FTS International (FTSI) 10-Q 5 Nov 19 2019 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 01, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Entity Registrant Name	FTS INTERNATIONAL, INC.
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		107,215,035
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001529463
Amendment Flag	false

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue
Revenue	$ 186	$ 324.4	$ 633.4	$ 1,202.3
Revenue from related parties		10	0.9	92.9
Total revenue	186	334.4	634.3	1,295.2
Operating expenses
Costs of revenue (excluding depreciation of $20.6, $18.8, $61.7 and $55.7 respectively, included in depreciation and amortization below)	147.2	222.2	476.2	863.8
Selling, general and administrative	21.1	19.7	66.4	66.3
Depreciation and amortization	22.7	21.1	67.9	62.4
Impairments and other charges	5.1	10	68.7	16
(Gain) loss on disposal of assets, net	(0.1)	(0.1)	(1)	0.2
Total operating expenses	196	272.9	678.2	1,008.7
Operating (loss) income	(10)	61.5	(43.9)	286.5
Interest expense, net	(7.6)	(10.4)	(23.5)	(39.9)
Gain (loss) on extinguishment of debt, net	0.8	(0.6)	1.2	(10.7)
Equity in net income (loss) of joint venture affiliate		(0.7)	0.6	(1.9)
Gain on sale of equity interest in joint venture affiliate	7		7
(Loss) income before income taxes	(9.8)	49.8	(58.6)	234
Income tax expense	1	0.2	1.3	2.1
Net (loss) income	(10.8)	49.6	(59.9)	231.9
Net (loss) income attributable to common stockholders	$ (10.8)	$ 49.6	$ (59.9)	$ 655.1
Basic and diluted earnings per share attributable to common stockholders	$ (0.10)	$ 0.45	$ (0.55)	$ 6.40
Shares used in computing basic and diluted earnings per share	108.6	109.3	109.3	102.4

CONSOLIDATED STATEMENTS OF OP_2

CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Depreciation
Depreciation	$ 20.6	$ 18.8	$ 61.7	$ 55.7

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 204.2	$ 177.8
Accounts receivable, net	119.5	158.3
Inventories	48.3	66.6
Prepaid expenses and other current assets	11.9	7
Total current assets	383.9	409.7
Property, plant, and equipment, net	237.7	275.3
Operating lease right-of-use assets	30.2
Intangible assets, net	29.5	29.5
Investment in joint venture affiliate		23.2
Other assets	4.2	6
Total assets	685.5	743.7
Current liabilities
Accounts payable	57.6	86.8
Accrued expenses	34.8	29.3
Current portion of operating lease liabilities	15
Other current liabilities	12	16.3
Total current liabilities	119.4	132.4
Long-term debt	456.6	503.2
Operating lease liabilities	17.2
Other liabilities	45.8	1.2
Total liabilities	639	636.8
Commitments and contingencies (Note 10)
Stockholders’ equity
Preferred stock, $0.01 par value, 25,000,000 shares authorized
Common stock, $0.01 par value, 320,000,000 shares authorized, 107,878,289 shares issued and outstanding at September 30, 2019 and 109,434,841 shares issued and outstanding at December 31, 2018	36.4	36.4
Additional paid-in capital	4,377.8	4,378.4
Accumulated deficit	(4,367.7)	(4,307.9)
Total stockholders’ equity	46.5	106.9
Total liabilities and stockholders’ equity	$ 685.5	$ 743.7

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Preferred stock
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	25,000,000	25,000,000
Common stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	320,000,000	320,000,000
Common stock, issued (in shares)	107,878,289	109,434,841
Common stock, outstanding (in shares)	107,878,289	109,434,841

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities
Net (loss) income	$ (10.8)	$ (59.9)	$ 231.9
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	22.7	67.9	62.4
Stock-based compensation		9.6	8.2
Amortization of debt discounts and issuance costs		1.4	2
Impairment of assets	4.2	9.7
(Gain) loss on disposal of assets, net	(0.1)	(1)	0.2
(Gain) loss on extinguishment of debt, net	(0.8)	(1.2)	10.7
(Gain) sale of equity interest in joint venture affiliate	(7)	(7)
Inventory write down		1.4
Non-cash provision for supply commitment charges	0.9	57.6	16
Cash paid to settle supply commitment charges		(16.1)	(2.1)
Other non-cash items		1.6	1.8
Changes in operating assets and liabilities:
Accounts receivable		38.7	16
Accounts receivable from related parties			(4.4)
Inventories		16.8	(23.3)
Prepaid expenses and other assets		(6.9)	1.1
Accounts payable		(28.5)	(25.2)
Accrued expenses and other liabilities		5.8	7.3
Net cash provided by operating activities		89.9	302.6
Cash flows from investing activities
Capital expenditures		(39.5)	(84.9)
Proceeds from disposal of assets		1.9	1
Proceeds from sale of equity interest interest in joint venture affiliate		30.7
Net cash used in investing activities		(6.9)	(83.9)
Cash flows from financing activities
Repayments of long-term debt		(46.4)	(569.3)
Repurchase of common stock		(8.3)
Taxes paid related to net share settlement of equity awards		(1.9)
Net proceeds from issuance of common stock			303
Payments of revolving credit facility issuance costs			(2.4)
Net cash used in financing activities		(56.6)	(268.7)
Net increase (decrease) in cash, cash equivalents, and restricted cash		26.4	(50)
Cash, cash equivalents, and restricted cash at beginning of period		177.8	217.2
Cash and cash equivalents at end of period	$ 204.2	204.2	167.2
Supplemental cash flow information:
Interest paid		17.9	32.7
Income tax payments		2.5	0.9
Noncash investing and financing activities:
Capital expenditures included in accounts payable		3.3	$ 6.3
Operating lease liabilities incurred from obtaining right-of-use assets		$ 10.9

