Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 04, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Transition Report | false | ||
Entity File Number | 001-38347 | ||
Entity Registrant Name | Nine Energy Service, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 80-0759121 | ||
Entity Address, Address Line One | 2001 Kirby Drive, Suite 200 | ||
Entity Address, City or Town | Houston | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 77019 | ||
City Area Code | 281 | ||
Local Phone Number | 730-5100 | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | NINE | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 48,292,605 | ||
Entity Common Stock, Shares Outstanding | 32,855,054 | ||
Documents Incorporated by Reference | Information called for in Part III of this Annual Report on Form 10-K is incorporated by reference to the registrant’s Definitive Proxy Statement for its 2022 Annual Meeting of Stockholders. | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001532286 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Audit Information [Abstract] | |
Auditor Name | PricewaterhouseCoopers LLP |
Auditor Firm ID | 238 |
Auditor Location | Houston, TX |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 21,509 | $ 68,864 |
Accounts receivable, net | 64,025 | 41,235 |
Income taxes receivable | 1,393 | 1,392 |
Inventories, net | 42,180 | 38,402 |
Prepaid expenses and other current assets | 10,195 | 16,270 |
Total current assets | 139,302 | 166,163 |
Property and equipment, net | 86,958 | 102,429 |
Operating lease right of use assets, net | 35,117 | 36,360 |
Finance lease right of use assets, net | 1,445 | 1,816 |
Intangible assets, net | 116,408 | 132,524 |
Other long-term assets | 2,383 | 3,308 |
Total assets | 381,613 | 442,600 |
Current liabilities | ||
Accounts payable | 28,680 | 18,140 |
Accrued expenses | 18,519 | 17,139 |
Current portion of long-term debt | 2,093 | 844 |
Current portion of operating lease obligations | 6,091 | 6,200 |
Current portion of finance lease obligations | 1,070 | 1,092 |
Total current liabilities | 56,453 | 43,415 |
Long-term liabilities | ||
Long-term debt | 332,314 | 342,714 |
Long-term operating lease obligations | 30,435 | 32,295 |
Long-term finance lease obligations | 65 | 1,109 |
Other long-term liabilities | 1,613 | 2,658 |
Total liabilities | 420,880 | 422,191 |
Commitments and Contingencies | ||
Stockholders’ equity | ||
Common stock (120,000,000 shares authorized at $0.01 par value; 32,826,325 and 31,557,809 shares issued and outstanding at December 31, 2021 and 2020 respectively) | 328 | 316 |
Additional paid-in capital | 773,350 | 768,429 |
Accumulated other comprehensive loss | (4,535) | (4,501) |
Accumulated deficit | (808,410) | (743,835) |
Total stockholders’ equity | (39,267) | 20,409 |
Total liabilities and stockholders’ equity | $ 381,613 | $ 442,600 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock shares authorized (in shares) | 120,000,000 | 120,000,000 |
Common stock par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock shares issued (in shares) | 32,826,325 | 31,557,809 |
Common stock shares outstanding (in shares) | 32,826,325 | 31,557,809 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues | $ 349,419 | $ 310,851 |
Cost and expenses | ||
General and administrative expenses | 45,301 | 49,346 |
Depreciation | 28,905 | 32,431 |
Amortization of intangibles | 16,116 | 16,467 |
Impairment of goodwill | 0 | 296,196 |
Loss on revaluation of contingent liabilities | 460 | 276 |
(Gain) loss on sale of property and equipment | 660 | (2,857) |
Loss from operations | (50,015) | (383,165) |
Interest expense | 32,527 | 36,759 |
Interest income | (26) | (615) |
Gain on extinguishment of debt | (17,618) | (37,841) |
Other income | (298) | (62) |
Loss before income taxes | (64,600) | (381,406) |
Benefit for income taxes | (25) | (2,458) |
Net loss | $ (64,575) | $ (378,948) |
Loss per share | ||
Basic (in usd per share) | $ (2.13) | $ (12.74) |
Diluted (in usd per share) | $ (2.13) | $ (12.74) |
Weighted average shares outstanding | ||
Basic (in shares) | 30,302,925 | 29,744,830 |
Diluted (in shares) | 30,302,925 | 29,744,830 |
Other comprehensive loss, net of tax | ||
Foreign currency translation adjustments, net of $0 tax in each period | $ (34) | $ (34) |
Total other comprehensive loss, net of tax | (34) | (34) |
Total comprehensive loss | (64,609) | (378,982) |
Service | ||
Revenues | 248,618 | 231,719 |
Cost and expenses | ||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 228,290 | 220,960 |
Product | ||
Revenues | 100,801 | 79,132 |
Cost and expenses | ||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | $ 79,702 | $ 81,197 |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||
Tax associated with foreign currency translation | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Retained Earnings (Accumulated Deficit)Cumulative Effect, Period of Adoption, Adjustment |
Stockholders' equity, beginning (in shares) at Dec. 31, 2019 | 30,555,677 | ||||||
Stockholders' equity, beginning at Dec. 31, 2019 | $ 389,877 | $ (72) | $ 306 | $ 758,853 | $ (4,467) | $ (364,815) | $ (72) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock under stock compensation plan, net of forfeitures (in shares) | 1,151,915 | ||||||
Issuance of common stock under stock compensation plan, net of forfeitures | 0 | $ 11 | (11) | ||||
Stock-based compensation expense | 9,744 | 9,744 | |||||
Vesting of restricted stock (in shares) | (149,783) | ||||||
Vesting of restricted stock | (158) | $ (1) | (157) | ||||
Other comprehensive income (loss) | (34) | (34) | |||||
Net loss | (378,948) | (378,948) | |||||
Stockholders' equity, ending (in shares) at Dec. 31, 2020 | 31,557,809 | ||||||
Stockholders' equity, ending at Dec. 31, 2020 | 20,409 | $ 316 | 768,429 | (4,501) | (743,835) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock under stock compensation plan, net of forfeitures (in shares) | 1,457,626 | ||||||
Issuance of common stock under stock compensation plan, net of forfeitures | 0 | $ 14 | (14) | ||||
Stock-based compensation expense | 5,406 | 5,406 | |||||
Vesting of restricted stock (in shares) | (189,110) | ||||||
Vesting of restricted stock | (473) | $ (2) | (471) | ||||
Other comprehensive income (loss) | (34) | (34) | |||||
Net loss | (64,575) | (64,575) | |||||
Stockholders' equity, ending (in shares) at Dec. 31, 2021 | 32,826,325 | ||||||
Stockholders' equity, ending at Dec. 31, 2021 | $ (39,267) | $ 328 | $ 773,350 | $ (4,535) | $ (808,410) |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities | ||
Net loss | $ (64,575) | $ (378,948) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation | 28,905 | 32,431 |
Amortization of intangibles | 16,116 | 16,467 |
Amortization of operating leases | 8,020 | 8,897 |
Amortization of deferred financing costs | 2,602 | 2,836 |
Provision for (recovery for) doubtful accounts | (229) | 2,820 |
Benefit for deferred income taxes | 0 | (1,588) |
Provision for inventory obsolescence | 4,831 | 8,957 |
Impairment of goodwill | 0 | 296,196 |
Impairment of operating lease | 0 | 466 |
Stock-based compensation expense | 5,406 | 9,744 |
Gain on extinguishment of debt | (17,618) | (37,841) |
(Gain) loss on sale of property and equipment | 660 | (2,857) |
Loss on revaluation of contingent liabilities | 460 | 276 |
Changes in operating assets and liabilities, net of effects from acquisitions | ||
Accounts receivable, net | (22,540) | 52,914 |
Inventories, net | (8,608) | 13,600 |
Prepaid expenses and other current assets | 3,350 | 1,368 |
Accounts payable and accrued expenses | 12,447 | (25,456) |
Income taxes receivable/payable | 0 | (732) |
Other assets and liabilities | (9,643) | (4,451) |
Net cash used in operating activities | (40,416) | (4,901) |
Cash flows from investing activities | ||
Proceeds from sales of property and equipment | 3,492 | 6,402 |
Proceeds from property and equipment casualty losses | 0 | 1,237 |
Purchases of property and equipment | (15,413) | (9,417) |
Net cash used in investing activities | (11,921) | (1,778) |
Cash flows from financing activities | ||
Proceeds from 2018 ABL Credit Facility | 15,000 | 0 |
Purchases of Senior Notes | (8,355) | (14,561) |
Payments on Magnum Promissory Notes | (844) | (281) |
Proceeds from short-term debt | 1,513 | 0 |
Payments of short-term debt | (545) | 0 |
Payments on finance leases | (1,094) | (995) |
Payments of contingent liabilities | (154) | (1,390) |
Vesting of restricted stock | (473) | (158) |
Net cash provided by (used in) financing activities | 5,048 | (17,385) |
Impact of foreign currency exchange on cash | (66) | (61) |
Net decrease in cash and cash equivalents | (47,355) | (24,125) |
Cash and cash equivalents | ||
Cash and cash equivalents at beginning of period | 68,864 | 92,989 |
Cash and cash equivalents at end of period | 21,509 | 68,864 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 30,085 | 34,421 |
Cash refunded for income taxes | 24 | 540 |
Termination of contingent liability related to business acquisition | 0 | 3,375 |
Capital expenditures in accounts payable and accrued expenses | 63 | 747 |
Receivable from property and equipment sale (including insurance) | $ 497 | $ 3,223 |
Company and Organization
Company and Organization | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Company and Organization | Company and Organization Company Description Nine Energy Service, Inc. (the “Company” or “Nine”), a Delaware corporation, is an oilfield services business that provides services integral to the completion of unconventional wells through a full range of tools and methodologies. The Company is headquartered in Houston, Texas. The Company’s chief operating decision maker, which is its Chief Executive Officer, and its board of directors allocate resources and assess performance based on financial information presented at a consolidated level. Accordingly, the Company determined that it operates as one reportable segment, known as Completion Solutions . Risks and Uncertainties The Company’s business depends, to a significant extent, on the level of unconventional resource development activity and corresponding capital spending of oil and natural gas companies. These activity and spending levels are strongly influenced by the current and expected oil and natural gas prices. In 2020, the coronavirus pandemic, coupled with production disputes amongst the Organization of the Petroleum Exporting Countries and other oil producing nations, led to a massive decline in the demand for oil and a risk of a substantial increase in supply, which led to extreme activity levels and pricing declines across all of the Company’s service offerings for the entire year. Although oil and natural gas prices rebounded in 2021, the Company’s publicly-traded customers remained committed to capital discipline, and activity only moderately increased. As pricing for its products and services continued to remain depressed as a result of this level of activity, the Company focused on strategically implementing modest price increases where it was able to do so without sacrificing its market share of customers. Thus, even with further improvements in commodity prices, the Company’s business in the near or medium term may not improve materially or at all depending on, among other things, the Company’s customers’ activity plans, its ability to implement price increases, the impact of wage and labor inflation, labor shortage and supply constraints, and the Company’s ability to find and retain qualified personnel. In addition, the coronavirus pandemic continues to present a significant threat to employees’ well-being and morale, which could impact employee retention and productivity. Liquidity Historically, the Company has met its liquidity needs principally from cash on hand, cash flow from operations and, if needed, external borrowings and issuances of debt securities. At December 31, 2021, the Company had $21.5 million of cash and cash equivalents and $43.2 million of remaining availability under the 2018 ABL Credit Facility (as defined in Note 9 – Debt Obligations) which resulted in a total liquidity position of $64.7 million. The Company expects its liquidity position to continue to erode in 2022, due in large part to semi-annual interest payments of $14.0 million each, due on its Senior Notes (as defined in Note 9 – Debt Obligations). Based on its current forecasts, the Company believes that cash on hand, together with cash flow from operations, and current and any potential future borrowings under the 2018 ABL Credit Facility should be sufficient to meet its cash requirements inclusive of, but not limited to, normal operating needs, debt service obligations, and planned capital expenditures and commitments for at least the next twelve months from the issuance date of its consolidated financial statements. However, the Company can make no assurance regarding its ability to achieve its forecasts, which are materially dependent on improved financial performance and the ever-changing market. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Principles of Consolidation The consolidated financial statements as of December 31, 2021 and 2020, and for the years ended December 31, 2021 and 2020, include the accounts of Nine and its wholly owned subsidiaries. All inter-company balances and transactions have been eliminated in the consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. Such estimates include fair value assumptions used in analyzing long-lived assets for possible impairment, useful lives used in depreciation and amortization expense, recognition of provisions for contingencies, and stock-based compensation fair value. It is at least reasonably possible that the estimates used will change within the next year. Revenue Recognition The Company recognizes revenue under Accounting Standards Codification Topic 606 (“ASC 606”) when products are received by a customer’s domestic common carrier at the Company’s facility or when the product is received by the customer’s international carrier. The Company believes this recognition policy reflects the point at which the customer obtains control of the product as required by ASC 606. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company excludes sales taxes, value added taxes, and other taxes it collects concurrent with revenue-producing activities from revenue. The Company’s revenue is derived from the sale of products and services which are sold directly to customers or are consumed by customers on their well sites. For domestic product sales, the Company typically recognizes revenue when it meets its performance obligation upon the shipment of the products from its facilities to its customer. For international product sales, the Company typically recognizes revenue when it meets its performance obligation upon receipt of the products by the customer’s international carrier. The Company recognizes service revenue over the time the service is performed as the customer consumes and benefits from the use of the Company’s products and services for well service. Service revenues represent revenue recognized over time, as the Company’s customer arrangements typically provide agreed upon hourly or daily fixed-rates, and the Company recognizes service revenue based upon the number of hours or days services have been performed. Contracts for the Company’s products and services are negotiated on a per-job basis at a regional level. Contracts vary in nature but typically have a duration of less than a month and have a single performance obligation either for a job, a series of distinct jobs, or a period the Company stands ready to provide its services to its client as needed. The Company’s payment terms vary by the type and location of its customers and type of product and service offered. The Company receives cash equal to the invoice amount for most services and product sales, and payment terms typically range from 30 to 60 days from the date the Company invoices a customer. Since the period between the delivery of the Company’s products and services and the Company’s receipt of customer payment for these products and services is not expected to exceed one year, the Company has elected not to calculate or disclose a financing component for its customer contracts. Contract Estimates The Company receives reimbursements from its customers for the purchase of supplies, equipment, personnel services, and other services provided at a customer’s request. Reimbursable revenues are subject to uncertainty as the timing of the receipt of these amounts is dependent on factors outside of the Company’s influence. Accordingly, these revenues are not recognized until the uncertainty is resolved, which typically occurs when the related costs are incurred on behalf of the customer. The Company is considered a principal in these transactions and records the associated revenues at the gross amount billed to the customer. Changes and modifications to contracts are routine in the performance of the Company’s contracts due to the dynamic nature of well operations and the services the Company provides for its customers. The Company considers contract modifications to exist when the modification either creates a new contract or changes the existing enforceable rights and obligations of a contract. Most of the Company’s contract modifications are for services or goods that are not distinct from existing contracts due to the significant integration provided or significant interdependencies in the context of the contract and are accounted for as if they were part of the original contract. Contract Balances Any contract assets are included in “Accounts receivable, net” in the Company’s Consolidated Balance Sheets. Contract assets arise when recorded revenues for a contract exceed the amounts billed under the terms of the contracts. The Company classifies contract liabilities as unearned income which is included in “Accrued expenses” in the Company’s Consolidated Balance Sheets. Such deferred revenue typically results from advance payments received on well service orders prior to performance of the service. For information regarding the Company’s revenue, see Note 3 – Revenues. Leases The Company determines if an arrangement is a lease at inception. To the extent an arrangement represents a lease, the Company classifies that lease as an operating lease or a finance lease under Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) and its related ASUs (“ASC 842”). The Company capitalizes operating leases on its Consolidated Balance Sheets through a Right of Use (“ROU”) asset and a corresponding lease liability. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the operating lease. Operating lease ROU assets and obligations are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term utilizing an interest rate that the Company would have incurred to borrow over a similar term the funds necessary to purchase the leased asset. Operating leases are included in “Operating lease right of use assets, net,” “Current portion of operating lease obligations,” and “Long-term operating lease obligations” in the Company’s Consolidated Balance Sheets as of December 31, 2021 and 2020. Lease expense for operating leases is recognized on a straight-line basis over the lease term for 2021 and 2020. Accounting for finance leases under ASC 842 remained unchanged from previous accounting guidance and are included in the line items “Finance lease right of use assets, net,” “Current portion of finance lease obligations,” and “Long-term finance lease obligations” in the Company’s Consolidated Balance Sheets as of December 31, 2021 and 2020. For additional information regarding the Company’s leases, see Note 6 – Leases. Cash and Cash Equivalents The Company considers all highly liquid debt instruments with a maturity of three months or less when purchased to be cash equivalents. Throughout the year, the Company maintained cash balances that were in excess of their federally insured limits. The Company has not experienced any losses in such accounts. Cash flows from the Company’s Canadian subsidiary are calculated based on its functional currency. As a result, amounts related to changes in assets and liabilities reported in the Company’s Consolidated Statements of Cash Flows will not necessarily agree to changes in the corresponding balances in the Company’s Consolidated Balance Sheets . Foreign Currency The Company’s functional currency is the United States Dollar (“USD”). The financial position and results of operations of the Company’s Canadian subsidiary are measured using the local currency as the functional currency. Revenues and expenses of the subsidiary have been translated into USD at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the date of the Company’s Consolidated Balance Sheets. The resulting translation gain and loss adjustments have been recorded as a separate component of other comprehensive income (loss) in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss) and its Consolidated Statements of Stockholders’ Equity. Accounts Receivable The Company extends credit to customers in the normal course of business. Accounts receivable are carried at their estimated collectible amount. Trade credit is generally extended on a short-term basis; thus, receivables do not bear interest, although a finance charge may be applied to amounts past due. The Company maintains an allowance for doubtful accounts for estimated losses that may result from the inability of its customers to make required payments. Such allowances are based upon several factors including, but not limited to, credit approval practices, industry and customer historical experience, as well as the current and projected financial condition of the specific customer. Accounts receivable outstanding longer than contractual terms are considered past due. The Company writes off accounts receivable to the allowance for doubtful accounts when they become uncollectible. Any payments subsequently received on receivables previously written off are credited to bad debt expense. The Company had $64.0 million and $41.2 million of “Accounts receivable, net” at December 31, 2021 and 2020, respectively. The Company maintains an allowance for doubtful accounts based on the expected collectability of accounts receivable, which is included in “Accounts receivable, net” on the Company’s Consolidated Balance Sheets. The Company had an allowance for doubtful accounts of $2.8 million and $3.4 million at December 31, 2021 and 2020, respectively. Bad debt expense recovery was $0.2 million for the year ended December 31, 2021, and bad debt expense was $2.8 million for the year ended December 31, 2020. Concentration of Credit Risk The Company derives a significant portion of its revenues from companies in the exploration and production (“E&P”) industry, and its customer base includes a broad range of integrated and independent domestic E&P companies and international E&P companies operating in the markets that the Company serves. While current energy prices are important contributors to positive cash flow for the customers, expectations about future prices and price volatility are generally more important for determining future spending levels. Any prolonged increase or decrease in oil and natural gas prices affects the levels of exploration, development, and production activity as well as the entire health of the oil and natural gas industry and can therefore negatively impact spending by the Company’s customers. No customer accounted for more than 10% of the revenues for the year ended December 31, 2021. One customer accounted for more than 10% of revenues for the year ended December 31, 2020. Concentration of Supplier Risk Purchases during the years ended December 31, 2021 and 2020 did not include purchases from any supplier that individually represented more than 10% of total operating purchases. Property and Equipment Property and equipment is stated at cost and depreciated under the straight-line method over the estimated useful lives of the assets. Equipment held under capital leases is stated at the present value of its future minimum lease payments and is depreciated under the straight-line method over the shorter of the lease term or the estimated useful life of the asset. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized within operating expenses. Normal repair and maintenance costs are charged to operating expense as incurred. Significant renewals and betterments are capitalized. Valuation of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for impairment, future cash flows expected to result from the use of the asset and its eventual disposal are estimated. If the undiscounted future cash flows are less than the carrying amount of the assets, there is an indication that the asset may be impaired. The amount of the impairment is measured as the difference between the carrying value and the Level 3 fair value of the asset. The Level 3 fair value is determined either through the use of an external valuation, or by means of an analysis of discounted future cash flows based on expected utilization. Determining fair value requires the use of estimates and assumptions. Such estimates and assumptions include revenue growth rates, operating profit margins, weighted average costs of capital, terminal growth rates, future market share, the impact of new product development, and future market conditions, among others. The Company believes that the estimates and assumptions used in impairment assessments are reasonable and appropriate. Impairment losses are reflected in “Income (loss) from operations” in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss). In the first quarter of 2020, with a significant reduction in exploration and production capital budgets and activity, primarily driven by sharp declines in global crude oil demand and an economic recession associated with the coronavirus pandemic, as well as sharp declines in oil and natural gas prices, the Company determined that the carrying amount of long-lived assets (inclusive of definite-lived intangible assets and property and equipment) associated with its asset groups may not be recoverable. As such, the Company performed an impairment assessment of long-lived assets in its asset groups under Accounting Standards Codification 360, Property, Plant and Equipment at March 31, 2020, based on its best internal projections and the likelihood of various outcomes. Based on its assessment, the Company determined that the estimated future undiscounted cash flows derived from long-lived assets associated with its asset groups exceeded the carrying amount of long-lived assets associated with its asset groups, and no impairment to long-lived assets was required. Valuation of Goodwill and Intangible Assets Goodwill has an indefinite useful life and is not subject to amortization. Intangible assets with indefinite useful lives (specifically trademarks and trade names) are also not subject to amortization. For goodwill and intangible assets with indefinite useful lives, an assessment for impairment is performed annually on December 31 or when there is an indication an impairment may have occurred. Goodwill is reviewed for impairment by comparing the carrying value of each of the Company’s reporting unit’s net assets (including allocated goodwill) to the Level 3 fair value of the reporting unit. The Level 3 fair value of the reporting unit is determined by using the income approach (discounted cash flows of forecasted income). Intangible assets with indefinite useful lives are reviewed for impairment by comparing the carrying value of the intangible asset to the Level 3 fair value of the intangible asset. The Level 3 fair value of intangible assets with indefinite useful lives (specifically trademarks and trade names) is estimated using the relief-from-royalty method of the income approach. This approach is based on the assumption that in lieu of ownership, a company would be willing to pay a royalty in order to exploit the related benefits of this intangible asset. Determining fair value requires the use of estimates and assumptions. Such estimates and assumptions include revenue growth rates, operating profit margins, royalty rates, weighted average costs of capital, terminal growth rates, future market share, the impact of new product development, and future market conditions, among others. The Company believe that the estimates and assumptions used in impairment assessments are reasonable and appropriate. The Company recognizes a goodwill impairment charge for the amount by which the carrying value of goodwill exceeds the reporting unit’s Level 3 fair value. The Company recognizes an indefinite-lived intangible asset impairment charge of the amount by which the carrying value of the intangible asset exceeds the Level 3 fair value of the intangible asset. Impairment losses are reflected in “Income (loss) from operations” in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss). Intangible assets with definite lives include technology, customer relationships, and non-compete agreements. The Level 3 fair value of technology and the Level 3 fair value of customer relationships are estimated using the income approach, specifically the multi-period excess earnings method. The multi-period excess earnings method consists of isolating the cash flows attributed to the intangible asset, which are then discounted to present value to calculate the Level 3 fair value of the intangible asset. The Level 3 fair value of non-compete agreements is estimated using a with and without scenario where cash flows are projected through the term of the non-compete agreement assuming the non-compete agreement is in place and compared to cash flows assuming the non-compete agreement is not in place. Intangible assets with definite lives are amortized based on the estimated consumption of the economic benefit over their estimated useful lives. Intangible assets with definite lives are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In the first quarter of 2020, in connection with an interim goodwill impairment test, the Company recorded goodwill impairment charges of $296.2 million in its tools, cementing, and wireline reporting units due to sharp declines in global crude oil demand, an economic recession associated with the coronavirus pandemic, sharp declines in oil and natural gas prices, and an increased weighted average cost of capital driven by a reduction in the Company’s stock price and the Level 2 fair value of its Senior Notes. For additional information on goodwill impairment charges, see Note 7 – Intangible Assets and Goodwill. Stock-based Compensation The Company has stock-based compensation plans for certain of its employees. The Company measures employee stock-based compensation awards at fair value on the date they are granted to employees and recognizes compensation cost in its financial statements over the requisite service period. As a result of the adoption of ASU No. 2016-09, the Company elected to account for stock-based compensation forfeitures as they occur. Restricted Stock and Restricted Stock Units Compensation expense is recorded for restricted stock and restricted stock units over the applicable vesting period based on the Company’s closing stock price as of the grant date. Performance Units Performance stock units are recorded at their fair value and expensed over their performance period. Fair value for performance stock units is measured using a Monte Carlo simulation model. Options Options are issued with an exercise price equal to the fair value of the stock on the date of grant. Compensation expense is recorded for the fair value of the stock options and is recognized over the period of the underlying security’s vesting schedule. Consideration paid on the exercise of stock options is credited to share capital and additional paid-in capital. For options, fair value of the stock-based compensation is measured by use of the Black-Scholes pricing model. The following discusses the assumptions used related to the Black-Scholes pricing model. • The expected term of stock options represents the period the stock options are expected to remain outstanding and is based on the simplified method, which is the weighted average vesting term plus the original contractual term, divided by two. • Expected volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period. The Company developed its expected volatility based upon a weighted average volatility of its peer group. • At the time of the issuance of the options, the Company did not plan to pay cash dividends in the foreseeable future. Therefore, a zero expected dividend yield was used in the valuation model. • The risk-free interest rate is based on United States’ Treasury zero-coupon issues with remaining terms similar to the expected term on the options. Income Taxes The Company accounts for income taxes under Accounting Standards Codification 740, Income Taxes (“ASC 740”) . Under this method, deferred income tax assets and liabilities are determined based upon temporary differences between the carrying amounts and tax bases of the Company’s assets and liabilities at the balance sheet date and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in the tax rates is recognized in income in the period in which the change occurs. The Company records a valuation reserve in each reporting period when management believes that it is more likely than not that any deferred tax asset created will not be realized. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. If a tax position meets the “more likely than not” recognition criteria, the tax position is measured at the largest amount of benefit greater than 50% likely of being realized upon ultimate settlement. Fair Value of Financial Instruments The carrying amounts for financial instruments classified as current assets and current liabilities approximate fair value, due to the short maturity of such instruments. For financial assets and liabilities disclosed at fair value, fair value is determined as the exit price, or the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The established fair value hierarchy divides fair value measurement into three levels: • Level 1 – inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; • Level 2 – inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly or indirectly; and • Level 3 – inputs are unobservable for the asset or liability, which reflect the best judgment of management. Financial assets and liabilities that are disclosed at fair value are categorized in one of the above three levels based on the lowest level input that is significant to the fair value measurement in its entirety. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The fair value of the Company’s debt obligations is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. For additional information on the fair value of the Company’s debt obligations, see Note 9 – Debt Obligations. The fair value of the Company’s contingent consideration is classified as Level 3 in the fair value hierarchy and is established on unobservable markets which reflect the best judgment of management. For additional information on the fair value of the Company’s contingent consideration, see Note 12 – Commitments and Contingencies. Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period, taking into effect, if any, the exercise of potentially dilutive stock options assumed to be purchased from the proceeds using the average market price of the Company’s stock for each of the periods presented as well as potentially dilutive restricted stock, restricted stock units, and performance stock units. There was no dilutive effect for the years ended December 31, 2021 and 2020 as the Company was in a net loss position for those years. For additional information on earnings (loss) per share, see Note 14 – Earnings (Loss) Per Share. Accounting Pronouncements Recently Adopted In March 2020, the Financial Accounting Standards Board (the “FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements included in this Annual Report. Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes , which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles and clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for public businesses for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. As an emerging growth company, the Company is permitted, and plans, to adopt the new standard for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. The Company does not expect the standard to have a material impact on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The amendments in ASU 2016-13 replace the current incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information. ASU 2016-13 is effective for Securities and Exchange Commission filers, excluding smaller reporting companies, for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. As an emerging growth company, the Company is permitted, and plans, to adopt the new standard for the fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company does not expect the standard to have a material impact on its consolidated financial statements. |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Disaggregation of Revenues Disaggregated revenue for the years ended December 31, 2021 and 2020 was as follows: Year Ended December 31, 2021 2020 (in thousands) Cement $ 114,181 $ 102,631 Tools 100,801 79,132 Wireline 72,436 81,684 Coiled tubing 62,001 47,404 Total revenues $ 349,419 $ 310,851 Year Ended December 31, 2021 2020 (in thousands) Service (1) $ 248,618 $ 231,719 Product (1) 100,801 79,132 Total $ 349,419 $ 310,851 (1) The Company recognizes revenues from the sales of products at a point in time and revenues from the sales of services over time. Performance Obligations At December 31, 2021 and December 31, 2020, the amount of remaining performance obligations were not material. Contract Balances At December 31, 2021 and December 31, 2020, contract assets and contract liabilities were not material. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories, consisting primarily of finished goods and raw materials, are stated at the lower of cost or net realizable value. Cost is determined on an average cost basis. The Company reviews its inventory balances and writes down its inventory for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. The reserve for obsolescence was $9.0 million and $13.3 million at December 31, 2021 and 2020, respectively. Inventories, net as of December 31, 2021 and 2020 were comprised of the following: December 31, 2021 2020 (in thousands) Raw materials $ 31,153 $ 33,361 Work in progress 675 367 Finished goods 19,323 17,952 Inventories 51,151 51,680 Reserve for obsolescence (8,971) (13,278) Inventories, net $ 42,180 $ 38,402 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment amounts as of December 31, 2021 and 2020 were as follows: December 31, Estimated 2021 2020 (in thousands) Operating equipment 1 to 12 years $ 299,602 $ 296,491 Autos and trucks 1 to 7 years 4,168 4,102 Furniture, fixtures, and equipment 2 to 12 years 4,059 4,100 Shop equipment 3 to 15 years 14,555 13,558 Buildings 7 to 39 years 8,994 8,489 Leasehold improvements 3 to 11 years 1,443 1,320 Land indefinite 828 791 333,649 328,851 Less: Accumulated depreciation (246,691) (226,422) Property and equipment, net $ 86,958 $ 102,429 Depreciation expense was $28.9 million and $32.4 million for the years ended December 31, 2021 and 2020, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Leases | Leases On December 31, 2020, the Company adopted ASC 842 with an effective date of January 1, 2020. The cumulative effect on retained earnings upon adoption was not material. Under ASC 842, the Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded in the Company’s Consolidated Balance Sheets. Lease with an initial term greater than 12 months are recognized in the Company’s Consolidated Balance Sheets based on lease classification as either operating or financing. Some of the Company’s lease agreements include lease and non-lease components for which the Company has elected to not separate for all classes of underlying assets. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company may sublease its real estate to third parties, subject to certain provision of the lease, when it has no future use for the property. Operating Leases As a lessee, the Company’s operating lease portfolio primarily consists of operating leases for equipment, vehicles, office space, yard facilities, and employee housing. Operating lease ROU assets and operating lease obligations are recognized based on the present value of the future minimum lease payments at commencement date. As most of the Company’s leases do not provide an implicit borrowing rate, the Company uses its incremental borrowing rate based on the lease information available at the commencement date in determining the present value of future payments. The incremental borrowing rate utilized is based upon the interest rate associated with the Company’s 2018 ABL Credit Facility which is utilized to fund its working capital needs and planned capital expenditures. The Company’s leases have remaining terms of one The Company leases most of these properties under long-term (greater than one year) non-cancelable term leases many of which contain renewal options that can extend the lease term from one The Company also leases supplemental equipment, typically under cancellable short-term contracts which are less than 30 days. This equipment is typically required for a specific project and for a short duration. Due to the nature of the Company’s operations, any option to renew these short-term leases is generally not considered reasonably certain to be exercised. Therefore, the periods covered by such optional periods are not included in the determination of the term of the lease, and the lease payments during these periods are similarly excluded from the calculation of operating lease asset and lease obligation balances. Operating lease expense consists of rent expense related to leases that were included in ROU assets under ASC 842. The Company recognizes operating lease expense on a straight-line basis, except for certain variable expenses that are recognized when the variability is resolved, typically during the period in which they are paid. Variable operating lease payments typically include charges for property taxes and insurance, and some leases contain variable payments related to non-lease components, including common area maintenance and usage of facilities or office equipment (for example, copiers). The Company does not have variable expenses. Operating leases are included in “Operating lease right of use assets, net,” “Current portion of operating lease obligations,” and “Long-term operating lease obligations” in the Company’s Consolidated Balance Sheets as of December 31, 2021 and 2020. Finance Leases Finance leases are included in the line items “Finance lease right of use assets, net,” “Current portion of finance lease obligations,” and “Long-term finance lease obligations” in the Company’s Consolidated Balance Sheets as of December 31, 2021 and 2020. Additional Information The following table summarizes the components of the Company’s lease expense recognized for the year ended December 31, 2021 and 2020, excluding variable lease and prepaid rent costs: Year Ended December 31, 2021 2020 (in thousands) Operating lease expense Operating lease right of use assets $ 8,020 $ 8,897 Operating lease non right of use assets 6,201 5,795 Total operating lease expense $ 14,221 $ 14,692 Finance lease expense Depreciation of right of use assets $ 399 $ 321 Interest on lease obligations 162 257 Total finance lease expense $ 561 $ 578 Operating lease expense is included in the line items “Cost of revenues” and “General and administrative expenses” in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss) for the years ended December 31, 2021 and 2020. Supplemental information related to leases was as follows as of December 31, 2021 and 2020: December 31, 2021 2020 Operating leases Weighted average remaining lease term 6.4 7.0 Weighted average discount rate 5.0% 5.0% Finance leases Weighted average remaining lease term 1.0 2.0 Weighted average discount rate 9.8% 9.3% Supplemental balance sheet information related to leases was as follows as of December 31, 2021 and 2020: December 31, 2021 2020 (in thousands) Operating lease right of use assets Operating lease right of use assets, gross $ 45,853 $ 43,061 Less: Accumulated amortization (10,736) (6,701) Operating lease right of use assets, net $ 35,117 $ 36,360 Operating lease obligations Current portion of operating lease obligations $ 6,091 $ 6,200 Long-term operating lease obligations 30,435 32,295 Total operating lease obligations $ 36,526 $ 38,495 Finance lease right of use assets Finance lease right of use assets, gross $ 2,980 $ 2,952 Less: Accumulated depreciation (1,535) (1,136) Finance lease right of use assets, net $ 1,445 $ 1,816 Finance lease obligations Current portion of finance lease obligations $ 1,070 $ 1,092 Long-term finance lease obligations 65 1,109 Total finance lease obligations $ 1,135 $ 2,201 Future annual minimum lease payments as of December 31, 2021 were as follows: Operating Lease Right of Use Obligations Finance Leases Total (in thousands) 2022 $ 7,745 $ 1,137 $ 8,882 2023 7,427 66 7,493 2024 6,034 — 6,034 2025 5,371 — 5,371 2026 5,163 — 5,163 Thereafter 10,940 — 10,940 Total lease payments $ 42,680 $ 1,203 $ 43,883 Less: present value discount (6,154) (68) (6,222) Present value of lease obligations $ 36,526 $ 1,135 $ 37,661 Supplemental cash flow information related to leases for the years ended December 31, 2021 and 2020 were as follows: Year Ended December 31, 2021 2020 (in thousands) Cash paid for amounts included in the measurement of lease obligations: Operating cash flows from operating leases $ 8,124 $ 8,592 Operating cash flows from finance leases $ 399 $ 321 Financing cash flows from finance leases $ 1,094 $ 995 Right of use assets obtained in exchange for lease obligations: Operating leases $ 5,059 $ 1,099 Finance leases $ 28 $ — |
Leases | Leases On December 31, 2020, the Company adopted ASC 842 with an effective date of January 1, 2020. The cumulative effect on retained earnings upon adoption was not material. Under ASC 842, the Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded in the Company’s Consolidated Balance Sheets. Lease with an initial term greater than 12 months are recognized in the Company’s Consolidated Balance Sheets based on lease classification as either operating or financing. Some of the Company’s lease agreements include lease and non-lease components for which the Company has elected to not separate for all classes of underlying assets. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company may sublease its real estate to third parties, subject to certain provision of the lease, when it has no future use for the property. Operating Leases As a lessee, the Company’s operating lease portfolio primarily consists of operating leases for equipment, vehicles, office space, yard facilities, and employee housing. Operating lease ROU assets and operating lease obligations are recognized based on the present value of the future minimum lease payments at commencement date. As most of the Company’s leases do not provide an implicit borrowing rate, the Company uses its incremental borrowing rate based on the lease information available at the commencement date in determining the present value of future payments. The incremental borrowing rate utilized is based upon the interest rate associated with the Company’s 2018 ABL Credit Facility which is utilized to fund its working capital needs and planned capital expenditures. The Company’s leases have remaining terms of one The Company leases most of these properties under long-term (greater than one year) non-cancelable term leases many of which contain renewal options that can extend the lease term from one The Company also leases supplemental equipment, typically under cancellable short-term contracts which are less than 30 days. This equipment is typically required for a specific project and for a short duration. Due to the nature of the Company’s operations, any option to renew these short-term leases is generally not considered reasonably certain to be exercised. Therefore, the periods covered by such optional periods are not included in the determination of the term of the lease, and the lease payments during these periods are similarly excluded from the calculation of operating lease asset and lease obligation balances. Operating lease expense consists of rent expense related to leases that were included in ROU assets under ASC 842. The Company recognizes operating lease expense on a straight-line basis, except for certain variable expenses that are recognized when the variability is resolved, typically during the period in which they are paid. Variable operating lease payments typically include charges for property taxes and insurance, and some leases contain variable payments related to non-lease components, including common area maintenance and usage of facilities or office equipment (for example, copiers). The Company does not have variable expenses. Operating leases are included in “Operating lease right of use assets, net,” “Current portion of operating lease obligations,” and “Long-term operating lease obligations” in the Company’s Consolidated Balance Sheets as of December 31, 2021 and 2020. Finance Leases Finance leases are included in the line items “Finance lease right of use assets, net,” “Current portion of finance lease obligations,” and “Long-term finance lease obligations” in the Company’s Consolidated Balance Sheets as of December 31, 2021 and 2020. Additional Information The following table summarizes the components of the Company’s lease expense recognized for the year ended December 31, 2021 and 2020, excluding variable lease and prepaid rent costs: Year Ended December 31, 2021 2020 (in thousands) Operating lease expense Operating lease right of use assets $ 8,020 $ 8,897 Operating lease non right of use assets 6,201 5,795 Total operating lease expense $ 14,221 $ 14,692 Finance lease expense Depreciation of right of use assets $ 399 $ 321 Interest on lease obligations 162 257 Total finance lease expense $ 561 $ 578 Operating lease expense is included in the line items “Cost of revenues” and “General and administrative expenses” in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss) for the years ended December 31, 2021 and 2020. Supplemental information related to leases was as follows as of December 31, 2021 and 2020: December 31, 2021 2020 Operating leases Weighted average remaining lease term 6.4 7.0 Weighted average discount rate 5.0% 5.0% Finance leases Weighted average remaining lease term 1.0 2.0 Weighted average discount rate 9.8% 9.3% Supplemental balance sheet information related to leases was as follows as of December 31, 2021 and 2020: December 31, 2021 2020 (in thousands) Operating lease right of use assets Operating lease right of use assets, gross $ 45,853 $ 43,061 Less: Accumulated amortization (10,736) (6,701) Operating lease right of use assets, net $ 35,117 $ 36,360 Operating lease obligations Current portion of operating lease obligations $ 6,091 $ 6,200 Long-term operating lease obligations 30,435 32,295 Total operating lease obligations $ 36,526 $ 38,495 Finance lease right of use assets Finance lease right of use assets, gross $ 2,980 $ 2,952 Less: Accumulated depreciation (1,535) (1,136) Finance lease right of use assets, net $ 1,445 $ 1,816 Finance lease obligations Current portion of finance lease obligations $ 1,070 $ 1,092 Long-term finance lease obligations 65 1,109 Total finance lease obligations $ 1,135 $ 2,201 Future annual minimum lease payments as of December 31, 2021 were as follows: Operating Lease Right of Use Obligations Finance Leases Total (in thousands) 2022 $ 7,745 $ 1,137 $ 8,882 2023 7,427 66 7,493 2024 6,034 — 6,034 2025 5,371 — 5,371 2026 5,163 — 5,163 Thereafter 10,940 — 10,940 Total lease payments $ 42,680 $ 1,203 $ 43,883 Less: present value discount (6,154) (68) (6,222) Present value of lease obligations $ 36,526 $ 1,135 $ 37,661 Supplemental cash flow information related to leases for the years ended December 31, 2021 and 2020 were as follows: Year Ended December 31, 2021 2020 (in thousands) Cash paid for amounts included in the measurement of lease obligations: Operating cash flows from operating leases $ 8,124 $ 8,592 Operating cash flows from finance leases $ 399 $ 321 Financing cash flows from finance leases $ 1,094 $ 995 Right of use assets obtained in exchange for lease obligations: Operating leases $ 5,059 $ 1,099 Finance leases $ 28 $ — |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Intangible Assets and Goodwill Intangible Assets The gross carrying amount and accumulated amortization of intangible assets as of December 31, 2021 and 2020 were as follows: December 31, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period (in thousands, except weighted average amortization period information) Customer relationships $ 63,270 $ (45,187) $ 18,083 5.3 Non-compete agreements 6,500 (5,766) 734 2.0 Technology 125,110 (28,519) 96,591 11.7 In-process research and development 1,000 — 1,000 Indefinite Total $ 195,880 $ (79,472) $ 116,408 December 31, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period (in thousands, except weighted average amortization period information) Customer relationships $ 63,270 $ (38,084) $ 25,186 5.5 Non-compete agreements 6,500 (5,366) 1,134 2.8 Technology 125,110 (19,906) 105,204 12.7 In-process research and development 1,000 — 1,000 Indefinite Total $ 195,880 $ (63,356) $ 132,524 Amortization of Intangibles Amortization of intangibles was $16.1 million and $16.5 million for the years ended December 31, 2021 and 2020, respectively. Future estimated amortization of intangibles is as follows: Year Ending December 31, (in thousands) 2022 $ 13,463 2023 11,516 2024 11,183 2025 11,183 2026 11,082 Thereafter 56,981 $ 115,408 Goodwill 2020 Goodwill Impairment With a significant reduction in exploration and production capital budgets and activity, primarily driven by sharp declines in global crude oil demand and an economic recession associated with the coronavirus pandemic, as well as, sharp declines in oil and natural gas prices, the outlook for expected future cash flows associated with the Company’s reporting units decreased dramatically in the first quarter of 2020. Based on these events, an indication of impairment associated with the Company’s reporting units occurred, triggering an interim goodwill impairment test of the Level 3 fair value of each reporting unit under Accounting Standards Codification 350, Intangibles - Goodwill and Other (“ASC 350”) at March 31, 2020. As such, based on its Level 3 fair value determination in connection with the interim goodwill impairment test under ASC 350, the Company recorded goodwill impairment charges of $296.2 million in the first quarter of 2020 associated with its tools, cementing, and wireline reporting units. These charges represented a full write-off of goodwill and were due to the events described above, coupled with an increased weighted average cost of capital driven by a reduction in the Company’s stock price and the Level 2 fair value of its Senior Notes. These goodwill impairment charges are included in the line item “Impairment of goodwill” in the Company’s Consolidated Statement of Income and Comprehensive Income (Loss) for the year ended December 31, 2020. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses as of December 31, 2021 and 2020 consisted of the following: December 31, 2021 2020 (in thousands) Accrued interest 4,980 5,313 Accrued compensation and benefits 6,897 5,430 Accrued bonus 1,125 — Accrued legal fees and settlements 1,076 165 Other accrued expenses 4,441 6,231 Accrued expenses $ 18,519 $ 17,139 |
Debt Obligations
