Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 25, 2019 | Jun. 30, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | Select Energy Services, Inc. | ||
Entity Central Index Key | 1,693,256 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 874.4 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Class A Common Stock | |||
Document and Entity Information | |||
Entity Common Stock, Shares Outstanding | 79,048,523 | ||
Class B Common Stock | |||
Document and Entity Information | |||
Entity Common Stock, Shares Outstanding | 26,026,843 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 17,237 | $ 2,774 |
Accounts receivable trade, net of allowance for doubtful accounts of $5,329 and $2,979, respectively | 341,711 | 373,633 |
Accounts receivable, related parties | 1,119 | 7,669 |
Inventories, net | 44,992 | 44,598 |
Prepaid expenses and other current assets | 27,093 | 17,842 |
Total current assets | 432,152 | 446,516 |
Property and equipment, gross | 1,114,378 | 1,034,995 |
Accumulated depreciation | (611,530) | (560,886) |
Property and equipment, net | 502,848 | 474,109 |
Goodwill | 273,801 | 273,421 |
Other intangible assets, net | 148,377 | 156,066 |
Other assets | 3,427 | 6,256 |
Total assets | 1,360,605 | 1,356,368 |
Current liabilities | ||
Accounts payable | 53,847 | 52,579 |
Accrued accounts payable | 62,536 | 45,857 |
Accounts payable and accrued expenses, related parties | 5,056 | 2,772 |
Accrued salaries and benefits | 22,113 | 21,324 |
Accrued insurance | 14,849 | 12,510 |
Sales tax payable | 5,820 | 12,931 |
Accrued expenses and other current liabilities | 14,560 | 35,255 |
Current portion of capital lease obligations | 938 | 1,965 |
Total current liabilities | 179,719 | 185,193 |
Accrued lease obligations | 16,752 | 18,979 |
Other long-term liabilities | 8,361 | 13,827 |
Long-term debt | 45,000 | 75,000 |
Total liabilities | 249,832 | 292,999 |
Commitments and contingencies (Note 10) | ||
Additional paid-in capital | 813,599 | 673,141 |
Retained earnings (accumulated deficit) | 18,653 | (17,859) |
Accumulated other comprehensive (deficit) income | (368) | 302 |
Total stockholders’ equity | 832,934 | 656,647 |
Noncontrolling interests | 277,839 | 406,722 |
Total equity | 1,110,773 | 1,063,369 |
Total stockholders’ equity | 1,360,605 | 1,356,368 |
Class A Common Stock | ||
Current liabilities | ||
Common stock | 790 | 592 |
Total equity | 790 | 592 |
Class A-2 Common Stock | ||
Current liabilities | ||
Common stock | 67 | |
Total equity | 67 | |
Class B Common Stock | ||
Current liabilities | ||
Common stock | 260 | 404 |
Total equity | $ 260 | $ 404 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Allowance for doubtful accounts | $ 5,329 | $ 2,979 |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Class A Common Stock | ||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 350,000,000 | 350,000,000 |
Common Stock, Shares, Issued | 78,956,555 | 59,182,176 |
Common Stock, Shares, Outstanding | 78,956,555 | 59,182,176 |
Class A-2 Common Stock | ||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 40,000,000 | 40,000,000 |
Common Stock, Shares, Issued | 0 | 6,731,845 |
Common Stock, Shares, Outstanding | 0 | 6,731,845 |
Class B Common Stock | ||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 26,026,843 | 40,331,989 |
Common Stock, Shares, Outstanding | 26,026,843 | 40,331,989 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue | |||
Total revenue | $ 1,528,930 | $ 692,491 | $ 302,399 |
Costs of revenue | |||
Depreciation and amortization | 130,537 | 101,645 | 95,020 |
Total costs of revenue | 1,330,448 | 634,711 | 346,527 |
Gross profit (loss) | 198,482 | 57,780 | (44,128) |
Operating expenses | |||
Selling, general and administrative | 103,156 | 82,403 | 34,643 |
Depreciation and amortization | 3,176 | 1,804 | 2,087 |
Impairment of goodwill | 17,894 | 0 | 138,666 |
Impairment of property and equipment | 6,657 | 60,026 | |
Impairment of cost-method investment | 2,000 | ||
Lease abandonment costs | 3,925 | 3,572 | 19,423 |
Total operating expenses | 136,808 | 87,779 | 254,845 |
Income (loss) from operations | 61,674 | (29,999) | (298,973) |
Other income (expense) | |||
Interest expense, net | (5,311) | (6,629) | (16,128) |
Foreign currency gain (loss), net | (1,292) | 281 | |
Other income, net | 932 | 369 | 629 |
Income (loss) before income tax expense (benefit) | 56,003 | (35,978) | (314,472) |
Income tax (expense) benefit | (1,704) | 851 | 524 |
Net income (loss) | 54,299 | (35,127) | (313,948) |
Less: net (income) loss attributable to noncontrolling interests | (17,787) | 18,311 | 6,424 |
Net income (loss) attributable to Select Energy Services, Inc. | 36,512 | (16,816) | (1,043) |
Predecessor | |||
Other income (expense) | |||
Net income (loss) | (306,481) | ||
Less: net (income) loss attributable to noncontrolling interests | 306,481 | ||
Water solutions and related services | |||
Revenue | |||
Revenue | 1,145,733 | 546,043 | 241,455 |
Costs of revenue | |||
Costs of revenue | 873,413 | 411,215 | 200,399 |
Accommodations and rentals | |||
Revenue | |||
Revenue | 66,744 | 53,888 | 27,151 |
Costs of revenue | |||
Costs of revenue | 44,115 | 41,885 | 22,019 |
Wellsite completion and construction services | |||
Revenue | |||
Revenue | 56,662 | 50,974 | 33,793 |
Costs of revenue | |||
Costs of revenue | 48,929 | 42,942 | 29,089 |
Oilfield chemical product sales | |||
Revenue | |||
Revenue | 259,791 | 41,586 | |
Costs of revenue | |||
Costs of revenue | 233,454 | 37,024 | |
Class A Common Stock | |||
Other income (expense) | |||
Net income (loss) attributable to Select Energy Services, Inc. | $ 35,720 | $ (12,560) | $ (199) |
Net income (loss) per share attributable to common stockholders | |||
Basic | $ 0.49 | $ (0.51) | $ (0.05) |
Diluted | $ 0.49 | $ (0.51) | $ (0.05) |
Class A-1 Common Stock | |||
Other income (expense) | |||
Net income (loss) attributable to Select Energy Services, Inc. | $ (3,691) | $ (844) | |
Net income (loss) per share attributable to common stockholders | |||
Basic | $ (0.51) | $ (0.05) | |
Diluted | $ (0.51) | $ (0.05) | |
Class A-2 Common Stock | |||
Other income (expense) | |||
Net income (loss) attributable to Select Energy Services, Inc. | $ 792 | $ (565) | |
Net income (loss) per share attributable to common stockholders | |||
Basic | $ 0.49 | $ (0.51) | |
Diluted | $ 0.49 | $ (0.51) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net income (loss) | $ 54,299 | $ (35,127) | $ (313,948) |
Interest rate derivatives designated as cash flow hedges | |||
Unrealized holding loss arising during period | (106) | ||
Net amount reclassified to earnings | 113 | ||
Foreign currency translation adjustment, net of tax of $0 | (670) | 302 | |
Net change in unrealized gain (loss) | (670) | 302 | 7 |
Comprehensive income (loss) | 53,629 | (34,825) | (313,941) |
Less: comprehensive (income) loss attributable to noncontrolling interests | (17,568) | 18,154 | 6,424 |
Comprehensive income (loss) attributable to Select Energy Services, Inc. | $ 36,061 | $ (16,671) | (1,043) |
Predecessor | |||
Net income (loss) | (306,481) | ||
Interest rate derivatives designated as cash flow hedges | |||
Comprehensive income (loss) | $ 306,474 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) $ in Thousands | 36 Months Ended |
Dec. 31, 2018USD ($) | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |
Foreign currency translation adjustment, tax amount | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Class A Common StockConversion of Class A-1 to Class A | Class A Common StockConversion of Class A-2 to Class A | Class A Common StockConversion of Class B to Class A | Class A Common Stock | Class A-1 Common StockConversion of Class A-1 to Class A | Class A-1 Common Stock | Class A-2 Common StockConversion of Class A-2 to Class A | Class A-2 Common Stock | Class B Common StockConversion of Class B to Class A | Class B Common Stock | Conversion of Class B to Class ATotal Stockholders’ Equity | Conversion of Class B to Class AAdditional Paid-In Capital | Conversion of Class B to Class ANoncontrolling Interests | Total Stockholders’ Equity | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total |
Beginning balance (Predecessor) at Dec. 31, 2015 | $ 317,161 | ||||||||||||||||||
Beginning balance at Dec. 31, 2015 | $ (7) | $ 10,621 | $ 327,775 | ||||||||||||||||
Beginning balance (in shares) (Predecessor) at Dec. 31, 2015 | 38,398,649 | ||||||||||||||||||
Member contributions | Predecessor | $ 23,519 | ||||||||||||||||||
Member contributions | $ 23,519 | ||||||||||||||||||
Member contributions (in shares) | Predecessor | 3,866,864 | ||||||||||||||||||
Purchase of additional controlling interest | Predecessor | $ 707 | ||||||||||||||||||
Purchase of additional controlling interest | (1,055) | (348) | |||||||||||||||||
Noncontrolling interest in subsidiary | 138 | 138 | |||||||||||||||||
Equity-based compensation | Predecessor | 317 | ||||||||||||||||||
Equity-based compensation | 317 | ||||||||||||||||||
Net loss prior to 144A Offering | Predecessor | (306,481) | ||||||||||||||||||
Net loss prior to 144A Offering | (4,407) | (310,888) | |||||||||||||||||
Reorganization and 144A Offering | Predecessor | (35,223) | ||||||||||||||||||
Reorganization and 144A Offering | $ 38 | $ 161 | $ 385 | $ 332,471 | $ 331,887 | $ 297,248 | |||||||||||||
Reorganization and 144A Offering (in shares) | Predecessor | (42,265,513) | ||||||||||||||||||
Reorganization and 144A Offering (in shares) | 3,802,972 | 16,100,000 | 38,462,541 | ||||||||||||||||
Initial allocation of noncontrolling interest of Select Energy Services, Inc. effective on date of 144A Offering | (218,712) | (218,712) | 218,712 | ||||||||||||||||
Net loss subsequent to reorganization and 144A Offering | (1,043) | $ (1,043) | (2,017) | $ (3,060) | |||||||||||||||
Net income (loss) | Predecessor | (306,481) | ||||||||||||||||||
Net income (loss) | (313,948) | ||||||||||||||||||
Ending balance at Dec. 31, 2016 | $ 38 | $ 161 | $ 385 | 112,716 | 113,175 | (1,043) | 221,992 | 334,708 | |||||||||||
Ending balance (in shares) at Dec. 31, 2016 | 3,802,972 | 16,100,000 | 38,462,541 | ||||||||||||||||
Fair value of interest rate swap | 7 | 7 | |||||||||||||||||
Balance prior to reorganization and 144A Offering transactions | Predecessor | 35,223 | ||||||||||||||||||
Balance prior to reorganization and 144A Offering transactions | 5,297 | $ 40,520 | |||||||||||||||||
Balance prior to reorganization and 144A Offering transactions (in shares) | Predecessor | 42,265,513 | ||||||||||||||||||
Balance subsequent to reorganization and 144A Offering transactions | $ 38 | $ 161 | $ 385 | 113,759 | 113,175 | 224,009 | $ 337,768 | ||||||||||||
Balance subsequent to reorganization and 144A Offering transactions (in shares) | 3,802,972 | 16,100,000 | 38,462,541 | ||||||||||||||||
Purchase of additional controlling interest | (368) | (368) | |||||||||||||||||
Conversion of common stock | $ 161 | $ (161) | |||||||||||||||||
Conversion of common stock (in shares) | 16,100,000 | (16,100,000) | |||||||||||||||||
Exchange of shares of Class B common stock and SES Holdings, LLC units for shares of Class A common stock | $ 25 | $ (25) | 16,298 | 16,298 | (16,298) | ||||||||||||||
Exchange of shares of Class B common stock and SES Holdings, LLC common units for shares of Class A common stock (in shares) | 2,487,029 | (2,487,029) | |||||||||||||||||
Equity-based compensation | 4,346 | 4,346 | 3,345 | 7,691 | |||||||||||||||
Issuance of shares for acquisition | $ 6 | 5,001 | 4,995 | 4,879 | 9,880 | ||||||||||||||
Issuance of shares for acquisition (in shares) | 560,277 | ||||||||||||||||||
Issuance of shares for merger | $ 262 | $ 67 | $ 44 | 447,615 | 447,242 | 170,276 | 617,891 | ||||||||||||
Issuance of shares for merger (in shares) | 26,246,115 | 6,731,845 | 4,356,477 | ||||||||||||||||
Issuance of shares for initial public offering | $ 100 | 87,369 | 87,269 | 41,135 | 128,504 | ||||||||||||||
Issuance of shares for initial public offering (in shares) | 10,005,000 | ||||||||||||||||||
Repurchase of common stock | (184) | (184) | (113) | (297) | |||||||||||||||
Repurchase of common stock ( in shares) | (19,217) | ||||||||||||||||||
Foreign currency translation adjustment | 302 | 302 | 185 | 487 | |||||||||||||||
Net income (loss) | (16,816) | (16,816) | (18,311) | (35,127) | |||||||||||||||
Ending balance at Dec. 31, 2017 | $ 592 | $ 67 | $ 404 | 656,647 | 673,141 | (17,859) | 302 | 406,722 | 1,063,369 | ||||||||||
Ending balance (in shares) at Dec. 31, 2017 | 59,182,176 | 6,731,845 | 40,331,989 | ||||||||||||||||
Conversion of common stock | $ 67 | $ (67) | |||||||||||||||||
Conversion of common stock (in shares) | 6,731,839 | (6,731,839) | |||||||||||||||||
ESPP shares issued | 132 | 132 | (15) | 117 | |||||||||||||||
ESPP shares issued (in shares) | 9,793 | ||||||||||||||||||
Exchange of shares of Class B common stock and SES Holdings, LLC units for shares of Class A common stock | $ 144 | $ (144) | $ 146,865 | $ 146,865 | $ (146,865) | ||||||||||||||
Exchange of shares of Class B common stock and SES Holdings, LLC common units for shares of Class A common stock (in shares) | 14,305,146 | (14,305,146) | |||||||||||||||||
Noncontrolling interest in subsidiary | (506) | (506) | |||||||||||||||||
Equity-based compensation | 7,312 | 7,312 | 3,059 | 10,371 | |||||||||||||||
Issuance of restricted shares | $ 4 | 2,325 | 2,321 | (2,325) | |||||||||||||||
Issuance of restricted shares (in shares) | 438,182 | ||||||||||||||||||
Exercise of restricted stock units | 104 | 104 | (104) | ||||||||||||||||
Exercise of restricted stock units (in shares) | 27,860 | ||||||||||||||||||
Stock options exercised | $ 1 | 1,019 | 1,018 | (374) | 645 | ||||||||||||||
Stock options exercised (in shares) | 79,333 | ||||||||||||||||||
Repurchase of common stock | $ (17) | (17,138) | (17,121) | 576 | (16,562) | ||||||||||||||
Repurchase of common stock ( in shares) | (1,766,428) | (6) | |||||||||||||||||
Restricted shares forfeited | $ (1) | (383) | (382) | 383 | |||||||||||||||
Restricted shares forfeited (in shares) | (51,346) | ||||||||||||||||||
NCI income tax adjustment | 209 | 209 | (209) | ||||||||||||||||
Foreign currency translation adjustment | (670) | (670) | (290) | (960) | |||||||||||||||
Net income (loss) | 36,512 | 36,512 | 17,787 | 54,299 | |||||||||||||||
Ending balance at Dec. 31, 2018 | $ 790 | $ 260 | $ 832,934 | $ 813,599 | $ 18,653 | $ (368) | $ 277,839 | $ 1,110,773 | |||||||||||
Ending balance (in shares) at Dec. 31, 2018 | 78,956,555 | 26,026,843 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Cash flows from operating activities | ||||
Net income (loss) | $ 54,299 | $ (35,127) | $ (313,948) | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | ||||
Depreciation and amortization | 133,713 | 103,449 | 97,107 | |
Net gain on disposal of property and equipment | (3,803) | (2,726) | (97) | |
Gain realized on previously held interest in Rockwater | (1,210) | |||
Bad debt expense | 2,210 | 1,542 | 2,385 | |
Amortization of debt issuance costs | 688 | 4,031 | 3,435 | |
Inventory write-down | 442 | |||
Equity-based compensation | 10,371 | 7,691 | 317 | |
Impairment of goodwill | 17,894 | 0 | 138,666 | |
Impairment of property and equipment | 6,657 | 0 | 60,026 | |
Impairment of cost-method investment | 2,000 | |||
Other operating items, net | 1,287 | (353) | (1,619) | |
Changes in operating assets and liabilities | ||||
Accounts receivable | 36,537 | (100,485) | 1,290 | |
Prepaid expenses and other assets | (9,115) | (2,177) | 1,224 | |
Accounts payable and accrued liabilities | (20,771) | 22,466 | 16,345 | |
Net cash provided by (used in) operating activities | 232,409 | (2,899) | 5,131 | |
Cash flows from investing activities | ||||
Acquisitions, net of cash received | [1] | (16,999) | (65,488) | |
Purchase of property and equipment | (165,360) | (98,722) | (36,290) | |
Proceeds received from sale of property and equipment | 13,998 | 7,479 | 9,335 | |
Net cash used in investing activities | (168,361) | (156,731) | (26,955) | |
Cash flows from financing activities | ||||
Proceeds from 144A Offering, net of underwriter fees and expenses | 297,248 | |||
Proceeds from revolving line of credit and issuance of long-term debt | 60,000 | 109,000 | 27,500 | |
Payments on long-term debt | (90,000) | (111,000) | (298,000) | |
Payments of capital lease obligations | (1,881) | |||
Payment of debt issuance costs | (3,442) | (4,497) | ||
Proceeds from initial public offering | 140,070 | |||
Proceeds from share issuance | 762 | |||
Payments incurred for initial public offering | (11,566) | |||
Purchase of noncontrolling interests | (348) | |||
Distributions to noncontrolling interests, net | (506) | (368) | 138 | |
Repurchase of common stock | (16,562) | (297) | ||
Member contributions (distributions) | 23,519 | |||
Contingent consideration | (1,106) | |||
Net cash (used in) provided by financing activities | (49,293) | 122,397 | 45,560 | |
Effect of exchange rate changes on cash | (292) | (34) | ||
Net increase (decrease) in cash and cash equivalents | 14,463 | (37,267) | 23,736 | |
Cash and cash equivalents, beginning of period | 2,774 | 40,041 | 16,305 | |
Cash and cash equivalents, end of period | 17,237 | 2,774 | 40,041 | |
Supplemental cash flow disclosure: | ||||
Cash paid for interest | 5,243 | 1,999 | 12,773 | |
Cash (refunds) paid for income taxes | (550) | (54) | (192) | |
Supplemental disclosure of noncash investing activities: | ||||
Capital expenditures included in accounts payable and accrued liabilities | $ 17,910 | $ 11,137 | $ 1,563 | |
[1] | Includes $12.4 million to acquire Pro Well, $2.6 million to acquire pipeline assets and $2.0 million to acquire water rights. |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($) | ||
Acquisitions, net of cash received | $ (16,999) | [1] |
Pro Well Acquisition | ||
Acquisitions, net of cash received | 12,400 | |
Pipeline Assets | ||
Acquisitions, net of cash received | 2,600 | |
Water rights | ||
Acquisitions, net of cash received | $ 2,000 | |
[1] | Includes $12.4 million to acquire Pro Well, $2.6 million to acquire pipeline assets and $2.0 million to acquire water rights. |
BUSINESS AND BASIS OF PRESENTAT
BUSINESS AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2018 | |
BUSINESS AND BASIS OF PRESENTATION | |
BUSINESS AND BASIS OF PRESENTATION | NOTE 1—BUSINESS AND BASIS OF PRESENTATION Description of the business : Select Energy Services, Inc. (“we,” “Select Inc.” or “the Company”) was incorporated as a Delaware corporation on November 21, 2016. The Company is a holding company whose sole material asset consists of a membership interest in SES Holdings, LLC (“SES Holdings” or the “Predecessor”). Unless otherwise stated or the context otherwise indicates, all references to the “Company” or similar expressions for time periods prior to the reorganization and Select 144A Offering transactions (as defined below) refer to SES Holdings and its subsidiaries. For time periods subsequent to the reorganization and Select 144A Offering transactions, these terms refer to Select Energy Services and its subsidiaries. On November 1, 2017, the Company completed the transactions in which subsidiaries of Select Inc. and SES Holdings merged with Rockwater Energy Solutions, Inc. (“Rockwater”) and Rockwater Energy Solutions, LLC (“Rockwater LLC”), respectively, in a stock-for-stock and a unit-for-unit transaction (the “Rockwater Merger”). Rockwater operations described in this report describe the operations of Rockwater LLC. See Note 3—Acquisitions for further discussion. We are a leading provider of water-management solutions to the oil and gas industry in North America. We also develop, manufacture and deliver chemical solutions for use in oil and gas well completions and production operations. Within the major shale plays in the United States, we believe we are a market leader in water sourcing, water transfer (both by permanent pipeline and temporary hose) and temporary water containment prior to its use in drilling and completion activities associated with hydraulic fracture stimulation or “fracking,” which we refer to collectively as “pre‑frac water services”. In addition, we provide testing and flowback services immediately following the well completion. In most of our areas of operations, we also provide additional complementary water‑related services that support oil and gas well completion and production activities, including monitoring, treatment, hauling, water recycling and disposal. We also manufacture a full suite of specialty chemicals used in the fracturing process, and we provide chemicals needed by our customers to help increase oil and gas production and lower costs over the life of a well. We believe we are the only company in the oilfield services industry that combines water-management services with related chemical products. We also offer wellsite services that complement our water-management and chemical solutions offerings. These services include equipment rental, accommodations, crane and logistics services, wellsite and pipeline construction, field and well services, sand-hauling and fluid-logistics services. In addition, we provide water transfer, fluid hauling, containment and rental services in Canada. Reorganization : On December 20, 2016, Select Inc. completed a private placement (the “Select 144A Offering”) of 16,100,000 shares of Select Inc. Class A‑1 common stock, par value $0.01 per share (“Class A-1 Common Stock”) at an offering price of $20.00 per share. In conjunction with the Select 144A Offering, SES Holdings’ then existing Class A and Class B units were converted into a single class of common units (the “SES Holdings LLC Units”) and SES Holdings effected a 10.3583 for 1 unit split. In exchange for the contribution of all net proceeds from the Select 144A Offering to SES Holdings, SES Holdings issued 16,100,000 SES Holdings LLC Units to Select Inc., and Select Inc. became the sole managing member of SES Holdings. Select Inc. issued 38,462,541 shares of its Class B common stock, par value $0.01 per share (“Class B Common Stock”), to the other member of SES Holdings, SES Legacy Holdings, LLC (“Legacy Owner Holdco”) or one share for each SES Holdings LLC Unit held by Legacy Owner Holdco. Select Inc. also acquired 3,802,972 SES Holdings LLC Units from certain legacy owners (the “Contributing Legacy Owners”) in exchange for the issuance of 3,802,972 shares of Select Inc. Class A common stock, par value $0.01 per share (“Class A Common Stock”). Upon the effectiveness of a shelf registration statement registering such shares for resale on June 13, 2017, all shares of Class A-1 Common Stock converted into shares of Class A Common Stock on a one-for-one basis. Refer below for further discussion. Shareholders of Class A Common Stock and Class B Common Stock vote together as a single class on all matters, subject to certain exceptions in the Company’s amended and restated certificate of incorporation. Holders of Class B Common Stock have voting rights only and are not entitled to an economic interest in Select Inc. based on their ownership of Class B Common Stock. The reorganization transactions were treated as a combination of entities under common control with assets and liabilities transferred at their carrying amounts in a manner similar to a pooling of interests. Initial Public Offering: On April 26, 2017, the Company completed its initial public offering (“IPO”) of 8,700,000 shares of Class A Common Stock at a price of $14.00 per share. On May 10, 2017, the underwriters of the IPO exercised their over-allotment option to purchase an additional 1,305,000 shares of Class A Common Stock at the IPO price of $14.00 per share. After deducting underwriting discounts and commissions and estimated offering expenses payable by it, the Company received $128.5 million of the aggregate net proceeds from the IPO (including the over-allotment option). The Company contributed all of the net proceeds received by it to SES Holdings in exchange for SES Holdings LLC Units. SES Holdings used the net proceeds in the following manner: (i) $34.0 million was used to repay borrowings incurred under the Company’s Previous Credit Facility (as defined and discussed in Note 9) to fund the cash portion of the purchase price of the GRR Acquisition, as described below, (ii) $7.8 million was used for the cash settlement of outstanding phantom unit awards and (iii) the remaining net proceeds were used for general corporate purposes, including funding capital expenditures. Rockwater Merger: On November 1, 2017, we completed the Rockwater Merger, as contemplated by the Agreement and Plan of Merger, dated as of July 18, 2017 (the “Merger Agreement”), by and among us, SES Holdings, Raptor Merger Sub, Inc., a Delaware corporation and our wholly owned subsidiary, Raptor Merger Sub, LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of SES Holdings, Rockwater and Rockwater LLC. Pursuant to the Merger Agreement, we combined with Rockwater in a stock‑for‑stock transaction in which we issued approximately 25.9 million shares of Class A Common Stock, 6.7 million shares of Select Inc. Class A-2 common stock, par value $0.01 (the “Class A‑2 Common Stock”) and 4.4 million shares of Class B Common Stock to the former holders of Rockwater common stock and a unit‑for‑unit transaction in which SES Holdings issued approximately 37.3 million SES Holdings LLC Units to the former holders of units in Rockwater LLC. See Note 3 — Acquisitions for further discussion. Credit Agreement: Concurrent with the Rockwater Merger, the Company entered into a $300.0 million senior secured revolving credit facility (the “Credit Agreement”). In addition, the obligations under the Previous Credit Facility were repaid in full and the Previous Credit Facility was terminated. See Note 9— Debt for further discussion . Exchange rights : Under the Eighth Amended and Restated Limited Liability Company Agreement of SES Holdings (the “SES Holdings LLC Agreement”), Legacy Owner Holdco and its permitted transferees have the right (an “Exchange Right”) to cause SES Holdings to acquire all or a portion of its SES Holdings LLC Units for, at SES Holdings’ election, (i) shares of Class A Common Stock at an exchange ratio of one share of Class A Common Stock for each SES Holdings LLC Unit exchanged, subject to conversion rate adjustments for stock splits, stock dividends, reclassification and other similar transactions or (ii) cash in an amount equal to the Cash Election Value (as defined within the SES Holdings LLC Agreement) of such Class A Common Stock. Alternatively, upon the exercise of any Exchange Right, Select Inc. has the right (the “Call Right”) to acquire the tendered SES Holdings LLC Units from the exchanging unitholder for, at its election, (i) the number of shares of Class A Common Stock the exchanging unitholder would have received under the Exchange Right or (ii) cash in an amount equal to the Cash Election Value of such Class A Common Stock. In connection with any exchange of SES Holdings LLC Units pursuant to an Exchange Right or Call Right, the corresponding number of shares of Class B Common Stock will be cancelled. Registration rights : In December 2016, in connection with the closing of the Select 144A Offering, Select Inc. entered into a registration rights agreement with FBR Capital Markets & Co. for the benefit of the investors in the Select 144A Offering. Under this registration rights agreement, the Company agreed, at its expense, to file with the SEC, in no event later than April 30, 2017, a shelf registration statement registering for resale the 16,100,000 shares of Class A Common Stock issuable upon conversion of the Class A‑1 Common Stock sold in the Select 144A Offering plus any additional shares of Class A‑1 Common Stock issued in respect thereof whether by stock dividend, stock distribution, stock split or otherwise, and to use commercially reasonable efforts to cause such registration statement to be declared effective by the SEC as soon as practicable but in any event within 60 days after the closing of the IPO. The Company filed this registration statement with the SEC on April 28, 2017 and this registration statement was declared effective by the SEC on June 13, 2017. Accordingly, each share of Class A‑1 Common Stock outstanding automatically converted into a share of Class A Common Stock on a one‑for‑one basis at that time. In addition, Legacy Owner Holdco has the right, under certain circumstances, to cause the Company to register the shares of Class A Common Stock obtained pursuant to the Exchange Right. Legacy Owner Holdco exercised this right in May 2018, and the registration statement registering these shares was declared automatically effective by the SEC on May 16, 2018. Rockwater Registration Rights Agreement: In connection with the closing of the Rockwater Merger, pursuant to that certain Assignment and Assumption Agreement (the “Assignment and Assumption Agreement”), dated as of November 1, 2017, by and between Rockwater and Select Inc., Rockwater assigned, and Select Inc. assumed, Rockwater’s rights and obligations under that certain Registration Rights Agreement made and entered into as of February 16, 2017, between Rockwater and FBR Capital Markets & Co. (as assumed by Select Inc. pursuant to the Assignment and Assumption Agreement, the “Rockwater Registration Rights Agreement”). Under the Rockwater Registration Rights Agreement, Select Inc. agreed, at its expense, to file with the SEC a shelf registration statement registering for resale shares of Class A Common Stock into which the outstanding shares of Class A-2 Common Stock were convertible, and to cause such registration statement to be declared effective by the SEC as soon as practicable but in any event within 180 days after the initial filing of such registration statement. On January 12, 2018, the Company, pursuant to the Rockwater Registration Rights Agreement, filed with the SEC, a shelf registration statement registering for resale of 6,653,777 shares of Class A Common Stock into which certain of the outstanding shares of Class A-2 Common Stock registered under such registration statement were convertible. Pursuant to the Company’s Third Amended and Restated Certificate of Incorporation, upon the effectiveness of this registration statement on March 29, 2018, each outstanding share of Class A-2 Common Stock converted automatically into a share of Class A Common Stock on a one-for-one basis. No shares of Class A-2 Common Stock are currently outstanding. Tax Receivable Agreements : In connection with the Company’s restructuring at the Select 144A Offering, Select Inc. entered into two tax receivable agreements (the “Tax Receivable Agreements”) with Legacy Owner Holdco and certain other affiliates of the then-holders of SES Holdings LLC Units (each such person and any permitted transferee thereof, a “TRA Holder,” and together, the “TRA Holders”). On July 18, 2017, the Company’s board of directors approved amendments to each of the Tax Receivable Agreements. See Note 13—Related Party Transactions for further discussion. Basis of presentation : The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the SEC. The consolidated financial statements include the accounts of the Company and all of its majority‑owned or controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. For investments in subsidiaries that are not wholly owned, but where the Company exercises control, the equity held by the minority owners and their portion of net income or loss are reflected as noncontrolling interests. Investments in entities in which the Company exercises significant influence over operating and financial policies are accounted for using the equity method, and investments in entities for which the Company does not have significant control or influence are accounted for using the cost-method. As of December 31, 2018, the Company has no equity method investees and one cost-method investee. The Company’s investments are reviewed for impairment whenever events or circumstances indicate that the carrying value may not be recoverable. When circumstances indicate that the fair value of its investment is less than its carrying value and the reduction in value is other than temporary, the reduction in value is recognized in earnings. During the first quarter of 2018, the Company determined that its cost-method investee was no longer fully recoverable and was written down to its estimated fair value of $0.5 million. The impairment expense of $2.0 million is included in impairment of cost-method investment within the consolidated statements of operations. Segment reporting : The Company has three operating and reportable segments. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. As a result of the Rockwater Merger on November 1, 2017, the Company reorganized its reporting structure and aligned its segments and underlying businesses to execute on the strategies of the combined company. The Company’s revised operating and reportable segments are Water Solutions, Oilfield Chemicals and Wellsite Services. Accordingly, prior period segment information has been retrospectively revised for the year ended December 31, 2016 . Corporate and other expenses that do not individually meet the criteria for segment reporting are reported separately as Corporate. Reclassifications : Certain reclassifications have been made to the Company’s prior period consolidated financial information in order to conform to the current year presentation. These presentation changes did not impact the Company’s consolidated net income, consolidated cash flows, total assets, total liabilities or total stockholders’ equity. Immaterial error correct ion : The Company made a correction of an immaterial error, which resulted in a $16.0 million increase in goodwill, a $16.0 million reduction in property, plant and equipment a $3.2 million reduction in depreciation expense and a $3.2 million increase in income from operations. The adjustment was the result of incorrectly assigning value to certain property, plant and equipment in the Rockwater Merger. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SIGNIFICANT ACCOUNTING POLICIES Use of estimates : The preparation of consolidated 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to the recoverability of long‑lived assets and intangibles, useful lives used in depreciation and amortization, uncollectible accounts receivable, income taxes, self‑insurance liabilities, share‑based compensation, inventory and contingent liabilities. The Company bases its estimates on historical and other pertinent information that are believed to be reasonable under the circumstances. The accounting estimates used in the preparation of the consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Cash and cash equivalents : The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Accounts receivable and allowance for doubtful accounts : Accounts receivable are stated at the invoiced amount, or the earned but not yet invoiced amount, net of an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on the review of several factors, including historical collection experience, the current aging status of the customer accounts and financial condition of its customers. Accounts receivable are written off when a settlement is reached for an amount less than the outstanding historical balance or when the Company determines that it is probable the balance will not be collected. The change in allowance for doubtful accounts is as follows: For the year ended December 31, 2018 2017 2016 (in thousands) Balance at beginning of year $ 2,979 $ 2,144 $ 2,351 Provisions for bad debts, included in selling, general and administrative 2,210 1,542 2,385 Uncollectible receivable recoveries (write-offs) 140 (707) (2,592) Balance at end of year $ 5,329 $ 2,979 $ 2,144 Concentrations of credit and customer risk : Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. The amounts held in financial institutions periodically exceed the federally insured limit. Management believes that the financial institutions are financially sound and the risk of loss is minimal. The Company minimizes its exposure to counterparty credit risk by performing credit evaluations and ongoing monitoring of the financial stability of its customers. There were no customers that accounted for more than 10.0% of the Company’s consolidated revenues for the years ended December 31, 2018, 2017 and 2016. Inventories : The Company values its inventories at lower of cost or net realizable value. Inventory costs are determined under the weighted-average method. Inventory costs primarily consist of chemicals and materials available for resale and parts and consumables used in operations. Debt issuance costs : Debt issuance costs consist of costs directly associated with obtaining credit with financial institutions. These costs are recorded as a direct deduction from the carrying value of the associated debt liability and are generally amortized on a straight‑line basis over the life of the credit agreement, which approximates the effective‑interest method. During the year ended December 31, 2017, the Company expensed unamortized debt issuance costs of $2.9 million upon repayment and termination of the Previous Credit Facility. In connection with the entry into the Credit Agreement, the Company incurred debt issuance cost of $3.4 million. Amortization expense for debt issuance costs was $0.7 million, $4.0 million and $3.4 million for the years ended December 31, 2018, 2017 and 2016, respectively, and is included in interest expense in the consolidated statements of operations. Property and equipment : Property and equipment are stated at cost less accumulated depreciation. Depreciation (and amortization of capital lease assets) is calculated on a straight line basis over the estimated useful life of each asset as noted below: Asset Classification Useful Life (years) Land Indefinite Buildings and leasehold improvements 30 or lease term Vehicles and equipment 4 - 8 Machinery and equipment 2 - 15 Computer equipment and software 3 - 4 Office furniture and equipment 7 Disposal wells 7 - 10 Depreciation expense related to the Company’s property and equipment, including amortization of property under capital leases, was $120.4 million, $92.6 million and $88.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. Change in depreciable lives of property and equipment: In accordance with its policy, the Company reviews the estimated useful lives and estimated salvage values of its fixed assets on an ongoing basis. This most recent review, conducted in the first quarter of 2018, indicated that the economic lives of certain assets were longer than the historic asset lives previously used by the Company. This increase was positively supported by effective use, care and custody of the assets. Also, this review indicated increased salvage value estimates for certain assets within vehicles and equipment, which was supported by recent vehicle sales data, and is expected to continue prospectively. As a result, effective January 1, 2018, the Company changed its estimates of the useful lives of certain assets included in vehicles and equipment and machinery and equipment, and increased salvage value estimates for certain assets within vehicles and equipment, to better reflect the estimated periods and depreciable amounts during which these assets will remain in service. The average estimated useful lives of the assets impacted in the vehicles and equipment category increased from 6.0 to 8.1 years, while the average estimated useful lives of assets impacted in machinery and equipment increased from 5.5 years to 6.9 years. The impact of the increase of useful lives was to defer and extend out depreciation expense, including lower expense in 2018. The impact of the increase in salvage values was to permanently lower current and future depreciation expense. The fixed assets obtained in 2017 through mergers and acquisitions, including the Rockwater Merger, have consistent useful life and salvage value estimates with the rest of the Company’s fixed assets. The change in the estimated useful lives of fixed assets and change in salvage value estimates was implemented on a prospective basis starting January 1, 2018. Excluding fixed assets attained through mergers and acquisitions during 2017, the impact of the change in useful estimate of fixed assets purchased on or before December 31, 2017 was to reduce and defer depreciation expense by $12.6 million during the year ended December 31, 2018. Also, the increase in estimated vehicle salvage value produced a permanent depreciation expense reduction of $3.9 million during the year ended December 31, 2018. For the year ended December 31, 2018, the changes in useful life estimate and increased salvage value produced an increase to net income of $10.9 million (including the impact of noncontrolling interests) and increased both basic and diluted earnings per share attributable to our stockholders by $0.15. Expenditures for additions to property and equipment and major replacements are capitalized when they significantly increase the functionality or extend the useful life of the asset. Gains and losses on dispositions, maintenance, repairs and minor replacements are included in the consolidated statements of operations as incurred. See Note 7—Property and Equipment for further discussion. Business Combinations: The Company records business combinations using the acquisition method of accounting. Under the acquisition method of accounting, identifiable assets acquired and liabilities assumed are recorded at their acquisition date fair values. The excess of the purchase price over the estimated fair value is recorded as goodwill. Changes in the estimated fair values of net assets recorded for acquisitions prior to the finalization of more detailed analysis, but not to exceed one year from the date of acquisition, will adjust the amount of the purchase price allocable to goodwill. Measurement period adjustments are reflected in the period in which they occur. Goodwill and other intangible assets : Goodwill represents the excess of the purchase price of acquisitions over the fair value of the net assets acquired. Goodwill and other intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets with finite useful lives are amortized either on a straight‑line basis over the asset’s estimated useful life or on a basis that reflects the pattern in which the economic benefits of the intangible assets are realized. Impairment of goodwill, long‑lived assets and intangible assets : Long‑lived assets, such as property and equipment and finite‑lived intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that its carrying value may not be recoverable. Recoverability is measured by a comparison of its carrying amount to the estimated undiscounted cash flows to be generated by those assets. If the undiscounted cash flows are less than the carrying amount, the Company records impairment losses for the excess of its carrying value over the estimated fair value. The development of future cash flows and the estimate of fair value represent its best estimates based on industry trends and reference to market transactions and are subject to variability. The Company considers the factors within the fair value analysis to be Level 3 inputs within the fair value hierarchy. During the year ended December 31, 2018, the Company reviewed certain fluid disposal machinery and equipment used in our fluid hauling and disposal services that are included in our Water Solutions segment. Due to the condition of the equipment, the Company determined that long-lived assets with a carrying value of $2.3 million were no longer recoverable and were written down to their estimated fair value of zero. Additionally, the Company determined that $4.4 million of Canadian fixed assets were impaired due to an expectation of a loss on asset disposals. The Company determined that triggering events existed during 2016 resulting in an evaluation of the recoverability of the carrying value of certain property and equipment. As a result of this evaluation, the Company recorded impairment of property and equipment of $60.0 million related to the Company’s Water Solutions segment and impairment of other intangible assets of $0.1 million related to the Company’s Wellsite Services segment. As a result of this annual impairment test, the Company recorded no impairment of property and equipment during the year ended December 31, 2017. See Note 12—Fair Value Measurement for further discussion. The Company conducts its annual goodwill impairment tests in the fourth quarter of each year, and whenever impairment indicators arise, by examining relevant events and circumstances which could have a negative impact on its goodwill such as macroeconomic conditions, industry and market conditions, cost factors that have a negative effect on earnings and cash flows, overall financial performance, acquisitions and divestitures and other relevant entity-specific events. If a qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company is required to perform a quantitative impairment test for goodwill comparing the reporting unit’s carrying value to its fair value. The Company’s reporting units are based on its organizational and reporting structure. In determining fair values for the reporting units, the Company relies primarily on the income, market and cost approaches for valuation. In the income approach, the Company discounts predicted future cash flows using a weighted-average cost of capital calculation based on publicly traded peer companies. In the market approach, valuation multiples are developed from both publicly traded peer companies as well as other company transactions. The cost approach considers replacement cost as the primary indicator of value. If the fair value of a reporting unit is less than its carrying value, goodwill impairment is calculated by subtracting the fair value of the reporting unit from the carrying value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, allocation of assets (including goodwill) and liabilities to reporting units and determining the fair value. The determination of reporting unit fair value relies upon certain estimates and assumptions that are complex and are affected by numerous factors, including the general economic environment and levels of exploration and production (“E&P”) activity of oil and gas companies, the Company’s financial performance and trends and the Company’s strategies and business plans, among others. Unanticipated changes, including immaterial revisions, to these assumptions, could result in a provision for impairment in a future period. Given the nature of these evaluations and their application to specific assets and time frames, it is not possible to reasonably quantify the impact of changes in these assumptions. During the year ended December 31, 2018, the Company recorded $12.7 million of goodwill impairment on the Oilfield Chemicals segment. The impairment was primarily the result of low profit margins. Additionally, during 2018, the Company recorded $5.2 million of goodwill impairment on its Affirm subsidiary in the Wellsite Services segment as the estimated fair value was not adequate to fully cover its carrying value. As a result of the Company’s annual impairment test, no impairment loss was recognized during the year ended December 31, 2017. The Company determined that triggering events were present during 2016 resulting in a goodwill impairment assessment of $138.5 million, primarily related to the Company’s Water Solutions segment. See Note 8—Goodwill and Other Intangible Assets and Note 12—Fair Value Measurement for further discussion. Asset retirement obligations : The asset retirement obligation (“ARO”) liability reflects the present value of estimated costs of plugging, site reclamation and similar activities associated with the Company’s salt water disposal wells. The Company utilizes current retirement costs to estimate the expected cash outflows for retirement obligations. The Company also estimates the productive life of the disposal wells, a credit‑adjusted risk‑free discount rate and an inflation factor in order to determine the current present value of this obligation. The Company’s ARO liabilities are included in accrued expenses and other current liabilities and other long-term liabilities as of December 31, 2018 and 2017. The change in asset retirement obligations is as follows: For the year ended December 31, 2018 2017 (in thousands) Balance at beginning of year $ 1,846 $ 1,668 Accretion expense, included in depreciation and amortization expense 183 178 Change in estimate 377 — Divestitures (508) — Balance at end of year $ 1,898 $ 1,846 Self‑insurance : The Company self‑insures, through deductibles and retentions, up to certain levels for losses related to general liability, workers’ compensation and employer’s liability and vehicle liability. The Company’s exposure (i.e. the retention or deductible) per occurrence is $1.0 million for general liability, $1.0 million for workers’ compensation and employer’s liability and $1.0 million for vehicle liability. We also have an excess loss policy over these coverages with a limit of $100.0 million in the aggregate. Management regularly reviews its estimates of reported and unreported claims and provide for losses through reserves. Prior to June 1, 2016, the Company was self‑insured for group medical claims subject to a deductible of $0.3 million for large claims. As of June 1, 2016, the Company is fully‑insured for group medical. In connection with the Rockwater Merger, the Company maintained a separate group medical program for certain employees where medical claims were subject to a deductible of $0.3 million for large claims. During 2018, this was integrated into the Company’s existing plan. Employee benefit plans : The Company sponsors a defined contribution 401(k) Profit Sharing Plan (the “401(k) Plan”) for the benefit of substantially all employees of the Company. The 401(k) Plan allows eligible employees to make tax‑deferred contributions, not to exceed annual limits established by the Internal Revenue Service. The Company did not make any matching contributions for the year ended December 31, 2016. Effective July 1, 2017, the Company reinstated matching contributions of 100% of employee contributions, up to 4% of compensation with immediate vesting for existing employees. Starting July 1, 2017, the vesting schedule for new hires is 25% for the first year, 50% for the second year, 75% for the third year and 100% for the fourth year. The Company’s contributions to the 401(k) Plan were $3.6 million and $0.8 million for the years ended December 31, 2018 and 2017, respectively. In connection with the Rockwater Merger, the Company temporarily maintained a separate 401(k) Plan for U.S. employees (the “Rockwater 401(k) Plan”) and a Registered Retirement Savings Plans for Canadian employees for specified eligible Rockwater employees. In June 2018, the temporary plan was combined into the Company’s current plan. The Company made employer contributions either at their discretion or as a matching percentage, as defined by the respective plan agreements. The Company made $0.1 million in employer contributions to the Rockwater 401(k) Plan for the year ended December 31, 2017. Revenue recognition : The Company adopted ASU 2014-09, Revenue from Contracts with Customers, for the year ended December 31, 2018, which constitutes a change in revenue recognition policy. See Note 4 for further detail on adopting this standard . The Company uses the five step process to recognize revenue which entails (i) identifying contracts with customers; (ii) identifying the performance obligations in each contract; (iii) determining the transaction price; (iv) allocating the transaction price to the performance obligations; and (v) recognizing revenue as we satisfy performance obligations. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services transferred to the customer. Revenue from the Company’s Water Solutions and Wellsite Services segments is typically recognized over the course of time, whereas revenue from the Company’s Chemicals segment is typically recognized upon delivery. Revenue generated by each of the Company’s revenue streams are outlined as follows: Water Solutions and Related Services —The Company provides water‑related services to customers, including the sourcing and transfer of water, the containment of fluids, measuring and monitoring of water, the filtering and treatment of fluids, well testing and handling, transportation and recycling or disposal of fluids. Operating under Rockwater LLC, the Company also offers sand hauling and logistics services in the Rockies and Bakken regions as well as water transfer, containment and fluids hauling in Western Canada. Revenue from water solutions is primarily based on a per‑barrel price or other throughput metrics as specified in the contract. The Company recognizes revenue from water solutions as services are performed. The Company’s agreements with its customers are often referred to as “price sheets” and sometimes provide pricing for multiple services. However, these agreements generally do not authorize the performance of specific services or provide for guaranteed throughput amounts. As customers are free to choose which services, if any, to use based on the Company’s price sheet, the Company prices its separate services on the basis of their standalone selling prices. Customer agreements generally do not provide for performance‑, cancellation‑, termination‑, or refund‑type provisions. Services based on price sheets with customers are generally performed under separately‑issued “work orders” or “field tickets” as services are requested. Of the Company’s Water Solutions service lines, only sourcing and transfer of water are consistently provided as part of the same arrangement. In these instances, revenue for both sourcing and transfer are recognized concurrently when delivered. Accommodations and Rentals —The Company provides workforce accommodations and surface rental equipment. Accommodation services include trailer housing and mobile home units for field personnel. Equipment rentals are related to the accommodations and include generators, sewer and water tanks and communication systems. Revenue from accommodations and equipment rental is typically recognized on a day-rate basis. Wellsite Completion and Construction Services —The Company provides crane and logistics services, wellsite and pipeline construction and field services. Revenue for heavy-equipment rental is typically recognized on a day-rate basis. Construction or field personnel revenue is based on hourly rates or on a per-job basis as services are performed. Oilfield Chemical Product Sales— The Company develops, manufactures and markets a full suite of chemicals utilized in hydraulic fracturing, stimulation, cementing and well completions, including polymers that create viscosity, crosslinkers, friction reducers, surfactants, buffers, breakers and other chemical technologies, to leading pressure pumping service companies in the United States. The Company also provides production chemicals solutions, which are applied to underperforming wells in order to enhance well performance and reduce production costs through the use of production treating chemicals, corrosion and scale monitoring, chemical inventory management, well failure analysis and lab services. Oilfield Chemicals products are generally sold under sales agreements based upon purchase orders or contracts with customers that do not include right of return provisions or other significant post‑delivery obligations. The Company’s products are produced in a standard manufacturing operation, even if produced to the customer’s specifications. The prices of products are fixed and determinable and are established in price lists or customer purchases orders. The Company recognizes revenue from product sales when title passes to the customer, the customer assumes risks and rewards of ownership, collectability is reasonably assured and delivery occurs as directed by the customer. Equity‑based compensation : The Company accounts for equity‑based awards by measuring the awards at the date of grant and recognizing the grant‑date fair value as an expense using either straight‑line or accelerated attribution, depending on the specific terms of the award agreements over the requisite service period, which is usually equivalent to the vesting period. The Company expenses awards with graded‑vesting service conditions on a straight‑line basis and accounts for forfeitures as they occur. The Company had liability awards that were contingent upon meeting certain equity returns and a liquidation event. These awards were settled in cash during the year ended December 31, 2017. See Note 11—Equity‑based Compensation for further discussion. Foreign currency: The Company’s functional currency is the U.S. dollar. As a result of the Rockwater Merger in 2017, the Company obtained a Canadian subsidiary that has designated the Canadian dollar as its functional currency. Assets and liabilities are translated at period-end exchange rates, while revenues and expenses are translated at average rates for the year. The Company follows a practice of settling its intercompany loans; accordingly, the related translation gains and losses are recognized within foreign currency gains (losses) on the accompanying consolidated statements of comprehensive income (loss). On the consolidated statements of operations, currency translation gains and losses are recorded on a net basis in other income and expense, net. During the years ended December 31, 2018 and 2017, the Company incurred a net foreign currency gain (loss) of $(1.3) million and $0.3 million, respectively. Translation adjustments for the asset and liability accounts are included as a separate component of accumulated other comprehensive income (loss) in shareholders’ equity. During the years ended December 31, 2018 and 2017, the Company reported net foreign currency translation adjustments of $(0.7) million and $0.3 million, respectively. Fair value measurements : The Company measures certain assets and liabilities pursuant to accounting guidance which establishes a three‑tier fair value hierarchy and prioritizes the inputs used in measuring fair value. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices or other market data for similar assets and liabilities in active markets, or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability. Level 3 inputs are unobservable inputs based upon its own judgment and assumptions used to measure assets and liabilities at fair value. See Note 12—Fair Value Measurement for further discussion. Income taxes : Select Inc. is subject to U.S. federal, foreign and state income taxes as a corporation. SES Holdings and its subsidiaries, with the exception of certain corporate subsidiaries, are treated as flow‑through entities for U.S. federal income tax purposes and as such, are generally not subject to U.S. federal income tax at the entity level. Rather, the tax liability with respect to their taxable income is passed through to their members or partners. Accordingly, prior to the reorganization in connection with the Select 144A Offering, the Predecessor only recorded a provision for Texas franchise tax and U.S. federal and state provisions for certain corporate subsidiaries as the Predecessor’s taxable income, or loss was includable in the income tax returns of the individual partners and members. However, for periods following the reorganization in connection with the Select 144A Offering, Select Inc. recognizes a tax liability on its allocable share of SES Holdings’ taxable income. The state of Texas includes in its tax system a franchise tax applicable to the Company and an accrual for franchise taxes is included in the financial statements when appropriate. The Company and its subsidiaries account for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled pursuant to the provisions of Accounting Standards Codification (“ASC”) 740, Income Taxes. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized. The determination of the provision for income taxes requires significant judgment, use of estimates and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more likely than not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes through the provision for income taxes. The Company recognizes interest and penalties relating to uncertain tax provisions as a component of tax expense. The Company identified no material uncertain tax positions as of December 31, 2018, 2017 and 2016. See Note 14—Income Taxes for further discussion. Emerging Growth Company status: Under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), the Company was an “emerging growth company,” or an “EGC,” which allowed the Company to have an extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. The Company took advantage of all of the reduced reporting requirements and exemptions, including the longer phase‑in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act until the Company was no longer an emerging growth company. The Company lost EGC status effective December 31, 2018 as a result of the aggregate market value of our voting and non-voting common stock held by non-affiliates exceeding $700 million at June 30, 2018. Recent accounting pronouncements : In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In August 2015, the FASB deferred the effective date by one year to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. As the Company lost its EGC status as of December 31, 2018, the ASU became effective for the calendar year 2018 at December 31, 2018. The Company adopted ASU 2014-09 using the modified retrospective method. The adoption of the ASU and related ASUs 2016-08, 2016-10, 2016-12 and 2016-20, did not have a material impact on the Company’s consolidated financial statements as (i) most customer agreements begin and end within the same period and (ii) the Company’s previous revenue recognition methodologies are consistent with the new guidance. In February 2016, the FASB issued ASU 2016-02, Leases , which modifies the lease recognition requirements and requires entities to recognize the assets and liabilities arising from leases on the balance sheet and to disclose key qualitative and quantitative information about the entity’s leasing arrangements. Based on the original guidance in ASU 2016-02, lessees and lessors would have been required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, including a number of optional practical expedients. In July 2018, the FASB issued ASU No. 2018-11, Leases (ASC 842): Targeted Improvements, which provides entities with an option to apply the guidance prospectively, instead of retrospectively, and allows for other classification provisions. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. As the Company lost its EGC status as of December 31, 2018, the ASU will become effective January 1, 2019. The Company will elect to recognize its lease assets and liabilities on a prospective basis, beginning on January 1, 2019, using the modified retrospective transition method. Additionally, the Company will (i) not set up right of |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2018 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 3—ACQUISITIONS Business combinations Pro Well Acquisition On November 20, 2018 the Company acquired Pro Well Testing and Wireline, Inc. (“Pro Well”) for $12.4 million, funded with cash on hand. This acquisition expands the Company’s flowback footprint into New Mexico and adds new strategic customers. The Pro Well Acquisition was accounted for as a business combination under the acquisition method of accounting. To determine the fair values of assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. These estimates, judgments and assumptions are subject to change upon final valuation and should be treated as preliminary values. Working capital estimates are based on provisional amounts. Management estimated that total consideration paid exceeded the fair value of the net assets acquired by $1.0 million, with the excess recorded as goodwill. The goodwill recognized was attributable to expanding the Company’s flowback footprint into New Mexico and adding new strategic customers. The assets acquired and liabilities assumed and the results of operations of the acquired business are included in the Company’s Water Solutions segment. The goodwill acquired is deductible for tax purposes. The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition: Preliminary purchase price allocation Amount Consideration transferred (in thousands) Cash paid $ 12,446 Total consideration transferred 12,446 Less: identifiable assets acquired and liabilities assumed Working capital 1,876 Property and equipment 6,588 Customer relationship intangible assets 3,000 Total identifiable net assets acquired 11,464 Goodwill 982 Fair value allocated to net assets acquired $ 12,446 Rockwater Merger On November 1, 2017, the Company completed the Rockwater Merger in which the Company combined with Rockwater. Total consideration was $620.2 million based on the closing price of the Company’s shares of Class A Common Stock on November 1, 2017. Consideration transferred consisted of shares of Class A Common Stock, shares of Class A-2 Common Stock, shares of Class B Common Stock, and SES Holdings LLC Units. Consideration transferred also included the Company’s previously held interest in Rockwater, which was acquired as consideration in a sale of assets by Select’s predecessor to Rockwater’s predecessor in 2008 prior to the contribution of those assets to Rockwater and the related conversion of the ownership interests received by Select’s predecessor to ownership interests in Rockwater in 2011, and the fair value of Rockwater’s replaced share-based payments attributed to pre-acquisition service. In addition, the Company’s previously held interest in Rockwater was cancelled pursuant to the Merger Agreement. The previously held interest in Rockwater was previously included in other assets in the consolidated balance sheet. It was remeasured to a fair value of $2.3 million, which resulted in a gain of $1.2 million recognized in the fourth quarter of 2017 in other income in the consolidated statements of operations. For the years ended December 31, 2018 and 2017, the Company expensed $6.3 million and $8.9 million of transaction-related costs, respectively, which are included in selling, general and administrative expenses within the consolidated statements of operations. The Rockwater Merger was accounted for as a business combination under the acquisition method of accounting. When determining the fair values of assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. The Company also engaged third-party valuation experts to assist in the purchase price allocation and the recorded valuation of property and equipment. Management estimated that total consideration paid exceeded the fair value of the net assets acquired and liabilities assumed by $264.5 million, with the excess recorded as goodwill. The goodwill recognized was primarily attributable to synergies driven by expanding into new geographies, service offerings and customer relationships, strengthening existing service lines and geographies, acquiring an established, trained workforce and expected cost reductions. Goodwill of $251.8 million and $12.7 million was allocated to the Company’s Water Solutions and Oilfield Chemicals segments, respectively. The acquired goodwill is not deductible for tax purposes. The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition: Purchase price allocation Amount Consideration transferred (in thousands) Class A Common Stock (25,914,260 shares) $ 423,957 Class A-2 Common Stock (6,731,845 shares) 110,133 Class B Common Stock (4,356,477 shares) and SES Holdings common units issued (4,356,477 units) 71,272 Fair value of previously held interest in Rockwater 2,310 Fair value of Rockwater share-based awards attributed to pre-acquisition service 12,529 Total consideration transferred 620,201 Less: identifiable assets acquired and liabilities assumed Working capital (1) 