CONSOLIDATED STATEMENTS OF STOC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) - USD ($) $ in Millions	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at beginning of period at Dec. 31, 2017	$ 35.9	$ 3,712.1	$ (4,566.3)	$ (818.3)
Balance at beginning of period (in shares) at Dec. 31, 2017	51,783,000
Net (loss) income			78.7	78.7
Activity related to stock plans		1.6		1.6
Recapitalization of convertible preferred stock to common stock	$ 0.4	349.4		349.8
Recapitalization of convertible preferred stock to common stock (in shares)	39,415,000
Issuance of common stock	$ 0.1	302.9		303
Issuance of common stock (in shares)	18,077,000
Balance at end of period at Mar. 31, 2018	$ 36.4	4,366	(4,487.6)	(85.2)
Balance at end of period (in shares) at Mar. 31, 2018	109,275,000
Balance at beginning of period at Dec. 31, 2017	$ 35.9	3,712.1	(4,566.3)	(818.3)
Balance at beginning of period (in shares) at Dec. 31, 2017	51,783,000
Net (loss) income				231.9
Balance at end of period at Sep. 30, 2018	$ 36.4	4,372.6	(4,334.4)	74.6
Balance at end of period (in shares) at Sep. 30, 2018	109,275,000
Balance at beginning of period at Dec. 31, 2017	$ 35.9	3,712.1	(4,566.3)	(818.3)
Balance at beginning of period (in shares) at Dec. 31, 2017	51,783,000
Balance at end of period at Dec. 31, 2018	$ 36.4	4,378.4	(4,307.9)	$ 106.9
Balance at end of period (in shares) at Dec. 31, 2018	109,435,000			109,434,841
Balance at beginning of period at Mar. 31, 2018	$ 36.4	4,366	(4,487.6)	$ (85.2)
Balance at beginning of period (in shares) at Mar. 31, 2018	109,275,000
Net (loss) income			103.6	103.6
Activity related to stock plans		3.4		3.4
Balance at end of period at Jun. 30, 2018	$ 36.4	4,369.4	(4,384)	21.8
Balance at end of period (in shares) at Jun. 30, 2018	109,275,000
Net (loss) income			49.6	49.6
Activity related to stock plans		3.2		3.2
Balance at end of period at Sep. 30, 2018	$ 36.4	4,372.6	(4,334.4)	74.6
Balance at end of period (in shares) at Sep. 30, 2018	109,275,000
Balance at beginning of period at Dec. 31, 2018	$ 36.4	4,378.4	(4,307.9)	$ 106.9
Balance at beginning of period (in shares) at Dec. 31, 2018	109,435,000			109,434,841
Net (loss) income			(55)	$ (55)
Cumulative effect of accounting change			0.1	0.1
Activity related to stock plans		1.3		1.3
Activity related to stock plans (in shares)	364,000
Balance at end of period at Mar. 31, 2019	$ 36.4	4,379.7	(4,362.8)	53.3
Balance at end of period (in shares) at Mar. 31, 2019	109,799,000
Balance at beginning of period at Dec. 31, 2018	$ 36.4	4,378.4	(4,307.9)	$ 106.9
Balance at beginning of period (in shares) at Dec. 31, 2018	109,435,000			109,434,841
Net (loss) income				$ (59.9)
Repurchase of common stock				$ (8.3)
Repurchase of common stock (in shares)				(1,975,000)
Balance at end of period at Sep. 30, 2019	$ 36.4	4,377.8	(4,367.7)	$ 46.5
Balance at end of period (in shares) at Sep. 30, 2019	107,878,000			107,878,289
Balance at beginning of period at Mar. 31, 2019	$ 36.4	4,379.7	(4,362.8)	$ 53.3
Balance at beginning of period (in shares) at Mar. 31, 2019	109,799,000
Net (loss) income			5.9	5.9
Repurchase of common stock		(4.6)		(4.6)
Repurchase of common stock (in shares)	(761,000)
Activity related to stock plans		3.4		3.4
Activity related to stock plans (in shares)	55,000
Balance at end of period at Jun. 30, 2019	$ 36.4	4,378.5	(4,356.9)	58
Balance at end of period (in shares) at Jun. 30, 2019	109,093,000
Net (loss) income			(10.8)	(10.8)
Repurchase of common stock		(3.7)		(3.7)
Repurchase of common stock (in shares)	(1,215,000)
Activity related to stock plans		3		3
Balance at end of period at Sep. 30, 2019	$ 36.4	$ 4,377.8	$ (4,367.7)	$ 46.5
Balance at end of period (in shares) at Sep. 30, 2019	107,878,000			107,878,289

