Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 03, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
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 | $ 47,805,208 | ||
Entity Common Stock, Shares Outstanding | 34,721,266 | ||
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 2023 Annual Meeting of Stockholders. | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001532286 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 17,445 | $ 21,509 |
Accounts receivable, net | 105,277 | 64,025 |
Income taxes receivable | 741 | 1,393 |
Inventories, net | 62,045 | 42,180 |
Prepaid expenses and other current assets | 11,217 | 10,195 |
Total current assets | 196,725 | 139,302 |
Property and equipment, net | 89,717 | 86,958 |
Operating lease right of use assets, net | 36,336 | 35,117 |
Finance lease right of use assets, net | 547 | 1,445 |
Intangible assets, net | 101,945 | 116,408 |
Other long-term assets | 1,564 | 2,383 |
Total assets | 426,834 | 381,613 |
Current liabilities | ||
Accounts payable | 42,211 | 28,680 |
Accrued expenses | 28,391 | 18,519 |
Current portion of long-term debt | 2,267 | 2,093 |
Current portion of operating lease obligations | 7,956 | 6,091 |
Current portion of finance lease obligations | 178 | 1,070 |
Total current liabilities | 81,003 | 56,453 |
Long-term liabilities | ||
Long-term debt | 338,031 | 332,314 |
Long-term operating lease obligations | 29,370 | 30,435 |
Long-term finance lease obligations | 0 | 65 |
Other long-term liabilities | 1,937 | 1,613 |
Total liabilities | 450,341 | 420,880 |
Commitments and contingencies (Note 12) | ||
Stockholders’ equity (deficit) | ||
Common stock (120,000,000 shares authorized at $0.01 par value; 33,221,266 and 32,826,325 shares issued and outstanding at December 31, 2022 and 2021 respectively) | 332 | 328 |
Additional paid-in capital | 775,006 | 773,350 |
Accumulated other comprehensive loss | (4,828) | (4,535) |
Accumulated deficit | (794,017) | (808,410) |
Total stockholders’ equity (deficit) | (23,507) | (39,267) |
Total liabilities and stockholders’ equity (deficit) | $ 426,834 | $ 381,613 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
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) | 33,221,266 | 32,826,325 |
Common stock shares outstanding (in shares) | 33,221,266 | 32,826,325 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | $ 593,382 | $ 349,419 |
Cost and expenses | ||
General and administrative expenses | 51,653 | 45,301 |
Depreciation | 26,784 | 28,905 |
Amortization of intangibles | 13,463 | 16,116 |
Loss on revaluation of contingent liability | 454 | 460 |
Loss on sale of property and equipment | 367 | 660 |
Income (loss) from operations | 43,568 | (50,015) |
Interest expense | 32,486 | 32,527 |
Interest income | (305) | (26) |
Gain on extinguishment of debt | (2,843) | (17,618) |
Other income | (709) | (298) |
Income (loss) before income taxes | 14,939 | (64,600) |
Provision (benefit) for income taxes | 546 | (25) |
Net income (loss) | $ 14,393 | $ (64,575) |
Earnings (loss) per share | ||
Basic (in dollars per share) | $ 0.47 | $ (2.13) |
Diluted (in dollars per share) | $ 0.45 | $ (2.13) |
Weighted average shares outstanding | ||
Basic (in shares) | 30,930,890 | 30,302,925 |
Diluted (in shares) | 32,251,398 | 30,302,925 |
Other comprehensive loss, net of tax | ||
Foreign currency translation adjustments, net of $0 tax in each period | $ (293) | $ (34) |
Total other comprehensive loss, net of tax | (293) | (34) |
Total comprehensive income (loss) | 14,100 | (64,609) |
Service | ||
Revenues | 455,364 | 248,618 |
Cost and expenses | ||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 350,733 | 228,290 |
Product | ||
Revenues | 138,018 | 100,801 |
Cost and expenses | ||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | $ 106,360 | $ 79,702 |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Tax associated with foreign currency translation | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) |
Stockholders' equity (deficit), beginning (in shares) at Dec. 31, 2020 | 31,557,809 | ||||
Stockholders' equity (deficit), beginning 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 and stock units | (473) | $ (2) | (471) | ||
Other comprehensive loss | (34) | (34) | |||
Net income (loss) | $ (64,575) | (64,575) | |||
Stockholders' equity (deficit), ending (in shares) at Dec. 31, 2021 | 32,826,325 | 32,826,325 | |||
Stockholders' equity (deficit), ending at Dec. 31, 2021 | $ (39,267) | $ 328 | 773,350 | (4,535) | (808,410) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock under stock compensation plan, net of forfeitures (in shares) | 623,328 | ||||
Issuance of common stock under stock compensation plan, net of forfeitures | 0 | $ 7 | (7) | ||
Stock-based compensation expense | 2,440 | 2,440 | |||
Vesting of restricted stock (in shares) | (228,387) | ||||
Vesting of restricted stock and stock units | (780) | $ (3) | (777) | ||
Other comprehensive loss | (293) | (293) | |||
Net income (loss) | $ 14,393 | 14,393 | |||
Stockholders' equity (deficit), ending (in shares) at Dec. 31, 2022 | 33,221,266 | 33,221,266 | |||
Stockholders' equity (deficit), ending at Dec. 31, 2022 | $ (23,507) | $ 332 | $ 775,006 | $ (4,828) | $ (794,017) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities | ||
Net income (loss) | $ 14,393 | $ (64,575) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | ||
Depreciation | 26,784 | 28,905 |
Amortization of intangibles | 13,463 | 16,116 |
Amortization of operating leases | 8,670 | 8,020 |
Amortization of deferred financing costs | 2,545 | 2,602 |
Recovery for doubtful accounts | (166) | (229) |
Provision for inventory obsolescence | 2,966 | 4,831 |
Stock-based compensation expense | 2,440 | 5,406 |
Gain on extinguishment of debt | (2,843) | (17,618) |
Loss on sale of property and equipment | 367 | 660 |
Loss on revaluation of contingent liability | 454 | 460 |
Abandonment of in-process research and development | 1,000 | 0 |
Changes in operating assets and liabilities | ||
Accounts receivable, net | (41,114) | (22,540) |
Inventories, net | (22,968) | (8,608) |
Prepaid expenses and other current assets | (818) | 3,350 |
Accounts payable and accrued expenses | 19,476 | 12,447 |
Income taxes receivable/payable | 655 | 0 |
Other assets and liabilities | (8,632) | (9,643) |
Net cash provided by (used in) operating activities | 16,672 | (40,416) |
Cash flows from investing activities | ||
Proceeds from sales of property and equipment | 2,959 | 3,492 |
Proceeds from property and equipment casualty losses | 175 | 0 |
Purchases of property and equipment | (28,551) | (15,413) |
Net cash used in investing activities | (25,417) | (11,921) |
Cash flows from financing activities | ||
Proceeds from ABL Credit Facility | 24,000 | 15,000 |
Payments on ABL Credit Facility | (7,000) | 0 |
Purchases of 2023 Notes | (10,081) | (8,355) |
Payments on Magnum Promissory Notes | (1,125) | (844) |
Proceeds from short-term debt | 4,086 | 1,513 |
Payments of short-term debt | (2,787) | (545) |
Payments on finance leases | (1,269) | (1,094) |
Payments of contingent liability | (195) | (154) |
Vesting of restricted stock and stock units | (780) | (473) |
Net cash provided by financing activities | 4,849 | 5,048 |
Impact of foreign currency exchange on cash | (168) | (66) |
Net decrease in cash and cash equivalents | (4,064) | (47,355) |
Cash and cash equivalents | ||
Cash and cash equivalents at beginning of period | 21,509 | 68,864 |
Cash and cash equivalents at end of period | 17,445 | 21,509 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 29,708 | 30,085 |
Cash refunded for income taxes | 116 | 24 |
Supplemental schedule of non-cash activities: | ||
Capital expenditures in accounts payable and accrued expenses | 3,443 | 63 |
Receivable from property and equipment sale (including insurance) | $ 701 | $ 497 |
Company and Organization
Company and Organization | 12 Months Ended |
Dec. 31, 2022 | |
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. Following an extreme decline in activity levels and pricing in 2020, the Company has been focused on strategically implementing price increases and gaining market share. In 2022, oil and natural gas prices improved, and activity levels increased compared to 2021, resulting in higher demand for the Company’s products and services. Due to a heightened competition for qualified labor, an under-supply of equipment, and other supply chain-related constraints, the Company implemented price increases in most service lines. Finding and retaining qualified labor continues to be a challenge resulting in wage inflation, offsetting some of the price increases. Going forward, the Company’s earnings will be affected by its customers’ activity plans (which are strongly influenced by commodity prices), the Company’s ability to implement further price increases, the impact of wage and labor inflation, and labor shortage and supply chain constraints. Additionally, activity levels could be affected as oilfield service providers continue to raise prices and customers are impacted by cost inflation to drill, complete, and produce oil and natural gas wells. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021, and for the years ended December 31, 2022 and 2021, 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, 2022 and 2021. Lease expense for operating leases is recognized on a straight-line basis over the lease term for 2022 and 2021. 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, 2022 and 2021. 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 (Deficit). 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 $105.3 million and $64.0 million of “Accounts receivable, net” at December 31, 2022 and 2021, 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 $0.2 million and $2.8 million at December 31, 2022 and 2021, respectively. Bad debt expense recovery was $0.2 million for both the years ended December 31, 2022 and 2021. 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 years ended December 31, 2022 and 2021. Concentration of Supplier Risk Purchases during the years ended December 31, 2022 and 2021 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). Valuation of Intangible Assets 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. Intangible assets with indefinite useful lives are not subject to amortization. For 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. 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 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 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). 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 Stock Units and Performance Cash Awards Performance stock units and performance cash awards are recorded at their fair value and expensed over their performance period. Fair value for performance stock units and performance cash awards 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 U.S. 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 year ended December 31, 2021 as the Company was in a net loss position. For additional information on earnings (loss) per share, see Note 14 – Earnings (Loss) Per Share. Accounting Pronouncements Recently Adopted In December 2019, the Financial Accounting Standards Board (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 adopted, the new standard for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. 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 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 financial position, results of operations, or |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Disaggregation of Revenues Disaggregated revenue for the years ended December 31, 2022 and 2021 was as follows: Year Ended December 31, 2022 2021 (in thousands) Cement $ 229,409 $ 114,181 Tools 138,018 100,801 Wireline 107,352 72,436 Coiled tubing 118,603 62,001 Total revenues $ 593,382 $ 349,419 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, 2022 and December 31, 2021, the amount of remaining performance obligations was not material. Contract Balances At December 31, 2022 and December 31, 2021, contract assets and contract liabilities were not material. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2022 | |