141,720 Property and equipment (2) 172,650 Intangible assets Customer relationships (3) 89,661 Trademarks and patents 31,223 Non-compete agreements 3,811 Other long-term assets 88 Deferred tax liabilities (408) Long-term debt (80,555) Other long-term liabilities (3) (2,517) Total identifiable net assets acquired 355,673 Goodwill 264,528 Fair value allocated to net assets acquired $ 620,201 (1) During the year ended December 31, 2018, the Company obtained additional information related to working capital which led to a decrease of $5.2 million and a corresponding increase in goodwill of $5.2 million compared to the estimated fair values included in the 2017 Form 10-K. (2) During the year ended December 31, 2018 , the Company obtained additional information related to property and equipment which led to a decrease of $13.0 million and a corresponding increase in goodwill of $13.0 million compared to the estimated fair values included in the 2017 Form 10-K. (3) During the year ended December 31, 2018 , the Company obtained additional information related to customer relationships and other long-term liabilities which led to an increase of $0.7 million and a decrease of $0.1 million, respectively, and a corresponding decrease to goodwill of $0.8 million compared to the estimated fair values included in the 2017 Form 10-K. During the fourth quarter of 2018, the Company recorded a purchase price adjustment to decrease property plant and equipment and increase goodwill by $16.0 million in connection with the material weakness discussed in Item 9A in this annual report on Form 10-K. Resource Water Acquisition On September 15, 2017, the Company completed its acquisition (the “Resource Water Acquisition”) of Resource Water Transfer Services, L.P. and certain other affiliated assets (collectively, “Resource Water”). Resource Water provides water transfer services to E&P operators in West Texas and East Texas. Resource Water’s assets include 24 miles of layflat hose as well as numerous pumps and ancillary equipment required to support water transfer operations. Resource Water has longstanding customer relationships across its operating regions which are viewed as strategic to the Company’s water solutions business. The acquired goodwill is deductible for tax purposes. The total consideration for the Resource Water Acquisition was $9.0 million, with $6.6 million paid in cash and $2.4 million paid in shares of Class A Common Stock valued at $15.17 per share. The Company funded the cash portion of the consideration for the Resource Water Acquisition with $6.6 million of cash on hand. The Resource Water Acquisition was accounted for as a business combination under the acquisition method of accounting. When determining the fair values of assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. Management estimated that total consideration paid exceeded the fair value of the net assets acquired by $1.9 million, with the excess recorded as goodwill. The goodwill recognized was attributable to Resource Water’s assembled workforce as well as synergies related to the Company’s comprehensive water solutions strategy. The assets acquired and liabilities assumed and the results of operations of the acquired business are included in the Company’s Water Solutions segment. The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition: Purchase price allocation Amount Consideration transferred (in thousands) Cash paid $ 6,586 Class A Common Stock (156,909 shares) 2,380 Total consideration transferred 8,966 Less: identifiable assets acquired and liabilities assumed Working capital 1,189 Property and equipment 3,485 Customer relationship intangible assets 1,933 Other intangible assets 465 Total identifiable net assets acquired 7,072 Goodwill 1,894 Fair value allocated to net assets acquired $ 8,966 GRR Acquisition On March 10, 2017, the Company completed its acquisition (the “GRR Acquisition”) of Gregory Rockhouse Ranch, Inc. and certain other affiliated entities and assets (collectively, the “GRR Entities”). The GRR Entities provide water and water‑related services to E&P companies in the Permian Basin and own and have rights to a vast array of fresh, brackish and effluent water sources with access to significant volumes of water annually and water transport infrastructure, including over 1,000 miles of temporary and permanent pipeline infrastructure and related storage facilities and pumps, all located in the northern Delaware Basin portion of the Permian Basin. The total consideration for the GRR Acquisition was $59.6 million, with $53.0 million paid in cash, $1.1 million in assumed tax liabilities and $5.5 million paid to the sellers in shares of Class A Common Stock valued at $20.00 per share. The Company funded the cash portion of the consideration for the GRR Acquisition with $19.0 million of cash on hand and $34.0 million of borrowings under the Company’s Previous Credit Facility. For the year ended December 31, 2017, the Company expensed $1.0 million of transaction-related costs, which are included in selling, general and administrative expenses within the consolidated statements of operations. The GRR Acquisition was accounted for as a business combination under the acquisition method of accounting. When determining the fair values of assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. Management estimated that consideration paid exceeded the fair value of the net assets acquired by $12.0 million, with the excess recorded as goodwill. The goodwill recognized was primarily attributable to synergies related to the Company’s comprehensive water solutions strategy that is expected to arise from the GRR Acquisition and was attributable to the Company’s Water Solutions segment. The assets acquired and liabilities assumed and the results of operations of the acquired business are included in the Company’s Water Solutions segment. The acquired goodwill is deductible for tax purposes. The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition: Purchase price allocation Amount Consideration transferred (in thousands) Cash paid $ 53,032 Class A Common Stock (274,998 shares) 5,500 Assumed liabilities 1,106 Total consideration transferred 59,638 Less: identifiable assets acquired and liabilities assumed Working capital 7,728 Property and equipment 13,225 Customer relationship intangible assets 21,484 Other intangible assets 5,152 Total identifiable net assets acquired 47,589 Goodwill 12,049 Fair value allocated to net assets acquired $ 59,638 The following unaudited consolidated pro forma information is presented as if the Rockwater Merger, the Resource Water Acquisition and the GRR Acquisition had occurred on January 1, 2016 and the Pro Well Acquisition had occurred on January 1, 2017: Pro Forma Year ended December 31, 2018 2017 2016 (unaudited) (in thousands) Revenue $ 1,536,524 $ 1,270,736 $ 698,778 Net income (loss) $ 56,269 (13,079) (372,397) Less: net (income) loss attributable to noncontrolling interests (1) (18,432) 5,299 152,930 Net income (loss) attributable to Select Energy Services, Inc. (1) $ 37,837 $ (7,780) $ (219,467) (1) The allocation of net income (loss) attributable to noncontrolling interests and Select Inc. gives effect to the equity structure as of December 31, 2017 as though the Select 144A Offering, the IPO, the Rockwater Merger, the Resource Water Acquisition and the GRR Acquisition occurred as of January 1, 2016. However, the calculation of pro forma net income (loss) does not give effect to any other pro forma adjustments for the Select 144A Offering or the subsequent IPO. The unaudited pro forma amounts above have been calculated after applying the Company’s accounting policies and adjusting the Rockwater Merger, the Resource Water Acquisition and the GRR Acquisition results to reflect the increase to depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied from January 1, 2016 and other related pro forma adjustments. The pro forma amounts do not include any potential synergies, cost savings or other expected benefits of the Rockwater Merger, the Resource Water Acquisition or the GRR Acquisition, and are presented for illustrative purposes only and are not necessarily indicative of results that would have been achieved if the Rockwater Merger, the Resource Water Acquisition and the GRR Acquisition had occurred as of January 1, 2016 or of future operating performance. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2018 | |
REVENUE | |
REVENUE | NOTE 4—REVENUE Effective for the year ended December 31, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) using the modified retrospective adoption method. There was no impact on the consolidated financial statements and no cumulative effect adjustment was recognized. Although most revenue recognition is governed by the new standard, the accommodations and rentals revenue continued to be guided by ASC 840 - Leases , discussed further below. The core principle of Topic 606 is that revenue is recognized when goods or services are transferred to customers in an amount that reflects consideration for which entitlement is expected in exchange for those goods or services. ASU 2014-09 provides a five-step model for determining revenue recognition for arrangements that are within the scope of the standard: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that we will collect the consideration the Company are entitled to in exchange for the goods or services the Company transfers to the customer. The Company elected practical expedients (i) not to access whether immaterial promised goods or services are performance obligations, (ii) not to provide disclosures on remaining performance obligations for contracts that have an original expected duration of one year or less and (iii) to exclude transaction price taxes assessed by governmental authorities as revenue. The following factors are applicable to all three of the Company’s segments during the years ended December 31, 2018, 2017, and 2016: · The vast majority of customer agreements are short-term, lasting less than one year. · Contracts are seldom combined together as virtually all of our customer agreements constitute separate performance obligations. Each job is typically distinct, thereby not interdependent or interrelated with other customer agreements. · Most contracts allow either party to terminate at any time without substantive penalties. If the customer terminates the contract, the Company is unconditionally entitled to the payments for the products delivered to date. · Contract terminations before the end of the agreement are rare. · Sales returns are rare and no sales return assets have been recognized on the balance sheet. · There are no volume discounts. · There are no service-type warranties. · There is no long-term customer financing. In the Water Solutions and Wellsite Services segments, performance obligations arise in connection with services provided to customers in accordance with contractual terms, in an amount the Company expects to collect. Services are generally sold based upon customer orders or contracts with customers that include fixed or determinable prices. Revenues are generated by services rendered and measured based on output generated, which is usually simultaneously received and consumed by customers at their jobsites. As a multi-jobsite organization, contract terms, including pricing for the Company’s services, are negotiated on a jobsite level on a per-job basis. Most jobs completed in a short period of time, usually between one day and one month. Revenue is recognized as performance obligations are completed on a daily, hourly or per unit basis with unconditional rights to consideration for services rendered reflected as accounts receivable trade, net of allowance for doubtful accounts. In cases where a prepayment is received before the Company satisfies its performance obligations, a contract liability is recorded in accrued expenses and other current liabilities. Final billings generally occur once all of the proper approvals are obtained. No revenue is associated with mobilization or demobilization of personnel and equipment. Rather, mobilization and demobilization is factored into pricing for services. Billings and costs related to mobilization and demobilization is not material for customer agreements that start in one period and end in another. As of December 31, 2018, the Company had no contracts in process lasting over a year. In the Oilfield Chemicals segment, the typical performance obligation is to provide a specific quantity of chemicals to customers in accordance with the customer agreement in an amount the Company expects to collect. Products and services are generally sold based upon customer orders or contracts with customers that include fixed or determinable prices. Revenue is recognized as the customer takes title to chemical products in accordance with the agreement. Products may be provided to customers in packaging or delivered to the customers’ containers through a hose. In some cases, the customer takes title to the chemicals upon consumption from storage containers on their property, where the chemicals are considered inventory until customer usage. In cases where the Company delivers products and recognizes revenue before collecting payment, the Company usually has an unconditional right to payment reflected in accounts receivable trade, net of allowance for doubtful accounts. Customer returns are rare and immaterial and there were no in-process customer agreements at December 31, 2018 lasting greater than on year. The Company accounts for accommodations and rentals agreements as an operating lease. The Company recognizes revenue from renting equipment on a straight-line basis. Accommodations and rental contract periods are generally daily, weekly or monthly. The average lease term is less than one month and as of December 31, 2018, no rental agreements lasted more than a year. |
EXIT AND DISPOSAL ACTIVITIES
EXIT AND DISPOSAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2018 | |
EXIT AND DISPOSAL ACTIVITIES | |
EXIT AND DISPOSAL ACTIVITIES | NOTE 5—EXIT AND DISPOSAL ACTIVITIES Due to a reduction in oil and gas industry activity that began in 2014, the Company decided during the year ended December 31, 2016 to close 15 facilities and consolidate operations for the purpose of improving operating efficiencies. In addition, the Company decided to consolidate or close additional facilities following consummation of the Rockwater Merger. With the subsequent rebound in the oil and gas industry, the Company expects to ramp up operations in some areas while continuing to evaluate consolidating operations in others. During the years ended December 31, 2018 and 2017, the Company recorded $3.9 million and $3.6 million, respectively, of charges related to exit and disposal activities. These costs are included in lease abandonment costs in the consolidated statements of operations. Additionally, during the year ended December 31, 2017, we reclassified $0.2 million of deferred rent related to accrued lease obligations related to exited facilities. The Company had a remaining balance of $18.8 million, inclusive of a short-term balance of $2.1 million in accrued expenses and other current liabilities, as of December 31, 2018, related to accrued lease obligations and terminations at exited facilities within its Water Solutions segment. The Company will continue to make non-cancelable lease payments for related facilities through the year ended 2027. The Company’s abandonment of these facilities is not a part of a formalized exit plan. The changes in the abandoned lease obligations for the years ended December 31, 2018 and 2017 are as follows: Acquired abandoned Provision during the Usage during the lease obligations Balance as of year ended year ended during the year ended Balance as of December 31, 2017 December 31, 2018 December 31, 2018 December 31, 2018 December 31, 2018 (in thousands) Lease obligations and terminations $ 21,350 $ 3,925 $ 7,795 $ — $ 17,480 Reclassification of deferred rent 1,254 1,332 Total $ 22,604 $ 18,812 Acquired abandoned Provision during the Usage during the lease obligations Balance as of year ended year ended during the year ended Balance as of December 31, 2016 December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2017 (in thousands) Lease obligations and terminations $ 18,000 $ 3,572 $ 2,761 $ 2,539 $ 21,350 Reclassification of deferred rent 1,069 1,254 Total $ 19,069 $ 22,604 |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2018 | |
INVENTORIES | |
INVENTORIES | NOTE 6—INVENTORIES Inventories, which are comprised of chemicals and materials available for resale and parts and consumables used in operations, are valued at the lower of cost and net realizable value, with cost determined under the weighted-average method. The significant components of inventory are as follows: As of December 31, 2018 2017 (in thousands) Raw materials $ 15,219 $ 11,462 Finished goods 28,540 29,674 Materials and supplies 1,233 3,462 $ 44,992 $ 44,598 During the year ended December 31, 2018, the Company recorded charges to the reserve for excess and obsolete inventory for $0.4 million, which were recognized within costs of revenue on the accompanying consolidated statements of operations. No charges were recorded during the year ended December 31, 2017. The reserve for excess and obsolete inventories is determined based on the Company’s historical usage of inventory on hand, as well as future expectations, and the amount necessary to reduce the cost of the inventory to its estimated net realizable value. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2018 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 7—PROPERTY AND EQUIPMENT Property and equipment consists of the following as of December 31, 2018 and 2017: As of December 31, 2018 2017 (in thousands) Land $ 17,799 $ 15,286 Buildings and leasehold improvements 106,626 99,222 Vehicles and equipment 83,435 70,537 Vehicles and equipment - capital lease 1,833 2,810 Machinery and equipment 758,528 716,064 Machinery and equipment - capital lease 532 900 Computer equipment and software 15,775 12,822 Computer equipment and software - capital lease 356 — Office furniture and equipment 4,612 4,320 Disposal wells 64,038 67,805 Other 497 497 Construction in progress 60,347 44,732 1,114,378 1,034,995 Less accumulated depreciation (611,530) (560,886) Total property and equipment, net $ 502,848 $ 474,109 Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. During the year ended December 31, 2018, the Company reviewed certain fluid disposal machinery and equipment used in our fluid hauling and disposal services that are included in our Water Solutions segment. Due to the condition of the equipment, the Company determined that long-lived assets with a carrying value of $2.3 million were no longer recoverable and were written down to their estimated fair value of zero. Additionally, the Company determined that $4.4 million of Canadian fixed assets were impaired due to an expectation of a loss on asset disposals. During the years ended December 31, 2018 and 2017, depreciation expense was $120.4 million and $92.6 million, respectively. As a result of the Rockwater Merger, the Company acquired various capital leases for certain vehicles, machinery and equipment that expire at various dates during the next five years. Depreciation of assets held under capital leases for the years ended December 31, 2018 and 2017 was $1.3 million and $0.2 million, respectively, and is included in depreciation and amortization expense in the accompanying consolidated statements of operations. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS. | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 8—GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill is evaluated for impairment on at least an annual basis, or more frequently if indicators of impairment exist. The Company performed its annual goodwill impairment test in the fourth quarter of 2018. This resulted in $12.7 million of goodwill impairment on our Oilfield Chemicals segment using income and market valuation techniques. This also resulted in $5.2 million of goodwill impairment in connection with the Affirm subsidiary as the estimated fair value was not adequate to fully cover its carrying value using a cost valuation technique. The annual impairment tests are based on Level 3 inputs (see Note 12). The changes in the carrying amounts of goodwill by reportable segment for the years ended December 31, 2018 and 2017 are as follows: Water Oilfield Wellsite Solutions Chemicals Services Total (in thousands) Balance as of December 31, 2016 $ — $ — $ 12,242 $ 12,242 Additions 245,542 15,637 — 261,179 Balance as of December 31, 2017 245,542 15,637 12,242 273,421 Additions 982 — — 982 Impairment — (12,652) (5,242) (17,894) Measurement period adjustments (1) 20,277 (2,985) — 17,292 Balance as of December 31, 2018 $ 266,801 $ — $ 7,000 $ 273,801 (1) See Note 3―Acquisitions for additional information. The components of other intangible assets as of December 31, 2018 and 2017 are as follows: As of December 31, 2018 As of December 31, 2017 Gross Accumulated Net Gross Accumulated Net Value Amortization Value Value Amortization Value (in thousands) (in thousands) Definite-lived Customer relationships $ 171,245 $ 66,402 $ 104,843 $ 169,250 $ 57,836 $ 111,414 Patents 10,110 1,417 8,693 10,109 414 9,695 Other 7,234 2,866 4,368 9,423 3,182 6,241 Total definite-lived 188,589 70,685 117,904 188,782 61,432 127,350 Indefinite-lived Water rights 7,031 — 7,031 5,281 — 5,281 Trademarks 23,442 — 23,442 23,435 — 23,435 Total indefinite-lived 30,473 — 30,473 28,716 — 28,716 Total other intangible assets $ 219,062 $ 70,685 $ 148,377 $ 217,498 $ 61,432 $ 156,066 During the year ended December 31, 2018, the Company added $3.0 million of customer relationships and $1.8 million of water rights. During the year ended December 31, 2017, the Company added $112.4 million in customer relationships, $9.7 million of patents, $5.9 million of other definite-lived intangibles assets, $3.7 million of water rights and $23.4 million of trademarks. The weighted average amortization period for customer relationships, patents and other definite-lived intangible assets as of December 31, 2018 was 11.7 years, 8.7 years and 2.3 years, respectively. The indefinite lived water rights and trademarks are generally subject to renewal every five to ten years. Amortization expense of $13. 1 million, $10.7 million and $8.7 million was recorded for the years ended December 31, 2018, 2017 and 2016, respectively. Annual amortization of intangible assets for the next five years and beyond is as follows: Year Ending December 31, Amount (in thousands) 2019 $ 11,855 2020 11,561 2021 10,378 2022 10,163 2023 10,092 Thereafter 63,855 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2018 | |
DEBT | |
DEBT | NOTE 9—DEBT Credit facility and revolving line of credit Our subsidiary, Select Energy Services, LLC’s (“Select LLC”) previous credit facility (the “Previous Credit Facility”), had a maturity date of February 28, 2020 and a revolving line of credit of $100.0 million. On November 1, 2017, in connection with the closing of the Rockwater Merger (the “Closing”), SES Holdings entered into the Credit Agreement, the obligations of SES Holdings and Select LLC under the Previous Credit Facility were repaid in full and the Previous Credit Facility was terminated. On November 1, 2017, in connection with the Closing, SES Holdings and Select LLC entered into a $300.0 million senior secured revolving credit facility (the “Credit Agreement”), by and among SES Holdings, as parent, Select LLC, as Borrower and certain of SES Holdings’ subsidiaries, as guarantors, each of the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent, issuing lender and swingline lender (the “Administrative Agent”). The Credit Agreement also has a sublimit of $40.0 million for letters of credit and a sublimit of $30.0 million for swingline loans. Subject to obtaining commitments from existing or new lenders, the Company has the option to increase the maximum amount under the Credit Agreement by $150.0 million during the first three years following the closing. The maturity date of the Credit Agreement is the earlier of (a) November 1, 2022, and (b) the earlier termination in whole of the Commitments pursuant to Section 2.1(b) of Article VII of the Credit Agreement. The Credit Agreement permits extensions of credit up to the lesser of $300.0 million and a borrowing base that is determined by calculating the amount equal to the sum of (i) 85% of the Eligible Billed Receivables (as defined in the Credit Agreement), plus (ii) 75% of Eligible Unbilled Receivables (as defined in the Credit Agreement), provided that this amount will not equal more than 35% of the borrowing base, plus (iii) the lesser of (A) the product of 70% multiplied by the value of Eligible Inventory (as defined in the Credit Agreement) at such time and (B) the product of 85% multiplied by the Net Recovery Percentage (as defined in the Credit Agreement) identified in the most recent Acceptable Appraisal of Inventory (as defined in the Credit Agreement), multiplied by the value of Eligible Inventory at such time, provided that this amount will not equal more than 30% of the borrowing base, minus (iv) the aggregate amount of Reserves (as defined in the Credit Agreement), if any, established by the Administrative Agent from time to time, including, if any, the amount of the Dilution Reserve (as defined in the Credit Agreement). The borrowing base is calculated on a monthly basis pursuant to a borrowing base certificate delivered by Select LLC to the Administrative Agent. Borrowings under the Credit Agreement bear interest, at Select LLC’s election, at either the (a) one-, two-, three- or six-month LIBOR (“Eurocurrency Rate”) or (b) the greatest of (i) the federal funds rate plus 0.5%, (ii) the one-month Eurocurrency Rate plus 1% and (iii) the Administrative Agent’s prime rate (the ”Base Rate”), in each case plus an applicable margin. Interest is payable monthly in arrears. The applicable margin for Eurocurrency Rate loans ranges from 1.50% to 2.00% and the applicable margin for Base Rate loans ranges from 0.50% to 1.00%, in each case, depending on Select LLC’s average excess availability under the Credit Agreement. During the continuance of a bankruptcy event of default, automatically and during the continuance of any other default, upon the Administrative Agent’s or the required lenders’ election, all outstanding amounts under the Credit Agreement will bear interest at 2.00% plus the otherwise applicable interest rate. Level Average Excess Availability Base Rate Margin Eurocurrency Rate Margin I < 33% of the commitments II < 66.67% of the commitments and ≥ 33.33% of the commitments III ≥ 66.67% of the commitments Level Average Revolver Usage Unused Line Fee Percentage I ≥ 50% of the commitments II < 50% of the commitments The obligations under the Credit Agreement are guaranteed by SES Holdings and certain subsidiaries of SES Holdings and Select LLC and secured by a security interest in substantially all of the personal property assets of SES Holdings, Select LLC and their domestic subsidiaries. The Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants and events of default. If an event of default occurs and is continuing, the lenders may declare all amounts outstanding under the Credit Agreement to be immediately due and payable. In addition, the Credit Agreement restricts SES Holdings’ and Select LLC’s ability to make distributions on, or redeem or repurchase, its equity interests, except for certain distributions, including distributions of cash so long as, both at the time of the distribution and after giving effect to the distribution, no default exists under the Credit Agreement and either (a) excess availability at all times during the preceding 30 consecutive days, on a pro forma basis and after giving effect to such distribution, is not less than the greater of (1) 25% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (2) $37.5 million or (b) if SES Holdings’ fixed charge coverage ratio is at least 1.0 to 1.0 on a pro forma basis, and excess availability at all times during the preceding 30 consecutive days, on a pro forma basis and after giving effect to such distribution, is not less than the greater of (1) 20% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (2) $30.0 million. Additionally, the Credit Agreement generally permits Select LLC to make distributions to allow Select Inc. to make payments required under the existing Tax Receivable Agreements. The Credit Agreement also requires SES Holdings to maintain a fixed charge coverage ratio of at least 1.0 to 1.0 at any time availability under the Credit Agreement is less than the greater of (i) 10% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (ii) $15.0 million and continuing through and including the first day after such time that availability under the Credit Agreement has equaled or exceeded the greater of (i) 10% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (ii) $15.0 million for 60 consecutive calendar days. Certain lenders party to the Credit Agreement and their respective affiliates have from time to time performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for the Company and its affiliates in the ordinary course of business for which they have received and would receive customary compensation. In addition, in the ordinary course of their various business activities, such parties and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investments and securities activities may involve the Company’s securities and/or instruments. In addition, certain lenders party to the Previous Credit Facility are lenders under the Credit Agreement. The Company had $45.0 million and $75.0 million outstanding under the Credit Agreement as of December 31, 2018 and 2017, respectively. The weighted average interest rate of outstanding borrowings under the Credit Agreement was 4.256% and 3.319% as of December 31, 2018 and 2017, respectively. As of December 31, 2018 and 2017, the borrowing base under the Credit Agreement was $270.5 million and $261.1 million, respectively. The borrowing capacity under the Credit Agreement was reduced by outstanding letters of credit of $20.8 million and $19.8 million as of December 31, 2018 and 2017, respectively. The Company’s letters of credit have a variable interest rate between 1.50% and 2.00% based on the Company’s average excess availability as outlined above. The unused portion of the available borrowings under the Credit Agreement was $204.7 million at December 31, 2018. Debt issuance costs are amortized to interest expense over the life of the debt to which they pertain. Total unamortized debt issuance costs as of December 31, 2018 and 2017 were $2.6 million and $3.3 million, respectively. As the debt issuance costs relate to a revolving line of credit, they are presented as a deferred charge within other assets on the consolidated balance sheet. In connection with the entry into the Credit Agreement in 2017, the Company incurred $3.4 million of debt issuance costs during the year ended December 31, 2017. In connection with amending its Previous Credit Facility, the Company incurred $4.5 million of debt issuance costs during the year ended December 31, 2016. The Company wrote off unamortized debt issuance cost related to its Previous Credit Facility of $2.9 million in connection with entry into the Credit Agreement during the year ended December 31, 2017. Amortization expense related to debt issuance costs were $0.7 million, $4.0 million and $3.4 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Company was in compliance with all debt covenants as of December 31, 2018. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 10—COMMITMENTS AND CONTINGENCIES Operating and capital leases The Company is party to non‑cancelable leases for operating locations, equipment and office space. The Company also has capital leases for trucks, trailers and equipment. Many lease agreements include extension options. Rent under the operating lease agreements is recognized ratably over the lease term. Total expenses incurred under these operating lease agreements for the years ended December 31, 2018, 2017 and 2016 was $ 57 .7 million, $19.2 million and $21.6 million, respectively. In January 2016 the Company bought out vehicle operating leases at a total purchase price of $16.2 million. The Company has the following operating and capital lease commitments under non‑cancelable lease terms as of December 31, 2018: Year Ending December 31, Operating Leases (1) (2) Capital Leases Total (in thousands) 2019 $ 33,377 $ 1,079 $ 34,456 2020 21,015 208 21,223 2021 16,123 82 16,205 2022 12,296 — 12,296 2023 9,643 — 9,643 Thereafter 40,991 — 40,991 Total minimum lease payments $ 133,445 1,369 $ 134,814 Less: imputed interest of 5.9% (81) Present value of net minimum capital lease payments 1,288 Less: current portion of capital lease obligations (1,015) Present value of long-term portion of capital lease obligations $ 273 (1) The Company’s operating lease commitments under non‑cancelable lease terms as of December 31, 2018 include $37.9 million of lease payments related to facilities that are included within the accrual for exit and disposal activities. Refer to Note 5—Exit and Disposal Activities for further discussion. (2) This table excludes non-cancelable sublease income of $1.4 million, $0.9 million and $0.1 million during the years ended 2019, 2020 and 2021, respectively. Litigation The Company is subject to a number of lawsuits and claims arising out of the normal conduct of its business. The ability to predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. Based on a consideration of all relevant facts and circumstances, including applicable insurance coverage, it is not expected that the ultimate outcome of any currently pending lawsuits or claims against the Company will have a material adverse effect on its consolidated financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these matters. Certain subsidiaries acquired in the Rockwater Merger are under investigation by the U.S. Attorney's Office for the Middle District of Pennsylvania and the U.S. Environmental Protection Agency. It is alleged that certain employees at some of the facilities altered emissions controls systems on 4% of the vehicles in the fleet in violation of the Clean Air Act. The Company is cooperating with the relevant authorities to resolve the matter. At this time no administrative, civil or criminal charges have been brought against the Company and the Company cannot estimate the possible fines and penalties that may be levied against the Company. Self-Insured Reserves We are self-insured up to certain retention limits with respect to workers’ compensation, general liability and vehicle liability matters. We maintain accruals for self-insurance retentions that we estimate using third-party data and claims history. |