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2019
Disclosure Text Block
BASIS OF PRESENTATION	NOTE 1 — BASIS OF PRESENTATION Unless the context requires otherwise, the use of the terms “FTSI,” “Company,” “we,” “us,” “our” or “ours” in these Notes to Consolidated Financial Statements refer to FTS International, Inc., together with its consolidated subsidiaries. The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. Accordingly, certain information and disclosures normally included in our annual consolidated financial statements have been condensed or omitted. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2018. In our opinion, the consolidated financial statements included herein contain all adjustments of a normal, recurring nature considered necessary for a fair presentation of the interim periods. The results of operations of the interim periods are not necessarily indicative of the results of operations to be expected for the full year. There were no items of other comprehensive income in the periods presented. The Company had $9.1 million of restricted cash at January 1, 2018 and zero restricted cash at September 30, 2019 and 2018. Reclassifications Current liabilities related to accrued supply commitment charges have been reclassified from accounts payable to other current liabilities on the balance sheet as of December 31, 2018, and the statement of cash flows for the nine months ended September 30, 2018. These reclassifications had no effect on total assets, total liabilities, total equity, or net cash provided by operating activities as previously reported. New Accounting Standards Updates In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases. The FASB subsequently issued a number of additional ASUs to update this guidance. This standard was issued to increase transparency and comparability among organizations by requiring that a right-of-use asset and corresponding lease liability be recorded on the balance sheet for leases with terms longer than 12 months. We elected to use three practical expedients allowed under the guidance. According to these practical expedients we did not reassess whether existing contracts are or contain a lease; we did not reassess whether existing leases are operating or finance leases; and we did not reassess the accounting for initial direct costs for existing leases. Our approach to adopting this new standard included a review of existing leases and other executory contracts that could contain embedded leases and we identified the key terms that were necessary for us to calculate the right-of-use asset and lease liability. These consolidated financial statements have been prepared in accordance with the new ASU utilizing the modified retrospective transition method, which resulted in the recording of operating lease liabilities of $38.7 million as of January 1, 2019 on our consolidated balance sheet with an immaterial effect on our consolidated statement of stockholders’ equity (deficit) and no related effect on our consolidated statement of operations.

JOINT VENTURE

JOINT VENTURE	9 Months Ended
	Sep. 30, 2019
Disclosure Text Block
JOINT VENTURE	NOTE 2 — JOINT VENTURE In August 2019, FTSI closed on the sale of its 45% equity ownership interest in SinoFTS Petroleum Services Ltd., FTSI’s joint venture in China, to Sinopec Oilfield Services Corporation, FTSI’s joint venture partner. In exchange, FTSI, through its affiliate FTS International Netherlands B.V., received consideration of $26.9 million for the sale of its equity interest, and through FTS International Services, LLC, received a royalty fee of $5.8 million for a license for its intellectual property use and for future limited support of the joint venture’s operations. After conducting an analysis of the relative fair values of the equity interest and royalty fee, FTSI allocated $30.7 million of the total consideration received to the sale of its equity interest and $2.0 million to the prepaid royalty fee. FTSI recognized a gain of $7.0 million on the sale of its equity interest. The prepaid royalty fee will be recognized over approximately the next six years.

INDEBTEDNESS AND BORROWING FACI

INDEBTEDNESS AND BORROWING FACILITY	9 Months Ended
	Sep. 30, 2019
Disclosure Text Block
INDEBTEDNESS AND BORROWING FACILITY	NOTE 3 — INDEBTEDNESS AND BORROWING FACILITY The following table summarizes our long-term debt: September 30, December 31, (In millions) 2019 2018 Term loan due April 2021 ("Term Loan") $ 90.0 $ 121.0 Senior notes due May 2022 ("2022 Senior Notes") 369.9 386.9 Total principal amount 459.9 507.9 Less unamortized discount and debt issuance costs (3.3) (4.7) Total long-term debt $ 456.6 $ 503.2 Estimated fair value of long-term debt $ 396.4 $ 461.2 Estimated fair values for our Term Loan and 2022 Senior Notes were determined using recent trading activity and/or bid-ask spreads and are classified as Level 2 in the FASB’s fair value hierarchy. We believe we were in compliance with all of the covenants in our debt agreements at September 30, 2019. Debt Repayments In the first nine months of 2019, we repaid $31.0 million of aggregate principal amount of Term Loan using cash on hand. We recognized a loss on this debt extinguishment of $0.2 million. In the first nine months of 2019, we repurchased $17.0 million of aggregate principal amount of 2022 Senior Notes in the qualified institutional buyer market using cash on hand. We recognized a gain on this debt extinguishment of $1.4 million. Revolving Credit Facility The maximum availability of credit under our revolving credit facility is limited at any time to the lesser of $250 million or a borrowing base. The borrowing base is based on percentages of eligible accounts receivable and eligible inventory and is subject to certain reserves. In an event of default or if the amount available under the credit facility is less than either 10% of our maximum availability or $12.5 million, we will be required to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0. If at any time borrowings and letters of credit issued under the credit facility exceed the borrowing base, we will be required to repay an amount equal to such excess. As of September 30, 2019, the borrowing base was $94.8 million and therefore our maximum availability under the credit facility was $94.8 million. As of September 30, 2019, there were no borrowings outstanding under the credit facility, and letters of credit totaling $4.3 million were issued, resulting in $90.5 million of availability under the credit facility. We believe we were in compliance with all of the covenants in the credit facility at September 30, 2019.