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 $6.7 million and $9.0 million at December 31, 2022 and 2021, respectively. Inventories, net as of December 31, 2022 and 2021 were comprised of the following: December 31, 2022 2021 (in thousands) Raw materials $ 39,249 $ 31,153 Work in progress 161 675 Finished goods 29,345 19,323 Inventories 68,755 51,151 Reserve for obsolescence (6,710) (8,971) Inventories, net $ 62,045 $ 42,180 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment amounts as of December 31, 2022 and 2021 were as follows: December 31, Estimated 2022 2021 (in thousands) Operating equipment 1 to 12 years $ 321,315 $ 299,602 Autos and trucks 1 to 7 years 4,140 4,168 Furniture, fixtures, and equipment 2 to 12 years 3,843 4,059 Shop equipment 3 to 15 years 14,552 14,555 Buildings 7 to 39 years 4,599 8,994 Leasehold improvements 3 to 11 years 2,017 1,443 Land indefinite 1,348 828 351,814 333,649 Less: Accumulated depreciation (262,097) (246,691) Property and equipment, net $ 89,717 $ 86,958 Depreciation expense was $26.8 million and $28.9 million for the years ended December 31, 2022 and 2021, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Leases | Leases 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 ABL Credit Facility (as defined and described in Note 9 – Debt Obligations) 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. Additional Information The following table summarizes the components of the Company’s lease expense recognized for the years ended December 31, 2022 and 2021, excluding variable lease and prepaid rent costs: Year Ended December 31, 2022 2021 (in thousands) Operating lease expense Operating lease right of use assets $ 8,670 $ 8,020 Operating lease non right of use assets 7,697 6,201 Total operating lease expense $ 16,367 $ 14,221 Finance lease expense Depreciation of right of use assets $ 385 $ 399 Interest on lease obligations 199 162 Total finance lease expense $ 584 $ 561 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, 2022 and 2021. Supplemental information related to leases was as follows as of December 31, 2022 and 2021: December 31, 2022 2021 Operating leases Weighted average remaining lease term 5.3 6.4 Weighted average discount rate 5.0% 5.0% Finance leases Weighted average remaining lease term 0.4 1.0 Weighted average discount rate 21.7% 9.8% Supplemental balance sheet information related to leases was as follows as of December 31, 2022 and 2021: December 31, 2022 2021 (in thousands) Operating lease right of use assets Operating lease right of use assets, gross $ 52,947 $ 45,853 Less: Accumulated amortization (16,611) (10,736) Operating lease right of use assets, net $ 36,336 $ 35,117 Operating lease obligations Current portion of operating lease obligations $ 7,956 $ 6,091 Long-term operating lease obligations 29,370 30,435 Total operating lease obligations $ 37,326 $ 36,526 Finance lease right of use assets Finance lease right of use assets, gross $ 1,057 $ 2,980 Less: Accumulated depreciation (510) (1,535) Finance lease right of use assets, net $ 547 $ 1,445 Finance lease obligations Current portion of finance lease obligations $ 178 $ 1,070 Long-term finance lease obligations — 65 Total finance lease obligations $ 178 $ 1,135 Future annual minimum lease payments as of December 31, 2022 were as follows: Operating Lease Right of Use Obligations Finance Leases Total (in thousands) 2023 $ 9,599 $ 219 $ 9,818 2024 7,994 — 7,994 2025 7,047 — 7,047 2026 6,474 — 6,474 2027 5,130 — 5,130 Thereafter 6,243 — 6,243 Total lease payments $ 42,487 $ 219 $ 42,706 Less: present value discount (5,161) (41) (5,202) Present value of lease obligations $ 37,326 $ 178 $ 37,504 Supplemental cash flow information related to leases for the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, 2022 2021 (in thousands) Cash paid for amounts included in the measurement of lease obligations: Operating cash flows from operating leases $ 8,698 $ 8,124 Operating cash flows from finance leases $ 385 $ 399 Financing cash flows from finance leases $ 1,269 $ 1,094 Right of use assets obtained in exchange for lease obligations: Operating leases $ 8,356 $ 5,059 Finance leases $ 336 $ 28 |
Leases | Leases 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 ABL Credit Facility (as defined and described in Note 9 – Debt Obligations) 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. Additional Information The following table summarizes the components of the Company’s lease expense recognized for the years ended December 31, 2022 and 2021, excluding variable lease and prepaid rent costs: Year Ended December 31, 2022 2021 (in thousands) Operating lease expense Operating lease right of use assets $ 8,670 $ 8,020 Operating lease non right of use assets 7,697 6,201 Total operating lease expense $ 16,367 $ 14,221 Finance lease expense Depreciation of right of use assets $ 385 $ 399 Interest on lease obligations 199 162 Total finance lease expense $ 584 $ 561 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, 2022 and 2021. Supplemental information related to leases was as follows as of December 31, 2022 and 2021: December 31, 2022 2021 Operating leases Weighted average remaining lease term 5.3 6.4 Weighted average discount rate 5.0% 5.0% Finance leases Weighted average remaining lease term 0.4 1.0 Weighted average discount rate 21.7% 9.8% Supplemental balance sheet information related to leases was as follows as of December 31, 2022 and 2021: December 31, 2022 2021 (in thousands) Operating lease right of use assets Operating lease right of use assets, gross $ 52,947 $ 45,853 Less: Accumulated amortization (16,611) (10,736) Operating lease right of use assets, net $ 36,336 $ 35,117 Operating lease obligations Current portion of operating lease obligations $ 7,956 $ 6,091 Long-term operating lease obligations 29,370 30,435 Total operating lease obligations $ 37,326 $ 36,526 Finance lease right of use assets Finance lease right of use assets, gross $ 1,057 $ 2,980 Less: Accumulated depreciation (510) (1,535) Finance lease right of use assets, net $ 547 $ 1,445 Finance lease obligations Current portion of finance lease obligations $ 178 $ 1,070 Long-term finance lease obligations — 65 Total finance lease obligations $ 178 $ 1,135 Future annual minimum lease payments as of December 31, 2022 were as follows: Operating Lease Right of Use Obligations Finance Leases Total (in thousands) 2023 $ 9,599 $ 219 $ 9,818 2024 7,994 — 7,994 2025 7,047 — 7,047 2026 6,474 — 6,474 2027 5,130 — 5,130 Thereafter 6,243 — 6,243 Total lease payments $ 42,487 $ 219 $ 42,706 Less: present value discount (5,161) (41) (5,202) Present value of lease obligations $ 37,326 $ 178 $ 37,504 Supplemental cash flow information related to leases for the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, 2022 2021 (in thousands) Cash paid for amounts included in the measurement of lease obligations: Operating cash flows from operating leases $ 8,698 $ 8,124 Operating cash flows from finance leases $ 385 $ 399 Financing cash flows from finance leases $ 1,269 $ 1,094 Right of use assets obtained in exchange for lease obligations: Operating leases $ 8,356 $ 5,059 Finance leases $ 336 $ 28 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets The gross carrying amount and accumulated amortization of intangible assets as of December 31, 2022 and 2021 were as follows: December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period (in thousands, except weighted average amortization period information) Customer relationships $ 63,270 $ (49,845) $ 13,425 4.8 Non-compete agreements 6,500 (6,166) 334 0.8 Technology 125,110 (36,924) 88,186 10.7 Total $ 194,880 $ (92,935) $ 101,945 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 The Company abandoned its “E-Set” tools business and related $1.0 million in-process research and development indefinite-lived intangible asset in the fourth quarter of 2022. Amortization of Intangibles Amortization of intangibles was $13.5 million and $16.1 million for the years ended December 31, 2022 and 2021, respectively. Future estimated amortization of intangibles is as follows: Year Ending December 31, (in thousands) 2023 $ 11,516 2024 11,183 2025 11,183 2026 11,082 2027 10,315 Thereafter 46,666 $ 101,945 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses as of December 31, 2022 and 2021 consisted of the following: December 31, 2022 2021 (in thousands) Accrued interest 5,012 4,980 Accrued compensation and benefits 10,283 6,897 Accrued bonus 3,979 1,125 Accrued legal fees and settlements 145 1,076 Other accrued expenses 8,972 4,441 Accrued expenses $ 28,391 $ 18,519 |
Debt Obligations
Debt Obligations | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations The Company’s debt obligations as of December 31, 2022 and 2021 were as follows: December 31, 2022 2021 (in thousands) 2023 Notes (1) $ 307,339 $ 320,343 ABL Credit Facility (1) 32,000 15,000 Magnum Promissory Notes (2) — 1,125 Other short-term debt (2) 2,267 968 Total debt before deferred financing costs $ 341,606 $ 337,436 Deferred financing costs (1,308) (3,029) Total debt $ 340,298 $ 334,407 Less: Current portion of long-term debt (2,267) (2,093) Long-term debt $ 338,031 $ 332,314 (1) Subsequent to December 31, 2022, the Company redeemed all of the outstanding 2023 Notes and extended the maturity date of the ABL Credit Facility from October 25, 2023 to January 29, 2027. As such, these obligations are classified as long-term on the Company’s Consolidated Balance Sheet at December 31, 2022. Refer to further disclosure within this footnote for additional information. (2) The weighted average interest rate of short-term debt outstanding at December 31, 2022 and 2021, respectively, was 6.0% and 5.1%. 