EQUITY-BASED COMPENSATION
EQUITY-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2018 | |
EQUITY-BASED COMPENSATION | |
EQUITY‑BASED COMPENSATION | NOTE 11—EQUITY‑BASED COMPENSATION The SES Holdings 2011 Equity Incentive Plan, (“2011 Plan”) was approved by the board of managers of SES Holdings in April 2011. In conjunction with the Select 144A Offering, the Company adopted the Select Energy Services, Inc. 2016 Equity Incentive Plan (as amended from time to time, the “2016 Plan”) for employees, consultants and directors of the Company and its affiliates. Options that were outstanding under the 2011 Plan immediately prior to the Select 144A Offering were cancelled in exchange for new options granted under the 2016 Plan. On July 18, 2017, the Select Inc. board of directors approved the First Amendment to the 2016 Plan (the “Equity Plan Amendment”), which clarifies the treatment of substitute awards under the 2016 Plan (including substitute awards that may be granted in connection with the Rockwater Merger) and allowed for the assumption by the Company of shares eligible under any pre-existing stockholder-approved plan of an entity acquired by the Company or its affiliate (including the Rockwater Energy Solutions Inc. Amended and Restated 2017 Long Term Incentive Plan (the “Rockwater Equity Plan”)), in each case subject to the listing rules of the stock exchange on which Class A Common Stock is listed. The effectiveness of the Equity Plan Amendment was subject to approval by the Company's stockholders and the consummation of the transactions contemplated by the Merger Agreement for the Rockwater Merger. The Company’s consenting stockholders, who hold a majority of the outstanding common stock of the Company, approved the Equity Plan Amendment on July 18, 2017. The Equity Plan Amendment became effective on November 1, 2017 upon the consummation of the Rockwater Merger. The maximum number of shares initially reserved for issuance under the 2016 Plan was 5,400,400 shares of Class A Common Stock, subject to adjustment in the event of recapitalization or reorganization, or related to forfeitures or the expiration of awards. Stock options are granted with terms not to exceed ten years. After giving effect to the Equity Plan Amendment, the maximum number of shares of Class A Common Stock reserved for issuance under the 2016 Plan is equal to (i) 5,400,400 shares plus (ii) 1,011,087 shares that became available on account of the assumption of the Rockwater Equity Plan, subject to adjustment in the event of recapitalization or reorganization, or related to forfeitures or the expiration of awards. The maximum number of shares described in the preceding sentence does not include 2,879,112 shares of Class A Common Stock related to substitute awards granted under the 2016 Plan following the conversion of outstanding equity awards originally granted under the Rockwater Equity Plan in accordance with the Merger Agreement. Consequently, the maximum number of awards that can be granted under the 2016 Plan is 9,290,199 shares. Stock option awards Stock options were granted with an exercise price equal to or greater than the fair market value of a share of Class A Common Stock as of the date of grant. Prior to the IPO, the Company historically valued Class A Common Stock on a quarterly basis using a market approach that includes a comparison to publicly traded peer companies using earnings multiples based on their market values and a discount for lack of marketability. This fair value measurement relied on Level 3 inputs. The estimated fair value of its stock options is expensed over their vesting period, which is generally three years from the applicable date of grant. However, certain awards granted during the years ended December 31, 2017 and 2016 in exchange for cancelled awards were immediately vested and fully exercisable on the date of grant because they were either granted in exchange for the cancellation of outstanding options granted under the 2011 Plan or the Rockwater Equity Plan, as applicable, that were fully vested and exercisable prior to such cancellation. The Company utilized the Monte Carlo simulation model to determine fair value of the options granted during 2018, which incorporates assumptions to value equity‑based awards. The risk‑free interest rate is based on the U.S. Treasury yield curve in effect for the expected term of the option at the time of grant. The expected life of the options was based on the vesting period and term of the options awarded, which is ten years. The table below presents the assumptions used in determining the fair value of stock options granted during the years ended December 31, 2018 and 2017, respectively. The weighted‑average grant date fair value of stock options granted was $8.98 and $7.85 for the years ended December 31, 2018 and 2017, respectively. For the year ended December 31, 2018 2017 Underlying equity $ 20.50 $ 20.00 Strike price $ 20.50 - 30.75 $ 20.00 Dividend yield (%) % % Risk-free rate (%) 2.3 % 2.0 - 2.7 % Volatility (%) 50.0 % 46.6 - 46.8 % Expected term (years) 10.0 4.0 - 6.0 A summary of the Company’s stock option activity and related information as of and for the year ended December 31, 2018 is as follows: For the year ended December 31, 2018 Weighted-average Weighted-average Weighted-average Remaining Contractual Aggregate Intrinsic Stock Options Grant Date Value Exercise Price Term (Years) Value (in thousands) (a) Beginning balance, outstanding 3,495,935 $ 7.65 $ 14.12 5.1 $ 16,368 Granted 584,846 8.98 26.02 Exercised (79,333) 9.41 8.12 493 Forfeited (95,380) 6.88 14.41 Expired (40,390) 1.67 17.32 Ending balance, outstanding 3,865,678 $ 7.95 $ 16.00 4.9 $ 19 Ending balance, exercisable 3,031,407 $ 7.61 $ 14.29 3.8 $ 19 Non-vested at end of period 834,271 N/A $ 22.23 (a) Aggregate intrinsic value for stock options is based on the difference between the exercise price of the stock options and the quoted closing Class A Common Stock price of $6.32 and $18.24 as of December 31, 2018 and 2017, respectively. The Company recognized $5.2 million, $1.9 million and $0.3 million of compensation expense related to stock options during the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, there was $4.7 million of unrecognized equity-based compensation expense related to non-vested stock options. This cost is expected to be recognized over a weighted-average period of 1.0 years. Restricted Stock Awards and Restricted Stock Units The value of the restricted stock awards and restricted stock units issued was established by the market price of the Class A Common Stock on the date of grant and is recorded as compensation expense ratably over the vesting term, which is generally one to three years from the applicable date of grant. The Company recognized compensation expense of $4.3 million and $0.5 million related to the restricted stock awards and restricted stock units for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018, there was $5.7 million of unrecognized compensation expense with a weighted-average remaining life of 1.7 years related to unvested restricted stock awards and restricted stock units. During 2018 and 2017, the Company paid $0. 9 million and $0.3 million, respectively, to repurchase shares in connection with employee minimum tax withholding obligation on vested shares. A summary of the Company’s restricted stock awards activity and related information for the year ended December 31, 2018 is as follows: o For the year ended December 31, 2018 Weighted-average Restricted Stock Awards Grant Date Fair Value Non-vested at December 31, 2017 299,801 $ 16.36 Granted 438,182 19.52 Vested (191,400) 16.36 Forfeited (49,638) 17.62 Non-vested at December 31, 2018 496,945 $ 19.02 A summary of the Company’s restricted stock unit activity and related information for the year ended December 31, 2018 is as follows: For the year ended December 31, 2018 Weighted-average Restricted Stock Units Grant Date Fair Value Non-vested at December 31, 2017 30,360 $ 19.88 Granted — — Vested (27,860) 19.96 Non-vested at December 31, 2018 2,500 $ 19.00 Performance Share Units (PSUs) During 2018, the Company approved grants of performance share units (“PSUs”) that are subject to both performance-based and service-based vesting provisions. The number of shares of Class A Common Stock issued to a recipient upon vesting of the PSU will be calculated based on performance against certain metrics that relate to the Company’s return on asset performance over the January 1, 2018 through December 31, 2020 performance period. The target number of shares of Class A Common Stock subject to each PSU is one; however, based on the achievement of performance criteria, the number of shares of Class A Common Stock that may be received in settlement of each PSU can range from zero to 1.75 times the target number. The PSUs become earned at the end of the performance period after the attainment of the performance level has been certified by the compensation committee, which will be no later than June 30, 2021, assuming the minimum performance metrics are achieved. The target PSUs that become earned PSUs during the performance period will be determined in accordance with the following table: Return on Assets at Performance Period End Date Percentage of Target PSUs Earned Less than 9.6% 0% 9.6% 50% 12% 100% 14.4% 175% The grant date fair value of PSUs issued during 2018 was $5.9 million. Compensation expense related to the PSUs is determined by multiplying the number of shares of Class A Common Stock underlying such awards that, based on the Company’s estimate, are probable to vest, by the measurement-date (i.e., the last day of each reporting period date) fair value and recognized using the accelerated attribution method. The Company recognized compensation expense of $0.5 million related to the PSUs for the year ended December 31, 2018. As of December 31, 2018, the fair value of outstanding PSUs issued was $1.6 million. The unrecognized compensation cost related to our unvested PSUs is estimated to be $1.1 million and is expected to be recognized over a weighted-average period of 2.0 years as of December 31, 2018. The following table summarizes the information about the performance share units outstanding at December 31, 2018: Period Granted Target Shares Outstanding at Beginning of Period Target Shares Granted Target Shares Vested Target Shares Forfeited Target Shares Outstanding at End of Period 2018 — 280,021 — (24,657) 255,364 Total — 280,021 — (24,657) 255,364 Stock-Settled Incentive Awards Effective May 17, 2018, Company approved grants of stock-settled incentive awards to certain key employees under the 2016 Equity Incentive Plan that are subject to both market-based and service-based vesting provisions. These awards will vest after a two-year service period and, if earned, settled in shares of the Company stock. The ultimate amount earned is based on the achievement of the market metrics, which is based on the stock price of the Company at the vesting date, for which payout could range from 0% to 200%. Any award not earned on the vesting date is forfeited. The target amount that becomes earned during the performance period will be determined in accordance with the following table: Stock Price at Vesting Date (1) Percentage of Target Amount Earned Less than $20.00 0% At least $20.00, but less than $25.00 100% $25.00 or greater 200% (1) The stock price at vesting date equals the greater of (i) the fair market value of a share of the Company’s stock on the vesting date, or (ii) the volume weighted average closing price of a share of the Company’s stock, as reported on the NYSE, for the 30 trading days preceding the vesting date. The target amount of stock-settled incentive awards granted was $3.9 million. However, the ultimate settlement of the awards will be in shares of the Company’s stock with fair market value equal to the earned amount, which could range from 0% to 200% of the target amount depending on the stock price at vesting date. Compensation expense associated with the stock-settled incentive awards is recognized ratably over the corresponding requisite service period. The fair value of the stock-settled incentive awards was determined using a Monte Carlo option pricing model, similar to the Black-Scholes-Merton model, and adjusted for the specific characteristics of the awards. The key assumptions in the model included price, the expected volatility of our stock, risk-free interest rate based on U.S. Treasury yield curve, cross-correlations between us and our self-determined peer companies’ asset, equity and debt-to-equity volatility. During the year ended December 31, 2018, the Company recognized stock compensation expense of $0.4 million related to the stock-settled incentive awards. The unrecognized compensation cost related to our unvested stock-settled incentive awards is estimated to be $0.8 million and is expected to be recognized over approximately 17 months as of December 31, 2018. The following table summarizes the information about the stock-settled incentive awards outstanding at December 31, 2018: Award Value Value at Target Being Recognized Non-vested at December 31, 2017 $ — $ — Granted during 2018 3,871 1,479 Forfeited during 2018 (724) (277) Non-vested at December 31, 2018 $ 3,147 $ 1,202 Employee Stock Purchase Plan (ESPP) We have an Employee Stock Purchase Plan (“ESPP”) under which employees that have been continuously employed for at least one year may purchase shares of our common stock at a discount. The plan provides for four offering periods for purchases: December 1 through February 28, March 1 through May 31, June 1 through August 31 and September 1 through November 30. At the end of each offering period, enrolled employees purchase shares of our common stock at a price equal to 95% of the market value of the stock on the last day of such offering period. The purchases are made at the end of an offering period with funds accumulated through payroll deductions over the course of the offering period. Subject to limitations set forth in the plan and under IRS regulations, eligible employees may elect to contribute a maximum of $15,000 to the plan in a single calendar year. The plan is deemed to be noncompensatory. The following table summarizes ESPP activity (in thousands, except shares): For the year ended December 31, 2018 Cash received for shares issued $ 117 Shares issued 9,793 Phantom unit awards The Company’s phantom unit awards were cash-settled awards that were contingent upon meeting certain equity returns and a liquidation event. The settlement amount was based on the fair market value of a share of the Company’s Class A common stock on the date of completion of the IPO, which constituted a liquidation event with respect to such phantom unit awards. As a result of the cash-settlement feature of these awards, the Company considered these awards to be liability awards, which were measured at fair value at each reporting date and the pro rata vested portion of the award was recognized as a liability to the extent that the performance condition was deemed probable. On May 5, 2017, the Company settled its outstanding phantom unit awards for an aggregate amount equal to $7.8 million as a result of the completion of its IPO, which constituted a liquidity event with respect to such phantom unit awards. Based on the fair market value of a share of the Company’s Class A common stock on the date of the IPO of $14.00, the cash payment with respect to each phantom unit was approximately $5.53, before employer taxes. The Company recognized compensation expense of $7.8 million for the year ended 2017 related to the settlement of its phantom unit awards. No compensation expense was recognized in 2016 due to the non-occurrence of the performance condition, which was not considered probable. Share-repurchases During 2018, the Company repurchased 1,703,651 shares in the open market and repurchased 62,777 shares in connection with employee minimum tax withholding requirements for units vested under the 2016 Plan. All repurchased shares were retired. This was accounted for as a decrease to paid in-capital of $17.1 million and a decrease to Class A common stock of approximately $18,000. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 12 Months Ended |
Dec. 31, 2018 | |
FAIR VALUE MEASUREMENT | |
FAIR VALUE MEASUREMENT | NOTE 12—FAIR VALUE MEASUREMENT The Company utilizes fair value measurements to measure assets and liabilities in a business combination or assess impairment of property and equipment, intangible assets and goodwill. Fair value is defined as the amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in an orderly transaction between market participants at the measurement date. Further, ASC 820, Fair Value Measurements, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and includes certain disclosure requirements. Fair value estimates are based on either (i) actual market data or (ii) assumptions that other market participants would use in pricing an asset or liability, including estimates of risk. ASC 820 establishes a three‑level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are defined as follows: Level 1 —Unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 —Quoted prices for similar assets or liabilities in non‑active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 —Inputs that are unobservable and significant to the fair value measurement (including the Company’s own assumptions in determining fair value). A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. There were no transfers into, or out of, the three levels of the fair value hierarchy for the years ended December 31, 2018, 2017 and 2016. Assets and liabilities measured at fair value on a recurring basis The Company estimated the fair value of derivative instruments using the market approach via a model that uses inputs that are observable in the market or can be derived from, or corroborated by, observable data. Assets and liabilities measured at fair value on a non‑recurring basis Nonfinancial assets and liabilities measured at fair value on a non‑recurring basis include certain nonfinancial assets and liabilities as may be acquired in a business combination and measurements of goodwill and intangible impairment. As there is no corroborating market activity to support the assumptions used, the Company has designated these measurements as Level 3. Long‑lived assets, such as property and equipment and finite‑lived intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that its carrying value may not be recoverable. The development of future cash flows and the estimate of fair value represent the Company’s best estimates based on industry trends and reference to market transactions and are subject to variability. The Company’s estimates of fair value have been determined at discrete points in time based on relevant information. These estimates involve uncertainty and cannot be determined with precision. There were no significant changes in valuation techniques or related inputs for the years ended December 31, 2018, 2017 and 2016. The following table presents information about the Company’s assets measured at fair value on a non‑recurring basis for the years ended December 31, 2018, 2017 and 2016. Fair Value Measurements Using Carrying Level 1 Level 2 Level 3 Value (1) Impairment (in thousands) Year Ended December 31, 2018 Goodwill $ — $ — $ 7,000 $ 24,894 $ 17,894 Cost-Method Investment — — 500 2,500 2,000 Fixed Assets — — 10,262 16,919 6,657 Year Ended December 31, 2017 $ — $ — $ — $ — $ — Year Ended December 31, 2016 Goodwill $ — $ — $ — $ 138,529 $ 138,529 Intangible Assets — — — 137 137 Fixed Assets — — 23,188 83,214 60,026 (1) Amount represents carrying value at the date of assessment. Other fair value considerations The carrying values of the Company’s current financial instruments, which include cash and cash equivalents, accounts receivable trade and accounts payable, approximate their fair value at December 31, 2018 and 2017 due to the short‑term maturity of these instruments. The carrying value of debt as of December 31, 2018 and 2017 approximates fair value due to variable market rates of interest. The fair value of debt at December 31, 2018 and 2017, which is a Level 3 measurement, is estimated based on the Company’s incremental borrowing rates for similar types of borrowing arrangements when quoted market prices are not available. The estimated fair values of the Company’s financial instruments are not necessarily indicative of the amounts that would be realized in a current market exchange. The consideration transferred and the purchase price allocation of identified assets acquired and liabilities assumed related to the Pro Well Acquisition, Rockwater Merger, Resource Water Acquisition and GRR Acquisition were based on the Company’s estimate of fair value utilizing Level 3 inputs at the date of acquisition. Refer to Note 3 – Acquisitions for further discussion. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2018 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 13—RELATED PARTY TRANSACTIONS The Company considers its related parties to be those stockholders who are beneficial owners of more than 5.0% of its common stock, executive officers, members of its board of directors or immediate family members of any of the foregoing persons and an unconsolidated joint venture. The Company has entered into a significant number of transactions with related parties. In accordance with the Company’s related persons transactions policy, the Company’s board of directors regularly reviews these transactions; however, the Company’s results of operations may have been different if these transactions were conducted with non‑related parties. During the year ended December 31, 2018, sales to related parties were $8.3 million and purchases from related party vendors were $16.7 million. These purchases consisted of $4.7 million relating to purchases of property and equipment, $0.3 million relating to inventory and consumables, $10.3 million relating to the rental of certain equipment or other services used in operations and $1.4 million relating to management, consulting and other services. During the year ended December 31, 2017, sales to related parties were $9.0 million and purchases from related party vendors were $10.4 million. These purchases consisted of $3.8 million relating to purchases of property and equipment, $0.3 million relating to inventory and consumables, $2.7 million relating to the rental of certain equipment or other services used in operations and $3.6 million relating to management, consulting and other services. During the year ended December 31, 2016, sales to related parties were $1.2 million and purchases from related party vendors were $4.3 million. These purchases consisted of $1.0 million relating to purchases of property and equipment, $0.2 million relating to inventory and consumables, $1.1 million relating to the rental of certain equipment or other services used in operations and $2.0 million relating to management, consulting and other services. Tax Receivable Agreements In connection with the Select 144A Offering, the Company entered into the Tax Receivable Agreements with the TRA Holders. The first of the Tax Receivable Agreements, which the Company entered into with Legacy Owner Holdco and Crestview Partners II GP, L.P. (“Crestview GP”), generally provides for the payment by the Company to such TRA Holders of 85% of the net cash savings, if any, in U.S. federal, state and local income and franchise tax that the Company actually realizes (computed using simplifying assumptions to address the impact of state and local taxes) or is deemed to realize in certain circumstances in periods after the Select 144A Offering as a result of, as applicable to each such TRA Holder, (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s SES Holdings LLC Units in connection with the Select 144A Offering or pursuant to the exercise of the Exchange Right or the Company’s Call Right and (ii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under such Tax Receivable Agreement. The second of the Tax Receivable Agreements, which the Company entered into with an affiliate of the Contributing Legacy Owners and Crestview GP, generally provides for the payment by the Company to such TRA Holders of 85% of the net cash savings, if any, in U.S. federal, state and local income and franchise tax that the Company actually realizes (computed using simplifying assumptions to address the impact of state and local taxes) or is deemed to realize in certain circumstances in periods after the Select 144A Offering as a result of, as applicable to each such TRA Holder, (i) any net operating losses available to the Company as a result of certain reorganization transactions entered into in connection with the Select 144A Offering and (ii) imputed interest deemed to be paid by the Company as a result of any payments the Company makes under such Tax Receivable Agreement. On July 18, 2017, the Company’s board of directors approved amendments to each of the Tax Receivable Agreements revising the definition of a “change of control” for purposes of the Tax Receivable Agreements and acknowledging that the Rockwater Merger would not result in such a change of control. See Note 14—Income Taxes for further discussion of amounts recorded in connection with the Select 144A Offering. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
INCOME TAXES | NOTE 14—INCOME TAXES Select Inc. is subject to U.S. federal and state income taxes as a corporation. SES Holdings and its subsidiaries, with the exception of certain corporate subsidiaries, are treated as flow‑through entities for U.S. federal income tax purposes and as such, are generally not subject to U.S. federal income tax at the entity level. Rather, the tax liability with respect to their taxable income is passed through to their members or partners. Accordingly, prior to the reorganization in connection with the Select 144A Offering, the Predecessor only recorded a provision for Texas franchise tax and U.S. federal and state provisions for certain corporate subsidiaries as the Predecessor’s taxable income or loss was includable in the income tax returns of the individual partners and members. However, for periods following the reorganization in connection with the Select 144A Offering, Select Inc. recognizes a tax liability on its allocable share of SES Holdings’ taxable income. The Company’s effective tax rates for the years ended December 31, 2018, 2017 and 2016 were 3.0%, 2.4% and 0.2% respectively. The effective tax rates for the years ended December 31, 2018 and 2017 differ from the statutory rate of 21% and 35%, respectively, due to net income allocated to noncontrolling interests, state income taxes and valuation allowances. The Company recorded income tax expense (benefit) of $1.7 million, $(0.9) millio n and $(0.5) million for the years ended December 31, 2018, 2017 and 2016, respectively. The components of the federal and state income tax expense (benefit) are summarized as follows: For the year ended December 31, 2018 2017 2016 (in thousands) Current tax (benefit) expense Federal income tax $ 1,073 $ (338) $ — State and local income tax 1,077 (77) 275 Foreign income tax — — — Total current (benefit) expense 2,150 (415) 275 Deferred tax (benefit) expense Federal income tax (20) (422) (841) State and local income tax (426) (14) 42 Foreign income tax — — — Total deferred benefit (446) (436) (799) Total income tax (benefit) provision $ 1,704 $ (851) $ (524) Tax (benefit) expense attributable to controlling interests $ 1,425 $ (405) $ (179) Tax benefit attributable to noncontrolling interests 279 (446) (345) Total income tax (benefit) provision $ 1,704 $ (851) $ (524) A reconciliation of the Company’s provision for income taxes as reported and the amount computed by multiplying income before taxes, less noncontrolling interest, by the U.S. federal statutory rate of 21% for 2018 and 35% for 2017: For the year ended December 31, 2018 2017 2016 (in thousands) Provision calculated at federal statutory income tax rate: Income (loss) before taxes $ 56,003 $ (35,978) $ (314,472) Statutory rate 21 % 35 % 35 % Income tax expense (benefit) computed at statutory rate 11,761 (12,592) (110,065) Less: noncontrolling interests (3,735) 6,409 109,230 Income tax expense (benefit) attributable to controlling interests 8,026 (6,183) (835) State and local income taxes, net of federal benefit 515 (91) 317 Change in enacted tax rate — 39,166 — Other 580 — — Change in valuation allowance (7,696) (33,297) 339 Income tax expense (benefit) attributable to controlling interests 1,425 (405) (179) Income tax expense (benefit) attributable to noncontrolling interests 279 (446) (345) Total income tax expense (benefit) $ 1,704 $ (851) $ (524) Deferred taxes result from the temporary differences between financial reporting carrying amounts and the tax basis of existing assets and liabilities. As of December 31, 2018, 2017 and 2016, the Company had net deferred tax liabilities of $0.1 million, $0.6 million and $0.6 million, respectively, which are recorded in other long‑term liabilities on the consolidated balance sheets. The principal components of the deferred tax assets (liabilities) are summarized as follows: For the year ended December 31, 2018 2017 (in thousands) Deferred tax assets Outside basis difference in SES Holdings $ 38,739 $ 37,931 Net operating losses 45,927 35,243 Credits and other carryforwards 1,679 863 Property and equipment 150 — Intangible assets 1,284 1,218 Stock compensation — 2,557 Other 468 1,340 Total deferred tax assets before valuation allowance 88,247 79,152 Valuation allowance (88,247) (75,886) Total deferred tax assets — 3,266 Deferred tax liabilities Property and equipment — 3,286 Other 123 549 Total deferred tax liabilities 123 3,835 Net deferred tax liabilities $ (123) $ (569) For the year ended December 31, 2018, the Company recorded an increase in valuation allowance of $12.4 million against certain deferred tax assets. The Company has assessed the future potential to realize these deferred tax assets and has concluded it is more likely than not that these deferred tax assets will not be realized based on current economic conditions and expectations of the future. As a result, the Company has not recorded a liability for the effect of any associated Tax Receivable Agreement liabilities as the liability is based on the actual cash tax savings, which are not considered probable as of December 31, 2018. See Note 13—Related Party Transactions for further discussion of the Tax Receivable Agreements. The U.S. federal income tax legislation enacted in Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act, reduced the corporate income tax rate effective January 1, 2018 from 35% to 21%. As of December 31, 2018, the Company has completed our accounting for the tax effects of the Tax Cuts and Jobs Act (TCJA). During the year ended December 31, 2017, the Company recognized the reasonably estimated (i) effects on our existing deferred tax balances and (ii) one-time transition tax. During the year ended December 31, 2018, the Company finalized the accounting for of the Tax Act. The Company incurred $0.6 million in incremental income tax expense from transitioning to the TCJA. As of December 31, 2018, the Company and certain corporate subsidiaries of SES Holdings had approximately $172.5 million of U.S. federal net operating loss carryforwards (“NOLs”), which will begin to expire in 2031, approximately $84.5 million of state NOLs which will begin to expire in 2023, and approximately $18.0 million of foreign NOLs, which will begin to expire in 2037. Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement methodology for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As of December 31, 2018 and 2017 there was no material liability or expense for the periods then ended recorded for payments of interest and penalties associated with uncertain tax positions or material unrecognized tax positions and the Company’s unrecognized tax benefits were not material. Separate federal and state income tax returns are filed for Select Inc., SES Holdings and certain consolidated affiliates. The tax years 2014 through 2017 remain open to examination by the major taxing jurisdictions to which the Company is subject to income tax. Select Inc. and SES Holdings are not currently under any income tax examinations. |
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS | 12 Months Ended |
Dec. 31, 2018 | |
NONCONTROLLING INTERESTS | |
