
|
|
||
Intangible assets, net
|
140,706
|
|
|
148,991
|
|
||
Goodwill
|
—
|
|
|
296,196
|
|
||
Other long-term assets
|
5,587
|
|
|
8,187
|
|
||
Total assets
|
$
|
468,859
|
|
|
$
|
850,895
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
11,114
|
|
|
$
|
35,490
|
|
Accrued expenses
|
16,056
|
|
|
24,730
|
|
||
Current portion of long-term debt
|
563
|
|
|
—
|
|
||
Current portion of capital lease obligations
|
1,043
|
|
|
995
|
|
||
Total current liabilities
|
28,776
|
|
|
61,215
|
|
||
Long-term liabilities
|
|
|
|
||||
Long-term debt
|
365,632
|
|
|
392,059
|
|
||
Deferred income taxes
|
—
|
|
|
1,588
|
|
||
Long-term capital lease obligations
|
1,667
|
|
|
2,201
|
|
||
Other long-term liabilities
|
2,834
|
|
|
3,955
|
|
||
Total liabilities
|
398,909
|
|
|
461,018
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
|
|
||
Stockholders’ equity
|
|
|
|
||||
Common stock (120,000,000 shares authorized at $.01 par value; 31,652,635 and 30,555,677 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively)
|
317
|
|
|
306
|
|
||
Additional paid-in capital
|
764,382
|
|
|
758,853
|
|
||
Accumulated other comprehensive loss
|
(4,863
|
)
|
|
(4,467
|
)
|
||
Accumulated deficit
|
(689,886
|
)
|
|
(364,815
|
)
|
||
Total stockholders’ equity
|
69,950
|
|
|
389,877
|
|
||
Total liabilities and stockholders’ equity
|
$
|
468,859
|
|
|
$
|
850,895
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Service
|
$
|
37,673
|
|
|
$
|
181,450
|
|
|
$
|
152,074
|
|
|
$
|
357,440
|
|
Product
|
15,062
|
|
|
56,067
|
|
|
47,285
|
|
|
109,782
|
|
||||
|
52,735
|
|
|
237,517
|
|
|
199,359
|
|
|
467,222
|
|
||||
Cost and expenses
|
|
|
|
|
|
|
|
||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below)
|
|
|
|
|
|
|
|
||||||||
Service
|
41,865
|
|
|
144,875
|
|
|
141,063
|
|
|
285,461
|
|
||||
Product
|
14,838
|
|
|
39,680
|
|
|
41,648
|
|
|
77,684
|
|
||||
General and administrative expenses
|
11,284
|
|
|
21,818
|
|
|
27,679
|
|
|
41,757
|
|
||||
Depreciation
|
8,449
|
|
|
13,846
|
|
|
16,990
|
|
|
27,376
|
|
||||
Amortization of intangibles
|
4,116
|
|
|
4,628
|
|
|
8,285
|
|
|
9,316
|
|
||||
Impairment of goodwill
|
—
|
|
|
—
|
|
|
296,196
|
|
|
—
|
|
||||
(Gain) loss on revaluation of contingent liabilities
|
910
|
|
|
(975
|
)
|
|
484
|
|
|
(14,930
|
)
|
||||
Gain on sale of property and equipment
|
(1,790
|
)
|
|
(310
|
)
|
|
(2,365
|
)
|
|
(333
|
)
|
||||
Income (loss) from operations
|
(26,937
|
)
|
|
13,955
|
|
|
(330,621
|
)
|
|
40,891
|
|
||||
Interest expense
|
9,186
|
|
|
10,771
|
|
|
19,014
|
|
|
20,097
|
|
||||
Interest income
|
(179
|
)
|
|
(168
|
)
|
|
(550
|
)
|
|
(328
|
)
|
||||
Gain on extinguishment of debt
|
(11,587
|
)
|
|
—
|
|
|
(21,703
|
)
|
|
—
|
|
||||
Income (loss) before income taxes
|
(24,357
|
)
|
|
3,352
|
|
|
(327,382
|
)
|
|
21,122
|
|
||||
Benefit for income taxes
|
(186
|
)
|
|
(2,735
|
)
|
|
(2,311
|
)
|
|
(2,275
|
)
|
||||
Net income (loss)
|
$
|
(24,171
|
)
|
|
$
|
6,087
|
|
|
$
|
(325,071
|
)
|
|
$
|
23,397
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.81
|
)
|
|
$
|
0.21
|
|
|
$
|
(10.97
|
)
|
|
$
|
0.80
|
|
Diluted
|
$
|
(0.81
|
)
|
|
$
|
0.21
|
|
|
$
|
(10.97
|
)
|
|
$
|
0.80
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
29,844,240
|
|
|
29,349,396
|
|
|
29,637,358
|
|
|
29,250,744
|
|
||||
Diluted
|
29,844,240
|
|
|
29,473,037
|
|
|
29,637,358
|
|
|
29,423,163
|
|
||||
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments, net of $0 tax in each period
|
$
|
207
|
|
|
$
|
192
|
|
|
$
|
(396
|
)
|
|
$
|
440
|
|
Total other comprehensive income (loss), net of tax
|
207
|
|
|
192
|
|
|
(396
|
)
|
|
440
|
|
||||
Total comprehensive income (loss)
|
$
|
(23,964
|
)
|
|
$
|
6,279
|
|
|
$
|
(325,467
|
)
|
|
$
|
23,837
|
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Retained
Earnings (Accumulated Deficit) |
|
Total
Stockholders’ Equity |
|||||||||||||
|
Shares
|
|
Amounts
|
|
|
|
|
|||||||||||||||
Balance, March 31, 2020
|
30,406,994
|
|
|
$
|
304
|
|
|
$
|
762,332
|
|
|
$
|
(5,070
|
)
|
|
$
|
(665,715
|
)
|
|
$
|
91,851
|
|
Issuance of common stock under stock compensation plan, net of forfeitures
|
1,294,688
|
|
|
13
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
2,105
|
|
|
—
|
|
|
—
|
|
|
2,105
|
|