2023 Notes On October 25, 2018, the Company issued $400.0 million principal amount of 8.750% Senior Notes due 2023 (the “2023 Notes”). The 2023 Notes were issued under an indenture, dated as of October 25, 2018 (the “2023 Notes Indenture”), by and among the Company, certain subsidiaries of the Company and Wells Fargo, National Association, as Trustee. The 2023 Notes bore interest at an annual rate of 8.750% payable on May 1 and November 1 of each year, commencing May 1, 2019. The 2023 Notes were senior unsecured obligations of the Company and were fully and unconditionally guaranteed on a senior unsecured basis by each of the Company’s current domestic subsidiaries and by certain future subsidiaries. The 2023 Notes Indenture contained covenants that limited 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 2023 Notes Indenture at December 31, 2022. Pursuant to the 2023 Notes Indenture, upon an event of default, the trustee or the holders of at least 25% in aggregate principal amount of then outstanding 2023 Notes may declare the 2023 Notes immediately due and payable, except that a default resulting from certain events of bankruptcy or insolvency with respect to the Company, any significant subsidiary or any group of subsidiaries that, taken together, would constitute a significant subsidiary, would automatically cause all outstanding 2023 Notes to become due and payable. Unamortized deferred financing costs associated with the 2023 Notes were $1.3 million and $3.0 million at December 31, 2022 and 2021, respectively. These costs were direct deductions from the carrying amount of the 2023 Notes and were amortized through interest expense through the maturity date of the 2023 Notes using the effective interest method. Extinguishment of Debt The Company repurchased approximately $13.0 million of 2023 Notes at a repurchase price of approximately $10.1 million in cash for the year ended December 31, 2022. Deferred financing costs associated with these transactions were $0.1 million for the year ended December 31, 2022. As a result, for the year ended December 31, 2022, the Company recorded a $2.8 million gain on the extinguishment of debt, which was calculated as the difference between the repurchase price and the carrying amount of the 2023 Notes partially offset by the deferred financing costs. The Company repurchased approximately $26.3 million of 2023 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 was calculated as the difference between the repurchase price and the carrying amount of the 2023 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, 2022 and 2021 . Redemption On February 1, 2023, with proceeds received from its public offering of Units (as defined and described below) and borrowings under its ABL Credit Facility (as defined and described below), the Company redeemed all of the outstanding 2023 Notes at a redemption price of 100.0% of outstanding principal amount thereof ($307.3 million), plus accrued and unpaid interest ($6.7 million). The Company also wrote off the unamortized deferred financing costs associated with the 2023 Notes in conjunction with the redemption. Units Offering and 2028 Notes Units On January 30, 2023, the Company completed its public offering of 300,000 units with an aggregate stated amount of $300.0 million (the “Units”). Each Unit consists of $1,000 principal amount of the Company’s 13.000% Senior Secured Notes due 2028 (collectively, the “2028 Notes”) and five shares of common stock of the Company. The Company received proceeds of $279.8 million from the Units offering, after deducting underwriting discounts and commission, which was used to fund a portion of the redemption price of the 2023 Notes. Each Unit will be separated into its constituent securities (the 2028 Notes and shares of the Company’s common stock) automatically on October 27, 2023, or, if earlier, on the date, if any, on which a change of control or event of default (each as defined in the indenture governing the 2028 Notes) occurs. A holder of Units may elect to separate its Units into its constituent securities, in whole but not in part, on or after March 31, 2023. Prior to such date, the Units may not be separated at the option of the holder. Once a Unit has been separated into its constituent securities at the option of a holder, it cannot be recreated. Prior to separating the Units into its constituent securities, a holder thereof will not be able to participate in any redemption or repurchase of the 2028 Notes, and holders of the 2028 Notes must have separated their Units prior to the date of any redemption of any offer to repurchase commencement date in order to participate in such redemption or repurchase. Holders of Units are entitled to the rights of a holder of the Company’s common stock, including, without limitation, the right to vote and consent to or receive notice as a stockholder. 2028 Notes On January 30, 2023, the Company and certain of its subsidiaries entered into an indenture, dated as of January 30, 2023 (the “2028 Notes Indenture”), with U.S. Bank Trust Company, National Association, as the trustee and as notes collateral agent, pursuant to which the 2028 Notes, which form a part of the Units, were issued. The 2028 Notes will mature on February 1, 2028 and bear interest at an annual rate of 13.000% payable in cash semi-annually in arrears on each of February 1 and August 1, commencing August 1, 2023. The 2028 Notes are senior secured obligations of the Company and are guaranteed on a senior secured basis by each of the Company’s current domestic subsidiaries and by certain future subsidiaries, subject to agreed guaranty and security principles and certain exclusions. Prior to February 1, 2026, the Company may, on any one or more occasions, redeem all or a part of the 2028 Notes at a redemption price equal to 100.0% of the principal amount of the 2028 Notes redeemed, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, prior to February 1, 2026, the Company may, from time to time, redeem up to 35.0% of the aggregate principal amount of the 2028 Notes with an amount of cash not greater than the net cash proceeds of certain equity offerings at a redemption price equal to 113.0% of the principal amount of the 2028 Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption, provided that at least 65.0% of the aggregate principal amount of the 2028 Notes issued under the 2028 Notes Indenture remains outstanding immediately after such redemption and the redemption occurs within 180 days of the closing date of such equity offering. Also, prior to February 1, 2026, the Company may redeem during each 12-month period beginning on January 30, 2023, up to 10% of the principal amount of the 2028 Notes on a redemption price equal to 103.0% of the aggregate principal amount of the 2028 Notes being redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. On and after February 1, 2026, the Company may redeem the 2028 Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount of the 2028 Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to, but excluding the date of redemption, if redeemed during the periods indicated: Redemption Price February 1, 2026 to January 31, 2027 106.500 % February 1, 2027 to October 31, 2027 103.250 % November 1, 2027 and thereafter 100.000 % On each May 15 and November 14, commencing November 14, 2023 (each, an “Excess Cash Flow Offer Date”), the Company is required to make an offer (an “Excess Cash Flow Offer”) to all holders of the 2028 Notes and, if required by the terms of any Pari Passu Notes Lien Indebtedness (as defined in the 2028 Notes Indenture), to any holders of any Pari Passu Notes Lien Indebtedness to purchase, prepay or redeem, together on a pro-rata basis, the maximum principal amount of the 2028 Notes and any such Pari Passu Notes Lien Indebtedness (plus all accrued interest (including additional interest, if any) on the 2028 Notes and any such Pari Passu Notes Lien Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith) that may be purchased, prepaid or redeemed using an amount of cash equal to the Excess Cash Flow Amount (as defined in the 2028 Notes Indenture and which is 75.0% of Excess Cash Flow (as defined in the 2028 Notes Indenture), as determined immediately prior to the Excess Cash Flow Offer Date), if any, subject to certain exceptions set forth in the 2028 Notes Indenture. The offer price in any such offer will be equal to 100% of the principal amount of the 2028 Notes and any such Pari Passu Notes Lien Indebtedness (or, in respect of any such Pari Passu Notes Lien Indebtedness, such lesser price, if any, as may be provided for by the terms of such Pari Passu Notes Lien Indebtedness), plus accrued and unpaid interest and additional interest, if any, to, but excluding, the date of purchase, prepayment or redemption, subject to the rights of holders of the 2028 Notes or any such Pari Passu Notes Lien Indebtedness on the relevant record date to receive interest due on an interest payment date that is on or prior to the date of purchase, prepayment or redemption, and will be payable in cash. If the Company experiences certain changes of control, each holder of 2028 Notes may require the Company to repurchase all or a portion of its 2028 Notes for cash at a price equal to 101.0% of the principal amount of such 2028 Notes, plus any accrued but unpaid interest, if any, to, but excluding, the date of repurchase. The 2028 Notes Indenture contains covenants that, among other things and subject to certain exceptions and qualifications, limit the Company’s ability and the ability of its restricted subsidiaries to (i) incur additional indebtedness and guarantee indebtedness; (ii) pay dividends or make other distributions of capital stock; (iii) prepay, redeem or repurchase certain debt; (iv) issue certain preferred stock or similar equity securities, (v) make loans and investments; (vi) sell assets; (vii) incur liens; (viii) enter into transactions with affiliates; (ix) enter into agreements restricting its subsidiaries’ ability to pay dividends; or (x) consolidate, merge, or sell all or substantially all of its assets. Upon an event of default, the trustee of the 2028 Notes or the holders of at least 25% in aggregate principal amount of then outstanding 2028 Notes may declare the 2028 Notes immediately due and payable, except that a default resulting from certain events of bankruptcy or insolvency with respect to the Company, any significant subsidiary or any group of restricted subsidiaries that, taken together, would constitute a significant subsidiary, will automatically cause all outstanding 2028 Notes to become due and payable. ABL Credit Facility Background 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 permitted 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 “ABL Credit Facility”). Pursuant to the 2018 ABL Credit Agreement, the ABL Credit Facility was set to mature on October 25, 2023 or, if earlier, on the date that is 180 days before the scheduled maturity date of the 2023 Notes if they had not been redeemed or repurchased by such date. Pursuant to the 2018 ABL Credit Agreement, loans to the Company and its domestic related subsidiaries (the “U.S. Credit Parties”) under the ABL Credit Facility were base rate loans or London Interbank Offered Rate (“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 varied from 0.75% to 1.25% and the applicable margin for LIBOR loans or CDOR loans varied 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 was charged on the average daily unused portion of the revolving commitments. On January 17, 2023, the Company entered into the First Amendment to Credit Agreement (the “ABL Facility Amendment”) with JP Morgan Chase Bank, N.A., as administrative agent, and the lender parties thereto, which amends certain terms of the 2018 ABL Credit Agreement (as amended the “ABL Credit Agreement”). The ABL Facility Amendment became effective on January 30, 2023. Pursuant to the ABL Facility Amendment, the maturity date of the ABL Credit Facility was extended from October 25, 2023 to January 29, 2027. In addition, the ABL Facility Amendment, among other changes, revised the terms of the ABL Credit Facility as follows: (a) decreased the size of the ABL Credit Facility from $200.0 million to $150.0 million, subject to the borrowing base, (b) changed the interest rate benchmark from LIBOR to Term