NONCONTROLLING INTERESTS | NOTE 15—NONCONTROLLING INTERESTS The Company’s noncontrolling interests fall into two categories as follows: · Noncontrolling interests attributable to joint ventures formed for water-related services. · Noncontrolling interests attributable to holders of Class B shares. As of December 31, 2018 2017 (in thousands) Noncontrolling interests attributable to joint ventures formed for water-related services $ 3,273 $ 5,722 Noncontrolling interests attributable to holders of Class B shares 274,566 401,000 Total noncontrolling interests $ 277,839 $ 406,722 For all periods presented, there were no changes to Select’s ownership interest in joint ventures formed for water-related services. However, during the years ended December 31, 2018, 2017 and 2016, there were changes in Select’s ownership interest in SES Holdings LLC. The effects of the changes in Select’s ownership interest in SES Holdings LLC is as follows: For the year ended December 31, 2018 2017 2016 (in thousands) Net income (loss) attributable to Select Energy Services, Inc. $ 36,512 $ (16,816) $ (307,524) Transfers (to) from noncontrolling interests: Decrease in additional paid-in capital as a result of the contribution of proceeds from the IPO to SES Holdings, LLC in exchange for common units — (41,135) — Decrease in additional paid-in capital as a result of the contribution of proceeds from the Select 144A Offering to SES Holdings, LLC in exchange for common units — — (218,712) Increase in contributed capital due to purchase of noncontrolling interest — — 707 Decrease in additional paid-in capital as a result of the contribution of net assets acquired to SES Holdings, LLC in exchange for common units — (4,879) — Decrease in additional paid-in capital as a result of the contribution of net assets from the Rockwater Merger to SES Holdings, LLC in exchange for common units — (170,276) — Increase in additional paid-in capital as a result of stock option exercises 374 — — Increase in additional paid-in capital as a result of restricted stock issuance, net of forfeitures 1,942 — — Increase in additional paid-in capital as a result of issuance of common stock due to vesting of restricted stock units 104 — — (Decrease) increase in additional paid-in capital as a result of the repurchase of SES Holdings LLC Units (576) 113 — Increase in additional paid-in capital as a result of exchanges of SES Holdings LLC Units (an equivalent number of shares of Class B common stock) for shares of Class A common stock 146,865 — — Increase in additional paid-in capital as a result of the Employee Stock Purchase Plan shares issued 15 — — Change to equity from net income (loss) attributable to Select Energy Services, Inc. and transfers from noncontrolling interests $ 185,236 $ (232,993) $ (525,529) |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2018 | |
EARNINGS (LOSS) PER SHARE | |
EARNINGS PER SHARE | NOTE 16—EARNINGS (LOSS) PER SHARE Earnings per share are based on the amount of income allocated to the shareholders and the weighted‑average number of shares outstanding during the period for each class of common stock. Outstanding options to purchase 2,706,159 shares are not included in the calculation of diluted weighted-average shares outstanding for the year ended December 31, 2018 as the effect is antidilutive. All options representing the rights to purchase shares during 2017 were not included in the diluted loss per share calculation, because the assumed exercise of such options would have been antidilutive. The following tables present the Company’s calculation of basic and diluted earnings per share for the years ended December 31, 2018, 2017 and 2016 (dollars in thousands, except share and per share amounts): For the year ended December 31, 2018 Select Energy Services, Inc. Class A Class A-2 Class B Numerator: Net income $ 54,299 Net income attributable to noncontrolling interests (17,787) Net income attributable to Select Energy Services, Inc. — basic 36,512 $ 35,720 $ 792 $ — Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of restricted stock 13 13 — — Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of stock options 30 30 — — Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of ESPP — — — — Net income (loss) attributable to Select Energy Services, Inc. — diluted $ 36,555 $ 35,763 $ 792 $ — Denominator: Weighted-average shares of common stock outstanding — basic 72,403,318 1,604,575 31,986,438 Dilutive effect of restricted stock 71,718 — — Dilutive effect of stock options 166,999 — — Dilutive effect of ESPP 112 — — Weighted-average shares of common stock outstanding — diluted 72,642,147 1,604,575 31,986,438 Earnings per share: Basic $ 0.49 $ 0.49 $ — Diluted $ 0.49 $ 0.49 $ — For the year ended December 31, 2017 Select Energy Services, Inc. Class A Class A-1 Class A-2 Class B Numerator: Net loss $ (35,127) Net loss attributable to noncontrolling interests 18,311 Net loss attributable to Select Energy Services, Inc. — basic (16,816) $ (12,560) $ (3,691) $ (565) $ — Net loss attributable to Select Energy Services, Inc. — diluted $ (16,816) $ (12,560) $ (3,691) $ (565) $ — Denominator: Weighted-average shares of common stock outstanding — basic 24,612,853 7,233,973 1,106,605 38,768,156 Dilutive effect of restricted stock — — — — Dilutive effect of stock options — — — — Dilutive effect of ESPP — — — — Weighted-average shares of common stock outstanding — diluted 24,612,853 7,233,973 1,106,605 38,768,156 Loss per share: Basic $ (0.51) $ (0.51) $ (0.51) $ — Diluted $ (0.51) $ (0.51) $ (0.51) $ — For the year ended December 31, 2016 Select Energy Services, Inc. Class A Class A-1 Class A-2 Class B Numerator: Net loss $ (313,948) Net loss attributable to Predecessor 306,481 Net loss attributable to noncontrolling interests 6,424 Net loss attributable to Select Energy Services, Inc. — basic (1,043) $ (199) $ (844) $ — $ — Net loss attributable to Select Energy Services, Inc. — diluted $ (1,043) $ (199) $ (844) $ — $ — Denominator: Weighted-average shares of common stock outstanding — basic 3,802,972 16,100,000 — 38,462,541 Dilutive effect of restricted stock — — — — Dilutive effect of stock options — — — — Dilutive effect of ESPP — — — — Weighted-average shares of common stock outstanding — diluted 3,802,972 16,100,000 — 38,462,541 Loss per share: Basic $ (0.05) $ (0.05) $ — $ — Diluted $ (0.05) $ (0.05) $ — $ — |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2018 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 17—SEGMENT INFORMATION Select Inc. is an oilfield services company that provides solutions to the North American onshore oil and natural gas industry. The Company’s services are offered through three operating segments. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the CODM in deciding how to allocate resources and assess performance. The Company’s CODM assesses performance and allocates resources on the basis of the three reportable segments. Corporate and other expenses that do not individually meet the criteria for segment reporting are reported separately as Corporate. Each operating segment reflects a reportable segment led by separate managers that report directly to the Company’s CODM. As a result of the Rockwater Merger, during the fourth quarter of 2017, the Company reorganized its reporting structure and aligned its segments and underlying businesses to execute on the strategies of the combined company. The Company’s revised operating and reportable segments are Water Solutions, Oilfield Chemicals and Wellsite Services. Accordingly, prior period segment information has been retrospectively revised as of December 31, 2017. The Company’s CODM assesses performance and allocates resources on the basis of the following three reportable segments: Water Solutions —The Water Solutions segment provides water‑related services to customers that include major integrated oil companies and independent oil and natural gas producers. These services include: the sourcing of water; the transfer of the water to the wellsite through permanent pipeline infrastructure and temporary pipe; the containment of fluids off‑ and on‑location; measuring and monitoring of water; the filtering and treatment of fluids, well testing and handling of flowback and produced formation water; and the transportation and recycling or disposal of drilling, completion and production fluids. Oilfield Chemicals —The Oilfield Chemicals segment develops, manufactures and provides a full suite of chemicals utilized in hydraulic fracturing, stimulation, cementing and well completions, including polymer slurries, crosslinkers, friction reducers, buffers, breakers and other chemical technologies, to leading pressure pumping service companies in the United States. Wellsite Services —The Wellsite Services segment provides oil and natural gas operators with a variety of services, including provision of workforce accommodations and surface rental equipment, crane and logistics services, wellsite and pipeline construction, field and well services, sand-hauling and fluid-logistics services. In addition, we provide water transfer, fluid hauling, containment and rental services in Canada. These services are performed to establish, maintain or improve production throughout the productive life of an oil or gas well or to otherwise facilitate other services performed on a well. Financial information by segment for the years ended December 31, 2018, 2017 and 2016 is as follows: For the year ended December 31, 2018 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water solutions $ 1,060,217 $ 113,667 $ 96,086 $ 148,303 Oilfield chemicals 260,281 (7,107) 10,496 10,832 Wellsite services 211,729 (6,283) 23,955 12,997 Eliminations (3,297) — — — Income from operations 100,277 Corporate — (38,603) 3,176 — Interest expense, net — (5,311) — — Other income, net — (360) — — $ 1,528,930 $ 56,003 $ 133,713 $ 172,132 For the year ended December 31, 2017 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water solutions $ 528,997 $ 17,424 $ 82,056 $ 87,123 Oilfield chemicals 41,586 663 2,040 3,063 Wellsite services 123,964 (6,527) 17,550 18,091 Eliminations (2,056) — — — Income from operations 11,560 Corporate — (41,559) 1,803 — Interest expense, net — (6,629) — — Other income, net — 650 — — $ 692,491 $ (35,978) $ 103,449 $ 108,277 For the year ended December 31, 2016 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water solutions $ 241,766 $ (282,019) $ 81,051 $ 34,458 Oilfield chemicals — — — — Wellsite services 61,461 (15,038) 16,056 1,868 Eliminations (828) — — — Loss from operations (297,057) Corporate — (1,916) — — Interest expense, net — (16,128) — — Other income, net — 629 — — $ 302,399 $ (314,472) $ 97,107 $ 36,326 Total assets by segment as of December 31, 2018 and 2017 is as follows: As of December 31, 2018 2017 (in thousands) Water solutions $ 1,057,063 $ 994,159 Oilfield chemicals 173,762 186,333 Wellsite services 106,708 151,272 Corporate 23,072 24,604 $ 1,360,605 $ 1,356,368 Revenue by groups of similar products and services are as follows: For the year ended December 31, 2018 2017 2016 (in thousands) Water sourcing and transfer (1) $ 827,727 $ 371,352 $ 144,659 Well testing and flowback 223,817 90,075 37,582 Fluid hauling and disposal 94,189 84,616 59,214 Oilfield chemicals (2) 259,791 41,586 — Accommodations and rentals 66,744 53,888 27,151 Wellsite completion and construction services 56,662 50,974 33,793 $ 1,528,930 $ 692,491 $ 302,399 (1) Includes water sourcing, water transfer, containment, water monitoring and water treatment and recycling services. (2) Includes completion and production chemicals. In connection with the Rockwater Merger in November 2017, the Company expanded into Canada. The Company attributes revenue to the United States and Canada based on the location where services are performed or the destination of the products or equipment sold or rented. Long-lived assets consist of property and equipment and are attributed to the United States and Canada based on the physical location of the asset at the end of the period. The Company’s revenue attributed to the United States was $1,480.4 million or 96.8% and $680.9 million or 98.3% of total revenue during the years ended December 31, 2018 and 2017, respectively. The Company’s revenue attributed to Canada was $48.6 million or 3.2% and $11.6 million or 1.7% of total revenue during the years ended December 31, 2018 and 2017, respectively. The Company’s net long-lived assets attributed to the United States was $492.4 million or 97.9% and $451.7 million or 95.3% of total net long-lived assets as of December 31, 2018 and December 31, 2017, respectively. The Company’s net long-lived assets attributed to Canada was $10.5 million or 2.1% and $22.4 million or 4.7% of total net long-lived assets as of December 31, 2018 and December 31, 2017, respectively. |
QUARTERLY RESULTS OF OPERATIONS
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | 12 Months Ended |
Dec. 31, 2018 | |
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | |
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | NOTE 18—QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) 2018 First Second Third Fourth Quarter Quarter Quarter Quarter (in thousands) Revenue $ 376,395 $ 393,247 $ 396,970 $ 362,318 Gross profit (loss) 47,949 56,728 59,397 34,408 Income (loss) from operations 18,603 24,795 32,258 (13,982) Net income (loss) 16,132 25,023 31,267 (18,123) Net income (loss) attributable to Select Energy Services, Inc. 10,099 16,963 22,951 (13,501) Net income (loss) per share attributable to common stockholders: Class A-Basic & Diluted $ 0.15 $ 0.24 $ 0.29 $ (0.17) Class A-1-Basic & Diluted $ — $ — $ — $ — Class A-2-Basic & Diluted $ 0.15 $ — $ — $ — Class B-Basic & Diluted $ — $ — $ — $ — 2017 First Second Third Fourth Quarter Quarter Quarter Quarter (in thousands) Revenue $ 99,925 $ 134,449 $ 153,880 $ 304,237 Gross profit (loss) (242) 12,254 19,509 26,259 Income (loss) from operations (12,508) (11,909) 2,457 (8,039) Net income (loss) (12,280) (10,490) 2,593 (14,950) Net income (loss) attributable to Select Energy Services, Inc. (4,172) (4,216) 1,224 (9,652) Net income (loss) per share attributable to common stockholders: Class A-Basic & Diluted $ (0.21) $ (0.16) $ 0.04 $ (0.18) Class A-1-Basic & Diluted $ (0.21) $ (0.16) $ — $ — Class A-2-Basic & Diluted $ — $ — $ — $ (0.18) Class B-Basic & Diluted $ — $ — $ — $ — |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2018 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 19—SUBSEQUENT EVENTS The Company has evaluated subsequent events for potential recognition and/or disclosure through March 1, 2019, the date these consolidated financial statements were available to be issued. During the first quarter of 2019, the Company made the decision to sell and wind down certain operations within its Wellsite Services segment, including the operations of its Affirm subsidiary, its Canadian operations and its sand hauling business. As a result, the Company is currently evaluating its reportable segments with the possibility of making changes to how the Company previously reported. On February 26, 2019, the Company closed on the sale of a portion of its Affirm subsidiary for a sales price of $11.2 million, subject to customary closing adjustments. The Company received proceeds of $11.0 million and expects to recognize a gain related to this sale. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Use of estimates | Use of estimates : The preparation of consolidated 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to the recoverability of long‑lived assets and intangibles, useful lives used in depreciation and amortization, uncollectible accounts receivable, income taxes, self‑insurance liabilities, share‑based compensation, inventory and contingent liabilities. The Company bases its estimates on historical and other pertinent information that are believed to be reasonable under the circumstances. The accounting estimates used in the preparation of the consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. |
Cash and cash equivalents | Cash and cash equivalents : The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. |
Accounts receivable and allowance for doubtful accounts | Accounts receivable and allowance for doubtful accounts : Accounts receivable are stated at the invoiced amount, or the earned but not yet invoiced amount, net of an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on the review of several factors, including historical collection experience, the current aging status of the customer accounts and financial condition of its customers. Accounts receivable are written off when a settlement is reached for an amount less than the outstanding historical balance or when the Company determines that it is probable the balance will not be collected. The change in allowance for doubtful accounts is as follows: For the year ended December 31, 2018 2017 2016 (in thousands) Balance at beginning of year $ 2,979 $ 2,144 $ 2,351 Provisions for bad debts, included in selling, general and administrative 2,210 1,542 2,385 Uncollectible receivable recoveries (write-offs) 140 (707) (2,592) Balance at end of year $ 5,329 $ 2,979 $ 2,144 |
Concentrations of credit and customer risk | Concentrations of credit and customer risk : Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. The amounts held in financial institutions periodically exceed the federally insured limit. Management believes that the financial institutions are financially sound and the risk of loss is minimal. The Company minimizes its exposure to counterparty credit risk by performing credit evaluations and ongoing monitoring of the financial stability of its customers. There were no customers that accounted for more than 10.0% of the Company’s consolidated revenues for the years ended December 31, 2018, 2017 and 2016. |
Inventories | Inventories : The Company values its inventories at lower of cost or net realizable value. Inventory costs are determined under the weighted-average method. Inventory costs primarily consist of chemicals and materials available for resale and parts and consumables used in operations. |
Debt issuance costs | Debt issuance costs : Debt issuance costs consist of costs directly associated with obtaining credit with financial institutions. These costs are recorded as a direct deduction from the carrying value of the associated debt liability and are generally amortized on a straight‑line basis over the life of the credit agreement, which approximates the effective‑interest method. During the year ended December 31, 2017, the Company expensed unamortized debt issuance costs of $2.9 million upon repayment and termination of the Previous Credit Facility. In connection with the entry into the Credit Agreement, the Company incurred debt issuance cost of $3.4 million. Amortization expense for debt issuance costs was $0.7 million, $4.0 million and $3.4 million for the years ended December 31, 2018, 2017 and 2016, respectively, and is included in interest expense in the consolidated statements of operations. |
Property and equipment | Property and equipment : Property and equipment are stated at cost less accumulated depreciation. Depreciation (and amortization of capital lease assets) is calculated on a straight line basis over the estimated useful life of each asset as noted below: Asset Classification Useful Life (years) Land Indefinite Buildings and leasehold improvements 30 or lease term Vehicles and equipment 4 - 8 Machinery and equipment 2 - 15 Computer equipment and software 3 - 4 Office furniture and equipment 7 Disposal wells 7 - 10 Depreciation expense related to the Company’s property and equipment, including amortization of property under capital leases, was $120.4 million, $92.6 million and $88.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. Change in depreciable lives of property and equipment: In accordance with its policy, the Company reviews the estimated useful lives and estimated salvage values of its fixed assets on an ongoing basis. This most recent review, conducted in the first quarter of 2018, indicated that the economic lives of certain assets were longer than the historic asset lives previously used by the Company. This increase was positively supported by effective use, care and custody of the assets. Also, this review indicated increased salvage value estimates for certain assets within vehicles and equipment, which was supported by recent vehicle sales data, and is expected to continue prospectively. As a result, effective January 1, 2018, the Company changed its estimates of the useful lives of certain assets included in vehicles and equipment and machinery and equipment, and increased salvage value estimates for certain assets within vehicles and equipment, to better reflect the estimated periods and depreciable amounts during which these assets will remain in service. The average estimated useful lives of the assets impacted in the vehicles and equipment category increased from 6.0 to 8.1 years, while the average estimated useful lives of assets impacted in machinery and equipment increased from 5.5 years to 6.9 years. The impact of the increase of useful lives was to defer and extend out depreciation expense, including lower expense in 2018. The impact of the increase in salvage values was to permanently lower current and future depreciation expense. The fixed assets obtained in 2017 through mergers and acquisitions, including the Rockwater Merger, have consistent useful life and salvage value estimates with the rest of the Company’s fixed assets. The change in the estimated useful lives of fixed assets and change in salvage value estimates was implemented on a prospective basis starting January 1, 2018. Excluding fixed assets attained through mergers and acquisitions during 2017, the impact of the change in useful estimate of fixed assets purchased on or before December 31, 2017 was to reduce and defer depreciation expense by $12.6 million during the year ended December 31, 2018. Also, the increase in estimated vehicle salvage value produced a permanent depreciation expense reduction of $3.9 million during the year ended December 31, 2018. For the year ended December 31, 2018, the changes in useful life estimate and increased salvage value produced an increase to net income of $10.9 million (including the impact of noncontrolling interests) and increased both basic and diluted earnings per share attributable to our stockholders by $0.15. Expenditures for additions to property and equipment and major replacements are capitalized when they significantly increase the functionality or extend the useful life of the asset. Gains and losses on dispositions, maintenance, repairs and minor replacements are included in the consolidated statements of operations as incurred. See Note 7—Property and Equipment for further discussion. |
Business combination | Business Combinations: The Company records business combinations using the acquisition method of accounting. Under the acquisition method of accounting, identifiable assets acquired and liabilities assumed are recorded at their acquisition date fair values. The excess of the purchase price over the estimated fair value is recorded as goodwill. Changes in the estimated fair values of net assets recorded for acquisitions prior to the finalization of more detailed analysis, but not to exceed one year from the date of acquisition, will adjust the amount of the purchase price allocable to goodwill. Measurement period adjustments are reflected in the period in which they occur. |
Goodwill and other intangible assets | Goodwill and other intangible assets : Goodwill represents the excess of the purchase price of acquisitions over the fair value of the net assets acquired. Goodwill and other intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets with finite useful lives are amortized either on a straight‑line basis over the asset’s estimated useful life or on a basis that reflects the pattern in which the economic benefits of the intangible assets are realized. |
Impairment of long‑lived and intangible assets | Impairment of goodwill, long‑lived assets and intangible assets : Long‑lived assets, such as property and equipment and finite‑lived intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that its carrying value may not be recoverable. Recoverability is measured by a comparison of its carrying amount to the estimated undiscounted cash flows to be generated by those assets. If the undiscounted cash flows are less than the carrying amount, the Company records impairment losses for the excess of its carrying value over the estimated fair value. The development of future cash flows and the estimate of fair value represent its best estimates based on industry trends and reference to market transactions and are subject to variability. The Company considers the factors within the fair value analysis to be Level 3 inputs within the fair value hierarchy. During the year ended December 31, 2018, the Company reviewed certain fluid disposal machinery and equipment used in our fluid hauling and disposal services that are included in our Water Solutions segment. Due to the condition of the equipment, the Company determined that long-lived assets with a carrying value of $2.3 million were no longer recoverable and were written down to their estimated fair value of zero. Additionally, the Company determined that $4.4 million of Canadian fixed assets were impaired due to an expectation of a loss on asset disposals. The Company determined that triggering events existed during 2016 resulting in an evaluation of the recoverability of the carrying value of certain property and equipment. As a result of this evaluation, the Company recorded impairment of property and equipment of $60.0 million related to the Company’s Water Solutions segment and impairment of other intangible assets of $0.1 million related to the Company’s Wellsite Services segment. As a result of this annual impairment test, the Company recorded no impairment of property and equipment during the year ended December 31, 2017. See Note 12—Fair Value Measurement for further discussion. The Company conducts its annual goodwill impairment tests in the fourth quarter of each year, and whenever impairment indicators arise, by examining relevant events and circumstances which could have a negative impact on its goodwill such as macroeconomic conditions, industry and market conditions, cost factors that have a negative effect on earnings and cash flows, overall financial performance, acquisitions and divestitures and other relevant entity-specific events. If a qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company is required to perform a quantitative impairment test for goodwill comparing the reporting unit’s carrying value to its fair value. The Company’s reporting units are based on its organizational and reporting structure. In determining fair values for the reporting units, the Company relies primarily on the income, market and cost approaches for valuation. In the income approach, the Company discounts predicted future cash flows using a weighted-average cost of capital calculation based on publicly traded peer companies. In the market approach, valuation multiples are developed from both publicly traded peer companies as well as other company transactions. The cost approach considers replacement cost as the primary indicator of value. If the fair value of a reporting unit is less than its carrying value, goodwill impairment is calculated by subtracting the fair value of the reporting unit from the carrying value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, allocation of assets (including goodwill) and liabilities to reporting units and determining the fair value. The determination of reporting unit fair value relies upon certain estimates and assumptions that are complex and are affected by numerous factors, including the general economic environment and levels of exploration and production (“E&P”) activity of oil and gas companies, the Company’s financial performance and trends and the Company’s strategies and business plans, among others. Unanticipated changes, including immaterial revisions, to these assumptions, could result in a provision for impairment in a future period. Given the nature of these evaluations and their application to specific assets and time frames, it is not possible to reasonably quantify the impact of changes in these assumptions. During the year ended December 31, 2018, the Company recorded $12.7 million of goodwill impairment on the Oilfield Chemicals segment. The impairment was primarily the result of low profit margins. Additionally, during 2018, the Company recorded $5.2 million of goodwill impairment on its Affirm subsidiary in the Wellsite Services segment as the estimated fair value was not adequate to fully cover its carrying value. As a result of the Company’s annual impairment test, no impairment loss was recognized during the year ended December 31, 2017. The Company determined that triggering events were present during 2016 resulting in a goodwill impairment assessment of $138.5 million, primarily related to the Company’s Water Solutions segment. See Note 8—Goodwill and Other Intangible Assets and Note 12—Fair Value Measurement for further discussion. |
Asset retirement obligations | Asset retirement obligations : The asset retirement obligation (“ARO”) liability reflects the present value of estimated costs of plugging, site reclamation and similar activities associated with the Company’s salt water disposal wells. The Company utilizes current retirement costs to estimate the expected cash outflows for retirement obligations. The Company also estimates the productive life of the disposal wells, a credit‑adjusted risk‑free discount rate and an inflation factor in order to determine the current present value of this obligation. The Company’s ARO liabilities are included in accrued expenses and other current liabilities and other long-term liabilities as of December 31, 2018 and 2017. The change in asset retirement obligations is as follows: For the year ended December 31, 2018 2017 (in thousands) Balance at beginning of year $ 1,846 $ 1,668 Accretion expense, included in depreciation and amortization expense 183 178 Change in estimate 377 — Divestitures (508) — Balance at end of year $ 1,898 $ 1,846 |
Self‑insurance | Self‑insurance : The Company self‑insures, through deductibles and retentions, up to certain levels for losses related to general liability, workers’ compensation and employer’s liability and vehicle liability. The Company’s exposure (i.e. the retention or deductible) per occurrence is $1.0 million for general liability, $1.0 million for workers’ compensation and employer’s liability and $1.0 million for vehicle liability. We also have an excess loss policy over these coverages with a limit of $100.0 million in the aggregate. Management regularly reviews its estimates of reported and unreported claims and provide for losses through reserves. Prior to June 1, 2016, the Company was self‑insured for group medical claims subject to a deductible of $0.3 million for large claims. As of June 1, 2016, the Company is fully‑insured for group medical. In connection with the Rockwater Merger, the Company maintained a separate group medical program for certain employees where medical claims were subject to a deductible of $0.3 million for large claims. During 2018, this was integrated into the Company’s existing plan. |
Employee benefit plans | Employee benefit plans : The Company sponsors a defined contribution 401(k) Profit Sharing Plan (the “401(k) Plan”) for the benefit of substantially all employees of the Company. The 401(k) Plan allows eligible employees to make tax‑deferred contributions, not to exceed annual limits established by the Internal Revenue Service. The Company did not make any matching contributions for the year ended December 31, 2016. Effective July 1, 2017, the Company reinstated matching contributions of 100% of employee contributions, up to 4% of compensation with immediate vesting for existing employees. Starting July 1, 2017, the vesting schedule for new hires is 25% for the first year, 50% for the second year, 75% for the third year and 100% for the fourth year. The Company’s contributions to the 401(k) Plan were $3.6 million and $0.8 million for the years ended December 31, 2018 and 2017, respectively. In connection with the Rockwater Merger, the Company temporarily maintained a separate 401(k) Plan for U.S. employees (the “Rockwater 401(k) Plan”) and a Registered Retirement Savings Plans for Canadian employees for specified eligible Rockwater employees. In June 2018, the temporary plan was combined into the Company’s current plan. The Company made employer contributions either at their discretion or as a matching percentage, as defined by the respective plan agreements. The Company made $0.1 million in employer contributions to the Rockwater 401(k) Plan for the year ended December 31, 2017. |