|||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Vesting of restricted stock
|
(49,047
|
)
|
|
—
|
|
|
(42
|
)
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
207
|
|
|
—
|
|
|
207
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,171
|
)
|
|
(24,171
|
)
|
|||||
Balance, June 30, 2020
|
31,652,635
|
|
|
$
|
317
|
|
|
$
|
764,382
|
|
|
$
|
(4,863
|
)
|
|
$
|
(689,886
|
)
|
|
$
|
69,950
|
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Retained
Earnings (Accumulated Deficit) |
|
Total
Stockholders’ Equity |
|||||||||||||
|
Shares
|
|
Amounts
|
|
|
|
|
|||||||||||||||
Balance, March 31, 2019
|
30,782,600
|
|
|
$
|
308
|
|
|
$
|
749,508
|
|
|
$
|
(4,595
|
)
|
|
$
|
(129,754
|
)
|
|
$
|
615,467
|
|
Issuance of common stock under stock compensation plan, net of forfeitures
|
(33,538
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
4,114
|
|
|
—
|
|
|
—
|
|
|
4,114
|
|
|||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Vesting of restricted stock
|
(66,053
|
)
|
|
(1
|
)
|
|
(1,550
|
)
|
|
—
|
|
|
—
|
|
|
(1,551
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
192
|
|
|
—
|
|
|
192
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,087
|
|
|
6,087
|
|
|||||
Balance, June 30, 2019
|
30,683,009
|
|
|
$
|
307
|
|
|
$
|
752,072
|
|
|
$
|
(4,403
|
)
|
|
$
|
(123,667
|
)
|
|
$
|
624,309
|
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Retained
Earnings (Accumulated Deficit) |
|
Total
Stockholders’ Equity |
|||||||||||||
|
Shares
|
|
Amounts
|
|
|
|
||||||||||||||||
Balance, December 31, 2019
|
30,555,677
|
|
|
$
|
306
|
|
|
$
|
758,853
|
|
|
$
|
(4,467
|
)
|
|
$
|
(364,815
|
)
|
|
$
|
389,877
|
|
Issuance of common stock under stock compensation plan, net of forfeitures
|
1,245,679
|
|
|
12
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
5,697
|
|
|
—
|
|
|
—
|
|
|
5,697
|
|
|||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Vesting of restricted stock
|
(148,721
|
)
|
|
(1
|
)
|
|
(156
|
)
|
|
—
|
|
|
—
|
|
|
(157
|
)
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(396
|
)
|
|
—
|
|
|
(396
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(325,071
|
)
|
|
(325,071
|
)
|
|||||
Balance, June 30, 2020
|
31,652,635
|
|
|
$
|
317
|
|
|
$
|
764,382
|
|
|
$
|
(4,863
|
)
|
|
$
|
(689,886
|
)
|
|
$
|
69,950
|
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Retained
Earnings (Accumulated Deficit) |
|
Total
Stockholders’ Equity |
|||||||||||||
|
Shares
|
|
Amounts
|
|
|
|
|
|||||||||||||||
Balance, December 31, 2018
|
30,163,408
|
|
|
$
|
302
|
|
|
$
|
746,428
|
|
|
$
|
(4,843
|
)
|
|
$
|
(147,064
|
)
|
|
$
|
594,823
|
|
Issuance of common stock under stock compensation plan, net of forfeitures
|
588,483
|
|
|
6
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
7,267
|
|
|
—
|
|
|
—
|
|
|
7,267
|
|
|||||
Exercise of stock options
|
674
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Vesting of restricted stock
|
(69,556
|
)
|
|
(1
|
)
|
|
(1,632
|
)
|
|
—
|
|
|
—
|
|
|
(1,633
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
440
|
|
|
—
|
|
|
440
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,397
|
|
|
23,397
|
|
|||||
Balance, June 30, 2019
|
30,683,009
|
|
|
$
|
307
|
|
|
$
|
752,072
|
|
|
$
|
(4,403
|
)
|
|
$
|
(123,667
|
)
|
|
$
|
624,309
|
|
|
Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Cash flows from operating activities
|
|
|
|
|
|
||
Net income (loss)
|
$
|
(325,071
|
)
|
|
$
|
23,397
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities
|
|
|
|
||||
Depreciation
|
16,990
|
|
|
27,376
|
|
||
Amortization of intangibles
|
8,285
|
|
|
9,316
|
|
||
Amortization of deferred financing costs
|
1,455
|
|
|
1,492
|
|
||
Provision for doubtful accounts
|
1,453
|
|
|
48
|
|
||
Benefit for deferred income taxes
|
(1,588
|
)
|
|
(3,019
|
)
|
||
Provision for inventory obsolescence
|
512
|
|
|
2,080
|
|
||
Stock-based compensation expense
|
5,697
|
|
|
7,267
|
|
||
Impairment of goodwill
|
296,196
|
|
|
—
|
|
||
Gain on extinguishment of debt
|
(21,703
|
)
|
|
—
|
|
||
Gain on sale of property and equipment
|
(2,365
|
)
|
|
(333
|
)
|
||
(Gain) loss on revaluation of contingent liabilities
|
484
|
|
|
(14,930
|
)
|
||
Changes in operating assets and liabilities, net of effects from acquisitions
|
|
|
|
||||
Accounts receivable, net
|
56,043
|