Secured Overnight Financing Rate with a 10 basis point spread adjustment and increased pricing from the existing range of 1.75% to 2.25% to a range of 2.00% to 2.50%, in each case depending on the Company’s leverage ratio, (c) modified the financial covenant, enhanced reporting and cash dominion triggers in the ABL Credit Facility from the existing minimum availability threshold of the greater of $18.75 million and 12.5% of the loan limit to a minimum availability threshold of (i) $12.5 million from January 30, 2023 until May 31, 2023 and (ii) the greater of $17.5 million and 12.5% of the loan limit thereafter, (d) decreased the Canadian tranche sub-limit from $25.0 million to $5.0 million, (e) decreased the letter of credit sub-limit from $50.0 million to $10.0 million and (f) made satisfaction of the Payment Conditions (as defined in the ABL Facility Amendment) a condition to an Excess Cash Flow Offer in addition to a condition to voluntary payments of the 2028 Notes. The Payment Conditions in summary are (A) no default or event of default on a pro forma basis and (B) immediately after and at all times and at all times during the 30 days prior, on a pro forma basis, (1) (x) availability under the ABL Credit Facility shall not be less than the greater of 15% of the loan limit and $22.5 million and (y) the fixed charge coverage ratio shall be at least 1.00 to 1.00 or (2) availability under the ABL Credit Facility shall not be less than the greater of 20% of the loan limit and $30.0 million. The 2018 ABL Credit Agreement contained and the 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 contained a minimum fixed charge ratio covenant of 1.00 to 1.00 that was tested quarterly when the availability under the ABL Credit Facility dropped 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, 2022. Pursuant to the 2018 ABL Credit Agreement, all of the obligations under the ABL Credit Facility were, and pursuant to the ABL Credit Agreement, all of the obligations under the ABL Credit Facility are secured by 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 security interests (subject to permitted liens) in substantially all of the personal property of Canadian Credit Parties, excluding certain assets. At December 31, 2022, the Company had $32.0 million outstanding borrowings under the ABL Credit Facility, and its availability under the ABL Credit Facility was approximately $66.6 million, net of outstanding letters of credit of $1.3 million. On January 27, 2023, the Company borrowed an additional $40.0 million under the ABL Credit Facility to pay for the redemption price of the 2023 Notes and to pay for fees and expenses related to the Units offering. Both the ABL Credit Facility and the Units collateralization were completed within 30 days after closing in accordance with the terms of the ABL Facility Amendment and the Units offering. 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 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 was paid in equal quarterly installments which began January 1, 2021. The remaining outstanding balance was paid on October 1, 2022. Other Short-Term Debt In the fourth quarter of 2022, the Company renewed certain insurance policies, and it financed the premium for its excess policy in the amount of $4.1 million. At December 31, 2022, the outstanding balance on this premium was $2.3 million. Fair Value of Debt Instruments The estimated fair value of the Company’s debt obligations as of December 31, 2022 and 2021 was as follows: December 31, 2022 2021 (in thousands) 2023 Notes $ 300,700 $ 153,765 ABL Credit Facility $ 32,000 $ 15,000 Magnum Promissory Notes $ — $ 1,125 Other short-term debt $ 2,267 $ 968 The fair value of the 2023 Notes, 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 2023 Notes is established based on observable inputs in less active markets. The fair value of the 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, 2022 | |
Retirement Benefits [Abstract] | |
Defined Contribution Plans | Defined Contribution Plans Background The Company sponsors a defined contribution plan, the Nine Energy Service 401(k) Plan (the “Nine Plan”), under Section 401(k) of the Internal Revenue Code of 1986, as amended, for all qualified employees. Contributions For the years ended December 31, 2022 and 2021, the Company made no employer contributions under the Nine Plan. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation Stock Options Information about stock option activity during the years ended December 31, 2022 and 2021 was as follows: 2022 Activity Number of Weighted Remaining Intrinsic Value (in thousands) Beginning balance 610,410 $ 33.52 3.9 $ — Granted — — — — Exercised — — — — Forfeited — — — — Expired (22,904) 26.28 — — Total outstanding 587,506 $ 33.80 3.0 $ — Options exercisable 587,506 $ 33.80 3.0 $ — 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 $ — The intrinsic value at December 31, 2022 and 2021 is the amount by which the fair value of the underlying share exceeds the exercise price of an option as of December 31, 2022 and 2021, respectively. The Company granted no options in 2022 and 2021. There was no compensation expense recorded for the years ended December 31, 2022 and 2021. As of December 31, 2022, 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, 2022 and 2021 was as follows: 2022 Activity Number of Shares and Units Weighted Average Grant Date Fair Value Nonvested at January 1, 2022 2,379,320 $ 2.83 Granted 651,250 2.80 Vested (1,068,092) 4.13 Forfeited (27,922) 2.02 Nonvested at December 31, 2022 1,934,556 $ 2.12 2021 Activity Number of Shares and Units Weighted Average Grant Date Fair Value Nonvested at January 1, 2021 1,714,398 $ 6.69 Granted 1,509,000 2.15 Vested (792,704) 9.77 Forfeited (51,374) 4.33 Nonvested at December 31, 2021 2,379,320 $ 2.83 The total amount of compensation expense related to the restricted stock and restricted stock units recorded was approximately $2.4 million and $4.9 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, the Company expects to record compensation expense related to restricted stock and restricted stock units of approximately $3.0 million over the remaining term of approximately 1.9 years. Future restricted stock and restricted stock unit grants would 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 U.S. Treasury security rates at the grant date, was 2.44%. 2022 2021 Nonvested at January 1, 61,900 61,900 Granted (1) — — Vested (42,714) — Forfeited (19,186) — Nonvested at December 31, — 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 nonvested PSU balance at January 1, 2021 is shown at target level. The Company did not grant PSUs in 2022 or 2021. There was no compensation expense related to PSUs for the year ended December 31, 2022, and for the year ended December 31, 2021, the total amount of compensation expense related to PSUs was approximately $0.5 million. As of December 31, 2022, the Company has no further compensation expense related to PSUs to record. Future PSU grants will result in additional compensation expense. Performance Cash Awards In May 2022, the Company granted performance cash awards (the “PCAs”) that vest based upon the Company’s achievement of certain criteria related to its relative total shareholder return (“TSR”) in comparison to TSR of members of its peer group (the “Peer Group”), as defined by the PCA grant. These awards, which the Company granted at a target achievement amount, are subject to three individual year-long performance periods (the “Performance Periods”), and payment related to each Performance Period can range from 0% to 200% of the target amount for that Performance Period. The PCAs were valued on the date of grant based on the estimated fair value, which was based on numerous assumptions including the likelihood of the Company’s stock price performance achieving targeted thresholds, using a Monte Carlo simulation model. The assumptions used to value the awards included the historical volatility of the Company as well as the volatility of its Peer Group and the risk-free rate, which was derived using the U.S. Treasury security rates. Under the relevant liability accounting, the fair values for each tranche of the PCAs are remeasured at the end of each reporting period. At December 31, 2022, the volatility for remeasurement was 123.82%, and the risk-free rate was 4.30%. Compensation expense related to PCAs for the year ended December 31, 2022 was approximately $1.8 million. As of December 31, 2022, based upon the valuation of the PCAs at year end, the Company had remaining compensation expense to recognize of $1.6 million. Future PCA grants will result in additional compensation expense. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021, the Company recorded a $0.1 million and a $1.1 million accrual, respectively, for liabilities related to legal matters, which is included under the caption “Accrued expenses” in its Consolidated Balance Sheets. 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. 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 $1.2 million and $1.0 million at December 31, 2022 and 2021, 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 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. The Company’s contingent liability (Level 3) for the years ended December 31, 2022 and 2021 was as follows: Frac Tech (in thousands) Balance at December 31, 2020 $ 604 Payments (154) Revaluation adjustments 460 Balance at December 31, 2021 $ 910 Payments (195) Revaluation adjustments 454 Balance at December 31, 2022 $ 1,169 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 $0.4 million and $0.1 million reported in “Accrued expenses” at December 31, 2022 and 2021, respectively, and $0.8 million reported in “Other long-term liabilities” at both December 31, 2022 and 2021 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). |
Taxes
Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Taxes | Taxes The components of the provision (benefit) for income taxes for the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, 2022 2021 (in thousands) Current U.S. federal $ — $ — U.S. state 510 (56) Foreign 36 31 Total current provision (benefit) $ 546 $ (25) Deferred U.S. federal $ — $ — U.S. state — — Foreign — — Total deferred provision (benefit) — — Total provision (benefit) for income taxes $ 546 $ (25) The provision (benefit) for income taxes for the years ended December 31, 2022 and 2021 differed from the provision (benefit) calculated using the applicable statutory federal income tax rate as follows: Year Ended December 31, 2022 2021 (in thousands) Tax provision (benefit) at statutory rate $ 3,137 $ (13,570) Foreign rate differential (16) (41) State income taxes, net of federal benefit 403 (44) Nondeductible expenses 912 413 Valuation allowance (5,823) 11,350 Non-cash compensation 1,879 1,893 Other 54 (26) Total provision (benefit) for income taxes $ 546 $ (25) The tax effects of the cumulative temporary differences resulting in the net deferred tax asset (liabilities) at December 31, 2022 and 2021 were as follows: December 31, 2022 2021 (in thousands) Deferred income tax assets: Inventories $ 2,298 $ 2,533 Goodwill and intangible assets 75,617 83,318 Deferred tax benefit from net losses 79,914 79,690 Stock-based compensation and cash award expense 2,524 4,194 Tax credit carryforwards 655 695 Accrued expenses 678 1,632 Interest carryover 13,860 6,824 Lease liability 8,441 8,162 Other 163 164 Total deferred income tax assets 184,150 187,212 Less: Valuation allowance (162,888) (170,747) Net deferred income tax assets $ 21,262 $ 16,465 Deferred income tax liabilities: Property and equipment $ (12,974) $ (8,387) ROU asset (8,288) (8,078) Total deferred income tax liabilities (21,262) (16,465) Net deferred income tax asset (liability) $ — $ — As of December 31, 2022, the Company had federal and state net operating loss carryforwards (“NOLs”) of approximately $442.2 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 expired 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, 2022. 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 U.S. domestic and Canadian deferred tax assets. The 2022 results include a decrease in the Company’s valuation allowance of approximately $7.9 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 U.S. 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 2019. 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: 2022 (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, 2022 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, 2022, no interest and penalties have been accrued. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 Net Income Average Shares Outstanding Earnings Per Share (in thousands, except for share and per share amounts) Basic $ 14,393 30,930,890 $ 0.47 Unvested restricted stock and stock units — 1,320,508 — Diluted $ 14,393 32,251,398 $ 0.45 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) Unvested restricted stock and stock units — — — Diluted $ (64,575) 30,302,925 $ (2.13) 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 because there is a net loss for the 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 period in which the Company experienced a net loss was as follows: 2022 2021 Year ended December 31, — 729,514 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company leases office space, yard facilities, and equipment and purchases building maintenance and repair services from entities owned by David Crombie, an executive officer of the Company. Total lease expense and building maintenance and repair expense associated with these entities was $1.3 million and $0.9 million for the years ended December 31, 2022 and 2021, respectively. The Company also purchased $2.6 million of products and services for both the years ended December 31, 2022 and 2021 from an entity in which Mr. Crombie is a limited partner. There were outstanding payables due to this entity relating to equipment purchases of $0.1 million and $0.7 million at December 31, 2022 and 2021, respectively. In addition, the Company currently leases office space in Corpus Christi, Texas and previously leased office space in 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 these office spaces, net of sub-leasing income, was $1.6 million and $1.4 million for the years ended December 31, 2022 and 2021, respectively. There were net outstanding payables due to these entities of $0.1 million at December 31, 2022. Additionally, on June 30, 2020, the Company issued the Magnum Promissory Notes to the sellers of Magnum, including Mr. Frazier. At December 31, 2022, there was no outstanding principal balance payable to Mr. Frazier, and the balance payable to Mr. Frazier was $1.1 million at December 31, 2021. For additional information regarding the Magnum Promissory Notes, see Note 9 – Debt Obligations. The Company purchases chemical additives used in cementing from Select Energy Services, Inc. (“Select”). One of the Company’s directors also served as a director of Select from November 2017 to November 2022. The Company was billed $1.5 million and $1.1 million for the years ended December 31, 2022 and 2021, respectively. There were outstanding payables due to Select of $0.1 million at both December 31, 2022 and 2021. 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 $0.8 million and $1.3 million for the years ended December 31, 2022 and 2021, respectively. 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 $0.2 million and $0.5 million at December 31, 2022 and 2021, 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 $2.2 million and $3.2 million for the years ended December 31, 2022 and 2021, respectively. There were outstanding receivables due from Devon of $0.5 million and $0.4 million at December 31, 2022 and 2021, respectively. |
Supplemental Information
Supplemental Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Supplemental Information | Supplemental Information Capital expenditures for years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, 2022 2021 (in thousands) Completion Solutions $ 32,162 $ 14,742 Corporate 105 15 $ 32,267 $ 14,757 Total assets by segment as of December 31, 2022 and 2021 were as follows: December 31, 2022 2021 (in thousands) Completion Solutions $ 399,546 $ 349,429 Corporate 27,288 32,184 $ 426,834 $ 381,613 Revenue by country for the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, 2022 Year Ended December 31, 2021 Amount Percentage Amount Percentage (in thousands) (in thousands) United States $ 591,614 99.7 % $ 347,445 99.4 % Canada 1,768 0.3 % 1,974 0.6 % $ 593,382 100.0 % $ 349,419 100.0 % Long-lived assets (defined as property and equipment and definite-lived intangible assets) by country as of December 31, 2022 and 2021 were as follows: December 31, 2022 2021 (in thousands) United States $ 189,962 $ 200,227 Canada and other 1,700 2,139 $ 191,662 $ 202,366 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021, and for the years ended December 31, 2022 and 2021, 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, 2022 and 2021. Lease expense for operating leases is recognized on a straight-line basis over the lease term for 2022 and 2021. 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, 2022 and 2021. |
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 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 (Deficit). |
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 years ended December 31, 2022 and 2021. 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). |
Valuation of Intangible Assets | Valuation of Intangible Assets 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. Intangible assets with indefinite useful lives are not subject to amortization. For 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. 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 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 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). |
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 Stock Units and Performance Cash Awards Performance stock units and performance cash awards are recorded at their fair value and expensed over their performance period. Fair value for performance stock units and performance cash awards 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 U.S. 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 year ended December 31, 2021 as the Company was in a net loss position. 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 December 2019, the Financial Accounting Standards Board (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 adopted, the new standard for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. 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 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 financial position, results of operations, or |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | Disaggregated revenue for the years ended December 31, 2022 and 2021 was as follows: Year Ended December 31, 2022 2021 (in thousands) Cement $ 229,409 $ 114,181 Tools 138,018 100,801 Wireline 107,352 72,436 Coiled tubing 118,603 62,001 Total revenues $ 593,382 $ 349,419 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net | Inventories, net as of December 31, 2022 and 2021 were comprised of the following: December 31, 2022 2021 (in thousands) Raw materials $ 39,249 $ 31,153 Work in progress 161 675 Finished goods 29,345 19,323 Inventories 68,755 51,151 Reserve for obsolescence (6,710) (8,971) Inventories, net $ 62,045 $ 42,180 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment amounts as of December 31, 2022 and 2021 were as follows: December 31, Estimated 2022 2021 (in thousands) Operating equipment 1 to 12 years $ 321,315 $ 299,602 Autos and trucks 1 to 7 years 4,140 4,168 Furniture, fixtures, and equipment 2 to 12 years 3,843 4,059 Shop equipment 3 to 15 years 14,552 14,555 Buildings 7 to 39 years 4,599 8,994 Leasehold improvements 3 to 11 years 2,017 1,443 Land indefinite 1,348 828 351,814 333,649 Less: Accumulated depreciation (262,097) (246,691) Property and equipment, net $ 89,717 $ 86,958 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Components of Lease Expense | The following table summarizes the components of the Company’s lease expense recognized for the years ended December 31, 2022 and 2021, excluding variable lease and prepaid rent costs: Year Ended December 31, 2022 2021 (in thousands) Operating lease expense Operating lease right of use assets $ 8,670 $ 8,020 Operating lease non right of use assets 7,697 6,201 Total operating lease expense $ 16,367 $ 14,221 Finance lease expense Depreciation of right of use assets $ 385 $ 399 Interest on lease obligations 199 162 Total finance lease expense $ 584 $ 561 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, 2022 and 2021. Supplemental information related to leases was as follows as of December 31, 2022 and 2021: December 31, 2022 2021 Operating leases Weighted average remaining lease term 5.3 6.4 Weighted average discount rate 5.0% 5.0% Finance leases Weighted average remaining lease term 0.4 1.0 Weighted average discount rate 21.7% 9.8% |
Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows as of December 31, 2022 and 2021: December 31, 2022 2021 (in thousands) Operating lease right of use assets Operating lease right of use assets, gross $ 52,947 $ 45,853 Less: Accumulated amortization (16,611) (10,736) Operating lease right of use assets, net $ 36,336 $ 35,117 Operating lease obligations Current portion of operating lease obligations $ 7,956 $ 6,091 Long-term operating lease obligations 29,370 30,435 Total operating lease obligations $ 37,326 $ 36,526 Finance lease right of use assets Finance lease right of use assets, gross $ 1,057 $ 2,980 Less: Accumulated depreciation (510) (1,535) Finance lease right of use assets, net $ 547 $ 1,445 Finance lease obligations Current portion of finance lease obligations $ 178 $ 1,070 Long-term finance lease obligations — 65 Total finance lease obligations $ 178 $ 1,135 |
Schedule of Operating Lease Liability Maturity | Future annual minimum lease payments as of December 31, 2022 were as follows: Operating Lease Right of Use Obligations Finance Leases Total (in thousands) 2023 $ 9,599 $ 219 $ 9,818 2024 7,994 — 7,994 2025 7,047 — 7,047 2026 6,474 — 6,474 2027 5,130 — 5,130 Thereafter 6,243 — 6,243 Total lease payments $ 42,487 $ 219 $ 42,706 Less: present value discount (5,161) (41) (5,202) Present value of lease obligations $ 37,326 $ 178 $ 37,504 |
Schedule of Financing Lease Liability Maturity | Future annual minimum lease payments as of December 31, 2022 were as follows: Operating Lease Right of Use Obligations Finance Leases Total (in thousands) 2023 $ 9,599 $ 219 $ 9,818 2024 7,994 — 7,994 2025 7,047 — 7,047 2026 6,474 — 6,474 2027 5,130 — 5,130 Thereafter 6,243 — 6,243 Total lease payments $ 42,487 $ 219 $ 42,706 Less: present value discount (5,161) (41) (5,202) Present value of lease obligations $ 37,326 $ 178 $ 37,504 |
Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases for the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, 2022 2021 (in thousands) Cash paid for amounts included in the measurement of lease obligations: Operating cash flows from operating leases $ 8,698 $ 8,124 Operating cash flows from finance leases $ 385 $ 399 Financing cash flows from finance leases $ 1,269 $ 1,094 Right of use assets obtained in exchange for lease obligations: Operating leases $ 8,356 $ 5,059 Finance leases $ 336 $ 28 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021 were as follows: December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period (in thousands, except weighted average amortization period information) Customer relationships $ 63,270 $ (49,845) $ 13,425 4.8 Non-compete agreements 6,500 (6,166) 334 0.8 Technology 125,110 (36,924) 88,186 10.7 Total $ 194,880 $ (92,935) $ 101,945 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 |
Schedule of Components of Intangible Assets | The gross carrying amount and accumulated amortization of intangible assets as of December 31, 2022 and 2021 were as follows: December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period (in thousands, except weighted average amortization period information) Customer relationships $ 63,270 $ (49,845) $ 13,425 4.8 Non-compete agreements 6,500 (6,166) 334 0.8 Technology 125,110 (36,924) 88,186 10.7 Total $ 194,880 $ (92,935) $ 101,945 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 |
Schedule of Future Estimated Amortization Expense | Future estimated amortization of intangibles is as follows: Year Ending December 31, (in thousands) 2023 $ 11,516 2024 11,183 2025 11,183 2026 11,082 2027 10,315 Thereafter 46,666 $ 101,945 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses as of December 31, 2022 and 2021 consisted of the following: December 31, 2022 2021 (in thousands) Accrued interest 5,012 4,980 Accrued compensation and benefits 10,283 6,897 Accrued bonus 3,979 1,125 Accrued legal fees and settlements 145 1,076 Other accrued expenses 8,972 4,441 Accrued expenses $ 28,391 $ 18,519 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Summary of Debt Obligations | The Company’s debt obligations as of December 31, 2022 and 2021 were as follows: December 31, 2022 2021 (in thousands) 2023 Notes (1) $ 307,339 $ 320,343 ABL Credit Facility (1) 32,000 15,000 Magnum Promissory Notes (2) — 1,125 Other short-term debt (2) 2,267 968 Total debt before deferred financing costs $ 341,606 $ 337,436 Deferred financing costs (1,308) (3,029) Total debt $ 340,298 $ 334,407 Less: Current portion of long-term debt (2,267) (2,093) Long-term debt $ 338,031 $ 332,314 (1) Subsequent to December 31, 2022, the Company redeemed all of the outstanding 2023 Notes and extended the maturity date of the ABL Credit Facility from October 25, 2023 to January 29, 2027. As such, these obligations are classified as long-term on the Company’s Consolidated Balance Sheet at December 31, 2022. Refer to further disclosure within this footnote for additional information. (2) The weighted average interest rate of short-term debt outstanding at December 31, 2022 and 2021, respectively, was 6.0% and 5.1%. |
Summary of Redemption of Debt | On and after February 1, 2026, the Company may redeem the 2028 Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount of the 2028 Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to, but excluding the date of redemption, if redeemed during the periods indicated: Redemption Price February 1, 2026 to January 31, 2027 106.500 % February 1, 2027 to October 31, 2027 103.250 % November 1, 2027 and thereafter 100.000 % |
Summary of Fair value of Debt Obligations | The estimated fair value of the Company’s debt obligations as of December 31, 2022 and 2021 was as follows: December 31, 2022 2021 (in thousands) 2023 Notes $ 300,700 $ 153,765 ABL Credit Facility $ 32,000 $ 15,000 Magnum Promissory Notes $ — $ 1,125 Other short-term debt $ 2,267 $ 968 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock Options Activity | Information about stock option activity during the years ended December 31, 2022 and 2021 was as follows: 2022 Activity Number of Weighted Remaining Intrinsic Value (in thousands) Beginning balance 610,410 $ 33.52 3.9 $ — Granted — — — — Exercised — — — — Forfeited — — — — Expired (22,904) 26.28 — — Total outstanding 587,506 $ 33.80 3.0 $ — Options exercisable 587,506 $ 33.80 3.0 $ — 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 $ — |
Schedule of Nonvested Restricted Stock Activity | Information about restricted stock and restricted stock unit activity during the years ended December 31, 2022 and 2021 was as follows: 2022 Activity Number of Shares and Units Weighted Average Grant Date Fair Value Nonvested at January 1, 2022 2,379,320 $ 2.83 Granted 651,250 2.80 Vested (1,068,092) 4.13 Forfeited (27,922) 2.02 Nonvested at December 31, 2022 1,934,556 $ 2.12 2021 Activity Number of Shares and Units Weighted Average Grant Date Fair Value Nonvested at January 1, 2021 1,714,398 $ 6.69 Granted 1,509,000 2.15 Vested (792,704) 9.77 Forfeited (51,374) 4.33 Nonvested at December 31, 2021 2,379,320 $ 2.83 2022 2021 Nonvested at January 1, 61,900 61,900 Granted (1) — — Vested (42,714) — Forfeited (19,186) — Nonvested at December 31, — 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 nonvested PSU balance at January 1, 2021 is shown at target level. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Contingent Liabilities | The Company’s contingent liability (Level 3) for the years ended December 31, 2022 and 2021 was as follows: Frac Tech (in thousands) Balance at December 31, 2020 $ 604 Payments (154) Revaluation adjustments 460 Balance at December 31, 2021 $ 910 Payments (195) Revaluation adjustments 454 Balance at December 31, 2022 $ 1,169 |
Taxes (Tables)
Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021 were as follows: Year Ended December 31, 2022 2021 (in thousands) Current U.S. federal $ — $ — U.S. state 510 (56) Foreign 36 31 Total current provision (benefit) $ 546 $ (25) Deferred U.S. federal $ — $ — U.S. state — — Foreign — — Total deferred provision (benefit) — — Total provision (benefit) for income taxes $ 546 $ (25) |
Schedule of Effective Income Tax Rate Reconciliation | The provision (benefit) for income taxes for the years ended December 31, 2022 and 2021 differed from the provision (benefit) calculated using the applicable statutory federal income tax rate as follows: Year Ended December 31, 2022 2021 (in thousands) Tax provision (benefit) at statutory rate $ 3,137 $ (13,570) Foreign rate differential (16) (41) State income taxes, net of federal benefit 403 (44) Nondeductible expenses 912 413 Valuation allowance (5,823) 11,350 Non-cash compensation 1,879 1,893 Other 54 (26) Total provision (benefit) for income taxes $ 546 $ (25) |
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, 2022 and 2021 were as follows: December 31, 2022 2021 (in thousands) Deferred income tax assets: Inventories $ 2,298 $ 2,533 Goodwill and intangible assets 75,617 83,318 Deferred tax benefit from net losses 79,914 79,690 Stock-based compensation and cash award expense 2,524 4,194 Tax credit carryforwards 655 695 Accrued expenses 678 1,632 Interest carryover 13,860 6,824 Lease liability 8,441 8,162 Other 163 164 Total deferred income tax assets 184,150 187,212 Less: Valuation allowance (162,888) (170,747) Net deferred income tax assets $ 21,262 $ 16,465 Deferred income tax liabilities: Property and equipment $ (12,974) $ (8,387) ROU asset (8,288) (8,078) Total deferred income tax liabilities (21,262) (16,465) Net deferred income tax asset (liability) $ — $ — |
Schedule of Reconciliation of Uncertain Tax Positions | A reconciliation of the beginning and ending amount of uncertain tax positions is as follows: 2022 (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 (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 Net Income Average Shares Outstanding Earnings Per Share (in thousands, except for share and per share amounts) Basic $ 14,393 30,930,890 $ 0.47 Unvested restricted stock and stock units — 1,320,508 — Diluted $ 14,393 32,251,398 $ 0.45 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) Unvested restricted stock and stock units — — — Diluted $ (64,575) 30,302,925 $ (2.13) |
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 period in which the Company experienced a net loss was as follows: 2022 2021 Year ended December 31, — 729,514 |
Supplemental Information (Table
Supplemental Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Summary of Financial Data by Segment | Capital expenditures for years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, 2022 2021 (in thousands) Completion Solutions $ 32,162 $ 14,742 Corporate 105 15 $ 32,267 $ 14,757 Total assets by segment as of December 31, 2022 and 2021 were as follows: December 31, 2022 2021 (in thousands) Completion Solutions $ 399,546 $ 349,429 Corporate 27,288 32,184 $ 426,834 $ 381,613 |
Schedule of Revenue and Long-Lived Assets, by Geographical Area | Revenue by country for the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, 2022 Year Ended December 31, 2021 Amount Percentage Amount Percentage (in thousands) (in thousands) United States $ 591,614 99.7 % $ 347,445 99.4 % Canada 1,768 0.3 % 1,974 0.6 % $ 593,382 100.0 % $ 349,419 100.0 % Long-lived assets (defined as property and equipment and definite-lived intangible assets) by country as of December 31, 2022 and 2021 were as follows: December 31, 2022 2021 (in thousands) United States $ 189,962 $ 200,227 Canada and other 1,700 2,139 $ 191,662 $ 202,366 |
Company and Organization - Narr
Company and Organization - Narrative (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments (in segments) | 1 |
Significant Accounting Polici_3
Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Accounts receivable, net | $ 105,277 | $ 64,025 |
Allowance for doubtful accounts | 200 | 2,800 |
Recovery for doubtful accounts | $ (166) | $ (229) |
Revenues (Details)
Revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 593,382 | $ 349,419 |
Cement | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 229,409 | 114,181 |
Tools | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 138,018 | 100,801 |
Wireline | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 107,352 | 72,436 |
Coiled tubing | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 118,603 | $ 62,001 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 39,249 | $ 31,153 |
Work in progress | 161 | 675 |
Finished goods | 29,345 | 19,323 |
Inventories | 68,755 | 51,151 |
Reserve for obsolescence | (6,710) | (8,971) |
Inventories, net | $ 62,045 | $ 42,180 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 351,814 | $ 333,649 |
Less: Accumulated depreciation | (262,097) | (246,691) |
Property and equipment, net | 89,717 | 86,958 |
Depreciation | 26,784 | 28,905 |
Operating equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 321,315 | 299,602 |
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 | $ 4,140 | 4,168 |
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 | $ 3,843 | 4,059 |
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 | $ 14,552 | 14,555 |
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 | $ 4,599 | 8,994 |
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 | $ 2,017 | 1,443 |