Revenue recognition | Revenue recognition : The Company adopted ASU 2014-09, Revenue from Contracts with Customers, for the year ended December 31, 2018, which constitutes a change in revenue recognition policy. See Note 4 for further detail on adopting this standard . The Company uses the five step process to recognize revenue which entails (i) identifying contracts with customers; (ii) identifying the performance obligations in each contract; (iii) determining the transaction price; (iv) allocating the transaction price to the performance obligations; and (v) recognizing revenue as we satisfy performance obligations. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services transferred to the customer. Revenue from the Company’s Water Solutions and Wellsite Services segments is typically recognized over the course of time, whereas revenue from the Company’s Chemicals segment is typically recognized upon delivery. Revenue generated by each of the Company’s revenue streams are outlined as follows: Water Solutions and Related Services —The Company provides water‑related services to customers, including the sourcing and transfer of water, the containment of fluids, measuring and monitoring of water, the filtering and treatment of fluids, well testing and handling, transportation and recycling or disposal of fluids. Operating under Rockwater LLC, the Company also offers sand hauling and logistics services in the Rockies and Bakken regions as well as water transfer, containment and fluids hauling in Western Canada. Revenue from water solutions is primarily based on a per‑barrel price or other throughput metrics as specified in the contract. The Company recognizes revenue from water solutions as services are performed. The Company’s agreements with its customers are often referred to as “price sheets” and sometimes provide pricing for multiple services. However, these agreements generally do not authorize the performance of specific services or provide for guaranteed throughput amounts. As customers are free to choose which services, if any, to use based on the Company’s price sheet, the Company prices its separate services on the basis of their standalone selling prices. Customer agreements generally do not provide for performance‑, cancellation‑, termination‑, or refund‑type provisions. Services based on price sheets with customers are generally performed under separately‑issued “work orders” or “field tickets” as services are requested. Of the Company’s Water Solutions service lines, only sourcing and transfer of water are consistently provided as part of the same arrangement. In these instances, revenue for both sourcing and transfer are recognized concurrently when delivered. Accommodations and Rentals —The Company provides workforce accommodations and surface rental equipment. Accommodation services include trailer housing and mobile home units for field personnel. Equipment rentals are related to the accommodations and include generators, sewer and water tanks and communication systems. Revenue from accommodations and equipment rental is typically recognized on a day-rate basis. Wellsite Completion and Construction Services —The Company provides crane and logistics services, wellsite and pipeline construction and field services. Revenue for heavy-equipment rental is typically recognized on a day-rate basis. Construction or field personnel revenue is based on hourly rates or on a per-job basis as services are performed. Oilfield Chemical Product Sales— The Company develops, manufactures and markets a full suite of chemicals utilized in hydraulic fracturing, stimulation, cementing and well completions, including polymers that create viscosity, crosslinkers, friction reducers, surfactants, buffers, breakers and other chemical technologies, to leading pressure pumping service companies in the United States. The Company also provides production chemicals solutions, which are applied to underperforming wells in order to enhance well performance and reduce production costs through the use of production treating chemicals, corrosion and scale monitoring, chemical inventory management, well failure analysis and lab services. Oilfield Chemicals products are generally sold under sales agreements based upon purchase orders or contracts with customers that do not include right of return provisions or other significant post‑delivery obligations. The Company’s products are produced in a standard manufacturing operation, even if produced to the customer’s specifications. The prices of products are fixed and determinable and are established in price lists or customer purchases orders. The Company recognizes revenue from product sales when title passes to the customer, the customer assumes risks and rewards of ownership, collectability is reasonably assured and delivery occurs as directed by the customer. |
Equity‑based compensation | Equity‑based compensation : The Company accounts for equity‑based awards by measuring the awards at the date of grant and recognizing the grant‑date fair value as an expense using either straight‑line or accelerated attribution, depending on the specific terms of the award agreements over the requisite service period, which is usually equivalent to the vesting period. The Company expenses awards with graded‑vesting service conditions on a straight‑line basis and accounts for forfeitures as they occur. The Company had liability awards that were contingent upon meeting certain equity returns and a liquidation event. These awards were settled in cash during the year ended December 31, 2017. See Note 11—Equity‑based Compensation for further discussion. |
Foreign currency | Foreign currency: The Company’s functional currency is the U.S. dollar. As a result of the Rockwater Merger in 2017, the Company obtained a Canadian subsidiary that has designated the Canadian dollar as its functional currency. Assets and liabilities are translated at period-end exchange rates, while revenues and expenses are translated at average rates for the year. The Company follows a practice of settling its intercompany loans; accordingly, the related translation gains and losses are recognized within foreign currency gains (losses) on the accompanying consolidated statements of comprehensive income (loss). On the consolidated statements of operations, currency translation gains and losses are recorded on a net basis in other income and expense, net. During the years ended December 31, 2018 and 2017, the Company incurred a net foreign currency gain (loss) of $(1.3) million and $0.3 million, respectively. Translation adjustments for the asset and liability accounts are included as a separate component of accumulated other comprehensive income (loss) in shareholders’ equity. During the years ended December 31, 2018 and 2017, the Company reported net foreign currency translation adjustments of $(0.7) million and $0.3 million, respectively. |
Fair value measurements | Fair value measurements : The Company measures certain assets and liabilities pursuant to accounting guidance which establishes a three‑tier fair value hierarchy and prioritizes the inputs used in measuring fair value. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices or other market data for similar assets and liabilities in active markets, or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability. Level 3 inputs are unobservable inputs based upon its own judgment and assumptions used to measure assets and liabilities at fair value. See Note 12—Fair Value Measurement for further discussion. |
Income taxes | Income taxes : Select Inc. is subject to U.S. federal, foreign and state income taxes as a corporation. SES Holdings and its subsidiaries, with the exception of certain corporate subsidiaries, are treated as flow‑through entities for U.S. federal income tax purposes and as such, are generally not subject to U.S. federal income tax at the entity level. Rather, the tax liability with respect to their taxable income is passed through to their members or partners. Accordingly, prior to the reorganization in connection with the Select 144A Offering, the Predecessor only recorded a provision for Texas franchise tax and U.S. federal and state provisions for certain corporate subsidiaries as the Predecessor’s taxable income, or loss was includable in the income tax returns of the individual partners and members. However, for periods following the reorganization in connection with the Select 144A Offering, Select Inc. recognizes a tax liability on its allocable share of SES Holdings’ taxable income. The state of Texas includes in its tax system a franchise tax applicable to the Company and an accrual for franchise taxes is included in the financial statements when appropriate. The Company and its subsidiaries account for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled pursuant to the provisions of Accounting Standards Codification (“ASC”) 740, Income Taxes. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized. The determination of the provision for income taxes requires significant judgment, use of estimates and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more likely than not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes through the provision for income taxes. The Company recognizes interest and penalties relating to uncertain tax provisions as a component of tax expense. The Company identified no material uncertain tax positions as of December 31, 2018, 2017 and 2016. See Note 14—Income Taxes for further discussion. |
Emerging Growth Company Status | Emerging Growth Company status: Under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), the Company was an “emerging growth company,” or an “EGC,” which allowed the Company to have an extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. The Company took advantage of all of the reduced reporting requirements and exemptions, including the longer phase‑in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act until the Company was no longer an emerging growth company. The Company lost EGC status effective December 31, 2018 as a result of the aggregate market value of our voting and non-voting common stock held by non-affiliates exceeding $700 million at June 30, 2018. |
Recent accounting pronouncements: | Recent accounting pronouncements : In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In August 2015, the FASB deferred the effective date by one year to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. As the Company lost its EGC status as of December 31, 2018, the ASU became effective for the calendar year 2018 at December 31, 2018. The Company adopted ASU 2014-09 using the modified retrospective method. The adoption of the ASU and related ASUs 2016-08, 2016-10, 2016-12 and 2016-20, did not have a material impact on the Company’s consolidated financial statements as (i) most customer agreements begin and end within the same period and (ii) the Company’s previous revenue recognition methodologies are consistent with the new guidance. In February 2016, the FASB issued ASU 2016-02, Leases , which modifies the lease recognition requirements and requires entities to recognize the assets and liabilities arising from leases on the balance sheet and to disclose key qualitative and quantitative information about the entity’s leasing arrangements. Based on the original guidance in ASU 2016-02, lessees and lessors would have been required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, including a number of optional practical expedients. In July 2018, the FASB issued ASU No. 2018-11, Leases (ASC 842): Targeted Improvements, which provides entities with an option to apply the guidance prospectively, instead of retrospectively, and allows for other classification provisions. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. As the Company lost its EGC status as of December 31, 2018, the ASU will become effective January 1, 2019. The Company will elect to recognize its lease assets and liabilities on a prospective basis, beginning on January 1, 2019, using the modified retrospective transition method. Additionally, the Company will (i) not set up right of use assets and lease liabilities for short-term leases, (ii) will elect to treat lease and non-lease components as a single lease component and (iii) will grandfather its current accounting for land easements that commenced before January 1, 2019, and (iv) used the package of practical expedients not to change prior lease classification, prior treatment of initial direct costs and prior determination of whether a contract constituted a lease. The Company expects the adoption of these ASUs to have a material increase to assets and liabilities on the consolidated balance sheets. Upon adoption, the Company expects the right-of-use assets and operating lease liabilities to range between $100 million and $120 million. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which is intended to simplify several aspects of the accounting for share‑based payment award transactions. ASU 2016-09 was effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. As a former EGC utilizing the extended transition period for new accounting pronouncements, this pronouncement was effective for annual reporting periods beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. As the Company lost its EGC status as of December 31, 2018, the ASU became effective for the calendar year 2018 at December 31, 2018. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, forfeiture estimates and classification on the statement of cash flows. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements or related disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which amends U.S. GAAP by introducing a new impairment model for financial instruments that is based on expected credit losses rather than incurred credit losses. The new impairment model applies to most financial assets, including trade accounts receivable. The amendments are effective for interim and annual reporting periods beginning after December 15, 2019, although it may be adopted one year earlier, and requires a modified retrospective transition approach. The Company is currently evaluating the impact this standard will have on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which amends eight specific cash flow issues with the objective of reducing diversity in practice. ASU 2016-15 was effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. As a former EGC utilizing the extended transition period for new accounting pronouncements, this pronouncement is effective for calendar year 2018 at December 31, 2018. The amendments in this ASU should be applied using a retrospective approach. The adoption of the ASU did not impact the Company’s consolidated statements of cash flows. In January 2017, the FASB issued ASU 2017-01 , Clarifying the Definition of a Business , with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This update was effective for fiscal years and interim periods within fiscal years beginning after December 15, 2017. As a former EGC utilizing the extended transition period for new accounting pronouncements the ASU became effective for calendar year 2018. The amendments in this ASU should be applied prospectively. The adoption of the ASU did not impact the Company’s consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment . This pronouncement removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This update is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. The amendments in this ASU should be applied prospectively. The Company early adopted ASU 2017-04 during the fourth quarter of 2018 to simplify the annual goodwill impairment testing process. The Company calculated 2018 goodwill impairment based on a simplified model of the difference between the carrying value less fair value. In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting . This pronouncement provides guidance about which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting in ASC 718. The pronouncement should be applied prospectively to an award modified on or after the adoption date. T he adoption of the ASU did not affect the Company’s consolidated financial statements and related disclosures. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of change in allowance for doubtful accounts | The change in allowance for doubtful accounts is as follows: For the year ended December 31, 2018 2017 2016 (in thousands) Balance at beginning of year $ 2,979 $ 2,144 $ 2,351 Provisions for bad debts, included in selling, general and administrative 2,210 1,542 2,385 Uncollectible receivable recoveries (write-offs) 140 (707) (2,592) Balance at end of year $ 5,329 $ 2,979 $ 2,144 |
Schedule of estimated useful life of property and equipment | Asset Classification Useful Life (years) Land Indefinite Buildings and leasehold improvements 30 or lease term Vehicles and equipment 4 - 8 Machinery and equipment 2 - 15 Computer equipment and software 3 - 4 Office furniture and equipment 7 Disposal wells 7 - 10 |
Summary of change in asset retirement obligations | For the year ended December 31, 2018 2017 (in thousands) Balance at beginning of year $ 1,846 $ 1,668 Accretion expense, included in depreciation and amortization expense 183 178 Change in estimate 377 — Divestitures (508) — Balance at end of year $ 1,898 $ 1,846 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of unaudited consolidated pro forma information | Pro Forma Year ended December 31, 2018 2017 2016 (unaudited) (in thousands) Revenue $ 1,536,524 $ 1,270,736 $ 698,778 Net income (loss) $ 56,269 (13,079) (372,397) Less: net (income) loss attributable to noncontrolling interests (1) (18,432) 5,299 152,930 Net income (loss) attributable to Select Energy Services, Inc. (1) $ 37,837 $ (7,780) $ (219,467) (1) The allocation of net income (loss) attributable to noncontrolling interests and Select Inc. gives effect to the equity structure as of December 31, 2017 as though the Select 144A Offering, the IPO, the Rockwater Merger, the Resource Water Acquisition and the GRR Acquisition occurred as of January 1, 2016. However, the calculation of pro forma net income (loss) does not give effect to any other pro forma adjustments for the Select 144A Offering or the subsequent IPO. |
Pro Well Acquisition | |
Schedule Of consideration transferred and the estimated fair value of identified assets acquired and liabilities | Preliminary purchase price allocation Amount Consideration transferred (in thousands) Cash paid $ 12,446 Total consideration transferred 12,446 Less: identifiable assets acquired and liabilities assumed Working capital 1,876 Property and equipment 6,588 Customer relationship intangible assets 3,000 Total identifiable net assets acquired 11,464 Goodwill 982 Fair value allocated to net assets acquired $ 12,446 |
Rockwater Merger | |
Schedule Of consideration transferred and the estimated fair value of identified assets acquired and liabilities | Purchase price allocation Amount Consideration transferred (in thousands) Class A Common Stock (25,914,260 shares) $ 423,957 Class A-2 Common Stock (6,731,845 shares) 110,133 Class B Common Stock (4,356,477 shares) and SES Holdings common units issued (4,356,477 units) 71,272 Fair value of previously held interest in Rockwater 2,310 Fair value of Rockwater share-based awards attributed to pre-acquisition service 12,529 Total consideration transferred 620,201 Less: identifiable assets acquired and liabilities assumed Working capital (1) 141,720 Property and equipment (2) 172,650 Intangible assets Customer relationships (3) 89,661 Trademarks and patents 31,223 Non-compete agreements 3,811 Other long-term assets 88 Deferred tax liabilities (408) Long-term debt (80,555) Other long-term liabilities (3) (2,517) Total identifiable net assets acquired 355,673 Goodwill 264,528 Fair value allocated to net assets acquired $ 620,201 (1) During the year ended December 31, 2018, the Company obtained additional information related to working capital which led to a decrease of $5.2 million and a corresponding increase in goodwill of $5.2 million compared to the estimated fair values included in the 2017 Form 10-K. (2) During the year ended December 31, 2018 , the Company obtained additional information related to property and equipment which led to a decrease of $13.0 million and a corresponding increase in goodwill of $13.0 million compared to the estimated fair values included in the 2017 Form 10-K. (3) During the year ended December 31, 2018 , the Company obtained additional information related to customer relationships and other long-term liabilities which led to an increase of $0.7 million and a decrease of $0.1 million, respectively, and a corresponding decrease to goodwill of $0.8 million compared to the estimated fair values included in the 2017 Form 10-K. |
Resource Water Acquisition | |
Schedule Of consideration transferred and the estimated fair value of identified assets acquired and liabilities | Purchase price allocation Amount Consideration transferred (in thousands) Cash paid $ 6,586 Class A Common Stock (156,909 shares) 2,380 Total consideration transferred 8,966 Less: identifiable assets acquired and liabilities assumed Working capital 1,189 Property and equipment 3,485 Customer relationship intangible assets 1,933 Other intangible assets 465 Total identifiable net assets acquired 7,072 Goodwill 1,894 Fair value allocated to net assets acquired $ 8,966 |
GRR Acquisition | |
Schedule Of consideration transferred and the estimated fair value of identified assets acquired and liabilities | Purchase price allocation Amount Consideration transferred (in thousands) Cash paid $ 53,032 Class A Common Stock (274,998 shares) 5,500 Assumed liabilities 1,106 Total consideration transferred 59,638 Less: identifiable assets acquired and liabilities assumed Working capital 7,728 Property and equipment 13,225 Customer relationship intangible assets 21,484 Other intangible assets 5,152 Total identifiable net assets acquired 47,589 Goodwill 12,049 Fair value allocated to net assets acquired $ 59,638 |
EXIT AND DISPOSAL ACTIVITIES (T
EXIT AND DISPOSAL ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
EXIT AND DISPOSAL ACTIVITIES | |
Summary of exit and disposal activities | Provision during the Usage during the lease obligations Balance as of year ended year ended during the year ended Balance as of December 31, 2017 December 31, 2018 December 31, 2018 December 31, 2018 December 31, 2018 (in thousands) Lease obligations and terminations $ 21,350 $ 3,925 $ 7,795 $ — $ 17,480 Reclassification of deferred rent 1,254 1,332 Total $ 22,604 $ 18,812 Acquired abandoned Provision during the Usage during the lease obligations Balance as of year ended year ended during the year ended Balance as of December 31, 2016 December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2017 (in thousands) Lease obligations and terminations $ 18,000 $ 3,572 $ 2,761 $ 2,539 $ 21,350 Reclassification of deferred rent 1,069 1,254 Total $ 19,069 $ 22,604 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
INVENTORIES | |
Schedule of inventory | As of December 31, 2018 2017 (in thousands) Raw materials $ 15,219 $ 11,462 Finished goods 28,540 29,674 Materials and supplies 1,233 3,462 $ 44,992 $ 44,598 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | As of December 31, 2018 2017 (in thousands) Land $ 17,799 $ 15,286 Buildings and leasehold improvements 106,626 99,222 Vehicles and equipment 83,435 70,537 Vehicles and equipment - capital lease 1,833 2,810 Machinery and equipment 758,528 716,064 Machinery and equipment - capital lease 532 900 Computer equipment and software 15,775 12,822 Computer equipment and software - capital lease 356 — Office furniture and equipment 4,612 4,320 Disposal wells 64,038 67,805 Other 497 497 Construction in progress 60,347 44,732 1,114,378 1,034,995 Less accumulated depreciation (611,530) (560,886) Total property and equipment, net $ 502,848 $ 474,109 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS. | |
Schedule of changes in the carrying amounts of goodwill by reportable segment | Water Oilfield Wellsite Solutions Chemicals Services Total (in thousands) Balance as of December 31, 2016 $ — $ — $ 12,242 $ 12,242 Additions 245,542 15,637 — 261,179 Balance as of December 31, 2017 245,542 15,637 12,242 273,421 Additions 982 — — 982 Impairment — (12,652) (5,242) (17,894) Measurement period adjustments (1) 20,277 (2,985) — 17,292 Balance as of December 31, 2018 $ 266,801 $ — $ 7,000 $ 273,801 (1) See Note 3―Acquisitions for additional information. |
Summary of components of other intangible assets | As of December 31, 2018 As of December 31, 2017 Gross Accumulated Net Gross Accumulated Net Value Amortization Value Value Amortization Value (in thousands) (in thousands) Definite-lived Customer relationships $ 171,245 $ 66,402 $ 104,843 $ 169,250 $ 57,836 $ 111,414 Patents 10,110 1,417 8,693 10,109 414 9,695 Other 7,234 2,866 4,368 9,423 3,182 6,241 Total definite-lived 188,589 70,685 117,904 188,782 61,432 127,350 Indefinite-lived Water rights 7,031 — 7,031 5,281 — 5,281 Trademarks 23,442 — 23,442 23,435 — 23,435 Total indefinite-lived 30,473 — 30,473 28,716 — 28,716 Total other intangible assets $ 219,062 $ 70,685 $ 148,377 $ 217,498 $ 61,432 $ 156,066 |
Summary of future estimated amortization expense for other intangible assets | Year Ending December 31, Amount (in thousands) 2019 $ 11,855 2020 11,561 2021 10,378 2022 10,163 2023 10,092 Thereafter 63,855 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
DEBT | |
Summary of Company’s leverage ratio | Level Average Excess Availability Base Rate Margin Eurocurrency Rate Margin I < 33% of the commitments II < 66.67% of the commitments and ≥ 33.33% of the commitments III ≥ 66.67% of the commitments |
Schedule of fee Percentage on unused credit facility | Level Average Revolver Usage Unused Line Fee Percentage I ≥ 50% of the commitments II < 50% of the commitments |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
Summary of operating lease commitments | Year Ending December 31, Operating Leases (1) (2) Capital Leases Total (in thousands) 2019 $ 33,377 $ 1,079 $ 34,456 2020 21,015 208 21,223 2021 16,123 82 16,205 2022 12,296 — 12,296 2023 9,643 — 9,643 Thereafter 40,991 — 40,991 Total minimum lease payments $ 133,445 1,369 $ 134,814 Less: imputed interest of 5.9% (81) Present value of net minimum capital lease payments 1,288 Less: current portion of capital lease obligations (1,015) Present value of long-term portion of capital lease obligations $ 273 (1) The Company’s operating lease commitments under non‑cancelable lease terms as of December 31, 2018 include $37.9 million of lease payments related to facilities that are included within the accrual for exit and disposal activities. Refer to Note 5—Exit and Disposal Activities for further discussion. (2) This table excludes non-cancelable sublease income of $1.4 million, $0.9 million and $0.1 million during the years ended 2019, 2020 and 2021, respectively. |
EQUITY-BASED COMPENSATION (Tabl
EQUITY-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Schedule of assumptions used in determining the fair value of certain equity options | For the year ended December 31, 2018 2017 Underlying equity $ 20.50 $ 20.00 Strike price $ 20.50 - 30.75 $ 20.00 Dividend yield (%) % % Risk-free rate (%) 2.3 % 2.0 - 2.7 % Volatility (%) 50.0 % 46.6 - 46.8 % Expected term (years) 10.0 4.0 - 6.0 |
Schedule of equity option activity and related information | For the year ended December 31, 2018 Weighted-average Weighted-average Weighted-average Remaining Contractual Aggregate Intrinsic Stock Options Grant Date Value Exercise Price Term (Years) Value (in thousands) (a) Beginning balance, outstanding 3,495,935 $ 7.65 $ 14.12 5.1 $ 16,368 Granted 584,846 8.98 26.02 Exercised (79,333) 9.41 8.12 493 Forfeited (95,380) 6.88 14.41 Expired (40,390) 1.67 17.32 Ending balance, outstanding 3,865,678 $ 7.95 $ 16.00 4.9 $ 19 Ending balance, exercisable 3,031,407 $ 7.61 $ 14.29 3.8 $ 19 Non-vested at end of period 834,271 N/A $ 22.23 (a) Aggregate intrinsic value for stock options is based on the difference between the exercise price of the stock options and the quoted closing Class A Common Stock price of $6.32 and $18.24 as of December 31, 2018 and 2017, respectively. |
Schedule of percentage of stock settled incentives earned | Stock Price at Vesting Date (1) Percentage of Target Amount Earned Less than $20.00 0% At least $20.00, but less than $25.00 100% $25.00 or greater 200% (1) The stock price at vesting date equals the greater of (i) the fair market value of a share of the Company’s stock on the vesting date, or (ii) the volume weighted average closing price of a share of the Company’s stock, as reported on the NYSE, for the 30 trading days preceding the vesting date. |
Schedule of stock-settled incentive awards outstanding | Award Value Value at Target Being Recognized Non-vested at December 31, 2017 $ — $ — Granted during 2018 3,871 1,479 Forfeited during 2018 (724) (277) Non-vested at December 31, 2018 $ 3,147 $ 1,202 |
summary of ESPP activity | The following table summarizes ESPP activity (in thousands, except shares): For the year ended December 31, 2018 Cash received for shares issued $ 117 Shares issued 9,793 |
Restricted Stock | |
Schedule of restricted stock activity | o For the year ended December 31, 2018 Weighted-average Restricted Stock Awards Grant Date Fair Value Non-vested at December 31, 2017 299,801 $ 16.36 Granted 438,182 19.52 Vested (191,400) 16.36 Forfeited (49,638) 17.62 Non-vested at December 31, 2018 496,945 $ 19.02 |
Restricted Stock Units | |
Schedule of restricted stock activity | For the year ended December 31, 2018 Weighted-average Restricted Stock Units Grant Date Fair Value Non-vested at December 31, 2017 30,360 $ 19.88 Granted — — Vested (27,860) 19.96 Non-vested at December 31, 2018 2,500 $ 19.00 |
Performance share units | |
Schedule of percentage of target PSUs earned | Return on Assets at Performance Period End Date Percentage of Target PSUs Earned Less than 9.6% 0% 9.6% 50% 12% 100% 14.4% 175% |
Summary of activity related to the units outstanding | Period Granted Target Shares Outstanding at Beginning of Period Target Shares Granted Target Shares Vested Target Shares Forfeited Target Shares Outstanding at End of Period 2018 — 280,021 — (24,657) 255,364 Total — 280,021 — (24,657) 255,364 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
FAIR VALUE MEASUREMENT | |
Summary of assets and liabilities measured at fair value on a non recurring basis | Fair Value Measurements Using Carrying Level 1 Level 2 Level 3 Value (1) Impairment (in thousands) Year Ended December 31, 2018 Goodwill $ — $ — $ 7,000 $ 24,894 $ 17,894 Cost-Method Investment — — 500 2,500 2,000 Fixed Assets — — 10,262 16,919 6,657 Year Ended December 31, 2017 $ — $ — $ — $ — $ — Year Ended December 31, 2016 Goodwill $ — $ — $ — $ 138,529 $ 138,529 Intangible Assets — — — 137 137 Fixed Assets — — 23,188 83,214 60,026 (1) Amount represents carrying value at the date of assessment. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
Summary of components of the federal and state income tax expense (benefit) | For the year ended December 31, 2018 2017 2016 (in thousands) Current tax (benefit) expense Federal income tax $ 1,073 $ (338) $ — State and local income tax 1,077 (77) 275 Foreign income tax — — — Total current (benefit) expense 2,150 (415) 275 Deferred tax (benefit) expense Federal income tax (20) (422) (841) State and local income tax (426) (14) 42 Foreign income tax — — — Total deferred benefit (446) (436) (799) Total income tax (benefit) provision $ 1,704 $ (851) $ (524) Tax (benefit) expense attributable to controlling interests $ 1,425 $ (405) $ (179) Tax benefit attributable to noncontrolling interests 279 (446) (345) Total income tax (benefit) provision $ 1,704 $ (851) $ (524) |
Summary of reconciliation of the provision for income taxes | For the year ended December 31, 2018 2017 2016 (in thousands) Provision calculated at federal statutory income tax rate: Income (loss) before taxes $ 56,003 $ (35,978) $ (314,472) Statutory rate 21 % 35 % 35 % Income tax expense (benefit) computed at statutory rate 11,761 (12,592) (110,065) Less: noncontrolling interests (3,735) 6,409 109,230 Income tax expense (benefit) attributable to controlling interests 8,026 (6,183) (835) State and local income taxes, net of federal benefit 515 (91) 317 Change in enacted tax rate — 39,166 — Other 580 — — Change in valuation allowance (7,696) (33,297) 339 Income tax expense (benefit) attributable to controlling interests 1,425 (405) (179) Income tax expense (benefit) attributable to noncontrolling interests 279 (446) (345) Total income tax expense (benefit) $ 1,704 $ (851) $ (524) |
Summary of principal components of the deferred tax assets (liabilities) | For the year ended December 31, 2018 2017 (in thousands) Deferred tax assets Outside basis difference in SES Holdings $ 38,739 $ 37,931 Net operating losses 45,927 35,243 Credits and other carryforwards 1,679 863 Property and equipment 150 — Intangible assets 1,284 1,218 Stock compensation — 2,557 Other 468 1,340 Total deferred tax assets before valuation allowance 88,247 79,152 Valuation allowance (88,247) (75,886) Total deferred tax assets — 3,266 Deferred tax liabilities Property and equipment — 3,286 Other 123 549 Total deferred tax liabilities 123 3,835 Net deferred tax liabilities $ (123) $ (569) |
NONCONTROLLING INTERESTS (Table
NONCONTROLLING INTERESTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
NONCONTROLLING INTERESTS | |
Schedule of Non Controlling Interests Categories | As of December 31, 2018 2017 (in thousands) Noncontrolling interests attributable to joint ventures formed for water-related services $ 3,273 $ 5,722 Noncontrolling interests attributable to holders of Class B shares 274,566 401,000 Total noncontrolling interests $ 277,839 $ 406,722 |
Summary of the effects of changes in noncontrolling interests | For the year ended December 31, 2018 2017 2016 (in thousands) Net income (loss) attributable to Select Energy Services, Inc. $ 36,512 $ (16,816) $ (307,524) Transfers (to) from noncontrolling interests: Decrease in additional paid-in capital as a result of the contribution of proceeds from the IPO to SES Holdings, LLC in exchange for common units — (41,135) — Decrease in additional paid-in capital as a result of the contribution of proceeds from the Select 144A Offering to SES Holdings, LLC in exchange for common units — — (218,712) Increase in contributed capital due to purchase of noncontrolling interest — — 707 Decrease in additional paid-in capital as a result of the contribution of net assets acquired to SES Holdings, LLC in exchange for common units — (4,879) — Decrease in additional paid-in capital as a result of the contribution of net assets from the Rockwater Merger to SES Holdings, LLC in exchange for common units — (170,276) — Increase in additional paid-in capital as a result of stock option exercises 374 — — Increase in additional paid-in capital as a result of restricted stock issuance, net of forfeitures 1,942 — — Increase in additional paid-in capital as a result of issuance of common stock due to vesting of restricted stock units 104 — — (Decrease) increase in additional paid-in capital as a result of the repurchase of SES Holdings LLC Units (576) 113 — Increase in additional paid-in capital as a result of exchanges of SES Holdings LLC Units (an equivalent number of shares of Class B common stock) for shares of Class A common stock 146,865 — — Increase in additional paid-in capital as a result of the Employee Stock Purchase Plan shares issued 15 — — Change to equity from net income (loss) attributable to Select Energy Services, Inc. and transfers from noncontrolling interests $ 185,236 $ (232,993) $ (525,529) |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