Debt Obligations | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations The Company’s debt obligations as of December 31, 2021 and 2020 were as follows: December 31, 2021 2020 (in thousands) Senior Notes $ 320,343 $ 346,668 2018 ABL Credit Facility 15,000 — Magnum Promissory Notes 1,125 1,969 Other short-term debt 968 — Total debt before deferred financing costs $ 337,436 $ 348,637 Deferred financing costs (3,029) (5,079) Total debt $ 334,407 $ 343,558 Less: Current portion of long-term debt (2,093) (844) Long-term debt $ 332,314 $ 342,714 Senior Notes Background On October 25, 2018, the Company issued $400.0 million principal amount of 8.750% Senior Notes due 2023 (the “Senior Notes”). The Senior Notes were issued under an indenture, dated as of October 25, 2018 (the “Indenture”), by and among the Company, certain subsidiaries of the Company and Wells Fargo, National Association, as Trustee. The Senior Notes bear interest at an annual rate of 8.750% payable on May 1 and November 1 of each year, and the first interest payment was due on May 1, 2019. The Senior Notes are senior unsecured obligations of the Company and are fully and unconditionally guaranteed on a senior unsecured basis by each of the Company’s current domestic subsidiaries and by certain future subsidiaries. The Indenture contains covenants that limit the Company’s ability and the ability of its restricted subsidiaries to engage in certain activities. The Company was in compliance with the provisions of the Indenture at December 31, 2021. Upon an event of default, the trustee or the holders of at least 25% in aggregate principal amount of then outstanding Senior Notes may declare the Senior Notes immediately due and payable, except that a default resulting from certain events of bankruptcy or insolvency with respect to the Company, any restricted subsidiary of the Company that is a significant subsidiary or any group of restricted subsidiaries that, taken together, would constitute a significant subsidiary, will automatically cause all outstanding Senior Notes to become due and payable. Unamortized deferred financing costs associated with the Senior Notes were $3.0 million and $5.1 million at December 31, 2021 and 2020, respectively. These costs are direct deductions from the carrying amount of the Senior Notes and are being amortized through interest expense through the maturity date of the Senior Notes using the effective interest method. Extinguishment of Debt The Company repurchased approximately $26.3 million of Senior Notes at a repurchase price of approximately $8.4 million in cash for the year ended December 31, 2021. Deferred financing costs associated with these transactions were $0.3 million for the year ended December 31, 2021. As a result, for the year ended December 31, 2021, the Company recorded a $17.6 million gain on the extinguishment of debt, which is calculated as the difference between the repurchase price and the carrying amount of the Senior Notes partially offset by the deferred financing costs. The Company repurchased approximately $53.3 million of Senior Notes at a repurchase price of approximately $14.6 million in cash for the year ended December 31, 2020. Deferred financing costs associated with these transactions were $0.9 million for the year ended December 31, 2020. As a result, for the year ended December 31, 2020, the Company recorded a $37.8 million gain on the extinguishment of debt, which was calculated as the difference between the repurchase price and the carrying amount of the Senior Notes partially offset by the deferred financing costs. The gain on extinguishment of debt is included as a separate line item in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss) for the years ended December 31, 2021 and 2020 . 2018 ABL Credit Facility On October 25, 2018, the Company entered into a credit agreement dated as of October 25, 2018 (the “2018 ABL Credit Agreement”), by and among the Company, Nine Energy Canada, Inc., JP Morgan Chase Bank, N.A. as administrative agent and as an issuing lender, and certain other financial institutions party thereto as lenders and issuing lenders. The 2018 ABL Credit Agreement permits aggregate borrowings of up to $200.0 million, subject to a borrowing base, including a Canadian tranche with a sub-limit of up to $25.0 million and a sub-limit of $50.0 million for letters of credit (the “2018 ABL Credit Facility”). The 2018 ABL Credit Facility will mature on October 25, 2023 or, if earlier, on the date that is 180 days before the scheduled maturity date of the Senior Notes if they have not been redeemed or repurchased by such date. Loans to the Company and its domestic related subsidiaries (the “U.S. Credit Parties”) under the 2018 ABL Credit Facility may be base rate loans or LIBOR loans; and loans to Nine Energy Canada Inc., a corporation organized under the laws of Alberta, Canada, and its restricted subsidiaries (the “Canadian Credit Parties”) under the Canadian tranche may be Canadian Dollar Offered Rate (“CDOR”) loans or Canadian prime rate loans. The applicable margin for base rate loans and Canadian prime rate loans vary from 0.75% to 1.25% and the applicable margin for LIBOR loans or CDOR loans vary from 1.75% to 2.25%, in each depending on the Company’s leverage ratio. In addition, a commitment fee of 0.50% per annum will be charged on the average daily unused portion of the revolving commitments. The 2018 ABL Credit Agreement contains various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other restricted payments, investments (including acquisitions), and transactions with affiliates. In addition, the 2018 ABL Credit Agreement contains a minimum fixed charge ratio covenant of 1.00 to 1.00 that is tested quarterly when the availability under the 2018 ABL Credit Facility drops below $18.75 million or a default has occurred until the availability exceeds such threshold for 30 consecutive days and such default is no longer outstanding. The Company was in compliance with all covenants under the 2018 ABL Credit Agreement as of December 31, 2021. All of the obligations under the 2018 ABL Credit Facility are secured by first priority perfected security interests (subject to permitted liens) in substantially all of the personal property of U.S. Credit Parties, excluding certain assets. The obligations under the Canadian tranche are further secured by first priority perfected security interests (subject to permitted liens) in substantially all of the personal property of Canadian Credit Parties, excluding certain assets. The 2018 ABL Credit Facility is guaranteed by the U.S. Credit Parties, and the Canadian tranche is further guaranteed by the Canadian Credit Parties and the U.S. Credit Parties. At December 31, 2021, the Company had $15.0 million of borrowings under the 2018 ABL Credit Facility for general corporate purposes, and its availability under the 2018 ABL Credit Facility was approximately $43.2 million, net of outstanding letters of credit of $0.5 million. The Company borrowed an additional $5.0 million under the 2018 ABL Credit Facility in the first two months of 2022. Magnum Promissory Notes On October 25, 2018, pursuant to the terms of a Securities Purchase Agreement, dated October 15, 2018 (as amended on June 7, 2019, the “Magnum Purchase Agreement”), the Company acquired all of the equity interests of Magnum Oil Tools International, LTD, Magnum Oil Tools GP, LLC, and Magnum Oil Tools Canada Ltd. (such entities collectively, “Magnum”). The Magnum Purchase Agreement included the potential for additional future payments in cash of (i) up to 60% of net income (before interest, taxes, and certain gains or losses) for the “E-Set” tools business in 2019 through 2026 and (ii) up to $25.0 million based on sales of certain dissolvable plug products in 2019 (the “Magnum Earnout”). On June 30, 2020, pursuant to an amendment to the Magnum Purchase Agreement to terminate the remaining Magnum Earnout and all obligations related thereto (the “Magnum Purchase Agreement Amendment”), the Company issued promissory notes with an aggregated principal amount of $2.3 million (the “Magnum Promissory Notes”) to the sellers of Magnum. The Magnum Promissory Notes bear interest at a rate of 6.0% per annum . The principal amount of the Magnum Promissory Notes will be paid in equal quarterly installments which began January 1, 2021. The entire unpaid principal amount will be due and payable on the maturity date, which is the earlier of October 1, 2022 or the business day after the date on which the Company sells, transfers or otherwise disposes of the “E-Set” tools business to an unaffiliated third party, unless such sale, transfer or disposition is made, directly or indirectly, as part of the sale, transfer or disposition of the Dissolvable Plugs Business or due to the occurrence of a Change of Control Event (each as defined in the Magnum Purchase Agreement). For additional information regarding the termination of the Magnum Earnout, see Note 12 – Commitments and Contingencies. Other Short-Term Debt In the fourth quarter of 2021, the Company renewed certain insurance policies, and it financed the premium for its excess policy in the amount of $1.5 million. At December 31, 2021, the outstanding balance on this premium was $1.0 million. Fair Value of Debt Instruments The estimated fair value of the Company’s debt obligations as of December 31, 2021 and 2020 was as follows: December 31, 2021 2020 (in thousands) Senior Notes $ 153,765 $ 156,001 2018 ABL Credit Facility $ 15,000 $ — Magnum Promissory Notes $ 1,125 $ 1,969 Other short-term debt $ 968 $ — The fair value of the Senior Notes, 2018 ABL Credit Facility, the Magnum Promissory Notes, and other short-term debt is classified as Level 2 in the fair value hierarchy. The fair value of the Senior Notes is established based on observable inputs in less active markets. The fair value of the 2018 ABL Credit Facility, the Magnum Promissory Notes, and other short-term debt approximates their carrying value. |
Defined Contribution Plans
Defined Contribution Plans | 12 Months Ended |
Dec. 31, 2021 | |
Retirement Benefits [Abstract] | |
Defined Contribution Plans | Defined Contribution Plans Background The Company sponsors a defined contribution plan under Section 401(k) of the Internal Revenue Code of 1986, as amended, for all qualified employees. From January 1, 2020 until April 25, 2020, under the Nine Energy Service 401(k) Plan (the “Nine Plan”), employee contributions were matched by the Company at 100% of the first 5% of the participant’s eligible compensation . Effective April 25, 2020, the Company suspended its matching contributions for employees. Contributions For the year ended December 31, 2021, the Company made no employer contributions under the Nine Plan. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation Stock Options Information about stock option activity during the years ended December 31, 2021 and 2020 was as follows: 2021 Activity Number of Weighted Remaining Intrinsic Value (in thousands) Beginning balance 702,542 $ 32.63 4.5 $ — Granted — — — — Exercised — — — — Forfeited — — — — Expired (92,132) 26.71 — — Total outstanding 610,410 $ 33.52 3.9 $ — Options exercisable 610,410 $ 33.52 3.9 $ — 2020 Activity Number of Weighted Remaining Intrinsic Value (in thousands) Beginning balance 816,427 $ 32.51 5.8 $ — Granted — — — — Exercised — — — — Forfeited (466) 31.18 — — Expired (113,419) 31.78 — — Total outstanding 702,542 $ 32.63 4.5 $ — Options exercisable 702,542 $ 32.63 4.5 $ — The intrinsic value at December 31, 2021 and 2020 is the amount by which the fair value of the underlying share exceeds the exercise price of an option as of December 31, 2021 and 2020, respectively. The Company granted no options in 2021 and 2020. There was no compensation expense recorded for the year ended December 31, 2021 and approximately $0.3 million for the year ended December 31, 2020. As of December 31, 2021, there is no remaining compensation expense related to options for the Company to expense. Future stock option grants will result in additional compensation expense. Restricted Stock and Restricted Stock Units Information about restricted stock and restricted stock unit activity during the years ended December 31, 2021 and 2020 was as follows: 2021 2020 Nonvested at January 1, 1,714,398 1,208,625 Granted 1,509,000 1,383,059 Vested (792,704) (641,658) Cancelled (51,374) (235,628) Nonvested at December 31, 2,379,320 1,714,398 The weighted-average grant date fair value of the restricted stock and restricted stock units granted was $2.15 and $0.85 during the years ended December 31, 2021 and 2020, respectively. The total amount of compensation expense related to the restricted stock and restricted stock units recorded was approximately $4.9 million and $9.0 million for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, the Company expects to record compensation expense related to restricted stock and restricted stock units of approximately $3.7 million over the remaining term of approximately 2.0 years. Future restricted stock and restricted stock unit grants will result in additional compensation expense. Performance Stock Units The Company granted performance stock units (“PSUs”) in 2019. The number of PSUs that vested in the first quarter of 2022 was contingent upon the Company’s achievement of certain specified targets. These awards had market conditions and were valued using a Monte Carlo simulation model. The volatility of 49.7% was developed based upon the historical volatility of the Company as well as the volatilities of a group of peer companies, as the Company’s trading history needed to be supplemented with additional data as it went public in 2018. The risk-free rate, which was derived using the United States’ Treasury security rates at the grant date, was 2.44%. 2021 2020 Nonvested at January 1, 61,900 61,900 Granted (1) — — Vested — — Cancelled — — Nonvested at December 31, 61,900 61,900 (1) The Company granted PSUs in 2019 that vested in the first quarter of 2022 contingent upon the Company’s achievement of certain specified targets based on a three-year performance period ending December 31, 2021. The number of PSUs in the table reflects the target level of PSUs. The Company did not grant PSUs in 2021 or 2020. The total amount of compensation expense related to PSUs was approximately $0.5 million for both the years ended December 31, 2021 and 2020. As of December 31, 2021, the Company has no further compensation expense related to PSUs to record. Future PSU grants will result in additional compensation expense. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation The Company records accruals related to litigation and other legal proceedings when they are either known or considered probable and can be reasonably estimated. Legal proceedings are inherently unpredictable and subject to significant uncertainties, and significant judgment is required to determine both probability and the estimated amount. Some of these uncertainties include the stage of litigation, available facts, uncertainty as to the outcome of any legal proceedings or settlement discussions, and any novel legal issues presented. Because of such uncertainties, accruals are based on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending litigation. As of December 31, 2021 and 2020, the Company recorded a $1.1 million and a $0.2 million accrual, respectively, for liabilities related to legal matters, which is included under the caption “Accrued expenses” in its Consolidated Balance Sheets. In addition to the matter disclosed below, from time to time, the Company has various claims, lawsuits, and administrative proceedings that are pending or threatened with respect to personal injury, workers’ compensation, contractual matters, and other matters. Although no assurance can be given with respect to the outcome of these claims, lawsuits, or proceedings or the effect such outcomes may have, the Company believes any ultimate liability resulting from the outcome of such claims, lawsuits, or administrative proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on its business, operating results, or financial condition. On May 21, 2018, a certified class action was filed in the United States District Court, District of New Mexico by Jacob Rodriguez on behalf of similarly situated employees. The class action alleged certain wage and overtime related claims and violations of the New Mexico Minimum Wage Act, which is a state law similar to the Fair Labor Standards Act. In 2021, the Company reached a settlement agreement for the class action for an aggregate $1.7 million plus related payroll taxes to be paid in four quarterly installments. Self-insurance The Company uses a combination of third-party insurance and self-insurance for health insurance claims. The self-insured liability represents an estimate of the undiscounted ultimate cost of uninsured claims incurred as of the balance sheet date. The estimate is based on an analysis of trailing months of incurred medical claims to project the amount of incurred but not reported claims liability. The estimated liability for self-insured medical claims was $1.0 million and $1.3 million at December 31, 2021 and 2020, respectively, and is included under the caption “Accrued expenses” on the Company’s Consolidated Balance Sheets. Although the Company does not expect the amounts ultimately paid to differ significantly from the estimates, the self-insurance liability could be affected if future claims experience differs significantly from historical trends and actuarial assumptions. Contingent Liabilities The Company’s contingent liabilities (Level 3) for the years ended December 31, 2021 and 2020 were as follows: Frac Tech Magnum Total (in thousands) Balance at January 1, 2020 $ 1,359 $ 2,609 $ 3,968 Payments (265) (1,125) (1,390) Revaluation adjustments (490) 766 276 Termination — (2,250) (2,250) Balance at December 31, 2020 $ 604 $ — $ 604 Payments (154) — (154) Revaluation adjustments 460 — 460 Balance at December 31, 2021 $ 910 $ — $ 910 All contingent liabilities that relate to contingent consideration are reported at fair value, based on a Monte Carlo simulation model. Significant inputs used in the fair value measurement include estimated gross margin related to forecasted sales of the plugs, term of the agreement, and a risk adjusted discount factor. Contingent liabilities include $0.1 million and $0.2 million reported in “Accrued expenses” at December 31, 2021 and 2020, respectively, and $0.8 million and $0.4 million reported in “Other long-term liabilities” at December 31, 2021 and 2020, respectively, in the Company’s Consolidated Balance Sheets. The impact of the revaluation adjustments is included in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss). Frac Tech Earnout On October 1, 2018, pursuant to the terms and conditions of a Securities Purchase Agreement (“the Frac Tech Purchase Agreement”), the Company acquired Frac Technology AS, a Norwegian private limited company (“Frac Tech”) focused on the development of downhole technology, including a casing flotation tool and a number of patented downhole completion tools. The Frac Tech Purchase Agreement, as amended, includes, among other things, the potential for additional future payments, based on certain Frac Tech revenue metrics through December 31, 2025. Magnum Earnout The Magnum Purchase Agreement included the potential for additional future payments in cash of (i) up to 60% of net income (before interest, taxes, and certain gains or losses) for the “E-Set” tools business in 2019 through 2026 and (ii) up to $25.0 million based on sales of certain dissolvable plug products in 2019. In 2019, the Company did not meet the sales requirement of certain dissolvable plug products during the year. In 2020, pursuant to the Magnum Purchase Agreement Amendment, which terminated the remaining Magnum Earnout and all obligations related thereto, the Company made a cash payment of $1.1 million and issued the Magnum Promissory Notes with an aggregated principal amount of $2.3 million to the sellers of Magnum. For additional information regarding the Magnum Promissory Notes, see Note 9 – Debt Obligations. |