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 | $ 1,348 | $ 828 |
Leases - Additional Information
Leases - Additional Information (Details) | Dec. 31, 2022 |
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, 2022 | Dec. 31, 2021 | |
Operating lease expense | ||
Operating lease right of use assets | $ 8,670 | $ 8,020 |
Operating lease non right of use assets | 7,697 | 6,201 |
Total operating lease expense | 16,367 | 14,221 |
Finance lease expense | ||
Depreciation of right of use assets | 385 | 399 |
Interest on lease obligations | 199 | 162 |
Total finance lease expense | $ 584 | $ 561 |
Leases - Supplemental Informati
Leases - Supplemental Information Related to Leases (Details) | Dec. 31, 2022 | Dec. 31, 2021 |
Operating leases | ||
Weighted average remaining lease term | 5 years 3 months 18 days | 6 years 4 months 24 days |
Weighted average discount rate | 5% | 5% |
Finance leases | ||
Weighted average remaining lease term | 4 months 24 days | 1 year |
Weighted average discount rate | 21.70% | 9.80% |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Operating lease right of use assets | ||
Operating lease right of use assets, gross | $ 52,947 | $ 45,853 |
Less: Accumulated amortization | (16,611) | (10,736) |
Operating lease right of use assets, net | 36,336 | 35,117 |
Current portion of operating lease obligations | 7,956 | 6,091 |
Long-term operating lease obligations | 29,370 | 30,435 |
Total operating lease obligations | 37,326 | 36,526 |
Finance lease right of use assets | ||
Finance lease right of use assets, gross | 1,057 | 2,980 |
Less: Accumulated depreciation | (510) | (1,535) |
Finance lease right of use assets, net | 547 | 1,445 |
Current portion of finance lease obligations | 178 | 1,070 |
Long-term finance lease obligations | 0 | 65 |
Total finance lease obligations | $ 178 | $ 1,135 |
Leases - Schedule of Lease Liab
Leases - Schedule of Lease Liability Maturity (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Operating Lease Right of Use Obligations | ||
2023 | $ 9,599 | |
2024 | 7,994 | |
2025 | 7,047 | |
2026 | 6,474 | |
2027 | 5,130 | |
Thereafter | 6,243 | |
Total lease payments | 42,487 | |
Less: present value discount | (5,161) | |
Present value of lease obligations | 37,326 | $ 36,526 |
Finance Leases | ||
2023 | 219 | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
2027 | 0 | |
Thereafter | 0 | |
Total lease payments | 219 | |
Less: present value discount | (41) | |
Present value of lease obligations | 178 | $ 1,135 |
Total | ||
2023 | 9,818 | |
2024 | 7,994 | |
2025 | 7,047 | |
2026 | 6,474 | |
2027 | 5,130 | |
Thereafter | 6,243 | |
Total lease payments | 42,706 | |
Less: present value discount | (5,202) | |
Present value of lease obligations | $ 37,504 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash paid for amounts included in the measurement of lease obligations: | ||
Operating cash flows from operating leases | $ 8,698 | $ 8,124 |
Operating cash flows from finance leases | 385 | 399 |
Financing cash flows from finance leases | 1,269 | 1,094 |
Right of use assets obtained in exchange for lease obligations: | ||
Operating leases | 8,356 | 5,059 |
Finance leases | $ 336 | $ 28 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Changes in Intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated Amortization | $ (92,935) | $ (79,472) |
Net Carrying Amount | 101,945 | |
Intangible assets, gross | 194,880 | 195,880 |
Intangible assets, net | 101,945 | 116,408 |
In-process research and development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 1,000 | |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 63,270 | 63,270 |
Accumulated Amortization | (49,845) | (45,187) |
Net Carrying Amount | $ 13,425 | $ 18,083 |
Weighted Average Amortization Period | 4 years 9 months 18 days | 5 years 3 months 18 days |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 6,500 | $ 6,500 |
Accumulated Amortization | (6,166) | (5,766) |
Net Carrying Amount | $ 334 | $ 734 |
Weighted Average Amortization Period | 9 months 18 days | 2 years |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 125,110 | $ 125,110 |
Accumulated Amortization | (36,924) | (28,519) |
Net Carrying Amount | $ 88,186 | $ 96,591 |
Weighted Average Amortization Period | 10 years 8 months 12 days | 11 years 8 months 12 days |
Intangible Assets - Additional
Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization intangibles | $ 13,463 | $ 16,116 |
In-process research and development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 1,000 | |
In-process research and development | "E-Set" tools business | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | $ 1,000 |
Intangible Assets - Amortizatio
Intangible Assets - Amortization Expense (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2023 | $ 11,516 |
2024 | 11,183 |
2025 | 11,183 |
2026 | 11,082 |
2027 | 10,315 |
Thereafter | 46,666 |
Net Carrying Amount | $ 101,945 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued interest | $ 5,012 | $ 4,980 |
Accrued compensation and benefits | 10,283 | 6,897 |
Accrued bonus | 3,979 | 1,125 |
Accrued legal fees and settlements | 145 | 1,076 |
Other accrued expenses | 8,972 | 4,441 |
Accrued expenses | $ 28,391 | $ 18,519 |
Debt Obligations - Summary of D
Debt Obligations - Summary of Debt Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | $ 341,606 | $ 337,436 |
Deferred financing costs | (1,308) | (3,029) |
Total debt | 340,298 | 334,407 |
Less: Current portion of long-term debt | (2,267) | (2,093) |
Long-term debt | $ 338,031 | $ 332,314 |
Weighted-average interest rate, short-term debt | 6% | 5.10% |
Other short-term debt | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | $ 2,267 | $ 968 |
Senior Notes | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | 307,339 | 320,343 |
Deferred financing costs | (1,300) | (3,000) |
Line of credit | 2018 ABL Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | 32,000 | 15,000 |
Line of credit | Magnum Promissory Notes | ||
Line of Credit Facility [Line Items] | ||
Total debt before deferred financing costs | $ 0 | $ 1,125 |
Debt Obligations - Additional I
Debt Obligations - Additional Information (Details) | 3 Months Ended | 12 Months Ended | |||||||
Feb. 01, 2023 USD ($) | Jan. 31, 2023 | Jan. 30, 2023 USD ($) shares | Oct. 25, 2018 USD ($) day | Dec. 31, 2021 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jan. 27, 2023 USD ($) | Jun. 30, 2020 USD ($) | |
Debt Instrument [Line Items] | |||||||||
Unamortized deferred finance costs | $ 3,029,000 | $ 1,308,000 | $ 3,029,000 | ||||||
Extinguishment of debt | $ 2,843,000 | 17,618,000 | |||||||
Offer price percentage | 100% | ||||||||
Debt covenant, fixed charge covenant, ratio | 1 | ||||||||
Financing agreement, insurance premium | 4,100,000 | ||||||||
Outstanding premium, amount | $ 2,300,000 | ||||||||
Subsequent Event | Public offering | |||||||||
Debt Instrument [Line Items] | |||||||||
Issuance of common stock (in shares) | shares | 300,000 | ||||||||
Aggregated stated amount of units | $ 300,000,000 | ||||||||
Conversion of units (in shares) | shares | 5 | ||||||||
Proceeds from issuance public offering | $ 279,800,000 | ||||||||
2018 ABL Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt fixed charge coverage ratio | 1 | ||||||||
2018 ABL Credit Facility | Loan Limit Greater Than Fifteen Percentage | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt voluntary payment condition to excess cash flow offer rate | 15% | ||||||||
Debt voluntary payment condition to excess cash flow offer amount | $ 22,500,000 | ||||||||
2018 ABL Credit Facility | Loan Limit Greater Than Twenty Percentage | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt voluntary payment condition to excess cash flow offer rate | 20% | ||||||||
Debt voluntary payment condition to excess cash flow offer amount | $ 30,000,000 | ||||||||
Promissory notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, annual interest rate | 6% | ||||||||
Promissory notes | Magnum Acquisition | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of potential future payment of net income in 2019 through 2026 | 60% | ||||||||
Sale on dissolvable plug products in 2019 | $ 25,000,000 | ||||||||
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% | ||||||||
Unamortized deferred finance costs | $ 3,000,000 | $ 1,300,000 | 3,000,000 | ||||||
Repurchased debt amount | 13,000,000 | 26,300,000 | |||||||
Repurchase price | 10,100,000 | 8,400,000 | |||||||
Payments of debt issuance costs | 100,000 | 300,000 | |||||||
Extinguishment of debt | $ 2,800,000 | $ 17,600,000 | |||||||
Senior Notes | ABL Credit Facility | Subsequent Event | |||||||||
Debt Instrument [Line Items] | |||||||||
Redemption Price | 100% | ||||||||
Debt instrument, outstanding principal amount | $ 307,300,000 | ||||||||
Debt instrument, increase, accrued and unpaid interest | $ 6,700,000 | ||||||||
Senior Notes | 2028 Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, redemption price, percentage of principal, default trigger | 25% | ||||||||
Line of credit | 2018 ABL Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 200,000,000 | ||||||||
Proceeds from lines of credit | $ 32,000,000 | ||||||||
Current borrowing capacity | $ 150,000,000 | 66,600,000 | |||||||
Letters of credit outstanding, amount | $ 1,300,000 | ||||||||
Commitment fee percentage | 0.50% | ||||||||
Percentage of loan limit to minimum availability of threshold | 12.50% | ||||||||
Maximum remaining borrowing capacity, that does not require quarterly testing | $ 18,750,000 | $ 17,500,000 | |||||||
Debt instrument, convertible, threshold consecutive trading days (in days) | day | 30 | ||||||||
Line of credit | 2018 ABL Credit Facility | Subsequent Event | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 40,000,000 | ||||||||
Maximum remaining borrowing capacity, that does not require quarterly testing | $ 12,500,000 | ||||||||
Line of credit | 2018 ABL Credit Facility | Canadian Tranche | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 25,000,000 | ||||||||
Current borrowing capacity | $ 5,000,000 | ||||||||
Line of credit | 2018 ABL Credit Facility | Canadian Tranche | Minimum | LIBOR | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument basis spread on variable rate | 0.75% | ||||||||
Line of credit | 2018 ABL Credit Facility | Canadian Tranche | Maximum | 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 | ||||||||
Current borrowing capacity | $ 10,000,000 | ||||||||
Line of credit | 2018 ABL Credit Facility | Letters of credit | SOFR | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis point spread adjustment | 0.10% | ||||||||
Line of credit | 2018 ABL Credit Facility | Letters of credit | Minimum | LIBOR | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument basis spread on variable rate | 1.75% | 2% | |||||||
Line of credit | 2018 ABL Credit Facility | Letters of credit | Maximum | LIBOR | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument basis spread on variable rate | 2.25% | 2.50% | |||||||
2028 Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Excess cash flowpercentage | 75% | ||||||||
Repurchase amount percentage | 101% | ||||||||
2028 Notes | Redemption Period One | |||||||||
Debt Instrument [Line Items] | |||||||||
Redemption Price | 106.50% | ||||||||
2028 Notes | Redemption Period Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Redemption Price | 103.25% | ||||||||