EARNINGS (LOSS) PER SHARE | |
Summary of calculation of basic and diluted earnings per share | The following tables present the Company’s calculation of basic and diluted earnings per share for the years ended December 31, 2018, 2017 and 2016 (dollars in thousands, except share and per share amounts): For the year ended December 31, 2018 Select Energy Services, Inc. Class A Class A-2 Class B Numerator: Net income $ 54,299 Net income attributable to noncontrolling interests (17,787) Net income attributable to Select Energy Services, Inc. — basic 36,512 $ 35,720 $ 792 $ — Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of restricted stock 13 13 — — Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of stock options 30 30 — — Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of ESPP — — — — Net income (loss) attributable to Select Energy Services, Inc. — diluted $ 36,555 $ 35,763 $ 792 $ — Denominator: Weighted-average shares of common stock outstanding — basic 72,403,318 1,604,575 31,986,438 Dilutive effect of restricted stock 71,718 — — Dilutive effect of stock options 166,999 — — Dilutive effect of ESPP 112 — — Weighted-average shares of common stock outstanding — diluted 72,642,147 1,604,575 31,986,438 Earnings per share: Basic $ 0.49 $ 0.49 $ — Diluted $ 0.49 $ 0.49 $ — For the year ended December 31, 2017 Select Energy Services, Inc. Class A Class A-1 Class A-2 Class B Numerator: Net loss $ (35,127) Net loss attributable to noncontrolling interests 18,311 Net loss attributable to Select Energy Services, Inc. — basic (16,816) $ (12,560) $ (3,691) $ (565) $ — Net loss attributable to Select Energy Services, Inc. — diluted $ (16,816) $ (12,560) $ (3,691) $ (565) $ — Denominator: Weighted-average shares of common stock outstanding — basic 24,612,853 7,233,973 1,106,605 38,768,156 Dilutive effect of restricted stock — — — — Dilutive effect of stock options — — — — Dilutive effect of ESPP — — — — Weighted-average shares of common stock outstanding — diluted 24,612,853 7,233,973 1,106,605 38,768,156 Loss per share: Basic $ (0.51) $ (0.51) $ (0.51) $ — Diluted $ (0.51) $ (0.51) $ (0.51) $ — For the year ended December 31, 2016 Select Energy Services, Inc. Class A Class A-1 Class A-2 Class B Numerator: Net loss $ (313,948) Net loss attributable to Predecessor 306,481 Net loss attributable to noncontrolling interests 6,424 Net loss attributable to Select Energy Services, Inc. — basic (1,043) $ (199) $ (844) $ — $ — Net loss attributable to Select Energy Services, Inc. — diluted $ (1,043) $ (199) $ (844) $ — $ — Denominator: Weighted-average shares of common stock outstanding — basic 3,802,972 16,100,000 — 38,462,541 Dilutive effect of restricted stock — — — — Dilutive effect of stock options — — — — Dilutive effect of ESPP — — — — Weighted-average shares of common stock outstanding — diluted 3,802,972 16,100,000 — 38,462,541 Loss per share: Basic $ (0.05) $ (0.05) $ — $ — Diluted $ (0.05) $ (0.05) $ — $ — |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SEGMENT INFORMATION | |
Summary of financial information by segment | For the year ended December 31, 2018 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water solutions $ 1,060,217 $ 113,667 $ 96,086 $ 148,303 Oilfield chemicals 260,281 (7,107) 10,496 10,832 Wellsite services 211,729 (6,283) 23,955 12,997 Eliminations (3,297) — — — Income from operations 100,277 Corporate — (38,603) 3,176 — Interest expense, net — (5,311) — — Other income, net — (360) — — $ 1,528,930 $ 56,003 $ 133,713 $ 172,132 For the year ended December 31, 2017 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water solutions $ 528,997 $ 17,424 $ 82,056 $ 87,123 Oilfield chemicals 41,586 663 2,040 3,063 Wellsite services 123,964 (6,527) 17,550 18,091 Eliminations (2,056) — — — Income from operations 11,560 Corporate — (41,559) 1,803 — Interest expense, net — (6,629) — — Other income, net — 650 — — $ 692,491 $ (35,978) $ 103,449 $ 108,277 For the year ended December 31, 2016 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water solutions $ 241,766 $ (282,019) $ 81,051 $ 34,458 Oilfield chemicals — — — — Wellsite services 61,461 (15,038) 16,056 1,868 Eliminations (828) — — — Loss from operations (297,057) Corporate — (1,916) — — Interest expense, net — (16,128) — — Other income, net — 629 — — $ 302,399 $ (314,472) $ 97,107 $ 36,326 Total assets by segment as of December 31, 2018 and 2017 is as follows: As of December 31, 2018 2017 (in thousands) Water solutions $ 1,057,063 $ 994,159 Oilfield chemicals 173,762 186,333 Wellsite services 106,708 151,272 Corporate 23,072 24,604 $ 1,360,605 $ 1,356,368 |
Revenue from External Customers by Products and Services | For the year ended December 31, 2018 2017 2016 (in thousands) Water sourcing and transfer (1) $ 827,727 $ 371,352 $ 144,659 Well testing and flowback 223,817 90,075 37,582 Fluid hauling and disposal 94,189 84,616 59,214 Oilfield chemicals (2) 259,791 41,586 — Accommodations and rentals 66,744 53,888 27,151 Wellsite completion and construction services 56,662 50,974 33,793 $ 1,528,930 $ 692,491 $ 302,399 (1) Includes water sourcing, water transfer, containment, water monitoring and water treatment and recycling services. (2) Includes completion and production chemicals. |
QUARTERLY RESULTS OF OPERATIO_2
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | |
Schedule of quarterly results of operations | 2018 First Second Third Fourth Quarter Quarter Quarter Quarter (in thousands) Revenue $ 376,395 $ 393,247 $ 396,970 $ 362,318 Gross profit (loss) 47,949 56,728 59,397 34,408 Income (loss) from operations 18,603 24,795 32,258 (13,982) Net income (loss) 16,132 25,023 31,267 (18,123) Net income (loss) attributable to Select Energy Services, Inc. 10,099 16,963 22,951 (13,501) Net income (loss) per share attributable to common stockholders: Class A-Basic & Diluted $ 0.15 $ 0.24 $ 0.29 $ (0.17) Class A-1-Basic & Diluted $ — $ — $ — $ — Class A-2-Basic & Diluted $ 0.15 $ — $ — $ — Class B-Basic & Diluted $ — $ — $ — $ — 2017 First Second Third Fourth Quarter Quarter Quarter Quarter (in thousands) Revenue $ 99,925 $ 134,449 $ 153,880 $ 304,237 Gross profit (loss) (242) 12,254 19,509 26,259 Income (loss) from operations (12,508) (11,909) 2,457 (8,039) Net income (loss) (12,280) (10,490) 2,593 (14,950) Net income (loss) attributable to Select Energy Services, Inc. (4,172) (4,216) 1,224 (9,652) Net income (loss) per share attributable to common stockholders: Class A-Basic & Diluted $ (0.21) $ (0.16) $ 0.04 $ (0.18) Class A-1-Basic & Diluted $ (0.21) $ (0.16) $ — $ — Class A-2-Basic & Diluted $ — $ — $ — $ (0.18) Class B-Basic & Diluted $ — $ — $ — $ — |
BUSINESS AND BASIS OF PRESENT_2
BUSINESS AND BASIS OF PRESENTATION (Details) | Jan. 12, 2018shares | Nov. 01, 2017USD ($)shares | May 10, 2017$ / sharesshares | May 05, 2017USD ($) | Apr. 26, 2017$ / sharesshares | Dec. 20, 2016USD ($)$ / sharesshares | May 31, 2016USD ($) | Dec. 31, 2018USD ($)segment$ / sharesshares | Dec. 31, 2017USD ($)segment$ / sharesshares | Dec. 31, 2016USD ($)segmentshares | Mar. 31, 2018USD ($) | Mar. 29, 2018shares | Jun. 13, 2017shares |
Net proceeds from the IPO | $ | $ 762,000 | ||||||||||||
Payments on long-term debt | $ | 90,000,000 | $ 111,000,000 | $ 298,000,000 | ||||||||||
Settlement of phantom units | $ | $ 7,800,000 | ||||||||||||
Number of tax receivable agreements | $ | 2 | ||||||||||||
Equity method investment | $ | $ 0 | ||||||||||||
Number of operating segments | segment | 3 | 3 | 3 | ||||||||||
Number of reportable segments | segment | 3 | 3 | 3 | ||||||||||
Fair value of cost method investee | $ | $ 500,000 | ||||||||||||
Impairment of cost-method investment | $ | $ 2,000,000 | ||||||||||||
Goodwill Adjustment | |||||||||||||
Adjustment for correction of immaterial error | $ | 16,000,000 | ||||||||||||
Property Plant And Equipment Adjustment | |||||||||||||
Adjustment for correction of immaterial error | $ | (16,000,000) | ||||||||||||
Depreciation Expense Adjustment | |||||||||||||
Adjustment for correction of immaterial error | $ | (3,200,000) | ||||||||||||
Income From Operations Adjustment | |||||||||||||
Adjustment for correction of immaterial error | $ | $ (3,200,000) | ||||||||||||
Revolving line of credit | |||||||||||||
Maximum borrowing capacity | $ | $ 300,000,000 | $ 300,000,000 | |||||||||||
Predecessor | |||||||||||||
Ratio | 10.3583 | ||||||||||||
Common units issued | 16,100,000 | ||||||||||||
Class A-1 Common Stock | |||||||||||||
Par value | $ / shares | $ 0.01 | ||||||||||||
Common stock issued | 16,100,000 | ||||||||||||
Conversion rate per share | 1 | ||||||||||||
Class A-1 Common Stock | Private Placement | |||||||||||||
Shares issued | 16,100,000 | ||||||||||||
Share price | $ / shares | $ 20 | ||||||||||||
Conversion rate per share | 1 | ||||||||||||
Class A Common Stock | |||||||||||||
Shares issued | 10,005,000 | ||||||||||||
Par value | $ / shares | 0.01 | $ 0.01 | $ 0.01 | ||||||||||
Common stock issued | 78,956,555 | 59,182,176 | |||||||||||
Number of shares outstanding | 78,956,555 | 59,182,176 | |||||||||||
Class A Common Stock | IPO | |||||||||||||
Shares issued | 8,700,000 | ||||||||||||
Share price | $ / shares | $ 14 | ||||||||||||
Net proceeds from the IPO | $ | $ 128,500,000 | ||||||||||||
Payments on long-term debt | $ | $ 34,000,000 | ||||||||||||
Class A Common Stock | Over-allotment option | |||||||||||||
Shares issued | 1,305,000 | ||||||||||||
Share price | $ / shares | $ 14 | ||||||||||||
Class A-2 Common Stock | |||||||||||||
Par value | $ / shares | $ 0.01 | $ 0.01 | |||||||||||
Common stock issued | 0 | 6,731,845 | |||||||||||
Number of shares outstanding | 0 | 6,731,845 | |||||||||||
Class B Common Stock | |||||||||||||
Par value | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||||||||
Common stock issued | 38,462,541 | 26,026,843 | 40,331,989 | ||||||||||
Number of shares outstanding | 26,026,843 | 40,331,989 | |||||||||||
Contributing Legacy Owners | Class A Common Stock | Predecessor | |||||||||||||
Common units issued | 3,802,972 | ||||||||||||
Common stock issued | 3,802,972 | ||||||||||||
Rockwater Merger | Class A Common Stock | |||||||||||||
Shares issued | 25,900,000 | ||||||||||||
Number of shares resold | 25,914,260 | ||||||||||||
Rockwater Merger | Class A-2 Common Stock | |||||||||||||
Shares issued | 6,700,000 | ||||||||||||
Number of shares outstanding | 0 | ||||||||||||
Conversion rate per share | 1 | ||||||||||||
Number of shares resold | 6,653,777 | 6,731,845 | |||||||||||
Rockwater Merger | Class B Common Stock | |||||||||||||
Shares issued | 4,400,000 | ||||||||||||
Number of shares resold | 4,356,477 | ||||||||||||
Rockwater Merger | SES Holdings | |||||||||||||
Common units issued | 37,300,000 | ||||||||||||
Number of shares resold | 4,356,477 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Allowance activity (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)customer | Dec. 31, 2017USD ($)customer | Dec. 31, 2016USD ($)customer | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance at beginning of year | $ 2,979 | $ 2,144 | $ 2,351 |
Provisions for bad debts, included in selling, general and administrative | 2,210 | 1,542 | 2,385 |
Uncollectible receivable recoveries (write-offs) | 140 | (707) | (2,592) |
Balance at end of year | $ 5,329 | $ 2,979 | $ 2,144 |
Concentrations of credit and customer risk | |||
Number of customers accounting for more than 10% of consolidated revenues | customer | 0 | 0 | 0 |
Debt issuance costs | |||
Unamortized Debt issuance Costs | $ 2,900 | ||
Agreement Debt Issuance Cost | 3,442 | $ 4,497 | |
Amortization of debt issuance costs | $ 688 | $ 4,031 | $ 3,435 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||||||||||
Balance at beginning of Current Period | $ 1,846 | $ 1,668 | $ 1,846 | $ 1,668 | |||||||
Accretion expense, included in depreciation and amortization expense | 183 | 178 | |||||||||
Change in estimate | 377 | ||||||||||
Divestitures | (508) | ||||||||||
Balance at end of Current Period | $ 1,898 | $ 1,846 | 1,898 | 1,846 | $ 1,668 | ||||||
PROPERTY AND EQUIPMENT | |||||||||||
Depreciation | 120,400 | 92,600 | |||||||||
Depreciation and amortization | 3,176 | 1,804 | 2,087 | ||||||||
Net income | (13,501) | $ 22,951 | $ 16,963 | $ 10,099 | $ (9,652) | $ 1,224 | $ (4,216) | $ (4,172) | 36,512 | (16,816) | (1,043) |
Goodwill and Intangible Asset Impairment | |||||||||||
Goodwill and Intangible Asset Impairment | 17,894 | 0 | 138,666 | ||||||||
Impairment of property and equipment | 6,657 | 0 | 60,026 | ||||||||
Impairment | 17,894 | ||||||||||
Fluid Dispoasal Equipment | |||||||||||
Goodwill and Intangible Asset Impairment | |||||||||||
Impaired asset carrying value | 2,300 | 2,300 | |||||||||
Estimated fair value | 0 | 0 | |||||||||
Canadian Assets | |||||||||||
Goodwill and Intangible Asset Impairment | |||||||||||
Impaired asset carrying value | $ 4,400 | 4,400 | |||||||||
Water Solutions | |||||||||||
Goodwill and Intangible Asset Impairment | |||||||||||
Goodwill and Intangible Asset Impairment | 138,500 | ||||||||||
Impairment of property and equipment | 60,000 | ||||||||||
Wellsite Services | |||||||||||
Goodwill and Intangible Asset Impairment | |||||||||||
Impairment of intangible assets | 100 | ||||||||||
Impairment | $ 5,242 | ||||||||||
Buildings and leasehold improvements | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 30 years | ||||||||||
Vehicles and equipment | Minimum | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 4 years | ||||||||||
Vehicles and equipment | Maximum | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 8 years | ||||||||||
Machinery and equipment | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Depreciation and amortization | $ 120,400 | $ 92,600 | $ 88,200 | ||||||||
Machinery and equipment | Minimum | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 2 years | ||||||||||
Machinery and equipment | Maximum | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 15 years | ||||||||||
Computer equipment and software | Minimum | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 3 years | ||||||||||
Computer equipment and software | Maximum | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 4 years | ||||||||||
Office furniture and equipment | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 7 years | ||||||||||
Disposal wells | Minimum | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 7 years | ||||||||||
Disposal wells | Maximum | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 10 years | ||||||||||
Change in useful life estimate and increased salvage value | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Depreciation | $ (12,600) | ||||||||||
Net income | $ 10,900 | ||||||||||
Basic and diluted earnings per share attributable to stockholders | $ 0.15 | ||||||||||
Change in useful life estimate and increased salvage value | Vehicles and equipment | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Depreciation | $ (3,900) | ||||||||||
Change in useful life estimate and increased salvage value | Vehicles and equipment | Minimum | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 6 years | ||||||||||
Change in useful life estimate and increased salvage value | Vehicles and equipment | Maximum | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 8 years 1 month 6 days | ||||||||||
Change in useful life estimate and increased salvage value | Machinery and equipment | Minimum | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 5 years 6 months | ||||||||||
Change in useful life estimate and increased salvage value | Machinery and equipment | Maximum | |||||||||||
PROPERTY AND EQUIPMENT | |||||||||||
Estimated useful lives of the assets | 6 years 10 months 24 days |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Self Insurance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2019 | Jun. 30, 2018 | |
Class of Stock [Line Items] | |||||
Self insurance reserve towards deductible for general liability | $ 1,000 | ||||
Self insurance reserve towards deductible for workers compensation and employers liability | 1,000 | ||||
Self insurance reserve towards deductible for vehicle liability | 1,000 | ||||
Excess loss policy limit | 100,000 | ||||
Self insured group medical claim plan deductible | $ 300 | ||||
Market value of stock held by non-affiliates | $ 700,000 | ||||
Employee benefit plans | |||||
Matching contribution as a percentage of employee contributions | 100.00% | ||||
Matching contribution as a percentage of employee compensation | 4.00% | ||||
Company 401k contribution | $ 3,600 | $ 800 | |||
Foreign currency translation adjustment | (670) | 302 | |||
Foreign currency gain (loss), net | (1,292) | 281 | |||
Other (income) expense | $ 932 | 369 | $ 629 | ||
First year | |||||
Employee benefit plans | |||||
Annual vesting matching contribution as a percentage of employee compensation | 25.00% | ||||
Second year | |||||
Employee benefit plans | |||||
Annual vesting matching contribution as a percentage of employee compensation | 50.00% | ||||
Third year | |||||
Employee benefit plans | |||||
Annual vesting matching contribution as a percentage of employee compensation | 75.00% | ||||
Fourth year | |||||
Employee benefit plans | |||||
Annual vesting matching contribution as a percentage of employee compensation | 100.00% | ||||
Rockwater Merger | |||||
Employee benefit plans | |||||
Company 401k contribution | $ 100 | ||||
Minimum | Restatement Adjustment | ASU 2016-02 | |||||
Class of Stock [Line Items] | |||||
Operating lease asset | $ 110,000 | ||||
Operating lease liability | 100,000 | ||||
Maximum | Restatement Adjustment | ASU 2016-02 | |||||
Class of Stock [Line Items] | |||||
Operating lease asset | 130,000 | ||||
Operating lease liability | $ 120,000 |
ACQUISITIONS - Pro Well Acquisi
ACQUISITIONS - Pro Well Acquisition (Details) - USD ($) $ in Thousands | Nov. 20, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Less: identified assets acquired and liabilities assumed | ||||
Goodwill | $ 273,801 | $ 273,421 | $ 12,242 | |
Pro Well Acquisition | ||||
Consideration transferred | ||||
Cash paid | $ 12,446 | |||
Total consideration transferred | 12,446 | |||
Less: identified assets acquired and liabilities assumed | ||||
Working capital | 1,876 | |||
Property and equipment | 6,588 | |||
Total identifiable net assets acquired | 11,464 | |||
Goodwill | 982 | |||
Fair value allocated to net assets acquired | 12,446 | |||
Pro Well Acquisition | Customer relationships | ||||
Less: identified assets acquired and liabilities assumed | ||||
Intangible assets | $ 3,000 |
ACQUISITIONS - Rockwater Merger
ACQUISITIONS - Rockwater Merger (Details) - USD ($) $ in Thousands | Jan. 12, 2018 | Nov. 01, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Less: identified assets acquired and liabilities assumed | |||||||
Goodwill | $ 273,801 | $ 273,421 | $ 273,801 | $ 273,421 | $ 12,242 | ||
SES Holdings | |||||||
Business Acquisition [Line Items] | |||||||
Gain on remeasurement of investment | 1,200 | ||||||
Water Solutions | |||||||
Less: identified assets acquired and liabilities assumed | |||||||
Goodwill | 266,801 | 245,542 | 266,801 | 245,542 | |||
Oilfield Chemicals | |||||||
Less: identified assets acquired and liabilities assumed | |||||||
Goodwill | $ 15,637 | 15,637 | |||||
Rockwater Merger | |||||||
Business Acquisition [Line Items] | |||||||
Transaction-related costs | 6,300 | $ 8,900 | |||||
Consideration transferred | |||||||
Fair value of previously held interest in Rockwater | $ 2,310 | ||||||
Fair value of Rockwater share-based awards attributed to pre-acquisition service | 12,529 | ||||||
Total consideration transferred | 620,201 | ||||||
Less: identified assets acquired and liabilities assumed | |||||||
Working capital | 141,720 | ||||||
Property and equipment | 172,650 | ||||||
Other long-term assets | 88 | ||||||
Deferred tax liabilities | (408) | ||||||
Long-term debt | (80,555) | ||||||
Other long-term liabilities | (2,517) | ||||||
Total identifiable net assets acquired | 355,673 | ||||||
Goodwill | 264,528 | ||||||
Fair value allocated to net assets acquired | $ 620,201 | ||||||
Decrease in working capital | 5,200 | ||||||
Increase (Decrease) in goodwill | 5,200 | ||||||
Decrease in other long-term liabilities | 100 | ||||||
Rockwater Merger | SES Holdings | |||||||
Less: identified assets acquired and liabilities assumed | |||||||
Shares issued in Merger Agreement | 4,356,477 | ||||||
Rockwater Merger | Property and equipment | |||||||
Less: identified assets acquired and liabilities assumed | |||||||
Increase (Decrease) in goodwill | (13,000) | ||||||
Decrease in Property and equipment | 16,000 | 13,000 | |||||
Increase in goodwill due to purchase price adjustment | $ (16,000) | ||||||
Rockwater Merger | Customer relationships | |||||||
Less: identified assets acquired and liabilities assumed | |||||||
Intangible assets | $ 89,661 | ||||||
Increase (Decrease) in goodwill | (800) | ||||||
Increase in customer relationships | $ 700 | ||||||
Rockwater Merger | Trademarks and patents | |||||||
Less: identified assets acquired and liabilities assumed | |||||||
Intangible assets | 31,223 | ||||||
Rockwater Merger | Noncompete agreements | |||||||
Less: identified assets acquired and liabilities assumed | |||||||
Intangible assets | 3,811 | ||||||
Rockwater Merger | Water Solutions | |||||||
Less: identified assets acquired and liabilities assumed | |||||||
Goodwill | 251,800 | ||||||
Rockwater Merger | Oilfield Chemicals | |||||||
Less: identified assets acquired and liabilities assumed | |||||||
Goodwill | 12,700 | ||||||
Class A Common Stock | Rockwater Merger | |||||||
Consideration transferred | |||||||
Common stock issued | $ 423,957 | ||||||
Less: identified assets acquired and liabilities assumed | |||||||
Shares issued in Merger Agreement | 25,914,260 | ||||||
Class A-2 Common Stock | Rockwater Merger | |||||||
Consideration transferred | |||||||
Common stock issued | $ 110,133 | ||||||
Less: identified assets acquired and liabilities assumed | |||||||
Shares issued in Merger Agreement | 6,653,777 | 6,731,845 | |||||
Class B Common Stock | Rockwater Merger | |||||||
Consideration transferred | |||||||
Common stock issued | $ 71,272 | ||||||
Less: identified assets acquired and liabilities assumed | |||||||
Shares issued in Merger Agreement | 4,356,477 |
ACQUISITIONS - Resource Water A
ACQUISITIONS - Resource Water Acquisition - Purchase price allocation (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 15, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Less: identified assets acquired and liabilities assumed | ||||
Goodwill | $ 273,801 | $ 273,421 | $ 12,242 | |
Resource Water Acquisition | ||||
Consideration transferred | ||||
Miles Of Layflat Hose | 24 | |||
Class A Common stock issued, Share Price | $ 15.17 | |||
Cash paid | $ 6,586 | |||
Common stock issued | 2,380 | |||
Total consideration transferred | 8,966 | |||
Less: identified assets acquired and liabilities assumed | ||||
Working capital | 1,189 | |||
Fixed assets | 3,485 | |||
Total identifiable net assets acquired | 7,072 | |||
Goodwill | 1,894 | |||
Fair value allocated to net assets acquired | 8,966 | |||
Cash on hand | $ 6,600 | |||
Resource Water Acquisition | Class A Common Stock | ||||
Less: identified assets acquired and liabilities assumed | ||||
Shares issued in Merger Agreement | 156,909 | |||
Resource Water Acquisition | Customer relationships | ||||
Less: identified assets acquired and liabilities assumed | ||||
Intangible assets | $ 1,933 | |||
Resource Water Acquisition | Other | ||||
Less: identified assets acquired and liabilities assumed | ||||
Intangible assets | $ 465 |
ACQUISITIONS - GRR Acquisition
ACQUISITIONS - GRR Acquisition (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 10, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
ACQUISITION | ||||
Goodwill | $ 273,801 | $ 273,421 | $ 12,242 | |
GRR Acquisition | ||||
ACQUISITION | ||||
Miles of layflat hose | 1,000 | |||
Cash paid | $ 53,032 | |||
Class A Common Stock (274,998 shares) | 5,500 | |||
Total consideration paid | 59,638 | |||
Goodwill | $ 12,049 | |||
Class A Common stock issued, Share Price | $ 20 | |||
Cash on hand | $ 19,000 | |||
Proceeds from credit facility | 34,000 | |||
Transaction cost | $ 1,000 |
ACQUISITIONS - GRR Acquisitio_2
ACQUISITIONS - GRR Acquisition - Purchase price allocation (Details) - USD ($) $ in Thousands | Mar. 10, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Less: identified assets acquired and liabilities assumed | ||||
Goodwill | $ 273,801 | $ 273,421 | $ 12,242 | |
GRR Acquisition | ||||
Consideration transferred | ||||
Cash paid | $ 53,032 | |||
Class A Common Stock (274,998 shares) | 5,500 | |||
Assumed liabilities | 1,106 | |||
Total consideration transferred | 59,638 | |||
Less: identified assets acquired and liabilities assumed | ||||
Working capital | 7,728 | |||
Fixed assets | 13,225 | |||
Total identifiable net assets acquired | 47,589 | |||
Goodwill | 12,049 | |||
Fair value allocated to net assets acquired | $ 59,638 | |||
Shares issued in Merger Agreement | 274,998 | |||
GRR Acquisition | Customer relationships | ||||
Less: identified assets acquired and liabilities assumed | ||||
Intangible assets | $ 21,484 | |||
GRR Acquisition | Other | ||||
Less: identified assets acquired and liabilities assumed | ||||
Intangible assets | $ 5,152 |
ACQUISITIONS - Proforma (Detail
ACQUISITIONS - Proforma (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Pro forma information | |||
Revenue | $ 1,536,524 | $ 1,270,736 | $ 698,778 |
Net loss (loss) | 56,269 | (13,079) | (372,397) |
Less: net (income) loss attributable to noncontrolling interests | (18,432) | 5,299 | 152,930 |
Net income (loss) attributable to Select Energy Services, Inc. | $ 37,837 | $ (7,780) | $ (219,467) |
EXIT AND DISPOSAL ACTIVITIES (D
EXIT AND DISPOSAL ACTIVITIES (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)facility | |
Exit and disposal activities | |||
Number of facilities closed | facility | 15 | ||
Charges related to exit and disposal activities | $ 3,900 | $ 3,600 | |
Amount reclassed to accrued lease obligations | 200 | ||
Accrued expenses and other current liabilities | 14,560 | 35,255 | |
Restructuring Reserve [Roll Forward] | |||
Restructuring Reserve, Beginning Balance | 22,604 | 19,069 | |
Restructuring Reserve, Ending Balance | 18,812 | 22,604 | $ 19,069 |
Accrued Liabilities | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring Reserve, Ending Balance | 2,100 | ||
Lease obligations and terminations | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring Reserve, Beginning Balance | 21,350 | 18,000 | |
Provision for Restructuring | 3,925 | 3,572 | |
Payments for Restructuring | 7,795 | 2,761 | |
Acquired abandoned lease obligations | 2,539 | ||
Restructuring Reserve, Ending Balance | 17,480 | 21,350 | 18,000 |
Reclassifications of deferred rent | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring Reserve, Beginning Balance | 1,254 | 1,069 | |
Restructuring Reserve, Ending Balance | $ 1,332 | $ 1,254 | $ 1,069 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Significant components of inventory | ||
Raw materials | $ 15,219 | $ 11,462 |
Finished goods | 28,540 | 29,674 |
Materials and supplies | 1,233 | 3,462 |
Inventory net | 44,992 | 44,598 |
Inventory reserve | 400 | $ 0 |
Inventory write-down | $ 442 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property and equipment | |||
Property, Plant and Equipment, Gross. | $ 1,114,378 | $ 1,034,995 | |
Accumulated depreciation | (611,530) | (560,886) | |
Property and equipment, net | 502,848 | 474,109 | |
Write off of property and equipment | 6,657 | 0 | $ 60,026 |
Depreciation | 120,400 | 92,600 | |
Write off of property and equipment | $ 4,400 | ||
Leases expiry period | 5 years | ||
Capital lease obligations | |||
Property and equipment | |||
Depreciation | $ 1,300 | 200 | |
Land | |||
Property and equipment | |||
Property and equipment | 17,799 | 15,286 | |
Buildings and leasehold improvements | |||
Property and equipment | |||
Property and equipment | 106,626 | 99,222 | |
Vehicles and equipment | |||
Property and equipment | |||
Property and equipment | 83,435 | 70,537 | |
Property and equipment - capital lease | 1,833 | 2,810 | |
Machinery and equipment | |||
Property and equipment | |||
Property and equipment | 758,528 | 716,064 | |
Property and equipment - capital lease | 532 | 900 | |
Computer equipment and software | |||
Property and equipment | |||
Property and equipment | 15,775 | 12,822 | |
Property and equipment - capital lease | 356 | ||
Office furniture and equipment | |||
Property and equipment | |||
Property and equipment | 4,612 | 4,320 | |
Disposal wells | |||
Property and equipment | |||
Property and equipment | 64,038 | 67,805 | |
Other | |||
Property and equipment | |||
Property and equipment | 497 | 497 | |
Construction in progress | |||
Property and equipment | |||
Property and equipment | $ 60,347 | $ 44,732 | |
Water Solutions | |||
Property and equipment | |||
Write off of property and equipment | $ 60,000 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - GOODWILL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill | ||
Balance at the beginning of the period | $ 273,421 | $ 12,242 |
Additions | 982 | 261,179 |
Impairment | (17,894) | |
Measurement period adjustment | 17,292 | |
Balance at the end of the period | 273,801 | 273,421 |
Water Solutions | ||
Goodwill | ||
Balance at the beginning of the period | 245,542 | |
Additions | 982 | 245,542 |
Measurement period adjustment | 20,277 | |
Balance at the end of the period | 266,801 | 245,542 |
Oilfield Chemicals | ||
Goodwill | ||
Balance at the beginning of the period | 15,637 | |
Additions | 15,637 | |
Impairment | (12,652) | |
Measurement period adjustment | (2,985) | |
Balance at the end of the period | 15,637 | |
Wellsite Services | ||
Goodwill | ||
Balance at the beginning of the period | 12,242 | 12,242 |
Impairment | (5,242) | |
Balance at the end of the period | $ 7,000 | $ 12,242 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other intangible assets | |||
Gross Value | $ 188,589 | $ 188,782 | |
Accumulated Amortization | 70,685 | 61,432 | |
Net Value | 117,904 | 127,350 | |
Intangible assets | 30,473 | 28,716 | |
Intangible Assets, Gross (Excluding Goodwill) | 219,062 | 217,498 | |
Intangible Assets, Net (Excluding Goodwill) | 148,377 | 156,066 | |
Amortization expense | 13,100 | 10,700 | $ 8,700 |
Annual amortization of intangible assets | |||
2,019 | 11,855 | ||
2,020 | 11,561 | ||
2,021 | 10,378 | ||
2,022 | 10,163 | ||
2,023 | 10,092 | ||
Thereafter | 63,855 | ||
Water rights | |||
Other intangible assets | |||
Intangible assets | $ 7,031 | 5,281 | |
Indefinite-lived intangible assets added | 3,700 | ||
Water rights | Minimum | |||
Other intangible assets | |||
Renewal term | 5 years | ||
Water rights | Maximum | |||
Other intangible assets | |||
Renewal term | 10 years | ||
Trademarks | |||
Other intangible assets | |||
Intangible assets | $ 23,442 | 23,435 | |
Indefinite-lived intangible assets added | 23,400 | ||
Trademarks | Minimum | |||
Other intangible assets | |||
Renewal term | 5 years | ||
Trademarks | Maximum | |||
Other intangible assets | |||
Renewal term | 10 years | ||
Customer relationships | |||
Other intangible assets | |||
Gross Value | $ 171,245 | 169,250 | |
Accumulated Amortization | 66,402 | 57,836 | |
Net Value | 104,843 | 111,414 | |
Definite-lived intangible asset aquired | $ 3,000 | 112,400 | |
Weighted average amortization period | 11 years 8 months 12 days | ||
Patents | |||
Other intangible assets | |||
Gross Value | $ 10,110 | 10,109 | |
Accumulated Amortization | 1,417 | 414 | |
Net Value | $ 8,693 | 9,695 | |
Definite-lived intangible asset aquired | 9,700 | ||
Weighted average amortization period | 8 years 8 months 12 days | ||
Other | |||
Other intangible assets | |||
Gross Value | $ 7,234 | 9,423 | |
Accumulated Amortization | 2,866 | 3,182 | |
Net Value | $ 4,368 | 6,241 | |
Definite-lived intangible asset aquired | $ 5,900 | ||
Weighted average amortization period | 2 years 3 months 18 days | ||
Water rights | |||
Other intangible assets | |||
Definite-lived intangible asset aquired | $ 1,800 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Nov. 01, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 20, 2016 |
DEBT | |||||
Unamortized Debt issuance Costs | $ 2,900 | ||||
Amortization of debt issuance costs | $ 688 | 4,031 | $ 3,435 | ||
Average excess availability, less than 33% of the commitments | Base Rate Advances | |||||
DEBT | |||||
Variable interest rate (as a percent) | 1.00% | ||||
Average excess availability, less than 33% of the commitments | LIBOR | |||||
DEBT | |||||
Variable interest rate (as a percent) | 2.00% | ||||
Average excess availability, less than 66.67% of the commitments and more than or equal to 33.33% of the commitments | Base Rate Advances | |||||
DEBT | |||||
Variable interest rate (as a percent) | 0.75% | ||||
Average excess availability, less than 66.67% of the commitments and more than or equal to 33.33% of the commitments | LIBOR | |||||
DEBT | |||||
Variable interest rate (as a percent) | 1.75% | ||||
Average excess availability, more than or equal to 66.67% of the commitments | Base Rate Advances | |||||
DEBT | |||||
Variable interest rate (as a percent) | 0.50% | ||||
Average excess availability, more than or equal to 66.67% of the commitments | LIBOR | |||||
DEBT | |||||
Variable interest rate (as a percent) | 1.50% | ||||
Average excess availability more than or equal to fifty percent | |||||
DEBT | |||||
Unused line fee (as a percent) | 0.25% | ||||
Average excess availability less than fifty percent | |||||
DEBT | |||||
Unused line fee (as a percent) | 0.375% | ||||
Letter of credit | |||||
DEBT | |||||
Amount outstanding | $ 45,000 | 75,000 | |||
Debt issuance costs | $ 4,500 | ||||
Write off of unamortized debt issuance cost | 2,900 | ||||
Revolving line of credit | |||||
DEBT | |||||
Maximum borrowing capacity | $ 300,000 | $ 300,000 | |||
Revolving line of credit | Letter of credit | |||||
DEBT | |||||
Unused portion of available borrowing | $ 270,500 | $ 261,100 | |||
Senior secured credit facility | |||||
DEBT | |||||
Additional borrowing capacity | $ 150,000 | ||||