|
|
(14,560
|
)
|
||
Inventories, net
|
959
|
|
|
1,566
|
|
||
Prepaid expenses and other current assets
|
(1,658
|
)
|
|
(1,952
|
)
|
||
Accounts payable and accrued expenses
|
(36,156
|
)
|
|
(20,061
|
)
|
||
Income taxes receivable/payable
|
30
|
|
|
40
|
|
||
Other assets and liabilities
|
2,796
|
|
|
(319
|
)
|
||
Net cash provided by operating activities
|
2,359
|
|
|
17,408
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Proceeds from sales of property and equipment
|
4,105
|
|
|
1,187
|
|
||
Proceeds from property and equipment casualty losses
|
555
|
|
|
1,480
|
|
||
Proceeds from notes receivable payments
|
—
|
|
|
7,626
|
|
||
Purchases of property and equipment
|
(2,892
|
)
|
|
(37,363
|
)
|
||
Net cash provided by (used in) investing activities
|
1,768
|
|
|
(27,070
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Purchases of Senior Notes
|
(7,414
|
)
|
|
—
|
|
||
Proceeds from 2018 ABL Credit Facility
|
—
|
|
|
10,000
|
|
||
Payments on 2018 ABL Credit Facility
|
—
|
|
|
(45,000
|
)
|
||
Payments on capital leases
|
(486
|
)
|
|
(429
|
)
|
||
Payments of contingent liability
|
(206
|
)
|
|
(138
|
)
|
||
Proceeds from exercise of stock options
|
—
|
|
|
15
|
|
||
Vesting of restricted stock
|
(157
|
)
|
|
(1,633
|
)
|
||
Net cash used in financing activities
|
(8,263
|
)
|
|
(37,185
|
)
|
||
Impact of foreign currency exchange on cash
|
(175
|
)
|
|
118
|
|
||
Net decrease in cash and cash equivalents
|
(4,311
|
)
|
|
(46,729
|
)
|
||
Cash and cash equivalents
|
|
|
|
||||
Cash and cash equivalents beginning of year
|
92,989
|
|
|
63,615
|
|
||
Cash and cash equivalents end of period
|
$
|
88,678
|
|
|
$
|
16,886
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
17,834
|
|
|
$
|
19,386
|
|
Cash paid (refunded) for income taxes
|
$
|
(1,061
|
)
|
|
$
|
694
|
|
Capital expenditures in accounts payable and accrued expenses
|
$
|
2,118
|
|
|
$
|
3,079
|
|
Property and equipment obtained by capital lease
|
$
|
—
|
|
|
$
|
1,310
|
|
Receivable from property and equipment sale (including insurance)
|
$
|
4,958
|
|
|
$
|
—
|
|
Termination of contingent liability related to business acquisition
|
$
|
3,375
|
|
|
$
|
—
|
|
|
Three Months Ended June 30, 2020
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||
|
Completion Solutions
|
|
Total
|
|
Completion Solutions
|
|
Production Solutions(2)
|
|
Total
|
||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||
Coiled tubing
|
$
|
7,566
|
|
|
$
|
7,566
|
|
|
$
|
38,897
|
|
|
$
|
—
|
|
|
$
|
38,897
|
|
Cement
|
20,431
|
|
|
20,431
|
|
|
56,742
|
|
|
—
|
|
|
56,742
|
|
|||||
Tools
|
15,062
|
|
|
15,062
|
|
|
56,067
|
|
|
—
|
|
|
56,067
|
|
|||||
Wireline
|
9,676
|
|
|
9,676
|
|
|
64,165
|
|
|
—
|
|
|
64,165
|
|
|||||
Well service
|
—
|
|
|
—
|
|
|
—
|
|
|
21,646
|
|
|
21,646
|
|
|||||
Total revenues
|
$
|
52,735
|
|
|
$
|
52,735
|
|
|
$
|
215,871
|
|
|
$
|
21,646
|
|
|
$
|
237,517
|
|
|
Six Months Ended June 30, 2020
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||
|
Completion Solutions
|
|
Total
|
|
Completion Solutions
|
|
Production Solutions(2)
|
|
Total
|
||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||
Coiled tubing
|
$
|
28,297
|
|
|
$
|
28,297
|
|
|
$
|
77,540
|
|
|
$
|
—
|
|
|
$
|
77,540
|
|
Cement
|
69,068
|
|
|
69,068
|
|
|
110,000
|
|
|
—
|
|
|
110,000
|
|
|||||
Tools
|
47,285
|
|
|
47,285
|
|
|
109,782
|
|
|
—
|
|
|
109,782
|
|
|||||
Wireline
|
54,709
|
|
|
54,709
|
|
|
127,681
|
|
|
—
|
|
|
127,681
|
|
|||||
Well service
|
—
|
|
|
—
|
|
|
—
|
|
|
42,219
|
|
|
42,219
|
|
|||||
Total revenues
|
$
|
199,359
|
|
|
$
|
199,359
|
|
|
$
|
425,003
|
|
|
$
|
42,219
|
|
|
$
|
467,222
|
|
|
Three Months Ended June 30, 2020
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||
|
Completion Solutions
|
|
Total
|
|
Completion Solutions
|
|
Production Solutions(2)
|
|
Total
|
||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||
Services(1)
|
$
|
37,673
|
|
|
$
|
37,673
|
|
|
$
|
159,804
|
|
|
$
|
21,646
|
|
|
$
|
181,450
|
|
Products(1)
|
15,062
|
|
|
15,062
|
|
|
56,067
|
|
|
—
|
|
|
56,067
|
|
|||||
Total revenues
|
$
|
52,735
|
|
|
$
|
52,735
|
|
|
$
|
215,871
|
|
|
$
|
21,646
|
|
|
$
|
237,517
|
|
|
Six Months Ended June 30, 2020
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||
|
Completion Solutions