Taxes
Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Taxes | Taxes The components of the provision (benefit) for income taxes for the years ended December 31, 2021 and 2020 were as follows: Year Ended December 31, 2021 2020 (in thousands) Current U.S. federal $ — $ (874) U.S. state (56) 4 Foreign 31 — Total current benefit $ (25) $ (870) Deferred U.S. federal $ — $ (1,122) U.S. state — (466) Foreign — — Total deferred benefit — (1,588) Total benefit for income taxes $ (25) $ (2,458) The provision (benefit) for income taxes for the years ended December 31, 2021 and 2020 differed from the provision (benefit) calculated using the applicable statutory federal income tax rate as follows: Year Ended December 31, 2021 2020 (in thousands) Tax benefit at statutory rate $ (13,570) $ (80,095) Foreign rate differential (41) (117) State income taxes, net of federal benefit (44) (463) Nondeductible expenses 413 608 Impact from goodwill impairment — 5,036 Valuation allowance 11,350 70,387 Non-cash compensation 1,893 — Other (26) 2,186 Total benefit for income taxes $ (25) $ (2,458) The tax effects of the cumulative temporary differences resulting in the net deferred tax asset (liabilities) at December 31, 2021 and 2020 were as follows: December 31, 2021 2020 (in thousands) Deferred income tax assets: Inventories $ 2,533 $ 2,990 Goodwill and intangible assets 83,318 90,829 Deferred tax benefit from net losses 79,690 63,844 Stock-based compensation 4,194 5,564 Tax credit carryforwards 695 680 Accrued expenses 1,632 2,142 Interest carryover 6,824 553 Lease liability 8,162 8,607 Other 164 165 Total deferred income tax assets 187,212 175,374 Less: Valuation allowance (170,747) (157,703) Net deferred income tax assets $ 16,465 $ 17,671 Deferred income tax liabilities: Property and equipment $ (8,387) $ (9,283) ROU asset (8,078) (8,388) Total deferred income tax liabilities (16,465) (17,671) Net deferred income tax liability $ — $ — As of December 31, 2021, the Company had federal and state net operating loss carryforwards (“NOLs”) of approximately $436.4 million. The federal NOLs related to tax years 2017 and prior can be used for a 20-year period and, if unused, will begin to expire in 2034. The state NOLs can be used from 7 to 20 years and vary by state. A small portion of state NOLs will begin to expire in 2022. The Company evaluates its deferred tax assets on a quarterly basis to determine whether a valuation allowance is required. The Company assesses whether a valuation allowance should be established based on its determination of whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and prior to the expiration of its NOL and tax credit carryforwards. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Due to recent operating results, the Company continues to be in a three-year cumulative loss position for the year ended December 31, 2021. According to ASC 740, cumulative losses in recent years represent significant negative evidence in considering whether deferred tax assets are realizable. As a result, the Company continues to record a valuation allowance against its United States’ domestic and Canadian deferred tax assets. The 2021 results include an increase in the Company’s valuation allowance of approximately $13.0 million. If the Company is able to generate sufficient taxable income in the future, and it becomes more likely than not that the Company will be able to fully utilize the net deferred tax assets on which a valuation allowance was recorded, the allowance will be released resulting in a tax benefit. The Company is subject to United States’ federal income tax as well as income tax in multiple state jurisdictions. The earliest period the Company is subject to examination of federal income tax returns by the Internal Revenue Service is 2018. The state income tax returns and other state tax filings of the Company are subject to examination by the state taxing authorities for various periods, generally up to four years after they are filed. The Company accounts for uncertain tax positions in accordance with guidance in ASC 740, which prescribes the minimum recognition threshold a tax position taken or expected to be taken in a tax return is required to meet before being recognized in the financial statements. A reconciliation of the beginning and ending amount of uncertain tax positions is as follows: 2021 (in thousands) Balance at January 1, $ 779 Additional based on tax positions related to prior years — Additional based on tax positions related to current year — Reduction based on tax positions related to prior years — Lapse of statute of limitations — Balance at December 31, $ 779 The total amount of unrecognized tax benefits at December 31, 2021 was $0.8 million. The total balance of unrecognized tax benefit would impact the Company’s future effective income tax rate if recognized. The Company recognizes interest and penalties related to uncertain tax positions within the provision for income taxes in its Consolidated Statements of Income and Comprehensive Income (Loss). As of December 31, 2021, no interest and penalties have been accrued. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is based on the weighted average number of shares outstanding during each period and the exercise of potentially dilutive stock options assumed to be purchased from the proceeds using the average market price of the Company’s stock for each of the periods presented as well as the potentially dilutive restricted stock, restricted stock units, and performance stock units. Basic and diluted earnings (loss) per common share was computed as follows: Year Ended December 31, 2021 Net Loss Average Shares Outstanding Loss Per Share (in thousands, except for share and per share amounts) Basic $ (64,575) 30,302,925 $ (2.13) Assumed exercise of stock options — — — Unvested restricted stock and stock units — — — Diluted $ (64,575) 30,302,925 $ (2.13) Year Ended December 31, 2020 Net Loss Average Shares Outstanding Loss Per Share (in thousands, except for share and per share amounts) Basic $ (378,948) 29,744,830 $ (12.74) Assumed exercise of stock options — — — Unvested restricted stock and stock units — — — Diluted $ (378,948) 29,744,830 $ (12.74) The diluted earnings (loss) per share calculation excludes all stock options, unvested restricted stock, unvested restricted stock units, and unvested performance stock units for 2021 and 2020 because there is a net loss for each period and their inclusion would be anti-dilutive. The average number of securities that were excluded from diluted earnings (loss) per share that would potentially dilute earnings (loss) per share for the periods in which the Company experienced a net loss were as follows: 2021 2020 Year ended December 31, 729,514 753,609 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company leases office space, yard facilities, and equipment and purchases building maintenance services from entities owned by David Crombie, an executive officer of the Company. Total lease expense and building maintenance expense associated with these entities was $0.8 million for both the years ended December 31, 2021 and 2020. The Company also purchased $2.6 million and $1.6 million of products and services for the years ended December 31, 2021 and 2020, respectively, from an entity in which Mr. Crombie is a limited partner. There were outstanding payables due to this entity relating to equipment purchases of $0.7 million and $0.2 million at December 31, 2021 and 2020, respectively. In addition, the Company leases office space in Corpus Christi and Midland, Texas from an entity affiliated with Warren Lynn Frazier, a beneficial owner of more than 5% of the Company’s stock. In the third quarter of 2020, another entity affiliated with Mr. Frazier began to sub-lease a portion of such space in Corpus Christi, Texas from the Company. Total rental expense associated with this office space, net of sub-leasing income, was $1.4 million and $1.3 million for the years ended December 31, 2021 and 2020, respectively. There were net outstanding payables due to this entity of $0.1 million at December 31, 2020. Additionally, on June 30, 2020, the Company issued the Magnum Promissory Notes to the sellers of Magnum, including Mr. Frazier. At December 31, 2021 and 2020, the outstanding principal balance payable to Mr. Frazier was $1.1 million and $1.9 million, respectively. For additional information regarding the Magnum Promissory Notes, see Note 9 – Debt Obligations. The Company purchases cable for its wireline trucks from an entity owned by Forum Energy Technologies (“Forum”). Previously, two of the Company’s directors served as directors of Forum; both individuals have ended their directorships at Forum as of December 31, 2021. The Company was billed $0.5 million for cable for both the years ended December 31, 2021 and 2020. There were outstanding payables due to this entity of $0.1 million at both December 31, 2021 and 2020. The Company purchases coiled tubing string from another entity owned by Forum. The Company was billed $6.2 million and $4.6 million for coiled tubing string during the years ended December 31, 2021 and 2020, respectively. There were outstanding payables due to this entity of $0.6 million and $0.9 million at December 31, 2021 and 2020, respectively. The Company purchases chemical additives used in cementing from Select Energy Services, Inc. (“Select”). One of the Company’s directors also serves as a director of Select. The Company was billed $1.1 million and $1.2 million for chemicals during the years ended December 31, 2021 and 2020, respectively. There were outstanding payables due to this entity of $0.1 million and $0.2 million at December 31, 2021 and 2020, respectively. The Company provides products and rentals to National Energy Reunited Corp. (“NESR”), where one of the Company’s directors serves as a director. The Company billed NESR $1.3 million for the year ended December 31, 2021. The Company billed NESR $1.6 million for products and rentals and issued credit memos of $0.5 million during the year ended December 31, 2020. During the fourth quarter of 2019, the Company sold coiled tubing equipment for $5.9 million to NESR with payments due in 24 monthly equal installments beginning on January 31, 2020. Total outstanding receivables due to the Company from NESR (inclusive of the equipment sale above) were $0.5 million and $3.7 million at December 31, 2021 and 2020, respectively. Ann G. Fox, President and Chief Executive Officer and a director of the Company, is a director of Devon Energy Corporation (“Devon”). The Company generated revenue from Devon of $3.2 million and $5.8 million for the years ended December 31, 2021 and 2020, respectively. There were outstanding receivables due from Devon of $0.4 million at both December 31, 2021 and 2020. |
Supplemental Information
Supplemental Information | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Supplemental Information | Supplemental Information Capital expenditures for years ended December 31, 2021 and 2020 were as follows: Year Ended December 31, 2021 2020 (in thousands) Completion Solutions $ 14,742 $ 10,147 Corporate 15 7 $ 14,757 $ 10,154 Total assets by segment as of December 31, 2021 and 2020 were as follows: December 31, 2021 2020 (in thousands) Completion Solutions $ 349,429 $ 358,128 Corporate 32,184 84,472 $ 381,613 $ 442,600 Revenue by country for the years ended December 31, 2021 and 2020 were as follows: Year Ended December 31, 2021 Year Ended December 31, 2020 Amount Percentage Amount Percentage (in thousands) (in thousands) United States $ 347,445 99.4 % $ 309,206 99.5 % Canada 1,974 0.6 % 1,645 0.5 % $ 349,419 100.0 % $ 310,851 100.0 % Long-lived assets (defined as property and equipment and definite-lived intangible assets) by country as of December 31, 2021 and 2020 were as follows: December 31, 2021 2020 (in thousands) United States $ 200,227 $ 231,294 Canada and other 2,139 2,659 $ 202,366 $ 233,953 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements as of December 31, 2021 and 2020, and for the years ended December 31, 2021 and 2020, include the accounts of Nine and its wholly owned subsidiaries. All inter-company balances and transactions have been eliminated in the consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. Such estimates include fair value assumptions used in analyzing long-lived assets for possible impairment, useful lives used in depreciation and amortization expense, recognition of provisions for contingencies, and stock-based compensation fair value. It is at least reasonably possible that the estimates used will change within the next year. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under Accounting Standards Codification Topic 606 (“ASC 606”) when products are received by a customer’s domestic common carrier at the Company’s facility or when the product is received by the customer’s international carrier. The Company believes this recognition policy reflects the point at which the customer obtains control of the product as required by ASC 606. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company excludes sales taxes, value added taxes, and other taxes it collects concurrent with revenue-producing activities from revenue. The Company’s revenue is derived from the sale of products and services which are sold directly to customers or are consumed by customers on their well sites. For domestic product sales, the Company typically recognizes revenue when it meets its performance obligation upon the shipment of the products from its facilities to its customer. For international product sales, the Company typically recognizes revenue when it meets its performance obligation upon receipt of the products by the customer’s international carrier. The Company recognizes service revenue over the time the service is performed as the customer consumes and benefits from the use of the Company’s products and services for well service. Service revenues represent revenue recognized over time, as the Company’s customer arrangements typically provide agreed upon hourly or daily fixed-rates, and the Company recognizes service revenue based upon the number of hours or days services have been performed. Contracts for the Company’s products and services are negotiated on a per-job basis at a regional level. Contracts vary in nature but typically have a duration of less than a month and have a single performance obligation either for a job, a series of distinct jobs, or a period the Company stands ready to provide its services to its client as needed. The Company’s payment terms vary by the type and location of its customers and type of product and service offered. The Company receives cash equal to the invoice amount for most services and product sales, and payment terms typically range from 30 to 60 days from the date the Company invoices a customer. Since the period between the delivery of the Company’s products and services and the Company’s receipt of customer payment for these products and services is not expected to exceed one year, the Company has elected not to calculate or disclose a financing component for its customer contracts. Contract Estimates The Company receives reimbursements from its customers for the purchase of supplies, equipment, personnel services, and other services provided at a customer’s request. Reimbursable revenues are subject to uncertainty as the timing of the receipt of these amounts is dependent on factors outside of the Company’s influence. Accordingly, these revenues are not recognized until the uncertainty is resolved, which typically occurs when the related costs are incurred on behalf of the customer. The Company is considered a principal in these transactions and records the associated revenues at the gross amount billed to the customer. Changes and modifications to contracts are routine in the performance of the Company’s contracts due to the dynamic nature of well operations and the services the Company provides for its customers. The Company considers contract modifications to exist when the modification either creates a new contract or changes the existing enforceable rights and obligations of a contract. Most of the Company’s contract modifications are for services or goods that are not distinct from existing contracts due to the significant integration provided or significant interdependencies in the context of the contract and are accounted for as if they were part of the original contract. Contract Balances Any contract assets are included in “Accounts receivable, net” in the Company’s Consolidated Balance Sheets. Contract assets arise when recorded revenues for a contract exceed the amounts billed under the terms of the contracts. The Company classifies contract liabilities as unearned income which is included in “Accrued expenses” in the Company’s Consolidated Balance Sheets. Such deferred revenue typically results from advance payments received on well service orders prior to performance of the service. |
Leases | Leases The Company determines if an arrangement is a lease at inception. To the extent an arrangement represents a lease, the Company classifies that lease as an operating lease or a finance lease under Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) and its related ASUs (“ASC 842”). The Company capitalizes operating leases on its Consolidated Balance Sheets through a Right of Use (“ROU”) asset and a corresponding lease liability. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the operating lease. Operating lease ROU assets and obligations are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term utilizing an interest rate that the Company would have incurred to borrow over a similar term the funds necessary to purchase the leased asset. Operating leases are included in “Operating lease right of use assets, net,” “Current portion of operating lease obligations,” and “Long-term operating lease obligations” in the Company’s Consolidated Balance Sheets as of December 31, 2021 and 2020. Lease expense for operating leases is recognized on a straight-line basis over the lease term for 2021 and 2020. Accounting for finance leases under ASC 842 remained unchanged from previous accounting guidance and are included in the line items “Finance lease right of use assets, net,” “Current portion of finance lease obligations,” and “Long-term finance lease obligations” in the Company’s Consolidated Balance Sheets as of December 31, 2021 and 2020. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid debt instruments with a maturity of three months or less when purchased to be cash equivalents. Throughout the year, the Company maintained cash balances that were in excess of their federally insured limits. The Company has not experienced any losses in such accounts. |