Time frame for increasing borrowing capacity | 3 years | ||||
Percentage of borrowing base allowed | 35.00% | ||||
Margin (as a percent) | 2.00% | ||||
Weighted average interest rate (as a percent) | 4.256% | 3.319% | |||
Reduction in borrowing capacity | $ 20,800 | $ 19,800 | |||
Unused portion of available borrowing | 204,700 | ||||
Debt issuance costs | 3,400 | ||||
Unamortized Debt issuance Costs | $ 2,600 | $ 3,300 | |||
Senior secured credit facility | Minimum | |||||
DEBT | |||||
Percentage of borrowing base allowed | 30.00% | ||||
Variable interest rate (as a percent) | 1.50% | ||||
Senior secured credit facility | Maximum | |||||
DEBT | |||||
Variable interest rate (as a percent) | 2.00% | ||||
Senior secured credit facility | Base Rate Advances | Minimum | |||||
DEBT | |||||
Margin (as a percent) | 0.50% | ||||
Senior secured credit facility | Base Rate Advances | Maximum | |||||
DEBT | |||||
Margin (as a percent) | 1.00% | ||||
Senior secured credit facility | LIBOR | |||||
DEBT | |||||
Margin (as a percent) | 1.00% | ||||
Senior secured credit facility | LIBOR | Minimum | |||||
DEBT | |||||
Margin (as a percent) | 1.50% | ||||
Senior secured credit facility | LIBOR | Maximum | |||||
DEBT | |||||
Margin (as a percent) | 2.00% | ||||
Senior secured credit facility | Federal Funds Rate | |||||
DEBT | |||||
Margin (as a percent) | 0.50% | ||||
Senior secured credit facility | Eligible billed receivables | |||||
DEBT | |||||
Borrowing base (as a percent) | 85.00% | ||||
Senior secured credit facility | Eligible unbilled receivables | |||||
DEBT | |||||
Borrowing base (as a percent) | 75.00% | ||||
Senior secured credit facility | Eligible inventory | |||||
DEBT | |||||
Borrowing base (as a percent) | 70.00% | ||||
Senior secured credit facility | Net recovery percentage | |||||
DEBT | |||||
Borrowing base (as a percent) | 85.00% | ||||
Senior secured credit facility | Criteria for distributions, scenario one | |||||
DEBT | |||||
Lookback period | 30 days | ||||
Percentage outstanding | 25.00% | ||||
Base amount | $ 37,500 | ||||
Senior secured credit facility | Criteria for distributions, scenario two | |||||
DEBT | |||||
Lookback period | 30 days | ||||
Percentage outstanding | 20.00% | ||||
Base amount | $ 30,000 | ||||
Fixed charge coverage ratio | 1.00% | ||||
Senior secured credit facility | Coverage Ratio Criteria | |||||
DEBT | |||||
Lookback period | 60 days | ||||
Percentage outstanding | 10.00% | ||||
Base amount | $ 15,000 | ||||
Fixed charge coverage ratio | 1.00% | ||||
Senior secured credit facility | Letter of credit | |||||
DEBT | |||||
Maximum borrowing capacity | $ 40,000 | ||||
Senior secured credit facility | Swingline loan | |||||
DEBT | |||||
Maximum borrowing capacity | $ 30,000 | ||||
Previous Credit Facility | |||||
DEBT | |||||
Maximum borrowing capacity | $ 100,000 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Restructuring Cost and Reserve [Line Items] | ||||
Total lease expenses | $ 57,700 | $ 19,200 | $ 21,600 | |
Vehicle operating lease buyout | $ 16,200 | |||
Operating lease commitments under non-cancelable leases | ||||
2,019 | 33,377 | |||
2,020 | 21,015 | |||
2,021 | 16,123 | |||
2,022 | 12,296 | |||
2,023 | 9,643 | |||
Thereafter | 40,991 | |||
Total minimum lease payments | 133,445 | |||
Capital leases | ||||
2,019 | 1,079 | |||
2,020 | 208 | |||
2,021 | 82 | |||
Total minimum lease payments | 1,369 | |||
Less: Interest | (81) | |||
Present value of net minimum capital lease payments | 1,288 | |||
Less: current portion of capital lease obligations | (1,015) | |||
Capital Leases, Future Minimum Payments, Present Value of Long Term Portion | 273 | |||
Operating Leases and Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||
2,019 | 34,456 | |||
2,020 | 21,223 | |||
2,021 | 16,205 | |||
2,022 | 12,296 | |||
2,023 | 9,643 | |||
Thereafter | 40,991 | |||
Total minimum lease payments | 134,814 | |||
Non-cancelable sublease income | ||||
2,019 | 1,400 | |||
2,020 | 900 | |||
2,021 | $ 100 | |||
Percentage of vehicles in which certain employees at some of the facilities altered emissions controls systems | 4.00% | |||
Lease obligations and terminations | ||||
Operating lease commitments under non-cancelable leases | ||||
Total minimum lease payments | $ 37,900 |
EQUITY-BASED COMPENSATION (Deta
EQUITY-BASED COMPENSATION (Details) - $ / shares | Nov. 01, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | May 10, 2017 | Apr. 26, 2017 |
EQUITY-BASED COMPENSATION | |||||
offering period | 3 years | ||||
Maximum | |||||
EQUITY-BASED COMPENSATION | |||||
Equity options term | 10 years | ||||
Class A Common Stock | Over-allotment option | |||||
EQUITY-BASED COMPENSATION | |||||
Share Price | $ 14 | ||||
Class A Common Stock | IPO | |||||
EQUITY-BASED COMPENSATION | |||||
Share Price | $ 14 | ||||
2016 plan | Maximum | |||||
EQUITY-BASED COMPENSATION | |||||
Equity options term | 10 years | ||||
2016 plan | Class A Common Stock | |||||
EQUITY-BASED COMPENSATION | |||||
Maximum number of shares | 5,400,400 | 9,290,199 | |||
Rockwater Equity Plan | Class A Common Stock | |||||
EQUITY-BASED COMPENSATION | |||||
Maximum number of shares | 1,011,087 | ||||
Substitute Awards | 2016 plan | Class A Common Stock | |||||
EQUITY-BASED COMPENSATION | |||||
Maximum number of shares | 2,879,112 |
EQUITY-BASED COMPENSATION - Ass
EQUITY-BASED COMPENSATION - Assumptions (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
EQUITY-BASED COMPENSATION | ||
Weighted-average grant date fair value of equity options granted | $ 8.98 | $ 7.85 |
Equity options | ||
EQUITY-BASED COMPENSATION | ||
Weighted-average grant date fair value of equity options granted | 8.98 | |
Assumptions for equity options granted: | ||
Underlying Equity | $ 20.50 | 20 |
Strike Price | $ 20 | |
Dividend Yield (%) | 0.00% | 0.00% |
Risk free rate(%) | 2.30% | |
Volatility (%) | 50.00% | |
Expected Term (Years) | 10 years | |
Equity options | Minimum | ||
Assumptions for equity options granted: | ||
Strike Price | $ 20.50 | |
Expected Term (Years) | 4 years | |
Risk free rate(%), minimum | 2.00% | |
Volatility (%), minimum | 46.60% | |
Equity options | Maximum | ||
Assumptions for equity options granted: | ||
Strike Price | $ 30.75 | |
Expected Term (Years) | 6 years | |
Risk free rate(%), maximum | 2.70% | |
Volatility (%), maximum | 46.80% |
EQUITY-BASED COMPENSATION - Equ
EQUITY-BASED COMPENSATION - Equity Options Changed During Period (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted-average Grant Date Value | ||
Granted (in dollars per share) | $ 8.98 | $ 7.85 |
Equity options | ||
Equity Options | ||
Beginning balance (in shares) | 3,495,935 | |
Granted (in shares) | 584,846 | |
Stock options exercised (in shares) | (79,333) | |
Vested (in shares) | (95,380) | |
Forfeited (in shares) | (40,390) | |
Ending balance (in shares) | 3,865,678 | 3,495,935 |
Ending balance, exercisable (in shares) | 3,031,407 | |
Non-vested at end of period (in shares) | 834,271 | |
Weighted-average Grant Date Value | ||
Beginning balance (in dollars per share) | $ 7.65 | |
Granted (in dollars per share) | 8.98 | |
Exercised (in dollars per share) | 9.41 | |
Forfeited (in dollars per share) | 6.88 | |
Expired (in dollars per share) | 1.67 | |
Ending balance (in dollars per share) | 7.95 | $ 7.65 |
Ending balance, exercisable | 7.61 | |
Weighted-average Exercise Price | ||
Beginning balance (in dollars per share) | 14.12 | |
Granted (in dollars per share) | 26.02 | |
Exercised (in dollars per share) | 8.12 | |
Forfeited (in dollars per share) | 14.41 | |
Expired (in dollars per share) | 17.32 | |
Ending balance (in dollars per share) | 16 | $ 14.12 |
Ending balance, exercisable | 14.29 | |
Non-vested at end of period (in dollar per share) | $ 22.23 | |
Weighted-average Remaining Contractual Term (Years) | ||
Outstanding | 4 years 10 months 24 days | 5 years 1 month 6 days |
Ending balance, exercisable | 3 years 9 months 18 days | |
Aggregate Intrinsic Value | ||
Beginning balance, outstanding | $ 16,368 | |
Exercised | 493 | |
Ending balance, outstanding | 19 | $ 16,368 |
Ending balance, exercisable | $ 19 |
EQUITY-BASED COMPENSATION - E_2
EQUITY-BASED COMPENSATION - Equity Options (Details) - Equity options - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share Price | $ 20.50 | $ 20 | |
Compensation expense | $ 5.2 | $ 1.9 | $ 0.3 |
Unrecognized compensation expense | $ 4.7 | ||
Weighted-average period for recognition (in years) | 1 year | ||
Class A Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share Price | $ 6.32 | $ 18.24 |
EQUITY-BASED COMPENSATION - Res
EQUITY-BASED COMPENSATION - Restricted stock (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | |
EQUITY-BASED COMPENSATION | ||
offering period | 3 years | |
Payments for repurchase of common stock | $ | $ 16,562 | $ 297 |
Restricted Stock | ||
EQUITY-BASED COMPENSATION | ||
Compensation expense | $ | 4,300 | 500 |
Unrecognized compensation expense | $ | $ 5,700 | |
Weighted-average remaining life | 1 year 8 months 12 days | |
Payments for repurchase of common stock | $ | $ 900 | $ 300 |
Restricted Stock | Minimum | ||
EQUITY-BASED COMPENSATION | ||
offering period | 1 year | |
Restricted Stock | Maximum | ||
EQUITY-BASED COMPENSATION | ||
offering period | 3 years | |
Restricted Stock Awards | ||
Restricted stock | ||
Beginning balance (in shares) | shares | 299,801 | |
Granted (in shares) | shares | 438,182 | |
Vested (in shares) | shares | (191,400) | |
Forfeited (in shares) | shares | (49,638) | |
Ending balance (in shares) | shares | 496,945 | 299,801 |
Grant Date Fair Value | ||
Beginning balance (in dollars per share) | $ / shares | $ 16.36 | |
Granted (in dollars per share) | $ / shares | 19.52 | |
Vested (in dollars per share) | $ / shares | 16.36 | |
Forfeited | $ / shares | 17.62 | |
Ending balance (in dollars per share) | $ / shares | $ 19.02 | $ 16.36 |
Restricted Stock Units | ||
Restricted stock | ||
Beginning balance (in shares) | shares | 30,360 | |
Vested (in shares) | shares | (27,860) | |
Ending balance (in shares) | shares | 2,500 | 30,360 |
Grant Date Fair Value | ||
Beginning balance (in dollars per share) | $ / shares | $ 19.88 | |
Vested (in dollars per share) | $ / shares | 19.96 | |
Ending balance (in dollars per share) | $ / shares | $ 19 | $ 19.88 |
EQUITY-BASED COMPENSATION - Per
EQUITY-BASED COMPENSATION - Performance share units (Details) - Performance share units | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of times shares issued for each performance share settlement | 1 |
Grant date fair value of PSUs | $ 5,900,000 |
Compensation expense | 500,000 |
Fair value of outstanding shares | 1,600,000 |
Unrecognized compensation expense | $ 1,100,000 |
Weighted-average remaining life | 2 years |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of times shares issued for each performance share settlement | 0 |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of times shares issued for each performance share settlement | 1.75 |
Return on assets Less than 9.6% | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percentage of Target PSUs Earned | 0.00% |
Return on assets 9.6% | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percentage of Target PSUs Earned | 50.00% |
Return on assets 12% | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percentage of Target PSUs Earned | 100.00% |
Return on assets 14.4% | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percentage of Target PSUs Earned | 175.00% |
EQUITY-BASED COMPENSATION - P_2
EQUITY-BASED COMPENSATION - Performance share units outstanding (Details) - Performance share units | 12 Months Ended |
Dec. 31, 2018shares | |
Performance share units | |
Target Shares Granted | 280,021 |
Target Shares Forfeited | (24,657) |
Ending balance (in shares) | 255,364 |
2,018 | |
Performance share units | |
Target Shares Granted | 280,021 |
Target Shares Forfeited | (24,657) |
Ending balance (in shares) | 255,364 |
EQUITY-BASED COMPENSATION - Sto
EQUITY-BASED COMPENSATION - Stock-Settled Incentive Awards (Details) - USD ($) $ in Millions | May 17, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
EQUITY-BASED COMPENSATION | |||
offering period | 3 years | ||
Stock-Settled Incentive Awards | |||
EQUITY-BASED COMPENSATION | |||
offering period | 2 years | ||
Vesting date | 30 days | ||
Stock settled incentive awards granted | $ 3.9 | ||
Compensation expense | 0.4 | ||
Unrecognized compensation expense | $ 0.8 | ||
Weighted-average period for recognition (in years) | 17 months | ||
Stock-Settled Incentive Awards | Minimum | |||
EQUITY-BASED COMPENSATION | |||
Pay out percentage | 0.00% | ||
Stock-Settled Incentive Awards | Maximum | |||
EQUITY-BASED COMPENSATION | |||
Pay out percentage | 200.00% | ||
Stock-Settled Incentive Awards | Less than $20.00 | |||
EQUITY-BASED COMPENSATION | |||
Percentage of Target Amount Earned | 0.00% | ||
Stock-Settled Incentive Awards | At least $20.00, but less than $25.00 | |||
EQUITY-BASED COMPENSATION | |||
Percentage of Target Amount Earned | 100.00% | ||
Stock-Settled Incentive Awards | $25.00 or greater | |||
EQUITY-BASED COMPENSATION | |||
Percentage of Target Amount Earned | 200.00% |
EQUITY-BASED COMPENSATION - S_2
EQUITY-BASED COMPENSATION - Stock-settled incentive awards outstanding (Details) - Stock-Settled Incentive Awards $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Value at Target | |
Granted during 2018 | $ 3,871 |
Forfeited during 2018 | (724) |
Non-vested at end of period | 3,147 |
Award Value Being Recognized | |
Granted during 2018 | 1,479 |
Forfeited during 2018 | (277) |
Non-vested at end of period | $ 1,202 |
EQUITY-BASED COMPENSATION - Emp
EQUITY-BASED COMPENSATION - Employee Stock Purchase Plan (ESPP) (Details) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
offering period | 3 years | |
ESPP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
offering period | 4 years | |
Issue price (percentage) | 95.00% | |
Maximum annual employees contribution | $ 15,000 | |
Cash received for shares issued | $ 117 | |
Shares issued | 9,793 | |
Minimum | ESPP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Employee service period | 1 year |
EQUITY-BASED COMPENSATION - Pha
EQUITY-BASED COMPENSATION - Phantom unit awards (Details) - USD ($) $ / shares in Units, $ in Millions | May 05, 2017 | Dec. 31, 2018 | Dec. 31, 2016 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Settlement of phantom units | $ 7.8 | ||
Phantom unit awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Settlement of phantom units | $ 7.8 | ||
Share price | $ 14 | ||
Cash payment (in dollars per share) | $ 5.53 | ||
Compensation expense | $ 7.8 | $ 0 |
EQUITY-BASED COMPENSATION - Sha
EQUITY-BASED COMPENSATION - Share-repurchases (Details) - 2016 plan $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares repurchased in open market | 1,703,651 |
Number of shares repurchased with employee minimum tax withholding requirements | 62,777 |
Decrease in paid in-capital | $ | $ 17.1 |
Class A Common Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Decrease in Class A common stock | 18,000 |
FAIR VALUE MEASUREMENT (Details
FAIR VALUE MEASUREMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Transfers into Level3 | $ 0 | $ 0 | $ 0 |
Transfers out of Level3 | 0 | $ 0 | 0 |
Nonrecurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Goodwill | 17,894 | 138,529 | |
Cost-Method Investment | 2,000 | ||
Intangible Assets | 137 | ||
Fixed Assets | 6,657 | 60,026 | |
Nonrecurring | Carrying value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Goodwill | 24,894 | 138,529 | |
Cost-Method Investment | 2,500 | ||
Intangible Assets | 137 | ||
Fixed Assets | 16,919 | 83,214 | |
Level 3 | Nonrecurring | Fair value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Goodwill | 7,000 | ||
Cost-Method Investment | 500 | ||
Fixed Assets | $ 10,262 | $ 23,188 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS | |||
Sales to related parties | $ 8.3 | $ 9 | $ 1.2 |
Purchases from related party vendors | $ 16.7 | $ 10.4 | 4.3 |
Minimum | |||
RELATED PARTY TRANSACTIONS | |||
Beneficial ownership (as a percent) | 5.00% | 5.00% | |
Property and equipment | |||
RELATED PARTY TRANSACTIONS | |||
Purchases from related party vendors | $ 4.7 | $ 3.8 | 1 |
Inventory and consumables | |||
RELATED PARTY TRANSACTIONS | |||
Purchases from related party vendors | 0.3 | 0.3 | 0.2 |
Rent of certain equipment or other services | |||
RELATED PARTY TRANSACTIONS | |||
Purchases from related party vendors | 10.3 | 2.7 | 1.1 |
Management, consulting and other services | |||
RELATED PARTY TRANSACTIONS | |||
Purchases from related party vendors | $ 1.4 | $ 3.6 | $ 2 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
INCOME TAXES | |||
Effective Income tax (as percent) | 3.00% | 2.40% | 0.20% |
Statutory tax rate (as a percent) | 21.00% | 35.00% | 35.00% |
Tax expense (benefit) | $ 1,704 | $ (851) | $ (524) |
Current tax (benefit) expense | |||
Federal income tax | 1,073 | (338) | |
State and local income tax | 1,077 | (77) | 275 |
Total current (benefit) expense | 2,150 | (415) | 275 |
Deferred tax (benefit) expense | |||
Federal income tax | (20) | (422) | (841) |
State and local income tax | (426) | (14) | 42 |
Total deferred benefit | (446) | (436) | (799) |
Total income tax (benefit) provision | 1,704 | (851) | (524) |
Tax (benefit) expense attributable to controlling interests | 1,425 | (405) | (179) |
Income tax expense (benefit) attributable to noncontrolling interests | 279 | (446) | (345) |
Provision calculated at federal statutory income tax rate: | |||
Income (loss) before taxes | $ 56,003 | $ (35,978) | $ (314,472) |
Statutory rate | 21.00% | 35.00% | 35.00% |
Income tax expense (benefit) computed at statutory rate | $ 11,761 | $ (12,592) | $ (110,065) |
Less: noncontrolling interests | (3,735) | 6,409 | 109,230 |
Income tax expense (benefit) attributable to controlling interests | 8,026 | (6,183) | (835) |
State and local income taxes, net of federal benefit | 515 | (91) | 317 |
Change in enacted tax rate | 39,166 | ||
Other | 580 | ||
Change in valuation allowance | (7,696) | (33,297) | 339 |
Income tax expense (benefit) attributable to controlling interests | 1,425 | (405) | (179) |
Income tax expense (benefit) attributable to noncontrolling interests | 279 | (446) | (345) |
Total income tax (benefit) provision | $ 1,704 | $ (851) | $ (524) |
INCOME TAXES- Deferred tax asse
INCOME TAXES- Deferred tax assets (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets | ||
Outside basis difference in SES Holdings | $ 38,739 | $ 37,931 |
Net operating losses | 45,927 | 35,243 |
Credits and other carryforwards | 1,679 | 863 |
Property and equipment | 150 | |
Intangible assets | 1,284 | 1,218 |
Stock compensation | 2,557 | |
Other | 468 | 1,340 |
Total deferred tax assets before valuation allowance | 88,247 | 79,152 |
Valuation allowance | (88,247) | (75,886) |
Total deferred tax assets | 3,266 | |
Deferred tax liabilities | ||
Property and equipment | 3,286 | |
Other | 123 | 549 |
Total deferred tax liabilities | 123 | 3,835 |
Net deferred tax (liabilities) | $ (123) | $ (569) |
INCOME TAXES- Valuation allowan
INCOME TAXES- Valuation allowance (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Change in valuation allowance | |||
Change during the year | $ 12.4 | ||
Statutory rate | 21.00% | 35.00% | 35.00% |
Liability or expense | $ 0 | $ 0 | |
Incremental income tax expense from transitioning to the TCJA | 0.6 | ||
Federal | Rockwater | |||
Change in valuation allowance | |||
Net operating loss carryforward | 172.5 | ||
State | Rockwater | |||
Change in valuation allowance | |||
Net operating loss carryforward | 84.5 | ||
Foreign | Rockwater | |||
Change in valuation allowance | |||
Net operating loss carryforward | $ 18 |
NONCONTROLLING INTERESTS (Detai
NONCONTROLLING INTERESTS (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
NONCONTROLLING INTERESTS | ||
Noncontrolling interests attributable to joint ventures formed for water-related services | $ 3,273 | $ 5,722 |
Noncontrolling interests attributable to holders of Class B shares | 274,566 | 401,000 |
Total noncontrolling interests | $ 277,839 | $ 406,722 |
NONCONTROLLING INTERESTS - Effe
NONCONTROLLING INTERESTS - Effect of Changes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Effects of changes in noncontrolling interests on equity | |||
Net income (loss) attributable to Select Energy Services, Inc. | $ 36,512 | $ (16,816) | $ (307,524) |
Transfers (to) from noncontrolling interests: | |||
Decrease in additional paid-in capital as a result of the contribution of proceeds from the IPO to SES Holdings, LLC in exchange for common units | (41,135) | (218,712) | |
Decrease in additional paid-in capital as a result of the contribution of proceeds from the Select 144A Offering to SES Holdings, LLC in exchange for common units | 41,135 | 218,712 | |
Increase in contributed capital due to purchase of noncontrolling interest | 707 | ||
Decrease in additional paid-in capital as a result of the contribution of net assets acquired to SES Holdings, LLC in exchange for common units | 4,879 | ||
Decrease in additional paid-in capital as a result of the contribution of net assets from the Rockwater Merger to SES Holdings, LLC in exchange for common units | 170,276 | ||
Increase in additional paid-in capital as a result of stock option exercises | 374 | ||
Increase in additional paid-in capital as a result of restricted stock issuance, net of forfeitures | 1,942 | ||
Increase in additional paid-in capital as a result of issuance of common stock due to vesting of restricted stock units | 104 | ||
(Decrease) increase in additional paid-in capital as a result of the repurchase of SES Holdings LLC Units | (576) | 113 | |
Increase in additional paid-in capital as a result of exchanges of SES Holdings LLC Units (an equivalent number of shares of Class B common stock) for shares of Class A common stock | 146,865 | ||
Increase in additional paid-in capital as a result of the Employee Stock Purchase Plan shares issued | 15 | ||
Change to equity from net income (loss) attributable to Select Energy Services, Inc. and transfers from noncontrolling interests | $ 185,236 | $ (232,993) | $ (525,529) |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Calculation of basic and diluted earnings per share: | |||||||||||
Antidilutive shares | 2,706,159 | ||||||||||
Net income (loss) | $ (18,123) | $ 31,267 | $ 25,023 | $ 16,132 | $ (14,950) | $ 2,593 | $ (10,490) | $ (12,280) | $ 54,299 | $ (35,127) | $ (313,948) |
Net (income) loss attributable to noncontrolling interests | (17,787) | 18,311 | 6,424 | ||||||||
Net income (loss) attributable to Select Energy Services, Inc. | $ (13,501) | $ 22,951 | $ 16,963 | $ 10,099 | $ (9,652) | $ 1,224 | $ (4,216) | $ (4,172) | 36,512 | (16,816) | (1,043) |
Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of restricted stock | 13 | ||||||||||
Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of stock options | 30 | ||||||||||
Net income (loss) attributable to Select Energy Services, Inc. — diluted | 36,555 | (16,816) | (1,043) | ||||||||
Predecessor | |||||||||||
Calculation of basic and diluted earnings per share: | |||||||||||
Net income (loss) | (306,481) | ||||||||||
Net (income) loss attributable to noncontrolling interests | 306,481 | ||||||||||
Class A Common Stock | |||||||||||
Calculation of basic and diluted earnings per share: | |||||||||||
Net income (loss) attributable to Select Energy Services, Inc. | 35,720 | (12,560) | (199) | ||||||||
Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of restricted stock | 13 | ||||||||||
Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of stock options | 30 | ||||||||||
Net income (loss) attributable to Select Energy Services, Inc. — diluted | $ 35,763 | $ (12,560) | $ (199) | ||||||||
Weighted-average shares of common stock outstanding — basic | 72,403,318 | 24,612,853 | 3,802,972 | ||||||||
Dilutive effect of restricted stock | 71,718 | ||||||||||
Dilutive effect of stock options | 166,999 | ||||||||||
Dilutive effect of ESPP | 112 | ||||||||||
Weighted-average shares of common stock outstanding — diluted | 72,642,147 | 24,612,853 | 3,802,972 | ||||||||
Earnings (loss) per share, Basic (in dollars per share) | $ 0.49 | $ (0.51) | $ (0.05) | ||||||||
Earnings (loss) per share, Diluted (in dollars per share) | $ 0.49 | $ (0.51) | $ (0.05) | ||||||||
Basic & Diluted | $ (0.17) | $ 0.29 | $ 0.24 | $ 0.15 | $ (0.18) | $ 0.04 | $ (0.16) | $ (0.21) | |||
Class A-1 Common Stock | |||||||||||
Calculation of basic and diluted earnings per share: | |||||||||||
Net income (loss) attributable to Select Energy Services, Inc. | $ (3,691) | $ (844) | |||||||||
Net income (loss) attributable to Select Energy Services, Inc. — diluted | $ (3,691) | $ (844) | |||||||||
Weighted-average shares of common stock outstanding — basic | 7,233,973 | 16,100,000 | |||||||||
Weighted-average shares of common stock outstanding — diluted | 7,233,973 | 16,100,000 | |||||||||
Earnings (loss) per share, Basic (in dollars per share) | $ (0.51) | $ (0.05) | |||||||||
Earnings (loss) per share, Diluted (in dollars per share) | $ (0.51) | $ (0.05) | |||||||||
Basic & Diluted | $ (0.16) | $ (0.21) | |||||||||
Class A-2 Common Stock | |||||||||||
Calculation of basic and diluted earnings per share: | |||||||||||
Net income (loss) attributable to Select Energy Services, Inc. | $ 792 | $ (565) | |||||||||
Net income (loss) attributable to Select Energy Services, Inc. — diluted | $ 792 | $ (565) | |||||||||
Weighted-average shares of common stock outstanding — basic | 1,604,575 | 1,106,605 | |||||||||
Weighted-average shares of common stock outstanding — diluted | 1,604,575 | 1,106,605 | |||||||||
Earnings (loss) per share, Basic (in dollars per share) | $ 0.49 | $ (0.51) | |||||||||
Earnings (loss) per share, Diluted (in dollars per share) | $ 0.49 | $ (0.51) | |||||||||
Basic & Diluted | $ 0.15 | $ (0.18) | |||||||||
Class B Common Stock | |||||||||||
Calculation of basic and diluted earnings per share: | |||||||||||
Weighted-average shares of common stock outstanding — basic | 31,986,438 | 38,768,156 | 38,462,541 | ||||||||
Weighted-average shares of common stock outstanding — diluted | 31,986,438 | 38,768,156 | 38,462,541 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($)segment | Dec. 31, 2016USD ($)segment | |
SEGMENT INFORMATION | |||||||||||
Number of operating segments | segment | 3 | 3 | 3 | ||||||||
Number of reportable segments | segment | 3 | 3 | 3 | ||||||||
Assets | $ 1,360,605 | $ 1,356,368 | $ 1,360,605 | $ 1,356,368 | |||||||
Segment information | |||||||||||
Revenue | 362,318 | $ 396,970 | $ 393,247 | $ 376,395 | 304,237 | $ 153,880 | $ 134,449 | $ 99,925 | 1,528,930 | 692,491 | $ 302,399 |
Income (loss) before taxes | 56,003 | (35,978) | (314,472) | ||||||||
Depreciation and Amortization | 133,713 | 103,449 | 97,107 | ||||||||
Capital Expenditures | 172,132 | 108,277 | 36,326 | ||||||||
Income (loss) from operations | (13,982) | $ 32,258 | $ 24,795 | $ 18,603 | (8,039) | $ 2,457 | $ (11,909) | $ (12,508) | 61,674 | (29,999) | (298,973) |
Interest expense, net | (6,629) | ||||||||||
Other income, net | 932 | 369 | 629 | ||||||||
Oilfield Chemicals | |||||||||||
Segment information | |||||||||||
Revenue | 259,791 | 41,586 | |||||||||
Accommodations and Rentals | |||||||||||
Segment information | |||||||||||
Revenue | 66,744 | 53,888 | 27,151 | ||||||||
Wellsite Services | |||||||||||
Segment information | |||||||||||
Revenue | 56,662 | 50,974 | 33,793 | ||||||||
Operating segment | Water Solutions | |||||||||||
SEGMENT INFORMATION | |||||||||||
Assets | 1,057,063 | 994,159 | 1,057,063 | 994,159 | |||||||
Segment information | |||||||||||
Revenue | 1,060,217 | 528,997 | 241,766 | ||||||||
Income (loss) before taxes | 113,667 | 17,424 | (282,019) | ||||||||
Depreciation and Amortization | 96,086 | 82,056 | 81,051 | ||||||||
Capital Expenditures | 148,303 | 87,123 | 34,458 | ||||||||
Operating segment | Oilfield Chemicals | |||||||||||
SEGMENT INFORMATION | |||||||||||
Assets | 173,762 | 186,333 | 173,762 | 186,333 | |||||||
Segment information | |||||||||||
Revenue | 260,281 | 41,586 | |||||||||
Income (loss) before taxes | (7,107) | 663 | |||||||||
Depreciation and Amortization | 10,496 | 2,040 | |||||||||
Capital Expenditures | 10,832 | 3,063 | |||||||||
Operating segment | Wellsite Services | |||||||||||
SEGMENT INFORMATION | |||||||||||
Assets | 106,708 | 151,272 | 106,708 | 151,272 | |||||||
Segment information | |||||||||||
Revenue | 211,729 | 123,964 | 61,461 | ||||||||
Income (loss) before taxes | (6,283) | (6,527) | (15,038) | ||||||||
Depreciation and Amortization | 23,955 | 17,550 | 16,056 | ||||||||
Capital Expenditures | 12,997 | 18,091 | 1,868 | ||||||||
Elimination | |||||||||||
Segment information | |||||||||||
Revenue | (3,297) | (2,056) | (828) | ||||||||
Corporate | |||||||||||
SEGMENT INFORMATION | |||||||||||
Assets | $ 23,072 | $ 24,604 | 23,072 | 24,604 | |||||||
Segment information | |||||||||||
Income (loss) before taxes | (38,603) | (41,559) | (1,916) | ||||||||
Depreciation and Amortization | 3,176 | 1,803 | |||||||||
Material reconciling items | |||||||||||
Segment information | |||||||||||
Income (loss) from operations | 100,277 | 11,560 | (297,057) | ||||||||
Interest expense, net | (5,311) | (16,128) | |||||||||
Other income, net | $ (360) | $ 650 | $ 629 |
SEGMENT INFORMATION - Total Ass
SEGMENT INFORMATION - Total Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Segment Reporting Information [Line Items] | ||
Assets | $ 1,360,605 | $ 1,356,368 |
Operating segment | Water Solutions | ||
Segment Reporting Information [Line Items] | ||
Assets | 1,057,063 | 994,159 |
Operating segment | Oilfield Chemicals | ||
Segment Reporting Information [Line Items] | ||
Assets | 173,762 | 186,333 |
Operating segment | Wellsite Services | ||
Segment Reporting Information [Line Items] | ||
Assets | 106,708 | 151,272 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 23,072 | $ 24,604 |
SEGMENT INFORMATION - Revenue b
SEGMENT INFORMATION - Revenue by product (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||||||||||
Revenue | $ 362,318 | $ 396,970 | $ 393,247 | $ 376,395 | $ 304,237 | $ 153,880 | $ 134,449 | $ 99,925 | $ 1,528,930 | $ 692,491 | $ 302,399 |
Water sourcing and transfer | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 827,727 | 371,352 | 144,659 | ||||||||
Well testing and flowback | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 223,817 | 90,075 | 37,582 | ||||||||
Fluid hauling and disposal | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 94,189 | 84,616 | 59,214 | ||||||||
Oilfield Chemicals | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 259,791 | 41,586 | |||||||||
Accommodations and Rentals | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 66,744 | 53,888 | 27,151 | ||||||||
Wellsite Services | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | $ 56,662 | $ 50,974 | $ 33,793 |
SEGMENT INFORMATION - Other dis
SEGMENT INFORMATION - Other disclosures (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Concentration Risk [Line Items] | |||||||||||
Revenue | $ 362,318 | $ 396,970 | $ 393,247 | $ 376,395 | $ 304,237 | $ 153,880 | $ 134,449 | $ 99,925 | $ 1,528,930 | $ 692,491 | $ 302,399 |
Geographic concentration risk | UNITED STATES | Revenue | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Revenue | $ 1,480,400 | $ 680,900 | |||||||||
Concentration risk (as a percent) | 96.80% | 98.30% | |||||||||
Geographic concentration risk | UNITED STATES | Long Lived Asset | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Long-lived assets | 492,400 | 451,700 | $ 492,400 | $ 451,700 | |||||||
Concentration risk (as a percent) | 97.90% | 95.30% | |||||||||
Geographic concentration risk | CANADA | Revenue | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Revenue | $ 48,600 | $ 11,600 | |||||||||
Concentration risk (as a percent) | 3.20% | 1.70% | |||||||||
Geographic concentration risk | CANADA | Long Lived Asset | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Long-lived assets | $ 10,500 | $ 22,400 | $ 10,500 | $ 22,400 | |||||||
Concentration risk (as a percent) | 2.10% | 4.70% |
QUARTERLY RESULTS OF OPERATIO_3
QUARTERLY RESULTS OF OPERATIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Data [Abstract] | |||||||||||
Revenue | $ 362,318 | $ 396,970 | $ 393,247 | $ 376,395 | $ 304,237 | $ 153,880 | $ 134,449 | $ 99,925 | $ 1,528,930 | $ 692,491 | $ 302,399 |
Gross profit (loss) | 34,408 | 59,397 | 56,728 | 47,949 | 26,259 | 19,509 | 12,254 | (242) | 198,482 | 57,780 | (44,128) |
Income (loss) from operations | (13,982) | 32,258 | 24,795 | 18,603 | (8,039) | 2,457 | (11,909) | (12,508) | 61,674 | (29,999) | (298,973) |
Net income (loss) | (18,123) | 31,267 | 25,023 | 16,132 | (14,950) | 2,593 | (10,490) | (12,280) | 54,299 | (35,127) | (313,948) |
Net income(loss) attributable to Select Energy Services, Inc. | $ (13,501) | $ 22,951 | $ 16,963 | $ 10,099 | $ (9,652) | $ 1,224 | $ (4,216) | $ (4,172) | 36,512 | (16,816) | (1,043) |
Class A Common Stock | |||||||||||
Quarterly Financial Data [Abstract] | |||||||||||
Net income(loss) attributable to Select Energy Services, Inc. | 35,720 | (12,560) | (199) | ||||||||
Net income (loss) per share attributable to common stockholders | |||||||||||
Basic & Diluted | $ (0.17) | $ 0.29 | $ 0.24 | $ 0.15 | $ (0.18) | $ 0.04 | $ (0.16) | $ (0.21) | |||
Class A-1 Common Stock | |||||||||||
Quarterly Financial Data [Abstract] | |||||||||||
Net income(loss) attributable to Select Energy Services, Inc. | (3,691) | $ (844) | |||||||||
Net income (loss) per share attributable to common stockholders | |||||||||||
Basic & Diluted | $ (0.16) | $ (0.21) | |||||||||
Class A-2 Common Stock | |||||||||||
Quarterly Financial Data [Abstract] | |||||||||||
Net income(loss) attributable to Select Energy Services, Inc. | $ 792 | $ (565) | |||||||||
Net income (loss) per share attributable to common stockholders | |||||||||||
Basic & Diluted | $ 0.15 | $ (0.18) |
SUBSEQUENT EVENTS - (Details)
SUBSEQUENT EVENTS - (Details) - Subsequent Event $ in Millions | Feb. 26, 2019USD ($) |
Sale of subsidiary | |
Sales price of subsidiary | $ 11.2 |
Proceeds from sale | $ 11 |