LEASES

LEASES	9 Months Ended
	Sep. 30, 2019
LEASES
LEASES	NOTE 4 — LEASES We lease certain administrative offices, sales offices, and operational facilities. We also lease some service equipment and light duty vehicles. These leases have remaining lease terms of 6 years or less. Some leases contain options to extend the leases, and some include options to terminate the leases. We do not include renewal or termination options in our assessment of the lease terms unless extension or termination for certain assets is deemed to be reasonably certain. The accounting for some of our leases requires significant judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rates, if necessary, to utilize in the calculation of our lease liabilities, and assessing the likelihood of renewal or termination options. We also have some lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. We provide residual value guarantees for our leases of light-duty vehicles and certain service equipment. No amounts related to these residual value guarantees have been deemed probable and included in the lease liabilities on our consolidated balance sheet; however, if the value for all of the vehicles was zero and if we cancelled these leases at September 30, 2019, we would be required to pay a total of $12.9 million in residual value guarantees. We had no material amount of finance leases or subleases at September 30, 2019. We had no material variable lease costs for the three or nine months ended September 30, 2019. The following table summarizes the components of our lease costs: Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2019 2019 Operating lease cost $ 4.7 $ 16.7 Short-term lease cost 1.5 4.2 Total lease cost $ 6.2 $ 20.9 Short-term lease costs represent costs related to leases with terms of one year or less. We elected the practical expedient to not recognize lease assets and liabilities for these leases. The following table includes other supplemental information for our operating leases: Nine Months Ended September 30, (Dollars in millions) 2019 Cash paid for amounts included in the measurement of our lease obligations $ 16.9 Right-of-use assets obtained in exchange for lease obligations $ 10.9 Right-of-use assets recognized upon adoption of the leasing standard $ 37.8 Weighted-average remaining lease term 2.5 years Weighted-average discount rate The following table summarizes the maturity of our operating leases as of September 30, 2019: (In millions) Remainder of 2019 $ 4.4 2020 15.4 2021 11.0 2022 1.2 2023 1.2 2024 and thereafter 1.0 Total lease payments 34.2 Less imputed interest (2.0) Total lease liabilities $ 32.2

SHARE REPURCHASE

SHARE REPURCHASE	9 Months Ended
	Sep. 30, 2019
SHARE REPURCHASE
SHARE REPURCHASE	NOTE 5 — SHARE REPURCHASE In May 2019, our board of directors (our “Board”) approved an authorization for a total share repurchase of up to $100 million of the Company’s common stock to be executed through open market or private transactions. The authorization expires on May 14, 2020 and may be discontinued at any time. For the first nine months of 2019 we repurchased approximately 1,975,000 shares of common stock at an average price of $4.21 per share for a total of $8.3 million. At September 30, 2019, $91.7 million of the authorized amount was available for share repurchases under this program. The amount and timing of share repurchases are at the sole discretion of the Company, and plans for future share repurchases may be revised by the Board at any time. The share repurchase program could be affected by, among other things, changes in results of operations, capital expenditures, cash flows, and applicable tax laws.

REVENUE

REVENUE	9 Months Ended
	Sep. 30, 2019
REVENUE
REVENUE	NOTE 6 — REVENUE The Company contracts with its customers to perform hydraulic fracturing services on one or more oil or natural gas wells. Under these arrangements, we satisfy our performance obligations as services are rendered, which is generally upon the completion of a fracturing stage or the passage of time. Pricing for our services is frequently negotiated with our customers and is based on prevailing market rates during each reporting period. The amounts we invoice our customers for services performed during a period are directly related to the value received by the customers for the period. There is no inherent uncertainty to the amount of consideration we will receive for services performed during a period and no judgment is required to allocate a portion of the transaction price to a future period. Accordingly, we are not required to identify any unsatisfied performance obligations nor attribute any revenue to them. We have no material contract assets or liabilities with our customers. We do not present disaggregated revenue because we do not believe this information is necessary to understand the nature, amount, timing and uncertainty of our revenues and cash flows.