Foreign Currency | Foreign Currency The Company’s functional currency is the United States Dollar (“USD”). The financial position and results of |
Accounts Receivable | Accounts Receivable The Company extends credit to customers in the normal course of business. Accounts receivable are carried at their estimated collectible amount. Trade credit is generally extended on a short-term basis; thus, receivables do not bear interest, although a finance charge may be applied to amounts past due. The Company maintains an allowance for doubtful accounts for estimated losses that may result from the inability of its customers to make required payments. Such allowances are based upon several factors including, but not limited to, credit approval practices, industry and customer historical experience, as well as the current and projected financial condition of the specific customer. Accounts receivable outstanding longer than contractual terms are considered past due. The Company writes off accounts receivable to the allowance for doubtful accounts when they become uncollectible. Any payments subsequently received on receivables previously written off are credited to bad debt expense. |
Concentration of Credit Risk and Concentration of Supplier Risk | Concentration of Credit Risk The Company derives a significant portion of its revenues from companies in the exploration and production (“E&P”) industry, and its customer base includes a broad range of integrated and independent domestic E&P companies and international E&P companies operating in the markets that the Company serves. While current energy prices are important contributors to positive cash flow for the customers, expectations about future prices and price volatility are generally more important for determining future spending levels. Any prolonged increase or decrease in oil and natural gas prices affects the levels of exploration, development, and production activity as well as the entire health of the oil and natural gas industry and can therefore negatively impact spending by the Company’s customers. No customer accounted for more than 10% of the revenues for the year ended December 31, 2021. One customer accounted for more than 10% of revenues for the year ended December 31, 2020. Concentration of Supplier Risk |
Property and Equipment | Property and Equipment Property and equipment is stated at cost and depreciated under the straight-line method over the estimated useful lives of the assets. Equipment held under capital leases is stated at the present value of its future minimum lease payments and is depreciated under the straight-line method over the shorter of the lease term or the estimated useful life of the asset. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized within operating expenses. Normal repair and maintenance costs are charged to operating expense as incurred. Significant renewals and betterments are capitalized. Valuation of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for impairment, future cash flows expected to result from the use of the asset and its eventual disposal are estimated. If the undiscounted future cash flows are less than the carrying amount of the assets, there is an indication that the asset may be impaired. The amount of the impairment is measured as the difference between the carrying value and the Level 3 fair value of the asset. The Level 3 fair value is determined either through the use of an external valuation, or by means of an analysis of discounted future cash flows based on expected utilization. Determining fair value requires the use of estimates and assumptions. Such estimates and assumptions include revenue growth rates, operating profit margins, weighted average costs of capital, terminal growth rates, future market share, the impact of new product development, and future market conditions, among others. The Company believes that the estimates and assumptions used in impairment assessments are reasonable and appropriate. Impairment losses are reflected in “Income (loss) from operations” in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss). In the first quarter of 2020, with a significant reduction in exploration and production capital budgets and activity, primarily driven by sharp declines in global crude oil demand and an economic recession associated with the coronavirus pandemic, as well as sharp declines in oil and natural gas prices, the Company determined that the carrying amount of long-lived assets (inclusive of definite-lived intangible assets and property and equipment) associated with its asset groups may not be recoverable. As such, the Company performed an impairment assessment of long-lived assets in its asset groups under Accounting Standards Codification 360, Property, Plant and Equipment at March 31, 2020, based on its best internal projections and the likelihood of various outcomes. Based on its assessment, the Company determined that the estimated future undiscounted cash flows derived from long-lived assets associated with its asset groups exceeded the carrying amount of long-lived assets associated with its asset groups, and no impairment to long-lived assets was required. |
Valuation of Goodwill and Intangible Assets | Valuation of Goodwill and Intangible Assets Goodwill has an indefinite useful life and is not subject to amortization. Intangible assets with indefinite useful lives (specifically trademarks and trade names) are also not subject to amortization. For goodwill and intangible assets with indefinite useful lives, an assessment for impairment is performed annually on December 31 or when there is an indication an impairment may have occurred. Goodwill is reviewed for impairment by comparing the carrying value of each of the Company’s reporting unit’s net assets (including allocated goodwill) to the Level 3 fair value of the reporting unit. The Level 3 fair value of the reporting unit is determined by using the income approach (discounted cash flows of forecasted income). Intangible assets with indefinite useful lives are reviewed for impairment by comparing the carrying value of the intangible asset to the Level 3 fair value of the intangible asset. The Level 3 fair value of intangible assets with indefinite useful lives (specifically trademarks and trade names) is estimated using the relief-from-royalty method of the income approach. This approach is based on the assumption that in lieu of ownership, a company would be willing to pay a royalty in order to exploit the related benefits of this intangible asset. Determining fair value requires the use of estimates and assumptions. Such estimates and assumptions include revenue growth rates, operating profit margins, royalty rates, weighted average costs of capital, terminal growth rates, future market share, the impact of new product development, and future market conditions, among others. The Company believe that the estimates and assumptions used in impairment assessments are reasonable and appropriate. The Company recognizes a goodwill impairment charge for the amount by which the carrying value of goodwill exceeds the reporting unit’s Level 3 fair value. The Company recognizes an indefinite-lived intangible asset impairment charge of the amount by which the carrying value of the intangible asset exceeds the Level 3 fair value of the intangible asset. Impairment losses are reflected in “Income (loss) from operations” in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss). Intangible assets with definite lives include technology, customer relationships, and non-compete agreements. The Level 3 fair value of technology and the Level 3 fair value of customer relationships are estimated using the income approach, specifically the multi-period excess earnings method. The multi-period excess earnings method consists of isolating the cash flows attributed to the intangible asset, which are then discounted to present value to calculate the Level 3 fair value of the intangible asset. The Level 3 fair value of non-compete agreements is estimated using a with and without scenario where cash flows are projected through the term of the non-compete agreement assuming the non-compete agreement is in place and compared to cash flows assuming the non-compete agreement is not in place. Intangible assets with definite lives are amortized based on the estimated consumption of the economic benefit over their estimated useful lives. Intangible assets with definite lives are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In the first quarter of 2020, in connection with an interim goodwill impairment test, the Company recorded goodwill impairment charges of $296.2 million in its tools, cementing, and wireline reporting units due to sharp declines in global crude oil demand, an economic recession associated with the coronavirus pandemic, sharp declines in oil and natural gas prices, and an increased weighted average cost of capital driven by a reduction in the Company’s stock price and the Level 2 fair value of its Senior Notes. |
Stock-based Compensation | Stock-based Compensation The Company has stock-based compensation plans for certain of its employees. The Company measures employee stock-based compensation awards at fair value on the date they are granted to employees and recognizes compensation cost in its financial statements over the requisite service period. As a result of the adoption of ASU No. 2016-09, the Company elected to account for stock-based compensation forfeitures as they occur. Restricted Stock and Restricted Stock Units Compensation expense is recorded for restricted stock and restricted stock units over the applicable vesting period based on the Company’s closing stock price as of the grant date. Performance Units Performance stock units are recorded at their fair value and expensed over their performance period. Fair value for performance stock units is measured using a Monte Carlo simulation model. Options Options are issued with an exercise price equal to the fair value of the stock on the date of grant. Compensation expense is recorded for the fair value of the stock options and is recognized over the period of the underlying security’s vesting schedule. Consideration paid on the exercise of stock options is credited to share capital and additional paid-in capital. For options, fair value of the stock-based compensation is measured by use of the Black-Scholes pricing model. The following discusses the assumptions used related to the Black-Scholes pricing model. • The expected term of stock options represents the period the stock options are expected to remain outstanding and is based on the simplified method, which is the weighted average vesting term plus the original contractual term, divided by two. • Expected volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period. The Company developed its expected volatility based upon a weighted average volatility of its peer group. • At the time of the issuance of the options, the Company did not plan to pay cash dividends in the foreseeable future. Therefore, a zero expected dividend yield was used in the valuation model. • The risk-free interest rate is based on United States’ Treasury zero-coupon issues with remaining terms similar to the expected term on the options. |
Income Taxes | Income Taxes The Company accounts for income taxes under Accounting Standards Codification 740, Income Taxes (“ASC 740”) . Under this method, deferred income tax assets and liabilities are determined based upon temporary differences between the carrying amounts and tax bases of the Company’s assets and liabilities at the balance sheet date and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in the tax rates is recognized in income in the period in which the change occurs. The Company records a valuation reserve in each reporting period when management believes that it is more likely than not that any deferred tax asset created will not be realized. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. If a tax position meets the “more likely than not” recognition criteria, the tax position is measured at the largest amount of benefit greater than 50% likely of being realized upon ultimate settlement. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts for financial instruments classified as current assets and current liabilities approximate fair value, due to the short maturity of such instruments. For financial assets and liabilities disclosed at fair value, fair value is determined as the exit price, or the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The established fair value hierarchy divides fair value measurement into three levels: • Level 1 – inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; • Level 2 – inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly or indirectly; and • Level 3 – inputs are unobservable for the asset or liability, which reflect the best judgment of management. Financial assets and liabilities that are disclosed at fair value are categorized in one of the above three levels based on the lowest level input that is significant to the fair value measurement in its entirety. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The fair value of the Company’s debt obligations is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. For additional information on the fair value of the Company’s debt obligations, see Note 9 – Debt Obligations. The fair value of the Company’s contingent consideration is classified as Level 3 in the fair value hierarchy and is established on unobservable markets which reflect the best judgment of management. For additional information on the fair value of the Company’s contingent consideration, see Note 12 – Commitments and Contingencies. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period, taking into effect, if any, the exercise of potentially dilutive stock options assumed to be purchased from the proceeds using the average market price of the Company’s stock for each of the periods presented as well as potentially dilutive restricted stock, restricted stock units, and performance stock units. There was no dilutive effect for the years ended December 31, 2021 and 2020 as the Company was in a net loss position for those years. For additional information on earnings (loss) per share, see Note 14 – Earnings (Loss) Per Share. |
Accounting Pronouncements Recently Adopted and Accounting Pronouncements Not Yet Adopted | Accounting Pronouncements Recently Adopted In March 2020, the Financial Accounting Standards Board (the “FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements included in this Annual Report. Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes , which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles and clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for public businesses for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. As an emerging growth company, the Company is permitted, and plans, to adopt the new standard for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. The Company does not expect the standard to have a material impact on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The amendments in ASU 2016-13 replace the current incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information. ASU 2016-13 is effective for Securities and Exchange Commission filers, excluding smaller reporting companies, for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. As an emerging growth company, the Company is permitted, and plans, to adopt the new standard for the fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company does not expect the standard to have a material impact on its consolidated financial statements. |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | Disaggregated revenue for the years ended December 31, 2021 and 2020 was as follows: Year Ended December 31, 2021 2020 (in thousands) Cement $ 114,181 $ 102,631 Tools 100,801 79,132 Wireline 72,436 81,684 Coiled tubing 62,001 47,404 Total revenues $ 349,419 $ 310,851 Year Ended December 31, 2021 2020 (in thousands) Service (1) $ 248,618 $ 231,719 Product (1) 100,801 79,132 Total $ 349,419 $ 310,851 (1) The Company recognizes revenues from the sales of products at a point in time and revenues from the sales of services over time. |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net | Inventories, net as of December 31, 2021 and 2020 were comprised of the following: December 31, 2021 2020 (in thousands) Raw materials $ 31,153 $ 33,361 Work in progress 675 367 Finished goods 19,323 17,952 Inventories 51,151 51,680 Reserve for obsolescence (8,971) (13,278) Inventories, net $ 42,180 $ 38,402 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment amounts as of December 31, 2021 and 2020 were as follows: December 31, Estimated 2021 2020 (in thousands) Operating equipment 1 to 12 years $ 299,602 $ 296,491 Autos and trucks 1 to 7 years 4,168 4,102 Furniture, fixtures, and equipment 2 to 12 years 4,059 4,100 Shop equipment 3 to 15 years 14,555 13,558 Buildings 7 to 39 years 8,994 8,489 Leasehold improvements 3 to 11 years 1,443 1,320 Land indefinite 828 791 333,649 328,851 Less: Accumulated depreciation (246,691) (226,422) Property and equipment, net $ 86,958 $ 102,429 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Components of Lease Expense | The following table summarizes the components of the Company’s lease expense recognized for the year ended December 31, 2021 and 2020, excluding variable lease and prepaid rent costs: Year Ended December 31, 2021 2020 (in thousands) Operating lease expense Operating lease right of use assets $ 8,020 $ 8,897 Operating lease non right of use assets 6,201 5,795 Total operating lease expense $ 14,221 $ 14,692 Finance lease expense Depreciation of right of use assets $ 399 $ 321 Interest on lease obligations 162 257 Total finance lease expense $ 561 $ 578 Operating lease expense is included in the line items “Cost of revenues” and “General and administrative expenses” in the Company’s Consolidated Statements of Income and Comprehensive Income (Loss) for the years ended December 31, 2021 and 2020. Supplemental information related to leases was as follows as of December 31, 2021 and 2020: December 31, 2021 2020 Operating leases Weighted average remaining lease term 6.4 7.0 Weighted average discount rate 5.0% 5.0% Finance leases Weighted average remaining lease term 1.0 2.0 Weighted average discount rate 9.8% 9.3% |
Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows as of December 31, 2021 and 2020: December 31, 2021 2020 (in thousands) Operating lease right of use assets Operating lease right of use assets, gross $ 45,853 $ 43,061 Less: Accumulated amortization (10,736) (6,701) Operating lease right of use assets, net $ 35,117 $ 36,360 Operating lease obligations Current portion of operating lease obligations $ 6,091 $ 6,200 Long-term operating lease obligations 30,435 32,295 Total operating lease obligations $ 36,526 $ 38,495 Finance lease right of use assets Finance lease right of use assets, gross $ 2,980 $ 2,952 Less: Accumulated depreciation (1,535) (1,136) Finance lease right of use assets, net $ 1,445 $ 1,816 Finance lease obligations Current portion of finance lease obligations $ 1,070 $ 1,092 Long-term finance lease obligations 65 1,109 Total finance lease obligations $ 1,135 $ 2,201 |