|
|
Total
|
|
Completion Solutions
|
|
Production Solutions(2)
|
|
Total
|
||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||
Services(1)
|
$
|
152,074
|
|
|
$
|
152,074
|
|
|
$
|
315,221
|
|
|
$
|
42,219
|
|
|
$
|
357,440
|
|
Products(1)
|
47,285
|
|
|
47,285
|
|
|
109,782
|
|
|
—
|
|
|
109,782
|
|
|||||
Total revenues
|
$
|
199,359
|
|
|
$
|
199,359
|
|
|
$
|
425,003
|
|
|
$
|
42,219
|
|
|
$
|
467,222
|
|
|
June 30, 2020
|
|
December 31,
2019 |
||||
|
(in thousands)
|
||||||
Raw materials
|
$
|
41,129
|
|
|
$
|
38,823
|
|
Work in progress
|
91
|
|
|
—
|
|
||
Finished goods
|
23,126
|
|
|
27,555
|
|
||
Inventories
|
64,346
|
|
|
66,378
|
|
||
Reserve for obsolescence
|
(5,013
|
)
|
|
(5,433
|
)
|
||
Inventories, net
|
$
|
59,333
|
|
|
$
|
60,945
|
|
|
Goodwill
|
||||||||||
|
Gross Value
|
|
Accumulated
Impairment Loss |
|
Net
|
||||||
|
(in thousands)
|
||||||||||
Balance as of December 31, 2019
|
$
|
408,732
|
|
|
$
|
(112,536
|
)
|
|
$
|
296,196
|
|
Impairment
|
—
|
|
|
(296,196
|
)
|
|
(296,196
|
)
|
|||
Balance as of June 30, 2020
|
$
|
408,732
|
|
|
$
|
(408,732
|
)
|
|
$
|
—
|
|
|
Customer Relationships
|
|
Non- Compete Agreements
|
|
Technology
|
|
In-process R&D
|
|
Total
|
||||||||||
|
(in thousands, except weighted average amortization period information)
|
||||||||||||||||||
Balance as of December 31, 2019
|
$
|
32,536
|
|
|
$
|
1,534
|
|
|
$
|
113,921
|
|
|
$
|
1,000
|
|
|
$
|
148,991
|
|
Amortization expense
|
(3,726
|
)
|
|
(200
|
)
|
|
(4,359
|
)
|
|
—
|
|
|
(8,285
|
)
|
|||||
Balance as of June 30, 2020
|
$
|
28,810
|
|
|
$
|
1,334
|
|
|
$
|
109,562
|
|
|
$
|
1,000
|
|
|
$
|
140,706
|
|
Weighted average amortization period
|
5.7
|
|
3.3
|
|
13.1
|
|
Indefinite
|
|
|
Year Ending December 31,
|
(in thousands)
|
||
2020
|
$
|
8,182
|
|
2021
|
16,116
|
|
|
2022
|
13,463
|
|
|
2023
|
11,516
|
|
|
2024
|
11,183
|
|
|
Thereafter
|
79,246
|
|
|
Total
|
$
|
139,706
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(in thousands)
|
||||||
Accrued compensation and benefits
|
$
|
4,340
|
|
|
$
|
7,009
|
|
Accrued interest
|
5,655
|
|
|
6,091
|
|
||
Accrued bonus
|
—
|
|
|
5,043
|
|
||
Accrued sales tax
|
244
|
|
|
820
|
|
||
Contingent liabilities
|
306
|
|
|
391
|
|
||
Other accrued expenses
|
5,511
|
|
|
5,376
|
|
||
Accrued expenses
|
$
|
16,056
|
|
|
$
|
24,730
|
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
(in thousands)
|
||||||
Senior Notes
|
$
|
370,334
|
|
|
$
|
400,000
|
|
2018 ABL Credit Facility
|
—
|
|
|
—
|
|
||
Magnum Promissory Notes
|
2,250
|
|
|
—
|
|
||
Total debt before deferred financing costs
|
$
|
372,584
|
|
|
$
|
400,000
|
|
Deferred financing costs
|
(6,389
|
)
|
|
(7,941
|
)
|
||
Total debt
|
$
|
366,195
|
|
|
$
|
392,059
|
|
Less: Current portion of long-term debt
|
(563
|
)
|
|
—
|
|
||
Long-term debt
|
$
|
365,632
|
|
|
$
|
392,059
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(in thousands)
|
||||||
Senior Notes
|
$
|
177,760
|
|
|
$
|
324,000
|
|
2018 ABL Credit Facility
|
$
|
—
|
|
|
$
|
—
|
|
Magnum Promissory Notes
|
$
|
2,250
|
|
|
$
|
—
|
|
|
Magnum
|
|
Frac Tech
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Balance at December 31, 2019
|
$
|
2,609
|
|
|
$
|
1,359
|
|
|
$
|
3,968
|
|
Revaluation adjustments
|
766
|
|
|
(282
|
)
|
|
484
|
|
|||
Payments
|
—
|
|
|
(206
|
)
|
|
(206
|
)
|
|||
Termination
|
(3,375
|
)
|
|
—
|
|
|
(3,375
|
)
|
|||
Balance at June 30, 2020
|
$
|
—
|
|
|
$
|
871
|
|
|
$
|
871
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in thousands, except percentages)
|
|
(in thousands, except percentages)
|
||||||||||||
Income tax benefit
|
$
|
(186
|
)
|
|
$
|
(2,735
|
)
|
|
$
|
(2,311
|
)
|
|
$
|
(2,275
|
)
|
Effective tax rate
|
0.8
|
%
|
|
(81.6
|
)%
|
|
0.7
|
%
|
|
(10.8
|
)%
|
|
Three Months Ended June 30, 2020
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||||
|
Net Loss
|
|
Average Shares Outstanding
|
|
Loss Per Share
|
|
Net Income
|
|
Average Shares Outstanding
|
|
Earnings Per Share
|
||||||||||
|
(in thousands, except share and per share amounts)
|
||||||||||||||||||||
Basic
|
$
|
(24,171
|
)
|
|
29,844,240
|
|
|
$
|
(0.81
|
)
|
|
$
|
6,087
|
|
|
29,349,396
|
|
|
$
|
0.21
|
|
Assumed exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
||||