IMPAIRMENTS AND OTHER CHARGES

IMPAIRMENTS AND OTHER CHARGES	9 Months Ended
	Sep. 30, 2019
Disclosure Text Block
IMPAIRMENTS AND OTHER CHARGES	NOTE 7 — IMPAIRMENTS AND OTHER CHARGES The following table summarizes our impairments and other charges: Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2019 2018 2019 2018 Supply commitment charges $ 0.9 $ 10.0 $ 57.6 $ 16.0 Impairment of assets 4.2 — 9.7 — Inventory write-down — — 1.4 — Total impairments and other charges $ 5.1 $ 10.0 $ 68.7 $ 16.0 Supply Commitment Charges We incur supply commitment charges when our purchases of sand from certain suppliers are less than the minimum purchase commitments in our supply contracts. According to the accounting guidance for firm purchase commitments, future losses that are considered likely are also required to be recorded in the current period. During the first nine months of 2019 and 2018, we recorded aggregate charges under these supply contracts of $57.6 million and $16.0 million, respectively. These charges relate to actual purchase shortfalls incurred, as well as forecasted losses expected to be incurred and settled in future periods. These purchase shortfalls are largely due to our customers choosing to procure their own sand, often from sand mines closer to their operating areas. In May 2019, we restructured and amended our largest sand supply contract to reduce the total remaining commitment through 2024 by approximately $162 million. This reduced our annual commitment from $47.9 million to $21.0 million from 2019 through 2024. The reduced annual commitments of $21.0 million represent the annual payments we would make under the contract if we do not purchase any sand from this vendor. Due to the terms of the amended agreement and our estimated future purchases under this contract, we determined that we would not be able to satisfy $11.0 million of the $21.0 million annual commitment with sand purchases for the last five years of the contract. Therefore, in connection with this amendment, we recorded a supply commitment charge of $55.0 million in the first quarter of 2019 to accelerate these purchase shortfalls. After recording the $55.0 million supply commitment charge in the first quarter of 2019, the amount of accrued supply commitment charges for future periods that was recognized on our consolidated balance sheet at March 31, 2019 was $66.0 million. We paid $11.0 million of this amount in the second quarter of 2019 and we expect to pay the remaining $55.0 million in annual installments of $11.0 million from January 2020 through January 2024. These payments may be accelerated under limited circumstances. The remaining amount of the 2019 charges represent revised estimates of our purchase shortfalls under this contract for 2019. After recording the $55.0 million supply commitment charge, the remaining annual purchase commitment that we must satisfy to avoid additional charges is $10.0 million. We will satisfy this annual purchase commitment if we purchase at least 1.0 million tons of sand per year, which we believe better matches our current and forecasted sand needs. If we purchase more than 1.0 million tons of sand in a year, then we could recover a portion of the supply commitment charge. We entered into this contract in 2013 in connection with selling our sand mines, which was at a time when our then current and expected needs for sand were significantly higher than they are today. As our sand needs have declined over the years due to industry cycles and due to our customers choosing to procure their own sand, we and our supplier have continuously worked together to accommodate changing market conditions by amending the contract. Estimated losses related to these supply contracts contain uncertainties, such as future customer demand and sand preferences. These uncertainties require us to use judgment to quantify these estimates. Actual results could materially differ from our estimates. Fleet Capacity Reduction In the fourth quarter of 2019, we decided to dispose of certain idle equipment where we now believe there is no expectation of future use. The equipment we have selected for disposal is comprised primarily of hydraulic fracturing pumps that are substantially depreciated. Certain hydraulic fracturing components, such as engines and transmissions that we believe to have remaining useful lives, will be removed prior to disposing of the equipment and used in our maintenance and repair activities for our remaining fleets. These disposals will reduce our capacity of equipment from 34 total fleets to 28 total fleets. The amount of proceeds we anticipate receiving from these disposals is not significant. We recorded an asset impairment of $4.2 million in connection with these anticipated disposals. Discontinued Wireline Operations In May 2019, we decided to discontinue our wireline operations due to underperformance. We are in the process of identifying the best options for disposing of these assets. As a result of this decision, we recorded an asset impairment of $2.8 million and an inventory write-down of $1.4 million in the first quarter of 2019 to adjust these assets to their estimated fair market values and net realizable values, respectively. Other Impairments In the second quarter of 2019, we recorded $2.7 million of impairments for certain land and buildings that we no longer use. We are closely monitoring current industry conditions and future expectations. If current industry conditions continue for a prolonged period or worsen, we may be subject to impairments of long-lived assets or intangible assets in future periods.

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2019
Disclosure Text Block
INCOME TAXES	NOTE 8 — INCOME TAXES In 2012, we established a full valuation allowance with respect to our U.S. federal deferred tax assets and state deferred tax assets in excess of our deferred tax liabilities. We have continued to record a valuation allowance for these net deferred tax assets since 2012. As a result, we only recorded income tax expense for the three and nine months ended September 30, 2019 and 2018 for states that limit the deduction of net operating loss carryforwards and for foreign income taxes. Deferred tax assets related to our U.S. federal and state operating losses are still available to us to offset future taxable income, subject to limitations in the event of a change of control under Section 382 of the Internal Revenue Code. At September 30, 2019, we had not incurred such an ownership change. At each reporting date, we consider all available positive and negative evidence to evaluate whether our deferred tax assets are more likely than not to be realized. A significant piece of negative evidence that we consider is that the Company generated a loss before income taxes for each year from 2012 to 2016. Such negative evidence weighs heavily against other more subjective positive evidence such as projections for future taxable income. The Company generated income before income taxes in 2017 and 2018 and has generated cumulative income for its most recent three year period. This represents positive evidence that we may be able to realize some or all of our deferred tax assets; however, due to the negative evidence of our annual losses generated from 2012 through 2016, the significant cyclicality of our business in recent years, and our loss before income taxes for the first nine months of 2019, we concluded that a full valuation allowance was still required at September 30, 2019.

EARNINGS PER SHARE

EARNINGS PER SHARE	9 Months Ended
	Sep. 30, 2019
EARNINGS PER SHARE
EARNINGS PER SHARE	NOTE 9 — EARNINGS PER SHARE The numerators and denominators of the basic and diluted earnings per share (“EPS”) computations for our common stock are calculated as follows: Three Months Ended Nine Months Ended September 30, September 30, (In millions, except per share amounts) 2019 2018 2019 2018 Numerator: Net (loss) income $ (10.8) $ 49.6 $ (59.9) $ 231.9 Net reversal of convertible preferred stock — — — 423.2 Net (loss) income attributable to common $ (10.8) $ 49.6 $ (59.9) $ 655.1 Denominator: Weighted average shares used for 108.6 109.3 109.3 102.4 Dilutive potential common shares (2) — — — — Number of shares used for diluted EPS computation 108.6 109.3 109.3 102.4 Basic and diluted EPS $ (0.10) $ 0.45 $ (0.55) $ 6.40 _________________________ (1) The accreted value of our convertible preferred stock was $1,132.7 million at December 31, 2017. In connection with the Company’s initial public offering (“IPO”) in 2018, the convertible preferred stock was recapitalized into 39.4 million shares of common stock. These shares of common stock had a value of $709.5 million at the IPO share price of $18.00, which resulted in a net reversal of $423.2 million of convertible preferred stock accretion previously recognized. (2) The dilutive effect of employee restricted stock units was immaterial for the first quarter of 2018. The following table includes common stock equivalents that were not included in the calculation of diluted EPS for the periods presented because the effect would be antidilutive. These securities could be dilutive in future periods. Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2019 2018 2019 2018 Employee restricted stock units 3.3 — 3.3 —