Schedule of Operating Lease Liability Maturity | Future annual minimum lease payments as of December 31, 2021 were as follows: Operating Lease Right of Use Obligations Finance Leases Total (in thousands) 2022 $ 7,745 $ 1,137 $ 8,882 2023 7,427 66 7,493 2024 6,034 — 6,034 2025 5,371 — 5,371 2026 5,163 — 5,163 Thereafter 10,940 — 10,940 Total lease payments $ 42,680 $ 1,203 $ 43,883 Less: present value discount (6,154) (68) (6,222) Present value of lease obligations $ 36,526 $ 1,135 $ 37,661 |
Schedule of Financing Lease Liability Maturity | Future annual minimum lease payments as of December 31, 2021 were as follows: Operating Lease Right of Use Obligations Finance Leases Total (in thousands) 2022 $ 7,745 $ 1,137 $ 8,882 2023 7,427 66 7,493 2024 6,034 — 6,034 2025 5,371 — 5,371 2026 5,163 — 5,163 Thereafter 10,940 — 10,940 Total lease payments $ 42,680 $ 1,203 $ 43,883 Less: present value discount (6,154) (68) (6,222) Present value of lease obligations $ 36,526 $ 1,135 $ 37,661 |
Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases for the years ended December 31, 2021 and 2020 were as follows: Year Ended December 31, 2021 2020 (in thousands) Cash paid for amounts included in the measurement of lease obligations: Operating cash flows from operating leases $ 8,124 $ 8,592 Operating cash flows from finance leases $ 399 $ 321 Financing cash flows from finance leases $ 1,094 $ 995 Right of use assets obtained in exchange for lease obligations: Operating leases $ 5,059 $ 1,099 Finance leases $ 28 $ — |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Components of Intangible Assets | The gross carrying amount and accumulated amortization of intangible assets as of December 31, 2021 and 2020 were as follows: December 31, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period (in thousands, except weighted average amortization period information) Customer relationships $ 63,270 $ (45,187) $ 18,083 5.3 Non-compete agreements 6,500 (5,766) 734 2.0 Technology 125,110 (28,519) 96,591 11.7 In-process research and development 1,000 — 1,000 Indefinite Total $ 195,880 $ (79,472) $ 116,408 December 31, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period (in thousands, except weighted average amortization period information) Customer relationships $ 63,270 $ (38,084) $ 25,186 5.5 Non-compete agreements 6,500 (5,366) 1,134 2.8 Technology 125,110 (19,906) 105,204 12.7 In-process research and development 1,000 — 1,000 Indefinite Total $ 195,880 $ (63,356) $ 132,524 |
Schedule of Components of Intangible Assets | The gross carrying amount and accumulated amortization of intangible assets as of December 31, 2021 and 2020 were as follows: December 31, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period (in thousands, except weighted average amortization period information) Customer relationships $ 63,270 $ (45,187) $ 18,083 5.3 Non-compete agreements 6,500 (5,766) 734 2.0 Technology 125,110 (28,519) 96,591 11.7 In-process research and development 1,000 — 1,000 Indefinite Total $ 195,880 $ (79,472) $ 116,408 December 31, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period (in thousands, except weighted average amortization period information) Customer relationships $ 63,270 $ (38,084) $ 25,186 5.5 Non-compete agreements 6,500 (5,366) 1,134 2.8 Technology 125,110 (19,906) 105,204 12.7 In-process research and development 1,000 — 1,000 Indefinite Total $ 195,880 $ (63,356) $ 132,524 |
Schedule of Future Estimated Amortization Expense | Future estimated amortization of intangibles is as follows: Year Ending December 31, (in thousands) 2022 $ 13,463 2023 11,516 2024 11,183 2025 11,183 2026 11,082 Thereafter 56,981 $ 115,408 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses as of December 31, 2021 and 2020 consisted of the following: December 31, 2021 2020 (in thousands) Accrued interest 4,980 5,313 Accrued compensation and benefits 6,897 5,430 Accrued bonus 1,125 — Accrued legal fees and settlements 1,076 165 Other accrued expenses 4,441 6,231 Accrued expenses $ 18,519 $ 17,139 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Summary of Debt Obligations | The Company’s debt obligations as of December 31, 2021 and 2020 were as follows: December 31, 2021 2020 (in thousands) Senior Notes $ 320,343 $ 346,668 2018 ABL Credit Facility 15,000 — Magnum Promissory Notes 1,125 1,969 Other short-term debt 968 — Total debt before deferred financing costs $ 337,436 $ 348,637 Deferred financing costs (3,029) (5,079) Total debt $ 334,407 $ 343,558 Less: Current portion of long-term debt (2,093) (844) Long-term debt $ 332,314 $ 342,714 |
Summary of Fair value of Debt Obligations | The estimated fair value of the Company’s debt obligations as of December 31, 2021 and 2020 was as follows: December 31, 2021 2020 (in thousands) Senior Notes $ 153,765 $ 156,001 2018 ABL Credit Facility $ 15,000 $ — Magnum Promissory Notes $ 1,125 $ 1,969 Other short-term debt $ 968 $ — |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Options Activity | Information about stock option activity during the years ended December 31, 2021 and 2020 was as follows: 2021 Activity Number of Weighted Remaining Intrinsic Value (in thousands) Beginning balance 702,542 $ 32.63 4.5 $ — Granted — — — — Exercised — — — — Forfeited — — — — Expired (92,132) 26.71 — — Total outstanding 610,410 $ 33.52 3.9 $ — Options exercisable 610,410 $ 33.52 3.9 $ — 2020 Activity Number of Weighted Remaining Intrinsic Value (in thousands) Beginning balance 816,427 $ 32.51 5.8 $ — Granted — — — — Exercised — — — — Forfeited (466) 31.18 — — Expired (113,419) 31.78 — — Total outstanding 702,542 $ 32.63 4.5 $ — Options exercisable 702,542 $ 32.63 4.5 $ — |
Schedule of Nonvested Restricted Stock Activity | Information about restricted stock and restricted stock unit activity during the years ended December 31, 2021 and 2020 was as follows: 2021 2020 Nonvested at January 1, 1,714,398 1,208,625 Granted 1,509,000 1,383,059 Vested (792,704) (641,658) Cancelled (51,374) (235,628) Nonvested at December 31, 2,379,320 1,714,398 2021 2020 Nonvested at January 1, 61,900 61,900 Granted (1) — — Vested — — Cancelled — — Nonvested at December 31, 61,900 61,900 (1) The Company granted PSUs in 2019 that vested in the first quarter of 2022 contingent upon the Company’s achievement of certain specified targets based on a three-year performance period ending December 31, 2021. The number of PSUs in the table reflects the target level of PSUs. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Contingent Liabilities | The Company’s contingent liabilities (Level 3) for the years ended December 31, 2021 and 2020 were as follows: Frac Tech Magnum Total (in thousands) Balance at January 1, 2020 $ 1,359 $ 2,609 $ 3,968 Payments (265) (1,125) (1,390) Revaluation adjustments (490) 766 276 Termination — (2,250) (2,250) Balance at December 31, 2020 $ 604 $ — $ 604 Payments (154) — (154) Revaluation adjustments 460 — 460 Balance at December 31, 2021 $ 910 $ — $ 910 |
Taxes (Tables)
Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of the Provision (Benefit) For Income Taxes | The components of the provision (benefit) for income taxes for the years ended December 31, 2021 and 2020 were as follows: Year Ended December 31, 2021 2020 (in thousands) Current U.S. federal $ — $ (874) U.S. state (56) 4 Foreign 31 — Total current benefit $ (25) $ (870) Deferred U.S. federal $ — $ (1,122) U.S. state — (466) Foreign — — Total deferred benefit — (1,588) Total benefit for income taxes $ (25) $ (2,458) |
Schedule of Effective Income Tax Rate Reconciliation | The provision (benefit) for income taxes for the years ended December 31, 2021 and 2020 differed from the provision (benefit) calculated using the applicable statutory federal income tax rate as follows: Year Ended December 31, 2021 2020 (in thousands) Tax benefit at statutory rate $ (13,570) $ (80,095) Foreign rate differential (41) (117) State income taxes, net of federal benefit (44) (463) Nondeductible expenses 413 608 Impact from goodwill impairment — 5,036 Valuation allowance 11,350 70,387 Non-cash compensation 1,893 — Other (26) 2,186 Total benefit for income taxes $ (25) $ (2,458) |
Schedule of Deferred Tax Assets (Liabilities) | The tax effects of the cumulative temporary differences resulting in the net deferred tax asset (liabilities) at December 31, 2021 and 2020 were as follows: December 31, 2021 2020 (in thousands) Deferred income tax assets: Inventories $ 2,533 $ 2,990 Goodwill and intangible assets 83,318 90,829 Deferred tax benefit from net losses 79,690 63,844 Stock-based compensation 4,194 5,564 Tax credit carryforwards 695 680 Accrued expenses 1,632 2,142 Interest carryover 6,824 553 Lease liability 8,162 8,607 Other 164 165 Total deferred income tax assets 187,212 175,374 Less: Valuation allowance (170,747) (157,703) Net deferred income tax assets $ 16,465 $ 17,671 Deferred income tax liabilities: Property and equipment $ (8,387) $ (9,283) ROU asset (8,078) (8,388) Total deferred income tax liabilities (16,465) (17,671) Net deferred income tax liability $ — $ — |
Schedule of Reconciliation of Uncertain Tax Positions | A reconciliation of the beginning and ending amount of uncertain tax positions is as follows: 2021 (in thousands) Balance at January 1, $ 779 Additional based on tax positions related to prior years — Additional based on tax positions related to current year — Reduction based on tax positions related to prior years — Lapse of statute of limitations — Balance at December 31, $ 779 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Table) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Summary of Basic and Diluted Income (Loss) per Common Share | Basic and diluted earnings (loss) per common share was computed as follows: Year Ended December 31, 2021 Net Loss Average Shares Outstanding Loss Per Share (in thousands, except for share and per share amounts) Basic $ (64,575) 30,302,925 $ (2.13) Assumed exercise of stock options — — — Unvested restricted stock and stock units — — — Diluted $ (64,575) 30,302,925 $ (2.13) Year Ended December 31, 2020 Net Loss Average Shares Outstanding Loss Per Share (in thousands, except for share and per share amounts) Basic $ (378,948) 29,744,830 $ (12.74) Assumed exercise of stock options — — — Unvested restricted stock and stock units — — — Diluted $ (378,948) 29,744,830 $ (12.74) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The average number of securities that were excluded from diluted earnings (loss) per share that would potentially dilute earnings (loss) per share for the periods in which the Company experienced a net loss were as follows: 2021 2020 Year ended December 31, 729,514 753,609 |
Supplemental Information (Table
Supplemental Information (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Summary of Financial Data by Segment | Capital expenditures for years ended December 31, 2021 and 2020 were as follows: Year Ended December 31, 2021 2020 (in thousands) Completion Solutions $ 14,742 $ 10,147 Corporate 15 7 $ 14,757 $ 10,154 Total assets by segment as of December 31, 2021 and 2020 were as follows: December 31, 2021 2020 (in thousands) Completion Solutions $ 349,429 $ 358,128 Corporate 32,184 84,472 $ 381,613 $ 442,600 |
Schedule of Revenue and Long-Lived Assets, by Geographical Area | Revenue by country for the years ended December 31, 2021 and 2020 were as follows: Year Ended December 31, 2021 Year Ended December 31, 2020 Amount Percentage Amount Percentage (in thousands) (in thousands) United States $ 347,445 99.4 % $ 309,206 99.5 % Canada 1,974 0.6 % 1,645 0.5 % $ 349,419 100.0 % $ 310,851 100.0 % Long-lived assets (defined as property and equipment and definite-lived intangible assets) by country as of December 31, 2021 and 2020 were as follows: December 31, 2021 2020 (in thousands) United States $ 200,227 $ 231,294 Canada and other 2,139 2,659 $ 202,366 $ 233,953 |
Company and Organization (Detai
Company and Organization (Details) $ in Thousands | 2 Months Ended | 12 Months Ended | |
Feb. 28, 2022USD ($) | Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Number of reportable segments | segment | 1 | ||
Cash and cash equivalents | $ 21,509 | $ 68,864 | |
Liability position | 64,700 | ||
Senior Notes | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Debt instrument, periodic payment, interest | 14,000 | ||
2018 ABL Credit Facility | Term Loan Credit Facility | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Current borrowing capacity | 43,200 | ||
Proceeds from lines of credit | 15,000 | ||
2018 ABL Credit Facility | Term Loan Credit Facility | Subsequent Event | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Proceeds from lines of credit | $ 5,000 | ||
2018 ABL Credit Facility | Senior Notes | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Long-term debt | $ 320,300 |
Significant Accounting Polici_3
Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | |||
Accounts receivable, net | $ 64,025 | $ 41,235 | |
Allowance for doubtful accounts | 2,800 | 3,400 | |
Provision for (recovery for) doubtful accounts | (229) | 2,820 | |
Impairment of goodwill | $ 296,200 | $ 0 | $ 296,196 |
Revenues (Details)
Revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 349,419 | $ 310,851 |
Cement | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 114,181 | 102,631 |
Tools | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 100,801 | 79,132 |
Wireline | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 72,436 | 81,684 |
Coiled tubing | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 62,001 | 47,404 |
Service | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 248,618 | 231,719 |
Service | Transferred over Time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 248,618 | 231,719 |
Product | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 100,801 | 79,132 |
Product | Transferred at Point in Time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 100,801 | $ 79,132 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 31,153 | $ 33,361 |
Work in progress | 675 | 367 |
Finished goods | 19,323 | 17,952 |
Inventories | 51,151 | 51,680 |
Reserve for obsolescence | (8,971) | (13,278) |
Inventories, net | $ 42,180 | $ 38,402 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 333,649 | $ 328,851 |
Less: Accumulated depreciation | (246,691) | (226,422) |
Property and equipment, net | 86,958 | 102,429 |
Depreciation | 28,905 | 32,431 |
Operating equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 299,602 | 296,491 |
Operating equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 1 year | |
Operating equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 12 years | |
Autos and trucks | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 4,168 | 4,102 |
Autos and trucks | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 1 year | |
Autos and trucks | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 7 years | |
Furniture, fixtures, and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 4,059 | 4,100 |
Furniture, fixtures, and equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 2 years | |
Furniture, fixtures, and equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 12 years | |
Shop equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 14,555 | 13,558 |
Shop equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Shop equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 15 years | |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 8,994 | 8,489 |
Buildings | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 7 years | |
Buildings | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 39 years | |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,443 | 1,320 |
Leasehold improvements | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Leasehold improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 11 years | |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 828 | $ 791 |
Leases - Additional Information
Leases - Additional Information (Details) | Dec. 31, 2021 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 1 year |
Renewal term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 10 years |
Renewal term | 5 years |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating lease expense | ||
Operating lease right of use assets | $ 8,020 | $ 8,897 |
Operating lease non right of use assets | 6,201 | 5,795 |
Total operating lease expense | 14,221 | 14,692 |
Finance lease expense | ||
Depreciation of right of use assets | 399 | 321 |
Interest on lease obligations | 162 | 257 |
Total finance lease expense | $ 561 | $ 578 |
Leases - Supplemental Informati
Leases - Supplemental Information Related to Leases (Details) | Dec. 31, 2021 | Dec. 31, 2020 |
Operating leases | ||
Weighted average remaining lease term | 6 years 4 months 24 days | 7 years |
Weighted average discount rate | 5.00% | 5.00% |
Finance leases | ||
Weighted average remaining lease term | 1 year | 2 years |
Weighted average discount rate | 9.80% | 9.30% |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Operating lease right of use assets | ||
Operating lease right of use assets, gross | $ 45,853 | $ 43,061 |
Less: Accumulated amortization | (10,736) | (6,701) |
Operating lease right of use assets, net | 35,117 | 36,360 |
Current portion of operating lease obligations | 6,091 | 6,200 |
Long-term operating lease obligations | 30,435 | 32,295 |
Total operating lease obligations | 36,526 | 38,495 |
Finance lease right of use assets | ||
Finance lease right of use assets, gross | 2,980 | 2,952 |
Less: Accumulated depreciation | (1,535) | (1,136) |
Finance lease right of use assets, net | 1,445 | 1,816 |
Current portion of finance lease obligations | 1,070 | 1,092 |
Long-term finance lease obligations | 65 | 1,109 |
Total finance lease obligations | $ 1,135 | $ 2,201 |
Leases - Schedule of Lease Liab
Leases - Schedule of Lease Liability Maturity (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Operating Lease Right of Use Obligations | ||
2022 | $ 7,745 | |
2023 | 7,427 | |
2024 | 6,034 | |
2025 | 5,371 | |
2026 | 5,163 | |
Thereafter | 10,940 | |
Total lease payments | 42,680 | |
Less: present value discount | (6,154) | |
Present value of lease obligations | 36,526 | $ 38,495 |
Finance Leases | ||
2022 | 1,137 | |
2023 | 66 | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
Thereafter | 0 | |
Total lease payments | 1,203 | |
Less: present value discount | (68) | |
Present value of lease obligations | 1,135 | $ 2,201 |
Total | ||
2022 | 8,882 | |
2023 | 7,493 | |
2024 | 6,034 | |
2025 | 5,371 | |
2026 | 5,163 | |
Thereafter | 10,940 | |
Total lease payments | 43,883 | |
Less: present value discount | (6,222) | |
Present value of lease obligations | $ 37,661 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash paid for amounts included in the measurement of lease obligations: | ||