Unvested restricted stock and stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
123,629
|
|
|
—
|
|
||||
Diluted
|
$
|
(24,171
|
)
|
|
29,844,240
|
|
|
$
|
(0.81
|
)
|
|
$
|
6,087
|
|
|
29,473,037
|
|
|
$
|
0.21
|
|
|
Six Months Ended June 30, 2020
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||
|
Net Loss
|
|
Average Shares Outstanding
|
|
Loss Per Share
|
|
Net Income
|
|
Average Shares Outstanding
|
|
Earnings Per Share
|
||||||||||
|
(in thousands, except share and per share amounts)
|
||||||||||||||||||||
Basic
|
$
|
(325,071
|
)
|
|
29,637,358
|
|
|
$
|
(10.97
|
)
|
|
$
|
23,397
|
|
|
29,250,744
|
|
|
$
|
0.80
|
|
Assumed exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
71
|
|
|
—
|
|
||||
Unvested restricted stock and stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
172,348
|
|
|
—
|
|
||||
Diluted
|
$
|
(325,071
|
)
|
|
29,637,358
|
|
|
$
|
(10.97
|
)
|
|
$
|
23,397
|
|
|
29,423,163
|
|
|
$
|
0.80
|
|
|
2020
|
|
2019
|
Three months ended June 30,
|
984,453
|
|
—
|
Six months ended June 30,
|
568,635
|
|
—
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||
Completion Solutions
|
$
|
52,735
|
|
|
$
|
215,871
|
|
|
$
|
199,359
|
|
|
$
|
425,003
|
|
Production Solutions
|
—
|
|
|
21,646
|
|
|
—
|
|
|
42,219
|
|
||||
|
$
|
52,735
|
|
|
$
|
237,517
|
|
|
$
|
199,359
|
|
|
$
|
467,222
|
|
Cost of revenues (exclusive of depreciation and amortization shown separately below)
|
|
|
|
|
|
|
|
||||||||
Completion Solutions
|
$
|
56,703
|
|
|
$
|
166,022
|
|
|
$
|
182,711
|
|
|
$
|
327,461
|
|
Production Solutions
|
—
|
|
|
18,533
|
|
|
—
|
|
|
35,684
|
|
||||
|
$
|
56,703
|
|
|
$
|
184,555
|
|
|
$
|
182,711
|
|
|
$
|
363,145
|
|
Adjusted gross profit (loss)
|
|
|
|
|
|
|
|
||||||||
Completion Solutions
|
$
|
(3,968
|
)
|
|
$
|
49,849
|
|
|
$
|
16,648
|
|
|
$
|
97,542
|
|
Production Solutions
|
—
|
|
|
3,113
|
|
|
—
|
|
|
6,535
|
|
||||
|
$
|
(3,968
|
)
|
|
$
|
52,962
|
|
|
$
|
16,648
|
|
|
$
|
104,077
|
|
|
|
|
|
|
|
|
|
||||||||
General and administrative expenses
|
11,284
|
|
|
21,818
|
|
|
27,679
|
|
|
41,757
|
|
||||
Depreciation
|
8,449
|
|
|
13,846
|
|
|
16,990
|
|
|
27,376
|
|
||||
Amortization of intangibles
|
4,116
|
|
|
4,628
|
|
|
8,285
|
|
|
9,316
|
|
||||
Impairment of goodwill
|
—
|
|
|
—
|
|
|
296,196
|
|
|
—
|
|
||||
(Gain) loss on revaluation of contingent liabilities
|
910
|
|
|
(975
|
)
|
|
484
|
|
|
(14,930
|
)
|
||||
Gain on sale of property and equipment
|
(1,790
|
)
|
|
(310
|
)
|
|
(2,365
|
)
|
|
(333
|
)
|
||||
Income (loss) from operations
|
$
|
(26,937
|
)
|
|
$
|
13,955
|
|
|
$
|
(330,621
|
)
|
|
$
|
40,891
|
|
Non-operating (income) expenses
|
(2,580
|
)
|
|
10,603
|
|
|
(3,239
|
)
|
|
19,769
|
|
||||
Income (loss) before income taxes
|
(24,357
|
)
|
|
3,352
|
|
|
(327,382
|
)
|
|
21,122
|
|
||||
Benefit for income taxes
|
(186
|
)
|
|
(2,735
|
)
|
|
(2,311
|
)
|
|
(2,275
|
)
|
||||
Net income (loss)
|
$
|
(24,171
|
)
|
|
$
|
6,087
|
|
|
$
|
(325,071
|
)
|
|
$
|
23,397
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Completion Solutions
|
$
|
3,577
|
|
|
$
|
12,719
|
|
|
$
|
5,000
|
|
|
$
|
35,197
|
|
Production Solutions
|
—
|
|
|
1,072
|
|
|
—
|
|
|
1,986
|
|
||||
Corporate
|
—
|
|
|
38
|
|
|
—
|
|
|
93
|
|
||||
|
$
|
3,577
|
|
|
$
|
13,829
|
|
|
$
|
5,000
|
|
|
$
|
37,276
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(in thousands)
|
||||||
Completion Solutions
|
$
|
365,325
|
|
|
$
|
739,142
|
|
Corporate
|
103,534
|
|
|
111,753
|
|
||
|
$
|
468,859
|
|
|
$
|
850,895
|
|
•
|
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 (Loss): Adjusted gross profit (loss) is a key metric that we use to evaluate operating performance. We define adjusted gross profit (loss) 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, (iii) loss or gain on revaluation of contingent liabilities, (iv) gain on extinguishment of debt, (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, (iii) interest expense (income), (iv) restructuring charges, (v) loss or gain on the sale of subsidiaries, (vi) gain on extinguishment of debt, and (vii) 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 period-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 consciousness, restriction of work or motion, transfer to another job, or medical treatment other than first aid.