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2019
Disclosure Text Block
COMMITMENTS AND CONTINGENCIES	NOTE 10 — COMMITMENTS AND CONTINGENCIES Purchase Obligations We have purchase commitments with certain vendors to supply a significant portion of the proppant used in our operations. These agreements have remaining terms ranging from one to six years. Some of these agreements have minimum unconditional purchase obligations. See Note 7 – “Impairments and Other Charges” for more discussion of these purchase commitments. Litigation In the ordinary course of business, we are subject to various legal proceedings and claims, some of which may not be covered by insurance. Many of these legal proceedings and claims are in early stages, and many of them seek an indeterminate amount of damages. We estimate and provide for potential losses that may arise out of legal proceedings and claims to the extent that such losses are probable and can be reasonably estimated. Significant judgment is required in making these estimates and our final liabilities may ultimately be materially different from these estimates. When preparing our estimates, we consider, among other factors, the progress of each legal proceeding and claim, our experience and the experience of others in similar legal proceedings and claims, and the opinions and views of legal counsel. Legal costs related to litigation contingencies are expensed as incurred. With respect to the litigation matters below, if there is an adverse outcome individually or collectively, there could be a material adverse effect on the Company’s consolidated financial position or results of operations. These litigation matters are subject to inherent uncertainties and management’s view of these matters may change in the future. Therefore, there can be no assurance as to the ultimate outcome of these matters. Regardless of the outcome, any such litigation and claims can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. Patterson v. FTS International Manufacturing, LLC and FTS International Services, LLC : On June 24, 2015, Joshua Patterson filed a lawsuit against the Company in the 115 th Judicial District Court of Upshur County, Texas, alleging, among other things, that the Company was negligent with respect to an automobile accident in 2013. Mr. Patterson sought monetary relief of more than $1 million. On July 19, 2018, a jury returned a verdict of approximately $100 million, including punitive damages, against the Company. The trial court reduced the judgment on November 12, 2018 to approximately $33 million. The Company’s insurance carriers have been defending the suit and are appealing the final judgment. The Company’s appellate brief was filed with the Twelfth Court of Appeals on June 28, 2019. While the outcome of this case is uncertain, the Company has met its insurance deductible for this matter and we do not expect the ultimate resolution of this case to have a material adverse effect on our consolidated financial statements. Securities Act Litigation : On February 22, 2019, Carol Glock filed a purported securities class action in the 160th Civil District Court of Dallas County, Texas (Cause No. DC-19-02668) against the Company, certain of our officers, directors and stockholders, and certain of the underwriters of our IPO. The petition is brought on behalf of an alleged class of persons or entities who purchased our common stock in or traceable to our IPO, and purports to allege claims arising under Sections 11 and 15 of the Securities Act of 1933, as amended. The petition generally alleges that the defendants violated federal securities laws relating to the disclosure in the registration statement and prospectus filed with the Securities and Exchange Commission in connection with our IPO. The petition seeks, among other relief, class certification, damages in an amount in excess of $1.0 million, and reasonable costs and expenses, including attorneys’ fees. The Company has insurance coverage on this matter and has hired counsel to vigorously defend the case. Defendants have filed Special Exceptions to the petition and have requested dismissal if the defects cannot be cured. While the outcome of this case is uncertain, we do not expect the ultimate resolution of this case to have a material adverse effect on our consolidated financial statements. We believe that costs associated with other legal matters will not have a material adverse effect on our consolidated financial statements.

BASIS OF PRESENTATION (Policies

BASIS OF PRESENTATION (Policies)	9 Months Ended
	Sep. 30, 2019
BASIS OF PRESENTATION
Reclassifications	Reclassifications Current liabilities related to accrued supply commitment charges have been reclassified from accounts payable to other current liabilities on the balance sheet as of December 31, 2018, and the statement of cash flows for the nine months ended September 30, 2018. These reclassifications had no effect on total assets, total liabilities, total equity, or net cash provided by operating activities as previously reported.
New Accounting Standards Updates	New Accounting Standards Updates In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases. The FASB subsequently issued a number of additional ASUs to update this guidance. This standard was issued to increase transparency and comparability among organizations by requiring that a right-of-use asset and corresponding lease liability be recorded on the balance sheet for leases with terms longer than 12 months. We elected to use three practical expedients allowed under the guidance. According to these practical expedients we did not reassess whether existing contracts are or contain a lease; we did not reassess whether existing leases are operating or finance leases; and we did not reassess the accounting for initial direct costs for existing leases. Our approach to adopting this new standard included a review of existing leases and other executory contracts that could contain embedded leases and we identified the key terms that were necessary for us to calculate the right-of-use asset and lease liability. These consolidated financial statements have been prepared in accordance with the new ASU utilizing the modified retrospective transition method, which resulted in the recording of operating lease liabilities of $38.7 million as of January 1, 2019 on our consolidated balance sheet with an immaterial effect on our consolidated statement of stockholders’ equity (deficit) and no related effect on our consolidated statement of operations.