Operating cash flows from operating leases | $ 8,124 | $ 8,592 |
Operating cash flows from finance leases | 399 | 321 |
Financing cash flows from finance leases | 1,094 | 995 |
Right of use assets obtained in exchange for lease obligations: | ||
Operating leases | 5,059 | 1,099 |
Finance leases | $ 28 | $ 0 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Schedule of Changes in Intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated Amortization | $ (79,472) | $ (63,356) |
Net Carrying Amount | 115,408 | |
Intangible assets, gross | 195,880 | 195,880 |
Intangible assets, net | 116,408 | 132,524 |
In-process research and development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 1,000 | 1,000 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 63,270 | 63,270 |
Accumulated Amortization | (45,187) | (38,084) |
Net Carrying Amount | $ 18,083 | $ 25,186 |
Weighted Average Amortization Period | 5 years 3 months 18 days | 5 years 6 months |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 6,500 | $ 6,500 |
Accumulated Amortization | (5,766) | (5,366) |
Net Carrying Amount | $ 734 | $ 1,134 |
Weighted Average Amortization Period | 2 years | 2 years 9 months 18 days |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 125,110 | $ 125,110 |
Accumulated Amortization | (28,519) | (19,906) |
Net Carrying Amount | $ 96,591 | $ 105,204 |
Weighted Average Amortization Period | 11 years 8 months 12 days | 12 years 8 months 12 days |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization intangibles | $ 16,116 | $ 16,467 | |
Impairment of goodwill | $ 296,200 | $ 0 | $ 296,196 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Amortization Expense (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2022 | $ 13,463 |
2023 | 11,516 |
2024 | 11,183 |
2025 | 11,183 |
2026 | 11,082 |
Thereafter | 56,981 |
Net Carrying Amount | $ 115,408 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accrued interest | $ 4,980 | $ 5,313 |
Accrued compensation and benefits | 6,897 | 5,430 |
Accrued bonus | 1,125 | 0 |
Accrued legal fees and settlements | 1,076 | 165 |
Other accrued expenses | 4,441 | 6,231 |
Accrued expenses | $ 18,519 | $ 17,139 |
Debt Obligations - Summary of D
Debt Obligations - Summary of Debt Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | $ 337,436 | $ 348,637 |
Deferred financing costs | (3,029) | (5,079) |
Total debt | 334,407 | 343,558 |
Less: Current portion of long-term debt | (2,093) | (844) |
Long-term debt | 332,314 | 342,714 |
Other short-term debt | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | 968 | 0 |
Senior Notes | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | 320,343 | 346,668 |
Deferred financing costs | (3,000) | (5,100) |
Line of Credit | 2018 ABL Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | 15,000 | 0 |
Line of Credit | Magnum Promissory Notes | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | $ 1,125 | $ 1,969 |
Debt Obligations - Additional I
Debt Obligations - Additional Information (Details) | Oct. 25, 2018USD ($)day | Feb. 28, 2022USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Jun. 30, 2021USD ($) | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | |||||||
Unamortized deferred finance costs | $ 3,029,000 | $ 3,029,000 | $ 5,079,000 | ||||
Extinguishment of debt | 17,618,000 | 37,841,000 | |||||
Debt covenant, fixed charge covenant, ratio | 1 | ||||||
Financing Agreement, Insurance Premium | 1,500,000 | ||||||
Outstanding premium, amount | 1,000,000 | 1,000,000 | |||||
Beneficial Owner | |||||||
Debt Instrument [Line Items] | |||||||
Notes payable, related parties | 1,100,000 | $ 1,100,000 | 1,900,000 | ||||
Magnum Acquisition | |||||||
Debt Instrument [Line Items] | |||||||
Percentage of potential future payment of net income in 2019 through 2026 | 60.00% | ||||||
Sale on dissolvable plug products in 2019 | $ 25,000,000 | ||||||
Notes payable, related parties | 2,300,000 | ||||||
Magnum Promissory Notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, annual interest rate | 6.00% | ||||||
Magnum Promissory Notes | Magnum Acquisition | |||||||
Debt Instrument [Line Items] | |||||||
Percentage of potential future payment of net income in 2019 through 2026 | 60.00% | ||||||
Sale on dissolvable plug products in 2019 | $ 25,000,000 | ||||||
Magnum Promissory Notes | Magnum Acquisition | Beneficial Owner | |||||||
Debt Instrument [Line Items] | |||||||
Notes payable, related parties | $ 2,300,000 | ||||||
Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 400,000,000 | ||||||
Debt instrument, annual interest rate | 8.75% | ||||||
Debt instrument, redemption price, percentage of principal, default trigger | 25.00% | ||||||
Unamortized deferred finance costs | 3,000,000 | $ 3,000,000 | 5,100,000 | ||||
Repurchased debt amount | 26,300,000 | 53,300,000 | |||||
Repurchase price | 8,400,000 | 14,600,000 | |||||
Payments of debt issuance costs | 300,000 | 900,000 | |||||
Extinguishment of debt | 17,600,000 | $ 37,800,000 | |||||
Line of Credit | 2018 ABL Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 200,000,000 | ||||||
Commitment fee percentage | 0.50% | ||||||
Maximum remaining borrowing capacity, that does not require quarterly testing | 18,750,000 | 18,750,000 | |||||
Debt instrument, convertible, threshold consecutive trading days | day | 30 | ||||||
Proceeds from lines of credit | 15,000,000 | ||||||
Current borrowing capacity | 43,200,000 | 43,200,000 | |||||
Letters of credit outstanding, amount | $ 500,000 | $ 500,000 | |||||
Line of Credit | 2018 ABL Credit Facility | Subsequent Event | |||||||
Debt Instrument [Line Items] | |||||||
Proceeds from lines of credit | $ 5,000,000 | ||||||
Line of Credit | 2018 ABL Credit Facility | Canadian Tranche | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 25,000,000 | ||||||
Line of Credit | 2018 ABL Credit Facility | Canadian Tranche | Minimum | London Interbank Offered Rate (LIBOR) | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument basis spread on variable rate | 0.75% | ||||||
Line of Credit | 2018 ABL Credit Facility | Canadian Tranche | Maximum | London Interbank Offered Rate (LIBOR) | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument basis spread on variable rate | 1.25% | ||||||
Line of Credit | 2018 ABL Credit Facility | Letters of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||
Line of Credit | 2018 ABL Credit Facility | Letters of Credit | Minimum | London Interbank Offered Rate (LIBOR) | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument basis spread on variable rate | 1.75% | ||||||
Line of Credit | 2018 ABL Credit Facility | Letters of Credit | Maximum | London Interbank Offered Rate (LIBOR) | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument basis spread on variable rate | 2.25% |
Debt Obligations - Fair Value (
Debt Obligations - Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Other short-term debt | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | $ 968 | $ 0 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | 153,765 | 156,001 |
Line of Credit | 2018 ABL Credit Facility | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | 15,000 | 0 |
Line of Credit | Magnum Promissory Notes | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | $ 1,125 | $ 1,969 |
Defined Contribution Plans (Det
Defined Contribution Plans (Details) - Nine Energy Service 401k Plan - USD ($) $ in Millions | 4 Months Ended | 12 Months Ended | |
Apr. 25, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Employer contributions | $ 0 | $ 1.4 | |
Matching Contribution Tranche One | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of employees' gross pay | 100.00% | ||
Employer matching contribution, percent of match | 5.00% |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Shares in Underlying Options | |||
Beginning balance (in shares) | 702,542 | 816,427 | |
Granted (in shares) | 0 | 0 | |
Exercised (in shares) | 0 | 0 | |
Forfeited (in shares) | 0 | (466) | |
Expired (in shares) | (92,132) | (113,419) | |
Ending balance (in shares) | 610,410 | 702,542 | 816,427 |
Options exercisable (in shares) | 610,410 | 702,542 | |
Weighted Average Exercise Price | |||
Beginning balance (in dollars per share) | $ 32.63 | $ 32.51 | |
Granted (in dollars per share) | 0 | 0 | |
Exercised (in dollars per share) | 0 | 0 | |
Forfeited (in dollars per share) | 0 | 31.18 | |
Expired (in dollars per share) | 26.71 | 31.78 | |
Ending balance (in dollars per share) | 33.52 | 32.63 | $ 32.51 |
Options exercisable (in dollars per share) | $ 33.52 | $ 32.63 | |
Remaining Weighted Average Contractual Life in Years | |||
Outstanding (in years) | 3 years 10 months 24 days | 4 years 6 months | 5 years 9 months 18 days |
Options exercisable (in years) | 3 years 10 months 24 days | 4 years 6 months | |
Intrinsic Value | |||
Beginning balance | $ 0 | $ 0 | |
Granted | 0 | 0 | |
Exercised | 0 | 0 | |
Forfeited | 0 | 0 | |
Expired | 0 | 0 | |
Ending balance | 0 | 0 | $ 0 |
Options exercisable | $ 0 | $ 0 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in shares) | 0 | 0 |
Weighted average grant date fair value (in dollars per share) | $ 2.15 | $ 0.85 |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 0 | $ 300,000 |
Expected future compensation expense | 0 | |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 4,900,000 | 9,000,000 |
Expected future compensation expense | $ 3,700,000 | |
Expected future compensation expense, period for recognition | 2 years | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 500,000 | $ 500,000 |
Expected future compensation expense | $ 0 | |
Volatility rate | 49.70% | |
Risk-free rate | 2.44% | |
Award vesting period | 3 years |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted and Performance Stock Activity (Details) - shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Nonvested at the beginning of the year (in shares) | 1,714,398 | 1,208,625 |
Granted (in shares) | 1,509,000 | 1,383,059 |
Vested (in shares) | (792,704) | (641,658) |
Cancelled (in shares) | (51,374) | (235,628) |
Nonvested at the end of the year (in shares) | 2,379,320 | 1,714,398 |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Nonvested at the beginning of the year (in shares) | 61,900 | 61,900 |
Granted (in shares) | 0 | 0 |
Vested (in shares) | 0 | 0 |
Cancelled (in shares) | 0 | 0 |
Nonvested at the end of the year (in shares) | 61,900 | 61,900 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($)installment | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Loss Contingencies [Line Items] | |||
Accrued legal fees and settlements | $ 1,076 | $ 165 | |
Payments for legal settlements | $ 1,700 | ||
Number of quarterly payroll tax installments | installment | 4 | ||
Contingent liabilities | $ 910 | 604 | $ 3,968 |
Accrued Expenses | |||
Loss Contingencies [Line Items] | |||
Contingent liabilities | 100 | 200 | |
Other long term liabilities | |||
Loss Contingencies [Line Items] | |||
Contingent liabilities | 800 | 400 | |
Scorpion Acquisition | Accrued Expenses | |||
Loss Contingencies [Line Items] | |||
Estimated liability for self-insured medical claims | 1,000 | 1,300 | |
Magnum Acquisition | |||
Loss Contingencies [Line Items] | |||
Contingent liabilities | $ 0 | 0 | $ 2,609 |
Percentage of potential future payment of net income in 2019 through 2026 | 60.00% | ||
Sale on dissolvable plug products in 2019 | $ 25,000 | ||
Payment for contingent consideration | 1,100 | ||
Notes payable, related parties | $ 2,300 |
Commitments and Contingencies_2
Commitments and Contingencies - Contingent Consideration (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Loss Contingency Accrual [Roll Forward] | ||
Balance at beginning of year | $ 604 | $ 3,968 |
Payments | (154) | (1,390) |
Revaluation adjustments | 460 | 276 |
Termination | (2,250) | |
Balance at end of the period | 910 | 604 |
Frac Tech | ||
Loss Contingency Accrual [Roll Forward] | ||
Balance at beginning of year | 604 | 1,359 |
Payments | (154) | (265) |
Revaluation adjustments | 460 | (490) |
Termination | 0 | |
Balance at end of the period | 910 | 604 |
Magnum | ||
Loss Contingency Accrual [Roll Forward] | ||
Balance at beginning of year | 0 | 2,609 |
Payments | 0 | (1,125) |
Revaluation adjustments | 0 | 766 |
Termination | (2,250) | |
Balance at end of the period | $ 0 | $ 0 |
Taxes - Components of Income Ta
Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Current | ||
U.S. federal | $ 0 | $ (874) |
U.S. state | (56) | 4 |
Foreign | 31 | 0 |
Total current benefit | (25) | (870) |
Deferred | ||
U.S. federal | 0 | (1,122) |
U.S. state | 0 | (466) |
Foreign | 0 | 0 |
Total deferred benefit | 0 | (1,588) |
Total benefit for income taxes | $ (25) | $ (2,458) |
Taxes - Effective Income Tax Ra
Taxes - Effective Income Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Tax benefit at statutory rate | $ (13,570) | $ (80,095) |
Foreign rate differential | (41) | (117) |
State income taxes, net of federal benefit | (44) | (463) |
Nondeductible expenses | 413 | 608 |
Impact from goodwill impairment | 0 | 5,036 |
Valuation allowance | 11,350 | 70,387 |
Non-cash compensation | 1,893 | 0 |
Other | (26) | 2,186 |
Total benefit for income taxes | $ (25) | $ (2,458) |
Taxes - Deferred Income Tax Lia
Taxes - Deferred Income Tax Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred income tax assets: | ||
Inventories | $ 2,533 | $ 2,990 |
Goodwill and intangible assets | 83,318 | 90,829 |
Deferred tax benefit from net losses | 79,690 | 63,844 |
Stock-based compensation | 4,194 | 5,564 |
Tax credit carryforwards | 695 | 680 |
Accrued expenses | 1,632 | 2,142 |
Interest carryover | 6,824 | 553 |
Lease liability | 8,162 | 8,607 |
Other | 164 | 165 |
Total deferred income tax assets | 187,212 | 175,374 |
Less: Valuation allowance | (170,747) | (157,703) |
Net deferred income tax assets | 16,465 | 17,671 |
Deferred income tax liabilities: | ||
Property and equipment | (8,387) | (9,283) |
ROU asset | (8,078) | (8,388) |
Total deferred income tax liabilities | (16,465) | (17,671) |
Net deferred income tax liability | $ 0 | $ 0 |
Taxes - Additional Information
Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 436,400,000 | |
Valuation allowance, increase (decrease) | 13,000,000 | |
Unrecognized tax benefits | 779,000 | $ 779,000 |
Unrecognized tax benefits, accrued income tax penalties and interest | $ 0 | |
Domestic | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards, periods of use | 20 years | |
State | Minimum | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards, periods of use | 7 years | |
State | Maximum | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards, periods of use | 20 years |
Taxes - Uncertain Tax Positions
Taxes - Uncertain Tax Positions (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |
Uncertain tax positions, beginning balance | $ 779 |
Additional based on tax positions related to prior years | 0 |
Additional based on tax positions related to current year | 0 |
Reduction based on tax positions related to prior years | 0 |
Lapse of statute of limitations | 0 |
Uncertain tax positions, ending balance | $ 779 |
Earnings (Loss) Per Share - Com
Earnings (Loss) Per Share - Computation of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Net Loss | $ (64,575) | $ (378,948) |
Average shares outstanding (in shares) | 30,302,925 | 29,744,830 |
Loss per share, basic (in usd per share) | $ (2.13) | $ (12.74) |
Assumed exercise of stock options (in shares) | 0 | 0 |
Unvested restricted stock and stock units (in shares) | 0 | 0 |
Average shares outstanding, diluted (in shares) | 30,302,925 | 29,744,830 |
Loss per share, diluted (in usd per share) | $ (2.13) | $ (12.74) |
Earnings (Loss) Per Share - Sum
Earnings (Loss) Per Share - Summary of Average Number of Securities Excluded from Diluted Income (loss) Per Share Potentially Dilute Earnings Per Shares (Details) - shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Options To Purchase Shares Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 729,514 | 753,609 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | |||
Rental expense | $ 8,020 | $ 8,897 | |
Issued credit memos | 500 | ||
Beneficial Owner | |||
Related Party Transaction [Line Items] | |||
Payables due to entities | 100 | ||
Notes payable, related parties | 1,100 | 1,900 | |
Forum Energy Technologies | |||
Related Party Transaction [Line Items] | |||
Costs and expenses | 500 | 500 | |
Accounts payable | 100 | 100 | |
Entity owned by Forum Energy Technologies | |||
Related Party Transaction [Line Items] | |||
Costs and expenses | 6,200 | 4,600 | |
Accounts payable | 600 | 900 | |
Select Energy Services, Inc. | |||
Related Party Transaction [Line Items] | |||
Costs and expenses | 1,100 | 1,200 | |
Accounts payable | 100 | 200 | |
National Energy Services Reunited | |||
Related Party Transaction [Line Items] | |||
Costs and expenses | 1,300 | ||
Accounts receivable | 500 | 3,700 | |
Mr. Crombie | |||
Related Party Transaction [Line Items] | |||
Lease and building maintenance expense | 800 | 800 | |
Equipment purchased | $ 2,600 | 1,600 | |
Percent of company stock owned (more than) | 5.00% | ||
Rental expense | $ 1,400 | 1,300 | |
Equipment | Mr. Crombie | |||
Related Party Transaction [Line Items] | |||
Payables due to entities | 700 | 200 | |
Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | 3,200 | 5,800 | |
Due from related parties | $ 400 | 400 | |
Products and rentals | National Energy Services Reunited | |||
Related Party Transaction [Line Items] | |||
Costs and expenses | $ 1,600 | ||
Coiled tubing equipment | National Energy Services Reunited | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | $ 5,900 | ||
Monthly installments | 24 months |
Supplemental Information - Summ
Supplemental Information - Summary of Financial Data by Segment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 14,757 | $ 10,154 |
Total assets | 381,613 | 442,600 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 15 | 7 |
Total assets | 32,184 | 84,472 |
Completion Solutions | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 14,742 | 10,147 |
Total assets | $ 349,429 | $ 358,128 |
Supplemental Information - Geog
Supplemental Information - Geographic Areas (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 349,419 | $ 310,851 |
Long-lived assets | $ 202,366 | $ 233,953 |
Geographic Concentration Risk | Revenue | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 100.00% | 100.00% |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 347,445 | $ 309,206 |
Long-lived assets | $ 200,227 | $ 231,294 |
United States | Geographic Concentration Risk | Revenue | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 99.40% | 99.50% |
Canada | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 1,974 | $ 1,645 |
Long-lived assets | $ 2,139 | $ 2,659 |
Canada | Geographic Concentration Risk | Revenue | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 0.60% | 0.50% |
Uncategorized Items - nine-2021
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2016-02 [Member] |