|
|
Three Months Ended June 30,
|
|
|
||||||||
|
2020
|
|
2019
|
|
Change
|
||||||
|
(in thousands)
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|||
Completion Solutions
|
$
|
52,735
|
|
|
$
|
215,871
|
|
|
$
|
(163,136
|
)
|
Production Solutions (1)
|
—
|
|
|
21,646
|
|
|
(21,646
|
)
|
|||
|
$
|
52,735
|
|
|
$
|
237,517
|
|
|
$
|
(184,782
|
)
|
Cost of revenues (exclusive of depreciation and amortization shown separately below)
|
|
|
|
|
|
||||||
Completion Solutions
|
$
|
56,703
|
|
|
$
|
166,022
|
|
|
$
|
(109,319
|
)
|
Production Solutions (1)
|
—
|
|
|
18,533
|
|
|
(18,533
|
)
|
|||
|
$
|
56,703
|
|
|
$
|
184,555
|
|
|
$
|
(127,852
|
)
|
Adjusted gross profit (loss)
|
|
|
|
|
|
||||||
Completion Solutions
|
$
|
(3,968
|
)
|
|
$
|
49,849
|
|
|
$
|
(53,817
|
)
|
Production Solutions (1)
|
—
|
|
|
3,113
|
|
|
(3,113
|
)
|
|||
|
$
|
(3,968
|
)
|
|
$
|
52,962
|
|
|
$
|
(56,930
|
)
|
|
|
|
|
|
|
||||||
General and administrative expenses
|
$
|
11,284
|
|
|
$
|
21,818
|
|
|
$
|
(10,534
|
)
|
Depreciation
|
8,449
|
|
|
13,846
|
|
|
(5,397
|
)
|
|||
Amortization of intangibles
|
4,116
|
|
|
4,628
|
|
|
(512
|
)
|
|||
Impairment of goodwill
|
—
|
|
|
—
|
|
|
—
|
|
|||
(Gain) loss on revaluation of contingent liabilities
|
910
|
|
|
(975
|
)
|
|
1,885
|
|
|||
Gain on sale of property and equipment
|
(1,790
|
)
|
|
(310
|
)
|
|
(1,480
|
)
|
|||
Income (loss) from operations
|
(26,937
|
)
|
|
13,955
|
|
|
(40,892
|
)
|
|||
Non-operating (income) expenses
|
(2,580
|
)
|
|
10,603
|
|
|
(13,183
|
)
|
|||
Income (loss) before income taxes
|
(24,357
|
)
|
|
3,352
|
|
|
(27,709
|
)
|
|||
Benefit for income taxes
|
(186
|
)
|
|
(2,735
|
)
|
|
2,549
|
|
|||
Net income (loss)
|
$
|
(24,171
|
)
|
|
$
|
6,087
|
|
|
$
|
(30,258
|
)
|
|
Six Months Ended June 30,
|
|
|
||||||||
|
2020
|
|
2019
|
|
Change
|
||||||
|
(in thousands)
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|||
Completion Solutions
|
$
|
199,359
|
|
|
$
|
425,003
|
|
|
$
|
(225,644
|
)
|
Production Solutions (1)
|
—
|
|
|
42,219
|
|
|
(42,219
|
)
|
|||
|
$
|
199,359
|
|
|
$
|
467,222
|
|
|
$
|
(267,863
|
)
|
Cost of revenues (exclusive of depreciation and amortization shown separately below)
|
|
|
|
|
|
||||||
Completion Solutions
|
$
|
182,711
|
|
|
$
|
327,461
|
|
|
$
|
(144,750
|
)
|
Production Solutions (1)
|
—
|
|
|
35,684
|
|
|
(35,684
|
)
|
|||
|
$
|
182,711
|
|
|
$
|
363,145
|
|
|
$
|
(180,434
|
)
|
Adjusted gross profit
|
|
|
|
|
|
||||||
Completion Solutions
|
$
|
16,648
|
|
|
$
|
97,542
|
|
|
$
|
(80,894
|
)
|
Production Solutions (1)
|
—
|
|
|
6,535
|
|
|
(6,535
|
)
|
|||
|
$
|
16,648
|
|
|
$
|
104,077
|
|
|
$
|
(87,429
|
)
|
|
|
|
|
|
|
||||||
General and administrative expenses
|
$
|
27,679
|
|
|
$
|
41,757
|
|
|
$
|
(14,078
|
)
|
Depreciation
|
16,990
|
|
|
27,376
|
|
|
(10,386
|
)
|
|||
Amortization of intangibles
|
8,285
|
|
|
9,316
|
|
|
(1,031
|
)
|
|||
Impairment of goodwill
|
296,196
|
|
|
—
|
|
|
296,196
|
|
|||
(Gain) loss on revaluation of contingent liabilities
|
484
|
|
|
(14,930
|
)
|
|
15,414
|
|
|||
Gain on sale of property and equipment
|
(2,365
|
)
|
|
(333
|
)
|
|
(2,032
|
)
|
|||
Income (loss) from operations
|
(330,621
|
)
|
|
40,891
|
|
|
(371,512
|
)
|
|||
Non-operating (income) expenses
|
(3,239
|
)
|
|
19,769
|
|
|
(23,008
|
)
|
|||
Income (loss) before income taxes
|
(327,382
|
)
|
|
21,122
|
|
|
(348,504
|
)
|
|||
Benefit for income taxes
|
(2,311
|
)
|
|
(2,275
|
)
|
|
(36
|
)
|
|||
Net income (loss)
|
$
|
(325,071
|
)
|
|
$
|
23,397
|
|
|
$
|
(348,468
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
EBITDA reconciliation:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(24,171
|
)
|
|
$
|
6,087
|
|
|
$
|
(325,071
|
)
|
|
$
|
23,397
|
|
Interest expense
|
9,186
|
|
|
10,771
|
|
|
19,014
|
|
|
20,097
|
|
||||
Interest income
|
(179
|
)
|
|
(168
|
)
|
|
(550
|
)
|
|
(328
|
)
|
||||
Depreciation
|
8,449
|
|
|
13,846
|
|
|
16,990
|
|
|
27,376
|
|
||||
Amortization of intangibles
|
4,116
|
|
|
4,628
|
|
|
8,285
|
|
|
9,316
|
|
||||
Benefit for income taxes
|
(186
|
)
|
|
(2,735
|
)
|
|
(2,311
|
)
|
|
(2,275
|
)
|
||||
EBITDA
|
$
|
(2,785
|
)
|
|
$
|
32,429
|
|
|
$
|
(283,643
|
)
|
|
$
|
77,583
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA reconciliation:
|
|
|
|
|
|
|
|
||||||||
EBITDA
|
$
|
(2,785
|
)
|
|
$
|
32,429
|
|
|
$
|
(283,643
|
)
|
|
$
|
77,583
|
|
Impairment of goodwill
|
—
|
|
|
—
|
|
|
296,196
|
|
|
—
|
|
||||
Transaction and integration costs
|
—
|
|
|
2,684
|
|
|
146
|
|
|
7,446
|
|
||||
(Gain) loss on revaluation of contingent liabilities (1)
|
910
|
|
|
(975
|
)
|
|
484
|
|
|
(14,930
|
)
|
||||
Gain on extinguishment of debt
|
(11,587
|
)
|
|
—
|
|
|
(21,703
|
)
|
|
—
|
|
||||
Restructuring charges
|
2,094
|
|
|
—
|
|
|
4,423
|