INDEBTEDNESS AND BORROWING FA_2

INDEBTEDNESS AND BORROWING FACILITY (Tables)	9 Months Ended
	Sep. 30, 2019
Table Text Blocks
Summary of long-term debt	September 30, December 31, (In millions) 2019 2018 Term loan due April 2021 ("Term Loan") $ 90.0 $ 121.0 Senior notes due May 2022 ("2022 Senior Notes") 369.9 386.9 Total principal amount 459.9 507.9 Less unamortized discount and debt issuance costs (3.3) (4.7) Total long-term debt $ 456.6 $ 503.2 Estimated fair value of long-term debt $ 396.4 $ 461.2

LEASES (Tables)

LEASES (Tables)	9 Months Ended
	Sep. 30, 2019
LEASES
Summary of components of our lease costs and other supplemental information for our operating leases	Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2019 2019 Operating lease cost $ 4.7 $ 16.7 Short-term lease cost 1.5 4.2 Total lease cost $ 6.2 $ 20.9 Short-term lease costs represent costs related to leases with terms of one year or less. We elected the practical expedient to not recognize lease assets and liabilities for these leases. The following table includes other supplemental information for our operating leases: Nine Months Ended September 30, (Dollars in millions) 2019 Cash paid for amounts included in the measurement of our lease obligations $ 16.9 Right-of-use assets obtained in exchange for lease obligations $ 10.9 Right-of-use assets recognized upon adoption of the leasing standard $ 37.8 Weighted-average remaining lease term 2.5 years Weighted-average discount rate
Summary of maturity of our operating leases	(In millions) Remainder of 2019 $ 4.4 2020 15.4 2021 11.0 2022 1.2 2023 1.2 2024 and thereafter 1.0 Total lease payments 34.2 Less imputed interest (2.0) Total lease liabilities $ 32.2

IMPAIRMENTS AND OTHER CHARGES (

IMPAIRMENTS AND OTHER CHARGES (Tables)	9 Months Ended
	Sep. 30, 2019
Table Text Blocks
Schedule of impairments and other charges	Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2019 2018 2019 2018 Supply commitment charges $ 0.9 $ 10.0 $ 57.6 $ 16.0 Impairment of assets 4.2 — 9.7 — Inventory write-down — — 1.4 — Total impairments and other charges $ 5.1 $ 10.0 $ 68.7 $ 16.0

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2019
EARNINGS PER SHARE
Schedule of computations for basic and diluted earnings (loss) per share	Three Months Ended Nine Months Ended September 30, September 30, (In millions, except per share amounts) 2019 2018 2019 2018 Numerator: Net (loss) income $ (10.8) $ 49.6 $ (59.9) $ 231.9 Net reversal of convertible preferred stock — — — 423.2 Net (loss) income attributable to common $ (10.8) $ 49.6 $ (59.9) $ 655.1 Denominator: Weighted average shares used for 108.6 109.3 109.3 102.4 Dilutive potential common shares (2) — — — — Number of shares used for diluted EPS computation 108.6 109.3 109.3 102.4 Basic and diluted EPS $ (0.10) $ 0.45 $ (0.55) $ 6.40 _________________________ (1) The accreted value of our convertible preferred stock was $1,132.7 million at December 31, 2017. In connection with the Company’s initial public offering (“IPO”) in 2018, the convertible preferred stock was recapitalized into 39.4 million shares of common stock. These shares of common stock had a value of $709.5 million at the IPO share price of $18.00, which resulted in a net reversal of $423.2 million of convertible preferred stock accretion previously recognized. (2) The dilutive effect of employee restricted stock units was immaterial for the first quarter of 2018.
Summary of common stock equivalents that were not included in the calculation of diluted net earnings per share	The following table includes common stock equivalents that were not included in the calculation of diluted EPS for the periods presented because the effect would be antidilutive. These securities could be dilutive in future periods. Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2019 2018 2019 2018 Employee restricted stock units 3.3 — 3.3 —

BASIS OF PRESENTATION (Details)

BASIS OF PRESENTATION (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Jan. 01, 2019	Jan. 01, 2018
Other comprehensive income
Other comprehensive income	$ 0	$ 0	$ 0	$ 0
Restricted cash	0	$ 0	0	$ 0		$ 9.1
Operating lease liabilities	$ 17.2		$ 17.2		$ 38.7

JOINT VENTURE (Details)

JOINT VENTURE (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		9 Months Ended
	Aug. 31, 2019	Dec. 31, 2019	Sep. 30, 2019	Sep. 30, 2019
JOINT VENTURE
Equity ownership interest	45.00%
Consideration received	$ 26.9	$ 30.7		$ 30.7
Royalties received	$ 5.8	$ 2
Gain on sale of equity interest in joint venture affiliate			$ 7	$ 7
Prepaid royalty fee recognition period				6 years

INDEBTEDNESS AND BORROWING FA_3

INDEBTEDNESS AND BORROWING FACILITY - Summary of Long-term Debt (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
INDEBTEDNESS
Total principal amount	$ 459.9		$ 459.9		$ 507.9
Less unamortized discount and debt issuance costs	(3.3)		(3.3)		(4.7)
Total long-term debt	456.6		456.6		503.2
Estimated fair value of long-term debt	396.4		396.4		461.2
Gain (loss) on extinguishment of debt, net	0.8	$ (0.6)	1.2	$ (10.7)
Term Loan
INDEBTEDNESS
Total principal amount	90		90		121
Principal amount repaid			31
Gain (loss) on extinguishment of debt, net			(0.2)
2022 Senior notes
INDEBTEDNESS
Total principal amount	$ 369.9		369.9		$ 386.9
Principal amount repaid			17
Gain (loss) on extinguishment of debt, net			$ 1.4