2028 Notes | Redemption Period Three | |||||||||
Debt Instrument [Line Items] | |||||||||
Redemption Price | 100% | ||||||||
2028 Notes | Subsequent Event | Redemption Period One | |||||||||
Debt Instrument [Line Items] | |||||||||
Redemption Price | 35% | ||||||||
Debt instrument, redemption price percentage | 100% | ||||||||
2028 Notes | Subsequent Event | Redemption Period Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Redemption Price | 65% | ||||||||
Debt instrument, redemption price percentage | 113% | ||||||||
2028 Notes | Subsequent Event | Redemption Period Three | |||||||||
Debt Instrument [Line Items] | |||||||||
Redemption Price | 10% | ||||||||
Debt instrument, redemption price percentage | 103% | ||||||||
2028 Notes | Subsequent Event | Public offering | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, annual interest rate | 13% |
Debt Obligations - Redemption P
Debt Obligations - Redemption Prices (Details) - 2028 Notes | 12 Months Ended |
Dec. 31, 2022 | |
February 1, 2026 to January 31, 2027 | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 106.50% |
February 1, 2027 to October 31, 2027 | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 103.25% |
November 1, 2027 and thereafter | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 100% |
Debt Obligations - Fair Value (
Debt Obligations - Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Other short-term debt | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | $ 2,267 | $ 968 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | 300,700 | 153,765 |
Line of credit | 2018 ABL Credit Facility | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | 32,000 | 15,000 |
Line of credit | Promissory notes | ||
Debt Instrument [Line Items] | ||
Fair value of debt instruments | $ 0 | $ 1,125 |
Defined Contribution Plans (Det
Defined Contribution Plans (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Nine Energy Service 401k Plan | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer contributions | $ 0 | $ 0 |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Shares in Underlying Options | |||
Beginning balance (in shares) | 610,410 | 702,542 | |
Granted (in shares) | 0 | 0 | |
Exercised (in shares) | 0 | 0 | |
Forfeited (in shares) | 0 | 0 | |
Expired (in shares) | (22,904) | (92,132) | |
Ending balance (in shares) | 587,506 | 610,410 | 702,542 |
Options exercisable (in shares) | 587,506 | 610,410 | |
Weighted Average Exercise Price | |||
Beginning balance (in dollars per share) | $ 33.52 | $ 32.63 | |
Granted (in dollars per share) | 0 | 0 | |
Exercised (in dollars per share) | 0 | 0 | |
Forfeited (in dollars per share) | 0 | 0 | |
Expired (in dollars per share) | 26.28 | 26.71 | |
Ending balance (in dollars per share) | 33.80 | 33.52 | $ 32.63 |
Options exercisable (in dollars per share) | $ 33.80 | $ 33.52 | |
Remaining Weighted Average Contractual Life in Years | |||
Outstanding (in years) | 3 years | 3 years 10 months 24 days | 4 years 6 months |
Options exercisable (in years) | 3 years | 3 years 10 months 24 days | |
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, 2022 | Dec. 31, 2021 | May 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 0 | 0 | |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 0 | $ 0 | |
Expected future compensation expense | 0 | ||
Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | 2,400,000 | 4,900,000 | |
Expected future compensation expense | $ 3,000,000 | ||
Expected future compensation expense, period for recognition | 1 year 10 months 24 days | ||
Performance shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 0 | $ 500,000 | |
Award vesting period | 3 years | ||
Volatility rate | 49.70% | ||
Risk-free rate | 2.44% | ||
Performance Cash Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 1,800,000 | ||
Expected future compensation expense | $ 1,600,000 | ||
Volatility rate | 123.82% | ||
Risk-free rate | 4.30% | ||
Performance Cash Awards | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Payment related to performance period | 0% | ||
Performance Cash Awards | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Payment related to performance period | 200% |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted and Performance Stock Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
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) | 2,379,320 | 1,714,398 |
Granted (in shares) | 651,250 | 1,509,000 |
Vested (in shares) | (1,068,092) | (792,704) |
Forfeited (in shares) | (27,922) | (51,374) |
Nonvested at the end of the year (in shares) | 1,934,556 | 2,379,320 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Beginning balance (in dollars per share) | $ 2.83 | $ 6.69 |
Granted (in dollars per share) | 2.80 | 2.15 |
Vested (in dollars per share) | 4.13 | 9.77 |
Forfeited (in dollars per share) | 2.02 | 4.33 |
Ending balance (in dollars per share) | $ 2.12 | $ 2.83 |
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) | (42,714) | 0 |
Forfeited (in shares) | (19,186) | 0 |
Nonvested at the end of the year (in shares) | 0 | 61,900 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Loss Contingencies [Line Items] | ||
Accrued legal fees and settlements | $ 145 | $ 1,076 |
Accrued expenses | ||
Loss Contingencies [Line Items] | ||
Contingent liabilities | 400 | 100 |
Other long term liabilities | ||
Loss Contingencies [Line Items] | ||
Contingent liabilities | 800 | 800 |
Scorpion acquisition | Accrued expenses | ||
Loss Contingencies [Line Items] | ||
Estimated liability for self-insured medical claims | $ 1,200 | $ 1,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Contingent Consideration (Details) - Frac Tech - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Loss Contingency Accrual [Roll Forward] | ||
Balance at beginning of year | $ 910 | $ 604 |
Payments | (195) | (154) |
Revaluation adjustments | 454 | 460 |
Balance at end of the period | $ 1,169 | $ 910 |
Taxes - Components of Income Ta
Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current | ||
U.S. federal | $ 0 | $ 0 |
U.S. state | 510 | (56) |
Foreign | 36 | 31 |
Total current provision (benefit) | 546 | (25) |
Deferred | ||
U.S. federal | 0 | 0 |
U.S. state | 0 | 0 |
Foreign | 0 | 0 |
Total deferred provision (benefit) | 0 | 0 |
Total provision (benefit) for income taxes | $ 546 | $ (25) |
Taxes - Effective Income Tax Ra
Taxes - Effective Income Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Tax provision (benefit) at statutory rate | $ 3,137 | $ (13,570) |
Foreign rate differential | (16) | (41) |
State income taxes, net of federal benefit | 403 | (44) |
Nondeductible expenses | 912 | 413 |
Valuation allowance | (5,823) | 11,350 |
Non-cash compensation | 1,879 | 1,893 |
Other | 54 | (26) |
Total provision (benefit) for income taxes | $ 546 | $ (25) |
Taxes - Deferred Income Tax Lia
Taxes - Deferred Income Tax Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred income tax assets: | ||
Inventories | $ 2,298 | $ 2,533 |
Goodwill and intangible assets | 75,617 | 83,318 |
Deferred tax benefit from net losses | 79,914 | 79,690 |
Stock-based compensation and cash award expense | 2,524 | 4,194 |
Tax credit carryforwards | 655 | 695 |
Accrued expenses | 678 | 1,632 |
Interest carryover | 13,860 | 6,824 |
Lease liability | 8,441 | 8,162 |
Other | 163 | 164 |
Total deferred income tax assets | 184,150 | 187,212 |
Less: Valuation allowance | (162,888) | (170,747) |
Net deferred income tax assets | 21,262 | 16,465 |
Deferred income tax liabilities: | ||
Property and equipment | (12,974) | (8,387) |
ROU asset | (8,288) | (8,078) |
Total deferred income tax liabilities | (21,262) | (16,465) |
Net deferred income tax asset (liability) | $ 0 | $ 0 |
Taxes - Additional Information
Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 442,200,000 | |
Valuation allowance, increase (decrease) | 7,900,000 | |
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, 2022 USD ($) | |
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, 2022 | Dec. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Net income (loss) | $ 14,393 | $ (64,575) |
Average shares outstanding, basic (in shares) | 30,930,890 | 30,302,925 |
Earnings (loss) per share, basic (in dollars per share) | $ 0.47 | $ (2.13) |
Unvested restricted stock and stock units (in shares) | 1,320,508 | 0 |
Average shares outstanding, diluted (in shares) | 32,251,398 | 30,302,925 |
Earnings (loss) per share, diluted (in dollars per share) | $ 0.45 | $ (2.13) |
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, 2022 | Dec. 31, 2021 | |
Options to purchase shares of common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 729,514 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | |||
Rental expense | $ 8,670,000 | $ 8,020,000 | |
Affiliated entity | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | 2,200,000 | 3,200,000 | |
Due from related parties | 500,000 | 400,000 | |
Affiliated entity | Warren Lynn Frazier | |||
Related Party Transaction [Line Items] | |||
Payables due to entities | 100,000 | ||
Notes payable, related parties | 0 | 1,100,000 | |
Affiliated entity | Select Energy Services, Inc. | |||
Related Party Transaction [Line Items] | |||
Costs and expenses | 1,500,000 | 1,100,000 | |
Accounts payable | 100,000 | 100,000 | |
Affiliated entity | National Energy Services Reunited | |||
Related Party Transaction [Line Items] | |||
Costs and expenses | 800,000 | ||
Accounts receivable | 200,000 | 500,000 | |
Mr. Crombie | |||
Related Party Transaction [Line Items] | |||
Lease and building maintenance expense | 1,300,000 | 900,000 | |
Equipment purchased | $ 2,600,000 | 2,600,000 | |
Percent of company stock owned (more than) | 5% | ||
Rental expense | $ 1,600,000 | 1,400,000 | |
Equipment | Mr. Crombie | |||
Related Party Transaction [Line Items] | |||
Payables due to entities | $ 100,000 | 700,000 | |
Products and rentals | Affiliated entity | National Energy Services Reunited | |||
Related Party Transaction [Line Items] | |||
Costs and expenses | $ 1,300,000 | ||
Coiled tubing equipment | Affiliated entity | National Energy Services Reunited | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | $ 5,900,000 | ||
Monthly installments | 24 months |
Supplemental Information - Summ
Supplemental Information - Summary of Financial Data by Segment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 32,267 | $ 14,757 |
Total assets | 426,834 | 381,613 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 105 | 15 |
Total assets | 27,288 | 32,184 |
Completion Solutions | Operating segments | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 32,162 | 14,742 |
Total assets | $ 399,546 | $ 349,429 |
Supplemental Information - Geog
Supplemental Information - Geographic Areas (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 593,382 | $ 349,419 |
Long-lived assets | $ 191,662 | $ 202,366 |
Geographic concentration risk | Revenue | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 100% | 100% |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 591,614 | $ 347,445 |
Long-lived assets | $ 189,962 | $ 200,227 |
United States | Geographic concentration risk | Revenue | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 99.70% | 99.40% |
Canada | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 1,768 | $ 1,974 |
Long-lived assets | $ 1,700 | $ 2,139 |
Canada | Geographic concentration risk | Revenue | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 0.30% | 0.60% |