|
|
—
|
|
||||
Stock-based compensation expense
|
2,105
|
|
|
4,114
|
|
|
5,697
|
|
|
7,267
|
|
||||
Gain on sale of property and equipment
|
(1,790
|
)
|
|
(310
|
)
|
|
(2,365
|
)
|
|
(333
|
)
|
||||
Legal fees and settlements (2)
|
20
|
|
|
75
|
|
|
24
|
|
|
143
|
|
||||
Adjusted EBITDA
|
$
|
(11,033
|
)
|
|
$
|
38,017
|
|
|
$
|
(741
|
)
|
|
$
|
77,176
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Net income (loss)
|
$
|
(24,171
|
)
|
|
$
|
6,087
|
|
|
$
|
(325,071
|
)
|
|
$
|
23,397
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Impairment of goodwill
|
—
|
|
|
—
|
|
|
296,196
|
|
|
—
|
|
||||
Transaction and integration costs
|
—
|
|
|
2,684
|
|
|
146
|
|
|
7,446
|
|
||||
Interest expense
|
9,186
|
|
|
10,771
|
|
|
19,014
|
|
|
20,097
|
|
||||
Interest income
|
(179
|
)
|
|
(168
|
)
|
|
(550
|
)
|
|
(328
|
)
|
||||
Restructuring charges
|
2,094
|
|
|
—
|
|
|
4,423
|
|
|
—
|
|
||||
Gain on extinguishment of debt
|
(11,587
|
)
|
|
—
|
|
|
(21,703
|
)
|
|
—
|
|
||||
Benefit for deferred income taxes
|
—
|
|
|
(2,541
|
)
|
|
(1,588
|
)
|
|
(3,019
|
)
|
||||
After-tax net operating profit (loss)
|
$
|
(24,657
|
)
|
|
$
|
16,833
|
|
|
$
|
(29,133
|
)
|
|
$
|
47,593
|
|
Total capital as of prior period-end:
|
|
|
|
|
|
|
|
||||||||
Total stockholders’ equity
|
$
|
91,851
|
|
|
$
|
615,467
|
|
|
$
|
389,877
|
|
|
$
|
594,823
|
|
Total debt
|
386,171
|
|
|
415,000
|
|
|
400,000
|
|
|
435,000
|
|
||||
Less cash and cash equivalents
|
(90,116
|
)
|
|
(31,157
|
)
|
|
(92,989
|
)
|
|
(63,615
|
)
|
||||
Total capital as of prior period-end
|
$
|
387,906
|
|
|
$
|
999,310
|
|
|
$
|
696,888
|
|
|
$
|
966,208
|
|
Total capital as of period-end:
|
|
|
|
|
|
|
|
||||||||
Total stockholders’ equity
|
$
|
69,950
|
|
|
$
|
624,309
|
|
|
$
|
69,950
|
|
|
$
|
624,309
|
|
Total debt
|
372,584
|
|
|
400,000
|
|
|
372,584
|
|
|
400,000
|
|
||||
Less cash and cash equivalents
|
(88,678
|
)
|
|
(16,886
|
)
|
|
(88,678
|
)
|
|
(16,886
|
)
|
||||
Total capital as of period-end
|
$
|
353,856
|
|
|
$
|
1,007,423
|
|
|
$
|
353,856
|
|
|
$
|
1,007,423
|
|
Average total capital
|
$
|
370,881
|
|
|
$
|
1,003,367
|
|
|
$
|
525,372
|
|
|
$
|
986,816
|
|
ROIC
|
(26.6)%
|
|
6.7%
|
|
(11.1)%
|
|
9.6%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Calculation of gross profit (loss)
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
52,735
|
|
|
$
|
237,517
|
|
|
$
|
199,359
|
|
|
$
|
467,222
|
|
Cost of revenues (exclusive of depreciation and amortization shown separately below)
|
56,703
|
|
|
184,555
|
|
|
182,711
|
|
|
363,145
|
|
||||
Depreciation (related to cost of revenues)
|
7,858
|
|
|
13,616
|
|
|
15,801
|
|
|
26,922
|
|
||||
Amortization of intangibles
|
4,116
|
|
|
4,628
|
|
|
8,285
|
|
|
9,316
|
|
||||
Gross profit (loss)
|
$
|
(15,942
|
)
|
|
$
|
34,718
|
|
|
$
|
(7,438
|
)
|
|
$
|
67,839
|
|
Adjusted gross profit (loss) reconciliation:
|
|
|
|
|
|
|
|
||||||||
Gross profit (loss)
|
$
|
(15,942
|
)
|
|
$
|
34,718
|
|
|
$
|
(7,438
|
)
|
|
$
|
67,839
|
|
Depreciation (related to cost of revenues)
|
7,858
|
|
|
13,616
|
|
|
15,801
|
|
|
26,922
|
|
||||
Amortization of intangibles
|
4,116
|
|
|
4,628
|
|
|
8,285
|
|
|
9,316
|
|
||||
Adjusted gross profit (loss)
|
$
|
(3,968
|
)
|
|
$
|
52,962
|
|
|
$
|
16,648
|
|
|
$
|
104,077
|
|
|
Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands)
|
||||||
Operating activities
|
$
|
2,359
|
|
|
$
|
17,408
|
|
Investing activities
|
1,768
|
|
|
(27,070
|
)
|
||
Financing activities
|
(8,263
|
)
|
|
(37,185
|
)
|
||
Impact of foreign exchange rate on cash
|
(175
|
)
|
|
118
|
|
||
Net change in cash and cash equivalents
|
$
|
(4,311
|
)
|
|
$
|
(46,729
|
)
|
•
|
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 our internal audit department, with responsibility for direction and oversight of all internal audit functions.
|
•
|
Substantially completed a comprehensive risk assessment of the design of internal controls, including the implementation of new internal controls as needed to ensure the segregation of certain accounting duties related to journal entries, account reconciliations, and other accounting functions.
|
•
|
Designed and implemented a monitoring control that captures key roles and responsibilities within our enterprise resource planning system with consideration of mitigating business process controls designed to reduce the risk of material misstatement related to inadequate segregation of certain accounting duties related to journal entries, account reconciliations, and other accounting functions. Our management continues to assess the effectiveness of this control.
|
•
|
Instituted additional training programs for appropriate personnel regarding the application of our enterprise resource planning system.