INDEBTEDNESS AND BORROWING FA_4

INDEBTEDNESS AND BORROWING FACILITY - Revolving Credit Facility (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019USD ($)
Revolving credit facility
Revolving Credit Facility
Borrowing base on line of credit	$ 94.8
Maximum borrowing capacity	$ 94.8
Minimum credit facility percentage	10.00%
Minimum maintained credit facility	$ 12.5
Fixed coverage ratio	100.00%
Revolving credit	$ 0
Maximum borrowing credit facility	90.5
Revolving credit facility | Maximum
Revolving Credit Facility
Maximum borrowing capacity	250
Letter of Credit
Revolving Credit Facility
Revolving credit	$ 4.3

LEASES (Details)

LEASES (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2019USD ($)	Sep. 30, 2019USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Remaining lease terms	6 years	6 years
Options to extend		true
Options to terminate		true
Value at end of lease term	$ 0	$ 0
Residual owed if value of leased assets is zero	12.9	12.9
Components of our lease costs
Operating lease cost	4.7	16.7
Short-term lease cost	1.5	4.2
Total lease cost	6.2	20.9
Cash paid for amounts included in the measurement of our lease obligations		16.9
Right-of-use assets obtained in exchange for lease obligations		10.9
Operating lease right-of-use assets	$ 30.2	$ 30.2
Weighted average remaining lease term (years)	2 years 6 months	2 years 6 months
Weighted average discount rate	5.00%	5.00%
Accounting Standards Update 2016-02
Components of our lease costs
Operating lease right-of-use assets	$ 37.8	$ 37.8

LEASES - Maturity of operating

LEASES - Maturity of operating lease liabilities (Details) $ in Millions	Sep. 30, 2019USD ($)
Maturity of our operating leases
Remainder of 2019	$ 4.4
2020	15.4
2021	11
2022	1.2
2023	1.2
2024 and thereafter	1
Total lease payments	34.2
Less imputed interest	(2)
Total lease liabilities	$ 32.2

SHARE REPURCHASE (Details)

SHARE REPURCHASE (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2019	May 31, 2019
SHARE REPURCHASE
Stock Repurchase Program, Authorized Amount				$ 100
Stock Repurchase Program, Shares Repurchased			1,975,000
Stock Repurchase Program, Share Price	$ 4.21		$ 4.21
Stock Repurchase Program, Repurchase Amount	$ 3.7	$ 4.6	$ 8.3
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 91.7		$ 91.7

IMPAIRMENTS AND OTHER CHARGES -

IMPAIRMENTS AND OTHER CHARGES - Summary of Impairments and Other Charges (Details) $ in Millions	May 01, 2019USD ($)	Apr. 30, 2019USD ($)	May 31, 2019USD ($)	Dec. 31, 2019USD ($)item	Sep. 30, 2019USD ($)	Mar. 31, 2019USD ($)	Sep. 30, 2018USD ($)	Sep. 30, 2019USD ($)item	Sep. 30, 2018USD ($)
Impairments and other charges
Supply commitment charges					$ 0.9		$ 10	$ 57.6	$ 16
Impairment of assets					4.2	$ 2.8		9.7
Inventory write down						1.4		1.4
Total impairments and other charges					5.1		$ 10	68.7	$ 16
Reduction of commitments			$ 162
Estimated loss from commitments under contract						55
Commitment amount	$ 21	$ 47.9
Annual commitment amount accrued					11			11
Total commitment amount accrued					55	$ 66		$ 55
Remaining annual commitment amount			$ 10
Other Impairments					$ 2.7
Amount of sand to be purchased annually to meet contract obligations			1
Amount of sand to be purchased where charges may be reduced			1
Number of fleets | item				28				34
Impairment of assets				$ 4.2

EARNINGS PER SHARE - (Details)

EARNINGS PER SHARE - (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended						9 Months Ended		12 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Numerator:
Net (loss) income	$ (10.8)	$ 5.9	$ (55)	$ 49.6	$ 103.6	$ 78.7	$ (59.9)	$ 231.9
Net reversal of convertible preferred stock accretion due to recapitalization of convertible preferred stock to common stock								423.2
Net income (loss) attributable to common stockholders used for basic and diluted EPS computation	$ (10.8)			$ 49.6			$ (59.9)	$ 655.1
Denominator:
Weighted average shares used for basic EPS computation	108.6			109.3			109.3	102.4
Number of shares used for diluted EPS computation	108.6			109.3			109.3	102.4
Basic and diluted EPS	$ (0.10)			$ 0.45			$ (0.55)	$ 6.40
Estimated accreted amount										$ 1,132.7
Recapitalization of convertible preferred stock to common stock						$ 349.8
Share price	$ 4.21						$ 4.21
Net reversal								$ 423.2
IPO
Numerator:
Net reversal of convertible preferred stock accretion due to recapitalization of convertible preferred stock to common stock									$ 423.2
Denominator:
Recapitalization of convertible preferred stock to common stock (in shares)									39.4
Recapitalization of convertible preferred stock to common stock									$ 709.5
Share price									$ 18
Net reversal									$ 423.2

EARNINGS PER SHARE - Antidiluti

EARNINGS PER SHARE - Antidilutive Securities (Details) - shares shares in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Employee restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of common stock equivalents that were not included in calculation of diluted net earnings per share	3.3	3.3

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions	Feb. 22, 2019	Nov. 12, 2018	Jul. 19, 2018	Jun. 24, 2015	Sep. 30, 2019
Minimum
Purchase obligations due
Duration of purchase agreement (in years)					1 year
Maximum
Purchase obligations due
Duration of purchase agreement (in years)					6 years
Patterson Case
Litigation
Damages sought				$ 1
Damages awarded value		$ 33	$ 100
Glock Case
Litigation
Damages sought	$ 1