|
Exhibit
Number
|
|
Description
|
2.1*
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
10.1*
|
|
|
|
|
|
10.2*
|
|
|
|
|
|
10.3*
|
|
|
|
|
|
10.4*
|
|
|
|
|
|
10.5*
|
|
|
|
|
|
10.6*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
101*
|
|
Interactive Data Files
|
*
|
Filed herewith.
|
**
|
Furnished herewith in accordance with Item 601(b)(32) of Regulation S-K.
|
|
|
|
Nine Energy Service, Inc.
|
||
|
|
|
|
|
|
Date:
|
August 6, 2020
|
|
By:
|
|
/s/ Ann G. Fox
|
|
|
|
|
|
Ann G. Fox
|
|
|
|
|
|
President, Chief Executive Officer and Director
|
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
Date:
|
August 6, 2020
|
|
By:
|
|
/s/ Guy Sirkes
|
|
|
|
|
|
Guy Sirkes
|
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
(Principal Financial Officer)
|
a)
|
Capped Operational Requirements Claims
|
b)
|
Completed Sales
|
c)
|
Dissolvable Plugs
|
d)
|
Dissolvable Plugs Business
|
e)
|
E-Set Business
|
f)
|
E-Set Earnout Payment
|
g)
|
Earnout Disputed Items
|
h)
|
Earnout EBIT
|
i)
|
Earnout Objection Date
|
j)
|
Earnout Objection Notice
|
k)
|
Earnout Payment
|
l)
|
Earnout Period
|
m)
|
Earnout Statement
|
n)
|
Earnout Term
|
o)
|
EBIT
|
p)
|
Joint Management Committee
|
q)
|
Operational Requirements Cap
|
r)
|
Sales Earnout Payment
|
s)
|
Sales Earnout Period
|
SELLERS:
|
WARREN LYNN FRAZIER
By: /s/ Warren Lynn Frazier
|
|
GARRETT LYNN FRAZIER 2018 DG TRUST
By: /s/ Leah Schexnayder-Delaune
|
Name: Leah Schexnayder-Delaune
|
Title: Trustee
|
|
DERRICK CHASE FRAZIER 2018 DG TRUST
By: /s/ Leah Schexnayder-Delaune
|
Name: Leah Schexnayder-Delaune
|
Title: Trustee
|
|
FRAZIER FAMILY FOUNDATION, INC.
By: /s/ Warren Lynn Frazier
|
Name: Warren Lynn Frazier
|
Title: President
|
BUYERS:
|
MOTI HOLDCO, LLC
By: /s/ Ann G. Fox
|
Name: Ann G. Fox
|
Title: President, Chief Executive Officer, Secretary and Director
|
|
NINE ENERGY CANADA INC.
By: /s/ Ann G. Fox
|
Name: Ann G. Fox
|
Title: President and Chief Executive Officer
|
|
BUYER PARENT:
|
NINE ENERGY SERVICE, INC.
By: /s/ Ann G. Fox
|
Name: Ann G. Fox
|
Title: President and Chief Executive Officer
|
|
|
NINE ENERGY SERVICE, LLC.
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Theodore R. Moore
|
|
|
Name:
|
Theodore R. Moore
|
|
|
Title:
|
Senior Vice President and General Counsel
|
|
|
|
|
AGREED AND ACCEPTED:
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Ann G. Fox
|
|
|
Name:
|
Ann G. Fox
|
|
|
Title:
|
President, Chief Executive Officer
|
|
|
|
|
NINE ENERGY SERVICE, LLC.
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Ann G. Fox
|
|
|
Name:
|
Ann G. Fox
|
|
|
Title:
|
President, Chief Executive Officer
|
|
|
|
|
AGREED AND ACCEPTED:
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ David Crombie
|
|
|
Name:
|
David Crombie
|
|
|
Title:
|
Executive Vice President, Chief Operating Officer
|
|
|
|
|
NINE ENERGY SERVICE, LLC.
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Ann G. Fox
|
|
|
Name:
|
Ann G. Fox
|
|
|
Title:
|
President, Chief Executive Officer
|
|
|
|
|
AGREED AND ACCEPTED:
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Guy Sirkes
|
|
|
Name:
|
Guy Sirkes
|
|
|
Title:
|
Senior Vice President, Chief Financial Officer
|
|
|
|
|
NINE ENERGY SERVICE, LLC.
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Ann G. Fox
|
|
|
Name:
|
Ann G. Fox
|
|
|
Title:
|
President, Chief Executive Officer
|
|
|
|
|
AGREED AND ACCEPTED:
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Edward Bruce Morgan
|
|
|
Name:
|
Edward Bruce Morgan
|
|
|
Title:
|
President, Administration and Operations
|
|
|
|
|
NINE ENERGY SERVICE, LLC.
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Ann G. Fox
|
|
|
Name:
|
Ann G. Fox
|
|
|
Title:
|
President, Chief Executive Officer
|
|
|
|
|
AGREED AND ACCEPTED:
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Theodore R. Moore
|
|
|
Name:
|
Theodore R. Moore
|
|
|
Title:
|
Senior Vice President and General Counsel
|
|
|
|
|
NINE ENERGY SERVICE, LLC.
|
|
|
|
|
|
|
|
By:
|
/s/ Ann G. Fox
|
|
|
Name:
|
Ann G. Fox
|
|
|
Title:
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
NINE ENERGY SERVICE, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Ann G. Fox
|
|
Name:
|
Ann G. Fox
|
|
|
|
Title:
|
President and Chief Executive Officer
|
ACKNOWLEDGED AND ACCEPTED:
|
|
|
|
|
|
|
|
|
/s/ Edward Bruce Morgan
|
|
|
|
Edward Bruce Morgan
|
|
|
|
|
|
|
|
6/2/20
|
|
|
|
Date
|
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(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:
|
August 6, 2020
|
/s/ Ann G. Fox
|
|
|
Ann G. Fox
|
|
|
President, Chief Executive Officer and Director
|
|
|
(Principal Executive Officer)
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
Date:
|
August 6, 2020
|
/s/ Guy Sirkes
|
|
|
Guy Sirkes
|
|
|
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:
|
August 6, 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/ Guy Sirkes
|
|
|
|
Guy Sirkes
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
|
|
|
Date:
|
August 6, 2020
|